RNS Number : 7141E
Newport Networks Group PLC
30 September 2008
For release on 30 September 2008
Newport Networks Group PLC ("Company")
Interim Results for the 6 Months to 30 June 2008
Chairman's report
As previously stated in the Trading Update released on 11 July 2008, the major delays in the deployment of Next Generation Networks have
left Newport Networks with little revenue for the first half of 2008, and an expectation of minimal revenue for the remainder of the year.
As a result it has been necessary to reduce significantly the staffing levels and associated costs. By the end of October 2008 the Company
expects to have four employees remaining.
For the six months to 30 June 2008 revenue was �18,000 (2007: �76,000) and the loss for the period was �7.75m (2007: �3.96m). The loss
for the period is stated after crediting �0.5m in respect of R&D Tax Credits.
Detailed discussions have taken place with many potential interested parties to seek an offer for the entire issued share capital of the
Company or its technology. The Board of Directors is not optimistic that these discussions will reach a successful conclusion.
To date no interest has been expressed by any party in the hardware products of the Company. As a result the Company has therefore taken
the further step of writing down the hardware inventory and lab hardware, within property, plant and equipment, to zero with an impairment
charge of �3.48m which has been included in the first half financial results.
Despite the severe conditions, I continue to support the Company by providing funding through my private venture capital company Wesley
Clover Corporation. Although the existing loan facility has been fully drawn down, I have increased it to cover day-by-day operations.
The Board of Directors is actively considering what options are available to the Company under the current challenging circumstances.
Sir Terence Matthews
Chairman.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm, to the best of their knowledge, that this condensed set of financial statements has been prepared in accordance
with IAS 34 as adopted by the European Union, and that the Interim Management Report includes a fair review of the information required by
Rules 4.2.7 and 4.2.8 of the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority.
On behalf of the Board
John Ackroyd John Everard
Chief Executive Non - executive director
GROUP INCOME STATEMENT
6 months to 6 months to Year to
30 June 30 June 31 December
2008 2007 2007
Unaudited Unaudited Audited
�000 �000 �000
Revenue 18 76 131
Cost of sales (9) (27) (55)
Gross profit 9 49 76
Administrative expenses (8,271) (4,544) (9,833)
Operating loss from continuing (8,262) (4,495) (9,757)
operations
Finance revenue 20 47 147
Finance cost (7) - -
Loss from continuing operations before (8,249) (4,448) (9,610)
taxation
Income tax credit 500 487 1,027
Loss for the period from continuing (7,749) (3,961) (8,583)
operations
attributable to the equity holders of
the parent
company
Loss per share
- Basic and diluted from continuing (2.1p) (2.4p) (3.6p)
operations
GROUP STATEMENT OF RECOGNISED INCOME
AND EXPENSE
6 months to 6 months to Year to
30 June 30 June 31 December
2008 2007 2007
Unaudited Unaudited Audited
�000 �000 �000
Loss for the period (7,749) (3,961) (8,583)
Exchange differences on foreign net (2) 22 (17)
investments
Total recognised income and expense (7,751) (3,939) (8,600)
for the period
attributable to the equity holders of
the parent company
Total recognized income and expense (7,751) (3,939) (8,600)
GROUP BALANCE SHEET
30 June 30 June 31 December
2008 2007 2007
Unaudited Unaudited Audited
�000 �000 �000
Non-current assets
Property, plant and equipment 120 2,115 1,796
Current assets
Inventories - 2,284 2,132
Trade and other receivables 344 1,265 504
Tax credit receivable 1,490 450 990
Cash at bank and in hand - 691 2,328
Total assets 1,954 6,805 7,750
Current liabilities
Bank overdraft (782) - -
Loan (1,002) - -
Trade payables (488) (305) (399)
Other taxes (157) (167) (166)
Other payables (537) (578) (451)
Total liabilities (2,966) (1,050) (1,016)
Net (liabilities)/assets (1,012) 5,755 6,734
Capital and reserves
Equity share capital 8,529 8,329 8,529
Share premium 41,850 36,390 41,850
Merger reserve 8,088 8,088 8,088
Other reserve 884 899 879
Accumulated losses (60,363) (47,951) (52,612)
Total (deficit)/ equity attributable (1,012) 5,755 6,734
to members of the parent company
GROUP CASH FLOW STATEMENT
6 months to 6 months to Year to
30 June 2008 30 June 31
Unaudited 2007 Decembe
Unaudited r
2007
Audited
�000 �000 �000
Operating activities
Loss for the period (7,749) (3,961) (8,583)
Adjustments to reconcile loss for the period to net
cash flow from operating activities
Depreciation 412 521 977
Impairment of property, plant and 1,500 - -
equipment
Impairment of inventories 1,976 - -
Decrease/(increase) in inventories 156 (404) (252)
Decrease in trade receivables 160 381 1,142
Increase/(decrease) in trade and other 166 (365) (399)
payables
Finance revenue (20) (47) (147)
Finance cost 7 - -
Tax credit (500) (487) (1,027)
Share based payment charge 5 30 10
Other non cash items (2) 22 (17)
Net cash flow from operating activities (3,889) (4,310) (8,296)
Investing activities
Payments to acquire equipment (236) (120) (257)
Finance revenue 20 47 147
Net cash flow from investing activities (216) (73) (110)
Taxation
UK corporation tax received - 1,377 1,377
Net cash flow from taxation - 1,377 1,377
Financing activities
Net proceeds from share issues - - 5,660
Finance cost (7) - -
Loan finance 1,002 - -
Net cash flow from financing activities 995 - 5,660
(Decrease) in cash and cash equivalents (3,110) (3,006) (1,369)
Cash and cash equivalents at the 2,328 3,697 3,697
beginning of period
Cash and cash equivalents at the end of (782) 691 2,328
period
NOTES TO THE INTERIM STATEMENT
1. General information
Newport Networks Group PLC is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of
Newport Networks Group PLC's registered office is Castlegate Business Park, Portskewett, Caldicot, Monmouthshire, NP26 5AA. Its shares are
listed on AIM, a market of the London Stock Exchange.
These consolidated interim financial statements have been approved by the Board of Directors on 30 September 2008.
The financial information contained in this interim statement does not amount to statutory financial statements within the meaning of
section 240 Companies Act 1985 and has not been reported on by the auditors or delivered to the Registrar of Companies. The figures for the
year to 31 December 2007 have been extracted from the full statutory financial statements for that year which have been filed with the
Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under Section
237(2) or (3) of the Companies Act 1985.
2. Basis of preparation
The interim financial statements for the six months to 30 June 2008 have been prepared in accordance with International Financial
Reporting Standards ("IFRSs") as adopted by the European Union as they apply to the financial statements of the Group and applied in
accordance with the Companies Act 1985. The interim financial statements for the six months to 30 June 2007 were prepared in accordance
with UK Generally Accepted Accounting Standards. The financial statements for the year to 31 December 2007 were the first financial
statements that have been prepared in accordance with IFRS and the transition to IFRS did not give rise to any adjustments to previously
reported financial statements, other than changes in presentation and disclosures required under IFRS.
The directors have prepared the financial statements on the going concern basis as a result of the continuing support provided by Wesley
Clover Corporation.
The principal accounting policies of the Group have been consistently applied throughout 2007 and 2008.
The interim financial statement complies with IAS 34 and has not been audited or reviewed by the group's auditors pursuant to the
Auditing Practices Board's ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information prepared by the Independent Auditor of the
Entity.'
3. Loss per ordinary share
The basic loss per share (LPS) of (2.1p) is based on the loss for the period of �7,749,000 and the weighted average number of ordinary
shares in issue of 366,582,833.
The 30 June 2007 comparative loss per share (LPS) of (2.4p) is based on the loss for the period of �3,961,000 and the weighted average
number of ordinary shares in issue of 166,582,833.
The 31 December 2007 comparative loss per share (LPS) of (3.6p) is based on the loss for the year of �8,583,000 and the weighted average
number of ordinary shares in issue of 238,911,600.
Diluted LPS has not been disclosed, due to employee share options being anti-dilutive. In these circumstances diluted LPS is the same as the
basic LPS.
4. Segment information
The primary segment reporting format used for segmental reporting is by the geographic segments based on customer location. The
Group operates in one business segment and has only one business activity and the products being sold are all similar, except
for their volume capabilities. All goods are manufactured in the UK and shipped to the Rest of Europe, Americas and APAC for
onward sale. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
Europe
Americas
Asia Pacific ("APAC")
Europe Americas APAC Eliminations Total
�000 �000 �000 �000 �000
Revenue
Period ended 30 June 2008
Revenue - - 18 - 18
Inter-segment revenue 18 - - (18) -
Total revenue 18 - 18 (18) 18
Period ended 30 June 2007
Revenue - 76 - - 76
Inter-segment revenue 76 - - (76) -
Total revenue 76 76 - (76) 76
Year ended 31 December 2007
Revenue - 159 (28) - 131
Inter-segment revenue 131 - - (131) -
Total revenue 131 159 (28) (131) 131
Segment result
Period ended 30 June 2008
Segment result (7,870) (205) (187) - (8,262)
Period ended 30 June 2007
Segment result (4,303) (6) (186) - (4,495)
Year ended 31 December 2007
Segment result (9,166) (177) (414) - (9,757)
Europe Americas APAC Unallocated Total
�000 �000 �000 �000 �000
Assets by location
Period ended 30 June 2008
Assets by location 436 25 3 1,490 1,954
Period ended 30 June 2007
Assets by location 4,801 208 655 1,141 6,805
Year ended 31 December 2007
Assets by location 4,155 215 62 3,318 7,750
Liabilities by location
Period ended 30 June 2008
Liabilities by location 2,957 9 - - 2,966
Period ended 30 June 2007
Liabilities by location 1,039 11 - - 1,050
Year ended 31 December 2007
Liabilities by location 1,007 9 - - 1,016
Depreciation
Period ended 30 June 2008
Depreciation by location 411 - 1 - 412
Period ended 30 June 2007
Depreciation by location 520 - 1 - 521
Year ended 31 December 2007
Depreciation by location 975 - 2 - 977
Capital spend
Period ended 30 June 2008
Capital spend by location 236 - - - 236
Period ended 30 June 2007
Capital spend by location 120 - - - 120
Year ended 31 December 2007
Capital spend by location 257 - - - 257
Europe Americas APAC Eliminations Total
�000 �000 �000 �000 �000
Inventory provision
Period ended 30 June 2008
Inventory provision by 4,413 - - - 4,413
location
Period ended 30 June 2007
Inventory provision by 2,450 - - - 2,450
location
Year ended 31 December 2007
Inventory provision by 2,406 - - - 2,406
location
Receivables impairment
Period ended 30 June 2008
Receivables impairment by 244 80 639 - 963
location
Period ended 30 June 2007
Receivables impairment by - - 40 - 40
location
Year ended 31 December 2007
Receivables impairment by 257 80 639 - 976
location
Property, plant and equipment
impairment
Period ended 30 June 2008
Property, plant and equipment 1,500 - - - 1,500
impairment by location
Period ended 30 June 2007
Property, plant and equipment - - - - -
impairment by location
Year ended 31 December 2007
Property, plant and equipment - - - - -
impairment by location
Inventories impairment
Period ended 30 June 2008
Inventories impairment by 1,976 - - - 1,976
location
Period ended 30 June 2007
Inventories impairment by - - - - -
location
Year ended 31 December 2007
Inventories impairment by - - - - -
location
5. Impairment
Property, plant and equipment have been impaired by �1,500,000 as the equipment is not currently operational following the reduction in
headcount. Inventories have also been impaired by �1,976,000.
6. Taxation
The income tax credit of �500,000 for the period comprises R&D Tax Credit receivable. Payment on account of the 2007 claim for R&D Tax
Credit is expected before the end of October 2008. As a result of accumulated tax losses, there is a deferred tax asset at 30 June 2008 of
�10,500,000 which has not been recognised in the financial statements as there is uncertainty over when it will be recoverable.
7. Issued capital
Issued capital at 30 June 2008 amounted to 366,582,833 ordinary shares of 0.1p each and 166,582,833 deferred ordinary shares of 4.9p
each. There were no movements in the issued capital of the Company in the period ended 30 June 2008.
8. Borrowings
During the period the Group obtained a bank overdraft facility of �1m. The overdraft is at market
rates and is due for repayment before 30 November 2008. The overdraft is secured by an all assets debenture and also the guarantee of
Wesley Clover Corporation.
9. Loan
During the period the Group entered into a loan facility in the amount of �2m with Wesley Clover Corporation. The loan is repayable on
demand and is secured by a debenture with interest accruing at 2% over Bank of England base rate.
At 30 June 2008 �1m of the loan had been drawn and accrued interest amounted to �2,000.
At 29 September 2008 the entire loan of �2m had been drawn down.
10. Events after the balance sheet date
On 11 July 2008 the Group announced a further cost reduction programme to significantly reduce monthly running costs. The cost of
implementation of this programme has been calculated to be �350,000 and this amount has not been provided and included in these financial
statements.
11. Consolidated statement of changes in equity
Profit
Share Share Merger Other & loss
capital premium reserve reserve account Total
�000 �000 �000 �000 �000 �000
At 1 January 2007 8,329 36,390 8,088 869 (44,012) 9,664
Share based payment charge - - - 30 - 30
Exchange differences on
foreign net investments - - - - 22 22
Loss for the period - - - - (3,961) (3,961)
At 1 July 2007 8,329 36,390 8,088 899 (47,951) 5,755
Share based payment credit - - - (20) - (20)
Exchange differences on
foreign net investments - - - - (39) (39)
Shares issued in the period 200 5,800 - - - 6,000
Costs of share issue - (340) - - - (340)
Loss for the period - - - - (4,622) (4,622)
At 1 January 2008 8,529 41,850 8,088 879 (52,612) 6,734
Share based payment charge - - - 5 - 5
Exchange differences on
foreign net investments - - - - (2) (2)
Loss for the period - - - - (7,749) (7,749)
At 30 June 2008 8,529 41,850 8,088 884 (60,363) (1,012)
This information is provided by RNS
The company news service from the London Stock Exchange
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