TIDMNSV
RNS Number : 2149L
NetServices PLC
04 May 2010
30 April 2010
NetServices plc ("NetServices", the "Company" or the "Group")
Interim results for the six months ended 28 February 2010
Highlights
+----------+------+------------------------------------------------------+-----+-+
| · | Revenue1 of GBP2.3m (2009: GBP3.2m) | |
+-----------------+------------------------------------------------------------+-+
| · | Gross profit1 of GBP0.9m (2009: GBP1.4m) | |
+-----------------+------------------------------------------------------------+-+
| · | Gross profit margin of 38% (2009: 43%) | |
+-----------------+------------------------------------------------------------+-+
| · | EBITDA2 loss of GBP0.2m (2009: GBP0.1m profit) | |
+-----------------+------------------------------------------------------------+-+
| · | Loss before tax of GBP0.3m (2009: GBP0.4m) | |
+-----------------+------------------------------------------------------------+-+
| · | Cash in hand at period end of GBP0.1m (2009: GBP0.8m) | |
+-----------------+------------------------------------------------------------+-+
| · | Agreement to sell trade and assets of the Group for | |
| | aggregate cash of | |
+-----------------+------------------------------------------------------------+-+
| | GBP3.2m3 to GCI Telecom Group Limited subject to | |
| | shareholder approval | |
+-----------------+------------------------------------------------------------+-+
| 1 | Attributable to discontinued operations. |
+----------+---------------------------------------------------------------------+
| 2 | EBITDA = earnings before interest, tax, depreciation and |
| | amortisation and non-recurring items for both continuing and |
| | discontinued operations. |
+----------+---------------------------------------------------------------------+
| 3 | Aggregate cash includes settlement of approximately GBP1.5m | |
| | of intra group debt. | |
+----------+-------------------------------------------------------------+-------+
| | | | | |
+----------+------+------------------------------------------------------+-----+-+
Chairman's statement
Overview
I am pleased to announce the results for the six months ended 28 February 2010.
The period under review has continued to be a challenging period for the
business. Revenues for the first half were GBP2.3m (2009: GBP3.2m) which
produced a gross margin of GBP0.9m (2009: GBP1.4m) and a loss before tax of
GBP0.3m (2009: GBP0.4m). Cash balances at the period end were GBP0.1m (2009:
GBP0.8m).
The business has made considerable steps in consolidating its technical
capability and skill set in the areas of Cisco Powered Managed Services, and in
developing its route to market through Cisco and dark fibre providers in line
with the strategy outlined in November 2009 when the Company announced its
preliminary results for the financial year ended 31 August 2009. However, as we
reported at the time, our expectations were that it would take time to convert
this targeted technical capability into sales and this has proved to be the
case. We have however been successful in securing existing customers, by signing
contract extensions with our major customers and protecting the existing revenue
base. This demonstrates both the strength of our Cisco capability and services
offering once we secure a customer.
In January 2010 we secured an investment of funds of GBP0.1m from Ian Smith,
formerly CEO of Xploite plc, and granted Ian an option over new shares at 8.7p
per share to invest a further GBP2.0m in cash in the Company upon agreement of a
suitable acquisition target. At the same time Ian was appointed a non-executive
director of the Company. Shortly after completing the subscription and grant of
the option, we were approached by a number of interested parties who expressed
an interest in buying the trading assets of the Group, including customer
contracts, computer equipment and short leasehold properties. The Company has
entered into an agreement with GCI Telecom Group Limited to sell substantially
all of the business of the Group for aggregate cash of GBP3.2m, subject to
shareholders' approval. The Company is also seeking shareholders' approval on an
investing policy and a change of name to Accumuli plc.
For the purpose of these statements the results of the business, which is the
subject of an offer from GCI Telecom Group Limited, have been treated as
discontinued.
Half-year results
Revenue for the six months ended 28 February 2010 was GBP2.3m (2009: GBP3.2m).
The lower revenues resulted from the Company starting the financial year with a
lower annuity revenue base, combined with lower new business activity for the
period.
New business sales activity was focused on establishing routes to market through
Cisco to its customers. We have been successful in converting one of those
opportunities with the provision of Multi Protocol Label Switching connections
for a Cisco Advanced Technology Partner for TelePresence. We also focused on
working with a dark fibre provider to supply a managed service complementary to
its fibre offering. In the period under review we tendered for a local
government network contract with this provider worth over GBP1m per annum.
Whilst we were successful in being shortlisted we were not successful in
securing the contract.
Gross profit was GBP0.9m (2009: GBP1.4m) which equated to a gross margin of 38%.
We produced an EBITDA loss before non-recurring items of GBP0.2m (2009: GBP0.1m
profit). We have continued to manage the cost base effectively and efficiently,
however in order to maintain capability and levels of accreditation we have not
been able to reduce operating costs to a level which would produce a monthly net
profit.
Loss before tax for the period was GBP0.3m (2009: GBP0.4m) which was in line
with expectations for the first half of the trading year.
Cash balances at 28 February 2010 were GBP0.1m (2009: GBP0.8m). Timing of
payments to suppliers and receipts from customers in addition to the cumulative
effect of losses in the first half accounted for the lower than expected cash
balance. Subsequent to the period end we realised GBP0.1m from one of our
unlisted investments and completed on the sale of one of the Group's surplus
properties, realising GBP0.1m net of mortgage repayment.
Business developments
During the period we continued with our core strategy of consolidating and
broadening our Cisco Powered Managed Services capability. This meant that during
September 2009 we became the first non-carrier in the UK to achieve Master
Managed Services Channel Program ("MSCP") Partner in Connectivity and Security.
In October we became the first Cisco MSCP Partner in Europe to be accredited to
offer White Label Network Operation Centre ("NOC") services, which allows us to
assist Cisco resellers to access higher levels of manufacturers' rebate on Cisco
equipment.
In January 2010 we attended the Cisco Live event in Barcelona to showcase our
White Label NOC and Host-Agent services, which has provided some significant
leads within Cisco.
We also continued with our strategy, first outlined in last year's annual
report, of seeking to work collaboratively and in partnership with a dark fibre
provider. We signed a partnership agreement with H20 Networks Limited in early
2010, and already we have worked together on a number of proposals for local
government network provision, as yet unsuccessfully.
Disposal
We acknowledge that whilst we have continued to make significant progress in our
technical capability and in securing, on renewal terms, significant customer
accounts, this has yet to be reflected in our financial results. I have also
indicated earlier that we are currently faced with a dilemma that if we were to
reduce our operating costs further we would also impact our recognised Cisco
capability. Finally we also have the continuing issue of our onerous supply
contract, under which our commitments to pay now exceed the value of services we
are actually receiving and hence have an adverse effect on cash flow.
We have commented previously that we would always look at ways to enhance
shareholder value. In a circular to shareholders, we set out the details of the
agreement reached with GCI Telecom Group Limited to acquire the trading business
of the Group for aggregate cash receivable of GBP3.2m. We believe that the
agreed terms represent the best outcome for shareholders. We have set out full
details and our reasons for recommending the proposed sale in that document. The
disposal requires shareholders' approval at a general meeting which is being
convened for 18 May 2010.
Outlook
If the proposed disposal is not approved by shareholders, the outlook for the
business would be uncertain. While we have a technical capability which is
gaining some traction, the revenues that will arise and the timing from this are
still uncertain. If the proposed disposal, investing policy and name change are
approved by shareholders, the Company will be in a position to re-invest the
proceeds in line with its chosen policy. In pursuing this investing policy we
intend to place strong reliance on Ian Smith's experience, knowledge and
contacts in the managed IT sector.
I look forward to providing an update on progress later in the year at the time
of the final results.
Graham Norfolk
Non-executive chairman
30 April 2010
Consolidated income statement
for the six months ended 28 February 2010
+--------------------------+--+----+-----------+-----------+------------+
| Six months | Six | Year |
| | months | |
+----------------------------------------------+-----------+------------+
| ended | ended | ended |
+----------------------------------------------+-----------+------------+
| 28 February | 28 | 31 August |
| | February | |
+----------------------------------------------+-----------+------------+
| 2010 | 2009 | 2009 |
+----------------------------------------------+-----------+------------+
| Unaudited | Unaudited | Audited |
+----------------------------------------------+-----------+------------+
| Notes | GBP000s | GBP000s | GBP000s |
+----------------------------------+-----------+-----------+------------+
| Operating expenses | (295) | (353) | (675) |
+----------------------------------+-----------+-----------+------------+
| Depreciation | (10) | (10) | (20) |
+----------------------------------+-----------+-----------+------------+
| Operating loss before | (305) | (363) | (695) |
| non-recurring items | | | |
+----------------------------------+-----------+-----------+------------+
| Non-recurring items - | 2A | - | (45) | (77) |
| restructuring costs | | | | |
+-----------------------------+----+-----------+-----------+------------+
| Operating loss | (305) | (408) | (772) |
+----------------------------------+-----------+-----------+------------+
| Finance income | - | 5 | 5 |
+----------------------------------+-----------+-----------+------------+
| Finance costs | (6) | (12) | (22) |
+----------------------------------+-----------+-----------+------------+
| Loss before taxation | (311) | (415) | (789) |
+----------------------------------+-----------+-----------+------------+
| Income tax expense | 3 | - | - | - |
+--------------------------+-------+-----------+-----------+------------+
| Loss after taxation | (311) | (415) | (789) |
+----------------------------------+-----------+-----------+------------+
| Loss for the period from discontinued |
+-----------------------------------------------------------------------+
| operations | 2 | (18) | (4) | (26) |
+--------------------------+-------+-----------+-----------+------------+
| Loss for the period | (329) | (419) | (815) |
+----------------------------------+-----------+-----------+------------+
| Loss per share |
+-----------------------------------------------------------------------+
| - basic and diluted (p) | 4 | (1.08) | (1.42) | (2.75) |
+--------------------------+-------+-----------+-----------+------------+
| | | | | | |
+--------------------------+--+----+-----------+-----------+------------+
There was no recognised income or expenditure other than the loss for the
period. Accordingly, no statement of recognised income and expenditure has been
prepared.
Consolidated balance sheet
as at 28 February 2010
+----------------------------------------+---------+-----------+---------+
| As at | As at | As |
| | | at |
+--------------------------------------------------+-----------+---------+
| 28 February | 28 | 31 |
| | February | August |
+--------------------------------------------------+-----------+---------+
| 2010 | 2009 | 2009 |
+--------------------------------------------------+-----------+---------+
| Unaudited | Unaudited | Audited |
+--------------------------------------------------+-----------+---------+
| GBP000s | GBP000s | GBP000s |
+--------------------------------------------------+-----------+---------+
| ASSETS |
+------------------------------------------------------------------------+
| Non-current assets |
+------------------------------------------------------------------------+
| Property, plant and equipment | 872 | 1,211 | 1,158 |
+----------------------------------------+---------+-----------+---------+
| Goodwill | - | 334 | 334 |
+----------------------------------------+---------+-----------+---------+
| Intangible assets | - | 153 | 179 |
+----------------------------------------+---------+-----------+---------+
| Investments | 59 | 59 | 59 |
+----------------------------------------+---------+-----------+---------+
| 931 | 1,757 | 1,730 |
+--------------------------------------------------+-----------+---------+
| Current assets |
+------------------------------------------------------------------------+
| Trade and other receivables | 87 | 894 | 834 |
+----------------------------------------+---------+-----------+---------+
| Cash and cash equivalents | 148 | 810 | 649 |
+----------------------------------------+---------+-----------+---------+
| 235 | 1,704 | 1,483 |
+--------------------------------------------------+-----------+---------+
| Assets classified as held for resale | 1,470 | - | - |
+----------------------------------------+---------+-----------+---------+
| Total assets | 2,636 | 3,461 | 3,213 |
+----------------------------------------+---------+-----------+---------+
| EQUITY AND LIABILITIES |
+------------------------------------------------------------------------+
| Equity attributable to equity holders of the parent |
+------------------------------------------------------------------------+
| Share capital | 82 | 74 | 74 |
+----------------------------------------+---------+-----------+---------+
| Share premium reserve | 4,379 | 4,293 | 4,293 |
+----------------------------------------+---------+-----------+---------+
| Share-based payment reserve | 14 | 14 | 14 |
+----------------------------------------+---------+-----------+---------+
| Purchase of own shares | (12) | - | (12) |
+----------------------------------------+---------+-----------+---------+
| Revaluation reserve | 152 | 152 | 152 |
+----------------------------------------+---------+-----------+---------+
| Retained losses | (4,798) | (4,073) | (4,469) |
+----------------------------------------+---------+-----------+---------+
| TOTAL EQUITY SHAREHOLDERS' FUNDS | (183) | 460 | 52 |
+----------------------------------------+---------+-----------+---------+
| Non-current liabilities |
+------------------------------------------------------------------------+
| Financial liabilities | 287 | 449 | 390 |
+----------------------------------------+---------+-----------+---------+
| Provisions | - | 1,382 | 1,457 |
+----------------------------------------+---------+-----------+---------+
| Deferred tax | 67 | 67 | 67 |
+----------------------------------------+---------+-----------+---------+
| 354 | 1,898 | 1,914 |
+--------------------------------------------------+-----------+---------+
| Current liabilities |
+------------------------------------------------------------------------+
| Financial liabilities | 69 | 108 | 157 |
+----------------------------------------+---------+-----------+---------+
| Trade and other payables | 78 | 995 | 1,090 |
+----------------------------------------+---------+-----------+---------+
| 147 | 1,103 | 1,247 |
+--------------------------------------------------+-----------+---------+
| Liabilities directly associated with assets classified as held |
| for |
+------------------------------------------------------------------------+
| resale | 2,318 | - | - |
+----------------------------------------+---------+-----------+---------+
| TOTAL LIABILITIES | 2,819 | 3,001 | 3,161 |
+----------------------------------------+---------+-----------+---------+
| TOTAL EQUITY AND LIABILITIES | 2,636 | 3,461 | 3,213 |
+----------------------------------------+---------+-----------+---------+
Consolidated statement of changes in equity
for the six months ended 28 February 2010
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Share | Share-based | Purchase | |
+-----------------------------+-------------+----------+----------------------------------+
| Share | premium | payment | of | Revaluation | Retained | |
| | | | own | | | |
+-------------------+---------+-------------+----------+-------------+----------+---------+
| capital | reserve | reserve | shares | reserve | losses | Total |
+-------------------+---------+-------------+----------+-------------+----------+---------+
| GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s | GBP000s |
+-------------------+---------+-------------+----------+-------------+----------+---------+
| Balance at 1 |
+-----------------------------------------------------------------------------------------+
| September | 74 | 4,293 | 14 | (12) | 152 | (4,469) | 52 |
| 2009 | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Total recognised |
+-----------------------------------------------------------------------------------------+
| income and |
+-----------------------------------------------------------------------------------------+
| expense for | - | - | - | - | - | (329) | (329) |
| the period | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Issue of | 8 | 86 | - | - | - | - | 94 |
| share | | | | | | | |
| capital | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Balance at 28 |
+-----------------------------------------------------------------------------------------+
| February | 82 | 4,379 | 14 | (12) | 152 | (4,798) | (183) |
| 2010 | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Balance at 1 |
+-----------------------------------------------------------------------------------------+
| September | 74 | 4,293 | 8 | - | 152 | (3,654) | 873 |
| 2008 | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Total recognised |
+-----------------------------------------------------------------------------------------+
| income and |
+-----------------------------------------------------------------------------------------+
| expense for | - | - | - | - | - | (815) | (815) |
| the period | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Purchase of own |
+-----------------------------------------------------------------------------------------+
| shares | - | - | - | (12) | - | - | (12) |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Share-based | - | - | 6 | - | - | - | 6 |
| payment | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Balance at 31 August |
+-----------------------------------------------------------------------------------------+
| 2009 | 74 | 4,293 | 14 | (12) | 152 | (4,469) | 52 |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Balance at 1 |
+-----------------------------------------------------------------------------------------+
| September | 74 | 4,293 | 8 | - | 152 | (3,654) | 873 |
| 2008 | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Total recognised |
+-----------------------------------------------------------------------------------------+
| income and |
+-----------------------------------------------------------------------------------------+
| expense for | - | - | - | - | - | (419) | (419) |
| the period | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Share-based | - | - | 6 | - | - | - | 6 |
| payment | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
| Balance at 28 |
+-----------------------------------------------------------------------------------------+
| February | 74 | 4,293 | 14 | - | 152 | (4,073) | 460 |
| 2009 | | | | | | | |
+--------------+----+---------+-------------+----------+-------------+----------+---------+
Consolidated cash flow statement
for the six months ended 28 February 2010
+--------------------------------+-----+----+------+-----------+------------+
| Six months | Six | Year |
| | months | |
+--------------------------------------------------+-----------+------------+
| ended | ended | ended |
+--------------------------------------------------+-----------+------------+
| 28 February | 28 | 31 August |
| | February | |
+--------------------------------------------------+-----------+------------+
| 2010 | 2009 | 2009 |
+--------------------------------------------------+-----------+------------+
| Unaudited | Unaudited | Audited |
+--------------------------------------------------+-----------+------------+
| Notes | GBP000s | GBP000s | GBP000s |
+--------------------------------------+-----------+-----------+------------+
| Cash flow from operating activities |
+---------------------------------------------------------------------------+
| Cash used in operations | 5 | (458) | (280) | (278) |
+--------------------------------+-----+-----------+-----------+------------+
| Finance costs | (20) | (25) | (56) |
+--------------------------------------+-----------+-----------+------------+
| Net cash used in operating | (478) | (305) | (334) |
| activities | | | |
+--------------------------------------+-----------+-----------+------------+
| Cash flow from investing activities |
+---------------------------------------------------------------------------+
| Purchase of property, plant and | (6) | - | (5) |
| equipment | | | |
+--------------------------------------+-----------+-----------+------------+
| Purchases of intangible assets | (30) | (43) | (96) |
+--------------------------------------+-----------+-----------+------------+
| Finance income | - | 5 | 5 |
+--------------------------------------+-----------+-----------+------------+
| Net cash used in investing | (36) | (38) | (96) |
| activities | | | |
+--------------------------------------+-----------+-----------+------------+
| Cash flow from financing activities |
+---------------------------------------------------------------------------+
| Purchase of own shares for EBT | - | - | (12) |
+--------------------------------------+-----------+-----------+------------+
| Issue of share capital | 94 | - | - |
+--------------------------------------+-----------+-----------+------------+
| Repayment of long term borrowings | (31) | (46) | (58) |
+--------------------------------------+-----------+-----------+------------+
| Payment of finance lease liabilities | (50) | (55) | (105) |
+--------------------------------------+-----------+-----------+------------+
| Net cash generated from/(used in) | 13 | (101) | (175) |
| financing activities | | | |
+-------------------------------------------+------+-----------+------------+
| Net decrease in cash and cash | (501) | (444) | (605) |
| equivalents | | | |
+--------------------------------------+-----------+-----------+------------+
| Cash and cash equivalents at beginning of | 649 | 1,254 | 1,254 |
| the period | | | |
+-------------------------------------------+------+-----------+------------+
| Cash and cash equivalents at end of | 148 | 810 | 649 |
| the period | | | |
+--------------------------------------+-----------+-----------+------------+
| | | | | | |
+--------------------------------+-----+----+------+-----------+------------+
Notes to the interim statement
for the six months ended 28 February 2010
1. Basis of preparation
The group's interim results consolidate the results of the company and its
subsidiary undertakings made up to 28 February 2010. The company is a limited
liability company incorporated and domiciled in England and Wales and whose
shares are listed on AIM.
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. It does
not, therefore, include all the information and disclosures required in the
annual financial statements and should be read in conjunction with the group's
annual financial statements for the year ended 31 August 2009.
The financial information for the six months ended 28 February 2010 is unaudited
but has been reviewed by the auditors in accordance with the International
Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued
by the Auditing Practices Board for use in the United Kingdom. The group has not
applied IAS 34 "Interim Financial Reporting", which is not mandatory for UK
groups, in the preparation of these interim financial statements.
The group's statutory accounts for the year ended 31 August 2009 have been
delivered to the Registrar of Companies. The report of the auditors on these
accounts was unqualified and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
Significant accounting policies
The accounting policies used in the preparation of the financial information for
the six months ended 28 February 2010 are in accordance with the recognition and
measurement criteria of International Financial Reporting Standards ("IFRS") as
adopted by the European Union and are consistent with those which were adopted
in the annual statutory financial statements for the year ended 31 August 2009
and those which will be adopted in the financial statements for the year ending
31 August 2010.
For the purposes of these statements the results of the business which is the
subject of an offer from GCI Telecom Group Limited have been treated as
discontinued. Continued operations represents executive and non-executive
director costs, along with the costs associated with the Company's owned
properties and the costs of AIM listing.
The board of directors approved the interim report on 30 April 2010.
2. Loss for the period
Consolidated income statement for discontinued operations
+-----------------------------+-------+--+----------+-----------+------------+
| Six months | Six | Year |
| | months | |
+---------------------------------------------------+-----------+------------+
| ended | ended | ended |
+---------------------------------------------------+-----------+------------+
| 28 February | 28 | 31 August |
| | February | |
+---------------------------------------------------+-----------+------------+
| 2010 | 2009 | 2009 |
+---------------------------------------------------+-----------+------------+
| Unaudited | Unaudited | Audited |
+---------------------------------------------------+-----------+------------+
| | Notes | GBP000s | GBP000s | GBP000s |
+-----------------------------+-------+-------------+-----------+------------+
| Revenue | 2,303 | 3,193 | 5,909 |
+-------------------------------------+-------------+-----------+------------+
| Cost of sales | 1,427 | 1,828 | 3,557 |
+-------------------------------------+-------------+-----------+------------+
| Gross profit | 876 | 1,365 | 2,352 |
+-------------------------------------+-------------+-----------+------------+
| Other operating expenses | 798 | 877 | 1,768 |
+-------------------------------------+-------------+-----------+------------+
| Profit from operations before depreciation, |
+----------------------------------------------------------------------------+
| amortisation, share-based payments |
+----------------------------------------------------------------------------+
| and non-recurring items | 78 | 488 | 584 |
+-------------------------------------+-------------+-----------+------------+
| Depreciation | 42 | 74 | 122 |
+-------------------------------------+-------------+-----------+------------+
| Amortisation of intangibles | 40 | 32 | 59 |
+-------------------------------------+-------------+-----------+------------+
| Share-based payment costs | - | 6 | 6 |
+-------------------------------------+-------------+-----------+------------+
| Operating (loss)/profit before | (4) | 376 | 397 |
| non-recurring items | | | |
+----------------------------------------+----------+-----------+------------+
| Non-recurring items - | 2A | - | 73 | 95 |
| restructuring costs | | | | |
+-----------------------------+-------+-------------+-----------+------------+
| Non-recurring items - loss | 2A | - | 294 | 294 |
| on disposal of | | | | |
+-----------------------------+-------+-------------+-----------+------------+
| property, plant and equipment |
+----------------------------------------------------------------------------+
| Operating (loss)/profit | (4) | 9 | 8 |
+-------------------------------------+-------------+-----------+------------+
| Finance income | - | - | - |
+-------------------------------------+-------------+-----------+------------+
| Finance costs | (14) | (13) | (34) |
+-------------------------------------+-------------+-----------+------------+
| Loss before taxation | (18) | (4) | (26) |
+-------------------------------------+-------------+-----------+------------+
| Income tax expense | 3 | - | - | - |
+-----------------------------+-------+-------------+-----------+------------+
| Loss for the period | (18) | (4) | (26) |
+-------------------------------------+-------------+-----------+------------+
| | | | | | |
+-----------------------------+-------+--+----------+-----------+------------+
2A. Loss for the period is stated after charging the following non-recurring
items:
+--------------------------------------+--------+-----------+---------+
| Six months | Six | Year |
| | months | |
+-----------------------------------------------+-----------+---------+
| ended | ended | ended |
+-----------------------------------------------+-----------+---------+
| 28 February | 28 | 31 |
| | February | August |
+-----------------------------------------------+-----------+---------+
| 2010 | 2009 | 2009 |
+-----------------------------------------------+-----------+---------+
| Unaudited | Unaudited | Audited |
+-----------------------------------------------+-----------+---------+
| GBP000s | GBP000s | GBP000s |
+-----------------------------------------------+-----------+---------+
| Non-recurring restructuring costs: |
+---------------------------------------------------------------------+
| - redundancy costs and staff | - | 73 | 95 |
| re-organisation | | | |
+--------------------------------------+--------+-----------+---------+
| - strategic business review | - | 45 | 77 |
+--------------------------------------+--------+-----------+---------+
| - non-recurring loss on disposal of | - | 253 | 253 |
| PPE | | | |
+--------------------------------------+--------+-----------+---------+
| - non-recurring loss on disposal of | - | 41 | 41 |
| intangible fixed assets | | | |
+--------------------------------------+--------+-----------+---------+
3. Taxation
There is no tax charge for the period and no deferred tax asset has been
provided for.
4. Loss per share
+----------------------------------+--------------+-----------+----------+
| Six months | Six | Year |
| | months | |
+-------------------------------------------------+-----------+----------+
| ended | ended | ended |
+-------------------------------------------------+-----------+----------+
| 28 February | 28 | 31 |
| | February | August |
+-------------------------------------------------+-----------+----------+
| 2010 | 2009 | 2009 |
+-------------------------------------------------+-----------+----------+
| Unaudited | Unaudited | Audited |
+-------------------------------------------------+-----------+----------+
| Loss per share |
+------------------------------------------------------------------------+
| - basic and diluted (p) | (1.08) | (1.42) | (2.75) |
+----------------------------------+--------------+-----------+----------+
| | | | |
+----------------------------------+--------------+-----------+----------+
The calculation of diluted loss per ordinary share is identical to that used for
the basic loss per ordinary share. This is because the exercise of the options
would have the effect of reducing the loss per ordinary share and is therefore
not dilutive under the terms of IAS 33.
Loss per share from discontinued operations has not been disclosed on the
grounds that it is not material for any of the periods under review.
Earnings and the number of shares used in the calculations of loss per share are
set out below:
+--------------------------------------+------------+-----------+---------+
| Six months | Six | Year |
| | months | |
+---------------------------------------------------+-----------+---------+
| ended | ended | ended |
+---------------------------------------------------+-----------+---------+
| 28 February | 28 | 31 |
| | February | August |
+---------------------------------------------------+-----------+---------+
| 2010 | 2009 | 2009 |
+---------------------------------------------------+-----------+---------+
| Unaudited | Unaudited | Audited |
+---------------------------------------------------+-----------+---------+
| GBP000s | GBP000s | GBP000s |
+---------------------------------------------------+-----------+---------+
| Loss for the period | (329) | (419) | (815) |
+--------------------------------------+------------+-----------+---------+
| | | | |
+--------------------------------------+------------+-----------+---------+
Weighted average number of shares used in the calculations of loss per share are
set out below:
+-------------------------------------+------------+------------+------------+
| Six months | Six | Year |
| | months | |
+--------------------------------------------------+------------+------------+
| ended | ended | ended |
+--------------------------------------------------+------------+------------+
| 28 February | 28 | 31 |
| | February | August |
+--------------------------------------------------+------------+------------+
| 2010 | 2009 | 2009 |
+--------------------------------------------------+------------+------------+
| Unaudited | Unaudited | Audited |
+--------------------------------------------------+------------+------------+
| No. | No. | No. |
+--------------------------------------------------+------------+------------+
| For basic and diluted loss per | 30,421,195 | 29,600,434 | 29,608,898 |
| share | | | |
+-------------------------------------+------------+------------+------------+
| | | | |
+-------------------------------------+------------+------------+------------+
5. Reconciliation of loss to net cash outflow from operating activities
+---------------------------------------+-------+-----------+---------+
| Six months | Six | Year |
| | months | |
+-----------------------------------------------+-----------+---------+
| ended | ended | ended |
+-----------------------------------------------+-----------+---------+
| 28 February | 28 | 31 |
| | February | August |
+-----------------------------------------------+-----------+---------+
| 2010 | 2009 | 2009 |
+-----------------------------------------------+-----------+---------+
| Unaudited | Unaudited | Audited |
+-----------------------------------------------+-----------+---------+
| GBP000s | GBP000s | GBP000s |
+-----------------------------------------------+-----------+---------+
| Loss before tax including | (329) | (419) | (815) |
| discontinued operations | | | |
+---------------------------------------+-------+-----------+---------+
| Adjustments for: |
+---------------------------------------------------------------------+
| Depreciation and amortisation | 92 | 116 | 201 |
+---------------------------------------+-------+-----------+---------+
| Share-based payment costs | - | 6 | 6 |
+---------------------------------------+-------+-----------+---------+
| Loss on disposal following impairment | - | 294 | 294 |
| of PPE | | | |
+---------------------------------------+-------+-----------+---------+
| Finance income | - | (5) | (5) |
+---------------------------------------+-------+-----------+---------+
| Finance costs | 20 | 25 | 56 |
+---------------------------------------+-------+-----------+---------+
| Operating (loss)/profit before | (217) | 17 | (263) |
| changes in working capital | | | |
+---------------------------------------+-------+-----------+---------+
| and provisions |
+---------------------------------------------------------------------+
| Decrease/(increase) in trade and | 20 | (50) | 62 |
| other receivables | | | |
+---------------------------------------+-------+-----------+---------+
| Decrease in provisions | (48) | (138) | (63) |
+---------------------------------------+-------+-----------+---------+
| Decrease in trade and other | (213) | (109) | (14) |
| liabilities | | | |
+---------------------------------------+-------+-----------+---------+
| Net cash outflow from operations | (458) | (280) | (278) |
+---------------------------------------+-------+-----------+---------+
Independent review report
to NetServices plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the interim report for the six months ended 28 February 2010 which
comprises the consolidated income statement, consolidated balance sheet,
consolidated statement of changes in equity, consolidated cash flow statement
and the related explanatory notes. We have read the other information contained
in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of meeting the requirements of the AIM Rules for
Companies and for no other purpose. We do not, therefore, in producing this
report, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Directors' responsibilities
The interim report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing and presenting the
half-yearly financial report in accordance with the AIM Rules for Companies.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRS and International Financial Reporting
Interpretations Committee ("IFRIC") pronouncements as adopted by the European
Union. The condensed set of financial statements included in this interim report
has been prepared in accordance with the measurement and recognition criteria of
IFRS and IFRIC pronouncements, as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the interim report for the six
months ended 28 February 2010 is not prepared, in all material respects, in
accordance with the measurement and recognition criteria of IFRS and IFRIC
pronouncements as adopted by the European Union, and the AIM Rules for
Companies.
Baker Tilly UK Audit LLP
Chartered Accountants
3 Hardman Street
Manchester M3 3HF
30 April 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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