RNS Number : 7348X
Nettworx PLC
27 June 2008
Nettworx Plc
(the "Company")
Final Results for the year ended 31 December 2007
27 June 2008
Nettworx Plc (AIM-NTWX) is pleased to present the results for the Company for the year ended 31 December 2007.
In the interim statement for the period to 30 June 2007, it was stated that the Company had made one investment in Sim4Travel Holdings
Plc in April 2007. Subsequent to the year end, Sim4Travel repaid �500,000 of the 5% Convertible Unsecured Loan Note 2008. The balance
outstanding on the Loan Note and the remaining equity investment in Sim4Travel have been fully provided for.
The Company's cash available for future acquisitions or investments of �8.6 million remains largely intact. The investment strategy of
the Company remains unchanged, to acquire companies and businesses which could benefit from the convergence of voice, video and data, and
fixed line and mobile networks.
RESULTS
The Company commenced trading on 21 December 2006, following the admission to trading on AIM. In the year end 31 December 2007, the
Company's loss amounts to �999,646 after taxation (2006: restated loss of �285,783).
BUSINESS REVIEW
The Directors have been evaluating a number of potential acquisitions and have conducted extensive due diligence. These transactions
have not come to fruition due to competitive third parties bids, no-agreement reached on pricing of a transaction or material issues being
uncovered in the due diligence process.
The Board is continuing to evaluate further possibilities and will keep shareholders informed of any developments.
The Annual Report and Accounts for the year ended 31 December 2007 have been published and sent to all shareholders of the Company.
Copies of the Annual Report and Accounts are available on the Company's website at www.nettworxplc.com
For further information, contact:
Nettworx Plc
Jonathan Rowland, Director Tel: +44 (0) 20 7087 7971
Canaccord Adams Limited
Mark Williams Tel: +44 (0) 20 7050 6500
Income Statement
For the year ended 31 December 2007
Notes As restated
Period from 4
October 2005 to
31 December
Year end 31 December 2007 2006
� �
Operating expenses (772,513) (601,480)
Other operating income 50,000 -
OPERATING LOSS (722,513) (601,480)
Impairment of fixed asset 6 (704,000) -
investment
Interest receivable 429,852 325,219
LOSS ON ORDINARY ACTIVITIES 1 (996,661) (276,261)
BEFORE TAXATION
Taxation 4 (2,985) (9,522)
RETAINED LOSS FOR THE PERIOD 11 (999,646) (285,783)
LOSS PER SHARE - Basic 5 (0.90p) (0.26p)
LOSS PER SHARE - Diluted 5 (0.90p) (0.26p)
The operating loss for the period arises from the Company's continuing operations. None of the activities of the Company were acquired
or disposed of during the period.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the period ended 31 December 2007
Notes As restated
Period from 4
Year end 31 December October 2005 to
2007 31 December
� 2006
�
Total recognised gains and (999,646) (285,783)
losses for the period as above
Prior period adjustment 2 (308,000)
Total recognised gains and (1,307,646)
losses since the last
financial statements
Balance Sheet
31 December 2007
Notes As restated
2007 2006
� �
FIXED ASSETS
Financial assets - available for sale 6 - -
investments
CURRENT ASSETS
Debtors 7 501,490 1,275
Cash at bank and in hand 8,061,534 9,565,931
8,563,024 9,567,206
CREDITORS: Amounts falling due within one year 8 (31,965) (36,501)
NET CURRENT ASSETS 8,531,059 9,530,705
TOTAL ASSETS LESS CURRENT LIABILITIES 8,531,059 9,530,705
CAPITAL AND RESERVES
Called up share capital 9 1,110,000 1,110,000
Share premium account 10 8,398,488 8,398,488
Profit and loss account 11 (977,429) 22,217
EQUITY SHAREHOLDERS' FUNDS 8,531,059 9,530,705
Cashflow Statement
For the year ended 31 December 2007
Notes As restated
2007 2006
� �
Cash flow from operating activities 13a (1,025,769) (267,776)
Returns on investments and servicing 13b 429,852 325,219
of finance
Taxation 13b (12,505) -
Investment activities 13b (895,975) -
CASH (OUTFLOW)/INFLOW BEFORE FINANCING (1,504,397) 57,443
Financing 13b - 9,508,488
(DECREASE)/INCREASE IN CASH IN THE 13c (1,504,397) 9,565,931
PERIOD
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
As restated
2007 2006
� �
(Decrease) / Increase in cash in the period (1,504,397) 9,565,931
NET FUNDS AT 31 DECEMBER 2006 9,565,931 -
NET FUNDS AT 31 DECEMBER 2007 8,061,534 9,565,931
Notes to the Financial Statements
For the year ended 31 December 2007
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting
standards.
FINANCIAL ASSETS - AVAILABLE FOR SALE INVESTMENTS
Investments are stated at the lower of cost and net realisable value. Net realisable value is determined from published price quotations
for listed investments, where the liquidity of the market is sufficient to make this appropriate. For non listed investments net realisable
value is determined via a review of the related Company's financial position and future prospects.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at
the balance sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the financial
statements.
Deferred tax is measured at the tax rates which apply in the periods in which timing differences are expected to reverse, based on tax
rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted
basis.
SHARE WARRANTS
In accordance with FRS 20: Share-based payment, the Company reflects the economic cost of awarding share warrants in exchange for
services provided to the Company recording an expense in the profit and loss account equal to the fair value of the benefit awarded, which
has been calculated by reference to the Black-Scholes method. Where the share warrants granted do not vest immediately but after a specified
period of time, the fair value is expensed to the profit and loss account over the vesting period.
FINANCIAL INSTRUMENTS
Financial Instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial
assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets
of the Company after deducting all of its liabilities.
1 LOSS ON ORDINARY 2007 � As restated2006 �
ACTIVITIES BEFORE
TAXATION
Loss on ordinary
activities before
taxation is stated
after charging:
Auditors* 9,988 12,000
remuneration for
audit services
Loss on disposal of 191,975 -
fixed asset
investment
Impairment of other 256,000 -
receivable
2 PRIOR PERIOD ADJUSTMENT
As a result of the adoption of FRS 20 *Share-based payments*, there is a prior period
adjustment to the profit and loss account of �308,000. Due to the fact that the FRS 20 charge
is credited back to reserves, the profit and loss revenue brought forward and total
shareholders* funds are unchanged.
3 EMPLOYEES 2007 No. As restated2006 No.
The average monthly
number of persons
(including Directors)
employed by the
Company during the
period was:
Office and 3 4
management
� �
Staff costs for above
persons
Wages and salaries 160,000 167,160
Social security costs 17,953 16,984
177,953 184,144
4 TAXATION 2007� As
restated2006�
Current tax charge 2,985 9,522
Factors affecting the tax
charge for the period
Loss on ordinary (996,661) (276,261)
activities before
taxation
Corporation tax charge at (298,998) (82,878)
30%
Prior period adjustment (92,400) 92,400
Expenses not allowable 18,000 -
for tax
Capital loss carried 268,793 -
forward
Revenue loss carried 104,605 -
forward
Underprovision in prior 2,985 -
period
Current tax charge 2,985 9,522
5 LOSS PER SHARE
The calculation of loss per share is based upon 111,000,000 being the weighted average number of ordinary shares in issue during the
period.
The warrants have an exercise price above the fair value of the Company's shares and hence are non-dilutive.
6 FINANCIAL ASSETS - AVAILABLE FOR SALE As restated
INVESTMENTS 2007 2006
� �
Cost
Additions 1,203,950 -
Disposals (499,950) -
As at 31 December 2007 704,000 -
Impairment
Impairment recognised during the year 704,000 -
As at 31 December 2007 704,000 -
Net book value
As at 31 December 2007 - -
As at 31 December 2007, the Company owns 117,333,333 ordinary shares, representing 11.8% of the ordinary share capital of Sim4Travel
Holdings PLC, a company quoted on PLUS Markets.
The investment in Sim4Travel Holdings PLC has been fully provided against in line with the directors' assessment of the recoverable
amount.
7 DEBTORS As restated
2007 2006
� �
Due within one year:
Prepayments and accrued income 1,332 1,275
Other Debtors 500,158 -
501,490 1,275
At the year end, the Company held �756,000 of convertible loan notes, which were convertible into 126,000,000 ordinary shares in
Sim4Travel Holdings PLC. On 14 April 2008, �500,000 of these loan notes were repaid. The remaining amount of �256,000 has been fully
provided against at the year end.
8 CREDITORS: Amounts falling due within one As restated
year 2007 2006
� �
Trade creditors 19,965 12,879
Corporation Tax - 9,522
Accruals and deferred income 12,000 14,100
37,965 36,501
9 SHARE CAPITAL As restated
2007 2006
� �
Authorised:
5,000,000,000 ordinary shares of 1p each 50,000,000 50,000,000
Allotted, issued and fully paid:
111,000,000 ordinary shares of 1p each 1,110,000 1,110,000
Share issues:
The Company was incorporated on 4 October 2006 with authorised share capital of 100,000 ordinary shares of �1 each of which one share
were allotted at par on incorporation nil paid
On 11 November 2006, the authorised share capital was increased to �50,000,000 by the creation of 49,900,000 ordinary shares of �1
each.
Each ordinary share of �1.00 each were sub divided into 100 Ordinary shares of 1p each creating 5,000,000,000 ordinary shares of 1p
On 2 December 2006 the Company issued, credited as fully paid 9,999,900 ordinary shares of 1p each at par for cash consideration.
On 15 December 2006, the Company issued 1,000,000 ordinary shares of 1p each at par.
On 21 December 2006, the Company allotted 100,000,000 ordinary shares of 1p each at 10p per share for total cash consideration of
�10,000,000 and the Company's shares were admitted to trading on AIM on 21 December 2006.
Share warrants:
On 15 December 2006, the Company issued 11,000,000 warrants to the Directors and other holders. Each warrant gives the right to
subscribe for one ordinary share at a price of 10p per share. These warrants are exercisable from 15 December 2006 to 15 December 2015. No
warrants have been exercised, and no other warrants granted.
In determining the fair value of the warrants issued, the Company has used the Black-Scholes model. The significant assumption made in
respect of the issues made in 2006 are listed below:
2006
Weighted average share price at grant date (pence) 10
Exercise price (pence) 10
Expected life (years) 5
Expected volatility (%) 20
Risk free interest rate (%) 4.5
The expected volatility has been estimated by considering the Company's historic share price volatility as well as comparable quoted
companies.
10 SHARE PREMIUM ACCOUNT As restated
2007 2006
� �
At 31 December 2006 8,398,488 9,000,000
Expenses in connection with share issue - (601,512)
At 31 December 2007 8,398,488 8,398,488
11 PROFIT AND LOSS ACCOUNT As restated
2007 2006
� �
Retained profit brought forward 22,217 -
Loss for the financial period (996,646) (285,783)
Share based payment charge credited to - 308,000
reserves
(Accumulated deficit) / retained profit (974,429) 22,217
carried forward
12 RECONCILIATION OF MOVEMENT IN EQUITY As restated
SHAREHOLDERS' FUNDS 2007 2006
� �
Loss for the financial period (996,646) (285,783)
Share based payment charge credited to - 308,000
reserves
(996,646)
22,217
New share capital issued net of costs - 9,508,488
Net (decrease)/increase to equity (996,646) 9,530,705
shareholders' funds
Opening equity shareholders' funds 9,530,705 -
Closing equity shareholders' funds 8,534,059 9,530,705
13 CASH FLOWS As restated
2007 2006
� �
A Reconciliation of operating loss to net
cash flow from operating activities
Operating loss (722,513) (293,480)
Loss on disposal of investments 191,975 -
Increase in debtors (500,215) (1,275)
Increase in creditors 4,984 26,979
Net cash flow from operating activities (1,025,769) (267,776)
B Analysis of cash flows for headings
netted in the cash flow
Returns on investments and servicing of
finance
Interest received 429,852 325,219
Taxation (12,505)
Net cash inflow from returns on
investments, servicing of finance and (44,397) 325,219
taxation
Investment activities
Purchase of current asset investments (1,203,950) -
Sale of current asset investments 307,975 -
Net cash outflow from investment (895,975) -
activities
Financing
Issue of ordinary share capital - 10,110,000
Expenses paid in connection with share - (601,512)
issue
Net cash inflow from financing - 9,508,488
At At
C Analysis of net funds 31 December 31 December
2006 2007
� Cash flow �
�
Cash in hand, at bank 9,565,931 (1,504,397) 8,061,534
14 FINANCIAL INSTRUMENTS
The Company's financial instruments comprise cash, debtors and creditors that arise from its operations. All debtors and creditors are
due to be settled within one year and have been excluded from the following disclosures.
The Company has not traded in any financial instruments throughout the period under review. The main risk arising from the Company's
financial instruments are interest rate risk. The board reviews and agrees its policies are managing this risk, which is summarised below.
Interest rate risk
The Company earns interest on its surplus cash held on bank deposits at variable market rates.
Fair value of financial instruments
There is no material difference between the fair value and book value of the Company's cash.
15 RELATED PARTY TRANSACTIONS
The Company was charged by Rowland Capital (C.I.) Limited during the period �12,000 (2006: �12,000) for the provision of accountancy
and secretarial services.
Rowland Capital (C.I.) Limited is controlled by the trustees of The Rowland Purpose Trust 2001. Mr J Rowland is a discretionary
beneficiary of a trust that has the same trustees as The Rowland Purpose Trust 2001.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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