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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Netservices | LSE:NSV | London | Ordinary Share | GB00B0YMTT32 | ORD 0.25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 7.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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 IR SDUFWSFSSEDL
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