Netstore Share Discussion Threads

[sue helen] 17/2/2004 07:09

RNS Number:4780V
NetStore PLC
17 February 2004


Immediate release 17 February 2004


Netstore plc

Interim Results for the six months ended 31 December 2003


"Operating Profits Achieved for the first time in the Second Quarter."

"Board and Senior Management Changes."

Netstore plc ("Netstore"), a leading UK Enterprise Application Service Provider,
announces Interim results for the six months ended 31 December 2003.

Highlights:

* Turnover increased by 70% to #10.6m compared with the same period in the
previous year (2002:#6.2m) and by 33% compared with the previous six months
of trading

* Operating profits were achieved for the first time, in the second quarter;
although there was an operating loss for the period of #0.2m compared with a
loss of #1.5m in the previous six months of trading (2002: a loss of #1.7m)
(before charges for goodwill)

* Operationally cash positive throughout the six month period; operating
cash in flow of #1.4m

* Cash balances of #12.2m compared with #12.5m at 30 June 2003 (2002:
#15.8m)

* Acquisition of the managed service business ofEMS Global completed in
December 2003; trading profitably post acquisition

* Restructuring and strengthening of the Board and senior management

Paul Barry-Walsh, Chairman and Chief Executive Officer, commenting on the
results said:

"This has been an important trading period for us, having achieved an operating
profit for the first time in the second quarter. These profits were dependent
on an unusually high proportion of consultancy income; nonetheless we have
passed a significant milestone. The acquisition of the managed service business
of EMS Global was particularly pleasing as 80% of its turnover is managed
service under long-term contract and it's now trading profitably."

On prospects he added:

"The high level of revenue visibility and the stability of our cost base give a
great deal of confidence that short-term targets will be met. We have now
proved that we have a profitable business model and have strengthened our team
to gear up for growth. I am confident about our future prospects."

For further information, please contact:

Netstore plc (NES) 0870 3006600
Paul Barry-Walsh, Chairman & CEO [e-mail]
Neil Lloyd, CFO [e-mail]

Buchanan Communications 020 7466 5000
Charles Ryland [e-mail]
Catherine Miles [e-mail]

Evolution Beeson Gregory 020 7071 4300
Michael Brennan [e-mail]
Bobbie Hilliam [e-mail]


I am very pleased to announce the results of Netstore plc for the six months
ended 31 December 2003; a period when we have continued to make impressive
progress; notably achieving operating profits for the first time in our history
in the second quarter of the period.

Results

Turnover

Turnover increased by 70% to #10.6m, in line with our expectations, compared
with the same period last year (2002: #6.2m) and by 33% compared with the six
months ended 30 June 2003. The amount of new business signed in the six month
period, measured as first year contract value, was #4.1m, which was below
expectation due to the reported shortfall in the first quarter; new sales in the
second quarter were in line with expectation, with only RedRock, our mobile
software subsidiary, performing behind our expectation.

Income from managed IT services under long-term contracts continues to make up
the major part of our business. However, and as anticipated, during the period
the mix of managed service revenues was approximately 48% as we completed major
implementation phases of the Hackney Council and Housing Corporation contracts,
which contained consultancy, training and product revenues. Longer term and for
the full year, we expect the sales mix of the business to trend back towards a
60% proportion of managed services.

The managed service business of EMS Global was acquired late December; therefore
its contribution to turnover was not material to the period.

Gross Margin

Gross margin for the period was slightly better than we anticipated at 49%
compared with 46% for the six months to 30 June 2003 (2002: 50%). We had
expected that the higher proportion of implementation revenues in the period
would have a more dilutive effect on gross margins, as much of the
implementation is delivered by third parties at lower margin to us; however,
this was countered by improved revenue recognition from the contract elements
delivered by Netstore. In addition, capital expenditure was lower than expected
through the period; hence depreciation charges were lower than planned.

Overhead Costs

Selling and distribution costs were as expected at #3.5m compared with #3.4m for
the six months ended 30 June 2003 (2002: #3.3m). There waslittle one off cost
during the period, except for approximately #0.1m relating to the relocation of
the majority of our operational resource to Gateshead, which occurred in the
first quarter; this reflects the stability of our business and its largely fixed
overhead cost.

Likewise, our administrative costs were in line with expectation at #1.9m
compared with #1.6m for the six months ended 30 June 2003 (2002: #1.4m).
However, we did incur some exceptional cost in relation to the re-location of
our offices within Bracknell and the renewal of our BS7799 accreditation,
totalling approximately #0.1m.

In the six months to 31 December 2003, we incurred #1.1m of overhead cost in
relation to NetConnect, which was acquired in March 2003 and therefore not in
the comparative figures; disregarding NetConnect's costs, overhead costs fell by
9% compared with the same period last year.

Operating loss, therefore, was slightly better than expected at #0.2m compared
with a loss of #1.5m for thesix months ended 30 June 2003 (2002:a loss of
#1.7m) (before charges for goodwill); significantly, and for the first time in
our trading history we made operating profits, in the three months to 31
December 2003. Operating profits were only small and during the profitable
second quarter we recognised a larger amount of consultancy and third party
licence income than would normally be expected, largely due to the completion of
another stage of the Hackney Council financial management system project.
However, we see reasonable trading prospects ahead and we are focussed on
continuing to trade profitably.

EBITDA were #0.3m compared with #0.1m for the six months ended 30 June 2003
(2002: loss of #0.3m).

Cash Flow and Cash Balances

Operations generated a cash inflow of #1.4m (2002: #1.6m) and the total cash
movement was an out flow of only #0.3m, after making the final tranche payment
of #0.8m for the NetConnect acquisition and the initial payment of #0.3m for the
EMS Global Managed Service acquisition.

The only other major non-operating cash movement during the period was capital
expenditure of #0.5m; considerably lower than we anticipated.

Cash balances were #12.2m at 31 December 2003 compared with #12.1m at 30
September 2003 and #12.5m at 30 June 2003 (2002: #15.8m).

Disposals

As part of our continuing corporate strategy to concentrate on solutions for
medium to large organisations, and following on from the disposal of our SME
hosted Exchange business last year, we have also disposed of two other non-core
business units. During November 2003, we disposed of a small ISP business
acquired as part of the NetConnect acquisition and during December 2003 we
disposed of our SME On Line Backup business to BT; although we continue to
manage the infrastructure, with BT managing customer engagement. The latter
disposal is important in that it further consolidates our On Line Backup service
within the BT channel. The reduction in contracted turnover from these disposals
is approximately #0.4m per annum and the effect on operating profit is
negligible.

During February 2004, we also disposed of RedRock Technologies, our loss-making
mobile solutions software subsidiary, to management. RedRock was acquired as
part of a now discarded strategy of more than three years ago that focussed on
selling commodity solutions to SMEs and it has performed under our expectations
since acquisition. Consideration was nominal and disposal costs including
writing off remaining goodwill totalled #0.4m and have been provided for in
these results; budgeted turnover for the second half reduces by #0.5m as a
result of the disposal yet operating profits will be increased by approximately
#0.1m.

Acquisition

During December 2003, we completed the acquisition of the sales contracts and
all the infrastructure assets of the UK based managed service business of EMS
Global, an internet security company. EMS Global is a New Zealand based
software company that launched a managed internet security business in London in
October 2001 utilising its own Cortex software to deliver secure browsing, mail,
file transfer, productivity control and remote connection services to large
corporate customers; principallyin partnership with BT and NTL.

The business has approximately #2.5m of turnover under contract with an annual
value of approximately #1.0m; 80% of the revenues are recurring under long-term
contracts.

The initial consideration paid was #0.3m, with an additional consideration of
not more than #0.2m payable in March 2004. Further consideration of not more
than #0.4m may become payable in June 2004, dependent upon the achievement of
some very challenging profit targets.

Our strategy is togrow revenue both through new customers and by providing new
services to existing customers. The acquisition of the Cortex service business
provides a new service that sits well alongside our other infrastructure
services, On Line Backup and Managed Firewall, and can be sold across our
current customer base. The customers acquired fit Netstore's target market of
larger organisations and the substantial infrastructure investment made under
EMS Global's ownership provides significant excess capacity, with little further
investment by Netstore.

The Cortex service is currently trading profitably and we expect it to make a
small positive contribution during the current period after re-organisation
costs of approximately #0.1m.

Board andManagement Changes

In a separate statement issued today, we have announced that we will be
separating the roles of Chairman and Chief Executive Officer ("CEO"), with Neil
Lloyd, our current Chief Financial Officer ("CFO"), taking over the role of CEO
on 31 March 2004.

I will be remaining in the capacity of Executive Chairman, reducing my time
commitment to the Company to three days per week. This move is part of a
planned succession policy and brings us into line with best corporate governance
practice.

Sugi Sugunasingha joins the Company to replace Neil Lloyd as CFO and brings with
him a wealth of experience in financial management gained within the IT
industry. David Blundell continues as Chief Operating Officer with increased
responsibility for acquisitions and business development through new partners.
We have also strengthened our management team with the addition of Robert Hokin
as VP of Sales, replacing our previous head of sales who left in November 2003;
Colin Henderson, in addition to responsibility for Technical Operations, now
manages our Professional Services teams and new service development as VP of
Operations, and Tom Salkield now manages all of our security business, including
the recently acquired Cortex business, as Director of Security Services.

I wish them all well in their new and enlarged roles. I believe we have put in
place a management team capable of supporting and generating further growth.

Current Trading and Prospects

Current trading is progressing well for the current and final quarter. Income
from deferred revenue and contracted renewals, plus revenue from other projects
signed but not yet completed and billed, will total approximately #18m in the
current year. Costs remain under tight control with no plans to increase
materially the current level of overheads in the second half.

The high level of revenue visibility and the stability of our cost base give a
great deal of confidence that short-term targets will be met; the continuing
success of our corporate strategy and strengthening of our management team place
us well for future growth and sustained profitability. We can look forward with
confidence.

I am delighted that the improvement in the tradingof Netstore continues and,
once again, thanks are owed to our staff for their commitment and contribution
to a milestone trading period for us.

Paul Barry-Walsh
17 February 2004


GROUP PROFIT AND LOSS ACCOUNT
For the six months ended 31 December 2003

Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2003 2002 2003
Note #'000 #'000 #'000
TURNOVER
Continuing operations 10,602 6,224 12,497
Acquisitions - - 1,700
10,602 6,224 14,197

Cost of sales (5,368) (3,108) (7,433)

GROSS PROFIT 5,234 3,116 6,764

Selling and distribution costs (3,535) (3,292) (6,700)
Administrative expenses (1,893) (1,424) (3,044)
Amortisation of goodwill (230) (475) (210)
Charges arising from share price (14) (84) (198)
movements

OPERATING LOSS (438) (2,159) (3,388)
Continuing operations (438) (2,159) (3,608)
Acquisitions - - 220

Exceptional goodwill write off (374) - (2,362)
Interest receivable and similar 168297 541
income
Interest payable and similar (28) (18) (56)
charges

LOSS ON ORDINARY ACTIVITIES BEFORE (672) (1,880) (5,265)
TAXATION
Tax on loss on ordinary activities - - 148
LOSS FOR THE PERIOD (672) (1,880) (5,117)

Loss per share - basic and diluted 2 (0.70) (1.96) (5.33)
(pence)

All operations are continuing.


RECONCILIATION OF OPERATING LOSS TO EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
AND AMORTISATION ("EBITDA")
#'000 #'000 #'000

Operating Loss (438) (2,159) (3,388)
Depreciation 474 1,258 2,729
Amortisation of goodwill 230 475 210
Charges arising from share 14 84 198
price movements
EBITDA 280 (342) (251)



GROUP BALANCE SHEET
at 31 December 2003
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2003 2002 2003
#'000 #'000 #'000

FIXED ASSETS
Intangible assets 3,553 2,809 3,729
Tangible assets 3,786 4,144 3,730
Investments 90 80 80
7,429 7,033 7,539

CURRENT ASSETS
Debtors 6,505 2,518 4,671
Cash at bank and in hand 12,240 15,851 12,523
18,745 18,369 17,194

CREDITORS: amounts falling due within
oneyear
Deferred income 5,712 4,126 4,424
Other creditors 6,020 2,842 5,129
11,732 6,968 9,553

NET CURRENT ASSETS 7,013 11,401 7,641

14,442 18,434 15,180

TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: amounts falling due after 1,055 1,326 1,182
more than one year

PROVISIONS FOR LIABILITIES AND CHARGES 694 597 694

NET ASSETS 12,693 16,511 13,304

CAPITAL AND RESERVES
Called up share capital 19,459 19,207 19,260
Share premium account 34,706 34,689 34,706
Merger reserve (9,927) (9,744) (9,789)
Profit andloss account (31,545) (27,641) (30,873)

SHAREHOLDERS' FUNDS - equity interests 12,693 16,511 13,304





GROUP STATEMENT OF CASH FLOWS
For the six months ended 31 December 2003

Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2003 2002 2003
Note #'000 #'000 #'000

NET CASH INFLOW FROM OPERATING 1,397 1,606 115
ACTIVITIES 3


RETURN ON INVESTMENTS AND 139 279 485
SERVICING OF FINANCE

TAXATION - - 148

CAPITAL EXPENDITURE AND FINANCIAL (541) (2,328) (3,177)
INVESTMENT

ACQUISITIONS AND DISPOSALS (1,194) - (1,225)

NET CASH OUTFLOW BEFORE (199) (443) (3,654)
MANAGEMENT OF LIQUID RESOURCES
AND FINANCING

MANAGEMENT OF LIQUID RESOURCES 1,168 (579) 3,810

FINANCING (84) 887 770

INCREASE / (DECREASE) IN CASH 885 (135) 926




NOTES
For the 6 months ended 31 December 2003

1. BASIS OF PREPARATION

The financial information contained in this Interim report has been prepared
under the historical cost convention and on the basis of the accounting policies
set out in the Group's statutory accounts for the twelve months ended 30 June
2003. The financial information contained in this report does not constitute
statutory accounts as defined by section 240 of the Companies Act 1985.
Statutory accounts for the twelve months ended 30 June 2003 incorporating an
unqualified audit report have been filed with the Registrar of Companies.

The financial information for the six months ended 31 December 2003 and 31
December 2002 has not been reviewed or audited by the auditors.

2. LOSS PER SHARE

The basic and diluted loss per share has been calculated on the following
weighted average number of shares in issue during the period:

31 December 2003 96,276,631
31 December 2002 96,032,606
30 June 2003 96,048,476

3. NOTES TO STATEMENT OF CASH FLOWS

(a) Reconciliation of operating loss to net cash inflow from operating
activities


UnauditedUnaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2003 2002 2003
#'000 #'000 #'000

Operating loss (438) (2,159) (3,388)
Depreciation 474 1,258 2,729
Amortisation of goodwill 230 475 210
Increase in deferred income 1,288 1,064 132
(Increase) / decrease in debtors (1,834) 1,495 946
Increase / (decrease) in creditors 1,677 (604) (668)
Increase in provisions - 84 181
Profit on disposal of fixed assets - (7) (27)

Net cash inflow from operating activities 1,397 1,606 115



(b) Reconciliation of net cash flow to movement in net funds


Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
2003 2002 2003
#'000 #'000 #'000

Increase / (decrease) in cash 885 (135) 926
Cash flow from (decrease) / increase in short (1,168) 579 (3,810)
term deposits
Cash flow from decrease in debt and finance 145 113 256
leases
New long term loans - (1,000) (1,000)

Movement in net funds (138) (443) (3,628)

Net funds at beginning of period 11,064 14,692 14,692

Net funds at end of period 10,926 14,249 11,064




(c) Analysis of net funds


Finance
lease
Cash and and hire
cash deposits purchase Short term Long term
agreements loans loans Total
#'000 #'000 #'000 #'000 #'000

At 1 January 2003 15,851 (521) (133) (948) 14,249
Cash flow (2,938) 37 - 33 (2,868)
------ ----- ---- ---- ------
At 1 April 2003 12,913 (484) (133) (915) 11,381
Cash flow (390) 40 - 33 (317)
------ ----- ---- ---- ------
At 1 July 2003 12,523 (444) (133) (882) 11,064
Cash flow (435) 52 - 34 (349)
------ ----- ---- ---- ------
At 1 October 2003 12,088 (392) (133) (848) 10,715
Cash flow 152 26 - 33 211
------ ----- ---- ---- ------
At 31 December 2003 12,240 (366) (133) (815) 10,926


4. COPIES AVAILABLE



Copies of this statement are being sent to all shareholders. Copies are also
available at the Registered Office of the Company: Netstore plc, Atrium Court,
The Ring, Bracknell, Berkshire, RG12 1BW.

The Interim results were approved by the Board of Directors on 16 February 2004.


This information is provided by RNS
The company news service from the London Stock Exchange
END

IR GGGMZVVKGDZM

[pcok] 16/2/2004 23:34

Good luck tomorrow!

pcok

[polythene] 16/2/2004 16:51

Disappointing level of interest today. What will tomorrow bring?

[sue helen] 13/2/2004 14:00

yes bring on tuesday!

[polythene] 13/2/2004 13:58

I have double my normal holding. Was hoping to sell half with a few more pence, then double up on SDL. NES is dropping, sdl is rising. :-(

[carver66] 13/2/2004 10:50

Dropped again - not concerned have tucked 25000 of these away in my ISA for the long term. Average price is 39p.
If it falls a little further i might buy some more for a short term trade over the results........

[dr eh rook] 12/2/2004 11:10

Quiet before the storm ???

[sue helen] 11/2/2004 11:29

dropped a bit this am not worried and looking forward to tuesday

Sue

[dr eh rook] 11/2/2004 08:43

I too am looking forward to Tuesday. Surprised these haven't started to move up more already. Looking to move into profitability.

Doc

[sue helen] 10/2/2004 19:09

"Netstore continued to make very pleasing progress, during what is traditionally
a quiet period for new sales. Higher than expected revenue from two of our
existing large contracts plus our continuing cost discipline led to results
being better than expected."


12 million cash in the bank

[sue helen] 10/2/2004 16:22

Robbie Burns also tucked into these last week

www.frequenttrader.info

[sue helen] 10/2/2004 16:19

Results out 17/2/4
Recent director buys
Stonking results last time and a very upbeat statement looking forward to the future.

Convinced yet? YOU SHOULD BE!



RNS Number:7520U
NetStore PLC
29 January 2004

29.1.04

FOR IMMEDIATE RELEASE 29 January 2004



NETSTORE plc

Netstore plc, a leading provider of managed IT solutions, will be announcing
interim results for the six months ended 31 December 2003 on Tuesday, 17
February 2004.

For further information please contact:

Charles Ryland / Catherine Miles Tel: [phone]
Buchanan Communications Ltd


CEO LIFTS STAKE IN CO
10.11.04
LONDON (AFX) - NetStore PLC said its chairman and chief executive Paul
Barry-Walsh has bought 100,000 shares in the company at 35 pence each.
He now holds 15,663,603 NetStore shares, equivalent to a stake of 16.26 pct.
[e-mail]


Highlights at last interims:

RNS Number:7354R
NetStore PLC
06 November 2003

Immediate release 6 November 2003

Netstore plc

Results for the Quarter ended 30 September 2003
"Another Significant Step Towards Profitability"

Netstore plc ("Netstore"), a leading provider of managed IT solutions, announces
results for the quarter ended 30 September 2003.

Highlights:


*Turnover increased by 70% to #5.4m against the same period last year
(2002:#3.2m)


*Gross margin better than expected at 49% (2002: 51%)


*Operating losses reduced substantially to #(0.2)m (2002: #(1.0)m); ahead
of expectation


*EBITDA positive through the quarter (2002: EBITDA loss of #(0.3)m)


*Cash balances at #12.1m compared with #12.5m at 30 June 2003 (2002:
#15.4m)


*Recent acquisition NetConnect successfully met "earn out" targets; final
#0.8m of consideration paid during the quarter; continues to trade
profitably



Paul Barry-Walsh, Chairman and Chief Executive, commenting on the results said:


"Netstore continued to make very pleasing progress, during what is traditionally
a quiet period for new sales. Higher than expected revenue from two of our
existing large contracts plus our continuing cost discipline led to results
being better than expected."


On future prospects he added:


"Looking ahead, we have good visibility of revenue with approximately #16m
secured for the current year and good prospects for new managed service
contracts. We have every reason to look forward with confidence."

Major Shareholders:

NetStore PLC Shareholders

Shares in issue: 96.3m 20p Ords
Major Shareholders Amount % Holding
Paul Barry-Walsh • 15,663,603 16.26
3i Group PLC 12,984,267 13.48
M & G Investment Management Limited 9,500,000 9.86
Jeff Maynard • 8,275,600 8.59
Throgmorton Trust PLC 4,709,346 4.89
Elderstreet Inv's Ltd 4,414,532 4.58

Other Directors Amount % Holding
Michael Edward Jackson • 883,334 0.917
David Blundell • 203,458 0.211
Peter David Howell-Davies • 53,333 0.055
Neil Anthony Lloyd • 46,544 0.048
• = Director

totaling - around 60% of issued equity.

[widemouthfrog] 06/2/2004 08:58

there goes the neighbourhood.

[eastbourne1982] 05/2/2004 19:46

Robbie Burns (AKA Frequent Trader) bought into these yesterday at 44p, I have copied the article from his website for the benefit of current holders:

--------------------------------------------------------------------------------

I bought a new share yesterday afternoon. This one is definitely on the risky side so I've bought a small amount – it's certainly not one I'd consider for my pension!

The company concerned is called Netstore (NES). I bought 12,239 shares at 44p. Target 55p, stop loss 38p. Netstore sells nets to large stores. Only joking!

It's a software company that's about to break into profit – it's also trying to grow by buying other companies. Technically it appears to be breaking out of recent ranges.

It was going up nicely when I bought around 3.30pm yesterday, and there was some good buying coming in. Some big buys too, in the last few days.

The stock's quite liquid so I bought easily – looks like quite a few traders are getting into this one. The company is due to reports on 17th Feb which makes the shares even riskier.

If the report is not decent these shares could plummet. However from reading through its statements carefully over the last few months the signs are good and I'm going to take the risk.

I expect the share to remain volatile up to the announcement. The market-makers mess about with the price all the time. It was up quite a bit earlier today and is coming down as I write.
--------------------------------------------------------------------------------

[dr eh rook] 05/2/2004 15:54

Nice steady climb to results - looking good for 50p+ at this rate before the 17th.

[u813061] 05/2/2004 08:49

Lots of buys ticking through now.

[the jitters] 05/2/2004 08:14

Perhaps there is something to your story u8.......seems perky today already.

Phil

[u813061] 04/2/2004 16:20

BT to buy into Netstore ?

BT has a close relationship with Netstore in terms of BT datasure, an online backup service and its recent acquisition EMS which delivers secure internet browsing.

BT has recently struck deals with NSB retail systems and Transcomm. BT is aggressively looking to expand its revenues away from core telephony and Netstore could be an ideal vehicle to achieve this.

Recent virus warnings make Netstore's products all the more useful.

These two things aside, Netstore should show strong revenue growth and positive EBITDA when it reports its next set of results on Tuesday 17th February.

The recent chart breakout from 40p is good news for holders.

Best of luck.

[the jitters] 04/2/2004 14:12

I believe results will beat expectations and the market is showing us it thinks so too.

Phil

[alchemy] 04/2/2004 14:09

horse mouth wink wink no reason to doubt good results

[divina] 04/2/2004 13:35

as a previous poster said only requires small volume to get it moving. no overhang and MMs short for expected good results. This could fly if results are as good as expected IMO...

[carver66] 04/2/2004 13:32

Looks like we are off again..

[widemouthfrog] 04/2/2004 10:20

pacman - have taken liberty of linking to your nes charts on far3 thread.
many thanks.