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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nuverra Environmental Solutions Inc | AMEX:NES | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.149 | 0 | 01:00:00 |
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." For further information, please contact: Netstore plc (NES) 0870 3006600 Paul Barry-Walsh, Chairman paul.barry-walsh@netstore.net Neil Lloyd, CFO neil.lloyd@netstore.net Buchanan Communications 020 7466 5000 Charles Ryland Catherine Miles Evolution Beeson Gregory 020 7071 4300 Mike Brennan Chairman's Statement I am very pleased to announce results for the quarter ended 30 September 2003. The first quarter of the year is traditionally a quiet period for new sales yet we progressed well towards our target of operating profit. Results Turnover for the quarter was ahead of our expectations increasing by 70% to #5.4m compared with #3.2m for the quarter ended 30 September 2002, including #1.2m from NetConnect. This performance was as a result of better than expected revenue from our largest contracts with Hackney Council and Housing Corporation. The amount of new business signed in the quarter, measured as the first twelve months contract revenue, was lower than expected, totalling #1.7 m. However, as our new contracts grow larger our new sales number per quarter may be more irregular than in the past but the effect on recognised revenue is smoothed considerably by our deferred revenue recognition model. 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 quarter the mix of managed service revenues fell to approximately 50% as we completed 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 70% proportion of managed services. We had anticipated that the higher proportion of implementation revenues in the quarter would have a 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 in the quarter than expected, deferred rather than cancelled, hence depreciation charges were slightly lower than planned. Gross margin was higher than expected at 49% (2002: 51%). Selling and distribution costs were as expected at #1.9m (2002: #1.7m), including #0.4m from NetConnect, which was acquired in March this year. During the quarter we incurred extra planned costs of approximately #0.1m relating to the relocation of the majority of our operational resource to Gateshead; we do not expect these costs to recur and expect to see resultant savings from the relocation from the current quarter onwards. Administrative expenses were also in line with expectation at #1.0m (2002: #0.8m). During the quarter, we moved our Bracknell offices to smaller premises nearby as a result of the relocation of a number of staff to Gateshead; dilapidations and move costs totalled approximately #0.1m but these costs will not recur and we are already seeing the savings in the current quarter. As a result of the better than anticipated performance at turnover and gross margin level, coupled with costs remaining under tight control, operating loss was also better than expected at #(0.2)m (2002: #(1.0)m) (before charges for goodwill). Despite the one-off costs incurred, we were also EBITDA positive through the quarter, compared with an EBITDA loss of #(0.3)m for the same period last year. Cash Flow and Cash Resources Operations generated a cash inflow of #0.5m (2002: #0.6), and total cash out was only #0.4m, including #0.8m for the final tranche payment for NetConnect, acquired in March 2003. The only other major non-operating cash movement during the quarter was capital expenditure of #0.1m; lower than expected due to later timing of new sales opportunities and deferral of other internal projects. Cash balances were #12.1m at 30 September 2003 compared with #12.5m at 30 June 2003 (2002: #15.4m). The current quarter is when we bill and collect a large proportion of our contracts on annual payment terms. Acquisition NetConnect continues to trade profitably, as it has done since acquisition in March 2003. The final tranche payment was paid in September 2003 at the maximum value of #0.8m to give a final gross acquisition cost of #2.3m and an earnings multiple of approximately five times, based on annualised profit achievement to date. Current Trading and Prospects Trading has continued steadily since the end of the quarter. We have signed approximately #0.4m of new business (first year contract value) since the end of the quarter, with some good prospects for material managed service contracts in our sales pipeline; most of the opportunities continue to come from local authorities and the banking, finance and insurance sector. Visibility of revenue is strong with the combination of completed sales, contractual income not yet recognised, deals signed still in implementation and consultancy projects not yet complete providing approximately #16m of revenue to be recognised in the current year. Now that we have had a considerable period of stability in our business model, we have been able to look more carefully at our cost base and our key suppliers in particular; we expect to continue to reduce key areas of cost through the remainder of the year. We also continue to look for acquisition opportunities, focusing on those that will fill out our managed service portfolio and have an established customer base for managed solutions amongst medium to large organisations, in keeping with our business model. Our continuing strong progress is due entirely to our staff to whom we owe considerable thanks for their dedication and expertise. We have good reason to look forward with confidence. Paul Barry-Walsh 06 November 2003 GROUP PROFIT AND LOSS ACCOUNT For the quarter ended 30 September 2003 Unaudited Unaudited Audited 3 months to 3 months to 12 months to 30 September 30 September 30 June 2003 2002 2003 Note #'000 #'000 #'000 TURNOVER Continuing operations 5,362 3,157 12,497 Acquisitions - - 1,700 --------- --------- --------- 5,362 3,157 14,197 Cost of sales (2,719) (1,547) (7,433) --------- --------- --------- GROSS PROFIT 2,643 1,610 6,764 Selling and distribution (1,887) (1,744) (6,700) costs Administrative (984) (795) (3,044) expenses Amortisation of (101) (238) (210) goodwill Charges arising from (14) (36) (198) share price movements --------- --------- --------- OPERATING LOSS (343) (1,203) (3,388) --------- --------- --------- Continuing operations (343) (1,203) (3,608) Acquisitions - - 220 --------- --------- --------- Exceptional goodwill - - (2,362) write off Interest receivable and 86 158 541 similar income Interest payable and (15) (4) (56) similar charges --------- --------- --------- LOSS ON ORDINARY (272) (1,049) (5,265) ACTIVITIES BEFORE TAXATION Tax on loss on ordinary - - 148 activities --------- --------- --------- LOSS FOR THE PERIOD (272) (1,049) (5,117) ========= ========= ========= Loss per share - basic 2 (0.28) (1.11) (5.33) and diluted (pence) All operations are continuing. RECONCILIATION OF OPERATING LOSS TO EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION ("EBITDA") #'000 #'000 #'000 Operating Loss (343) (1,203) (3,338) Depreciation 231 642 2,729 Amortisation of goodwill 101 238 210 Charges arising from share price movements 14 36 198 --------- --------- --------- EBITDA 3 (287) (251) ========= ========= ========= NB: Operating loss is considered before charges arising from share price movements GROUP BALANCE SHEET at 30 September 2003 Unaudited Unaudited Audited 3 months to 3 months to 12 months to 30 September 30 September 30 June 2003 2002 2003 #'000 #'000 #'000 FIXED ASSETS Intangible assets 3,645 3,046 3,729 Tangible assets 3,611 3,131 3,730 Investments 80 59 80 ---------- ---------- ---------- 7,336 6,236 7,539 ========== ========== ========== CURRENT ASSETS Debtors 3,745 2,373 4,671 Cash at bank and in hand 12,088 15,417 12,523 ---------- ---------- ---------- 15,833 17,790 17,194 CREDITORS: amounts falling due within one year Deferred income 3,914 2,500 4,424 Other creditors 4,412 3,169 5,129 ---------- ---------- ---------- 8,326 5,669 9,553 ---------- ---------- ---------- NET CURRENT ASSETS 7,507 12,121 7,641 ---------- ---------- ---------- TOTAL ASSETS LESS CURRENT 14,843 18,357 15,180 LIABILITIES CREDITORS: amounts falling due 1,117 467 1,182 after more than one year PROVISIONS FOR LIABILITIES AND 694 549 694 CHARGES ---------- ---------- ---------- NET ASSETS 13,032 17,341 13,304 ========== ========== ========== CAPITAL and RESERVES Called up share capital 19,260 19,206 19,260 Share premium account 34,706 34,689 34,706 Merger reserve (9,789) (9,745) (9,789) Profit and loss account (31,145) (26,809) (30,873) ---------- ---------- ---------- SHAREHOLDERS' FUNDS - equity 13,032 17,341 13,304 interests ========== ========== ========== GROUP STATEMENT OF CASH FLOWS For the quarter ended 30 September 2003 Unaudited Unaudited Audited 3 months to 3 months to 12 months to 30 September 30 September 30 June 2003 2002 2003 Note #'000 #'000 #'000 NET CASH INFLOW 3 476 591 115 FROM OPERATING ACTIVITIES RETURN ON 71 154 485 INVESTMENTS AND SERVICING OF FINANCE TAXATION - - 148 CAPITAL (112) (678) (3,177) EXPENDITURE AND FINANCIAL INVESTMENT ACQUISITIONS (784) - (1,225) AND DISPOSALS --------------- -------- -------- NET CASH (349) 67 (3,654) OUTFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING MANAGEMENT OF 1,221 1,067 3,810 LIQUID RESOURCES FINANCING (86) (57) 770 INCREASE IN 786 1,077 926 CASH =============== ======== ======== NOTES For the quarter ended 30 September 2003 1. BASIS OF PREPARATION The financial information contained in this quarterly statement has been prepared using accounting policies and practices consistent with those adopted in the 2003 Annual Report and Accounts and have not yet been reported on by the company's auditors. The financial information contained in this report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. 2. LOSS PER SHARE The basic and diluted loss per share has been calculated on a weighted average number of 96,117,486 shares in issue during the period. (30 September 2002: 94,147,783; 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 Unaudited Unaudited Audited 3 months to 3 months to 12 months to 30 September 30 September 30 June 2003 2002 2003 #'000 #'000 #'000 Operating loss (343) (1,210) (3,338) Depreciation 231 642 2,729 Amortisation of goodwill 101 238 210 (Decrease) / increase in (510) (563) 132 deferred income Decrease in debtors 926 1,640 946 Increase / (decrease) in 71 (192) (668) creditors Increase in provisions - 36 181 Profit on disposal of fixed - - (27) assets --------- --------- --------- Net cash inflow from operating 476 591 115 activities ========= ========= ========= (b) Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited 3 months to 3 months to 12 months to 30 September 30 September 30 June 2003 2002 2003 #'000 #'000 #'000 Increase in cash 786 1,077 926 Cash flow from decrease in short (1,221) (1,067) (3,810) term deposits Cash flow from decrease in debt 86 57 256 and finance leases New long term loans - (1,000) -------- --------- --------- Movement in net funds (349) 67 (3,628) Net funds at beginning of 11,064 14,692 14,692 period -------- --------- --------- Net funds at end of period 10,715 14,759 11,064 ======== ========= ========= 3. NOTES TO STATEMENT OF CASH FLOWS (CONTINUED) (c) Analysis of net funds Finance lease and hire Cash and purchase Short term Long term cash deposits agreements loans loans Total #'000 #'000 #'000 #'000 #'000 At 1 July 15,407 (617) (33) (65) 14,692 2002 Cash flow 10 48 - 9 67 -------- ------- ------- ------- ------- At 1 15,417 (569) (33) (56) 14,759 October 2002 Cash flow 434 48 (100) (892) (510) -------- -------- ------- ------- ------- At 1 15,851 (521) (133) (948) 14,249 January 2003 Cash flow (2,938) 37 - 33 (2,868) -------- ------- ------- ------- ------- At 1 April 12,913 (484) (133) (915) 11,381 2003 Cash flow (390) 40 - 33 (317) -------- ------- ------- ------- ------- At 1 July 12,523 (444) (133) (882) 11,064 2003 Cash flow (435) 52 - 34 (349) -------- ------- ------- ------- ------- At 30 12,088 (392) (133) (848) 10,715 September ========= ======== ======== ======== ======== 2003 This information is provided by RNS The company news service from the London Stock Exchange END QRFUVRBROARARAA
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