Editor's Pick: The week ahead....
(NSV.L) NetServices PLC Buy/Sell
Add to portfolio Set Alert Level 2 Desktop Trader
Summary
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||
| Date/Time | Headline | Source |
|---|---|---|
| 17-11-09 | RNS |
|
This news article is displayed preformatted as it may contain results tables
RNS Number : 5994C
NetServices PLC
17 November 2009
NetServices plc
17 November 2009
For Immediate Release
Preliminary Results announcement
For the year ended 31 August 2009
NetServices plc, (AIM:NSV) the business-to-business unified network provider, announces its audited preliminary results for the year ended 31 August 2009.
Highlights
* NetServices achieved Master Managed Services Certification from Cisco, one of
a select few in the UK
* EBITDA before non-recurring items £0.1m loss (2008: profit £0.5m)
* Loss before tax and non-recurring items £0.3m (2008: profit £0.1m)
* Completed transformation to Cisco Powered house and managed services provider
* Actions taken to manage the cost base
* Gross period end cash balances £0.6m (2008:£1.3m)
Mark Vickers, Chief Executive Officer said:
'NetServices has re-positioned itself as a Cisco Powered managed services provider focused around the delivery of MPLS networks. Recent active engagement with our key technology partners has identified markets and sales opportunities where our value proposition is attractive. We are focused on converting technical capability into sales value and as ever we remain focused on tight cost control and maximizing shareholder value'
For further information, please contact:
NetServices Tel No: 0870 753 0900
Mark Vickers, Chief Executive
Ian Winn, Finance Director
MC2 (Manchester) Limited Tel No: 01565 872 478
Melanie Miotte
Arbuthnot Securities Tel No: 020 7012 2000
Tom Griffiths/ Alasdair Younie
Chairman's statement
I am pleased to report the results for NetServices plc for the year ended 31 August 2009, my first set of results as chairman. I would like to thank my predecessor Chris Townsend for his valuable contribution over the last four years and wish him well in the challenge of delivering, what I am sure will be, a fantastic Olympics for Britain in 2012.
Financial performance
The general economic background, against which these results have been delivered, has been challenging and the group was certainly not alone in being adversely affected by the economic conditions.
Revenue for the year was £5.9m (2008: £7.1m), which reflects the loss of a hosting contract and attrition in our non-core revenues. Revenues were also affected by the lower level of set up fees which resulted from a reduction in the number of significant MPLS networks implemented during the financial year. Gross profit at £2.4m (2008: £3.3m) ensured that the group's gross profit margin was 40%, in spite of pressure both from customers and pricing under the group's supply contract with Fibernet UK Limited. The group generated an EBITDA loss of £0.1m (2008: £0.5m profit), which in turn produced an operating loss before non-recurring costs of £0.3m (2008: £0.1m profit). The non-recurring costs related to a staff redundancy programme, the write-off of legacy networking equipment and professional fees relating to a strategic review of the business. The impact of these items resulted in a loss before tax of £0.81m (2008: £0.05m profit). In the year under review the board has taken measures to reduce the group's operating cost base to ensure that it is commensurate with both its current and future revenues and financial resources. At the year end, the group had £0.6m gross cash balances.
Whilst we are disappointed with the financial performance of the group for the last financial year, we are encouraged that our managed services technical capability continues to build.
Business strategy
In the last two years, the group has changed from a small, independent wholesaler of DSL to a dedicated, Cisco Powered, managed networking business. The group is now firmly positioned as both a managed services provider and a Cisco "house", meaning we will always use Cisco equipment in the solutions we provide to current and future customers. We believe that this positions the group in the right market space. During the year, we built on our technical foundation in legacy MPLS networking skills, leveraged experience within the business and assisted our staff in achieving Cisco accreditation. This allowed us to achieve certification in the following areas:
* Cisco Master Managed Services Channel Program ("MSCP") Partner in
Connectivity and Security, one of only a handful of such partners in the
UK;
* Cisco MSCP Host-Agent, which allows us to be used by out-of-country MSCP
Partners to provide UK services to their UK clients;
* Cisco Premier Partner; and
* Investors in People - bronze level.
The Cisco accreditations act as a business enabler in a number of ways: providing third*party validation of the group's skills, access to significant discounts on hardware, access to Cisco marketing resources and access to Cisco account management to provide sales opportunities. It is however worth pointing out that Cisco does not sell our product set - that remains with us.
Board changes
There have been a number of changes in the composition of the board during the period. With the departure of Paul Foley, sales director, in April 2009, Mark Vickers, chief executive officer, has taken direct responsibility for the delivery of new managed services contracts. Chris Townsend, as a result of his commitments in his role as commercial director for the London organising committee of the 2012 Olympic Games, stepped down from the board in May 2009 and was replaced as chairman by myself. Paul Williams was appointed to the board in June 2009 as operations director, and both prior to and since this date he has been instrumental in building the technical capability of the business.
Outlook
The board is mindful that the company has had a number of years now where it has failed to deliver meaningful progress in financial terms. The work that has been undertaken to obtain Cisco accreditation, whilst managing the company's cost base, will hopefully lead to an improved performance during the current financial year. However we also continue to review strategic opportunities to improve shareholder value.
In what has been a challenging period for the business, I would like to thank all the staff at NetServices for their efforts and diligence and I look forward to their hard work and skills being recognised by a positive outcome in the current financial year.
Graham Norfolk
Chairman
17 November 2009
Business review
Introduction
NetServices plc is a Cisco Powered managed services provider, qualified to supply integrated managed services focused around our core MPLS network. We have built on our heritage and experience in managed networking to deliver a cost-effective managed service which meets our customers' demanding needs and provides them with the peace of mind that they require 24/7 for 365 days a year.
Our business model, target market and routes to that market
Traditionally in this report, we have commented on the changes in the technical landscape that have shaped and impacted our business during the period under review. The last year has seen: a continuation of the trend for increasing bandwidth at reduced prices; BT's continued investment in its 21st Century network (and delays in its roll out); the green agenda increasing the attractiveness of video conferencing; and virtualisation changing the data centre model from one based on charging for space to one centred on power utilisation. Over the last twelve months, there has also been an increased focus on managed services both from customers, who welcome the lower cost of ownership and outsourced management by experts, and investors, who appreciate the contractual, predictable, annuity aspect of revenue streams.
In the last three years since listing on AIM, NetServices has changed substantially - from a wholesale DSL provider with some MPLS capability to a Cisco Powered managed services provider, focused around the delivery of MPLS networks. I believe that the progress we have made over the last year in augmenting our technical capability now positions the group in the most appropriate market space.
Our business model - "commitment to service excellence"
We are proud to describe ourselves as a Cisco "house". We provide experienced and knowledgeable engineering and pre-sales consultancy resource - all highly qualified and Cisco certified - alongside project management and service delivery teams who possess the latest ITIL® and PRINCE2 skills. We deliver managed MPLS networks, utilising our own core network within defined, industry leading, service level agreements. Due to our size, customer engagement with us is at management level or above and we are flexible and responsive to our customers business needs.
The Master MSCP accreditation awarded to us provides recognition that the services we are delivering are first class. Furthermore in achieving Master status we are one of only a handful of providers at this level in the UK, as recognised by Cisco.
During October 2009 Cisco successfully audited our White Label Network Operations Centre ("NOC") capability - the first organisation anywhere in the world to receive this accreditation.
Target market
We need to focus on those markets where our value proposition is recognised. Whilst we can provide additional services which run across a network we operate, through our relationships with third-party suppliers, it is our networking capability that we believe will secure us business and revenues. Through active engagement with our partners during the course of the last three months, listening to what their issues are and where they see opportunities, we have identified a number of target markets where we believe that our value proposition is attractive:
* local government network connectivity through established local government
partners;
* White Label NOC services to businesses who wish to retain the benefits of
Cisco Powered status but do not have the requisite NOC capabilities; and
* video conferencing managed end points.
Route to market
As we have restructured the business over the last two years into a managed services provider, we have found it difficult to map out an effective route to market. The perception of our business has been that it has good technical capability without the means to sell it. The turnover in sales directors has been the most evident testament to this. However, over recent months we believe that we have made real progress in establishing a credible and viable distribution model for our services. The key routes and engagements are listed below:
* we are in active discussions with two businesses that provide services
into the local government market, which have a requirement for a carrier
neutral, network provider;
* we are engaged with a business that provides connectivity through an
innovative delivery mechanism which has lacked the managed networking
component to deliver this to corporate customers, particularly local
government. Our service proposition is complementary to their model and
there exist a number of identified sales opportunities on which we are
currently working with them; and
* we are looking to leverage the resources and contacts made with Cisco to
generate leads into the business.
As a consequence of this, sales cycles are likely to extend. However the contracts that are secured are more likely to be of a significant scale and duration.
Results for the year
The last year has been a difficult one for the business as a consequence of both the economic environment and our efforts to develop our capability and engagement model.
Revenue for the year was £5.9m (2008: £7.1m) which reflected the loss of a hosting contract and attrition in our non-core, non-converged revenues. Revenues were also affected by lower set-up fees resulting from a reduction in the number of significant MPLS networks implemented during the financial year. However the group was successful in securing, through a partnership with Datapoint and because of the Cisco accreditation, a three year managed wide area and local network contract which is initially worth in excess of £0.4m.
Gross profit for the year was £2.4m (2008: £3.3m), representing a gross margin of 40%. The board is pleased to have maintained margins at 40% despite pricing pressure from existing customer renewals, changes in business mix and the obligations under its supply contract with Fibernet UK Limited (part of Global Crossing).
The current management team of the group has continued to demonstrate its ability to manage the cost and operating base in light of available financial resources. The normalised current overhead base is £0.18m per month which compares to £0.23m at August 2008, clear demonstration of action taken during the year. During the financial year an exercise was undertaken to reduce headcount, whilst ensuring that capability was maintained. This was completed in January 2009.
The group generated an EBITDA loss of £0.1m (2008: £0.5m profit), which in turn produced an operating loss before non-recurring costs of £0.3m (2008: £0.1m profit).
As a consequence of incurring non-recurring costs on the write-down of certain legacy networking equipment, staff re-organisation costs, and one-off professional fees relating to a strategic review of the business, a loss before tax was incurred of £0.81m (2008: £0.05m profit).
Balance sheet and working capital
During the year we developed our Cisco capability which has resulted in us capitalising £0.1m of expenditure. However given our investment in our core network in 2008, there was no further need for investment in this capability during the last financial year.
In spite of the economic environment, we maintained strong credit control and as a consequence incurred no bad debts during the year.
There was a small increase in the provision for onerous supply contracts at the year end, reflecting the group's lower activity levels. As we reported in our pre-close statement, released on 14 September 2009, we remain in negotiations with Fibernet UK Limited (part of Global Crossing) to try to achieve an outcome which is mutually beneficial to both companies.
Gross cash balances at the year end were £0.6m (2008: £1.3m). The reduction in cash balances resulted from the small operating loss, the cash cost of restructuring the business and undertaking a strategic review, a final reversal in the timing difference on 186k Limited re-charged infrastructure costs, investment in technical capability referred to above and the net repayment of borrowings.
Outlook
The board is focused on delivering growth in the markets identified and further building upon the relationships which have been established over the last six months. The board is acutely aware that having now completed the process of reshaping and refining the business model, with the consequential investment costs and reduced profitability that have resulted from those actions, it now must deliver shareholder value.
The directors in aggregate hold approximately 30% of the company's issued shares and therefore consider that their interests are closely aligned with those of all shareholders.
The board remains confident that the business model will ultimately prove successful. However it acknowledges the short term risks to both revenue growth and profitability growth from what are most likely to be longer sales cycles. In the meantime, the board will continue to review all available opportunities to maximise shareholder value.
We look forward to updating the markets and shareholders during the course of the year as the group succeeds in delivering its strategic objectives.
Mark Vickers
Chief executive officer
17 November 2009
Consolidated income statement
For the year ended 31 August 2009
Year ended Year ended
31 August 31 August
2009 2008
Notes £ £
REVENUE 2 5,908,997 7,145,442
Cost of sales 3,556,906 3,835,791
GROSS PROFIT 2,352,091 3,309,651
Other operating expenses 2,443,054 2,810,467
(LOSS)/PROFIT FROM OPERATIONS BEFORE
AMORTISATION, DEPRECIATION AND SHARE-
BASED PAYMENT COSTS (90,963) 499,184
Amortisation of intangibles 58,689 64,062
Depreciation 142,335 369,242
Share-based payment costs 6,048 -
(LOSS)/PROFIT FROM OPERATIONS BEFORE NON-
RECURRING ITEMS (298,035) 65,880
Non-recurring items - restructuring costs 3 172,462 -
Non-recurring items - loss on disposal of property, plant
and equipment 3 293,826 -
(LOSS)/PROFIT FROM OPERATIONS 3 (764,323) 65,880
Finance income 5,584 36,359
Finance costs (55,851) (52,923)
(LOSS)/PROFIT BEFORE TAX (814,590) 49,316
Income tax expense 4 - -
(LOSS)/PROFIT FOR THE YEAR (814,590) 49,316
(LOSS)/EARNINGS PER SHARE
- basic (p) 5 (2.75) 0.17
- diluted (p) 5 (2.75) 0.16
The retained loss for the year arises from the group's continuing operations.
No separate statement of total recognised income and expense is presented as all such income and expenses have been dealt with in the consolidated income statement.
Consolidated balance sheet
As at 31 August 2009
As at As at
31 August 31 August
2009 2008
£ £
ASSETS
Non-current assets
Property, plant and equipment 1,158,561 1,548,193
Goodwill 333,983 333,983
Intangibles 179,135 182,798
Other investments 58,667 58,667
1,730,346 2,123,641
Current assets
Trade and other receivables 834,567 844,234
Cash and cash equivalents 648,867 1,253,737
1,483,434 2,097,971
TOTAL ASSETS 3,213,780 4,221,612
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent
Share capital 74,042 73,992
Share premium reserve 4,293,446 4,293,246
Share-based payment reserve 14,332 8,284
Purchase of own shares (11,500) -
Revaluation reserve 151,650 151,650
Retained losses (4,469,195) (3,654,605)
52,775 872,567
Non-current liabilities
Trade and other payables - 1,343
Financial liabilities 390,571 508,107
Provisions 1,456,967 1,519,844
Deferred tax 66,827 66,827
1,914,365 2,096,121
Current liabilities
Financial liabilities 156,695 150,187
Trade and other payables 1,089,945 1,102,737
1,246,640 1,252,924
TOTAL EQUITY AND LIABILITIES 3,213,780 4,221,612
Consolidated statement of changes in equity
For the year ended 31 August 2009
Share Share-based Purchase
Share premium payment of own Revaluation Retained
capital reserve reserve shares reserve losses Total
£ £ £ £ £ £ £
BALANCE AT 1
SEPTEMBER 2007 73,962 4,293,126 8,284 - 151,650 (3,703,921) 823,101
Total recognised
income and expense
for the year - - - - - 49,316 49,316
Exercise of
options 30 120 - - - - 150
BALANCE AT 31
AUGUST 2008 73,992 4,293,246 8,284 - 151,650 (3,654,605) 872,567
Total recognised
income and expense
for the year - - - - - (814,590) (814,590)
Exercise of
options 50 200 - - - - 250
Purchase of own
shares - - - (11,500) - - (11,500)
Share-based
payment - - 6,048 - - - 6,048
BALANCE AT 31
AUGUST 2009 74,042 4,293,446 14,332 (11,500) 151,650 (4,469,195) 52,775
The revaluation reserve relates to the revaluation of the group's properties on transition to IFRS, net of the associated deferred tax liability.
During the period, the EBT acquired 342,209 shares on behalf of employees of NetServices plc, the cost of which is held within the purchase of own shares reserve.
Consolidated cash flow statement
For the year ended 31 August 2009
Year ended Year ended
31 August 31 August
2009 2008
Notes £ £
CASH FLOW FROM OPERATING ACTIVITIES
Cash used in operations 6 (278,420) (317,525)
Finance cost (55,851) (52,923)
NET CASH USED IN OPERATING ACTIVITIES (334,271) (370,448)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (5,305) (79,198)
Purchase of intangible assets (96,250) (116,942)
Proceeds from sale of equipment - 47,293
Finance income 5,584 36,359
NET CASH USED IN INVESTING ACTIVITIES (95,971) (112,488)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from the exercise of share options 250 150
Purchase of own shares for EBT (11,500) -
Repayment of long term borrowings (58,256) (46,596)
Payment of finance lease liabilities (105,122) (100,001)
CASH USED IN FINANCING ACTIVITIES (174,628) (146,447)
NET DECREASE IN CASH AND CASH EQUIVALENTS (604,870) (629,383)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,253,737 1,883,120
CASH AND CASH EQUIVALENTS AT END OF PERIOD 648,867 1,253,737
1. Consolidated accounting policies for the year ended 31 August 2009
Basis of accounting
NetServices plc ("the company") is a company incorporated and domiciled in the UK.
For the year ended 31 August 2009 the consolidated financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the EU and the Companies Act 2006.
IFRS issued at 8 September 2009
Effective date:
periods commencing EU endorsement
on or after status
Standard Issued
IAS1 "Presentation of 6 Sept 07 1 Jan 09 Endorsed 17 Dec 08
Financial Statements
- Comprehensive
Revision Including
Requiring a
Statement of
Comprehensive
Income"
IAS1(1) "Presentation of 14 Feb 08 1 Jan 09 Endorsed 21 Jan 09
Financial Statements
- Amendment:
Puttable Financial
Instruments and
Obligations Arising
on Liquidation"
IAS27 "Consolidated and 10 Jan 08 1 Jul 09 Endorsed 3 Jun 09
Separate Financial
Statements -
Amendments Arising
from IFRS3"
IAS27 "Consolidated and 22 May 08 1 Jan 09 Endorsed 23 Jan 09
Separate Financial
Statements -
Amendment: Cost of
an Investment in a
Subsidiary,
Jointly-controlled
Entity or Associate"
IAS31 "Investments in 10 Jan 08 1 Jul 09 Endorsed 3 Jun 09
Joint Ventures -
Consequential
Amendments Arising
from IFRS3"
IAS32 "Financial 14 Feb 08 1 Jan 09 Endorsed 21 Jan 09
Instruments:
Presentation-
Amendment: Puttable
Financial
Instruments and
Obligations Arising
on Liquidation"
IFRS1 "Revised IFRS1 27 Nov 08 1 July 09(2) Q4 2009
First-time Adoption
of IFRS"
IFRS1 "First-time Adoption 23 Jul 09 1 Jan 2010 To be confirmed
of IFRS - Amendment:
Additional
Exemptions for
First-time Adopters"
IFRS2(3) "Share-based 18 Jun 09 1 Jan 2010 Q1 2010
Payments-Amendment:
Cash-settled
Share-based Payment
Transactions"
IFRS7 "Financial 5 Mar 09 1 Jan 09 Q4 2009
Instruments:
Disclosures-
Amendment: Improving
Disclosures About
Financial
Instruments"
IFRS7 "Financial 27 Nov 08 Effective date 1 Jul Q3 2009
Instruments: 08
Disclosures-
Amendment:
Reclassification of
Financial Assets -
Effective Date and
Transition"
IAS39 "Financial 27 Nov 08 Effective date 1 Jul Q3 2009
Instruments: 08
Recognition and
Measurement-
Amendment:
Reclassification of
Financial
Assets-Effective
Date and Transition"
IAS39 "Financial 31 Jul 08 1 Jul 09 Q3 2009
Instruments:
Recognition and
Measurement-
Amendment: Eligible
Hedged Items"
IAS39 "Financial 12 Mar 09 Periods ending 30 Q4 2009
Instruments: Jun 09
Recognition and
Measurement-
Amendment: Embedded
Derivatives"
(1) Consequential amendments to IFRS 7, IAS 39 and IFRIC 2.
(2) Also: (a) revision to improve structure but no technical changes,
issued 27 November 2008 and effective for periods commencing on/after 1
July 2009; and (b) change of effective date from 1 January 2009 to 1
July 2009, issued 17 December 2008.
(3) Amendment incorporates guidance in IFRIC 8 "Scope of IFRS 2" and IFRIC
11 "IFRS 2 - Group and Treasury".
Going concern
The directors have considered the nature of the loss for the period just ended, and the opportunities available to the group in the future, as a consequence of the technical capability and services that have been developed over the last twelve months. The group's financial projections show that it can operate within the level of the current facilities available to it. Therefore the directors consider it appropriate to prepare financial statements on a going concern basis.
Basis of consolidation
The consolidated accounts incorporate the accounts of the company and all group undertakings.
These are adjusted, where appropriate, to conform to group accounting policies. Acquisitions are accounted for under the purchase method and goodwill is reviewed annually for impairment. The results of companies acquired or disposed of are included in the income statement after or up to the date that control passes, respectively.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Property, plant and equipment ("PPE")
Plant and equipment are stated at historic cost less accumulated depreciation and any recognised impairment losses. At the date of transition to IFRS, the group elected to revalue its property to fair value and to consider this value as the deemed cost at the date of transition. The valuation was based on market value provided by an independent surveyor.
Depreciation is charged so as to write off the cost of assets, other than land, to their estimated residual values over their estimated useful lives using the straight-line method on the following bases:
Long leasehold property - 2%
Fixtures and fittings - 20%
Plant and machinery - 20%
Motor vehicles - 20%
Computer equipment - 20%
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the group's interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly-controlled entity at the date of acquisition.
Upon the acquisition of subsidiaries, goodwill is separately disclosed. Goodwill on acquisition of associates and jointly-controlled entities is included in investment in associates and jointly-controlled entities.
Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating unit to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value.
On disposal of a subsidiary, associate or jointly-controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the amount previously calculated under UK GAAP subject to being tested for impairment at that date.
Other intangible assets
Research and development is capitalised as an intangible asset at the point a commercial value is quantifiable as the result of developing a new product or service.
Software is capitalised upon purchase at cost.
Internally generated goodwill is not capitalised as an intangible asset.
Amortisation is calculated to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Development costs - over the life of the associated product or service
Software - over five years
Impairment of PPE and intangible assets excluding goodwill
At each balance sheet date, the group reviews the carrying amounts of PPE and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). An intangible asset with an indefinite useful life is tested for impairment annually and also whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Investments
Investments are stated at cost less any provision for diminution in value.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits repayable on demand and short term deposits.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet dates. Transactions in foreign currencies are translated into sterling at the rate of exchange prevailing at the date of the transaction. Exchange differences are taken into account when arriving at operating profit. The functional and presentational currency used is sterling.
Financial instruments
Financial assets and financial liabilities are recognised on the group's balance sheet when the group has become a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables do not carry any interest and are initially stated at fair value and are subsequently reassessed when there is objective evidence of impairment.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Interest associated with financial liabilities is recognised in the income statement on an accruals basis over the term of the instrument using the effective interest method.
Trade payables
Trade payables are classified as "other liabilities" in accordance with IAS 39. They are initially recognised at fair value net of transaction costs and subsequently measured at amortised cost.
Equity instruments
Equity instruments issued by the company are recorded at the fair value, net of direct issue costs.
Provisions
Provisions are recognised when the group has a present obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reliably estimated.
Provision is held against an onerous contract entered into by a subsidiary company. The provision is based upon the expected expenditure under the contract against the contractual commitment across the remaining life of the onerous contract. The provision held is reviewed on a regular basis and adjusted to reflect current expected expenditure.
Leasing
Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the group, and hire purchase contracts, are capitalised in the balance sheet and are depreciated over their useful lives. The capital element of future obligations under the leases and hire purchase contracts are included as liabilities in the balance sheet.
Assets held under finance leases are recognised as assets of the group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, Value Added Tax and other sales related taxes. Sales of goods are recognised when goods are delivered to the customer, and installation revenue is recognised when the customer is connected to the network.
Other contracted income, including customer rental, is recognised over the contract period in proportion to the value of the service provided.
Deferred income represents that portion of rental fees paid by customers relating to a future period.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Share-based payments
The group has applied the requirements of IFRS 2 "Share-based Payment".
The group issues equity-settled share-based awards to its employees. Equity-settled share-based awards are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based awards is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model. The expected life used in the model is based upon exercise restrictions and expected volatility is based upon historical volatility over the expected life of the scheme.
Taxation
The tax expense represents the sum of the current tax and the deferred tax elements.
The current tax is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all temporary 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. Temporary differences are differences between the group's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.
Deferred tax is calculated at the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting accounting judgements will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
* goodwill has been tested for impairment by comparing the amount of
goodwill attributable to a cash generating unit against the expected
forecast cash flows to be generated in the future by that unit discounted
at an appropriate rate of interest;
* the fair value of share-based awards is measured using the Black-Scholes
model which inherently makes use of significant estimates and assumptions
concerning the future applied by the directors; and
* provisions are held to the extent that directors feel contractual
commitments against onerous contracts will not be met and have been
discounted back to present value at an appropriate discount rate.
Employee benefit trust
The company operates an employee benefit trust, NetServices plc Employee Benefit Trust, and has de facto control of the shares held by the trust and bears their benefits and risks. The company records certain assets and liabilities of the trust as its own.
2. Revenue
The group's revenue and profit before taxation were all derived from its principal activity which is the provision of converged networking solutions. 90% of the revenue (2008: 92%) was attributable to the UK, the remaining revenue was attributable to Europe. An analysis of the income, result and net assets by geographical area has not been disclosed, as the directors consider that the group has only one business segment.
3. (Loss)/profit from operations
(Loss)/profit from operations is stated after charging:
2009 2008
£ £
Depreciation of owned PPE 95,451 332,452
Depreciation of assets held under lease agreements 46,884 36,790
Loss on disposal of PPE - 35,663
Auditors' remuneration:
- as auditors of the parent company and group consolidated financial
statements 24,950 24,950
- audit of subsidiary company financial statements 9,000 8,900
- interim review 9,200 8,900
- corporation tax compliance 8,140 8,140
- other 2,150 2,500
Operating lease costs:
- land and buildings 58,298 58,298
Amortisation of internally generated assets 45,319 44,683
Amortisation of purchased software 13,370 19,379
Share-based payment costs 6,048 -
Onerous contracts:
- adjustment at period end 36,178 (80,000)
- utilised during the year (99,055) -
(62,877) (80,000)
Penal rate cost of onerous contracts included in administration costs 101,641 -
Non-recurring restructuring costs:
- redundancy costs and staff re-organisation 94,792 -
- strategic business review 77,670 -
- non-recurring loss on disposal of PPE 252,602 -
- non-recurring loss on disposal of intangible fixed assets 41,224 -
Non-recurring restructuring costs represent costs incurred as a result of corporate activity and staff redundancies.
4. Taxation on ordinary activities
(A) Taxation
2009 2008
£ £
Current tax
UK corporation tax based on the results for the year at 28% (2008: - -
29%)
Deferred tax
Origination and reversal of timing differences - -
Over provision for corporation tax in earlier years - -
Tax on loss on ordinary activities - -
(B) Factors affecting current tax charge
The tax assessed on the (loss)/profit on ordinary activities for the period is lower than the standard rate of corporation tax in the UK of 28% (2008: 29%).
2009 2008
£ £
(Loss)/profit on ordinary activities before tax (814,590) 49,316
(Loss)/profit on ordinary activities by rate of tax (228,085) 14,382
Differences between capital allowances and depreciation - (240,450)
Other short term timing differences - (9,470)
Expenses disallowed 29,717 9,097
Unrelieved tax losses 198,368 226,441
Total current tax (note 4(A)) - -
The group has not recognised a deferred tax asset relating to cumulative corporation tax losses of £23,689,709 (2008: losses of £22,875,119).
5. (Loss)/earnings per share
2009 2008
(Loss)/earnings per share
- basic (p) (2.75) 0.17
- diluted (p) (2.75) 0.16
The calculation of diluted loss per ordinary share is identical to that used for the basic loss per ordinary share for the year ended 31 August 2009. 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.
Earnings and the number of shares used in the calculations of earnings per share are set out below:
2009 2008
£ £
(Loss)/earnings for the year (814,590) 49,316
Weighted average number of shares used in the calculations of earnings per share are set out below:
2009 2008
No. No.
For basic earnings per share 29,608,898 29,595,703
Effect of dilutive potential ordinary shares:
- share options - 459,420
For diluted earnings per share - 30,055,123
6. Reconciliation of (loss)/profit to net cash inflow/(outflow) from operating activities
2009 2008
£ £
(Loss)/profit before tax (814,590) 49,316
Adjustments for:
Depreciation and amortisation 201,024 433,304
Share-based payment costs 6,048 -
Loss on disposal following impairment of PPE 293,826 -
Loss on disposal of equipment - 35,663
Finance income (5,584) (36,359)
Finance costs 55,851 52,923
Operating (loss)/profit before changes in working (263,425) 534,847
capital and provisions
Adjustments for:
Decrease in provisions (62,877) (80,000)
Increase/(decrease) in receivables 62,017 (1,168)
Increase in payables (14,135) (771,204)
Net cash outflow used in operating activities (278,420) (317,525)
7. Basis of Preparation
The board of directors of NetServices plc approved the Preliminary Results on 17 November 2008. Copies of this announcement are available from the Company's registered office at Waters Edge Business Park, 31 Modwen Road, Salford, Manchester M5 3EZ and from the Company's website at www.netservicesplc.com
Statutory accounts for the year ended 31 August 2008, which were prepared under accounting practices generally accepted in the UK, have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under Section 237 (2) or (3) of the Companies Act 1985.
The annual report is expected to be sent to shareholders before the end of November 2009. Additional copies will be available to the public free of charge, from the Company's registered office at Waters Edge Business Park, 31 Modwen Road, Salford, Manchester M5 3EZ and from the Company's website at www.netservicesplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR CKAKDFBDDNDD
More |
||
| 10-11-09 | RNS |
|
|
RNS Number : 2642C NetServices PLC 10 November 2009 TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARES
1. Identity of the issuer or the underlying issuer of
2 Reason for the notification (please tick the appropriate box or boxes):
An acquisition or disposal of voting rights An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments An event changing the breakdown of voting rights Other (please specify):
notification obligation:
4. Full name of shareholder(s) (if different from Barclays Stockbrokers Ltd.
3.):
threshold is crossed or reached:
8. Notified details: A: Voting rights attached to shares
CODE
B: Qualifying Financial Instruments Resulting situation after the triggering transaction
C: Financial Instruments with similar economic effect to Qualifying Financial Instruments Resulting situation after the triggering transaction
Total (A+B+C)
Number of voting rights Percentage of voting rights
9. Chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held, if applicable: Barclays Stockbrokers Ltd. Proxy Voting: 10. Name of the proxy holder: 11. Number of voting rights proxy holder will cease to hold: 12. Date on which proxy holder will cease to hold voting rights: 13. Additional information:
15. Contact telephone number: 020 7116 2913 This information is provided by RNS The company news service from the London Stock Exchange END
HOLBGBDBXBBGGCG More |
||
| 14-09-09 | RNS |
|
|
RNS Number : 9636Y NetServices PLC 14 September 2009 14 September 2009 NetServices Plc Trading update NetServices Plc (the 'Company') (AIM:NSV), the business-to-business unified network provider, provides the following trading update before entering the close period prior to the release of its preliminary results for the year to August 31 2009. The Company has made good strategic progress in the second half of the year by increasing its level of Cisco accreditation, which it believes will provide a significant boost for winning new business. During the second half of the financial year NetServices has become a Cisco Premier Partner and also a Host/ Agent Managed Service Channel Partner ("MSCP"). This enables overseas MSCPs to appoint NetSevices to provide managed network services for their UK based connections. In its interim results announced on 12 May 2009, the Company acknowledged that establishing and developing the necessary relationships to monetise its MSCP capability would take time; this has proved correct. As a consequence, the Directors anticipate that the company will report an operating loss (before non-recurring items) for the year to August 31 2009 in the order of £0.2m. The Company's cash balances at the 31 August 2009 were £0.6m (gross). Additionally in the interim results the Company reported that it had commenced negotiations during the period which may or may not lead to a reduction in the contractual obligation relating to its supply contract with Fibernet UK Limited (part of Global Crossing). The Company has continued with its negotiations but has yet to conclude them to its satisfaction. We expect to provide further guidance and an update on current trading and outlook at the time of the release of our preliminary results which is currently anticipated to be during late November. Enquiries:
Mark Vickers, Chief Executive Ian Winn, Finance Director
Tom Griffiths Alasdair Younie
Melanie Miotte This information is provided by RNS The company news service from the London Stock Exchange END
TSTEAKNFFFKNEFE More |
||
| 03-09-09 | RNS |
|
|
RNS Number : 4804Y NetServices PLC 03 September 2009 TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARES
1. Identity of the issuer or the underlying issuer of
2 Reason for the notification (please tick the appropriate box or boxes):
An acquisition or disposal of voting rights An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments An event changing the breakdown of voting rights Other (please specify):
notification obligation:
4. Full name of shareholder(s) (if different from Barclays Stockbrokers Ltd.
3.):
threshold is crossed or reached:
8. Notified details: A: Voting rights attached to shares
CODE
B: Qualifying Financial Instruments Resulting situation after the triggering transaction
C: Financial Instruments with similar economic effect to Qualifying Financial Instruments Resulting situation after the triggering transaction
Total (A+B+C)
Number of voting rights Percentage of voting rights
9. Chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held, if applicable: Barclays Stockbrokers Ltd. Proxy Voting: 10. Name of the proxy holder: 11. Number of voting rights proxy holder will cease to hold: 12. Date on which proxy holder will cease to hold voting rights: 13. Additional information:
15. Contact telephone number: 020 7116 2913 This information is provided by RNS The company news service from the London Stock Exchange END
HOLBBGDCSSGGGCX More |
||
| Date/Time | Subject | Author | ||
|---|---|---|---|---|
| 06-11-09 | ||||
|
| ||||
|
| ||||
|
Your hopes have come early, can you post that again an see if we can get another surge?
More | View thread (2) | Respond | Login to Vote up | Login to Vote down |
||||
| 15-09-09 | ||||
|
| ||||
|
| ||||
|
Hi fellow members
just to say i have a holding of 76,295 shares with this company i don't expect big returns on this share but i can see it reaching 4.75p a share in the next 12mths hopefully it may do more but thats my releastic target for me in ratio a gross profit of 35% good luck all ;-) More | View thread (2) | Respond | Login to Vote up | Login to Vote down |
||||
| 24-06-09 | ||||
|
| ||||
|
| ||||
|
theres been a few trades today does anyone know why
More | View thread (1) | Respond | Login to Vote up | Login to Vote down |
||||
| 12-06-09 | ||||
|
| ||||
|
| ||||
|
good luck to you, hope it goes OK
More | View thread (2) | Respond | Login to Vote up | Login to Vote down |
||||
They have not been approved or issued by Interactive Investor Trading Limited.
Discussion Board Terms & Conditions FSA Market Abuse Fact Sheet
More...