RNS Number:5367K
Net b2b2 PLC
21 December 2007
21 December 2007
Netb2b2 plc
Preliminary results for the year ended 30 June 2007
Netb2b2 plc ('Netb2b2' or 'the Group'), the digital communications business,
today announces its preliminary results for the year ended 30 June 2007.
Financial and business highlights:
* Turnover increased marginally to �6.65 million (2006: �6.59 million)
* Group loss after tax before provision for goodwill impairment of �236,000
(2006: �316,000)
* Loss per share of 6.5p (2006: 5.4p)
* Appointment of a new Marketing Director
* Major new clients and substantial ongoing work secured with Barclays,
Publicis, Computacenter, NHS (jobs site), Reed, Royal College of Physicians
and Esso
Post-period end event:
* Keith Young, Executive Chairman, has entered into a conditional agreement
with the Company to subscribe for 5 million Ordinary Shares at �0.10 per
share. The gross proceeds of the Placing, which amount to �500,000, will be
used to fund the on-going working capital requirements of the Company
Keith Young, Chairman of Netb2b2, commented:
"Though 2007 has had some uncertainties, due in part to our internal
restructuring, we have readied all the businesses for the challenges that lie
ahead by a sustained focus on good cost control via structural changes. We are
now better prepared to take advantage of the commercial opportunities in the
digital media arena that befit a company of our size and have planned to drive
the top line through investment in technology, marketing and key personnel.
"We have targeted markets in media, membership organisations and health and have
won significant contracts in these areas, whilst retaining strong alliances with
Microsoft, IBM and VMware as well as investing in technologies such as MOSS,
Rich Internet Applications and Virtualisation. All in all, the Group believes
that it has the products and services that are at the forefront of digital media
and has developed a good platform for growth. We look forward to 2008 with
reasonable confidence."
Enquiries, please contact:
Andrew Gannon
Netb2b2 PLC
020 7689 8800
Azhic Basirov / Siobhan Sergeant
Smith & Williamson Corporate Finance Limited
020 7131 4000
Duncan McCormick / John West
Tavistock Communications
020 7920 3150
CHAIRMAN'S STATEMENT
I believe that the results achieved for the year ended 30 June 2007 have
suitably positioned the Group for its progressive plans for 2008.
As part of our preparation for these plans, we have invested in an experienced
Marketing Director, Karen Johnson, who I am delighted to welcome to the Company.
Karen is a highly experienced B2B services marketer with a reputation for
developing, leading and implementing high impact marketing and sales plans into
a range of businesses. Karen enjoyed a successful career at Hewlett-Packard
where she left as Marketing Director of HP Consulting to found her own strategic
marketing services company. She has a track record in the Microsoft space as
Marketing Director for a significant BizTalk partner company, and will be a
valuable addition to the team.
We continue with our strategic plan to extract more value from established
relationships with blue chip clients that include ITV, BBC, ITN and Sky as well
as to continue to broaden our customer base through more effective sales and
marketing. We continue to explore bolt-on, small-scale acquisitions, but only
ones that would be immediately earnings enhancing.
Financial and operational review
Group turnover has increased fractionally by 1% to �6.65 million (2006: �6.59m).
Whilst the Group had problems with one major project, which continued to depress
trading profitability over the year, the Group managed to record a lower full
year loss after tax before provision for goodwill impairment of �236,000 (2006:
�316,000), with the loss per share being 6.5p compared with 5.4p in 2006.
Encouraging progress has been made in resolving the deficit resulting from a
pension fund operated by a liquidated subsidiary of the Group and some write
back has been made of the amount previously provided.
As we mentioned in our interim results, we intend to accelerate cost savings and
to increase turnover through more efficient sales and marketing. Whilst we have
successfully implemented a number of structural improvements, any expected
improvement in financial performance will not be realised until the next
reporting period.
As also stated in our interim results announcement, due to a severe technical
skills shortage, savings have been difficult to achieve against a backdrop
facing all companies that serve the digital market place, particularly in
central London where most of our businesses operate. The shortage of skilled new
media personnel has produced sharply rising labour costs and some turnover in
staff. This has been addressed by the Group by an increased reliance on more
flexible consultants.
Unfortunately, although it is possible that a contract might be obtained in the
future through the Group's Netpen division, it is considered prudent to provide
in full against the current work in progress. The One Stop Racing website has
proved disappointing in revenue terms and full provision has been made against
the assets of that operation.
The project performances of Fernhart New Media Limited ("Fernhart") and Blue Sky
Hosting Limited ("Blue Sky") have continued to justify our confidence in these
growing businesses. It should however be noted that the short-term profitability
of Fernhart has been subdued as the actions we have taken during the year
continue to be slow in feeding through into an improved financial performance.
We do however remain confident on the longer-term prospects of Fernhart.
Fernhart's creation of new online services for ITN using the recently launched
Microsoft Vista platform, is worth particular mention. This project clearly
demonstrates the Group synergies, as Blue Sky was also contracted to host the
services and video content. We have established a very strong position in the
media space with Microsoft Vista based developments for a number of TV companies
whilst our first SharePoint MOSS project has been completed and received a
glowing response from the NHS Confederation. We are planning on building on
this successful project to provide SharePoint services into other areas of the
NHS and public sector organisations. We are now approved suppliers to Microsoft
Consulting Services and have just completed our first Silverlight engagement for
them. Silverlight is Microsoft's latest presentation toolset to create Rich
Internet Applications with attractive visual user interfaces. We are now into
our second Silverlight project for a major UK Financial organisation. We
continue with discussions with Channel 4, ITN and BBC regarding delivery of
applications for Windows Vista, Silverlight and Media Center. All these
discussions come on the back of our successful projects this year.
Our largest Group company, cScape, has won substantial and ongoing work with
Barclays, Computacenter, Publicis and the Royal College of Physicians. It
encountered a major problem on one project earlier this year although steps have
been taken to minimise the impact of this problem, and to address the balance of
its workforce, with a decision to increase flexibility through the use of more
freelance programming and IT staff. cScape still managed to continue to win
other major mandates, as stated in our interim report, including a significant
new Web design contract to redevelop the website for Hed Kandi, part of the
Ministry of Sound music group. This contract meant cScape became the first new
media company to implement Microsoft's new Office SharePoint Server 2007TM. We
believe the significance of this contract is over and above its contract value.
cScape is a holder of Microsoft Gold Certified Partner status; going forward we
intend the Group to benefit more from this accreditation. Our Customer
Engagement Unit (CEU) continues to go from strength to strength. The second
annual CEU survey has now been undertaken with over 900 people having responded
and will be published later this month. We are investing in MOSS training to
take advantage of the growing market in this area.
At Blue Sky, our partnership with VMware is progressing well as together we
focus on the SME sector. Blue Sky has been accepted into the VMware Virtual
Infrastructure Partner Program (VIP) in preparation for its forthcoming launch
of virtualised high availability enterprise hosting solutions in 2007. It also
continues to leverage its position as one of the first hosting providers in the
RIM Alliance Partner network and has grown its Hosted BlackBerry Managed
Services portfolio to attract both Lotus Domino and Microsoft Exchange corporate
mail users. Blue Sky is the largest and most advanced Domino hosting company in
the UK and we recognise the good opportunity that we have to build on this
reputation.
A major new win with Reed has also given us a sound 2007 at ITM and a platform
for a promising 2008. Pagination has held up despite the uncertainties of the
publishing market and we have successfully undertaken some cross-selling
activity with Blue Sky and Fernhart.
The net result of the above has been to put pressure on the Group's cash flow
and scope for the selective deferral of creditors mentioned in our interim
results has significantly reduced. The Independent Directors have therefore
become of the view that it is very important that new equity is raised for the
Group and have welcomed Keith Young's subscription for �0.5m worth of ordinary
shares as announced to shareholders on 4 December.
Outlook
Though 2007 has had some uncertainties, due in part to our internal
restructuring, we have readied all the businesses for the challenges that lie
ahead by a sustained focus on good cost control via structural changes. We are
now better prepared to take advantage of the commercial opportunities in the
digital media arena that befit a company of our size and have planned to drive
the top line through investment in technology, marketing and key personnel.
We have targeted markets in media, membership organizations and health and have
won significant contracts in these areas, whilst retaining strong alliances with
Microsoft, IBM and VMware as well as investing in technologies such as MOSS,
Rich Internet Applications and Virtualisation. All in all, the Group believes
that it has the products and services that are at the forefront of digital media
and has developed a good platform for growth. We look forward to 2008 with
reasonable confidence.
Keith Young
Chairman
Date 21 December 2007
GROUP PROFIT & LOSS ACCOUNT
Year ended 30 June 2007
Note 2007 2006
�000 �000
Unaudited Audited
Total Total
TURNOVER 6,657 6,590
Cost of sales (1,885) (1,614)
-------- --------
GROSS PROFIT 4,772 4,976
-------- --------
Administrative expenses before exceptional item (5,187) (5,134)
Exceptional item (160) (20)
-------- --------
Administrative expenses (5,347) (5,154)
-------- --------
OPERATING LOSS (575) (178)
-------- --------
Non-operating exceptional items
Discontinuance of business and settlement of pension
liabilities in respect thereof 3 231 (170)
Surplus arising on discontinued activity 3 - 58
Interest payable and similar charges (52) (27)
Interest receivable and similar income - 1
-------- --------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (396) (316)
Tax on loss on ordinary activities - -
-------- --------
LOSS FOR THE FINANCIAL YEAR (396) (316)
======== ========
BASIC LOSS PER SHARE (PENCE) 4 (6.5)p (5.4)p
======== ========
DILUTED LOSS PER SHARE (PENCE) 4 (6.5)p (5.4)p
======== ========
All turnover and results arose from continuing operations apart from the
non-operating exceptional items which relate to the closure of discontinued
operations.
No separate statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
GROUP BALANCE SHEET
As at 30 June 2007
2007 2006
Unaudited Audited
Note �000 �000 �000 �000
FIXED ASSETS
Intangible assets 2,278 2,438
Tangible assets 532 570
------- -------
2,810 3,008
CURRENT ASSETS
Stocks 75 141
Debtors 1,483 1,398
Cash at bank 272 121
------- -------
1,830 1,660
CREDITORS: amounts falling due (2,844) (2,405)
within one year
NET CURRENT LIABILITIES (1,014) (745)
------- -------
TOTAL ASSETS LESS CURRENT 1,796 2,263
LIABILITIES
CREDITORS: amounts falling due (41) (112)
after more than one year
------- -------
NET ASSETS 1,755 2,151
======= =======
CAPITAL AND RESERVES
Called up share capital 606 606
Share premium 553 553
Capital redemption reserve 6 6
Profit and loss account 590 986
------- -------
EQUITY SHAREHOLDERS' FUNDS 1,755 2,151
======= =======
GROUP CASHFLOW STATEMENT
Year ended 30 June 2007
Note 2007 2006
�000 �000
Unaudited Audited
Net cash inflow/(outflow) from operating activities 5 465 (296)
Returns on investments and servicing of finance (52) (26)
Capital expenditure (162) (139)
Acquisitions - (200)
------ ------
Net cash inflow/(outflow) before financing 251 (661)
Financing (165) 340
------ ------
Increase/(decrease) in cash in the year 86 (321)
====== ======
Reconciliation of net cash flow to movement in net
funds
Increase/(decrease) in cash in the year 6 86 (321)
Decrease/(increase) in debt and lease financing 165 (476)
------ ------
Movement in net funds in the year 251 (797)
Net (debt)/funds at start of year (529) 268
------ ------
Net debt at end of year 6 (278) (529)
====== ======
Notes:
1. FINANCIAL INFORMATION
The unaudited financial information set out above does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. Statutory
accounts for the year ended 30 June 2007 will be finalised based on the
information in this preliminary announcement and will be delivered to the
Registrar of Companies in due course. The accounts for the year ended 30 June
2006, which received an unqualified auditor's report, have been filed with the
Registrar of Companies.
Emphasis of matter - going concern
In forming their opinion of the financial statements, which is not qualified,
the auditors have considered the adequacy of the disclosures made in the
financial statements concerning the Group's ability to continue as a going
concern. The Group incurred an operating loss of �575,000 during the year ended
30 June 2007 and, at that date, the Group's current liabilities exceeded its
current assets by �1,014,000. These conditions, along with the other
matters explained in note 1 to the financial statements, indicate the existence
of a material uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. The Directors set out in the financial
statements why they consider that a going concern basis is appropriate and why
they are adopting this for the accounts for the year to 30 June 2007. The
financial statements do not include any adjustments that would result if the
Group was unable to continue as a going concern.
2. SEGMENTAL INFORMATION
The Group operates in the UK and the whole of its turnover is in the UK market.
Turnover Operating
Profit/(Loss)
2007 2006 2007 2006
�000 �000 �000 �000
Internet services 3,525 3,464 80 235
Publishing and digital
communication services 1,632 1,945 20 46
Specialist hosting 770 668 198 151
Media and interactive
technology 730 503 (30) (16)
Central and other
income/(costs) - 10 (683) (574)
Exceptional item - - 160 (20)
------- ------- ------- -------
Group 6,657 6,590 (575) (178)
======= ======= ======= =======
Profit/(Loss) before tax Net assets/(liabilities)
2007 2006 2007 2006
�000 �000 �000 �000
Internet services 56 228 1,105 1,145
Publishing and digital
communication services 2 30 231 196
Specialist hosting 194 149 515 616
Media and interactive
technology (31) (18) 526 550
Central and other
costs/net assets (688) (573) (622) (356)
Exceptional item 71 (132) - -
------- ------- ------- -------
Group (396) (316) 1,755 2,151
======= ======= ======= =======
3. EXCEPTIONAL ITEMS
The Directors have reviewed the elements of goodwill and have concluded that it
would be prudent to make a provision for impairment of that relating to ITM
Graphics Ltd in the amount of �160,000.
An amount of �231,000 previously provided in respect of pension liabilities has
been written back in the year to reflect the current state of negotiations with
relevant parties. A net charge of �170,000 has been made in 2006 in respect of
the closure of the Typematters (London) Limited business in the year ended 30
June 2005, made up of a surplus on liquidation of �128,000 (assets written off
�128,000 and liabilities �256,000) and exceptional costs of �298,000, which
relates primarily to the settlement of pension liabilities. A further surplus of
�58,000 (assets written off �2,000 and liabilities �60,000) arose during 2006 as
a result of the liquidation of BS Communications Ltd, a non-trading subsidiary
of the group.
4. LOSS PER ORDINARY SHARE
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders by the weighted average number of ordinary shares during the year.
The diluted loss per share is the same as the actual loss per share. Due to the
loss incurred in the year, there is no dilution effect from the issued share
options.
2007 2006
Basic earnings attributable to ordinary shareholders:
�000 (396) (316)
========== ==========
Weighted average number of ordinary shares 6,061,569 5,846,909
========== ==========
Loss per share: (6.5)p (5.4)p
========== ==========
5. RECONCILIATION OF OPERATING (LOSS) TO NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES
2007 2006
�000 �000
Operating loss (575) (178)
Exceptional items 160 (112)
Depreciation 170 147
Loss on disposal/write off of tangible fixed assets 29 74
Decrease/(increase) in stocks 66 (43)
Increase in debtors (85) (71)
Increase/(decrease) in creditors 700 (113)
----- ------
Net cash inflow/(outflow) from operating activities 465 (296)
===== ======
6. ANALYSIS OF CHANGES IN NET DEBT
At 1 July Cash At 30 June 2007
2006 flow
Net cash: �000 �000 �000
Cash at bank 121 151 272
Bank overdrafts (141) (65) (206)
------ ------- -------
(20) 86 66
------ ------- -------
Debt:
Bank loans
(including invoice
discounting) (333) 140 (193)
Hire purchase
obligations (176) 25 (151)
------ ------- -------
Total (529) 251 (278)
7. ACCOUNTING FOR GOODWILL
The board has assessed each subsidiary with reference to its durability, ability
to sustain future long term profitability and assessed ability to maintain
market position. Based on this assessment the board is of the opinion that the
goodwill elements have indefinite economic lives. The board has carried out
impairment reviews on these goodwill elements and has concluded that a write off
of �160,000 in the year is appropriate.
8. COPIES OF PRELIMINARY STATEMENT
Copies of this announcement are available from www.netb2b2.com or the company
secretary at 4th Floor Central House, 142 Central Street, London, EC1V 8AR.
Copies of the Annual Report and Accounts of the Company for the year ended 30
June 2007 will be sent to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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