6th Dec 2007 07:01
Nasstar PLC06 December 2007 6 December 2007 Nasstar plc PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007 Nasstar plc ("Nasstar" or "the Group") (AIM: NASA) which provides on-demandcomputing is pleased to announce its audited results for the year ended 30September 2007. Highlights: • Turnover more than doubled to £1.19m (2006: £0.56m)• Reduction in loss for the period: EBITDA loss £272,000 (2006: £420,000); operating loss £394,000 (2006: £563,000)• Five-fold increase in subscribers of Hosted Exchange to 6,000 (2006: 1,158)• £500,000 fund raising in December 2006 for the acquisition of Network Support International Limited trading as Virtual Email ("Virtual Email")• Successful integration of Virtual Email• Operations streamlined for scalability Commenting on the Group's results, Lord Daresbury, Nasstar's Chairman said: "These results continue the strong growth we reported on at the interim stage.The market for on-demand computing is growing fast as more companies wish toadopt a pay as you go solution for their computing. With the experience we havegained over the last 2 years and the infrastructure we now have in place we haveearly mover advantage and as a result are in a strong position to capitalise onthis fast growing market. Our sales pipeline contains exciting opportunities andwe are very confident about the prospects of the Group." Further enquiries, please contact; Nasstar Plc 0870 240 1634Charles Black, Chief Executive W.H. Ireland Limited 0121 616 2101Tim Cofman-Nicoresti Note to Editors Nasstar was founded in 1998 by Charles Black with the vision of providingon-demand computing as an alternative to traditional on-premise computers andsoftware. Nasstar's on-demand computing service enables users to do all of theircomputing, including access to their files and applications) in the internetcloud rather than on a local computer. Hosted Desktop is Nasstar's core subscription package enabling subscribers toaccess their 'My Documents', company data and software applications includingMicrosoft Office over the internet. Hosted Exchange is Nasstar's hosted emailservice which enables subscribers to access their email, calendar and contactsremotely, through a web browser or a mobile device such as a BlackBerry. Both ofthese products are available on a pay monthly service. Nasstar plc was admitted to trading on the London Stock Exchange AlternativeInvestment Market in December 2005. For further information please visit www.nasstar.com Chairman's Statement During the period Nasstar has achieved a significant increase in the number ofsubscribers for the Group's Hosted Exchange email service, continuing the stronggrowth which was reported in the interim period. In addition to driving salesgrowth of the Hosted Exchange service Nasstar is increasingly focussed on salesof its Hosted Desktop service. Whilst Hosted Exchange enables subscribers to access their email from anywhereusing a Windows mobile or Blackberry handheld, Hosted Desktop extends thisservice by enabling subscribers to access their desktop, files and softwareapplications through the internet. This approach of delivering managedsoftware and computing services via the internet, known as "software as aservice" or "cloud computing" is developing at a fast rate as companies see thebenefits of on-demand services over traditional locally installed computing. The response to our hosted desktop service has been extremely positive withrecent post balance-sheet period contract wins for this service includingeasyGroup. Post balance sheet period sales pipeline remains strong. The Board believes thatcloud computing is a fast growing market and that Nasstar has early moveradvantage which it aims to capitalise on during the current and future periods.The Directors are excited about the future and are very confident about theprospects of the Group. The Lord DaresburyChairman6 December 2007 Operational Review Turnover increased to £1.19m in line with the Directors' expectations withapproximately one-third of the Group's turnover for the period - circa £400,000- resulting from the acquisition of Virtual Email. This increase in turnoverhas been achieved largely through the sale of Hosted Exchange. As a result ofthis growth we have incurred additional investment and costs to ensure we havethe infrastructure in place to manage the sales growth. Having recruitedadditional personnel and invested in upgrades to our technical platform we areconfident that our overheads are at a stable level and that as we reach acritical mass in terms of subscribers we will start to trade profitably. Loss per share decreased by 33% to 3.4p Dividends The Directors do not propose to pay a dividend for the period. Management As announced today, Richard Malkin resigned his position as part-time FinanceDirector to focus on his full time position as Finance Director of HoodlessBrennan plc. The Board would like to thank Richard for his contribution to theGroup over the last 2 years and wish him well for the future. We have appointed a new Finance Director, Tony Eve with immediate effect. Tonywas until May this year the part-time Finance Director of Highams SystemsServices Group plc, an IT contractor and recruitment agency. Current Trading The Group's sales pipeline remains strong with the Group's Hosted Desktopservice providing the most exciting opportunities for future growth andprofitability in the rapidly growing market for cloud computing services. Outlook The market for cloud computing is really taking off and we believe we have theright service at the right time, with huge interest being generated in what weare doing. This interest is being converted into sales and an exciting pipelinethat will enable us to reach new heights during the current financial period.The Directors are very confident about the future of Nasstar. Charles BlackChief Executive, Nasstar plc Consolidated Profit and Loss AccountFor the year ended 30 September 2007 2007 2006 Notes £000 £000 Turnover 1,193 556 Operating expenses (1,587) (1,119) ________ ________ Operating loss (394) (563) Interest payable and similar charges (88) (66) ________ ________Loss on ordinary activities before taxation (482) (629) Tax on loss on ordinary activities 2 6 104 ________ ________Loss for the year 7 (476) (525) ======== ========Loss per share 3Basic and diluted (3.4)p (5.1)p ======== ======== All amounts derive from continuing operations. There are no recognised gains and losses other than those passing through theprofit and loss account. Consolidated Balance SheetAs at 30 September 2007 Group 2007 2006 Notes £000 £000 Fixed assets Intangible assets 844 -Tangible assets 119 140Investments - - ________ ________ 963 140 ________ ________Current assetsDebtors: due within one year 489 321Cash at bank and in hand 58 48 ________ ________ 547 369 Creditors: amounts falling due within one year (881) (453) ________ ________Net current liabilities (334) (84) ________ ________ Total assets less current liabilities 629 56 Creditors: amounts falling due after more than one year - (20) ________ ________ 629 36 ======== ======== Capital and reservesCalled up share capital 145 109Share premium account 7 1,031 67Merger reserve 7 662 662Profit and loss account 7 (1,209) (802) ________ ________Shareholders' funds - equity interests 629 36 ======== ======== Consolidated Cash Flow StatementFor the year ended 30 September 2007 2007 2007 2006 2006 Notes £000 £000 £000 £000 Net cash outflow from operating activities 5 (69) (477) Returns on investments and servicing offinanceInterest on bank loans and overdrafts (7) -Interest on hire purchase contracts (12) (12)Other finance cost (69) (54) _____ _____Net cash outflow from returns oninvestments and servicing of finance (88) (66) TaxationUK corporation tax paid (25) - _____ _____Net cash outflow from taxation (25) - Capital expenditurePayments to acquire tangible fixed assets (66) (66)Disposal of tangible fixed assets 13 - _____ _____Net cash outflow from capital expenditure (53) (66) Acquisitions and disposalsPurchase of subsidiary undertaking (778) - _____ _____Net cash outflow from acquisitions anddisposals (778) - _____ _____ Net cash outflow before management ofliquid resources and financing (1,013) (609) FinancingIssue of ordinary share capital 1,000 624Capital element of hire purchase contracts (27) (4) _____ _____Net cash inflow from financing 973 620 _____ _____ (Decrease)/increase in cash in the year 6 (40) 11 ===== ===== Notes to the financial statementsFor the year ended 30 September 2007 1. Accounting policies Basis of preparation The financial statements have been prepared under the historical cost conventionand in accordance with applicable United Kingdom accounting standards, whichhave been applied consistently. The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The auditors have issued an unqualified opinion on the full financialstatements which will be distributed to shareholders and delivered to theRegistrar of Companies in due course. Statutory financial statements for 2006,on which the auditors gave an unqualified opinion, have been delivered to theRegistrar of Companies. Going concern The financial statements have been prepared on the assumption that the Group isa going concern. The financial statements show a loss for the year of £476,000and net current liabilities of £334,000. At the date of the financial statementsthe Group's ability to continue as a going concern reflects the net fundsavailable to the Group at the year end and the forecasts for the currentfinancial period. On this basis, in the opinion of the Directors, the financialstatements have been properly prepared on the assumption that the Group is agoing concern. Basis of consolidation The consolidated profit and loss account and balance sheet include the financialstatements of the company and its subsidiary undertakings made up to 30September 2007. Acquisitions of subsidiaries are dealt with by the acquisition method ofaccounting except for those qualifying as group reconstructions where mergeraccounting is permitted. Turnover Turnover represents amounts receivable for services net of VAT and tradediscounts. Revenue from service contracts is accrued evenly over the period ofthe contract except that set-up revenues are recognised over the length of theset-up period on a percentage to completion basis. Some contracts are financedby a process of invoice discounting with a finance house and in such cases anappropriate proportion of the funds received are carried forward to futureperiods in which the income is recognised. Research and development Research expenditure is written off to the profit and loss account in the yearin which it is incurred. Development expenditure is written off in the same wayunless the directors are satisfied as to the technical, commercial and financialviability of individual projects. In this situation, the expenditure is deferredand amortised over the period during which the company is expected to benefit. Goodwill The directors have undertaken an impairment review of goodwill at 30 September2007 in accordance with the provisions of Financial Reporting Standard ('FRS')10, which shows that the capitalised value of the cash flows derived from futureincome streams is greater than the carrying value shown in the Group'sconsolidated balance sheet at 30 September 2007. Impairment reviews willcontinue to be carried out at the end of each reporting period. Share-based payments The group operates executive and employee share schemes. For all grants of shareoptions, the fair value as at the date of grant is calculated using an optionpricing model and the corresponding expense is recognised over the vestingperiod. The expense is recognised as a staff cost and the associated creditentry is made against equity. Deferred consideration The terms of an acquisition may provide that part of the total value of thetotal of the purchase consideration, which may be payable at a future date,depends on uncertain future events such as the future performance of theacquired company. Where it is not possible to estimate amounts payable with anydegree of certainty, the amounts recognised in the financial statements arethose are reasonably expected to be paid as at the balance sheet date. 2. Taxation 2007 2006 £000 £000 Domestic current year taxU.K. corporation tax 1 - ________ ________ Current tax charge 1 - Deferred taxDeferred tax credit (7) (104) ________ ________ (6) (104) ________ ________Factors affecting the tax charge for the yearLoss on ordinary activities before taxation (482) (629) ________ ________Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 19% (2006: 19%) (92) (120) ________ ________Effects of:Non deductible expenses 31 4Depreciation add back 23 17Capital allowances (10) (10)Losses carried forward 49 109 ________ ________ 93 120 ________ ________Current tax charge 1 - ________ ________ There is no provision for UK corporation tax due tax losses carried forward,subject to agreement with HM Revenue & Customs. 3. Loss per share The calculation of the basic loss per share is based on the loss attributableto ordinary equity shareholders of £476,000 (2006: loss £525,000) divided by theweighted average of 13,876,190 (2006: 10,367,361) ordinary shares in issue. Due to the loss incurred in the year, there is no dilution effect from theissued share options. 4. Acquisition of Network Support International Limited On 1 December 2006 the company acquired 100% of the issued share capital ofNetwork Support International Limited for consideration comprising £250,000 incash and the issue of 1,785,714 ordinary shares of 1p each in the company. Theassets acquired are set out below. There was no material difference between thebook and fair values of the assets and liabilities acquired. £000 Tangible fixed assets 48Debtors 93Cash at bank 15Creditors (67) _______ Net assets 89 _______ Cash consideration 250Deferred consideration 140Fair value of shares issued 500Acquisition costs 43 _______ Fair value of total consideration 933Net assets acquired (89) _______ Goodwill 844 _______ The fair value of the non-cash consideration used a market price of 28p pershare, being the subscription price of shares being issued contemporaneously.The deferred consideration becomes payable on the Group achieving certain salestargets by 30 September 2008, and the amount is included with other creditorsfalling due within one year. No indication can be given of the contribution to turnover and operating profitof Network Support International Ltd, which was acquired in the year. This isbecause the business and assets were integrated into Nasstar (UK) Ltdimmediately after acquisition and it is now not possible to identify theseparate turnover and results of the acquired business. The profit after taxation of Network Support International Ltd was £60,000 forthe period 1 July 2006 to 1 December 2006 and £91,000 for the year ended 30 June2006. 5. Reconciliation of operating loss to operating cash flows 2007 2006 £000 £000 Operating loss (394) (563)Depreciation of tangible assets 122 90Equity-settled share-based payments 69 53Increase in debtors (75) (96)Increase in creditors 209 39 ________ ________ Net cash outflow from operating activities (69) (477) ________ ________ 6. Analysis and reconciliation of net funds/debt 1 October 2006 Cash flow 30 September 2007 £000 £000 £000Net cashCash at bank and in hand 48 10 58Bank overdrafts - (50) (50) _______ _______ _______ 48 (40) 8Finance leases (47) 27 (20) _______ _______ _______Net funds/(debt) 1 (13) (12) _______ _______ _______ 2007 2006 £000 £000 (Decrease)/increase in cash in the year (40) 11Cash outflow from decrease in debt and lease financing 27 4 ________ ________ Change in net funds/debt resulting from cash flows (13) 15New finance leases - - ________ ________Movement in net fund /debt (13) 15Opening net funds/(debt) 1 (14) ________ ________Closing net funds/(debt) (12) 1 ________ ________ 7. Statement of movements on reserves Share Profit and Merger premium loss reserve account accountGroup £000 £000 £000 Balance as at 1 October 2006 662 67 (802)Retained loss for the year - - (476)Equity-settled share-based payments - - 69Premium on shares issued during the year - 964 - ______ ______ ______Balance as at 30 September 2007 662 1,031 (1,209) ______ ______ ______ 8. Publication of non-statutory accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The summarised balance sheet at 30 September 2007 and the summarised profit andloss account, summarised cash flow statement and associated notes for the periodthen ended have been extracted from the Group's 2007 statutory financialstatements upon which the auditors opinion is unqualified and does not includeany statement under Section 237 of the Companies Act 1985. The accounts for the year ended 30 September 2007 will be posted to shareholdersand laid before the company at the Annual General Meeting on 10 January 2008.Copies will also be available from Nasstar plc's Registered Office: 14-18 OldStreet, London EC1V 9BH and via the website (www.nasstar.com) in accordance withAIM Rule 26. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
NASA.L