22nd Jun 2006 07:02
Redstone PLC22 June 2006 22 June 2006 REDSTONE PLC ("Redstone" or "the Group") Preliminary Results for the Year ended 31 March 2006 Redstone (AIM:RED.L), today announces its financial results for the year ended31 March 2006. FINANCIAL HIGHLIGHTS • Revenues up by 46.2% to £72.5m (FY05: £49.6m) • Gross Margin up by 49.5% to £26.2m (FY05: £17.5m) • Gross Margin percentage up to 36.1% from 35.3% • Operating loss reduced by 39.3% to £1.7m from £2.8m * • £2.1m EBITDA profit in the second half year following a £2.0m EBITDA loss in the first half year resulting in break-even EBITDA for the year ** • Cash flow positive in fourth quarter • £16.5m revolving debt facility agreed with Barclays • Announcement of offer for Symphony Telecom Holdings plc ("Symphony") * before goodwill impairment, amortisation of intangibles and restructuring costs ** before goodwill impairment, amortisation of intangibles, restructuring costs and share based payment charges OPERATIONAL HIGHLIGHTS • the acquisition and integration of Xpert Group Limited at the end of April 2005; • four autonomous business units have been established each with their own management, sales, operations and administration functions; • more than £8m of overheads have been removed from the business in this financial year; • growth in revenues and gross margin; • generating EBITDA profits in the second half and becoming cash flow positive in the last quarter; and • announcing the offer for Symphony. Martin Balaam, Chief Executive Officer, Redstone, commented, "This has been an excellent year for the Redstone Group that has included somevery significant achievements. The business has been transformed, bothculturally and organisationally, and is now well positioned to become a leaderin the IT and communications solutions market place. It is almost exactly a yearsince I was appointed as Chief Executive Officer and the single most fundamentalprinciple that I have firmly stamped onto the Redstone Group has been to focuson profit. The outlook for the group is positive and the Board remains committedto delivering revenue and EBITDA growth." ENQUIRIES:Redstone plc Tel. +44 (0)845 200 2200Martin Balaam, Chief Executive OfficerTim Perks, Chief Financial Officer ICIS Limited Tel. +44 (0)20 7651 8688Tom Moriarty or +44 (0)7769 937 626 Chief Executive's Review Introduction • Revenues up by 46.2% to £72.5m • Gross Margin up by 49.5% to £26.2m • Gross Margin percentage up to 36.1% from 35.3% • Operating loss reduced by 39.3% to £1.7m from £2.8m * • £2.1m EBITDA profit in the second half year following a £2.0m EBITDA loss in the first half year resulting in break-even EBITDA for the year ** • £16.5m revolving debt facility agreed with Barclays • Announcement of offer for Symphony Telecom Holdings plc ("Symphony") * before goodwill impairment, amortisation of intangibles and restructuring costs ** before goodwill impairment, amortisation of intangibles, restructuring costs and share based payment charges The Redstone Group has made significant progress during the year. The businesshas transformed itself both culturally and organisationally to enable it tobecome a leader in the IT and communications solutions market place. During the year since my appointment as Chief Executive Officer, the fundamentaltarget for the Redstone Group has been the focus on profitability and customersatisfaction. This is the primary driver behind the reorganisation into smaller,more agile, profit focused business units. Over the past 12 months the following actions have been implemented successfully: (1) the completion of the acquisition of Xpert Group Ltd at the end of April 2005; (2) the subsequent integration of Xpert with Redstone; (3) reorganisation into four autonomous business units each with their own management,sales,operations and administration capabilities; (4) reducing overheads: more than £8m of overheads have been removed from the business in this financial year; (5) generating positive EBITDA in the second half and becoming cash flow positive in the last quarter; and (6) announcing the offer for Symphony Business Capability The Redstone Group offers a comprehensive range of IT and communicationsolutions for business and public sector organisations within the UK andIreland. There are currently four divisions: Telecom - UK fixed line inbound and outbound minutes and other associated products Converged - IP solutions provider Solutions - expertise in contact centres, voice and video, IP Networks, IP Telephony, security Managed - ISP, online backup, hosting, co-location Solutions - IT Services, Microsoft, Server Desktop - Network Management, remote monitoring Technology - Hewlett Packard (HP) Enterprise Server solutions - Storage Area Networks, complex server clusters - Maintenance & break-fix services The proposed acquisition of Symphony, whose activities are split between fixedline telecoms and mobile telecoms, will create a fifth business unit to becalled Redstone Mobile. Redstone will then have, in-house, all the capabilitiesneeded to cover a business customer's entire telecoms and IT requirements. Divisional Review Redstone Telecom This division was formed as a separate business unit in September 2005. EddieBuxton was appointed as Managing Director (ex Managing Director of Onetel B2B )in February 2006 and he has since built a dedicated new sales team. Notable new customers this year include Ramada Jarvis Hotels, North LincolnshireCouncil, HiT Entertainment and Vue Entertainment. The opportunity to cross sellinto the Redstone Group base is being exploited. The inbound and outbound minutes that are sold to customers pass over the BTWholesale Redstone Network which continues to give competitive advantage whenbidding against 'virtual' fixed line resellers and the relationship between BTWholesale and Redstone remains beneficial to both parties. We have embarked on reviewing the options for Voice Over IP ("VOIP") - enablingof the Redstone Network alongside BT Wholesale - and it is our intention to addthis functionality to the Redstone Network during the current financial year. We are currently implementing VOIP on our Personal Numbering platform which willbe SIP enabled and allow 'Skype' type functionality. Once implemented, we willlook to re-launch a VOIP/SIP personal number service. Redstone Technology It was a particularly good year for this business unit with some significantcontract wins from the Irish Departments of Social & Family Affairs, ofAgriculture and Food and from Hewlett Packard. The business unit was previouslypart of the Xpert Group operating under the Xpert Technology brand and theManaging Director is Declan Van Esbeck. The business has recently strengthened its management team with the appointmentof a new Financial Controller and Technical Director, and due to the increase inbusiness activity it has expanded its facilities in Dublin. During the year the business achieved the highest accreditation from Red Hat,the open source solutions provider and also achieved the status of AccreditedService Delivery Partner with HP. In the coming year the business will be bedding down the recently awarded HPcontract and will look to grow its professional services and consultancyofferings and also seek to establish a foothold in the UK where the RedstoneGroup customer base offers significant opportunities. Redstone Converged Solutions This division has seen the most amount of integration during the past year withthe coming together of Xpert Communications and the Converged Solutions elementof Redstone Communications. This division is now fully integrated, includingback office and operational systems. A newly appointed Managing Director, PaulKennedy, will be joining the business in June 2006, having previously been CEOof A4e Limited. Even though the division experienced significant upheaval during the year, theunderlying business grew and has won some exciting new customers and projects,such as Ascot Race Course, Associated Newspapers Ltd and Northern Rock. The business unit is now focused on growth into its existing customer base,cross selling within the Redstone Group and the acquisition of new customers.The business is investing in the government's Building Schools for the Future("BSF") programme where we were recently awarded preferred bidder status forLancashire BSF. We are currently short listed on one additional BSF and arelooking to selectively bid on several others. The Redstone 'SmartB' product, now rebranded OneNet, (which offers multipleinfrastructure services running over an IP network, such as data, voice, CCTV,access control etc) continues to gain momentum, for example Cisco is addressingthis market sector through their 'Connected Real Estate' portfolio. Redstone Managed Solutions This business unit was formed in September 2005 from the combination of theRedstone ISP business, the Cambridge Metropolitan Network, the Redstone andXpert network management businesses and the Redstone/Xpert internal MIS team. A new management team and sales team have been recruited under the ManagingDirector, Tariq Saied, and the business has established its core set ofsolutions and capabilities. Key customer/project wins during the year includedwork for Ascot Race Course and the University for Lloyds TSB. The business unit recently achieved Microsoft Gold Accreditation as it seessignificant growth opportunities for these skills within the Redstone Group'scustomer base. Mergers & Acquisitions The Group successfully acquired and integrated Xpert Group Limited during thefinancial year, which has strengthened the Group's position in the Converged IPmarket and also brought new skills in Storage Area Networking and EnterpriseServer skills with Redstone Technology. The proposed offer to acquire Symphony Telecom Holdings plc will not only addcritical mass to the fixed line Redstone Telecom business unit but alsocomplements the Group's capabilities in IT and Communications Solutions by theaddition of a Mobile business unit, to be named Redstone Mobile. The Group will continue to seek acquisition opportunities that add scale, skillsand extend the customer base and which the Directors believe will be inShareholders' best interests. Outlook The Directors believe that the outlook for the Group is positive and the Boardremains committed to delivering revenue and EBITDA growth. The Group will actively look to exploit any cross selling opportunities withinits enlarged customer base whilst also looking to acquire new customers. The Group operates in a market place where the underlying technologies arerapidly converging and the Board believes that Redstone has a comprehensive setof capabilities that will enable it to take advantage of these marketopportunities. Martin BalaamChief Executive Officer 22 June 2006 Group Financial Review Trading For the year ended 31 March 2006 the Group is reporting a reduced pre taxoperating loss before goodwill impairment, intangibles amortisation andrestructuring costs of £1.7 million, down from £2.8 million in the prior year.Turnover increased by 46.2% to £72.5 million from £49.6 million in the year,primarily as a result of the acquisition of Xpert Group Limited as previouslyreported in the Group's interim results for the 6 month period to 30 September2005. Gross profit increased by 49.5% to £26.2 million from £17.5 million in 2005.This increase was in the main due to the acquisition of Xpert Group Limited. Iam pleased to report gross margin of 36.1% compared with 35.3% last year. We arenow seeing the benefits of creating focused autonomous business units. This hasenabled us to remain competitive in a market place which is subject to strongprice competition across all product ranges. Operating expenses before goodwill impairment, amortisation of intangibles andrestructuring costs, increased to £28.4 million for the enlarged Group, comparedwith £20.7 million last year. Immediately following the transaction, theenlarged Group was restructured into four autonomous operating units, and it hasreduced the overhead cost base, in the main through reduced headcount andoccupancy costs, by over £8.0 million on an annualised basis. As a result theoverall EBITDA before restructuring costs and goodwill impairment improved to aloss of £0.4 million compared with a £1.9 million loss in 2005. Before deductingthe IFRS charges for stock compensation payments and holiday accrual totalling£0.4 million for the year, and £0.3 million in the second half, the Groupachieved a breakeven position for the year at an EBITDA level, and a £2.1million EBITDA profit in the second half year. The Group will continue to invest in developing an effective sales operation inthe current year. There was interest receivable in the year of £0.2 million compared with £0.5million last year. As a result of the losses made during the first half year,and the payments made as a result of redundancies and office closures, cashbalances were on average below that of last year. The Group has maintained itspolicy of managing a business with minimal debt, with interest payable atnegligible levels. Other operating income relates to rent receivable. This has increased to £0.6million from £0.4 million last year. Every effort continues to be made tosub-let vacant properties. Overall operating losses were £22.9 million compared with £7.2 million in theyear ended 31 March 2005, an increase of £15.7 million. This increase is mainlydue to restructuring costs and the goodwill impairment of historicalacquisitions as follows: Restructuring costs £4.0 millionIncreased goodwill impairment £11.8 millionIncreased intangibles amortisation £1.0 million £16.8 millionReduction in trading losses £1.1 million £15.7 million Balance sheet and cash flow Cash flow and debtThe Group's net funds position reduced during the year by £3.2 million to £5.3million. The Group has loan notes of £0.6 million payable in June 2007. There was a cash outflow from operating activities of £5.6 million (2005 - £4.0million). Trade receivables have increased by £2.2 million as anticipated withthe larger Group and inventories have decreased by £0.8 million due to efficientordering processes. Provisions have increased by £0.5 million mainly due to thereduction in the number of operating sites from fourteen to eight during theyear and the related increase in vacant property provisions. The cash outflow from capital expenditure was £0.9 million during the year, adecrease of £0.2 million compared with the previous year. After making due enquiries, the Board has a reasonable expectation that theGroup has adequate resources to continue in operational existence for theforeseeable future. For this reason the going concern basis continues to beadopted in preparing the accounts. Treasury activities and policiesThe Group's treasury objectives and policies were agreed by the Board and aredesigned to manage the Group's financial risk and secure cost effective fundingfor the Group's operations. The Group finances its operations by cash and loannotes. Overdrafts are used to satisfy any short-term cash flow requirements.Other financial assets and liabilities, such as trade receivables and tradepayables, arise directly from the Group's operating activities. The Board hassanctioned a number of institutions with whom surplus funds may be invested witha view to maximising returns whilst minimising credit risks. The Group's policyis not to undertake speculative transactions in derivatives, such as interestrate swaps, on the ground that the cost outweighs the potential benefit giventhe Group's funding position. The main risks associated with the Group's financial assets and liabilitiesinclude: Foreign currency riskThe Group has invested in foreign operations outside the United Kingdom and alsobuys and sells goods and services denominated in currencies other than Sterling.As a result the value of the Group's non-Sterling revenues, purchases, financialassets and liabilities and cash flows can be affected by movements in exchangerates in general and in US Dollar and Euro rates in particular. The Group'spolicy on foreign currency risk is not to enter into forward contracts forpurchases until a firm commitment is in place. The Group considers using derivatives where appropriate to hedge its exposure tofluctuations in foreign exchange rates. The purpose is to manage the currencyrisks arising from the Group's operations. It is the Group's policy that notrading in financial instruments will be undertaken. Interest rate riskThe Group's policy is to manage interest rate risk and to maximise its returnfrom its cash balances. Interest on financial instruments classified as floating rate is set at apercentage above Bank of England base rate. Interest on financial instrumentsclassified as fixed rate is fixed until maturity of the instrument. The otherfinancial instruments of the Group that are not in the tables set out in thereport and accounts are non-interest bearing and are therefore not subject tointerest rate risk. Credit riskThe Group's policies are aimed at minimising losses due to credit risk.Customers who demonstrate appropriate payment history and satisfycreditworthiness checks are granted deferred payment terms. Debtor days, baddebt and cash flows are reviewed weekly by management. Liquidity riskThe Group aims to mitigate liquidity risk by managing cash within itsoperations. This is applied within the operations by setting cash collectiontargets and controlling expenditure by maintaining authorisation limits. Anyexcess cash is placed on low risk, short-term interest-bearing deposits. Other balance sheet areasGoodwill of £24.3 million represents goodwill on the acquisition ofsubsidiaries. As required by IAS 36 the Board has conducted a review of thecarrying value of goodwill on the balance sheet, resulting in an impairmentcharge of £16.1 million for the year. The intangible assets of £8.5 millioncomprise mainly the value attributed to acquired contracts and customerrelationships. These were subject to an amortisation charge of £1.2 millionduring the year in line with the Group's amortisation policy. The value of property, plant and equipment remained in line with the previousyear due to the low level of additions noted above being offset by the annualdepreciation charge. The trade and other payables balance includes deferred income of £8.0 million(2005 - £4.1 million). Shareholders' funds have increased to £29.0 million from£23.7 million in 2005. International Financial Reporting StandardsRedstone plc has adopted International Financial Reporting Standards ("IFRS")when preparing its Group accounts for the year ending 31 March 2006. A document entitled 'Restated Financial Information under InternationalFinancial Reporting Standards' was issued by Redstone plc on 24 November 2005and this Annual Report should be read in conjunction with that document. Thedocument can be found on the Company's website, www.redstone.co.uk, or can beobtained by writing to the Company Secretary at Redstone plc, 80 Great EasternStreet, London, EC2A 3RS. Tim PerksChief Financial Officer 22 June 2006 Financials Consolidated Income Statement Year ended 31 Year ended 31 March 2006 March 2005 £000 £000---------------------------------------------------------------------------- Revenue 72,478 49,577 Cost of sales (46,303) (32,063)----------------------------------------------------------------------------Gross profit 26,175 17,514 Other operating income 568 389Selling and distribution costs (9,016) (7,479)Administrativeexpenses (36,616) (17,586)Restructuring costs (4,006) ----------------------------------------------------------------------------- Operating loss before goodwill impairment,amortisation of intangibles andrestructuring costs (1,658) (2,808) Goodwill impairment (16,078) (4,236)Amortisation of intangibles (1,153) (118)Restructuring costs (4,006) ----------------------------------------------------------------------------- Operating loss (22,895) (7,162) Finance income 199 469Finance costs (221) (152)--------------------------------------------------------------------------- Loss on ordinary activities beforetaxation (22,917) (6,845) Tax on loss on ordinary activities 392 ---------------------------------------------------------------------------- Loss for the year (attributable toequity holders in the parent Company) (22,525) (6,845)--------------------------------------------------------------------------- Earnings per share Basic and diluted earnings per share (3.22)p (2.45)p---------------------------------------------------------------------------Non GAAP Measures Gross profit % (Gross profit as apercentage of revenue) 36.1 35.3 EBITDA (Earnings Before Interest, Tax,Depreciation and Amortisation) beforegoodwill impairment and restructuring costs (374) (1,944) ----------------------------------------------------------------------------Basic and diluted EBITDA per sharebefore goodwill impairment and restructuring costs (0.05)p (0.70)p---------------------------------------------------------------------------- Consolidated Balance Sheet 31 March 2006 31 March 2005 Note £000 £000------------------------------------------------------------------------------- AssetsNon-current assetsIntangible assets 32,828 21,259Property, plant and equipment 2,449 2,621Deferred tax asset 2,147 -Other non-current assets 545 429------------------------------------------------------------------------------- 37,969 24,309------------------------------------------------------------------------------- Current assetsInventories 241 683Trade and other receivables 3 15,490 7,994Cash and short-term deposits 5,327 8,513------------------------------------------------------------------------------- 21,058 17,190--------------------------------------------------------------------------------------------------------------------------------------------------------------Total assets 59,027 41,499------------------------------------------------------------------------------- Equity and liabilitiesEquityCalled up share capital 13,022 8,472Share premium account 208,100 185,336Other reserves 270 216Retained earnings (192,372) (170,313)------------------------------------------------------------------------------- 29,020 23,711------------------------------------------------------------------------------ Current liabilitiesTrade and other payables 4 23,245 14,716Income tax payable 10 -Provisions 5 1,989 816------------------------------------------------------------------------------- 25,244 15,532------------------------------------------------------------------------------- Non-current liabilitiesTrade and other payables 4 197 127Provisions 5 1,492 2,129Loan notes 643 -Deferred tax liability 2,431 -------------------------------------------------------------------------------- 4,763 2,256--------------------------------------------------------------------------------------------------------------------------------------------------------------Total equity andliabilities 59,027 41,499------------------------------------------------------------------------------- Consolidated Cash Flow Statement Year ended 31 Year ended 31 March 2006 March 2005 Note £000 £000--------------------------------------------------------------------------------------Cash flows from operating activitiesCash generated from operations 6 (5,514) (4,034)Income tax paid (91) ---------------------------------------------------------------------------------------Net cash flows used in operating activities (5,605) (4,034)-------------------------------------------------------------------------------------- Cash flows from investing activitiesProceeds from sale of property, plant and equipment 6 7Interest received 205 484Purchase of property, plant, equipment (726) (1,004)Purchase of intangible assets (133) (52)Acquisition of a subsidiary,net of cash acquired (21,442) ---------------------------------------------------------------------------------------Net cash flows used in investing activities (22,090) (565)-------------------------------------------------------------------------------------- Cash flows from financing activitiesProceeds from issue of shares 26,045 -Transaction costs of issuing shares (1,506) -Payment of finance lease liabilities - (62)Interest paid (60) (17)---------------------------------------------------------------------------------------Net cash flows from financing activities 24,479 (79)--------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (3,216) (4,678)Effects of currency translation oncash and cash equivalents 30 -Cash and cash equivalents at 1 April 8,513 13,191----------------------------------------------------------------------------------------Cash and cash equivalents at 31 March 5,327 8,513---------------------------------------------------------------------------------------- Non cash flow items As part of the purchase consideration for the acquisition of Xpert GroupLimited, 38,275,862 Ordinary Redstone shares with a value of £2,775,000 and loannotes of £638,000 were given as part payment. These items have no cash impact. Notes 1 Accounting policies - GroupThe principal accounting policies have been applied consistently throughout theyear in the preparation of these financial statements. (a) Basis of preparationThe preliminary results for the year ended 31 March 2006 have been extractedfrom the audited consolidated financial statements which have not yet beendelivered to the Registrar of Companies. The financial information set out inthis announcement does not constitute statutory accounts, within the meaning ofsection 240(1) of the Companies Act 1985, for the years ended 31 March 2006 or2005. The financial information for the year ended 31 March 2006 is derived fromthe statutory accounts for that year. This is the first year in which the Grouphas prepared its financial statements under IFRS, and the comparatives have beenrestated from UK Generally Accepted Accounting Practice (UK GAAP) to comply withIFRS. The restatement of the 31 March 2005 financial statements was issued byRedstone plc on 24 November 2005 and is available on the Company's website,www.redstone.co.uk. It also includes details of the Group's principle accountingpolicies under IFRS and the financial information set out in these preliminaryresults has been prepared in accordance with those accounting policies. The statutory accounts for the year ended 31 March 2006, upon which the auditorsissued an unqualified opinion, will be sent to Shareholders and will beavailable from the Company Secretary at Redstone plc, 80 Great Eastern Street,London, EC2A 3RS. The summary information presented herein was approved by the Board on 22 June2006. The financial information is presented in Sterling and all values are rounded tothe nearest thousand (£000) except where otherwise indicated. The Group has adopted IFRS 1 'First-time Adoption of International FinancialReporting Standards'. (b) Basis of consolidationThe consolidated financial statements comprise the financial statements ofRedstone plc and its subsidiaries as at and for the year ended 31 March of eachyear. Subsidiaries are consolidated from the date at which control is obtained by theGroup, and cease to be consolidated from the date at which the Group no longerretains control. Control comprises the power to govern the financial andoperating policies of the investee so as to obtain benefits from theiractivities, and is achieved through direct or indirect ownership of votingrights, currently exercisable or convertible potential voting rights, or by wayof contractual agreement. The financial statements of the subsidiaries areprepared for the same reporting year as the parent Company. All inter-company balances and transactions are eliminated in full. 2 Segment reportingPrimary reporting format - Business segmentsThe following tables present revenue, profit and certain assets and liabilityinformation regarding the Group's business segments for the years ended 31 March2006 and 2005. (a) For the year ended 31 March 2006 Telecom Converged Managed Technology Central Total Solutions Solutions £000 £000 £000 £000 £000 £000------------------------------------------------------------------------------------------Revenue 27,994 32,149 4,071 8,264 - 72,478----------------------------------------------------------------------------------------- Trading costs 25,539 34,711 3,837 7,545 1,976 73,608Equity-settled share-basedpayments 10 114 12 17 313 466Cash-settledshare-based payments - - - - 62 62Sub-total 2,445 (2,676) 222 702 (2,351) (1,658) Non-trading costsGoodwill impairment (2,286) (13,792) - - - (16,078)Amortisationof intangible assets - (956) - (57) (140) (1,153)Restructuring costs (54) (1,674) (47) (248) (1,983) (4,006)------------------------------------------------------------------------------------------Segment result 105 (19,098) 175 397 (4,474) (22,895)------------------------------------------------------------------------------------------Net finance costs (22)Tax 392 Loss for the year (22,525)------------------------------------------------------------------------------------------ Assets and liabilitiesSegment assets 6,694 30,169 4,669 11,362 6,133 59,027------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Segment liabilities 6,237 12,705 2,412 1,824 6,829 30,007------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Other segment informationCapital expenditureProperty,plant and equipment - 170 296 60 200 726Property,plant and equipmentacquired - business combination - 384 - 42 - 426Intangibles - software - - - - 133 133Intangible assetsacquired -business combinations - 8,898 - 496 - 9,394----------------------------------------------------------------------------------------Depreciation 217 240 337 34 456 1,284Goodwill impairment 2,286 13,792 - - - 16,078Amortisation - 956 - 57 140 1,153---------------------------------------------------------------------------------------- 2 Segment reportingPrimary reporting format - Business segments(b) For the year ended 31 March 2005 Telecom Converged Managed Technology Central Total Solutions Solutions £000 £000 £000 £000 £000-----------------------------------------------------------------------------------------Revenue 30,802 14,554 3,677 - 544 49,577-----------------------------------------------------------------------------------------Trading costs 28,668 18,894 4,448 - 302 52,312Equity-settledshare-based payments - - - - 73 73Sub-total 2,134 (4,340) (771) - 169 (2,808)Non-trading costsGoodwill impairment (935) (2,586) (715) - - (4,236)Amortisationof intangible assets - - - - (118) (118)-----------------------------------------------------------------------------------------Segment result 1,199 (6,926) (1,486) - 51 (7,162)-----------------------------------------------------------------------------------------Net finance income 317Loss for theyear (6,845)------------------------------------------------------------------------------------------Assets and liabilitiesSegment assets 9,273 17,118 4,391 - 10,717 41,499----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------Segmentliabilities 6,267 2,923 1,478 - 7,120 17,788----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Other segment informationCapital expenditureProperty,plant andequipment 35 405 286 - 278 1,004Intangibles - software 52 52-----------------------------------------------------------------------------------------Depreciation 21 17 282 - 544 864Goodwill impairment 935 2,586 715 - - 4,236Amortisation - - - - 118 118----------------------------------------------------------------------------------------- Redstone has four operating business units namely Telecom, Converged Solutions,Managed Solutions and Technology (Technology was not part of the Group in 2005,being acquired as part of the Xpert Group acquisition on 28 April 2005). Inaddition there is a Central division including back office functions andexecutive management to support the Group. In 2005 the Central divisiongenerated revenues through offering recruitment services for othertelecommunication organisations. All divisions deliver independent products andservices. Redstone Telecom provides telephony network services to the private and publicsector. The portfolio includes telephony services (both inbound and outboundcalls), line rental, SMS (short message service) and premium rate services(inbound calls to '09' number ranges). Redstone Telecom has a strategicrelationship with BT Wholesale guaranteeing service quality and availability.This is complemented by customer-focused services including dedicated accountmanagement and 24 hours a day, 7 days a week customer support. Redstone Converged Solutions is a provider of converged IP solutions, withexpertise in contact centres, voice and video, IP networks, intelligent building(OneNET) and security. Bringing together the combined knowledge and experienceof Xpert Communications and Redstone's Solutions business, Redstone ConvergedSolutions provides solutions to businesses and organisations in the health,education, local government, retail and finance sectors. Redstone Managed Solutions delivers a comprehensive portfolio of networkmanagement and internet services for businesses and public sector organisations.Solutions and services include server and desktop deployment, applicationdevelopment, hosting and co-location, network and system management, internetservice provision and consultancy. Redstone Technology provides enterprise storage solutions and is a specialist inbusiness critical enterprise-class servers and provides an array ofprofessional, consulting, logistics and maintenance services throughout Ireland. 3 Trade and other receivables 2006 2005 £000 £000------------------------------------------------------------------------------Trade receivables 9,186 4,115Other receivables 122 124Prepayments 3,627 2,014Accrued income 2,555 1,741------------------------------------------------------------------------------ 15,490 7,994------------------------------------------------------------------------------ 4 Trade and other payablesCurrent 2006 2005 £000 £000--------------------------------------------------------------------------------Trade payables 5,991 4,432Other payables 311 36VAT and social security 1,833 978Accruals 7,291 5,336Deferred income 7,819 3,934-------------------------------------------------------------------------------- 23,245 14,716-------------------------------------------------------------------------------- Non-current 2006 2005 £000 £000--------------------------------------------------------------------------------Deferred income 135 127Accruals 62 --------------------------------------------------------------------------------- 197 127------------------------------------------------------------------------------- 5 Provisions The Group currently has a number of vacant properties. Provisions have beenrecognised to cover the rents and service charges for the period that eachproperty is expected to be vacant, and any dilapidation expenditures on leaseexpiry. Provisions are calculated using the current costs of rents and servicecharges on each individual lease arrangement and management's estimates of costsof work required to fulfil the Group's contractual obligation under the leaseagreements to return the property to the same condition as at the commencementof the lease. The above provision has been discounted at a rate of 5% based onmanagement's best estimate. The obligations and these property leases range frombetween 1 to 15 years. The tax provision related to tax owed by a subsidiary. During the year this taxpayable was settled and the provision utilised. Tax Vacant property provison Total--------------------------------------------------------------------------------------------- £000 £000 £000---------------------------------------------------------------------------------------------At 1 April 2005 36 2,909 2,945Charge for the year - 1,749 1,749Utilised during the year (36) (1,016) (1,052)Unwinding of discount - (161) (161)---------------------------------------------------------------------------------------------At 31 March 2006 - 3,481 3,481---------------------------------------------------------------------------------------------Current - 1,989 1,989Non-current - 1,492 1,492--------------------------------------------------------------------------------------------- - 3,481 3,481---------------------------------------------------------------------------------------------At 31 March 2005Current - 816 816Non-current 36 2,093 2,129--------------------------------------------------------------------------------------------- 36 2,909 2,945--------------------------------------------------------------------------------------------- 6 Net cash flows from operating activities 2006 2005 £000 £000---------------------------------------------------------------------------------------Operating loss (22,895) (7,162)Adjustments for:Depreciation of property, plant and equipment 1,284 864Amortisation of intangible assets 1,153 118 Goodwill impairment charge 16,078 4,236 Equity-settled share-based payments 466 73Cash-settled share-based payments 62 - Loss/(profit) on disposal of property, plant and equipment 32 (5) Movements in working capital:Decrease/(increase) in inventories 825 (64)(Increase)/decrease in trade and other receivables (2,235) 2,634 Decrease in trade and other payables (776) (3,825) Increase/(decrease) in provisions 492 (903)----------------------------------------------------------------------------------------Cash generated from operations (5,514) (4,034)---------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CTP.L