21st Dec 2007 14:26
Net b2b2 PLC21 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 internalrestructuring, we have readied all the businesses for the challenges that lieahead by a sustained focus on good cost control via structural changes. We arenow better prepared to take advantage of the commercial opportunities in thedigital media arena that befit a company of our size and have planned to drivethe top line through investment in technology, marketing and key personnel. "We have targeted markets in media, membership organisations and health and havewon significant contracts in these areas, whilst retaining strong alliances withMicrosoft, IBM and VMware as well as investing in technologies such as MOSS,Rich Internet Applications and Virtualisation. All in all, the Group believesthat it has the products and services that are at the forefront of digital mediaand has developed a good platform for growth. We look forward to 2008 withreasonable confidence." Enquiries, please contact: Andrew GannonNetb2b2 PLC020 7689 8800 Azhic Basirov / Siobhan SergeantSmith & Williamson Corporate Finance Limited020 7131 4000 Duncan McCormick / John WestTavistock Communications020 7920 3150 CHAIRMAN'S STATEMENT I believe that the results achieved for the year ended 30 June 2007 havesuitably positioned the Group for its progressive plans for 2008. As part of our preparation for these plans, we have invested in an experiencedMarketing Director, Karen Johnson, who I am delighted to welcome to the Company.Karen is a highly experienced B2B services marketer with a reputation fordeveloping, leading and implementing high impact marketing and sales plans intoa range of businesses. Karen enjoyed a successful career at Hewlett-Packardwhere she left as Marketing Director of HP Consulting to found her own strategicmarketing services company. She has a track record in the Microsoft space asMarketing Director for a significant BizTalk partner company, and will be avaluable addition to the team. We continue with our strategic plan to extract more value from establishedrelationships with blue chip clients that include ITV, BBC, ITN and Sky as wellas to continue to broaden our customer base through more effective sales andmarketing. We continue to explore bolt-on, small-scale acquisitions, but onlyones 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 depresstrading profitability over the year, the Group managed to record a lower fullyear 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 apension fund operated by a liquidated subsidiary of the Group and some writeback has been made of the amount previously provided. As we mentioned in our interim results, we intend to accelerate cost savings andto increase turnover through more efficient sales and marketing. Whilst we havesuccessfully implemented a number of structural improvements, any expectedimprovement in financial performance will not be realised until the nextreporting period. As also stated in our interim results announcement, due to a severe technicalskills shortage, savings have been difficult to achieve against a backdropfacing all companies that serve the digital market place, particularly incentral London where most of our businesses operate. The shortage of skilled newmedia personnel has produced sharply rising labour costs and some turnover instaff. This has been addressed by the Group by an increased reliance on moreflexible consultants. Unfortunately, although it is possible that a contract might be obtained in thefuture through the Group's Netpen division, it is considered prudent to providein full against the current work in progress. The One Stop Racing website hasproved disappointing in revenue terms and full provision has been made againstthe assets of that operation. The project performances of Fernhart New Media Limited ("Fernhart") and Blue SkyHosting Limited ("Blue Sky") have continued to justify our confidence in thesegrowing businesses. It should however be noted that the short-term profitabilityof Fernhart has been subdued as the actions we have taken during the yearcontinue 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 launchedMicrosoft Vista platform, is worth particular mention. This project clearlydemonstrates the Group synergies, as Blue Sky was also contracted to host theservices and video content. We have established a very strong position in themedia space with Microsoft Vista based developments for a number of TV companieswhilst our first SharePoint MOSS project has been completed and received aglowing response from the NHS Confederation. We are planning on building onthis successful project to provide SharePoint services into other areas of theNHS and public sector organisations. We are now approved suppliers to MicrosoftConsulting Services and have just completed our first Silverlight engagement forthem. Silverlight is Microsoft's latest presentation toolset to create RichInternet Applications with attractive visual user interfaces. We are now intoour second Silverlight project for a major UK Financial organisation. Wecontinue with discussions with Channel 4, ITN and BBC regarding delivery ofapplications for Windows Vista, Silverlight and Media Center. All thesediscussions come on the back of our successful projects this year. Our largest Group company, cScape, has won substantial and ongoing work withBarclays, Computacenter, Publicis and the Royal College of Physicians. Itencountered a major problem on one project earlier this year although steps havebeen taken to minimise the impact of this problem, and to address the balance ofits workforce, with a decision to increase flexibility through the use of morefreelance programming and IT staff. cScape still managed to continue to winother major mandates, as stated in our interim report, including a significantnew Web design contract to redevelop the website for Hed Kandi, part of theMinistry of Sound music group. This contract meant cScape became the first newmedia company to implement Microsoft's new Office SharePoint Server 2007TM. Webelieve the significance of this contract is over and above its contract value.cScape is a holder of Microsoft Gold Certified Partner status; going forward weintend the Group to benefit more from this accreditation. Our CustomerEngagement Unit (CEU) continues to go from strength to strength. The secondannual CEU survey has now been undertaken with over 900 people having respondedand will be published later this month. We are investing in MOSS training totake advantage of the growing market in this area. At Blue Sky, our partnership with VMware is progressing well as together wefocus on the SME sector. Blue Sky has been accepted into the VMware VirtualInfrastructure Partner Program (VIP) in preparation for its forthcoming launchof virtualised high availability enterprise hosting solutions in 2007. It alsocontinues to leverage its position as one of the first hosting providers in theRIM Alliance Partner network and has grown its Hosted BlackBerry ManagedServices portfolio to attract both Lotus Domino and Microsoft Exchange corporatemail users. Blue Sky is the largest and most advanced Domino hosting company inthe UK and we recognise the good opportunity that we have to build on thisreputation. A major new win with Reed has also given us a sound 2007 at ITM and a platformfor a promising 2008. Pagination has held up despite the uncertainties of thepublishing market and we have successfully undertaken some cross-sellingactivity with Blue Sky and Fernhart. The net result of the above has been to put pressure on the Group's cash flowand scope for the selective deferral of creditors mentioned in our interimresults has significantly reduced. The Independent Directors have thereforebecome of the view that it is very important that new equity is raised for theGroup and have welcomed Keith Young's subscription for £0.5m worth of ordinaryshares as announced to shareholders on 4 December. Outlook Though 2007 has had some uncertainties, due in part to our internalrestructuring, we have readied all the businesses for the challenges that lieahead by a sustained focus on good cost control via structural changes. We arenow better prepared to take advantage of the commercial opportunities in thedigital media arena that befit a company of our size and have planned to drivethe top line through investment in technology, marketing and key personnel. We have targeted markets in media, membership organizations and health and havewon significant contracts in these areas, whilst retaining strong alliances withMicrosoft, IBM and VMware as well as investing in technologies such as MOSS,Rich Internet Applications and Virtualisation. All in all, the Group believesthat it has the products and services that are at the forefront of digital mediaand has developed a good platform for growth. We look forward to 2008 withreasonable confidence. Keith YoungChairman Date 21 December 2007 GROUP PROFIT & LOSS ACCOUNTYear 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 itemsDiscontinuance of business and settlement of pensionliabilities 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 thenon-operating exceptional items which relate to the closure of discontinuedoperations. No separate statement of Total Recognised Gains and Losses has been presented asall 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 ASSETSIntangible assets 2,278 2,438Tangible assets 532 570 ------- ------- 2,810 3,008CURRENT ASSETSStocks 75 141Debtors 1,483 1,398Cash at bank 272 121 ------- ------- 1,830 1,660CREDITORS: amounts falling due (2,844) (2,405)within one year NET CURRENT LIABILITIES (1,014) (745) ------- -------TOTAL ASSETS LESS CURRENT 1,796 2,263LIABILITIES CREDITORS: amounts falling due (41) (112)after more than one year ------- -------NET ASSETS 1,755 2,151 ======= =======CAPITAL AND RESERVESCalled up share capital 606 606Share premium 553 553Capital redemption reserve 6 6Profit 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 netfunds 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 statutoryaccounts within the meaning of section 240 of the Companies Act 1985. Statutoryaccounts for the year ended 30 June 2007 will be finalised based on theinformation in this preliminary announcement and will be delivered to theRegistrar of Companies in due course. The accounts for the year ended 30 June2006, which received an unqualified auditor's report, have been filed with theRegistrar 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 thefinancial statements concerning the Group's ability to continue as a goingconcern. The Group incurred an operating loss of £575,000 during the year ended30 June 2007 and, at that date, the Group's current liabilities exceeded itscurrent assets by £1,014,000. These conditions, along with the othermatters explained in note 1 to the financial statements, indicate the existenceof a material uncertainty which may cast significant doubt about the Group'sability to continue as a going concern. The Directors set out in the financialstatements why they consider that a going concern basis is appropriate and whythey are adopting this for the accounts for the year to 30 June 2007. Thefinancial statements do not include any adjustments that would result if theGroup 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 digitalcommunication services 1,632 1,945 20 46 Specialist hosting 770 668 198 151 Media and interactivetechnology 730 503 (30) (16) Central and otherincome/(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 1,145Publishing and digitalcommunication services 2 30 231 196 Specialist hosting 194 149 515 616 Media and interactivetechnology (31) (18) 526 550 Central and othercosts/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 itwould be prudent to make a provision for impairment of that relating to ITMGraphics Ltd in the amount of £160,000. An amount of £231,000 previously provided in respect of pension liabilities hasbeen written back in the year to reflect the current state of negotiations withrelevant parties. A net charge of £170,000 has been made in 2006 in respect ofthe closure of the Typematters (London) Limited business in the year ended 30June 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, whichrelates 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 asa result of the liquidation of BS Communications Ltd, a non-trading subsidiaryof the group. 4. LOSS PER ORDINARY SHARE Basic loss per share is calculated by dividing the loss attributable to ordinaryshareholders 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 theloss incurred in the year, there is no dilution effect from the issued shareoptions. 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) FROMOPERATING ACTIVITIES 2007 2006 £000 £000 Operating loss (575) (178)Exceptional items 160 (112)Depreciation 170 147Loss on disposal/write off of tangible fixed assets 29 74Decrease/(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 flowNet cash: £000 £000 £000 Cash at bank 121 151 272Bank overdrafts (141) (65) (206) ------ ------- ------- (20) 86 66 ------ ------- -------Debt:Bank loans(including invoicediscounting) (333) 140 (193)Hire purchaseobligations (176) 25 (151) ------ ------- -------Total (529) 251 (278) 7. ACCOUNTING FOR GOODWILL The board has assessed each subsidiary with reference to its durability, abilityto sustain future long term profitability and assessed ability to maintainmarket position. Based on this assessment the board is of the opinion that thegoodwill elements have indefinite economic lives. The board has carried outimpairment reviews on these goodwill elements and has concluded that a write offof £160,000 in the year is appropriate. 8. COPIES OF PRELIMINARY STATEMENT Copies of this announcement are available from www.netb2b2.com or the companysecretary 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 30June 2007 will be sent to shareholders in due course. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Chesterfield Sp