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Final Results

22nd Dec 2008 07:00

RNS Number : 5458K

Net b2b2 PLC

22 December 2008

Netb2b2 plc

Preliminary results for the year ended 30 June 2008

Netb2b2 plc ('Netb2b2' or 'the Group'), the digital communications business, today announces its preliminary unaudited results for the year ended 30 June 2008.

Enquiries, please contact:

Geoffrey Griggs

Netb2b2 PLC

020 7689 8800

Azhic Basirov / Siobhan Sergeant

Smith & Williamson Corporate Finance Limited

Tel: 020 7131 4000

CHAIRMAN'S STATEMENT

Introduction

The year ended 30 June 2008 has been a year of transition.

Both during and since the year end we have been reviewing our overhead structure and we continue to reduce headcount and simplify our structure.

As part of this progress we regret to announce that following six years of service as Group Managing Director, Andy Gannon has decided to step down with effect from 22 December 2008.

We would like to place on record our sincere thanks for his leadership, commitment and perseverance over this period and we wish him well in his several other business interests.

Financial and operational review

Group turnover has increased to £7.4 million (2007: £6.7m). Unfortunately the problematic major project, alluded to last year has resulted in a litigation claim which has been settled since the year end for £400,000 payable in instalments over the next 3 years. This prior period item has been fully provided for in these accounts. Prior to this claim and the provision for goodwill impairment, the Group managed to record a considerably lower full year loss after tax of £17,000 (2007: £236,000) and it traded profitably in the final quarter. The loss per share was 17.9p compared with 6.5p in 2007.

Good progress continues to be made in resolving the deficit resulting from a pension fund operated by a liquidated subsidiary of the Group and a further write back of the amount previously provided has been made.

We are pleased to report that cScape grew its revenues by 15% year on year and acquired a number of new blue chip clients during the period which offer a fair degree of promise in the medium term. cScape has also recently signed two new 3 year contracts with significant long term clients.

In addition cScape's Customer Engagement Unit gained greater prominence in its field and produced two influential reports, the second online "Customer Engagement Survey" and "Winners and Losers".

cScape, because of its Microsoft skills, was also chosen by Microsoft to create a global demo site for Sharepoint.

Blue Sky Hosting continues to provide good returns with a solid trading result. The adoption of the VMWare platform and the subsequent partnership has enabled Blue Sky to further enhance its value proposition increasing its capacity for 24 x 7 operation without a disproportionate increase in infrastructure costs.

IBM continue to position Blue Sky Hosting as one of their top Domino Hosting partners and this position is now well complemented by a strong Microsoft and Open Source offering. We have recently seen sustained support from existing customers such as Riverford and indeed the return of APTN to the fold after having "in-sourced" their infrastructure some 3 years ago.

Although Fernhart had a disappointing bottom line result it won a number of new clients during the period including in the public sector.

ITM had a reasonable trading year although it continues to operate in a challenging business environment.

In view of the above it is considered prudent to provide in full for impairment of the goodwill relating to Fernhart and ITM and this has resulted in a charge for the year of £1,026,000 (2007: £160,000).

Outlook

Unfortunately the general economic outlook for 2009 looks challenging but the effects of this on the Group will be mitigated to some extent through our strong position in chartered membership organisations and our long term hosting contracts.

Keith Young 22 December 2008

Chairman

UNAUDITED GROUP PROFIT & LOSS ACCOUNT

Year ended 30 June 2008

	Note	2008 £000	2007 £000

TURNOVER		7,433	6,657

Cost of sales		(2,114)	(1,885)
		______	______
GROSS PROFIT		5,319	4,772
		______	______
Administrative expenses before exceptional item		(5,746)	(5,187)
Exceptional item		(1,026)	(160)
		______	______
Administrative expenses		(6,772)	(5,347)

OPERATING LOSS		(1,453)	(575)
		______	______
Non-operating exceptional items
Discontinuance of business and settlement of pension liabilities in respect thereof	3	75	231


Interest payable and similar charges		(104)	(52)
Interest receivable and similar income		24	-
		______	______
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION		(1,458)	(396)


Tax on loss on ordinary activities		-	-
		______	______
LOSS FOR THE FINANCIAL YEAR		(1,458)	(396)
		______	______
BASIC LOSS PER SHARE (PENCE)	4	(17.90)p	(6.53)p
		______	______
DILUTED LOSS PER SHARE (PENCE)	4	(17.90)p	(6.53)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.

UNAUDITED GROUP BALANCE SHEET

As at 30 June 2008

	2008		2007
	£000	£000	£000	£000

FIXED ASSETS
Intangible assets		1,252		2,278
Tangible assets		631		532
		______		______
		1,883		2,810
CURRENT ASSETS
Stocks	77		75
Debtors	1,498		1,483
Cash at bank	409		272
	______		______
	1,984		1,830
CREDITORS: amounts falling due within one year	(2,615)		(2,844)
	______		______
NET CURRENT LIABILITIES		(631)		(1,014)
		______		______
TOTAL ASSETS LESS CURRENT LIABILITIES		1,252		1,796

CREDITORS: amounts falling due after more than one year		(494)		(41)
		______		______
NET ASSETS		758		1,755
		______		______
CAPITAL AND RESERVES
Called up share capital		1,106		606
Share premium		514		553
Capital redemption reserve		6		6
Profit and loss account		(868)		590
		______		______
EQUITY SHAREHOLDERS' FUNDS		758		1,755
		______		______

UNAUDITED GROUP CASHFLOW STATEMENT

Year ended 30 June 2008

	Note	2008 £000	2007 £000

Net cash inflow/(outflow) from operating activities	5	(13)	465

Returns on investments and servicing of finance		(80)	(52)

Capital expenditure		(341)	(162)

Acquisitions		-	-
		______	______
Net cash inflow/(outflow) before financing		(434)	251

Financing		577	(165)
		______	______
Increase/(decrease) in cash in the year		143	86
		______	______

Reconciliation of net cash flow to movement in net funds

Increase/(decrease) in cash in the year	6	143	86

Decrease/(increase) in debt and lease financing		(112)	165
		______	______
Movement in net funds in the year		31	251

Net (debt)/funds at start of year		(278)	(529)
		______	______
Net debt at end of year	6	(247)	(278)
		______	______

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 2008 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 2007, which received an unqualified auditor’s report, have been filed with the Registrar of Companies.

2. SEGMENTAL INFORMATION

The Group operates in the UK and the whole of its turnover is in the UK market.

	Turnover		Operating Profit/(Loss)
	2008 £000	2007 £000	2008 £000	2007 £000

Internet services	4,148	3,525	440	80

Publishing and digital communication services	1,901	1,632	36	20

Specialist hosting	842	770	190	198

Media and interactive technology	542	730	(87)	(30)

Central and other costs/net assets	-	-	(606)	(683)

Provision for liabilities	-	-	(400)	-

Impairment of goodwill	-	-	(1,026)	(160)
	______	______	______	______
Group	7,433	6,657	(1,453)	(575)
	______	______	______	______
	Profit/(Loss) before tax		Net assets/(liabilities)
	2008 £000	2007 £000	2008 £000	2007 £000

Internet services	447	56	1,152	1,105
Publishing and digital communication services	11	2	118	231

Specialist hosting	186	194	701	515

Media and interactive technology	(90)	(31)	436	526

Central and other costs/net assets	(661)	(688)	(623)	(462)

Exceptional items	(325)	231	-	-

Impairment of goodwill	(1,026)	(160)	(1,026)	(160)
	______	______	______	______
Group	(1,458)	(396)	758	1,755
		______	______	______

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 £1,026,000 relating to ITM Graphics Ltd and Fernhart New Media Ltd.

An amount of £75,000 previously provided in respect of pension liabilities has been written back in the year to reflect the current state of negotiations with relevant parties.

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.

	2008	2007

Basic earnings attributable to ordinary shareholders: £000	(1,458)	(396)
	______	______
Weighted average number of ordinary shares	8,144,902	6,061,569
	______	______

Loss per share:	(17.90)p	(6.53)p
	______	______

5. RECONCILIATION OF OPERATING (LOSS) TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES

	2008 £000	2007 £000
Operating loss	(1,453)	(575)
Impairment provision	1,026	160
Depreciation	218	171
Loss on disposal/write off of tangible fixed assets	(1)	28
Other provision	400	-
Decrease/(increase) in stocks	(2)	66
Increase in debtors	10	(85)
Increase/(decrease) in creditors	(211)	700
	______	______
Net cash inflow/(outflow) from operating activities	(13)	465
	______	______

6. ANALYSIS OF CHANGES IN NET DEBT

	At 1 July 2007	Cash flow	At 30 June 2008
Net cash:	£000	£000	£000
Cash at bank	272	137	409
Bank overdrafts	(206)	6	(200)
	______	______	______
	66	143	209
	______	______	______
Debt:
Bank loans (including invoice discounting)	(193)	(33)	(226)
Hire purchase obligations	(151)	(79)	(230)
	______	______	______
Total	(278)	31	(247)
	______	______	______

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 back of £1,026,000 is sufficient.

8. COPIES OF PRELIMINARY STATEMENT

Copies of this announcement are available on the Company’s website www.netb2b2.com or from 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 2008 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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