28th Sep 2006 07:04
Canisp PLC28 September 2006 28 September 2006 Canisp plc ("Canisp" or "the Company") Audited Preliminary Results for the twelve months ended 31 March 2006 Chairman's Statement The Board of Canisp announces today the Group's audited results for the yearended 31 March 2006. In the period under review the Group recorded a lossbefore taxation of £469,000 (2005: £3,537,000) and a loss per share of 2.42p(2005: 21.85p). No dividend is proposed. When the board last reported to shareholders on 15 June 2006 we said that wewould continue to work hard to grow our customer base but that we were alsoinvestigating alternative approaches to recover shareholder value. We have spoken to a number of parties interested in acquiring all or part of ourbusiness and it continues to be our view that the interest the Group hasreceived to date does not yet meet with our valuation of the Group's business.As a result, none of the approaches we have had to date have been worthy offurther detailed consideration. I am pleased to report that as a result of our work earlier in the year to drivedown the cost base of the business we have a much leaner and efficient business.In addition, we have continued to work to grow the Group's existing customerbase and to assist in this the directors decided to proceed with a placing ofnew shares. Consequently, on 15 June 2006 Canisp announced that it had placed60,000,000 ordinary shares of one penny each at par to raise £600,000 beforeexpenses. The net proceeds of the placing totalled £585,000, a proportion of which hasbeen used to repay, in part, existing borrowing from Bank of Scotland. At thesame time, the Company capitalised £257,500 of the debt owed to Corvus CapitalInc (Corvus) by the allotment and issue of 25,750,000 ordinary shares at par.As a result of the placing and capitalisation of debt Corvus holds 27.87 percent of the entire issued share capital of the Company. In addition to the capitalisation, the Company agreed with Corvus that Corvusmay capitalise the balance of its debt amounting to £527,500, in whole or part,at any time in the 24 months following the date of the EGM which was held on 10July 2006, at a price per share of whichever is the lower of 1 1/2p andthe average closing bid price for an ordinary share of the Company on the AIMmarket for the three trading days preceding Corvus' demand to capitalise debt,subject always to the capitalisation price per share being no lower than parvalue. Board changes In June the Company announced a number of Board changes. Mark Shrosbree joinedthe board as the Company's managing director, Tim Moss as part time financedirector and Sam Glover as a non-executive director. Mark Shrosbree, age 47,has over 20 years' experience in the UK telecoms market. From 1986 to 1992 hewas sales director for a telecom dealership in both hardware and networkservices. From 1993 to 1998 he worked for Alcatel and was promoted to nationalsales manager. In 1999 he helped establish, as sales director, a nationalswitch-less reseller business which was sold in 2005. He is currently salesdirector of The Airtime Group Limited, a wholly owned subsidiary of the Company. Timothy Moss, age 43,qualified as a chartered accountant with Pannell KerrForster in 1990.He has held senior financial positions with a number ofcompanies in the utilities, communications and telecoms sectors, and iscurrently a director of The Airtime Group Limited and CVS Management Limited. Heis based in Geneva, Switzerland. Tim holds options over 125,000 ordinary sharesin the capital of the Company exercisable at a price of 31p per ordinary share. Sam Glover, aged 32, has over ten years of IT development experience. Thisranges from the development of equity and derivative market analysis andcharting tools to the project management of the IT relocation for Lloyds ofLondon underwriters on behalf of Facilities Solutions Limited. Sam has alsoacted as a consultant on the technical infrastructure and computerisation forXchanging and Ins-Sure pre and post merger. Sam is currently a director of XLServices Limited. At the same time John Leat resigned from the board, I was appointed executivechairman and John Maundrell moved from executive to non-executive director. Loss of Capital The Group's results show that the Company's net assets are less than half of itscalled up share capital. In the circumstances, the directors of the Company areobliged by section 142 of the Companies Act 1985 to convene a general meetingfor the purpose of considering whether any, and if so what, steps should betaken to deal with the Company's current financial position. We propose toconsider this matter at the Company's annual general meeting, details of whichare set out below, although no resolution will be put to the AGM on this issue. Outlook We are confident that our strategy to drive down costs has been the right one,particularly in a sector that has continued to be very competitive. Thecorrectional work undertaken over the last year has now stemmed the losseswithin the business and stabilized the customer base where we believe we willstart to see rising order levels and enquiries on the back of an improvedservice range. In addition, we continue to investigate alternative approachesto recover shareholder value. Annual General Meeting A notice convening the Company's annual general meeting (AGM) will be sent toshareholders shortly. The AGM will be held at 2.00p.m on 24 October 2006 at theoffices of Fladgate Fielder, 25 North Row, London, W1K 6DJ. Mike HirschfieldChairman28 September 2006 CANISP PLC Consolidated Profit and loss Account For the year ended 31 March 2006 Note 2006 2005 £'000 £'000 TurnoverContinuing operations 3,422 3,298Discontinued operations - 783 3,422 4,081 Cost of sales (2,388) (2,942) Gross profit 1,034 1,139 Administrative expenses (1,542) (2,024) Operating lossContinuing operations (508) (556)Discontinued operations - (329) (508) (885) Loss on sale of discontinued operations 185 (2,542)Net interest payable (146) (110) Loss on ordinary activities before taxation (469) (3,537) Taxation 2 - - Loss on ordinary activities after taxation and retained loss 4 (469) (3,537) Loss per ordinary share 3 (2.42p) (21.85p) There were no recognised gains or losses other than the loss for the financialyear. CANISP PLC Consolidated Balance Sheet As at 31 March 2006 Note 2006 2005 £'000 £'000 Fixed assetsIntangible assets 2,748 3,267Tangible assets - 19 2,748 3,286 Current assetsDebtors 489 1,348Cash at bank and in hand - 43 489 1,391 Creditors:Amounts falling due within one year (3,409) (3,624) Net current liabilities (2,920) (2,233) Total assets less current liabilities (172) 1,053 Creditors: Amounts falling due after more than one year - (1,051) (172) 2 Capital and reservesCalled up share capital 196 182Share premium 4,047 3,766Profit and loss account (4,415) (3,946)Equity shareholders' (deficit)/funds 4 (172) 2 CANISP PLC Consolidated Cash Flow Statement For the year ended 31 March 2006 Note 2006 2005 £'000 £'000 Net cash outflow from operating activities 5 (211) (246) Returns on investments and servicing of financeInterest received 1 8Interest paid (147) (108) Net cash outflow from returns on investments and service (146) (100)of finance Capital expenditure and financial investmentSale of tangible fixed assets 25 4 Acquisitions and disposalsPurchase of subsidiary undertakings - (60)Purchase of businesses - (2,912)Sale of customer base - 120Net cash outflow from acquisitions - (2,852) Net cash outflow before financing (332) (3,194) FinancingIssue of shares 295 1,972Share issue costs - (17)New long term loans - 1,250Repayment of long term loans (208) -Capital element of hire purchase contracts (58) (105) Net cash inflow from financing 29 3,100 Decrease in cash 6 (303) (94) CANISP PLC Notes to the preliminary announcement For the year ended 31 March 2006 1 BASIS OF PREPARATION The preliminary announcement has been prepared in accordance with applicableaccounting standards and under the historical cost convention The principal accounting polices of the group are set out in the group's 2006annual report and financial statements. The policies have remained unchangedfrom the previous annual report apart from, with the introduction of FinancialReporting Standard 25, there has been a change to the treatment of financialinstruments. The change in accounting policy has the impact of reclassifyingall bank borrowings as due within one year as a result of breaches in thecovenants attached to those borrowings. GOING CONCERN The Directors have prepared cash flow forecasts for the period ending 30September 2007. The Directors have also secured confirmation from CorvusCapital Inc. (Corvus), a significant shareholder in the Company, that inaccordance with the Corvus capitalisation agreement entered into on 15 June2006, it is their intention to capitalise the debt due to them rather than seekrepayment and, in addition, that a further working capital facility of up to£400,000 will be provided if required. The forecasts supported by the agreementand facility from Corvus, together with existing bank facilities, demonstratethat the Group has sufficient finance facilities available to allow it tocontinue in business for a period of at least twelve months from the date ofapproval of these financial statements. On this basis the accounts have beenprepared on a going concern basis. 2 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge for the year. Unrelieved tax losses of approximately£3.1 million (2005: £2.8 million) remain available to offset against futuretaxable trading profits. The unprovided deferred tax asset at 31 March 2005 is£955,000 (2004 : £840,000) which has not been provided on the grounds that it isuncertain when taxable profits will be generated by the Group to utilise thoselosses. The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: 2006 2005 £'000 £'000 Loss on ordinary activities before tax ' (469) (3,537)Loss on ordinary activities multiplied by standard rate (141) (1,061)of corporation tax in the UK of 30% Effect ofExpenses not deductible for tax purposes 30 585Depreciation in excess of capital allowances (4) 16Deferred tax asset not recognised 115 460Current tax charge for year - - 3 LOSS PER SHARE The calculation of the loss per share is based on the loss on ordinaryactivities after tax divided by the weighted average number of ordinary sharesin issue during the year, as set out below. 2006 2005 Weighted Weighted average average number of number of shares shares Loss per Loss per Loss share Loss share £'000 pence £'000 pence Basic loss per share (469) 19,392,478 (2.42) (3,537) 16,189,629 (21.85) The impact of the share options on the loss per share is anti-dilutive. 4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' (DEFICIT)/FUNDS 2006 2005 £'000 £'000 Loss for financial year (469) (3,537)Issue of ordinary share capital 295 1,955Net decrease in shareholders' funds (174) (1,582)Equity shareholders' funds brought forward 2 1,584Equity shareholders' (deficit)/funds carried forward (172) 2 5 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2006 2005 £'000 £'000 Operating loss (508) (885)Cashflows in respect of loss on disposal of discontinued operation - (145)Depreciation 4 55Amortisation of goodwill 519 388Decrease/(increase) in debtors 859 (826)(Decrease)/increase in creditors (1,075) 1,163(Profit)/loss on disposal of fixed asset (10) 4Net cash outflow from operating activities (211) (246) 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2006 2005 £'000 £'000 Decrease in cash for the year (303) (94)Cashflow from capital element of hire purchase contracts 58 105Change in net funds resulting from cashflows (245) 11Loans repaid/(received) 208 (1,250) (37) (1,239)Net debt brought forward (1,270) (31)Net debt carried forward (1,307) (1,270) 7 ANALYSIS OF CHANGES IN NET DEBT 1 April 31 March 2005 Cash flow 2006 £'000 £'000 £'000 Cash at bank 43 (43) -Bank overdraft - (260) (260) 43 (303) (260)Bank loan (1,250) 208 (1,042)Hire purchase contracts (63) 58 (5) (1,270) (37) (1,307) 8 POST BALANCE SHEET EVENTS On 15 June 2006 the Company placed 60,000,000 ordinary shares of 1p each at parto raise £600,000 before expenses which was to raise money for working capitaland also to make an early repayment, of £300,000, of the existing bank loan. Contemporaneously with completion of the Placing the Company capitalised£257,000 of the debt owed to Corvus Capital Inc, by the allotment and issue of25,750,000 ordinary shares at par. In addition the Company agreed with CorvusCapital Inc. that Corvus may capitalise the balance of its debt, which at thattime amounted to £527,500, in whole or in part, at any time in the two yearsfollowing the agreement at a price per share of whichever is the lower of1.5pence and the average closing bid price for the three trading days prior toissuing the demand to capitalise debt subject to the capitalisation price pershare being no lower than par value. 9 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 consolidated balance sheet at 31 March 2006 and the summarisedconsolidated profit and loss account, summarised consolidated cash flowstatement and associated notes for the year then ended have been extracted fromthe Group's 2006 statutory financial statements upon which the auditors opinionis unqualified and does not include any statement under Section 237 of theCompanies Act 1985., Those financial statements have not yet been delivered to the registrar ofcompanies This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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