7th Mar 2005 07:30
Net b2b2 PLC07 March 2005 NETB2B2 PLC INTERIM RESULTSFOR THE SIX MONTHS ENDED 31 DECEMBER 2004 Netb2b2 plc ("Netb2b2" or "the Company"), the AIM traded business aggregatorfocusing on the digital communications sector, announces interim results for thesix months ended 31 December 2004. Highlights for the six months ended 31 December 2004: •Turnover £2.96m (restated 2004: £2.69m) •Operating profit £4,000 (restated 2004: £13,000) •Loss before tax £5,000 (restated 2004: £4,000) •Three main subsidiaries all win new contracts •Successful integration of Esna Hosting into Blue Sky •Continued evaluation of acquisition opportunities Since the period end: •Successful capital re-organisation •Share price rebased Commenting on the results, Keith Young, Chairman of Netb2b2, said: "The Groupcontinues its positive outlook and development. Since the period end cScape haswon further contracts with blue chip clients, such as the Carbon Trust and, withthe contracts already in place, we expect profitability to follow the increasein turnover for the full year. In addition, Blue Sky, NetPen UK and ITM Graphicswill begin to exploit the opportunities open to them. "We are aggressively pursuing value enhancing acquisitions that have, or caneasily acquire, our core values. The continuing improvement in performance ofthe operating companies provides cash both for investment in their own futuregrowth but also to help fund such acquisitions." For further information, please visit www.netb2b2.com or contact: Keith Young / Geoffrey Griggs John West / Claire MellyNetb2b2 plc Tavistock CommunicationsTel: 020 7878 1007 Tel: 020 7920 3150 CHAIRMAN'S STATEMENT Your Company has continued to develop during the reported period and cScape, inparticular, has continued to win important contracts in both the public andprivate sectors. Since the end of the reported period, the Group has traded welland as announced at the AGM we are delighted to have attracted the services ofthree well known and successful businessmen, who will add clout to the Company'sadvisory committee, in terms of strategic direction, city contacts and marketinginitiatives for Group subsidiaries. The core focus has been the improvement of the operating performance in oursubsidiary companies, while developing new divisions such as NetPen UK, throughwhich we see the opportunity to leverage externally our relationship withHewlett Packard and internally the broad capabilities of the other subsidiaries,notably the print presentation experience of ITM, the hosting capability of BlueSky and the implementation experience of cScape. Going forward our focus willclearly be on growth and an important element of this strategy will beacquisitions, particularly now that we have undergone a capital re-organisation,resulting in the re-basing of our share price. The effect of this is to make theCompany's balance sheet more appropriate for a quoted company seeking to raiseits profile among the institutional investor audiences. Financial Results Summary The Group's overall financial performance for the period was satisfactory and issummarised below: Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited £000's As restated £000's £000's Turnover for Group 2,956 2,689 5,265 ------ ------ ------Operating profit 4 13 1 Net interest paid (9) (17) (24) ------ ------ ------Group loss for the period before tax (5) (4) (23) ====== ====== ====== Turnover increased by 10% when compared to the corresponding period last year.This was mainly due to the contribution made by ESNA Hosting, which we acquiredin March 2004 and has now been successfully integrated into Blue Sky. Operatingprofit decreased slightly due to the investment made in marketing and personnel,but with the current operating performance encouraging and those costs nowhaving been fully absorbed, we expect to see the benefit of the investment wemade coming through at the full year. The directors have not declared an interim dividend although the payment ofdividends will continue to be kept under review. Operational Review The operating performance of the business during the period was satisfactory andour three main subsidiary companies all won new accounts. Our focus will now beto increase turnover, but it is important that we balance this with continuingto protect our margins, which should result in increased operating profit. cScape Strategic Internet Services ("cScape") cScape, is one of the UK's leading Microsoft partner firms and a supplier ofInternet consultancy services, including e-commerce and web expertise. Aspreviously reported we have increased investment in cScape's marketing and salesfunctions. This paid off in terms of new contract wins during the period in boththe public and private sectors. Examples of the types of contracts won includeservices based on Microsoft Content Management Server to The National PatientSafety Agency and to South Eastern Trains, who appointed cScape to redevelop andredesign both their web and intranet sites. cScape also had notable contractwins with the Chartered Institute of Library and Information Professionals,Westlaw UK, the London Borough of Greenwich and the Corporation of London. InFebruary we announced (after the reported period) that cScape has been appointedto provide web services to the Carbon Trust. cScape is a Microsoft Gold Certificate Partner and now has a sales and marketinginfrastructure that will enable it to continue to grow its turnover. We expectthis to feed through to operating profit and contribute more significantly atthe full year end. Blue Sky Blue Sky, a key UK IBM business partner, is a leading provider of ApplicationHosting. ESNA Hosting has now been fully incorporated into Blue Sky and indeedESNA contributed the majority of the increase in turnover attributable to thehosting business. The company enjoyed success in winning new business, including contracts withOxford School of Coaching & Mentoring, Toyota Manufacturing and Aqualisa. ITM Graphics ("ITM") ITM, the Group's publishing services business has now evolved into an'integrated web content management service' and the second stage of developmentin NetpublishTM, based on industry standard software and support from SiliconGraphics, has been well received. During the period won a number of new clients,including a two year contract with Quantum Business Media (publishers of severaltitles including The Publican and Press Gazette). NetPen UK Limited ("NetPen UK") Since the creation of NetPen UK we have been establishing the necessaryinfrastructure to support customer implementations and the marketingrelationship with Hewlett Packard. Whilst the market in the UK is only justbeginning, we have seen interest already from several sectors and look forwardto reporting our first wins over the next 6 months. Current Trading and Outlook The Group continues its positive outlook and development. Since the period endcScape has won further contracts with blue chip clients, such as the CarbonTrust and, with the contracts already in place, we expect profitability tofollow the increase in turnover for the full year. In addition, Blue Sky, NetPenUK and ITM Graphics will begin to exploit the opportunities open to them. We are aggressively pursuing value enhancing acquisitions that have, or caneasily acquire, our core values. The continuing improvement in performance ofthe operating companies provides cash both for investment in their own futuregrowth but also to help fund such acquisitions. Overall we are pleased with a satisfactory performance at the interim stage. Keith Young 7 March 2005Chairman GROUP PROFIT AND LOSS ACCOUNTSix months ended 31 December 2004 Note Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited £000's As Restated £000's £000's TURNOVER 3 2,956 2,689 5,265Cost of sales (806) (807) (1,493) ------ ------ ------- GROSS PROFIT 2,150 1,882 3,772 ------- ------- ------- Administrative expenses (2,146) (1,869) (3,771) ------- ------- ------- OPERATING PROFIT 3 4 13 1 ------- ------- ------- Interest receivable and similarincome 2 4 -Interest payable and similar (11) (21) (24)charges ------- ------- -------LOSS ON ORDINARY ACTIVITIES BEFORETAXATION (5) (4) (23) Tax on loss on ordinary activities 5 - - - ------- ------- ------- LOSS FOR THE FINANCIAL PERIOD (5) (4) (23) ======= ======= ======= LOSS PER SHARE (PENCE) 6 (0.00p) (0.00p) (0.00p) STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESSix months ended 31 December 2004 Six months Six months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited £000's As Restated £000's £000's Loss for the financial period (5) (4) (23) ------- ------- -------Total recognised gains and lossesrelating to the period (5) (4) (23) Prior year adjustment - - (326) ------- ------- -------Total gains and losses recognised forperiod (5) (4) (349) ======= ======= ======= GROUP BALANCE SHEET31 December 2004 Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.04 Unaudited Unaudited Audited As restated £000's £000's £000's FIXED ASSETSIntangible assets 1,887 1,511 1,887Tangible assets 400 409 387 ------- ------- ------- 2,287 1,920 2,274CURRENT ASSETSStocks 79 122 79Debtors 1,337 1,086 1,105Cash at bank 181 69 478 ------- ------- ------- 1,597 1,277 1,662 CREDITORS: amounts falling due (2,187) (2,653) (2,228)within one year ------- ------- -------NET CURRENT LIABILITIES (590) (1,376) (566) TOTAL ASSETS LESS CURRENT LIABILITIES 1,697 544 1,708 CREDITORS: amounts falling due after morethan one year - - (6) ------- ------- -------NET ASSETS 1,697 544 1,702 ======= ======= =======CAPITAL AND RESERVESCalled up share capital 2,873 2,737 2,873Share premium 11,035 9,994 11,035Profit and loss account (12,211) (12,187) (12,206) ------- ------- -------EQUITY SHAREHOLDERS' FUNDS 1,697 544 1,702 ======= ======= ======= GROUP CASH FLOW STATEMENTSix months ended 31 December 2004 Note Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited £000's £000's £000's Net cash outflow from operatingactivities 7 (230) (189) (493) Returns on investments andservicing of finance 8 (9) (17) (24) Taxation - - - Capital expenditure 8 (83) (44) (103) Acquisitions - - (376) ------- ------- -------Net cash outflow before financing (322) (250) (996) Financing 8 (13) 343 1,515 ------- ------- -------Increase/(decrease) in cash in theperiod (335) 93 519 ======= ======= =======Reconciliation of net cash flow tomovement in net funds Increase/(decrease) in cash in theperiod 9 (335) 93 519 Decrease in debt and lease 9 13 17 22financing ------- ------- -------Movement in net funds in the 9 (322) 110 541period Net debt at start of period 9 296 (245) (245) ------- ------- -------Net funds/(debt) at end of period 9 (26) (135) 296 ======= ======= ======= NOTES TO THE ACCOUNTSSix months ended 31 December 2004 1. FINANCIAL INFORMATION The financial information is for the six months ended 31 December 2004 and isneither audited nor reviewed as defined by APB Bulletin 1999/4. The balancesheet and profit and loss account do not constitute statutory statements withinthe meaning of section 240 Companies Act 1985. The results for the year ended 30June 2004 have been extracted from the financial statements of the group onwhich an unqualified report from the auditors has been received and which havebeen filed with the registrar of Companies. 2. BASIS OF PREPARATION The interim financial information has been prepared on the basis of theaccounting policies adopted for the audited accounts for the year ended 30 June2004 under the historical cost convention and in accordance with applicableaccounting standards. 3. SEGMENTAL INFORMATION The Group operates in the UK and the whole of its turnover and profit relate tocontinuing activities and to the UK market. Six months Six months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited As Restated £000's £000's £000'sTurnover--------Internet services 1,522 1,511 2,505 Publishing and DigitalCommunication 1,081 1,169 2,273Services Specialist Hosting 348 - 447 Central Costs 5 9 40 ------- ------- -------Group 2,956 2,689 5,265 ======= ======= ======= Profit before interest and tax------------------------------Internet services 131 210 232 Publishing and DigitalCommunication 20 41 114Services Specialist Hosting 109 - 125 Central Costs (256) (238) (470) ------- ------- -------Group 4 13 1 ======= ======= ======= 4. 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 thethree goodwill elements have indefinite economic lives. The board has carriedout impairment reviews on these goodwill elements and have concluded that theircurrent recoverable amounts are in excess of their carrying values. 5. TAXATION No liability to UK Corporation tax arose on ordinary activities for the periodowing to trade losses brought forward from previous periods. 6. 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. Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited As Restated £000's £000's £000'sBasic earnings attributableto ordinary shareholders: (5) (4) (23) Weighted average number ofordinary shares 479,547,265 302,033,497 377,461,785 Loss per share: (0.00p) (0.00p) (0.00p)Ongoing activities 7. RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH OUTFLOW FROM OPERATINGACTIVITIES Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited As Restated £000's £000's £000's Operating profit 4 13 1Depreciation charges 68 115 196(Increase)/decrease in stocks - (38) 5Increase in debtors (232) (152) (171)Decrease in creditors (70) (127) (524) ------- ------- -------Net cash outflow fromoperating activities (230) (189) (493) ======= ======= ======= 8. ANALYSIS OF CASH FLOWS Six Months Six Months Year Ended Ended Ended 31.12.2004 31.12.2003 30.06.2004 Unaudited Unaudited Audited As Restated £000's £000's £000'sReturns on investments and servicingof financeInterest received 2 4 -Interest paid (10) (21) (17)Interest element of hire purchasepayments (1) - (7) ------- ------- -------Net cash outflow for returns oninvestments and servicing offinance (9) (17) (24) ======= ======= =======Capital expenditurePurchase of tangible fixed assets (83) (44) (103)Sale of tangible fixed assets - - - ------- ------- -------Net cash outflow for capitalexpenditure (83) (44) (103) ======= ======= =======AcquisitionsPurchase of goodwill - - (376) ------- ------- -------Net cash outflow for acquisitions - - (376) ======= ======= =======FinancingIssue of ordinary share capital - 360 1,537Capital element of hire purchasepayments (13) (17) (22) ------- ------- -------Net cash inflow/ (outflow) fromfinancing (13) 343 1,515 ======= ======= ======= 9. ANALYSIS OF CHANGES IN NET (DEBT)/ FUNDS At 1 July 2004 Cash flow At 31 December 2004Net cash: £000's £000's £000'sCash at bank and in hand 478 (297) 181Bank overdrafts (138) (38) (176) ------- ------- ------- 340 (335) 5 ------- ------- -------Debt:Hire purchase agreements (44) 13 (31) ------- ------- -------Total 296 (322) (26) ======= ======= ======= At 1 July 2003 Cash flow At 31 December 2003Net cash: £000's £000's £000'sCash at bank and in hand 98 (29) 69Bank overdrafts (277) 122 (155) ------- ------- ------- (179) 93 (86) ------- ------- -------Debt:Hire purchase agreements (66) 17 (49) ------- ------- -------Total (245) 110 (135) ======= ======= ======= At 31 December At 31 December At 1 July 2004 2003 2004 £000's £000's £000'sAnalysed in balance sheetCash at bank and in hand 181 69 478Bank overdrafts (176) (155) (138)Hire purchase payments duewithin 1 year (31) (49) (38)Hire purchase payments due after1 year - - (6) ------- ------- ------- (26) (135) 296 ======= ======= ======= 10. COPIES OF THE INTERIM REPORT Copies of the interim report are available from www.netb2b2.com or the companysecretary at Netb2b2 Plc, 20-26 Brunswick Place, London, N1 6DZ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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