TSTR.L Regulatory News (TSTR)

14 Sep 2007 07:01

Canisp PLC14 September 2007 14 September 2007 Canisp plc ("Canisp" or "the Company") Audited Preliminary Results for the twelve months ended 31 March 2007 Chairman's Statement I present the Company's audited results for the year ended 31 March 2007. The trading environment remains very competitive and our core business has facedcontinued price pressures. Nevertheless, we have continued to build customerrelationships through our focus on improved administration and service. Weremain focused on product innovation and have recently launched a Voice OverInternet Protocol ("VOIP") offering which has initially been offered to alimited number of our customers and which we intend to offer to a wider customerbase in due course. Trading results At the half year stage, I reported that our determination to drive down our costbase had resulted in a very lean head office operation and I am pleased thatadministrative expenses (excluding goodwill amortisation) have been contained tojust over £750,000 which has enabled us to report a maintained trading profit(£19,000 against £11,000 for 2006) despite a reduction in turnover. During the year we undertook a critical review of our goodwill balance and weconcluded that our development of new products and changes in our customer basehas meant that assumptions which supported the historical goodwill are no longerreflected by the current business dynamic. Accordingly, the Board decided towrite-off a significant proportion of the recorded balance and has madeadditional provisions for impairment of £1,447,000 which, together with anannual amortisation charge of £451,000, has led to a total charge to the profitand loss account of £1,898,000 (2006: £519,000). After taking into account the above matters, in the period under review, theCompany recorded a loss before and after tax of £2,079,000 (2006: £469,000). Nodividend is proposed. Share capital During the year, the Company issued 60,000,000 new ordinary shares of 1p each atpar, to reduce the Company's indebtedness. In addition, £257,500 of the debtowed to Corvus Capital Inc. was capitalised by the allotment and issue of25,750,000 ordinary shares at par. Borrowings The Group's reliance on bank borrowings has been significantly reduced with thebalance owing on the term loan standing at £325,000 at the year-end (2006:£1,042,000) and the overdraft amounting to £160,000 (2006: £260,000). The Boardwould like to extend its thanks to Corvus Capital Inc for its continuedfinancial support of the Group. Board changes During the year, Mark Shrosbree and Tim Moss were appointed to the Board asChief Executive and Finance Director respectively. Both Mark and Tim have beendirectors of The Airtime Group Limited, Canisp's operating subsidiary, for somewhile. In addition, Sam Glover was appointed to the Board as a Non-executiveDirector and John Leat stepped down as Chairman and director of the Company. Ishould like to welcome Mark, Tim and Sam to the Board and to thank John for hiscontribution to the Company since its incorporation in 2003. Outlook The process to drive down costs has proved to be successful and has provided asolid base for the Group's operations and we will continue to maintain a verytight control of overheads. In the meantime, we believe that the workundertaken to improve the service range and administrative support will assistin the retention of customers, though churn remains an industry-wide factor.The Group will continue to develop new product offerings and will strive toexpand its VOIP base. Whilst we believe these to be the right ways to approachthe future, we have recognised in the past that this will be a slow and, attimes, difficult process and so we also remain open to strategic solutions tothe recovery of shareholder value. Annual General Meeting A notice convening the Company's annual general meeting (AGM) will be sent toshareholders shortly. The notice contains the standard AGM resolutions and atparagraph 5.2 an authority to waive the statutory pre-emption rights on theallotment of shares in order to capitalise indebtedness. The purpose of suchresolution is to allow the Board to improve the Company's balance sheet. Asimilar resolution was approved at last year's meeting but was not utilised.The AGM will be held at 2 pm on 9 October 2007 at the offices of FladgateFielder, 25 North Row, London W1K 6DJ. Mike HirschfieldChairman14 September 2007 CANISP PLCConsolidated Profit and Loss AccountFor the year ended 31 March 2007 2007 2006 Note Pre- goodwill Goodwill amortisation amortisation and and impairment impairment Total £'000 £'000 £'000 £'000 Turnover 2,805 - 2,805 3,422 Cost of sales (2,032) - (2,032) (2,388) Gross profit 773 - 773 1,034 Administrative expenses (754) - (754) (1,023)Amortisation of goodwill - (451) (451) (519)Impairment of goodwill - (1,447) (1,447) -Total administrative expenses (754) (1,898) (2,652) (1,542) Operating profit/(loss) 19 (1,898) (1,879) (508) Profit on sale of discontinued - 185operationsNet interest payable (200) (146) Loss on ordinary activities before (2,079) (469)taxation Taxation 2 - - Loss on ordinary activities after 4 (2,079) (469)taxation and retained loss Loss per ordinary share 3 (2.55p) (2.42p) All of the activities of the Group are classed as continuing. There were no recognised gains or losses other than the loss for the financialyear. CANISP PLCConsolidated Balance SheetAs at 31 March 2007 Note 2007 2006 £'000 £'000 Fixed assetsIntangible assets 850 2,748 Current assetsDebtors 316 489 Creditors:Amounts falling due within one year (2,460) (3,409) Net current liabilities (2,144) (2,920) Total assets less current liabilities (1,294) (172) Capital and reservesCalled up share capital 1,054 196Share premium 4,017 4,047Other reserves 129 -Profit and loss account (6,494) (4,415)Equity shareholders' deficit 4 (1,294) (172) CANISP PLCConsolidated Cash Flow StatementFor the year ended 31 March 2007 Note 2007 2006 £'000 £'000 Net cash outflow from operating activities 5 (205) (211) Returns on investments and servicing of financeInterest received 19 1Interest paid (90) (147) Net cash outflow from returns on investments and service of (71) (146)finance Capital expenditure and financial investmentSale of tangible fixed assets - 25 Net cash outflow before financing (276) (332) FinancingIssue of shares 600 295Share issue costs (30) -New loans 528 -Repayment of loans (717) (208)Capital element of hire purchase contracts (5) (58) Net cash inflow from financing 376 29 Increase/(decrease) in cash 6 100 (303) CANISP PLC Notes to the preliminary announcement For the year ended 31 March 2007 1 BASIS OF PREPARATION The preliminary announcement has been prepared under the historical costconvention and in accordance with applicable accounting standards. The principal accounting policies of the Group are set out in the Group's 2007annual report and financial statements. The policies have remained unchangedfrom the previous annual report. GOING CONCERN The Directors have prepared cash flow forecasts for the period ending 31 March2009. The Directors have also secured confirmation from Corvus Capital Inc.(Corvus), a significant shareholder in the Company, that they will not seekrepayment of the debt due to them within the next twelve months and, inaddition, that a further working capital facility of up to £500,000 will beprovided if required. The forecasts supported by the agreement and facilityfrom Corvus, together with existing bank facilities, demonstrate that the Grouphas sufficient finance facilities available to allow it to continue in businessfor a period of at least twelve months from the date of approval of thesefinancial statements. Accordingly, the accounts have been prepared on a goingconcern basis. 2 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge for the year. Unrelieved tax losses of approximately £5 million (2006: £3.1 million) remainavailable to offset against future taxable trading profits. The unprovideddeferred tax asset at 31 March 2007 is £1,493,000 (2006: £955,000) which has notbeen provided on the grounds that it is uncertain when taxable profits will begenerated by the Group to utilise those losses. The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: 2007 2006 £'000 £'000 Loss on ordinary activities before tax (2,079) (469)Loss on ordinary activities multiplied by standard rate (624) (141)of corporation tax in the UK of 30% Effect ofExpenses not deductible for tax purposes 124 30Income not assessable to tax (3) -Capital allowances in excess of depreciation (12) (4)Deferred tax asset not recognised 515 115Current 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. 2007 2006 Weighted Weighted average Loss average Loss per Loss number of per share Loss number of share £'000 shares pence £'000 shares pence Basic loss per share (2,079) 81,669,193 (2.55) (469) 19,392,478 (2.42) The impact of the share options on the loss per share is anti-dilutive. 4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' (DEFICIT)/FUNDS 2007 2006 £'000 £'000 Loss for financial period (2,079) (469)Issue of shares 828 295Conversion of loan 129 -Net decrease in shareholders' funds (1,122) (174) Equity shareholders' (deficit)/funds brought forward (172) 2Equity shareholders' deficit carried forward (1,294) (172) 5 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Group 2007 2006 £'000 £'000 Operating loss (1,879) (508)Depreciation - 4Amortisation of goodwill 451 519Impairment of goodwill 1,447 -Decrease in debtors 173 859Decrease in creditors (397) (1,075)Profit on disposal of fixed asset - (10)Net cash outflow from operating activities (205) (211) 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Group 2007 2006 £'000 £'000 Increase/(decrease) in cash for the period 100 (303)Cashflow from capital element of hire purchase contracts 5 58Change in net funds resulting from cashflows 105 (245)Loans repaid 189 208 294 (37)Net debt brought forward (1,307) (1,270)Net debt carried forward (1,013) (1,307) 7 ANALYSIS OF CHANGES IN NET debt 1 April Cash flow 31 March 2006 2007 £'000 £'000 £'000 Bank overdraft (260) 100 (160) (260) 100 (160)Bank loan (1,042) 717 (325)Convertible loan - (528) (528)Hire purchase contracts (5) 5 - (1,307) 294 (1,013) 8 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 2007 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 2007 statutory financial statements upon which the auditor's 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 Exchange