TSTR.L Regulatory News (TSTR)

30 Sep 2005 16:41

Canisp PLC30 September 2005 30 SEPTEMBER 2005 CANISP PLC Preliminary Results for the year ended 31 March 2005 - Turnover of £4.1m (2004: £0.4m) - Loss on ordinary activities before taxation of £3.5m after charging exceptional loss of £2.5m (2004: £0.4m) - Loss per share of 21.85p after exceptional loss (2004: 4.25p). Commenting, John Leat, Chairman, said: "We will continue to pursue every possible avenue to restrict costs and increaserevenues so as to achieve profitability, and to expand both organically andthrough further acquisitions. While this is not expected to be easy, and thesector within which we operate remains a difficult and increasingly competitiveone, we are confident that we are approaching the task in the right way and willin due course achieve these objectives." Canisp PLC will today publish its Annual Report and Accounts to its web site andpost to shareholders.. Chairman's Statement Introduction I present the Group's results for the year ended 31 March 2005. The period since the Company's admission to AIM in October 2003 has seenconsiderable corporate activity and consequent change in the underlyingbusiness. I believe the reported results and prospects can only be properlyconsidered in the context of these various developments, which I thereforesummarise below. Background Shareholders will remember that the Group was created with the stated objectiveof building, largely through acquisition, a group specialising in the provisionof telecommunications services, and this remains the case. Our first acquisition, completed in December 2003, was The Airtime Group Limited(TAG). Trading under the name World Telecom, TAG owned a number oftelecommunications assets as well as a telecommunications licence and fixed lineand global calling card businesses, and in 2004 achieved Service Provider statuswith BT Wholesale. TAG was loss-making at the time of its acquisition and,despite a number of measures to remedy this, it remained so and the globalcalling card business in particular became a significant drain on the Group'scash resources. It was clear that additional remedial action would be requiredand in January of this year, TAG was able to complete the sale of the contractsand customer base relating to its global calling card business. During 2004, the Group resolved to pursue opportunities to purchase the SMEfixed line customer bases of certain other operators. In September 2004 weannounced the acquisition by TAG of the business of International TelecomBrokers (ITB), and this was followed in December by the acquisition of thebusinesses of two smaller operators based in Scotland, ElphinstoneCommunications and Sports Club Telecom. In each case the fixed line customerbase and non-geographic number services were acquired, to complement those ofTAG and enhance group revenues. We are therefore now engaged principally in theprovision of fixed line telephony services to the SME market, includingwholesale line rental. Results For the year ended 31 March 2005 the Group recorded a loss on ordinaryactivities before taxation of £3,537,000 (2004: £409,000) and a loss per shareof 21.85p (2004: 4.25p). In each case the comparative figures for 2004 are forthe period from incorporation on 12 August 2003 to 31 March 2004. No dividend is recommended. Outlook In retrospect the performance of TAG has proved to be disappointing, absorbingan undue amount of management time and financial cost. Although the business isnow at last approaching profitability, it remains burdened by significantnon-trading liabilities inherited from the past. Additionally, with the loss ofcertain contracts, the monthly billings derived from the three acquired fixedline businesses have been below our original expectation, such that Grouprevenues have yet to reach a level capable of sustaining net cash generation.All necessary provisions to reflect this position have been made in arriving atthe reported figures accompanying this report. We have conducted another stringent review of the central overhead and we willcontinue to pursue every possible avenue to restrict costs and increase revenuesso as to achieve profitability, and to expand both organically and throughfurther acquisitions. While this is not expected to be easy, and the sectorwithin which we operate remains a difficult and increasingly competitive one, weare confident that we are approaching the task in the right way and will in duecourse achieve these objectives. I would like to thank all of our staff, advisers and financial stakeholders fortheir continued support. John LeatChairman30 September 2005 Note Year ended Period ended 31.3.2005 31.3.2004 £'000 £'000 TurnoverContinuing operations 352 104Acquisitions 2,946 - 3,298 104Discontinued operations 783 267 4,081 371 Cost of sales (2,942) (202) Gross profit 1,139 169 Administrative expenses (2,024) (587) Operating lossContinuing operations (744) (273)Acquisitions 188 - (556) (273)Discontinued operations (329) (145) (885) (418)Loss on sale of discontinued operations 2 (2,542) -Net interest (payable) / receivable (110) 9 Loss on ordinary activities before taxation (3,537) (409) Taxation 3 - - Loss on ordinary activities after taxationand retained loss 5 (3,537) (409) Loss per ordinary share 4 (21.85p) (4.25p) There were no recognised gains or losses other than the loss for the financialyear. Note 2005 2004 £'000 £'000 Fixed assetsIntangible assets 3,267 2,304Tangible assets 19 82 3,286 2,386 Current assetsDebtors 1,348 367Cash at bank and in hand 43 137 1,391 504 Creditors:Amounts falling due within one year (3,624) (1,243) Net current liabilities (2,233) (739) Total assets less current liabilities 1,053 1,647 Creditors:Amounts falling due after more than one year (1,051) (63) 2 1,584 Capital and reservesCalled up share capital 182 125Share premium 3,766 1,868Profit and loss account (3,946) (409)Equity shareholders' funds 5 2 1,584 Note Year Period ended ended 31.3.2005 31.3.2004 £'000 £'000 Net cash outflow from operating activities 6 (246) (515) Returns on investments and servicing of financeInterest received 8 10Interest paid (108) (1) Net cash (outflow)/inflow from returns oninvestments and service of finance (100) 9 Capital expenditure and financial investmentsSales of tangible fixed assets 4 - Acquisitions and disposalsPurchase of subsidiary undertakings (60) (1,336)Purchase of businesses (2,912) -Sale of customer base 120 -Net cash acquired with subsidiary undertakings - 25Net cash outflow from acquisitions (2,852) (1,311) Net cash outflow before financing (3,194) (1,817) FinancingIssue of shares 1,972 2,113Share issue costs (17) (120)New long term loans 1,250 -Capital element of hire purchase contracts (105) (39) Net cash inflow from financing 3,100 1,954 (Decrease)/increase in cash 7 (94) 137 1 BASIS OF PREPARATION The preliminary announcement has been prepared in accordance with applicableaccounting standards and under the historical cost convention. The principal accounting policies of the Group have remained unchanged fromthose set out in the Group's 2004 annual report and financial statements. 2 LOSS ON SALE OF DISCONTINUED OPERATIONS Exceptional items of £2,542,000 relate to the loss on disposal of the Group'sGlobal Calling Card customer base, which was sold in January 2005. 3 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge for the period. Unrelieved tax losses of £2.8 million (2004: £1.3 million) remain available tooffset against future taxable trading profits. The unprovided deferred tax assetat 31 March 2005 is £840,000 (2004: £390,000). The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: Year Period ended ended 31.3.2005 31.3.2004 £'000 £'000 Loss on ordinary activities before tax (3,537) (409)Loss on ordinary activities multiplied bystandard rate of corporation tax in the UKof 30% (1,061) (123) Effect ofExpenses not deductible for tax purposes 585 2Depreciation in excess of capitalallowances 16 26Deferred tax asset not recognised 460 95Current tax charge for period - - 4 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. 2005 2004 Loss Weighted Loss Loss Weighted Loss per average number per average number share of shares share of shares £'000 pence £'000 pence Basic loss (3,537) 16,189,629 (21.85) (409) 9,633,624 (4.25)per share The impact of the share options on the loss per share is anti-dilutive. 5 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Year Period ended ended 31.3.2005 31.3.2004 £'000 £'000 Loss for financial period (3,537) (409)Issue of ordinary share capital 1,955 1,993Net (decrease) / increase in shareholders' funds (1,582) 1,584Equity shareholders' funds brought forward 1,584 -Equity shareholders' funds carried forward 2 1,584 6 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2005 2004 £'000 £'000 Operating loss (885) (418)Cashflows in respect of loss on disposal of discontinuedoperation (145) -Depreciation 55 80Amortisation of goodwill 388 26(Increase) in debtors (826) (2)Increase / (decrease) in creditors 1,163 (201)Loss on disposal of fixed asset 4 -Net cash outflow from operating activities (246) (515) 7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £'000 £'000 (Decrease) / increase in cash for the period (94) 137Cashflow from capital element of hire purchase contracts 105 39Change in net funds resulting from cashflows 11 176New long term loans (1,250) -Hire purchase contracts acquired with subsidiary undertakings - (207) (1,239) (31)Net debt brought forward (31) -Net debt carried forward (1,270) (31) 8 ANALYSIS OF CHANGES IN NET DEBT 1 April Cash flow Non-cash items 31 March 2005 2004 £'000 £'000 £'000 £'000 Cash at bank and inhand 137 (94) - 43Bank loan - (1,250) - (1,250)Hire purchase contracts (168) 105 - (63) (31) (1,239) - (1,270) 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 consolidated balance sheet at 31 March 2005 and the consolidated profit andloss account, cash flow statement and associated notes for the year then endedhave been extracted from the Group's 2005 statutory financial statements uponwhich the auditors opinion is unqualified and does not include any statementunder Section 237 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange