TSTR.L Regulatory News (TSTR)

14 Dec 2007 10:06

Canisp PLC14 December 2007 Canisp plc ("Canisp" or the "Group") Unaudited Interim Results for the six month period ended 30 September 2007 I present the Company's interim results for the period ended 30 September 2007. Trading results In the last annual accounts issued in mid September 2007, I reported on thecompetitiveness of the trading environment and on the price pressures faced byour core business. Our strategy remains to build customer relationships throughfocus on improved administration and service and we remain focused on productinnovation. During September, we launched a Voice Over Internet Protocol ("VOIP") offering which has initially been offered to a limited number of ourcustomers and early trials are progressing well. Based on the outcome of thesetrials, we intend to offer this product range to a wider customer base in duecourse, though it is anticipated that significant revenues will not be obtainedfrom this business until after the current financial year. We remain committed to maintaining a very lean head office operation andoverhead costs are in line with expectations. In the period under review, theCompany recorded a loss before and after tax of £197,000 (2006: £262,000). Nodividend is proposed. Borrowings The Group's reliance on bank borrowings has been significantly reduced with thebalance owing on the term loan standing at £117,000 at the period-end (2006:£533,000) and the overdraft amounting to £302,000 (2006: £114,000). The Boardwould like to extend its thanks to Corvus Capital Inc for its continuedfinancial support of the Group. Outlook The ability to drive down overheads further is limited but the success of thehistorical exercise has provided a solid base for the Group's operations and wecontinue to maintain a very tight control of costs. The work undertaken toimprove the service range and administrative support together with thedevelopment of new product offerings continues. Whilst we believe these to bethe right ways to approach the future, we have always recognised that this willbe a slow and, at times, difficult process and so we also remain open tostrategic solutions to the recovery of shareholder value. Mike HirschfieldChairman14 December 2007 CANISP PLCCONSOLIDATED INCOME STATEMENTFOR THE PERIOD ENDED 30 SEPTEMBER 2007 Note Unaudited six Unaudited six Unaudited months ended 30 months ended 30 year ended September 2007 September 2006 31 March 2007 £'000 £'000 £'000 Sales revenue 1,306 1,429 2,805 Cost of sales (974) (1,007) (2,032) Gross profit 332 422 773 Administrative expenses (409) (407) (754)Amortisation of intangibles (95) (225) (451)Impairment of intangibles and goodwill - - (1,447) Loss from operations (172) (210) (1,879) Finance costs (25) (52) (200) Loss for the period before taxation (197) (262) (2,079) Taxation expense - - - Loss for the period (197) (262) (2,079) Basic and diluted loss per ordinary share 5 (0.19)p (0.45)p (2.55)p CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE PERIOD ENDED 30 SEPTEMBER 2007 Profit and Share Share Other loss Total capital premium reserves account equity £'000 £'000 £'000 £'000 £'000 At 1 April 2005 182 3,766 - (3,946) 2Issue of share capital 14 281 - - 295Loss for the year - - - (469) (469)At 31 March 2006 196 4,047 - (4,415) (172) Issue of share capital 858 - - - 858Cost of issue of share capital - (30) - - (30)Loss for the year - - - (2,079) (2,079)On conversion of loan - - 129 - 129At 31 March 2007 1,054 4,017 129 (6,494) (1,294) Loss for the period - - - (197) (197) At 30 September 2007 1,054 4,017 129 (6,691) (1,491) CONSOLIDATED BALANCE SHEETAS AT 30 SEPTEMBER 2007 Unaudited Unaudited Unaudited 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000ASSETS Non-current assetsIntangible assets 755 2,523 850Property, plant and equipment 15 - - 770 2,523 850 Current assetsTrade and other receivables 6 315 378 316Total current assets 315 378 316 Total assets 1,085 2,901 1,166 EQUITY AND LIABILITIES Current liabilitiesTrade and other payables 7 2,048 2,507 1,932Financial liabilities at fair value through profit 8 528 - 528or lossTotal current liabilities and total liabilities 2,576 2,507 2,460 EquityShare capital 9 1,054 1,054 1,054Share premium 4,017 4,017 4,017Other reserves 129 - 129Profit and loss account (6,691) (4,677) (6,494)Total equity attributable to equity holders (1,491) 394 (1,294) Total equity and liabilities 1,085 2,901 1,166 CONSOLIDATED CASH FLOW STATEMENTFOR THE PERIOD 30 SEPTEMBER 2007 Unaudited six Unaudited six Unaudited months ended months ended year ended 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Cash flows from operating activitiesLoss before taxation (197) (262) (2,079)Amortisation of intangibles 95 225 451Impairment of intangibles and goodwill - - 1,447On conversion of loan - - 129Finance cost 25 59 219Interest income - (7) (19)Decrease in trade and other receivables 1 112 173Increase/(decrease) in trade and other payables 54 15 (397)Net cash (outflow)/inflow from operating activities (22) 142 (76) Cash flows from investing activitiesPurchase of property, plant and equipment (15) - -Finance cost (25) (59) (219)Interest income - 7 19Net cash used in investing activities (40) (52) (200) Cash flows from financing activitiesProceeds from issue of share capital - 600 600Share issue costs - (30) (30)New loans 128 - 528Repayment of loans (208) (509) (717)Capital element of hire purchase liabilities - (5) (5)Net cash (outflow)/inflow from financing activities (80) 570 376 Net change in cash and cash equivalents (142) 56 100 Cash and cash equivalents at beginning of period (160) (260) (260) Cash and cash equivalents at end of period (302) (114) (160) NOTES TO THE INTERIM REPORTFOR THE PERIOD ENDED 30 SEPTEMBER 2007 1 GENERAL INFORMATION The information for the period ended 30 September 2007 does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefigures for the year ended 31 March 2007 have been extracted from the 2006statutory financial statements prepared under UK GAAP and adjusted wherenecessary in order to comply with International Financial Reporting Standards asadapted by the EU (IFRS) as shown in note 3. The auditors' report on thoseaccounts was unqualified and did not contain a statement under section 237(2) ofthe Companies Act 1985. 2 ACCOUNTING POLICIES BASIS OF PREPARATION This interim financial report has been prepared under the historical costconvention and in accordance with International Accounting Standard 34 "InterimFinancial Reporting" and the requirements of International Financial ReportingStandard 1 "First Time Adoption of International Reporting Standards" relevantto interim reports. The transition to IFRS reporting has resulted in a number of changes in thereported financial statements, notes thereto and accounting policies compared tothe previous annual report. Note 3 provides further details on the transitionfrom UK GAAP to IFRS. The principal accounting policies of the Group are set out below. GOING CONCERN The Directors have prepared cash flow. The Directors secured confirmation fromCorvus Capital Inc. (Corvus), a significant shareholder in the Company, thatthey would not seek repayment of the debt due to them within twelve months and,in addition, 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 business. BASIS OF CONSOLIDATION The Group financial statements consolidate those of the Company and all of itssubsidiary undertakings drawn up to the balance sheet date. Subsidiaries areentities over which the Group has the power to control the financial andoperating policies so as to obtain benefits from their activities. The Groupobtains and exercises control through voting rights. Unrealised gains on transactions between the Company and its subsidiaries areeliminated. Unrealised losses are also eliminated unless the transactionprovides evidence of an impairment of the asset transferred. Amounts reportedin the financial statements of subsidiaries have been adjusted where necessaryto ensure consistency with the accounting policies adopted by the Group. Acquisitions of subsidiaries are dealt with by the purchase method. The purchasemethod involves the recognition at fair value of all identifiable assets andliabilities, including contingent liabilities of the subsidiary, at theacquisition date, regardless of whether or not they were recorded in thefinancial statements of the subsidiary prior to acquisition. On initialrecognition, the assets and liabilities of the subsidiary are included in theconsolidated balance sheet at their fair values, which are also used as thebases for subsequent measurement in accordance with the Group accountingpolicies. Goodwill is stated after separating out identifiable intangibleassets. Goodwill represents the excess of acquisition cost over the fair valueof the Group's share of the identifiable net assets of the acquired subsidiaryat the date of acquisition. REVENUE The Group follows the principles of IAS18, Revenue, in determining theappropriate revenue recognition policies. In principle, therefore revenue isrecognised to the extent that the Group has obtained the right to considerationthrough its performance. Revenue excluding VAT comprises revenue arising from calls made by customers andelapsed rental periods during the period. GOODWILL Goodwill arising on acquisition prior to 31 March 2004 Goodwill arising on acquisition of a subsidiary for which the agreement date isbefore 31 March 2004 represents the excess of the cost of acquisition over theGroup's interest in fair value of the identifiable assets and liabilities of therelevant subsidiary at the date of acquisition. Such goodwill is stated after any accumulated amortisation and impairment.Under the transitional provisions in IFRS 3 "Business Combinations", thegoodwill can only be amortised up to 31 March 2006 and the accumulatedamortisation and impairment as at 1 April 2006 has been eliminated with acorresponding decrease in the cost of respective goodwill and, since then, anycarrying amount of the goodwill is tested at each balance sheet date forimpairment as well as when there are indications of impairment. Goodwill arising on acquisition on or after 31 March 2004 Goodwill arising on acquisition of a subsidiary for which the agreement date ison or after 31 March 2004 represents the excess of the cost of acquisition overthe Group's interest in the fair value of the identifiable assets andliabilities and contingent liabilities of the acquired subsidiary at the date ofacquisition. Such goodwill is tested annually for impairment and carried atcost less accumulated impairment losses. Goodwill is allocated tocash-generating units for the purpose of impairment testing. On subsequent disposal of the subsidiary the attributable amount of goodwillcapitalised is included in the determination of the amount of gain or loss ondisposal. TAXATION Current income tax assets and/or liabilities comprise those obligations to, orclaims from, fiscal authorities relating to the current or prior reportingperiod, that are unpaid at the balance sheet date. They are calculated accordingto the tax rates and tax laws applicable to the fiscal periods to which theyrelate, based on the taxable result for the year. All changes to current taxassets or liabilities are recognised as a component of tax expense in the incomestatement. Deferred income taxes are calculated using the liability method on temporarydifferences. This involves the comparison of the carrying amounts of assets andliabilities in the consolidated financial statements with their respective taxbases. In addition, tax losses available to be carried forward as well as otherincome tax credits to the Group are assessed for recognition as deferred taxassets. Deferred tax liabilities are always provided for in full. Deferred tax assetsare recognised to the extent that it is probable that they will be able to beoffset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply totheir respective period of realisation, provided they are enacted orsubstantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a componentof tax expense in the income statement. Only changes in deferred tax assets orliabilities that relate to a change in value of assets or liabilities that ischarged directly to equity are charged or credited directly to equity. INTANGIBLE ASSETS Assets acquired as part of a business combination In accordance with IFRS 3 Business Combinations, an intangible asset acquired ina business combination is deemed to have a cost to the Group of its fair valueat the acquisition date. The fair value of the intangible asset reflects marketexpectations about the probability that the future economic benefits embodied inthe asset will flow to the Group. Where an intangible asset might be separable,but only together with a related tangible or intangible asset, the group ofassets is recognised as a single asset separately from goodwill where theindividual fair values of the assets in the group are not reliably measurable.Where the individual fair values of the complimentary assets are reliablymeasurable, the Group recognises them as a single asset provided the individualassets have a similar useful lives. Customer bases The costs of acquiring customer bases are capitalised and, subject to impairmentreviews, amortised over the estimated economic life of the customer basesconcerned. Amortisation is calculated so as to write off the cost of an assetless its estimated residual value on a straight line basis over the usefuleconomic life of the asset as follows: Customer bases 7 Years IMPAIRMENT, TESTING OF GOODWILL, OTHER INTANGIBLE ASSETS AND PROPERTY, PLANT ANDEQUIPMENT For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individually for impairment andsome are tested at cash-generating unit level. Goodwill is allocated to thosecash-generating units that are expected to benefit from synergies of the relatedbusiness combination and represent the lowest level within the Group at whichmanagement monitors the related cash flows. Goodwill, other individual assets or cash-generating units that includegoodwill, other intangible assets with an indefinite useful life, and thoseintangible assets not yet available for use are tested for impairment at leastannually. All other individual assets or cash-generating units are tested forimpairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's orcash-generating unit's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of fair value, reflecting market conditionsless costs to sell, and value in use based on an internal discounted cash flowevaluation. Impairment losses recognised for cash-generating units, to whichgoodwill has been allocated, are credited initially to the carrying amount ofgoodwill. Any remaining impairment loss is charged pro rata to the other assetsin the cash generating unit. With the exception of goodwill, all assets aresubsequently reassessed for indications that an impairment loss previouslyrecognised may no longer exist PROPERTY, PLANT AND EQUIPMENT Measurement bases Property, plant and equipment are stated at cost less accumulated depreciationand impairment losses. The cost of an asset comprises its purchase price andany directly attributable costs of bringing the asset to the working conditionand location for its intended use. Subsequent expenditure relating to property,plant and equipment is added to the carrying amount of the assets only when itis probable that future economic benefits associated with the item will flow tothe Group and the cost of the item can be measured reliably. All other costs,such as repairs and maintenance are charged to the income statement during theperiod in which they are incurred. When assets are sold, any gain or loss resulting from their disposal, being thedifference between the net disposal proceeds and the carrying amount of theassets, is included in the income statement. Depreciation Depreciation is calculated so as to write off the cost of property, plant andequipment, less its estimated residual value, which is reviewed annually, overits useful economic life on a straight line basis as follows: Plant and equipment - 4 years FINANCIAL ASSETS The Group's financial assets include trade and other receivables. All financial assets are recognised on their settlement date. All financialassets are initially recognised at fair value, plus transaction costs.Non-compounding interest and other cash flows resulting from holding financialassets are recognised in profit or loss when received, regardless of how therelated carrying amount of financial assets is measured. Trade and other receivables are provided against when objective evidence isreceived that the Group will not be able to collect all amounts due to it inaccordance with the original terms of the receivables. The amount of thewrite-down is determined as the difference between the asset's carrying amountand the present value of estimated future cash flows. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash at bank and in hand, bank depositsrepayable on demand and other short-term highly liquid investments with originalmaturities of three months or less. EQUITY Share capital is determined using the nominal value of shares that have beenissued. The share premium account represents premiums received on the initial issuing ofthe share capital. Any transaction costs associated with the issuing of sharesare deducted from share premium, net of any related income tax benefits. Profit and loss account includes all current and prior period results asdisclosed in the income statement. Other reserves include the cost of conversion of the convertible loans. FINANCIAL LIABILITIES The Group's financial liabilities include trade and other payables and financialliabilities at fair value through profit or loss.. Financial liabilities are recognised when the Group becomes a party to thecontractual agreements of the instrument. All interest related charges arerecognised as an expense in "finance cost" in the income statement. Trade payables are recognised initially at their nominal value and subsequentlymeasured at amortised cost less settlement payments. Dividend distributions to shareholders are included in 'other short termfinancial liabilities' when the dividends are approved by the shareholders'meeting. Financial liabilities at fair value through profit or loss include embeddedderivatives which have been separated from their host contracts and financialliabilities that are designated by the Group to be carried at fair value throughprofit or loss upon initial recognition. Where a contract contains one or more embedded derivatives, the entire hybridcontract may be designated as a financial liability at fair value through profitor loss, except where the embedded derivative does not significantly modify thecash flows or it is clear that separation of the embedded derivative isprohibited. Financial liabilities may be designated at initial recognition as at fair valuethrough profit or loss if the following criteria are met: • the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the liabilities or recognising gains or losses on them on a different basis; or • the liabilities are part of a group of financial liabilities which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management strategy; or • the financial liability contains an embedded derivative that would need to be separately recorded. Subsequent to initial recognition, the financial liabilities included in thiscategory are measured at fair value with changes in fair value recognised in theincome statement. Financial liabilities originally designated as financialliabilities at fair value through profit or loss may not subsequently bereclassified. OTHER PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Other provisions are recognised when present obligations will probably lead toan outflow of economic resources from the Group and they can be estimatedreliably. Timing or amount of the outflow may still be uncertain. A presentobligation arises from the presence of a legal or constructive commitment thathas resulted from past events, for example, legal disputes or onerous contracts. Provisions are measured at the estimated expenditure required to settle thepresent obligation, based on the most reliable evidence available at the balancesheet date, including the risks and uncertainties associated with the presentobligation. Any reimbursement expected to be received in the course ofsettlement of the present obligation is recognised, if virtually certain as aseparate asset, not exceeding the amount of the related provision. Where thereare a number of similar obligations, the likelihood that an outflow will berequired in settlement is determined by considering the class of obligations asa whole. In addition, long term provisions are discounted to their presentvalues, where time value of money is material. All provisions are reviewed at each balance sheet date and adjusted to reflectthe current best estimate. In those cases where the possible outflow of economic resource as a result ofpresent obligations is considered improbable or remote, or the amount to beprovided for cannot be measured reliably, no liability is recognised in thebalance sheet. Probable inflows of economic benefits to the Group that do not yet meet therecognition criteria of an asset are considered contingent assets. SEGMENTAL REPORTING A segment is a distinguishable component of the Group that is engaged either ina particular business (business segment) or conducting business in a particulargeographical area (geographical segment), which is subject to risks and rewardsthat are different from those of other segments. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resultingaccounting estimates will, by definition, seldom equal the related actualresults. The estimates and assumptions that have a significant risk of causinga material adjustment to the carrying amounts of assets and liabilities withinthe next accounting period are discussed below. Impairment of assets The Group conducts impairment reviews of assets when events or changes incircumstances indicate that their carrying amounts may not be recoverableannually, or in accordance with the relevant accounting standards. Animpairment loss is recognised when the carrying amount of an asset is lower thanthe greater of its net selling price or the value in use. In determining thevalue in use, management assesses the present value of the estimated future cashflows expected to arise from the continuing use of the asset and from itsdisposal at the end of its useful life. Estimates and judgments are applied indetermining these future cash flows and the discount rate. The carrying valueof customer bases has been considered by the directors in relation to their netselling price and they have formed the view no further impairment provision isrequired at 30 September 2007. Critical judgements in applying the Group's accounting policies The directors in applying the accounting policies, which are described above,consider that the most significant judgement they have had to make is the fairvalue of the convertible loan and whether any impairment provision is requiredagainst the customer bases. 3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS The transition from UK GAAP to IFRS has been made in accordance with IFRS 1,"First-time Adoption of International Financial Reporting Standards". TheGroup's interim report for the six months ended 30 September 2007 and thecomparatives presented for the periods ended 30 September 2006 and 31 March 2007comply with all presentation recognition and measurement requirements of IFRSapplicable for accounting periods commencing on or after 1 April 2007. The following reconciliations and explanatory notes thereto describe the effectsof the transition at 1 April 2006, 30 September 2006 and 31 March 2007 and onthe periods then ended. All explanations should be read in conjunction with theIFRS accounting policies of Canisp plc. There is no difference between theprofit and loss reported under UK GAAP for each period and the profit and lossas reported under IFRS. The following reclassifications have been made as a consequence of the adoptionof IFRS: • the goodwill arising on the acquisition of certain customer bases since 31 March 2004 has been redesignated as a separable intangible asset as 1 April 2006, the transition date. The net book value at that date of £2,338,000 has been transferred from goodwill to customer bases without adjustment as the goodwill was being amortised over the expected useful life of the customer bases. There has been no impact on the income statement for the year ended 31 March 2007 as there was no difference in the amortisation period and impairment under IFRS • the convertible loan of £528,000 at 31 March 2007 has been redesignated as a financial liability at fair value through profit or loss. The directors do not consider the fair value of this convertible loan to be significantly different to its cost at 31 March 2007. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theseinterim financial statements have been prepared on the basis of taking thefollowing exemption: business combinations prior to 31 March 2004 have not beenrestated to comply with IFRS 3 "Business Combinations". Goodwill arising fromthese business combinations has not been restated. 4 SEGMENTAL REPORTING (a) By business segment (Primary segment) As defined under International Accounting Standard 14 (IAS 14) the only materialbusiness segment the Group has is that of telecommunications. (b) By Geographical Segment (Secondary segment) Under the definitions contained in IAS 14 the only material geographic segmentthe Group operates in is the United Kingdom. 5 LOSS PER SHARE The calculation of the basic loss per share is based on the loss attributable toordinary shareholders divided by the weighted average number of shares in issueduring the period. Unaudited six Unaudited six Unaudited months ended months ended year ended 30 September 30 September 31 March 2007 2006 2007 Loss for the period (£'000) (197) (262) (2,079) Weighted average number of 1p ordinary shares 105,397,275 58,070,772 81,669,193 Loss per share - basic and diluted (0.19)p (0.45)p (2.55)p 6 TRADE AND OTHER RECEIVABLES Unaudited Unaudited Unaudited 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Trade receivables 284 354 308Prepayments and accrued income 31 24 8Trade and other receivables, net 315 378 316 Trade and other receivables are usually due within 30 - 60 days and do not bearany effective interest rate. The fair value of these short term financial assets is not individuallydetermined as the carrying amount is a reasonable approximation of fair value. 7 TRADE AND OTHER PAYABLES Unaudited Unaudited Unaudited 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 Bank overdraft 302 114 160Bank loan 117 533 325Trade and other payables 204 179 178Social security and other taxes 45 117 28Other creditors 988 1,074 854Accruals and deferred income 392 490 387Trade and other payables 2,048 2,507 1,932 The fair value of trade and other payables has not been disclosed as, due totheir short duration, management considers the carrying amounts recognised inthe balance sheet to be a reasonable approximation of their fair value. 8 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS The financial liability at fair value through profit or loss is a convertibleloan, which is convertible at the option of the holder into a variable number ofordinary shares in the Company. The option to convert may be exercised inrespect of all or part of this balance until 10 July 2008. No interest ispayable on this loan. The Directors have considered the fair value of thisconvertible loan and do not consider it to be significantly different from itsoriginal cost. 9 SHARE CAPITAL Unaudited Unaudited Unaudited 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000Authorised500,000,000 ordinary shares of 1p 5,000 5,000 5,000 Allotted, issued and fully paid105,397,275 (30 September 2006 and 31 March 2007: 1,054 1,054 1,054 105,397,275) ordinary shares of 1p This information is provided by RNS The company news service from the London Stock Exchange