Interim Results

Netcentric Systems PLC 29 June 2001 NETCENTRIC SYSTEMS PLC 29 JUNE 2001 NETCENTRIC SYSTEMS PLC ('Netcentric' or 'the Group') INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2001 Netcentric is a provider of web content management tools and information management solutions CHAIRMAN'S STATEMENT The Group today reports a loss before tax of £3,237,000 (2000: £929,000) for the period under review. The loss includes exceptional operating charges of £363,000 (2000: £nil) relating to property revaluations, losses on property disposals and non-operating charges of £70,000 (2000: £310,000), arising from the disposal of Manx Crawley Limited, a property company. The Group's operating loss arises from its continuing investment in the development of its principal web content management product, Lychee and the establishment of its UK & European Sales and Marketing infrastructure. The property disposal programme continues, and for the period under review, provided net cash proceeds of £61,397 for the web content management business with further disposals having been made since the period end. The majority of the property portfolio is now under offer and on completion of the property disposal programme, the Group estimates that net cash proceeds of £2,850,000 will be available to provide further working capital. BUSINESS REVIEW Netcentric continues to develop its position in the rapidly expanding Content Management System market, which Gartner Group believes will grow worldwide from US$400m in 2000 to US£2.5bn in 2002. Testimony to this, Netcentric has won recent UK contacts with Baring Private Equity Partners, Lloyds TSB and BT Cellnet. The Group has also formed strategic marketing alliances with Sun, IBM, Oracle and Dell and following recent exhibitions at CEBIT, Europe's largest technology show and Internet World in London, is in talks with a large number of prospective partners. PRODUCT UPDATES Netcentric recently announced two new editions of its flagship Lychee Web Content Management System. Lychee Professional EditionTM is aimed at small enterprises, providing all of the features required to effectively manage content for a small business, at a very competitive price. Lychee Enterprise EditionTM is a feature rich, fully scalable, enterprise-class content management system able to support a significant number of users and is aimed at large corporates and other organisations. It offers a wealth of powerful features whilst at the same time being very competitively priced. In order to deliver this technically advanced offering, the development time of Lychee Enterprise has been extended with its commercial release now planned for September 2001. STRENGTHENED MANAGEMENT In April, Netcentric strengthened its management team with the appointment of Phillip Campbell as European Sales Director. He is tasked with the development of the UK & European sales partnership programs. Additionally, a Solutions division was established to provide a centre of excellence for Content Management Implementations focused on Lychee and complementary technologies. This division provides a source of expert consultants, who advise customers and partners on best practice in implementing Lychee based information management solutions. OUTLOOK The accounts have been prepared on the going concern basis as explained in note 2 to the accounts. The validity of this is dependent on the ability of the company to raise sufficient working capital from the sale of investment properties, cash flows from operations and through the raising of additional funds by the end of September 2001 through a placing and open offer or by other appropriate means. During the six months, turnover in the web content management business reflect sales mainly through the Company's Solutions division, with typically characteristic lengthy sales cycles. As mentioned, the commercial release of Lychee Enterprise is planned for September 2001 and as a consequence it is appropriate to adopt a cautious approach to the prospects for the business for the remainder of the financial year. The Directors continue to receive encouraging feedback from the market and with sales from our newly established partnership programs expected to form a substantial proportion of future revenues, the Directors are confident of progress in the next financial year. Robert Williams Chairman 29 June 2001 Enquiries: Jane Garrett, CEO, Netcentric 01223 839800 Gerry Thompson, COO, Netcentric 01223 839800 Shane Dolan, Biddicks 020 7448 1000 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months to 31 March 2001 Unaudited Audited Period ended Period ended Year ended 30 31 March 2001 31 March 2000 September 2000 £'000 £'000 £'000 Turnover Continuing operations 466 407 865 Discontinued operations - 1,836 1,840 --------- --------- ------------- Total turnover 466 2,243 2,705 --------- --------- ------------- Operating loss Continuing operations (2,665) (354) (1,337) Discontinued operations - (62) 42 --------- --------- ------------- (2,665) (416) (1,295) Exceptional operating costs (363) - (1,657) --------- --------- ------------- Total operating loss (3,028) (416) (2,952) Loss on disposals of (70) - (661) subsidiaries (Loss)/Profit on disposal of - (310) 35 businesses --------- --------- ------------- Loss on ordinary activities (3,098) (726) (3,578) before interest Interest income 66 4 35 Interest payable and similar (205) (207) (617) charges --------- --------- ------------- Loss on ordinary activities (3,237) (929) (4,160) before taxation Taxation - (3) (25) --------- --------- ------------- Loss for the period (3,237) (932) (4,185) Dividend - - - --------- --------- ------------- Retained Loss for the period (3,237) (932) (4,185) --------- --------- ------------- Statement of total recognised gains and losses Loss for the financial period (3,237) (932) (4,185) Unrealised loss on (364) - - revaluation of investment property --------- --------- ------------- Total recognised losses (3,601) (932) (4,185) relating to the period --------- --------- ------------- loss per share - basic (1.27p) (0.98p) (3.25p) ========= ========= ============= - diluted (1.27p) (1.0p) (3.24p) ========= ========= ============= CONSOLIDATED BALANCE SHEETS For the six months ended 31 March 2001 Unaudited Audited As at 31 As at 31 As at 30 March 2001 March 2000 September 2000 £'000 £'000 £'000 Fixed assets Intangible assets 4,602 - 5,133 Tangible assets 4,470 10,015 8,102 Investments 150 541 - --------- --------- --------- 9,222 10,556 13,235 --------- --------- --------- Current assets Cash at bank 1,029 179 3,662 Debtors: amounts falling due 518 221 483 within one year Debtors: amounts falling due 150 - - after one year --------- --------- --------- 1,697 400 4,145 Creditors: amounts falling due 1,204 1,461 1,742 within one year --------- --------- --------- Net current assets/( liabilities) 493 (1,061) 2,403 --------- --------- --------- Total assets less current 9,715 9,495 15,638 liabilities Creditors: amounts falling due 1,626 3,943 3,947 after more than one year --------- --------- --------- 8,089 5,552 11,691 ========= ========= ========= Capital and reserves Called-up share capital 12,737 4,762 12,737 Reserves (4,648) 790 (1,046) --------- --------- --------- Equity shareholders' funds 8,089 5,552 11,691 ========= ========= ========= Netcentric Systems Plc Notes to Interim Accounts 1. The interim financial statements have been prepared on the basis of the accounting policies as set out in the Statutory Financial Statement for the year ended 30 September 2000. 2. The accounts have been prepared on the going concern basis and the validity of this is dependent on the ability of the company to raise sufficient funds to meet its working capital requirements. The directors have considered the adequacy of the working capital for the period ended 12 months from the date of approval of these financial statements and have concluded that it is appropriate for the financial statements to be prepared on the going concern basis provided that by the end of September 2001 sufficient working capital is raised from the sale of investment properties, cash flows from operations and through the raising of additional funds through a placing and open offer. If the group were unable to continue in operational existence, adjustments would have to be made to reduce the balance sheet value of assets to their realisable values and to provide for further liabilities, which may arise. 3. There are no recognised gains and losses for the period other than those included in the results for the period. 4. The exceptional charge for the period arises as a result of the loss on disposal of Manx Crawley Limited. Exceptional operating costs arise from group property revaluations, losses on disposal of individual properties and goodwill amortised. 5. Earnings per share have been calculated on the weighted number of ordinary shares in issue for the period of 254,743,956 (31 March 2000: 95,244,606, 30 September 2000: 128,686,702). 6. Copies of this report are being sent to all shareholders. Further copies are available from the Company's registered office in the Isle of Man and from Lower Court 1, Copley Hill Farm, Cambridge Road, Babraham, Cambridge, CB2 4AF. 7. Segmental analysis by class of business For the six months ending 31 March For the Year Ending 30 2001 September 2000 Profit/(loss) Profit/ before (loss) taxation Net Net assets before assets Turnover Turnover taxation £'000 £'000 £'000 £'000 £'000 £'000 Distribution - - - 1,840 42 - Investment properties 380 (799) 2,055 824 (1,415) 3,218 IT Solutions 86 (2,438) 6,034 41 (362) 8,473 Common costs - - - - (2,425) - -------- ------------- ------ -------- ---------- ------ 466 (3,237) 8,089 2,705 (4,160) 11,691 ======== ============= ====== ======== ========== ====== Independent review report to Netcentric Systems Plc Introduction We have been instructed, by the company to review the financial information set out above comprising the profit and loss account, balance sheet and related notes and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Fundamental uncertainty - going concern In carrying out our review, we have considered the adequacy of the disclosures made in the interim report concerning the basis of preparation. The interim financial information has been prepared on the going concern basis and the validity of this depends on the ability of Netcentric Systems plc and its subsidiaries ('the Group') to raise sufficient funds to meet its working capital requirements through the sale of its investment properties, cash flows from operations and through the raising of additional funds through a placing and open offer by the end of September 2001. The interim financial information does not include any adjustments that would result should the Group be unable to continue in operational existence. Details of the circumstances relating to this fundamental uncertainty are described in note 2. Our review report is not qualified in this respect. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 March 2001. PricewaterhouseCoopers LP Chartered Accountants Sixty Circular Road Douglas Isle of Man 29 June 2001

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