Final Results

Canisp PLC 28 May 2004 28 May 2004 CANISP PLC PRELIMINARY RESULTS INTRODUCTION I am pleased to present the first set of figures since Canisp's incorporation on 12 August 2003. Canisp was admitted to the Alternative Investment Market (AIM) in October, and at that time it stated its objective to be to build, largely through acquisition, a group specialising in the provision of telecommunications services. On 18 December 2003, the Company announced the completion of its first acquisition, that of The Airtime Group Limited (TAG), which trades under the name World Telecom. TAG, which was incorporated in September 1999, owns a number of telecommunications assets as well as a telecommunications licence and fixed line and global calling card businesses. Earlier this year TAG achieved Service Provider status with BT Wholesale. RESULTS The reported results cover the period from the Company's incorporation on 12 August 2003 to its chosen accounting reference date of 31 March 2004. From incorporation to 18 December 2003 the Company had no trading activity, although certain costs were incurred relating to its establishment, preparation for admission to AIM and subsequent investigation of acquisition opportunities. From 18 December 2003 to 31 March 2004 the results of TAG are consolidated with those of the Company. For the period under review the Company recorded a loss on ordinary activities before taxation of £409,000 and a loss per share of 4.25p. No dividend is recommended. BUSINESS TAG was loss-making at the time of its acquisition and, as anticipated, remains so currently. There is additionally a central overhead to be absorbed. As a consequence, the limited cash resources of the Company are carefully managed. While TAG's overall trading performance to date has been broadly in line with budget, the balance of its business has changed. Global calling cards remains a core activity, with an expanded blue chip customer base and affinity partnerships with HSBC, AMEX, Diners Club and BTI Hogg Robinson. However, greater focus has been directed towards the SME fixed line sector. The establishment of Wholesale Access services now enables TAG to offer savings to customers on both line rental and call charges, effectively severing the link between customer and BT, and to act as a 'one-stop-shop' for all the customer's fixed line telephony. In conjunction with its existing family of calling card products, Wholesale Access allows TAG to offer imaginative solutions to its customers and to develop long term relationships with them. Alongside the pursuit of organic growth, the Company is actively seeking acquisitions in business areas complementary to that of TAG. In particular, opportunities exist to purchase the fixed line customer bases of other operators. Freed from the associated infrastructural overhead, these are potentially available on an attractive multiple of monthly billings and could therefore be expected to have an immediate beneficial impact on TAG's profitability and cash flow. A number of specific targets have been identified, and the Company is in advanced discussions with the vendors of certain of them. OUTLOOK Although expected to become cash positive during this calendar year, TAG's business has yet to achieve profitability and careful control of the Group's cash resources is required. Nevertheless, we remain on track and the developments described above give the Directors grounds for cautious optimism as to the year ahead. There is additionally every prospect of securing significantly increased business through acquisition. John Leat Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT Note Period ended 31.3.04 £'000 Turnover Acquisitions 371 Cost of sales (202) Gross profit 169 Other administrative expenses (561) Amortisation of goodwill (26) Administrative expenses (587) Operating loss pre amortisation of goodwill (392) Amortisation of goodwill (26) Operating loss Continuing operations (217) Acquisitions (201) (418) Net interest receivable 9 Loss on ordinary activities before taxation (409) Taxation 2 - Loss on ordinary activities after taxation and retained loss 4 (409) Loss per ordinary share - basic 3 (4.25)p There were no recognised gains or losses other than the loss for the financial period. CONSOLIDATED BALANCE SHEET Note 31.3.04 £'000 Fixed assets Intangible assets 2,304 Tangible assets 82 2,386 Current assets Debtors 367 Cash at bank and in hand 137 504 Creditors: Amounts falling due within one year (1,243) Net current liabilities (739) Total assets less current liabilities 1,647 Creditors: Amounts falling due after more than one year (63) 1,584 Capital and reserves Called up share capital 125 Share premium 1,868 Profit and loss account (409) Equity shareholders' funds 4 1,584 CONSOLIDATED CASH FLOW STATEMENT Note Period ended 31.3.04 £'000 Net cash outflow from operating activities 5 (515) Returns on investments and servicing of finance Interest received 10 Interest paid (1) Net cash outflow from returns on investments and service 9 of finance Acquisitions Purchase of subsidiary undertakings (1,336) Net cash acquired with subsidiary undertakings 25 Net cash outflow from acquisitions (1,311) Net cash outflow before financing (1,817) Financing Issue of shares 2,113 Share issue costs (120) Capital element of hire purchase contracts (39) Net cash inflow from financing 1,954 Increase in cash 6 137 NOTES TO THE PRELIMINARY ANNOUNCEMENT 1 BASIS OF PREPARATION The preliminary announcement has been prepared under the historical cost convention and in accordance with applicable accounting standards. The financial statements have been prepared on a going concern basis as the Directors have prepared cash flow forecasts which demonstrate that the Group has sufficient finance facilities available to allow it to continue in business for a period of twelve months from the date of approval of these financial statements. The principal accounting policies of the Group are set out in the Group's 2004 annual report. 2 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge for the period. Unrelieved tax losses of £1,346,422 remain available to offset against future taxable trading profits. The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows: Period ended 31.3.04 £'000 Loss on ordinary activities before tax (409) Loss on ordinary activities multiplied by standard rate of (123) corporation tax in the UK of 30% Effect of Expenses not deductible for tax purposes 2 Depreciation in excess of capital allowances 26 Deferred tax asset not recognised 95 Current tax charge for period - 3 LOSS PER SHARE The calculation of the basic loss per share is based on the loss on ordinary activities after tax of £409,000 divided by the weighted average number of ordinary shares in issue during the period of 9,633,624. The impact of the share options on the loss per share is anti-dilutive. 4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Period ended 31.3.04 £'000 Loss for financial period (409) Issue of ordinary share capital 1,993 Net increase in shareholders' funds 1,584 Equity shareholders' funds brought forward - Equity shareholders' funds carried forward 1,584 5 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Period ended 31.3.04 £'000 Operating loss (418) Depreciation 80 Amortisation of goodwill 26 Increase in debtors (2) Decrease in creditors (201) Net cash outflow from operating activities (515) 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Period ended 31.3.04 £'000 Increase in cash for the period 137 Cashflow from capital element of hire purchase contracts 39 Change in net funds resulting from cashflows 176 Hire purchase contracts acquired with subsidiary undertakings (207) (31) Net funds brought forward - Net debt carried forward (31) 7 ANALYSIS OF CHANGES IN NET DEBT 12 August Cash flow Non-cash 31 March items 2004 2003 £'000 £'000 £'000 £'000 Cash at bank and in hand - 137 - 137 Hire purchase contracts - 39 (207) (168) - 176 (207) (31) 8 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The consolidated balance sheet at 31 March 2004 and the consolidated profit and loss account, consolidated cash flow statement and associated notes for the period then ended have been extracted from the Group's 2004 statutory financial statements upon which the auditors opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange
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