RNS Number:0828J
Envesta PLC
24 March 2003
Strictly embargoed until: 07:00, Monday 24 March 2003
ENVESTA PLC INTERIM RESULTS
Envesta plc ("Envesta" or the "Company"), the alternative telephony provider,
announces interim results for the six months ended 31 December 2002.
Highlights (for the six months ended 31 December 2002)
* Group turnover increased 284% to #5,837,862 (2001: #1,520,309)
* Group operating profit of #452,169 (2001: loss #8,627) before
goodwill amortisation of #340,412, generated by the acquisition of Seven
Telecom
* Average monthly revenues from Happy Talk and similar Premium Rate Service
products grew by 104%
* BT interconnect soon to be activated
* Agreeing access to entirely new calling card markets in Africa and Asia
* Implemented the infrastructure and calling card platforms to service
the German calling card market
Stephen Dean, Non-executive Chairman of Envesta, commented "The last six months
have been an important period for Envesta. We are delighted to report that
despite difficult markets for the telecommunications sector as a whole, the high
quality niche market in which we operate continues to offer exciting
opportunities for growth. Seven Telecom has continued to be cash generative and
profitable at an operational level while also expanding and diversifying its
product range.
"The Board remains committed to developing Envesta as a broad based alternative
telephony provider both through organic growth and acquisitions that satisfy our
strict criteria of being synergistic with Seven Telecom and cash generative.
Various discussions have been held with target companies during the period, some
of which are ongoing."
For further information please visit www.envestaplc.com or contact:
Kevin McGovern, Finance Director Rosie Brown/Melissa Hubbard
Envesta plc Tavistock Communications
Tel: 0870 767 7778 Tel: 020 7600 2288
e-mail: Kevin.mcgovern@envestaplc.com e-mail: rbrown@tavistock.co.uk
CHAIRMAN'S STATEMENT
The last six months have been an important period for Envesta. We are delighted
to report that despite difficult markets for the telecommunications sector as a
whole, the high quality niche market in which we operate continues to offer
exciting opportunities for growth. Seven Telecom has continued to be cash
generative and profitable at an operational level while also expanding and
diversifying its product range.
FINANCIAL HIGHLIGHTS
Six months ended 31 December 2002
6 months 6 months 6 months 12 months 12 months
ended ended ended ended ended
31 December 31 December 31 December 30 June 30 June
2002 2002 2001 2002 2002
Excluding Including Excluding Including
Goodwill Goodwill Goodwill Goodwill
(Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
# # # # #
GROUP
TURNOVER 5,837,862 5,837,862 1,520,309 4,911,652 4,911,652
GROSS
PROFIT 1,308,668 1,308,688 473,313 1,225,474 1,225,474
GROUP
OPERATING
PROFIT
(LOSS) 452,169 111,757 (8,627) 285,335 (1,278,552)
PROFIT
(LOSS) ON
ORDINARY
ACTIVITIES
BEFORE
TAXATION 409,807 69,395 174,633 429,900 (1,133,987)
Basic
earnings
per share
(Loss) 0.23p (0.05)p 0.17p 0.30p (1.14)p
Diluted
earnings
per share
(Loss) 0.20p (0.04)p 0.17p 0.30p (1.14)p
Group turnover has increased 284% when compared to the same period last year and
demonstrates the success of Seven Telecom's strategy of focussing on high
quality services in what is a price driven market at the lower end.
Envesta's option to acquire the remaining 25% of Seven Telecom was exercised in
July 2002. The final consideration of 20 million Ordinary Shares in Envesta was
based upon the annualised post tax trading profit of Seven Telecom for the 16
months to 31 December 2002.
Application has now been made for these new Ordinary Shares to be admitted to
AIM and it is expected that trading in the new Ordinary Shares will commence on
28 March 2003. The Board has considered the carrying value of the #742,716 of
goodwill generated by the acquisition and has decided to continue its prudent
policy of amortising this over one year. This has resulted in an amortisation
charge of #340,412 in the period with the balance to be written off in the
second half.
SEVEN TELECOM
The Directors of Seven Telecom continue to grow the business organically and
have worked hard to identify further niche gaps in the market. While still
concentrating on what it does best - providing the infrastructure and capability
to deliver cost effective, quality international telephone connections - they
have achieved diversification and expansion of its product range in the last six
months.
Happy Talk
Average monthly revenues from Happy Talk and similar affinity branded Premium
Rate Service products have grown by 104% during the six-month period and Seven
Telecom continues to sign up strategic affinity partners, including the newly
signed Notun Din, the oldest published Bengali newspaper.
British Telecom Interconnect
The British Telecom ("BT") interconnect should be activated in the next few
weeks, enabling Seven Telecom to enhance margins through direct connection to
BT's UK infrastructure. The agreement makes it cost-effective for Seven Telecom
to carry higher volumes of lower margin traffic and maximise the use of its
switches. It also gives Seven Telecom access to better BT rates giving it the
opportunity to act as a pure wholesaler, selling the minutes on to carriers who
do not have a BT interconnect.
New calling card markets
Seven Telecom is in the process of agreeing access to entirely new calling card
markets in Africa and Asia through third party providers. Targets will include
India, Sierra Leone, Tanzania and Uganda. Such markets were not previously
accessible as it was not possible to dial internationally from call boxes
operated by government owned telephone companies. As with Seven Telecom's other
products there is no capital outlay or risk. Distribution will be through
existing channels and new distribution agreements within these countries.
European Expansion
Seven Telecom has recently implemented the infrastructure and calling card
platforms to service the German calling card market. This will be achieved by
routing traffic through its UK infrastructure, avoiding the requirement for
capital expenditure outside the UK.
Seven Telecom is reviewing other suitable European markets.
PROSPECTS
The Board remains committed to developing Envesta as a broad based alternative
telephony provider both through organic growth and acquisitions that satisfy our
strict criteria of being synergistic with Seven Telecom and cash generative.
Seven Telecom has already demonstrated the viability of our business model,
concentrating on carrying high quality traffic, and various discussions have
been held with target companies during the period, some of which are ongoing.
Stephen Dean
Non-executive Chairman
24 March 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months ended 31 December 2002
6 months 6 months 6 months 12 months 12 months
ended ended ended ended ended
31 31 31 December 30 June 30 June
December December
2002 2002 2001 2002 2002
Excluding Including Excluding Including
Goodwill Goodwill Goodwill Goodwill
(Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
# # # # #
TURNOVER
Continuing
operations 5,837,862 5,837,862 1,296,464 4,687,807 4,687,807
Discontinued
activities - - 223,845 223,845 223,845
GROUP
TURNOVER 5,837,862 5,837,862 1,520,309 4,911,652 4,911,652
COST OF
SALES (4,529,194) (4,529,194) (1,046,996) (3,686,178) (3,686,178)
GROSS PROFIT 1,308,668 1,308,668 473,313 1,225,474 1,225,474
Administrative (856,499) (1,196,911) (481,940) (1,071,330) (2,635,217)
expenses
Other
operating
income - - - 131,191 131,191
GROUP
OPERATING
PROFIT
(LOSS) 452,169 111,757 (8,627) 285,335 (1,278,552)
- Continuing
operations 452,169 111,757 62,302 356,264 (1,207,623)
- Discontinued
operations - - (70,929) (70,929) (70,929)
452,169 111,757 (8,627) 285,335 (1,278,552)
Profit on
sale of
subsidiary
undertaking - - 191,276 191,276 191,276
Interest
payable (45,931) (45,931) (8,739) (47,459) (47,459)
Interest
receivable &
similar
income 3,569 3,569 723 748 748
PROFIT
(LOSS) ON
ORDINARY
ACTIVITIES
BEFORE
TAXATION 409,807 69,395 174,633 429,900 (1,133,987)
TAXATION (127,037) (127,037) (1,524) (95,514) (95,514)
PROFIT
(LOSS) ON
ORDINARY
ACTIVITIES
AFTER
TAXATION 282,770 (57,642) 173,109 334,386 (1,229,501)
Equity
minority
interest - - (3,083) (7,284) (7,284)
RETAINED
PROFIT /
(LOSS) FOR
THE
FINANCIAL
PERIOD 282,770 (57,642) 170,026 327,102 (1,236,785)
Dividends - - - - -
RETAINED
PROFIT
(LOSS) FOR
THE
PERIOD 282,770 (57,642) 170,026 327,102 (1,236,785)
Basic
earnings per
share (Loss) 0.23p (0.05)p 0.17p 0.30p (1.14)p
Diluted
earnings per
share (Loss) 0.20p (0.04)p 0.17p 0.30p (1.14)p
CONSOLIDATED BALANCE SHEET
As at 31 December 2002
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
FIXED ASSETS
Intangible fixed assets 402,311 791,432 -
Tangible fixed assets 944,203 402,789 658,267
1,346,514 1,194,221 658,267
CURRENT ASSETS
Investments 868,479 858,479 868,479
Stocks & work in progress - - -
Debtors 495,186 763,209 518,929
Cash at bank & in hand 488,428 145,822 172,215
1,852,093 1,767,510 1,559,623
CREDITORS: Amounts falling due (1,817,703) (636,805) (1,022,060)
within one year
NET CURRENT ASSETS 34,390 1,130,705 537,563
TOTAL ASSETS LESS CURRENT 1,380,904 2,324,926 1,195,830
LIABILITIES
CREDITORS: Amounts falling due
after more than one year - (1,000,000) (500,000)
Provisions for liabilities and
other charges (23,514) - (23,514)
Equity minority interest - (3,083) (7,284)
NET ASSETS 1,357,390 1,321,843 665,032
CAPITAL & RESERVES
Called up share capital -
equity 1,437,564 1,137,564 1,237,564
Called up share capital -
non-equity 2,500,000 2,500,000 2,500,000
Share premium account 10,856,140 9,656,140 10,306,140
Profit & loss account (13,436,314) (11,971,861) (13,378,672)
SHAREHOLDERS' FUNDS 1,357,390 1,321,843 665,032
ANALYSIS OF SHAREHOLDERS'
FUNDS
Equity (1,142,610) (1,178,157) (1,834,968)
Non-equity 2,500,000 2,500,000 2,500,000
1,357,390 1,321,843 665,032
CONSOLIDATED CASH FLOW
For the period ended 31 December 2002
Six months Six months 12 months
ended ended ended
31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
NET CASH INFLOW / (OUTFLOW)
FROM OPERATING ACTIVITIES 1,211,866 (465,336) (38,959)
RETURNS ON INVESTMENTS &
SERVICING OF FINANCE
Preference dividends paid - - -
Interest received 3,569 723 748
Interest paid (45,931) (8,739) (47,459)
NET CASH INFLOW / (OUTFLOW) FROM
RETURNS
ON INVESTMENTS & SERVICING OF
FINANCE (42,362) (8,016) (46,711)
TAXATION
UK Corporation Tax paid - - -
CAPITAL EXPENDITURE & FINANCIAL
INVESTMENT
Purchase of tangible fixed assets (403,291) (433,215) (754,298)
Purchase of investments - - -
Sale of tangible fixed assets - - -
NET CASH INFLOW FROM CAPITAL
EXPENDITURE
& FINANCIAL INVESTMENT (403,291) (433,215) (754,298)
ACQUISITIONS & DISPOSALS
Purchase of subsidiary
undertakings - (311,725) (313,887)
Cash acquired with subsidiary
undertakings - - -
Disposal of subsidiary undertaking - - -
Cash disposed with subsidiary
undertaking - 38,044 -
NET CASH INFLOW / (OUTFLOW) FROM
ACQUISITIONS & DISPOSALS - (273,681) (313,887)
EQUITY DIVIDENDS PAID - - -
NET CASH INFLOW / (OUTFLOW)
BEFORE FINANCING 766,213 (1,180,248) (1,153,855)
FINANCING
Proceeds from issue of shares - 474,452 533,500
Costs of share issues - - (59,048)
Loan finance raised 300,000 - 1,000,000
Loan finance repaid (750,000) 400,000 (600,000)
NET CASH INFLOW / (OUTFLOW) FROM (450,000) 874,452 874,452
FINANCING
INCREASE / (DECREASE) IN CASH 316,213 (305,796) (279,403)
NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of operating profit to net cash inflow / (outflow) from
operating activities
Six months Six months 12 months
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
Operating profit / (loss) 111,757 (8,627) (1,278,552)
Depreciation 117,355 37,001 96,031
Amortisation 340,412 20,293 1,563,887
Goodwill impairment - - -
Loss on sale of subsidiary - - -
Increase in investments - (48,000) -
Decrease / (increase) in stock - - -
Decrease / (increase) in debtors 23,743 (414,459) (2,467)
(Decrease) / increase creditors 618,599 (51,544) (417,858)
NET CASH INFLOW / (OUTFLOW)
FROM OPERATING ACTIVITIES 1,211,866 (465,336) (38,959)
(b) Reconciliation of net cash flow to movement in net debt
Six months Six months 12 months
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
Increase / (decrease) in cash
in year 316,213 (305,796) (279,403)
Loan finance raised (300,000) (400,000) (400,000)
Loan finance repaid 750,000 - -
Movement in net funds in the
period 766,213 (705,796) (679,403)
Opening net (debt) (827,785) (148,382) (148,382)
Closing net (debt) (61,572) (854,178) (827,785)
(c) Analysis of net cash and debt
At 31 June Cash Flow At 31 December
2002 2002
# # #
Net cash
Cash at bank 172,215 316,213 488,428
Bank overdrafts - - -
172,215 316,213 488,428
Debt due within one year (500,000) (50,000) (550,000)
Debt due after more than one
year (500,000) 500,000 -
Net (debt) (827,785) 766,213 (61,572)
NOTES TO THE INTERIM STATEMENT
1. The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2002 statutory accounts to 30
June 2002. The interim figures have not been audited. The interim
financial statement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985 (The "Act"). Comparative
financial information for the 12 months ended 30 June 2002 has been
extracted from the statutory accounts for the period which have been
delivered to the Registrar of Companies and upon which the auditors gave an
unqualified report, with no statement under Section 237(2) or (3) of the
Act.
2. The taxation charge for the 6 months has been calculated at an effective
rate of 31% (30 June 2002: 30%).
3. The calculation of basic earnings per share is based on the loss for the
six months of #57,642 (year ended 30 June 2002: loss: #1,229,501) and on a
weighted average number of ordinary shares of 1p each in issue during the
period of 123,756,436 (30 June 2002: 108,323,475).
The calculation of the fully diluted earnings per share is based on the
loss for the six month period and 132,117,092 (year ended 30 June 2002:
108,323,475) ordinary shares of 1p each being the weighted average number
of shares in issue during the period, after allowing for share options and
other contingent share issues.
No dilution is accounted for in respect of the conversion of the preference
shares as the result for the year is a loss and the conversion price is 7.5
pence per ordinary share.
4. The Directors have not declared an interim dividend.
5. The interim statement was approved by the board of Directors on 21 March
2003. Copies of this statement will be available to members of the public,
free of charge, from the Company's registered office, 51 Cambridge Place,
Cambridge, CB2 1RE.
INDEPENDENT REVIEW REPORT TO ENVESTA PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 December 2002 which comprises the Group Profit and Loss
Account, the Group Balance Sheet, the Group Cash Flow Statement and the related
notes. 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 for use in the United Kingdom. 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 United Kingdom 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.
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 December 2002.
Spokes & Company
Chartered Accountants
Hilden Park House
79 Tonbridge Road
Hildenborough
Kent TN11 9BH
24 March 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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