RNS Number:5892M
OverNet Data PLC
20 June 2003
OverNet Data plc ("OverNet Data" or "the Company")
20 June 2003
Preliminary Results for the year ended 31 December 2002
Chairman's Report
Progress
The year to 31 December 2002 has proved to be extremely difficult for the Group
and has ultimately necessitated a change in both strategy and Board composition.
The Company announced in July 2002 that negotiations with a third party
regarding the acquisition of a subsidiary providing wireless data solutions had
been terminated. The Company took action at that time to reduce its operating
costs and its actual and contingent liabilities to a minimum whilst maintaining
its existing operations. These decisions were taken against a background of
uncertain stock market conditions and the Company's belief that there was
limited investor appetite for technology companies, which were not already cash
generative. The Company continues to explore the best way of realising value
from its past technology investments.
The Company strengthened its financial position in September 2002 through the
establishment of a #500,000 equity line of credit, drawing down #11,000 by the
issue of shares prior to the end of the year. The Company has continued to
concentrate its efforts on minimising its costs and liabilities whilst also
seeking opportunities to maximise any potential shareholder value.
Results
Turnover for the year ended 31 December 2002 declined to #80,000 (2001:
#164,000) as the Company reduced staff numbers as part of the cost reduction
exercise. Administrative costs fell to #1,500,000 (2001: #2,429,000) as a
result, and Directors waived their remuneration for services during the second
half of 2002. As a result Loss after tax declined to #1,387,000 (2001:
#2,084,000) and loss per Share declined to 56.0p (2001 restated for share
capital reorganisation: 92.3p).
Cash resources declined to #32,000 (2001: #1,169,000) by the year end, although
the Company still retains the ability to draw upon the majority of the #500,000
equity line of credit facility mentioned above.
The accounts are prepared on a going concern basis in the anticipation that
further equity funds could be raised should this prove necessary and subject to
the relevant shareholder resolutions being passed. The company raised #52,000 in
cash from a share placing of 5.2 million shares on 13 March 2003.
Capital reorganisations
Shareholders approved a share reorganisation in July 2002 to reduce the nominal
value of the Company's ordinary shares to 5p per share, and this was followed by
a further reorganisation at the Extraordinary General Meeting ("EGM") on 16
January 2003 to further reduce the nominal value to 0.5p per share. These
actions were taken to improve the Company's financial flexibility to allow it
greater freedom to issue ordinary shares as appropriate.
Board changes
The Board noted in its circular to shareholders dated 24 December 2002 the
intent to change the Board of Directors and to issue shares for the benefit of
two new directors, Mr Knifton and Mr Weller, as part of a package of proposals
designed to assist the Company in making a significant acquisition in exchange
for an issue of the Company's shares (a "Reverse Takeover Transaction"). These
proposals were agreed at the EGM on 16 January 2003 and were implemented
immediately following the EGM.
As a consequence Mr Knifton and Mr Weller joined the Company's Board and Mr
Laurence and Mr Rees resigned from the Board on 16 January 2003. Professor Henry
Beker stepped down as Chairman and a Director of the Company on 31 December 2002
following a decision to move overseas.
Annual General Meeting ("AGM")
The Board is seeking authority from shareholders at the AGM on 18 July 2003 to
enable it to issue further shares on a non-pre-emptive basis equivalent to 30%
of the shares currently in issue and to increase the authorised share capital to
25 million ordinary shares in order to provide the Group with further financial
flexibility. The Board will also seek authority to issue share options to
certain Directors to subscribe for 2.5 million new ordinary shares exercisable
at a price of 5p per share, which is in excess of the current share price, in
consideration for their services to the Company. Further details are included in
the notice of AGM.
Outlook
As previously announced on 23 December 2002 the Company had received preliminary
indications of interest in a Reverse Takeover Transaction from a number of third
parties. No discussions are currently taking place. However the Board will
continue to concentrate its efforts in identifying and completing a transaction
which it believes to be in shareholders' best interests. The board will continue
to keep shareholders informed on progress.
Leo Knifton
Chairman
20 June 2003
Enquiries
For enquiries please contact Mr Leo Knifton on 07887 877877
Consolidated profit and loss account
for the year ended 31 December 2002
Note 2002 2001
#000 #000
Turnover 2 80 164
Administration expenses (1,500) (2,429)
------------- -------------
Operating loss (1,420) (2,265)
Other interest receivable and
similar income 5 15 70
------------- -------------
Loss on ordinary activities before
taxation (1,405) (2,195)
Taxation on loss on ordinary
activities 3 18 111
------------- -------------
Loss after taxation for the
financial period (1,387) (2,084)
Dividends on equity shares - -
------------- -------------
Loss for the year for group (1,387) (2,084)
============= =============
Loss per ordinary share - Basic
and diluted 4 (56.0p) (92.3p)
============= =============
A statement of total recognised gains and losses has not been included as part
of these financial statements as the Company made no gains or losses in the
period other than disclosed above in the profit and loss account.
A note on historical gains or losses has not been included as part of the
financial statements as the results as disclosed in the profit and loss account
are prepared on an unmodified historical cost basis.
The results stated above are derived from continuing operations.
Consolidated balance sheet
at 31 December 2002
Note 2002 2002 2001 2001
#000 #000 #000 #000
Fixed assets
Tangible assets - 224
Current assets
Debtors 34 209
Cash at bank and in hand 32 1,169
------------- -------------
66 1,378
Creditors: (46) (199)
amounts falling due
within one year
------------- -------------
Net current assets 20 1,179
------------- -------------
Total assets less 20 1,403
current liabilities
Creditors: 5 - (23)
amounts falling due
after more than one
year including
convertible debt
------------- -------------
Net assets 20 1,380
============= =============
Capital and
reserves
Called up 6 139 2,400
share capital
Share premium 7 3,423 3,425
account
Capital redemption 2,290 -
reserve
Merger Reserve 7 (844) (844)
Profit and loss 7 (4,988) (3,601)
account
------------- -------------
Equity shareholders' 20 1,380
funds
============= =============
Company balance sheet
At 31 December 2002
Note 2002 2002 2001 2001
#000 #000 #000 #000
Fixed assets
Investments 18 1,403
Current assets
Cash at bank and 11 -
in hand
--- ---
Creditors: amounts (9) -
falling due within one
year
------------- -------------
Net current 2 -
assets
------------- -------------
Total assets less 20 1,403
current liabilities
Creditors: amounts
falling due after
more than one year
including convertible
debt 5 - (23)
------------- -------------
Net assets 20 1,380
============= =============
Capital and reserves
Called up share 6 139 2,400
capital
Share premium 7 3,423 3,425
account
Capital redemption 2,290 -
reserve
Profit and loss 7 (5,832) (4,445)
account
------------- -------------
20 1,380
============= =============
Consolidated cash flow statement
for the year ended 31 December 2002
Year Year
Ended Ended
Note 2002 2001
#000 #000
Cash outflow from operating activities 8 (1,249) (2,181)
Returns on investments and servicing of 15 70
finance
Taxation 75 36
Capital expenditure 18 (96)
------------- -------------
Cash outflow before financing (1,141) (2,171)
Financing 4 1,118
------------- -------------
(Decrease)/increase in cash in the year 9 (1,137) 1,053
============= =============
Reconciliation of net cash flow
to movement in net funds
Decrease in cash in the year 9 (1,137) (1,053)
Loan repaid during the year 23 8
------------- -------------
Movement in net funds in the year (1,114) (1,045)
Net funds at the start of the year 1,146 2,191
------------- -------------
Net funds at the end of the year 32 1,146
============= =============
Reconciliation's of movements in shareholders' funds
for the year ended 31 December 2002
Group Group Company Company
2002 2001 2002 2001
#000 #000 #000 #000
Loss for the (1,387) (2,084) (1,385) (4,445)
financial year
New share capital 27 1,126 25 1,126
subscribed (net of
issue costs)
-------------- -------------- -------------- --------------
Net (reduction)/ (1,360) (958) (1,360) (3,319)
addition to
shareholders'
funds
Opening 1,380 2,338 1,380 4,699
shareholders'
funds
-------------- -------------- -------------- --------------
Closing 20 1,380 20 1,380
shareholders'
funds
============== ============== ============== ==============
Notes
1 Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Group's financial
statements. The Group has adopted FRS 19 "Deferred tax" in these financial
statements. The adoption of the new standard has not had a material impact on
the financial statements.
Basis of accounting
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost accounting rules.
Going concern
The financial statements have been prepared on the going concern basis, which
assumes that the Company will continue to operate for the foreseeable future,
which the directors believe to be appropriate for the following reasons. At the
date of approval of these financial statements, the company has relied for its
working capital on increases in funding from external investors. The Directors
of the Company are confident that additional funding is available from
investors, given that further funding of #52,000 has already been received in
the post year end period, as set out in note 22 to the financial statements.
Additionally an existing agreement between OverNet Data plc and Principal
Corporate Investor Limited ('PCIL') enables OverNet Data Plc to draw down from a
line of funding from PCIL. This funding is obtained, as and when required,
through the issue of shares to PCIL, up to a remaining value of #489,100 until
26 September 2004. The maximum quantity of shares committed to be subscribed for
at any one time by PCIL is up to 150% of the average daily traded amount over
the preceding 15 days at a purchase price which is 90% of the lowest traded
price over the preceding 15 days, although PCIL is permitted to subscribe for a
higher amount at its discretion and subject to other conditions relating to the
drawdown request.
Furthermore the Directors of OverNet Data Plc had received preliminary
indications of interest in a Reverse Takeover Transaction from a number of third
parties. No discussions are currently taking place.
The Directors of the company have prepared cash flow information for the period
ending 12 months from the date of the approval of these financial statements
which show that with the receipt of further funds from investors or available to
it from PCIL, it will be able to meet its liabilities as they fall due. Whilst
there can be no certainty over the availability of this further funding the
Directors are confident that sufficient funding for the foreseeable future will
be obtained.
On this basis the Directors believe that it remains appropriate to prepare the
financial statements on a going concern basis. The financial statements do not
include any adjustments that would result from this going concern basis of
preparation being inappropriate.
Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiary undertaking up to 31 December 2002. The financial
statements of this group have been prepared using merger accounting principles
in accordance with Financial Reporting Standard 6: Mergers and Acquisitions and
Schedule 4 (A) of the Companies Act 1985.
Under section 230(4) of the Companies Act 1985 the Company is exempt from the
requirement to present its own profit and loss account.
Turnover
Turnover represents the amounts chargeable to customers for services and
products provided (excluding value added tax).
Systems integration turnover is recognised on a percentage of completion basis
for fixed price contracts (except for contracts lasting less than 30 days where
turnover is recognised on a completion basis) and as services are delivered for
time and materials contracts. All losses on fixed price contracts are recognised
in the first period they are incurred or foreseen.
The Group derives turnover from wireless application service provision and
related activities, consultancy, maintenance, installation and training.
Turnover on these activities is recognised as services are delivered except that
up front fees are not recognised until a contract is signed, delivery has
occurred, the total sales price is fixed and determinable, collectibility is
probable, and there are no significant vendor obligations remaining. Payments
received in advance of revenue recognition are recorded as deferred income in
the balance sheet.
2 Turnover
The turnover was derived from the Group's principal activity and was undertaken
wholly in the UK.
3 Taxation
Analysis of charge in period
2002 2001
#000 #000
UK corporation tax
Current tax on income for the period (18) (75)
Adjustments in respect of prior periods - (36)
---------------- ----------------
Total current tax (18) (111)
---------------- ----------------
Tax on profit on ordinary activities (18) (111)
================ ================
Factors affecting the tax charge for the current period
The current tax charge for the period is higher (2001: higher) than the standard
rate of corporation tax in the UK ( 30%, 2001: 30%). The differences are
explained below.
2002 2001
#000 #000
Current tax reconciliation
Loss on ordinary activities before tax (1,403) (2,195)
---------------- ----------------
Current tax at 30% (2001 : 30%) (421) (658)
Effects of:
Expenses not deductible for tax purposes 1 1
Capital allowances for period in excess of 42 10
depreciation
Increase in tax losses 360 572
Adjustments to tax charge in respect of - (36)
previous periods
---------------- ----------------
Total current tax charge (see above) (18) (111)
================ ================
4 Loss per share
2002 2001
Pence Pence
Loss per ordinary share
-Basic and diluted (56.0) (92.3)
================ ================
Loss per ordinary share is based on the Group's loss for the financial year of
#1,387,000 (2001: #2,084,000)
The weighted average number of shares used in the calculation are - basic
2,478,716 (2001 restated for the share reorganisation: 2,257,910); diluted
2,478,716 (2001 restated for the share reorganisation: 2,257,910). The diluted
earnings per share has been presented on the same basis as the basic earnings
per share as all potential ordinary shares would be anti-dilutive.
5 Creditors: amounts falling due after one year
Group Company
2002 2001 2002 2001
#000 #000 #000 #000
Convertible loan note - 23 - -
============== ============== ============== ==============
The convertible loan was converted into shares during the year (see note 6). The
balance of the convertible loan was repaid in the year. There was no interest
payable on the convertible loan.
6 Called up share capital
2002 2001
#000 #000
Authorised
Equity: 20,000,000 shares of #0.20 each - 4,000
Equity: 4,000,000 shares, of #0.05 each 200 -
---------------- ----------------
Allotted, called up and fully paid
Equity: 12,031,002 ordinary shares of #0.20 - 2,400
each
Equity: 2,772,895 ordinary shares of #0.05 139 -
each
---------------- ----------------
On 13 May 2002, OverNet Data plc issued 23,750 ordinary shares of 20p at a price
of 33p per share following the conversion of 33 per cent of the convertible loan
note as referred to in note 5.
On 26 July 2002, the share capital of OverNet Data plc was reorganised into 5p
ordinary shares and 5 old 20p shares were consolidated into 1 new 5p share.
On 26 July 2002, OverNet Data plc issued 20 ordinary shares of 5p at par.
On 26 September 2002, OverNet Data plc issued 144,000 ordinary shares of 5p each
at a price of 6.25p per share.
On 5 November 2002, OverNet Data plc issued 144,000 ordinary shares of 5p each
at par.
On 19 November 2002, OverNet Data plc issued a further 74,000 ordinary shares at
par.
7 Share premium and reserves
Share Capital Merger Profit
premium redemption reserve and loss
account reserve account
Group #000 #000 #000 #000
At beginning 3,425 - (844) (3,601)
of year
Loss for the year - - - (1,387)
Premium on share (2) - - -
issues, less expenses
Redemption of - 2,290 - -
deferred shares
-------------- -------------- -------------- --------------
At end of year 3,423 2,290 (844) (4,988)
================ ================ ================ ================
8 Reconciliation of operating loss to operating cash flows
Year Year
Ended Ended
2002 2001
#000 #000
Operating loss (1,420) (2,265)
Depreciation, amortisation and impairment charges 151 107
Loss on disposal of fixed assets 55 -
Decrease in debtors 118 129
Decrease in creditors (153) (152)
-------------- ----------------
Net cash outflow from operating activities (1,249) (2,181)
============== ================
9 Analysis of net funds
At beginning Cash flow At end of
of year year
#000 #000 #000
Cash in hand and at bank 1,169 (1,137) 32
Debt due before one year (23) 23 -
------------- ------------ ------------
1,146 (1,114) 32
============= ============= ============
10 Proposed dividend
The Directors do not recommend the payment of a dividend (2001: #nil).
11 Post balance sheet events
On 16 January 2003 a share reorganisation took place whereby the 2,772,895
issued ordinary shares of 5p each were divided and converted into 2,772,895
ordinary shares of 0.5p each and 2,772,895 deferred shares of 4.5p each. All
deferred shares were then brought back immediately by the company and as a
result had no right to vote or to participate in dividends and were not admitted
to the Alternative Investment Market on the London Stock Exchange. The un-issued
1,227,105 ordinary shares of 5p each were sub-divided into 12,271,050 ordinary
shares of 0.5p each. At the same time a further 20 0.5p ordinary shares were
issued at 5p per share to facilitate the share reorganisation and the company
exercised a term of its agreement with Monument Capital (LC) Limited requiring
them to subscribe for 1,182,733 0.5p ordinary shares at 4.98971p per share
following payment of their fee of #59,000 as explained in the shareholder
circular dated 24 December 2002.
On 13 March 2003 5,200,000 0.5p ordinary shares were issued at 1p per share.
The foregoing financial information does not amount to full accounts within the
meanings of Section 240 of the Companies Act 1985. The financial information has
been extracted from the Company's Annual Report & Accounts for the 12 month
period ended 31 December 2002.
Copies of the Annual Report & Accounts are being posted to shareholders on or
about 23 June 2002 and will be available from the Company's registered office at
35A Barfield Road, West Mersea, CO5 8QX.
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