RNS Number : 0568J
Network Technology PLC
27 November 2008
Announcement of Interim Results for the 6 months to 30 September 2008
27 November 2008
Chairman's Statement
I can report that turnover for the six months ended 30 September 2008 was slightly lower than expected at £0.9 million (2007: £1.1
million). This reflects further growth in sales of Access Control and FollowMe® product lines but a sharp decline in the older Token Ring
products and N-Lynx sales.
Despite achieving a further decrease in operating costs, the reduction in sales during the period has resulted in an operating loss of
£77,000 (2007: profit of £48,000).
The Group made a pre-tax loss of £85,000 for the six months ended 30 September 2008 compared to a profit of £21,000 in the same period
last year. The loss per share for the half year is 4.14p.
Against the background of a severe economic downturn in the last two months of the period, the Company has performed well. As outlined
in the Annual Report and Accounts, we have continued investing in our sales and support operations in the US and UK and we expected that the
increased cost base would result in only a small profit for the period which turned into a small loss. We have reviewed our models for the
next 18 months and expect to be able to report an overall profit for the second half of this financial year, in line with the seasonality of
our business sector consistently experienced each year over the last 10 years.
The Company's mix of sales is currently: 9% Networked Access Control System products; 81% FollowMe® Printing Systems; and 9% Token-Ring
and N-Lynx products with 1% legacy products.
Guidance
The Directors continue to consider a restructuring of the Company's shares to allow payment of a dividend at the earliest possible
time.
Our networked fax receivers that convert incoming fax to email and related fax convergence products have started to see further
increased sales. However, we believe that due to a corporate spending downturn, it is wise to adjust our expectations of sales from this
product line which are now likely to make a more significant contribution to sales in the next financial year.
We are re-aligning our product focus to the current economic situation and corporate spending patterns and believe that the full year is
likely to conclude with an overall profit.
Klaus Bollmann
Chairman
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements contained in this document has beenprepared in accordance with International Accounting
Standard 34 ('IAS 34'), 'Interim Financial Reporting' as adopted by the European Union;
(b) the Interim management report contained in this document includes a fair review of the information required by the Financial
Services Authority's Disclosure and Transparency Rules ('DTR') 4.2.7R (indication of important events during the first six months and
description of principal risks and uncertainties for the remaining six months of the year); and
(c) this document includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and
changes therein).
INCOME STATEMENTS
6 Months 6 Months 12 Months
to to to
30.9.08 30.9.07 31.3.08
£'000 £'000 £'000
Revenue 899 1,134 2,195
Operating costs (976) (1,086) (2,061)
Operating Profit/(Loss) (77) 48 134
Interest (4) (20) (29)
Profit/(Loss) before taxation (81) 28 105
Tax on loss on ordinary activities (4) (7) (50)
Profit/(Loss) after taxation (85) 21 55
Profit/(Loss) per Ordinary Share -4.14p 1.01p 2.7p
BALANCE SHEETS
30.9.08 30.9.07 31.3.08
£'000 £'000 £'000
Non Current Assets
Property, Plant & Equipment 242 262 223
Investments 40 28 40
Development Costs 983 658 794
Deferred Tax Asset 71 97 66
1,336 1,045 1,123
Current Assets
Inventories 975 916 898
Trade and Other Receivables 406 652 581
Cash and Cash Equivalents 50 41 35
1,431 1,609 1,514
2,767 2,654 2,637
Current Liabilities
Trade and Other Payables 1,443 1,206 1,222
Bank Overdrafts and Loans 96 197 159
1,539 1,403 1,381
Non Current Liabilities
Loans 560 609 547
Total Liabilities 2,099 2,012 1,928
Equity
Called Up Share Capital 4,112 4,112 4,112
Share Premium Account 8,028 8,028 8,028
Currency Translation Reserve (24) (89) (68)
Capital Redemption Reserve 12 12 12
Revaluation Reserve 12 0 12
Retained Loss (11,472) (11,421) (11,387)
Total Equity 668 642 709
Total Liabilities and Equity 2,767 2,654 2,637
CASH FLOW STATEMENTS
6 Months 6 Months 12 Months
to to to
30.9.08 30.9.07 31.3.08
£'000 £'000 £'000
Net Cash Inflow/(Outflow) from operating 193 53 330
activities
Investing Activities
Payments to Acquire Tangible Fixed Assets (38) (9) (11)
Payments to Acquire Intangible Fixed Assets (142) (69) (251)
Net Cash Inflow/(Outflow) from Investing (180) (78) (262)
Financing Activities
Repayment of Borrowings 0 (108) (37)
Increase/(Decrease) in Bank Overdrafts (32) (2) (14)
Proceeds from Borrowings 34 158 0
Net Cash Inflow/(Outflow) from Financing 2 48 (51)
Cash and Cash Equivalents at Beginning of 35 18 18
Period
Cash and Cash Equivalents at End of Period 50 41 35
STATEMENT OF CHANGES IN EQUITY
Foreign
Revaluation Share Share Other Currency Retained
Reserve Capital Premium Reserves Reserve Loss
1st April 2007 0 4,112 8,028 12 (54) (11,442)
Profit for the Period 21
Exchange Movement (35)
30th September 2007 0 4,112 8,028 12 (89) (11,421)
Profit for the Period 34
Exchange Movement 21
Revaluation 12
31st March 2008 12 4,112 8,028 12 (68) (11,387)
Loss for the Period (85)
Exchange Movement 44
30th September 2008 12 4,112 8,028 12 (24) (11,472)
NOTES TO THE INTERIM STATEMENT
1. Basis of Preparation
The interim financial statements have been prepared in accordance with the accounting policies as set out in the Group financial
statements for the 12 months ended 31 March 2008. The statements do not comprise full financial statement within the meaning of section 240
of the Companies Act 1985. The statements are unaudited and have not been independently reviewed.
The figures for the 12 months ended 31 March 2008 have been extracted from those financial statements.
2. Interim Dividend
The Directors continue to be unable to recommend the payment of a dividend for the 6 months ended 30 September 2008.
3. Loss per Share
Loss per share has been calculated on a loss after taxation of £85,000 (2007: profit £21,000) and 2,055,971 £2 ordinary shares (2007:
2,055,971 £2 ordinary shares).
4. Stock
The Directors have reviewed the Group's inventory and remain confident that it will all be sold for at least its book value. However, in
view of the current state of the market there must be a level of uncertainty surrounding the ability to realise certain items of inventory
at greater than or equal to book value.
5. Creditors' amounts due within one year
Included within creditors is the sum of £152,000 due to the executive directors, who have given loans to the company to finance the
increase in sales and marketing activities in the previous period.
6. Related Party Transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed. The following transactions to place in the period ended 30th September 2008 at arms length:
Woodgate Trust charged £19,800 in respect of rent and an amount of £59,551 was outstanding to Woodgate Trust at 30th September 2008.
Webpage-Marketing.Com Limited is considered to be a related party as it is controlled by close family of K. Bollmann and Mrs H.Bollmann. During the period, purchases of £145,610 were made from this company. At 30th September 2008 £863,646 was outstanding to
Webpage-Marketing.Com Limited. Webpage-Marketing.Com Limited owed the company £21,089 at the end of the period in respect of rates
recharges.
Woodgate Property Inc is considered to be a related party as it is controlled by K. Bollmann and Mrs H. Bollmann. Woodgate Property Inc
charged the group £20,713 in respect of rent during the period and at the end of the period £154,204 was owed by the group to Woodgate
Property Inc.
Woodgate FURBS is considered to be a related party as K. Bollmann and Mrs H. Bollmann are trustees. At the end of the period £244,000
was owed by the group to Woodgate FURBS.
The ultimate controlling party is K. Bollmann and Mrs H. Bollmann via their shareholdings and as trustees of The woodgate Trust which
also holds shares in the Company. At the end of the period £152,205 was owed by the group to K. Bollmann and Mrs H. Bollmann.
7. Segmental Information
For management purposes, the Group is currently organised into one business segment, which is computer products and services. Since this
is the only primary reporting segment no further information has been shown. The following table provides an analysis of the Group's revenue
by geographical market, irrespective of the origin of the goods and services:
6 Months to 6 Months to 12 Months to
30.9.08 30.9.07 31.3.08
£'000 £'000 £'000
Revenue by Geographical Market
United Kingdom 278 361 567
EC and other European Countries 240 306 582
United States of America 273 398 850
Japan and Asia Pacific 7 5 23
Rest of World 101 64 173
899 1,134 2,195
The following is an analysis of the carrying amount of segmental assets, and additions to property, plant and equipment and intangible
assets, analysed by the geographical area in which the assets are located:
Carrying amount of Segment Assets
United Kingdom 945 1,072 1,063
United States of America 1,760 1,510 1,503
Germany 62 72 71
2,767 2,654 2,637
Carrying amount of Segment Liabilities
United Kingdom 819 1,027 918
United States of America 1,262 971 985
Germany 18 14 25
2,099 2,012 1,928
Additions to Tangible and Intangible Assets
United Kingdom 30 5 57
United States of America 150 73 204
Germany 0 0 1
180 78 262
Depreciation and Amortisation
United Kingdom 17 17 37
United States of America 54 51 103
Germany 0 14 24
71 82 164
Results by Segment
United Kingdom 161 133 82
United States of America (248) (100) (12)
Germany 2 (12) (15)
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