TIDMNASA
RNS Number : 4171T
Nasstar PLC
05 June 2009
Nasstar plc
Interim results for the six months ended 31 March 2009
Nasstar plc ("Nasstar" or "the Group"), which provides a cloud computing
service, announces its results for the six months ended 31 March 2009.
Key figures for the period
* Turnover GBP1.05m (2008: GBP1.01m)
* EBITDA positive of GBP3k (2008: EBITDA GBP100k)
* Increase in Hosted Exchange subscribers to 8,300 (2008: 7,000)
* Increase in Hosted Desktop subscribers now live to 886 (2008: 350) with over 800
additional subscribers now under contract for future delivery
* Partner programme established with partners signed up and delivering sales
Chairman's Statement
Results
I am pleased to report the results for the Group for the six months ended 31
March 2009. As stated in our Annual Report and Accounts at the end of last year
we considered the next step in the development of the business was taking our
Hosted Desktop service to the wider market through a partner sales programme.
Thus, during the period management focus has been on establishing this partner
sales programme which we believe will create a better business in the longer
term but which has had a negative impact on short term direct sales. We've now
signed up 10 partners to the partner programme and sales from these partners
have started to come through towards the end of the period. The partner
programme has involved development of our customer portal and service so that it
can be sold under a partner's own brand. We've had to create the programme from
scratch with technical and sales documentation to enable partners to be trained
in both selling and supporting the Hosted Desktop service. This has incurred
additional costs.
During the period we've also re-structured our customer service team with much
improved levels of customer satisfaction now being returned. We considered this
was important because having experienced strong growth over the last couple of
years we needed to ensure we were delivering the highest standards of service to
those customers.
Direct sales were weaker during the period than in the previous 6 month period.
We believe this was due to two reasons. Firstly, the current economic climate
has caused some potential customers to hold fire on making a decision to adopt
our service. Secondly, we have diverted some of our sales team to the
development of the partner programme.
In terms of costs, the results include recruitment costs for the re-structuring
of the customer services team and higher than expected costs of producing our
full year end results due to the need to comply with the IFRS accounting
standards.
The market
Nasstar's Hosted Desktop is a cloud computing service that delivers desktop
computing in the internet cloud. Cloud computing provides an alternative to
traditional on-premise software which is sold as a boxed product and installed
and run on 'local' computers. The hosted desktop market is set to continue to
grow with research by Gartner released in March 2009 predicting that the
worldwide market for hosted desktops will increase from 0.5 million units in
2009 to 49 million units by 2013 with global revenues increasing from an
estimated US$1.4bn in 2009 to $65bn by 2013. The market therefore is predicted
to grow at a very fast pace as traditional locally powered computers are
replaced by a cloud service.
Outlook
Sales in recent weeks have been encouraging and the Board is confident about the
growth prospects of the market and our product within that market. Although the
economic climate on the whole remains challenging the continued growth of
partner programme should increase the number of sales opportunities for Nasstar
Hosted Desktop. We have a small number of partners now signed up but in light of
the number of enquiries taking place we are optimistic that more partners will
soon be signing up, including some large companies with whom we have been in
discussion. During the recession some potential customers may prefer to sit out
and wait rather than adopt a new service but that does not dent our confidence
in the longer term prospects for the business because we believe in the market
opportunity and in our ability to expand sales though an increasing number of
partners.
Funding Raising and Working Capital Requirements
While the Group has made progress with the re-structuring of the customer
services team and establishment of the partner programme, the slower sales
growth during the period under review has meant that the Group is operating with
tight cash constraints and will continue to do so for the remainder of the
financial year and until the anticipated sales from the partner programme flow
through into new contracts.
Nasstar raised GBP175,000 (net of expenses) in March 2009, as well as drawing
down a further GBP75,000 in the form of an interest free loan from myself during
April 2009, all of which has been utilised for working capital. The Group has
also agreed an extension to its overdraft facility by GBP125,000 to GBP175,000.
However, in addition, Nasstar needs to raise a further sum of approximately
GBP70,000 in the immediate short-term to finance the ongoing working capital
requirements for the remainder of the financial year and, provided the currently
anticipated sales are forthcoming the Directors consider this will be sufficient
for the Group's working capital requirements for the foreseeable future.
Discussions in this regard have commenced and the Group will progress these in
the short-term, making a further announcement in due course. The directors of
Nasstar have provided in writing their support to the Group for this fund
raising in the event that third party finance is not forthcoming.
Lord Daresbury
Chairman
5 June 2009
About Nasstar plc
Nasstar plc, an AIM-quoted company, makes computing a simple internet
subscription service, enabling subscribers of its Hosted Desktop service to do
all of their computing in the internet cloud rather than on a local computer.
Nasstar's Hosted Desktop provides subscribers with access to their desktop,
files, applications and email over the internet, providing a real alternative to
traditional on-premise computing.
The company vision is that everyday computing is becoming a utility in the
workplace - just like mobile phones - and should therefore be a simple
subscription service. Nasstar's vision is to use the internet to deliver
everyday computing, removing the need for traditional on-premise IT.
Nasstar is fast establishing itself as a force for change within the IT
industry, and customers who have already adopted this service approach include
Stelios' easyGroup.
Nasstar was founded in 1998 by Charles Black. Nasstar plc was admitted to
trading on the London Stock Exchange Alternative Investment Market in December
2005 (AIM: NASA).
For further information please visit www.nasstar.com and for investor relations
content please visit www.nasstar.com/ir.
Nasstar plc
Consolidated income statement
for the six months ended 31 March 2009
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | Six months to | Six months to | Year to |
| | | 31 March 2009 | 31 March 2008 | 30 September |
| | | Unaudited | Unaudited | 2008 |
| | Notes | GBP000 | GBP000 | Audited |
| | | | | GBP000 |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Revenue | | 1,052 | 1,010 | 2,101 |
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Operating expenses before depreciation | | | | |
| and amortisation | | (1,033) | (899) | (1,832) |
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Depreciation and amortisation | | (195) | (135) | (322) |
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Operating expenses | | (1,228) | (1,034) | (2,154) |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Share-based payments | | (16) | (11) | (28) |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| EBITDA | | 3 | 100 | 241 |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Other operating income | | - | - | 113 |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | ________ | ________ | ________ |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Operating profit/(loss) | | (192) | | 32 |
| | | | (35) | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
| Finance expense | | (95) | (82) | (161) |
| | | ________ | ________ | ________ |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss before taxation | | (287) | (117) | (129) |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Taxation | | 3 | - | (3) |
| | | ________ | ________ | _______ |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss for the period attributable to equity | | (284) | (117) | (132) |
| shareholders | | ------ | ------ | ------ |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss per share: | | | | |
| Basic and diluted | 2 | (1.75)p | (0.81)p | (0.9)p |
| | | ------ | ------ | ------ |
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------------+--------+-----------------+-----------------+-----------------+
Nasstar plc
Consolidated balance sheet
as at 31 March 2009
+----------------------------------------+---+-------------------+-------------------+---------------------+
| | | 31 March 2009 | 31 March 2008 | 30 September |
| | | Unaudited | Unaudited | 2008 |
| | | GBP000 | GBP000 | Audited |
| | | | | GBP000 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Assets | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Non-current assets | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Goodwill | | 844 | 844 | 844 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Intangible assets | | 179 | 86 | 153 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Plant and equipment | | 467 | 445 | 421 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Deferred taxation | | 175 | 175 | 175 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| | | 1,665 | 1,550 | 1,593 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Current assets | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Trade and other receivables | | 536 | 393 | 533 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Cash and cash equivalents | | - | 4 | 65 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| | | 536 | 397 | 598 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Total assets | | 2,201 | 1,947 | 2,191 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Equity and liabilities | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Capital and reserves | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Share capital | | 169 | 145 | 161 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Share premium | | 1,669 | 1,031 | 1,472 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Merger Reserve | | 662 | 662 | 662 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Retained earnings | | (1,577) | (1,295) | (1,309) |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Total equity | | 923 | 543 | 986 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Non-current liabilities | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Interest-bearing loans and borrowings | | 126 | 133 | 110 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Current liabilities | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Interest-bearing loans and borrowings | | 186 | 138 | 195 |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Trade and other payables | | 966 | 1,133 | 900 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| | | 1,152 | | 1,095 |
| | | ------ | 1,271 | ------ |
| | | | ------ | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| Total equity and liabilities | | 2,201 | 1,947 | 2,191 |
| | | ------ | ------ | ------ |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
| | | | | |
+----------------------------------------+---+-------------------+-------------------+---------------------+
Nasstar plc
Consolidated cash flow statement
for the six months ended 31 March 2009
+-----------------------------------------------------------+----------------+----------------+----------------+
| | Six months to | Six months to | Year to |
| | 31 March 2009 | 31 March 2008 | 30 September |
| | Unaudited | Unaudited | 2008 |
| | GBP000 | GBP000 | Audited |
| | | | GBP000 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Cash flow from operating activities | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Operating profit/(loss) | (192) | (35) | 32 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Adjustments for: | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Depreciation and amortisation | 195 | 135 | 322 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Share-based payments | 16 | 11 | 28 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Decrease/(increase) in trade and other receivables | (3) | 96 | (219) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Increase in trade payables | 66 | 85 | 88 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Profit on sale of plant and equipment | - | - | (113) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Corporation tax received/(paid) | 3 | - | (3) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Net cash flow generated from operating activities | ------ | ------ | ------ |
| | 85 | 292 | 135 |
| | ------ | ------ | ------ |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Investing activities | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Payments for intangible assets | (78) | (81) | (206) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Payments for property, plant and equipment | (189) | (293) | (399) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Proceeds from the sale of property, plant and equipment | - | - | 115 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Net cash outflow from investing activities | ------ | ------ | ------ |
| | (267) | (374) | (490) |
| | ------ | ------ | ------ |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Financing activities | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Issue of ordinary share capital | 205 | - | 457 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Proceeds from lease-finance arrangements | 174 | 176 | 235 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Repayment of lease-finance arrangements | (173) | (77) | (119) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Interest paid | (95) | (82) | (161) |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Net cash inflow from management of | ------ | ------ | ------ |
| liquid resources and financing | 111 | 17 | 412 |
| | ------ | ------ | ------ |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Net increase/(decrease) in cash & cash equivalents | (71) | (65) | 57 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | | | |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Cash & cash equivalents at beginning of period | 65 | 8 | 8 |
+-----------------------------------------------------------+----------------+----------------+----------------+
| | ------ | ------ | ------ |
+-----------------------------------------------------------+----------------+----------------+----------------+
| Cash & cash equivalents at end of period | (6) | (57) | 65 |
| | ------ | ------ | ------ |
+-----------------------------------------------------------+----------------+----------------+----------------+
Nasstar plc
Consolidated statement of changes in equity
for the six months ended 31 March 2009
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| | Share | Share | Merger | Retained | Total |
| | capital | premium | reserve | deficit | equity |
| | GBP000 | GBP000 | GBP000 | GBP000 | |
| | | | | | GBP000 |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| | | | | | |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| At 1 October 2008 | 161 | 1,472 | 662 | (1,309) | 986 |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| | | | | | |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| Loss for the period | - | - | - | (284) | (284) |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| Shares issued in period | 8 | 197 | - | - | 205 |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| Share-based payment recognised in equity | - | - | - | 16 | 16 |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| | | | | | |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
| | ------ | ------ | ------ | ------ | ----- |
| At 31 March 2009 | 169 | 1,669 | 662 | (1,577) | 923 |
| | ------ | ------ | ------ | ------ | ----- |
+--------------------------------------------+-------------+-------------+-------------+-------------+-----------+
Notes to the Interim Report
1Accounting policies
Basis of preparation
The interim financial information for the six months ended 31 March 2009 has
been prepared on an historical cost basis and in accordance with the accounting
policies that will apply for the year ended 30 September 2009, which will follow
the International Financial Reporting Standards (IFRS) and the interpretations
as endorsed by the European Union.
The comparatives for full year ended 30 September 2008 are based on the latest
published audited accounts.
Basis of consolidation
The consolidated financial statements include the results of the Company and all
of its subsidiary undertakings. A subsidiary is an entity controlled, directly
or indirectly, by the Group. Control is the power to govern the financial and
operating policies of the entity so as to obtain benefits from its activities.
The financial statements of subsidiary undertakings are included in the
consolidated financial statements from the date that control commences until the
date that control ceases. The results of subsidiary undertakings have been
included from the date of acquisition using the merger method of accounting or
the purchase method of accounting as appropriate.
The consolidated financial statements present the results of the Company and its
subsidiaries ("the Group") as if they formed a single entity. Inter-company
transactions and balances between Group companies are therefore eliminated in
full.
Revenue
Revenue represents amounts receivable for services net of VAT and trade
discounts. Revenue from service contracts is accrued evenly over the period of
the contract except that set-up revenues are recognised over the length of the
set-up period on a percentage to completion basis.
Research and development
Research costs are expensed as incurred. Development expenditure on an
individual project is recognised as an intangible asset when the Group can
demonstrate the technical feasibility of completing the intangible asset so that
it will be available for use or sale, its intention to complete and its ability
to use or sell the asset, how the asset will generate future economic benefits,
the availability of resources to complete the asset and the ability to measure
reliably the expenditure during development.
Goodwill
The directors undertake an impairment review of goodwill at the end of each
annual reporting period.
Deferred consideration
The terms of an acquisition may provide that part of the total value of the
total of the purchase consideration, which may be payable at a future date,
depends on uncertain future events such as the future performance of the
acquired company. Where it is not possible to estimate amounts payable with any
degree of certainty, the amounts recognised in the financial statements are
those are reasonably expected to be paid as at the balance sheet date.
Property, Plant and equipment
Tangible fixed assets are stated at cost less depreciation. Depreciation is
provided at rates calculated to write off the cost less estimated residual value
of each asset over its expected useful life, as follows:
+-----------------------------------------------+---------------------------------+
| Computer equipment & software development | over three years on straight |
| | line basis |
+-----------------------------------------------+---------------------------------+
| Fixtures & fittings | 25% on reducing balance basis |
+-----------------------------------------------+---------------------------------+
| Office equipment | 25% on reducing balance basis |
+-----------------------------------------------+---------------------------------+
Leasing
Rentals payable under operating leases are charged against income on a straight
line basis over the lease term
Deferred taxation
Deferred tax is provided in full in respect of taxation deferred by timing
differences between the treatment of certain items for taxation and accounting
purposes. Recognition of the deferred tax asset is limited to the extent that
the company anticipates making sufficient taxable profits in the future to
absorb the reversal of the underlying timing differences. The deferred tax
balance has not been discounted.
Share-based payments
The group operates executive and employee share schemes. For all grants of share
options, the fair value as at the date of grant is calculated using an option
pricing model and the corresponding expense is recognised over the vesting
period. The expense is recognised as a staff cost and the associated credit
entry is made against equity.
Pension costs
The group operates a defined contribution pensions scheme on behalf of its
employees, the costs of which are charged to the income statement on an accruals
basis.
Financial instruments
Financial instruments are classified and accounted for, according to the
substance of the contractual arrangement, as financial assets, financial
liabilities or equity instruments. An equity instrument is any contract that
evidences a residual interest in the assets of the company after deducting all
of its liabilities.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand. Bank overdrafts are
included within current liabilities unless there is a right of offset with cash
balances.
Notes to the Interim Report
2 Loss per share
The basic earnings per share is calculated by dividing the profit or loss for
the financial period attributable to equity holders by the weighted average
number of shares in issue.
+--------------------------------------------+------------+------------+-------------+
| | Six months | Six months | Year to |
| | to | to | 30 |
| | 31 March | 31 March | September |
| | 2009 | 2008 | 2008 |
| | Unaudited | Unaudited | Audited |
| | | | |
+--------------------------------------------+------------+------------+-------------+
| Weighted average number of shares | 16,227,545 | 14,471,428 | 14,786,768 |
| | ------ | ------ | ------ |
+--------------------------------------------+------------+------------+-------------+
| | | | |
+--------------------------------------------+------------+------------+-------------+
| Loss for the period | (284) | (117) | (132) |
| | ------ | ------ | ------ |
+--------------------------------------------+------------+------------+-------------+
| | | | |
+--------------------------------------------+------------+------------+-------------+
| Basic and diluted loss per 1p ordinary | (1.75)p | (0.81)p | (0.9)p |
| share | ------ | ------ | ------ |
+--------------------------------------------+------------+------------+-------------+
Due to the losses incurred, there is no dilution effect from the issued share
options.
3This unaudited half-yearly report does not constitute accounts of the group
within the meaning of section 35 of the Companies Act 2006. Statutory accounts
for the year ended 30 September 2008, which were prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRIC interpretations
adopted for use in the European Union, have been filed with the Registrar of
Companies. The auditors report on those on those accounts was unqualified and
did not contain a statement under section 237 of the Companies Act 1985.
The accounting policies applied in these unaudited half-yearly financial
statements are consistent with those that the Group used in the Annual Report
for the year end 30 September 2008 and expects to apply in its annual financial
statements for the year ending 30 September 2009.
For further information:
+-------------------------------------------------+-------------------------------------------------+
| Nasstar | Tel: 020 7148 5000 |
+-------------------------------------------------+-------------------------------------------------+
| Charles Black | |
+-------------------------------------------------+-------------------------------------------------+
| Chief Executive | |
+-------------------------------------------------+-------------------------------------------------+
| | |
+-------------------------------------------------+-------------------------------------------------+
| Ambrian Partners Limited | Tel: 020 7634 4700 |
+-------------------------------------------------+-------------------------------------------------+
| Samantha Harrison | |
+-------------------------------------------------+-------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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