Friday 29 August 2003
NSB Retail Systems PLC
PRESS RELEASE
Interim Results Announcement
NSB Retail Systems PLC, a leading supplier of software solutions to the global
retail industry, today announces interim results for the six months ended 30
June 2003.
Financial Highlights:
* Operating profits from continuing operations up at �925k (2002 loss of �
822k).
* Revenues down in North America but up in Europe. Group turnover from
continuing operations declined �5.6m to �31.9m (half of the decrease was
weakening of the US dollar).
* Strong performance from the UK. Challenging market conditions in North
America but signs of recovery.
* Cash balances up from �4m (December 2002) to �5.6m.
* Strong position in the Store confirmed with sales to JC Penney and WH
Smith.
* All `connected retailer' products successfully introduced to the UK with at
least one sale of each product.
* UK hardware services business successfully sold.
Nikaila Beckett, CEO of NSB Group said:
"The Group is benefiting from the cost restructuring that was completed in the
first half of 2003. The Group has been restored to profitability and is cash
generative even in the current challenging market conditions. We have
maintained high levels of investment in R&D and have successfully introduced,
sold and implemented new market leading products.
The fundamentals of our Group remain strong with committed management and staff
and an outstanding list of clients."
For further information please contact:-
NSB Retail Systems PLC
Nikaila Beckett, CEO 0118 930 1510
Stuart Mitchell, Group Finance 0118 930 1522
Director
www.nsbgroup.com
2003 Interim CEO Statement
Economic conditions in our major markets were challenging during the first half
of 2003. Despite this, the Group was able to increase operating profit from
continuing businesses by �1.7m to �925k and cash balances were �1.6m higher
than year end at �5.6m.
Our products demonstrated continuing appeal to retailers within our target
markets and we were pleased to achieve our milestone of a successful
introduction of all North American Connected Retailer solutions� into the UK
market place. We now have at least one sale of each of the Connected Retailer
products in Europe. The final stage of this was achieved by the sale of our CR
Planning product to Poundstretcher. We are also encouraged by the many
opportunities to cross sell the products newly introduced into the UK
marketplace to existing NSB clients.
Results
Turnover from continuing businesses declined �5.6m to �31.9m. The weakening of
the US dollar contributed to half of the decrease, the other principal
contributory factor being lower North America licence sales. Despite this,
continuing businesses were able to report much improved operating profits at �
925k (2002 loss �822k). This higher margin was attributable to cost reduction
actions taken over the past twelve months and a strong performance from the
European business. Year on year costs of continuing operations (after
eliminating currency effects and the bought out costs of hardware and third
party software) have fallen �6.5m.
In mid-April the Group sold it's UK hardware services business which is shown
as discontinued in the profit and loss account. Turnover and operating profits
were �1.0m and �101k respectively in the period to disposal (2002 turnover �
2.1m and operating profit �255k for the six month period). The sale produced a
gain of �407k.
Goodwill which reflects the Group's four year amortisation policy and previous
impairment write downs was much reduced at �15.5m (2002 �42.9m). The tax charge
for the six months ended 30 June 2003 is �200k (June 2002: �nil) reflecting a
rate lower than the full Corporation tax rate of 30%. The tax charge benefits
from a favourable Canadian tax treatment for part of the acquisition cost of
STS and tax losses in certain geographies.
Adjusted basic earnings per share is 0.07p compared to a loss last year of
0.27p. The basic loss per share before adjusting for goodwill amortisation and
profit on disposal of businesses is 3.69p compared to a loss of 11.04p in June
2002.
Cash Flow and Receivables
There was a cash inflow from 2003 operating activities of �1.9m (June 2002:
inflow �0.3m) while restructuring costs provided in exceptional charges last
year took �2.2m. Overall cash, which benefited from receipts from the disposal
of the hardware business of �1.4m and tax refunds of �1m, at �5.6m was �1.6m
higher than last year end.
Trade receivables and accrued income stood at �20.5m (December 2002: �21.3m;
June 2002: �27.7m). Collection of trade debtors remains a focus area for the
Group and days sales outstanding (DSOs) continue to show improvement. DSOs at
30 June 2003 were 79 days for North America (December 2002: 84 days; June 2002:
82 days) and 54 days for Europe (December 2002: 44 days; June 2002: 78 days).
Operating Company Performance
North America
North American retail spend continued to be soft in the first half of 2003 and,
in common with competitors, we found the market challenging. In local currency
terms revenues were down 18% on last year, principally attributable to lower
recognisable licence revenues. The weakening of the US dollar added a further �
2.8m to the decline in turnover from �28.1m in 2002 to �20.5m. Operating
contribution was down only �4.6m from �10.7m to �6.1m, benefiting from cost
savings of �1.8m from recent restructuring actions and �1.7m from the impact of
the weaker US dollar on the cost base.
While licence order intake was lower than the comparable period last year at �
2.3m, there were a number of important wins including:
* Dick's Sporting Goods (with revenues approaching $1billion) has a growing
customer database that now represents a substantial proportion of their
sales. They wanted to be able to increase their knowledge of their
customers' shopping behaviour and to measure the impact of their customer
loyalty program, Scorecard, and have purchased Connected Retailer CRM and
Foundation.
* Build-A-Bear Workshop, 2002 NRF Innovative Retailer of the year, has chosen
Connected Retailer CRM Solution to help them better understand their
customer base and support their accelerated growth plans.
* An NSB Group client for 10 years, K&G, a US menswear chain, has purchased
Planning, another Connected Retailer Solution.
* Long-time client Laura's, one of Canada's leading women's apparel retailers
with 145 stores (under the banners Laura, Laura Plus, Laura Petites and
Melanie Lyne) has signed for Connected Retailer Store and CRM solutions. In
addition they are expanding their current investment in Sales Analytics
with the purchase of the Loss Prevention product.
* An early adopter of the Connected Retailer, Liz Claiborne has over 200
outlet stores and more than 200 specialty fashion stores located in
department stores in the US. In Europe they own the Dutch apparel maker
Mexx. Liz Claiborne now plans to create one repository of customer
information with Connected Retailer CRM.
* A new client, Fred's Inc. has more than 450 discount stores in 14
southeastern states with annual sales of US$1.1bn. Their purchase of
Connected Retailer Allocation will help them reduce store and warehouse
inventory levels, minimize markdowns, and better allocate soft and seasonal
merchandise lines.
* With over 65 stores located throughout the Midwest, new client MC Sports
has invested in Connected Retailer Allocation to improve the internal
distribution of merchandise.
Looking forward, our pipeline in North America remains strong. However, the
Boards of customers are increasingly focusing on return on investment when
buying new systems. Whilst this diligence is appropriate and is expected to
increase the appeal of NSB Connected Retailer Solutions, this is delaying
decision making and lengthening the sales cycle. Also, we believe that a number
of clients are waiting for the system we sold to JC Penney to go live. This was
the .Net based Connected Retailer Store 6.0 product which has created much
interest within the retail community. JC Penney is due to go live, on schedule,
in October of this year and this will encourage the buying decisions of others
looking at this product.
Our North American business is also being affected by the strengthening of the
Canadian dollar since most of the company's revenues are US dollar based
whereas the large proportion of costs are in Canadian dollars. Since April the
Canadian dollar has strengthened around 15% and although we had benefited from
our hedge strategy through the first half of the year, the stronger currency
will increase the cost base in the second half.
Europe
In Europe, sales from continuing businesses are up �2.0m (22%) to �11.3m. This
combined with cost savings from our 2002 restructurings of �3.3m has enabled us
to report an operating profit from continuing operations of �4.0m, an increase
of �5.0m when compared with 2002.
Order intake was strongly up at �4.1m (2002 �0.5m). Important contract wins
contributing to the order intake included:
* WH Smith, with 740 stores and an e-commerce business, piloted NSB's
queue-busting technology to reduce congestion during peak times at the
point of sale. Building on the two year relationship, WH Smith has now
invested in Connected Retailer Store and Sales Analytics for rollout to all
their UK stores.
* An enduring name on the UK high street, Woolworths has a store estate of
750 stores and an online business. Their purchase of Connected Retailer
Voucher Management will enable them to handle Gift Cards throughout their
entire business.
* A leading men's and ladies' fashion retailer, with revenues of
approximately �100m and trading from 240 stores, has selected Connected
Retailer Store.
* Poundstretcher, the UK value variety retailer, has 300 stores and turnover
of �240m. This new client contract marks the first UK sale of the Connected
Retailer Planning Solution.
We have noted an increased level of activity in the UK over the last six
months, driven in part by the requirement of retailers to be chip and PIN
compliant by the end of 2004. Notwithstanding, there is overcapacity in the UK
and pressure on margins, but we believe this business with its reduced cost
base and extended strong product portfolio is now well placed.
Customers
Our commitment to client satisfaction, which was the focus of much effort in
2002, is bearing fruit. The Global Client Care Division has held client focus
groups and is rapidly putting their recommendations into practice. We have also
extended the capabilities and efficiencies of our Web-based call tracking and
problem resolution system to the UK.
Using the theme "Reality Retailing" and against the background of uncertainty
caused by the war in Iraq and the spread of SARS to Canada, we held a notably
successful Client Conference during the month of May in Montreal. This
conference, which was the 18th annual gathering of our clients, offers a
popular forum for our clients to give invaluable input into our R&D process,
network with their peers, and learn about the latest trends in our industry. We
also convened the second Executive Client Advisory Board on the closing day of
the Conference. This forum acts as a meeting of the minds for our senior retail
client executives and ensures the NSB Group's strategic thinking stays on
target with both our clients' needs and technological advances in the industry.
Our first global Client Satisfaction Survey was recently completed. It measured
how well we are meeting our clients' needs and how we can improve our service.
Areas identified for action will be monitored, and the Survey will become an
annual benchmark of customer satisfaction.
Products
During the first half of 2003, we launched the new, easy-to-install Connected
Retailer� Merchandising 3.0 and Connected Retailer Store 6.0 solutions aimed at
the medium and smaller retailer, including our installed base. These solutions
encompass further important product developments based on our previously
announced Microsoft� .NET strategy.
These product advances proved immediately popular at the North American launch
to our clients during our annual conference in Montreal, particularly with
retailers looking to upgrade their current implementations of classic NSB Group
products. These important announcements are central to our stated commitment of
demonstrating to our existing clients the ROI benefits of moving to the latest
retail IT technologies whilst staying with NSB.
The preconfigured Connected Retailer Store 6.0 Solution is built on our
innovative Microsoft .NET POS product that was announced late 2002. It was this
.NET POS product that was sold to major US department store JC Penney for
eventual deployment across their 1000 department stores, one of the largest POS
populations in North America. The ability to preconfigure this product for
smaller retailers demonstrates the flexibility of our development processes.
Board Changes
Angus Monro stepped down as non-executive Chairman of the Board of Directors on
May 22 due to other external commitments. The Group will, however, continue to
benefit from Angus's extensive retail experience in his new role of
non-executive Vice Chairman. The long-serving Board member, Richard Abraham,
will now assume the position of non-executive Chairman.
As announced in July, Mark Quartermaine left the Board upon leaving his
executive position within the Group on August 11.
Outlook
We are seeing increased business activity in both North America and the UK. The
US based National Retail Federation forecasted in July an improving trend in
its retail sales outlook report. For example, apparel retailers saw growth in
June 2003, rising a solid 2.9 percent unadjusted for the year and 1.3 percent
seasonally adjusted month-to-month. Low interest rates and increasing consumer
confidence are assisting this trend.
However, the issue remains of converting, in a timely manner, the pipeline of
sales opportunities into signed recognisable revenue. Whilst the trend appears
to be improving, we have set relatively undemanding targets for new business
for the remainder of 2003 and whilst some risk remains on North American
licence sales, we generally have good visibility of revenues for the second
half of 2003.
The fundamentals of the Group remain strong. We have committed management, an
outstanding list of clients and market leading products that are providing a
good return on investment for our retail partners. The Group has been restored
to profitability and is cash generative even in the current challenging market
conditions.
Nikaila Beckett
CEO
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2003
Note Half year ended Half year ended Year ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Turnover
Continuing operations 31,890 37,458 69,250
Discontinued operations 11 1,017 2,066 4,109
---------- ----------- -----------
Total turnover 2 32,907 39,524 73,359
======== ======= =======
Operating profit/(loss)
before amortisation of
goodwill
Continuing operations 925 (822) (662)
Discontinued operations 11 101 255 279
---------- ----------- -----------
Total operating profit/ 3 1,026 (567) (383)
(loss) before
amortisation of goodwill
Exceptional costs - - (8,814)
Amortisation of goodwill (15,536) (42,866) (185,268)
---------- ----------- -----------
Operating (loss) (14,510) (43,433) (194,465)
Profit on disposal of 11 407 - -
business
---------- ----------- -----------
(Loss) on ordinary (14,103 (43,433) (194,465)
activities before
interest and taxation
Amounts written off - - (738)
investments
Interest (payable) (555) (516) (1,029)
---------- ----------- -----------
(Loss) on ordinary (14,658) (43,949) (196,232)
activities before
taxation
Tax on loss on ordinary 4 (200) - 784
activities
---------- ----------- -----------
(Loss) on ordinary (14,858) (43,949) (195,448)
activities after taxation
Dividends - paid and 5 - - -
proposed
----------- ----------- -----------
Retained (loss) for the (14,858) (43,949) (195,448)
period
======= ======= =======
Half year ended Half year ended Year ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
(Loss)/earnings per 6 Pence pence Pence
ordinary share
Basic (3.69) (11.04) (49.05)
Adjusted basic 0.07 (0.27) (0.16)
Diluted (3.68) (11.04) (49.05)
Adjusted diluted 0.07 (0.27) (0.16)
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2003
Note 30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Fixed assets:
Intangible assets 41,908 199,846 57,444
Tangible assets 3,956 5,147 4,832
Investments 7 252 990 252
--------- ----------- -----------
46,116 205,983 62,528
Current assets:
Stock 367 1,067 1,425
Debtors 8 24,447 32,188 26,925
Cash at bank and in hand 10 5,624 4,809 3,974
---------- ----------- -----------
30,438 38,064 32,324
Creditors: Amounts
falling due within one
year
Deferred income (18,936) (16,794) (16,875)
Other creditors (11,484) (15,327) (14,204)
Exchangeable convertible 10 (5,352) (6,040) -
preference shares (ECPS)
---------- ----------- -----------
Total creditors falling (35,772) (38,161) (31,079)
due within one year
---------- ----------- -----------
Net current (liabilities) (5,334) (97) 1,245
/assets
----------- ----------- -----------
Total assets less current 40,782 205,886 63,773
liabilities
Creditors:
Amounts falling due after (17,233) (16,698) (20,054)
more than one year
Provisions for (3,066) (156) (5,527)
liabilities and charges
-------------- ----------- -----------
Net assets 20,483 189,032 38,192
======== ======= =======
Capital and reserves:
Called up share capital 6,497 6,414 6,479
Share premium account 191,318 186,714 191,318
Exchangeable shares 9 131,033 135,680 131,033
Merger reserve 3,638 3,638 3,638
Capital reserve 1,400 - -
Warrant reserve 6,164 7,564 7,564
Profit and loss account (319,567) (150,978) (301,840)
------------ ----------- -----------
Equity shareholders' 20,483 189,032 38,192
funds
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2003
Note Half year Half year Year ended
ended ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Net cash inflow from operating 1,914 341 (2,158)
activities
Cash flow arising from 2002 (2,242) - 5,371
exceptional costs provision
--------- ----------- -----------
Net cash (outflow)/inflow from (328) 341 3,213
operating activities and
exceptional costs
Returns on investments and (295) (16) (402)
servicing of finance
Taxation 986 - (1,105)
Capital expenditure (93) (747) (2,201)
Purchase of own shares - (990) -
Disposal proceeds 1,362 - -
Equity dividends paid - - -
--------- ----------- -----------
Cash inflow/(outflow) before 1,632 (1,412) (495)
management of liquid resources
and financing
Financing
Repayment of ECPS - (3,556) (4,364)
Repayment of bank loans - (773) (1,739)
Issue of share capital 18 118 140
----------- ----------- -----------
(Decrease)/increase in cash in 1,650 (5,623) (6,458)
the period
====== ======= =======
Reconciliation of net cash flow
to movement in net funds
(Decrease)/increase in cash in 1,650 (5,623) (6,458)
the period
Cash outflow from decrease in - 773 6,103
debt and lease financing
Exchangeable convertible - 3,556 -
preference shares
Exchange movements (2,539) (148) 1,714
--------- ----------- -----------
Change in net debt resulting (889) (1,442) 1,359
from cash flows
Net (debt)/funds at beginning 10 (15,789) (16,182) (17,148)
of period
----------- ----------- -----------
Net (debt)/funds at end of 10 (16,678) (17,624) (15,789)
period
====== ======= =======
Reconciliation of operating loss to net cash flow from operating activities
Half year Half year Year ended
ended ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Operating (loss) (14,510) (43,433) (194,465)
Depreciation and amortisation charges 16,135 43,831 187,750
(Profit) on sale of fixed assets - - 54
(Increase)/decrease in stocks 244 (147) (505)
(Increase)/Decrease in debtors 175 6,264 11,527
Increase/(Decrease) in creditors (130) (6,174) (6,519)
---------- ----------- -----------
Net cash inflow/(outflow) from 1,914 341 (2,158)
operating activities
====== ======= =======
Reconciliation of movement in shareholders' funds
for the six months ended 30 June 2003
Half year ended Half year Year ended
ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Retained (loss) for the (14,858) (43,949) (195,448)
period
Exchange differences (2,869) 288 925
Issue of share capital 18 118 140
Capital reserve 1,400 - -
Warrant reserve (1,400) - -
----------- ----------- -----------
Net reduction in (17,709) (43,543) (194,383)
shareholders' funds
Opening shareholders' 38,192 232,575 232,575
funds
----------- ----------- -----------
Closing shareholders' 20,483 189,032 38,192
funds
====== ======= =======
Consolidated Statement of Total Recognised Gains and Losses
for the six months ended 30 June 2003
Half year Half year Year ended
ended ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Loss for the period (14,858) (43,949) (195,448)
Exchange differences (2,869) 288 925
---------- ----------- -----------
Total gains and losses for the period (17,727) (43,661) (194,523)
====== ======= =======
Note of Consolidated Historical Cost Profit and Losses
for the six months ended 30 June 2003
There are no differences as the financial statements have been prepared under
historical cost accounting rules.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1) Basis of Preparation
The interim financial information has been prepared in accordance with the
accounting policies set out in, and are consistent with, the Group's 2002
financial statements.
The interim financial information is unaudited and does not comprise statutory
accounts for the purposes of Section 240 of the Companies Act 1985. The
abridged information for the year to 31 December 2002 has been extracted from
the Group's statutory accounts for that period which have been filed with the
Registrar of Companies. The auditors' report on the statutory accounts of the
Group for that period was unqualified and did not contain a statement under
either Section 237(2) or Section 237(3) of the Companies Act 1985.
Copies of the Report and Financial Statements for 2002 are available from the
Company's registered office by applying to the Company Secretary at NSB House,
1015 Arlington Business Park, Theale, Reading, RG7 4SA.
2) Turnover
An analysis of turnover by activity is as follows:
Half year ended Half year ended Year ended
30 June 2003 30 June 2002 31 December 2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Software licences 6,965 11,480 19,797
Software services and 21,963 23,964 44,938
support
Hardware 2,962 2,014 4,515
----------- ----------- -----------
Total continuing operations 31,890 37,458 69,250
Discontinued 1,017 2,066 4,109
----------- ----------- -----------
32,907 39,524 73,359
======= ======= =======
3) Analysis of result by region
North North
America America Europe Europe Total Total
30 June 30 June 30 June 30 June 30 June 30 June
2003 2002 2003 2002 2003 2002
�000 �000 �000 �000 �000 �000
Turnover - 20,542 28,123 11,348 9,335 31,890 37,458
continuing
operations
- discontinued - - 1,017 2,066 1,017 2,066
operations
----------- ---------- ----------- ---------- ----------- ----------
Total Turnover 20,542 28,123 12,365 11,401 32,907 39,524
----------- ---------- ----------- ---------- ----------- ----------
Operating profit/
(loss)
- continuing 6,064 10,680 4,036 (932) 10,100 9,748
operations
- discontinued - - 101 255 101 255
operations
----------- ---------- ----------- ---------- ----------- ----------
Total Operating 6,064 10,680 4,137 (677) 10,201 10,003
profit/(loss)
Development costs - - - - (6,382) (6,887)
Marketing costs - - - - (1,392) (1,519)
Central - - - - (1,401) (2,164)
administrative
costs
---------- ---------- --------- --------- ---------- ----------
Profit/(loss) - - - - 1,026 (567)
before goodwill and
interest
====== ======= ====== ======= ======= =======
4) Taxation
The full year tax rate on the profit before amortisation of goodwill is
expected to be lower than the full Corporation tax rate of 30% benefiting from
the favourable Canadian tax treatment for part of the acquisition cost of STS
and tax losses in certain geographies. The taxation charge for the six months
ended 30 June 2003 is �200,000 (June 2002: �nil, December 2002 �784,000
credit).
5) Dividends
The directors do not recommend the payment of a dividend for the period.
6) Earnings per share
Earnings per share is calculated under the provisions of Financial Reporting
Standard 14 "Earnings per Share".
Basic loss per share for the six months ended 30 June 2003 is based on loss
after taxation of �14,858,000 (June 2002: �43,949,000 loss, December 2002: �
195,448,000 loss) and on 402.5m ordinary shares being the average number of
shares in issue (June 2002: 397.8m; December 2002: 398.5m). Adjusted earnings
per share are based on loss after taxation, but before amortisation and
impairment of goodwill giving a profit of �271,000 (June 2002: �1,083,000 loss;
December 2002: �628,000 loss).
Adjusted diluted earnings per share is based on the loss after taxation but
before amortisation of goodwill and profit on disposal of business giving a
profit of �271,000 (June 2002: �1,083,000 loss; December 2002: �628,000 loss)
and then dividing this by 403.3m ordinary shares being the average number of
shares including unexercised share options at the end of the period (June 2002:
409.7m; December 2002: 406.0m). For the purposes of the disclosures required by
Financial Reporting Standard 14 "Earnings per share" none of the potential
ordinary shares are regarded as being dilutive as their conversion would reduce
the basic net loss per share.
7) Fixed asset investments
Fixed asset investments of �252,000 relate to own shares purchased by the NSB
Employee Share Trust. These have been classified within fixed asset investments
as the shares are held for the continuing benefit of the Company through the
reward of its employees. The shares have yet to vest unconditionally with the
employees and as such have been recognised as a fixed asset of the Company. The
market value of the shares in NSB Retail Systems PLC held by the NSB Employee
Share Trust at 30 June 2003 was �265,000 (30 June 2002: �662,000; December
2002: �252,000).
8) Debtors
Half year ended Half year ended Year ended
30 June 2003 30 June 2002 31 December 2002
(unaudited) (unaudited) (unaudited)
�000 �000 �000
Trade debtors 13,788 21,538 17,070
Accrued income 6,715 6,120 4,267
Other debtors and 3,944 4,530 5,588
prepayments
---------- ----------- -----------
Total 24,447 32,188 26,925
====== ======= =======
9) NSB true and fair override
The Group has applied the true and fair override provisions of the Companies
Act 1985 in respect of the Exchangeable Shares. At the time of the STS
acquisition 513165 N.B. Inc, a wholly owned Canadian subsidiary of NSB, was
established primarily to allow the STS vendors to participate in the future
performance of NSB in a tax efficient manner through holding Canadian
securities, principally the Exchangeable Shares, rather than taking the
consideration directly in NSB shares.
The Exchangeable Shares issued carry economic rights, including voting rights,
and benefits equivalent in all respects to those carried by existing NSB
ordinary shares and are convertible into NSB ordinary shares on a one-for-one
basis. Consequently, the Exchangeable Shares have been treated as NSB
shareholders equity.
Had the true and fair override not been applied, the Exchangeable Shares would
have been classified as equity minority interests in 2002 and 2003. This would
have reduced equity shareholders' funds by �135,680,000 in both years. There is
no impact on the loss attributable to ordinary shareholders for either year.
The remaining Exchangeable Convertible Preference Shares (ECPS) is now payable
in accordance with the following schedule:
31 March 2004 Canadian $12m
31 January 2005 Canadian $14m
31 January 2006 Canadian $12m
31 July 2006 Canadian $2m
31 January 2007 Canadian $4m
31 July 2007 Canadian $6m
Interest is payable at an effective rate of 5% on amounts outstanding.
At 30 June 2003 there were 14.3m ECPS in issue carried at their cash redemption
value of C$50m (�22.3m), of which �5.3m is included in creditors falling due
within one year and �17.0m is included within creditors due in greater than one
year.
10) Analysis of net debt
At start of Exchange At end of
period Cash flow ECPS movements period
�000 �000 �000 �000 �000
Cash at bank and in 3,974 1,650 - - 5,624
hand
ECPS due within one - - (5,352) - (5,352)
year
ECPS due after one (19,763) - 5,352 (2,539) (16,950)
year
----------- ----------- ----------- ----------- -----------
Net debt (15,789) 1,650 - (2,539) (16,678)
======= ======= ======= ======= =======
11) Discontinued business
In February 2003 it was announced that the Group has entered into an agreement
for the sale of its UK hardware services division. The sale was completed on 16
April 2003. Turnover and operating profits to the date of disposal are included
in discontinued operations in the consolidated profit and loss account with the
profit on disposal of the business of �407,000 shown separately.
12) Interim reports
Interim reports will be sent to shareholders shortly and thereafter will be
available from the Company's registered office. Copies of this announcement
will be available for the next fourteen days from the Company's registered
office, and will appear on the Company's website www.nsbgroup.com.
END