Final Results
August 21 2003 - 8:42AM
UK Regulatory
RNS Number:9227O
InterClubNet PLC
21 August 2003
INTERCLUBNET PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2003
CHAIRMAN'S STATEMENT
Introduction
The Board announces the preliminary results for the year ended 31 May 2003.
The results for the 12 months reflect the rationalisation of the Company
following the signing of the FA contract in August last year. The Company has
not found further investment opportunities in the sports sector and has been
re-evaluating the strategy of the Company which, as reported to you in the
Interim Statement, includes assessing the value to shareholders of remaining on
the Alternative Investment Market (AIM).
The main actions taken in the last 12 months have been:
* Completion of the handover of staff and operations to the English
Football Association (The FA).
* The novation of the BT Interactive Voice Response (IVR) agreement with
The FA.
* Services Agreement completion of the handover of staff and operations
to the England & Wales Cricket Board (ECB).
* Signing of a variation agreement with the Asian Football Confederation
(AFC) to transfer future development costs to the AFC following the successful
sign-off of the software.
* Ending of the Group's work in telecommunications software development.
* Reduction in the Group's staff numbers to 7.
Developments
Football:
* The Football Association:
The Company has continued to provide consultancy services to the FA, and expects
to receive future revenues of #2.25 million by way of a final payment of the
same amount in July 2005 in accordance with the FA contract.
In relation to the pursuit of IVR and SMS services in respect of the input and
retrieval of grassroots football information into and out of the FA's
administration systems, the Group is entitled to a revenue share. However, the
take up of the services and therefore a revenue share is largely dependent upon
the success of the Web Orientated National Football Administration System
(WONFAS) project, which is under the control of The FA.
The Board considers it unlikely that the Group will see significant revenue
share in the short to medium term.
* Asia:
Since we last reported to you the Company has been unable to progress matters to
its satisfaction in respect of a data rights dispute and consequently does not
expect a significant revenue share from its contract in the short to medium
term. The Company is reviewing and considering its position generally.
* Africa:
All activities in this region have ceased.
* Professional Football System (PFS):
The Company has continued to review the viability of providing the PFS service
to professional football clubs.
Many football club contracts have expired and have not been renewed although the
Company is obliged to maintain the PFS service for some clubs in the short term.
The Company is seeking other revenue sources from the underlying database to
contribute towards the costs of maintaining the PFS service.
Cricket:
As reported to you last and following the signing of the agreement with the
English Cricket Board (ECB) the Group continues to provide limited consultancy
services.
Tennis:
The Group has completed its work with the Lawn Tennis Association (LTA) but
continues to have a contractual right to work with the LTA on the generation of
revenues from IVR projects.
Telecommunications:
The Group did not receive sign off for work valued at around #400,000 as
expected and as reported to you last. The Group has issued a credit note for
outstanding invoices and the contract to provide services has been terminated.
Results and dividends
Trading results for the year to 31 May 2003:
* Turnover of #5.8 million (a decrease of 28% on 31 May 2002)
* Loss before interest, tax, depreciation and amortisation (EBITDA) of
#469,000 (against an EBITDA profit of #2.5 million for the year to 31 May
2002)
* Software development costs incurred during the year on the
development of systems have all been written off in the year
* Cash balances of #5.1 million at 31 May 2003 (#2.0 million at 31 May 2002).
Year Year Year
ended ended ended
31 May 2003 31 May 2002 31 May 2001
Reconciliation between the profit /
(loss) before taxation and EBITDA
#'000 #'000 #'000
EBITDA (469) 2,536 (2,124)
Depreciation, amortisation
and impairment (655) (1,178) (244)
Interest received 128 65 147
--------- ---------- -----------
Profit / (loss) before taxation (996) 1,423 (2,221)
========= ========== ===========
Net loss before tax for the year ended 31 May 2003 is stated after:
* Writing off #0.75m of software development
* Amortisation and disposal of #1.1 million in respect of deferred
development costs
* Amortisation and impairment of #0.5 million of goodwill on the
acquisition of the Play-Sport New Media Group.
Cash at the year-end stood at #5.1 million, and had decreased to #4.8 million at
18 August 2003.
The Directors are not recommending any final dividend.
Board
Since my last report, there have been a number of changes at Board level.
Following the Group's rationalisation, the number of Board members has reduced
in line with the needs for the future.
The Board currently consists of:
* Bob Morton (Non-executive Chairman)
* Nick Roach (CEO)
* Ian Lakin (Commercial and Legal Director)
Staff
The Group had an average of 21 permanent full-time staff during the year and 8
permanent full-time staff at 31 May 2003. The majority of employees are based at
the Group's head office in Farnham, Surrey. In addition, the Group has 29
correspondents and consultants.
I would like to thank the staff of InterClubNet for their excellent achievements
and support over the last 12 months during a period of significant change.
Future prospects
The sports sector has been the main source of income for the Group in the past.
Given the difficulties of the sector the Group has not found opportunities which
merit further use of cash resources.
Over the next 12 months the Group expects little revenue and inward cash flow
other than that contracted to it under the FA and ECB agreements but will
continue to incur costs. Consequently, given the prospects of depleting cash
resources the Board continues with a strategy of cost reduction.
In light of this strategy, the Board has carefully considered the value to
shareholders of remaining on the Alternative Investment Market (AIM) and has
taken the decision to de-list the Group and accordingly hereby gives the
requisite notice under the AIM Rules that it intends that trading in the
Company's shares on AIM will cease on 19 September 2003.
ALR MORTON
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 MAY 2003
2003 2002
#'000 #'000
Turnover 5,798 8,091
Cost of sales (2,489) (2,564)
--------- ---------
Gross profit 3,309 5,527
Administrative expenses (4,433) (4,169)
--------- ---------
Operating (loss)/profit (1,124) 1,358
Interest receivable and similar income 128 65
--------- ---------
(Loss)/profit on ordinary activities before taxation (996) 1,423
Tax on (loss)/profit on ordinary activities - -
--------- ---------
Retained (loss)/profit for the year (996) 1,423
========= =========
(Loss)/profit per ordinary share - basic and diluted (3.9)p 5.8p
========= =========
All of the Group's operations are classed as continuing. There were no gains or
losses other than those included in the above profit and loss account.
CONSOLIDATED BALANCE SHEET as at 31 MAY 2003
2003 2002
#'000 #'000
Fixed assets
Intangible assets - 1,549
Tangible assets 88 405
--------- ---------
88 1,954
--------- ---------
Current assets
Debtors 163 2,709
Cash at bank and in hand 5,093 2,041
--------- ---------
5,256 4,750
Creditors: amounts falling due within one year (1,331) (1,695)
--------- ---------
Net current assets 3,925 3,055
--------- ---------
Net assets 4,013 5,009
========= =========
Capital and reserves
Called up share capital 1,264 1,214
Shares to be issued - 470
Share premium account 5,551 5,131
Profit and loss account (2,802) (1,806)
--------- ---------
Shareholders' funds 4,013 5,009
========= =========
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 MAY 2003
2003 2002
#'000 #'000
Net cash inflow from operating activities 2,985 976
--------- ---------
Returns on investments and servicing of finance
Interest received 121 65
--------- ---------
Net cash inflow from returns on investments and servicing 121 65
of finance
--------- ---------
Capital expenditure and financial investment
Payments to acquire intangible fixed assets - (665)
Payments to acquire tangible fixed assets (58) (166)
Proceeds on sale of tangible fixed assets 4 11
--------- ---------
Net cash (outflow) for capital expenditure and financial (54) (820)
investment
--------- ---------
Acquisitions and disposals
Net cash acquired with subsidiaries - 53
--------- ---------
Net cash inflow from acquisitions and disposals - 53
--------- ---------
Cash inflow before management of liquid resources and 3,052 274
financing
--------- ---------
Increase in cash in the year 3,052 274
========= =========
1 Accounting policies
Below is an extract of the principal accounting policies of the Group and the
Company which have been consistently applied in dealing with items and which are
considered material in relation to the accounts:
Revenue recognition
Membership fees are recognised evenly over the term of the membership contract.
Joining fees are recognised evenly during the first twelve months of the
contract. No membership or joining fees are recognised until the application
software has been installed and an invoice raised. Invoiced fees not recognised
under this policy are categorised as deferred income in the balance sheet.
Software licence and support fees are recognised evenly over the period of the
contract.
Revenue on fixed price contracts is recognised whilst the contract is in
progress. A prudent estimate is made of the profit attributable to work
completed prior to the balance sheet date once the outcome of the contract can
be assessed with reasonable certainty. Provisions are made for all foreseeable
losses.
Revenue on other contracts for the supply of professional and technical services
is recognised when the service is delivered.
Research and development expenditure
Research and development expenditure is written off as incurred, except that
development expenditure incurred on an individual project is carried forward
when its future recoverability can reasonably be regarded as assured. Software
development expenditure carried forward is amortised on a straight-line basis
over three years which represents the estimated useful life. To the extent that
the rights to the software have been disposed of, the related cost has been
included within the cost of sales.
Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the
consideration given over the fair value of the identifiable net assets acquired.
In accordance with FRS7 the fair value of the consideration includes a
reasonable estimate of the fair values of amounts expected to be payable in the
future.
Goodwill arising in respect of subsidiary undertakings is included within
intangible fixed assets and then amortised on a straight-line basis over three
years which represents the estimated useful life.
2 (Loss)/profit on ordinary activities before 2003 2002
taxation is stated after charging: #'000 #'000
Software development expenditure written off 750 487
Development expenditure impairment provision - 330
Amortisation of deferred development expenditure 84 420
Disposal of intangible fixed assets (see note 1) 1,008 -
--------- ---------
1,842 1,237
Goodwill impairment provision 381 -
Amortisation of goodwill on acquisition of 76 196
subsidiaries
Depreciation 114 232
Foreign exchange differences 13 12
Operating lease rentals 140 174
Auditors' remuneration
- audit 11 25
- other services (payable to related company) 60 22
========= =========
3 Earnings per share - basic and diluted
(Loss)/profit per share are calculated by dividing the loss attributable to
ordinary shareholders for the year of #996,000 (2002: profit of #1,423,000) by
25,275,760 (2002: 24,457,130), being the total of the average number of Ordinary
5p shares in the Company during the year and the average number of shares to be
issued which had fulfilled their condition of issue during the year.
Share options could potentially dilute basic earnings per share in future.
4 Called up share capital
On 27 June 2002, InterClubNet plc issued 1,000,000 ordinary 5p shares pursuant
to a sale and purchase agreement dated 23 January 2002 for the purchase of 100%
of the share capital of Play-Sport New Media Limited and Catapult.it! Limited.
The share issue price was 47p per ordinary 5p share, resulting in a share
premium of #420,000.
As at 18 August 2003, the Company had a total of 25,275,760 ordinary 5p shares
in issue.
5 Reconciliation of operating (loss)profit to net
cash inflow from operating activities
2003 2002
#'000 #'000
Operating (loss)/profit (1,124) 1,358
Disposal of intangible fixed assets (see note 1) 1,008 -
Depreciation and amortisation 274 848
Impairment provision 381 330
Disposal of tangible fixed assets 257 40
Decrease in stocks - 7
Decrease/(increase) in debtors 2,553 (2,190)
(Decrease)/increase in creditors (364) 583
2,985
Net cash inflow from operating activities 976
========== ==========
6 The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 May 2003 nor for the year ended 31 May
2002. The financial information for the year ended 31 May 2003 is unaudited. The
financial information for the year ended 31 May 2002 is derived from the
statutory accounts.
For further information please contact:
Nick Roach InterClubNet plc Chief Executive 01420 525328
Adam Hart KBC Peel Hunt Limited 020 7418 8909
KBC Peel Hunt Limited 020 7418 8909
This information is provided by RNS
The company news service from the London Stock Exchange
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