RNS Number:7050D
Public Network PLC
13 November 2002
13 November 2002
Public Network PLC - Annual Report & Accounts and Notice of AGM.
RESULTS FOR THE YEAR ENDED 31 March 2002
The Directors of Public Network PLC announce the results for the
year ended 31 March 2002.
Public Network PLC has despatched its 2002 Annual Report & Accounts and Notice
of Annual General Meeting to its shareholders.
Copies of the Annual Report & Accounts are available at the company's registered
offices, until 12 December 2002 and from the Company on request by telephone
(0208 547 0220) or email (dmartin@thepubnet.net) and will be available for
download from the Company's website at www.thepubnet.com as from 13 November
2002.
Public Network PLC's Annual General Meeting will be held on 28 November 2002 at
12 noon at Unit 15 Kingsmill Business Park, Chapel Mill Lane, Kingston upon
Thames, Surrey KT1 3GZ.
Company number: 3726935
PUBLIC NETWORK PLC
ANNUAL REPORT
FOR THE YEAR ENDED 31 MARCH 2002
CONTENTS
Page No.
Directors and advisers 1&2
Chairman's statement 3
Report of the directors 4-6
Corporate governance 7&8
Report on remuneration 9&10
Independent auditors' report 11&12
Consolidated profit and loss account 13
Consolidated balance sheet 14
Company balance sheet 15
Consolidated cash flow statement 16
Notes to the consolidated cash flow statement 17
Notes to the consolidated financial statements 18-27
PUBLIC NETWORK PLC
DIRECTORS AND ADVISERS
Alan Grace, Chairman
Alan, 57, entered the leisure industry in 1972 and was immediately successful as
a pub manager moving on to buy his own premises, The Latchmere. He has lectured
University groups from around the world, including Harvard and Yale, on the role
of the British Pub in our society. Alan has introduced a number of innovative
ideas into his business, amongst them creating one of the first, highly
successful, fringe theatres, and now the in-pub Internet facility. He enjoys
connections at main board level with many breweries and pub operation companies
and has on occasion acted as a spokesperson for the industry on television and
in the press. Alan is responsible for sales and PR at Public Network plc, as
well as daily liaison with all machine operators. Alan sold The Latchmere in
order to devote his time fully to Public Network.
David Martin, Managing Director
David, 53, has a strong track record of significant achievements through leading
and motivating his team to achieve business goals. Nineteen years of his career
have been spent at Philips Electronics, the last five years of which, until
1996, he was managing director of Philips Car Systems, responsible for a team of
80 and a turnover of #60 million. David was headhunted for the role of Chief
Executive of NetProducts Ltd, a start-up company specialising in the development
of a niche market product, enabling the Internet to be accessed via a television
set. He created a worldwide network of distributors, and achieved significant
brand awareness for the product, successfully launching the first TV set-top box
in the UK. Realising the consumer market would not develop significantly in the
short to medium term, the board chose to close the business. Using his
experience and contacts, David's role within Public Network encompasses
technology, human resources and the strategic direction of the company.
Richard Nowacki, Non-Executive Director
Richard, 54, has spent thirty years in the advertising industry and has
particular experience in three key areas: breweries, teletext service and
Internet Service Providers (ISPs). Early in his career, Richard co-founded a '
below the line' agency and for the next eleven years established a client list
including Bass, Coral Racing, Kelloggs, Littlewoods, Nabisco and FIFA. Specific
projects included launches of Carling Black Label and Worthington. He has since
worked either as a freelance or within other advertising agencies, including two
years working on the NetChannel Consumer Service with David Martin. Richard is
responsible for the management and operating of Public Network's Internet
service 'PubNet'.
John Mackay, Non-Executive Director
John, 44, has fifteen years' experience in international equity capital markets.
He joined HSBC investment bank in 1995 after 10 years at US investment bank
Merril Lynch. He was educated at Sevenoaks School and Oxford University and
received an MBA from Insead in 1986.
Simon Banks-Cooper, Finance Director
Simon is a practising Chartered Management Accountant who established his own
firm in 1996 to provide management accounting services to companies in the
private sector. A director of a number of public companies (AIM and Ofex) he
holds executive and non-executive appointments as either finance director or
chairman. He has been involved with a number of public fund raisings and has
assisted in the corporate development of growing companies and in change
management.
Page 1
Secretary and Registered Office
Robert Macdonald Watson LLB FCIS
85 Elsenham Street
London
SW18 5NX
Stockbrokers
Seymour Pierce Limited
29/30 Cornhill
London
EC3V 3NF
Auditors
Auerbach Hope
58-60 Berners Street
London
W1T 3JS
Principal Bankers
HSBC Plc
Weybridge Branch
Church Street
Weybridge
Surrey
KT13 8DF
Solicitors and Corporate Advisers
Howard Kennedy
19 Cavendish Square
London
W1A 2AW
Registrars
Connaught St Michaels
P O Box 30
Cresta House
Alma Street
Luton
LU1 2PU
Page 2
PUBLIC NETWORK PLC
CHAIRMAN'S STATEMENT
Our results for the last financial year illustrate the difficulties that the
group suffered during 2001 and 2002. These difficulties restricted our
installations and our revenue opportunities. However the move to AIM was
successful and since then the group has continued to place Internet Kiosks into
revenue earning sites and to steadily increase its total monthly revenue.
The core business of earning money from our Kiosks and from associated
sponsorship has turned into a predictable, structured activity. We place on
average around 30 Kiosks a month in new sites. Currently we have 450 Kiosks in
sites with a confirmed forward order of another 40 waiting to be installed.
With a fixed cost base, closely controlled and kept to a minimum and a stock of
another 600 Kiosks purchased at extremely beneficial rates from Yava Limited,
the group aims to continue its business of installing Internet Kiosks in
profitable sites and incrementing its coin and sponsorship revenue.
We firmly believe that the group is well on the way to achieving a monthly cash
positive position by the end of the financial year.
On behalf of the board can I thank you for your support, which continues
unabated and I look forward to being able to report in 2003 a significantly
improved set of results.
Alan Grace
CHAIRMAN
Page 3
PUBLIC NETWORK PLC
REPORT OF THE DIRECTORS
The directors have pleasure in presenting their annual report on the affairs of
the group, together with the financial statements and auditors' report, for the
year ended 31 March 2002.
Principal activities
The principal activity of the group is that of the installation and rental of
internet units for retail and entertainment use.
The holding company did not trade during the year.
Business review
A review of the group's trading during the year is contained in the chairman's
statement.
Results and dividends
The consolidated loss for the year was #885,656 (2001: loss #1,514,939).
The directors do not recommend the payment of a dividend.
Directors
The directors who served during the year were as follows:
Alan Lionel Grace (Chairman)
David Joseph Martin (Managing)
Simon Andrew Banks-Cooper (Finance) (Appointed 6.8.2001)
John Sebastian Mackay (Non-executive)
Richard Lech Nowacki (Non-executive)
In accordance with the Articles of Association Mr R Nowacki and Mr S
Banks-Cooper retire and offer themselves for re-election.
Details of directors' emoluments together with directors' interests in shares
and share options are provided in the Report on Remuneration on pages 9 and 10.
Other than as disclosed on page 10 no directors had any other beneficial
interest in either the company or its subsidiary undertakings.
Contracts with controlling shareholders
No directors had an interest in any material contract of the company.
Page 4
Substantial shareholdings
In addition to those directors listed above the company has been notified of the
following holdings of more than 3% of the company's issued share capital at 29
October 2002.
Percentage of
Ordinary shares issued
of 10p each share capital
Yava Limited 2,056,513 7.95%
High Street Acquisitions Limited 1,500,000 5.80%
Providence Investment Company Limited 1,000,000 3.86%
Creditor payment policy
Amounts due to suppliers are settled in accordance with agreed terms of payment,
except in cases of dispute. Actual creditors days are 30 days (2001: 30 days)
calculated in accordance with the requirements set down in the Companies Act
1985. This represents the ratio expressed in days, between the amounts invoiced
to the group by its suppliers during the year and the amounts due, at the year
end, to trade creditors within one year.
Directors' responsibilities for the financial statements
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the group and of the profit or loss of the group for that year.
In preparing those statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
consolidated financial statements; and
* prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records, for
safeguarding the assets of the group and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are also responsible for ensuring the directors' report and the
information included within the annual report is prepared in accordance with
United Kingdom company law and includes information required by AIM rules.
Page 5
Auditors
Auerbach Hope have indicated their willingness to continue as auditors and offer
themselves for reappointment in accordance with Section 385 of the Companies Act
1985.
By order of the board of
directors and signed on their behalf
by
Registered Office:
85 Elsenham Street Robert Macdonald Watson
London SW18 5NX Secretary
29 October 2002
Page 6
PUBLIC NETWORK PLC
CORPORATE GOVERNANCE
The company is committed to and has applied the principles of corporate
governance contained in the Combined Code as appropriate to a group of this
size.
The audit and remuneration committees, which are chaired by Mr J Mackay, are an
important part of the implementing of the principles of good corporate
governance as set out in the Combined Code.
The audit committee is formally constituted with written terms of reference and
comprised two non-executive directors throughout the reporting period. The
executive directors are not members of the committee but the finance director
may from time to time be invited to attend its meetings. The committee meets at
least twice per year.
The external auditors will also be invited to attend for part of each meeting so
as to have direct access to the non-executive directors for independent
discussions without the presence of executive directors.
The audit committee may examine any matters relating to the financial affairs of
the group. This includes reviews of the interim and annual accounts,
announcements, internal control procedures, accounting policies, compliance with
accounting standards, the appointment of external auditors and such other
related functions as the board may require.
The remuneration committee determines the remuneration policies of the group
which includes the terms and conditions, including annual remuneration and
incentive awards, of the executive directors.
Board committees
The board of directors
The company supports the concept of an effective board leading and controlling
the group. The board is responsible for approving company policy and strategy.
It meets monthly and has a schedule of matters specifically reserved to it for
decision. Management supply the board with appropriate and timely information
and the directors are free to seek any further information they consider
necessary.
The board consists of three executive directors, who hold the key operational
positions in the group, and two non-executive directors who bring a breadth of
experience and knowledge. One of the non-executive directors is independent of
management and any business or other relationship which could interfere with the
exercise of his independent judgement. This provides a balance whereby the
board's decision making cannot be dominated by an individual or small group.
Going concern
After making enquiries, the directors have a reasonable expectation that the
group has adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the accounts.
Page 7
Internal control
The board is responsible for maintaining a sound system of internal control to
safeguard shareholders' investment and the group's assets, and for reviewing its
effectiveness. The system of internal control is designed to manage rather than
eliminate the risk of failure to achieve business objectives, and can only
provide reasonable and not absolute assurance against material loss and
misstatement.
The board has considered the need for an internal audit function but has decided
the size of the company does not justify it at present.
Relations with shareholders
The group values the views of its shareholders and recognises their interest in
the group's strategy and performance, board membership and quality of
management. It therefore keeps shareholders appraised of the current position
by way of circulars and also holds regular meetings with its major shareholders
to discuss objectives.
The AGM will be used to communicate with private investors and they are
encouraged to participate.
Page 8
PUBLIC NETWORK PLC
REPORT ON REMUNERATION
Composition and function of the remuneration committee
The remuneration committee comprises both the non-executive directors of the
group. It considers all aspects of the executive directors' remuneration and
administers the group's share option schemes.
The remuneration of non-executive directors is considered by the board following
recommendations by the executive directors.
Policy on executive directors' remuneration
Executive remuneration packages are designed to attract, motivate and retain
directors of the calibre necessary to maintain the group's position as a growing
business and to reward them if appropriate or enhancing shareholder value and
return. The performance measurement of the executive directors and the
determination of their annual remuneration package is undertaken by the
committee and each executive director's salary is reviewed annually.
Share options
The board believes that share ownership strengthens the link between personal
interests and those of the shareholders and encourages long-term improvement in
the group's performance.
Directors' share options
There have been no changes to the directors' shareholdings since 31 March 2002.
Service contracts
The executive directors have contracts, which are terminable by the company with
three months notice.
Details of directors' remuneration
Emoluments for the chairman, executive and non-executive directors for the year
were:
Salary Benefits Total 2001
# # # #
Executive
A L Grace 17,500 - 17,500 67,833
D J Martin 17,500 - 17,500 77,000
Non-Executive
R L Nowacki - - - 67,834
J S Mackay - - - -
35,000 - 35,000 212,667
In addition to the fees as finance director, Banks Cooper Associates Ltd, which
is owned by Simon Banks-Cooper was paid #10,415, in respect of fees for
accountancy services provided.
Page 9
Interests in shares
The directors' beneficial interests in the shares of the company and other group
companies during the year were as stated below:
Public Network Plc
Ordinary shares Ordinary shares
of 10p each of 10p each
31.3.2002 31.3.2001
A L Grace 1,890,000 1,890,000
D J Martin 1,905,000 1,905,000
J S Mackay 170,000 170,000
R L Nowacki 1,890,000 1,890,000
S A Banks-Cooper - -
Interests in share options
Directors' options over ordinary shares of 10p each are as follows:
Granted Earliest
Held on during the Held on exercise Expiry Exercise
Note 01-Apr-01 year 31-Mar-02 date date price
A L Grace 1 -
D J Martin 1 -
D J Martin - 300,000 300,000 Mar-02 Mar-12 10p
R L Nowacki 1 -
Options were granted under the unapproved option scheme or deed.
Note 1: During the year 900,000 options were approved for grant. The
remuneration committee have not yet met to agree the division of these options
between the above three directors.
By order of the board of directors
and signed on their behalf by
Alan Lionel Grace
Director
29 October 2002
Page 10
PUBLIC NETWORK PLC
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF PUBLIC NETWORK PLC
We have audited the financial statements of Public Network Plc on pages 13 to
27, which have been prepared under the accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the annual report. As described on
page 5, this includes responsibility for preparing the financial statements in
accordance with applicable United Kingdom Law and accounting standards. Our
responsibility is to audit the financial statements in accordance with relevant
legal and regulatory requirements and United Kingdom auditing standards.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the directors' report is not
consistent with the financial statements, if the company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and transactions with the group is not disclosed.
We read the other information contained in the annual report and considered
whether it is consistent with the audited financial statements. This
information comprises only the Chairman's Statement, the Directors' Report,
Corporate Governance Statement, Report on Remuneration, Statement of Directors'
Responsibilities and the Three Year Review. We consider the implications for
our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. We are not required to consider
whether the board's statements on internal control cover all risks and controls,
or form an opinion on the effectiveness of the group's Corporate Governance
procedures or its risk and control procedures. Our responsibilities do not
extend to any other information.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgements made
by the directors in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the company's and the group's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Page 11
Opinion
In our opinion the financial statements give a true and fair view of the state
of affairs of the company and the group at 31 March 2002 and of the group's loss
and cash flows for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
AUERBACH HOPE
58-60 Berners Street REGISTERED AUDITOR
London W1T 3JS CHARTERED ACCOUNTANTS
29 October 2002
Page 12
PUBLIC NETWORK PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2002
2002 2001
Notes # #
Turnover 3 234,180 87,988
Cost of sales (153,308) (388,371)
Gross profit/(loss) 80,872 (300,383)
Administrative expenses (963,248) (1,253,795)
Operating loss 4 (882,376) (1,554,178)
Interest receivable and similar income 7 251 41,469
Interest payable and similar charges 8 (3,531) (2,230)
Loss on ordinary activities before
taxation (885,656) (1,514,939)
Taxation 9 - -
Loss for the year 23 (885,656) (1,514,939)
Loss per ordinary share-basic 10 (4.68) (11.04)
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains or losses other than the consolidated loss of the
year.
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Page 13
PUBLIC NETWORK PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2002
2002 2001
Notes # # # #
Fixed assets
Intangible assets 12 802,341 642,788
Tangible assets 13 267,724 378,873
1,070,065 1,021,661
Current assets
Debtors 15a 145,495 108,315
Cash at bank and in hand 46,462 173
191,957 108,488
Creditors: Amounts falling due
within one year 16 (178,245) (346,939)
Net current assets/
(liabilities) 13,712 (238,451)
1,083,777 783,210
Creditors: Amounts falling due
after more than one year 17 (539,460) (250,000)
544,317 533,210
Capital and reserves
Called up share capital 20 2,586,530 1,372,109
Share premium account 21 980,292 1,297,950
Profit and loss account 22 (3,022,505) (2,136,849)
Shareholders' funds 23 544,317 533,210
The financial statements were approved by the board on 29 October 2002.
Signed on behalf of the board of directors
Alan Grace-Chairman
David Martin-Managing director
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Page 14
PUBLIC NETWORK PLC
COMPANY BALANCE SHEET
AS AT 31 MARCH 2002
2002 2001
Notes # # # #
Fixed assets
Fixed asset investments 14 955,751 750,100
Current assets
Debtors: Due within one
year 15a 71,204 2,196,576
Debtors: Due after
more than one year 15b 2,774,837 -
Cash at bank 53 170
2,846,094 2,196,746
Creditors: Amounts falling due
within one year 16 (9,606) (4,100)
Net current assets 2,836,488 2,192,646
3,792,239 2,942,746
Creditors: Amounts falling due
after more than one year 17 (261,750) (250,000)
3,530,489 2,692,746
Capital and reserves
Share capital 20 2,586,530 1,372,109
Share premium account 21 980,292 1,297,950
Profit and loss account 22 (36,333) 22,687
Shareholders' funds 23 3,530,489 2,692,746
The financial statements were approved by the board on 29 October 2002.
Signed on behalf of the board of directors
Alan Grace-Chairman
David Martin-Managing director
The notes on pages 18 to 27 form part of these financial statements.
Page 15
PUBLIC NETWORK PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2002
2002 2001
# #
Net cash outflow from operating activities (431,513) (1,031,533)
Returns on investments and servicing of finance
Interest received 251 41,469
Interest paid (3,531) (2,230)
Net cash inflow from investments and servicing
of finance (3,280) 39,239
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (203,358) (626,571)
Net cash outflow from investing activities (203,358) (626,571)
Net cash outflow before management of liquid
resources and financing (638,151) (1,618,865)
Financing
Convertible loan - 100,000
Issue of shares 1,110,635 -
Cost of share issue (419,423) -
Net cash inflow from financing 691,212 100,000
Increase/(decrease) in cash 53,061 (1,518,865)
The accompanying notes form an integral part of this financial information.
Page 16
PUBLIC NETWORK PLC
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2002
2002 2001
# #
Reconciliation of operating (loss) to net
cash outflow from operating activities
Operating loss (882,376) (1,554,178)
Depreciation and amortisation:
-Tangible fixed assets 339,486 275,968
-Intangible fixed assts 45,998 35,710
(Increase) in debtors (37,180) (69,146)
Increase in creditors 102,559 280,113
Net cash outflow from operating activities (431,513) (1,031,533)
Reconciliation of net cash flow to movement in
net (debt)/funds
Increase in cash in the year 53,061 (1,518,865)
53,061 (1,518,865)
New hire purchase contracts (24,979) -
(28,082) (1,518,865)
Net debt at the start of the year (596,766) (1,302,212)
Net debt at the end of the year (671,243) (596,766)
Analysis of changes in net (debt)/funds
At Acquisition Non-cash At
1 April 2001 excluding cash charges Cash flow 31 March 2002
# # # # #
Cash at bank and in hand 173 - - 46,289 46,462
Bank overdraft (6,772) - - 6,772 -
(6,599) - - 53,061 46,462
Debt less than one year (340,167) - 174,299 - (165,868)
Debt greater than one year (250,000) - (276,858) - (526,858)
Hire purchase contracts - - (24,979) - (24,979)
(596,766) - (127,538) 53,061 (671,243)
Page 17
PUBLIC NETWORK PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2002
1. Principal accounting policies
a. Basis of preparation
The financial statements have been prepared under the historical cost convention
and in accordance with applicable Accounting Standards.
The principal accounting policies of the group have remained unchanged from the
previous year and are set out below. The directors have reviewed the accounting
policies in light of the introduction of FRS 18 and consider them to be the most
appropriate to the group.
b. Basis of consolidation
The group financial statements consolidate the accounts of the company and its
subsidiary undertakings, drawn up to 31 March 2002. The results of the
subsidiary acquired during the year have been included from the date of
acquisition. At present the accounting reference date of the subsidiary is 31
October but the directors intend to change this to 31 March. Profits or losses
on intra-group transactions are eliminated in full. On acquisition of a
subsidiary, all of the subsidiary's assets and liabilities which exist at the
date of acquisition are recorded at their fair values reflecting their condition
at that date.
c. Turnover
Turnover represents, amounts receivable by the group for services to customers
excluding Value Added Tax and trade discounts.
d. Tangible fixed assets and depreciation
Depreciation is provided on all tangible fixed assets in order to write off
their costs over their estimated expected lives. The rates adopted are as
follows:
Leasehold land and buildings Over the term of the lease
Equipment and software for rental Straight line basis-over 2 years for
equipment and over 4 years for software
Furniture, fittings and equipment 25% on reducing balance basis
Motor vehicles 25% on reducing balance basis
e. Deferred taxation
The accounting policy in respect of deferred tax has been changed to reflect the
requirements of FRS 19-Deferred tax. 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. The deferred tax balance
has not been discounted.
The above amounts to a change in accounting policy. The previous policy was to
provide deferred tax only to the extent that it was probable that liabilities
would crystallise in the foreseeable future.
The adoption of the standard has not required a prior period adjustment.
f. Intangible fixed assets
Goodwill
Goodwill arising on consolidation, representing the excess of the fair value of
the consideration given over the fair values of the identifiable net assets
acquired, is capitalised and is amortised on a straight line basis over its
estimated useful economic life of 20 years.
Page 18
g. Leasing commitments
Assets held under hire purchase contracts are capitalised and depreciated over
their expected useful lives. The interest element of leasing payments
represents a constant proportion of the capital balance outstanding and is
charged to the profit and loss account over the period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the profit and loss account on a straight line basis over
the lease term.
h. Financial instruments
Financial assets are recognised in the balance sheet at the lower of cost and
net realisable value. Provision is made for diminution in value where
appropriate. Income and expenditure arising on financial instruments is
recognised on the accruals basis, and credited or charged to the profit and loss
account in the financial period to which it relates.
i. Fixed asset investment
Fixed asset investments are stated at cost less provision for impairment.
2. Going concern
The directors have considered the funding requirement for the next twelve months
and have concluded that it is appropriate to prepare the financial statements on
a going concern basis. Further details are given in the Corporate Governance
Report.
3. Turnover
The total turnover of the group for the year has been derived from its principal
activity wholly undertaken in the United Kingdom.
4. Operating loss
2002 2001
Operating loss is stated after charging: # #
Directors' emoluments 35,000 212,667
Depreciation and amortisation 385,484 311,678
Auditors' remuneration: Audit 10,950 8,950
Non-Audit 4,050 5,500
5. Loss for the financial year
As permitted by Section 230 of the Companies Act 1985, the holding company's
profit and loss account has not been included in these financial statements.
The (loss)/profit for the financial year is made up as follows:
2002 2001
# #
Holding company's (loss)/profit for the
financial year (59,020) 13,837
Page 19
6. Employees
Staff costs during the year were as follows:- 2002 2001
# #
Wages and salaries 231,774 432,889
Social security costs 20,778 44,765
252,552 477,654
Employees
The average monthly number of employees of the group (including
directors) during the year was:
No. No.
Management 3 3
Administrative 8 11
11 14
Remuneration in respect of directors is covered under the Report on Remuneration
on pages 9 and 10.
Group
7. Interest receivable and 2002 2001
similar income # #
Bank deposit interest 251 41,469
Group
8. Interest payable and 2002 2001
similar charges # #
Bank interest and charges - 2,230
Hire purchase interest 3,531 -
3,531 2,230
9. Taxation
There is no charge to Corporation Tax (2001: Nil) due to the availability of tax
losses within the group. Unrelieved tax losses of approximately #2.6 million
(2001: loss #2 million) are available for offset against future taxable trading
profits.
Page 20
10. Loss per share
Loss per ordinary share is calculated by dividing the loss for the year
available to ordinary shareholders by the sum of the weighted average number of
ordinary shares in issue.
Year ended Year ended
31 March 2002 31 March 2001
# #
The calculation of loss per share
is on losses of 885,656 1,514,939
No. No.
and the weighted number of ordinary
shares in issue during the year 18,917,284 13,721,094
Loss per ordinary share is 4.68p 11.04p
11. Acquisitions
On 19 December 2001, the group acquired the entire share capital of Pinco 1696
Limited for a total consideration of #205,651 to be satisfied by way of
2,056,513 ordinary shares of 10p each. Pinco 1696 Limited was incorporated on
24 October 2001, and the group took effective control with effect from the date
of acquisition.
The following table sets out the book values of the identifiable assets and
liabilities acquired.
#
Share capital 100
Purchase goodwill capitalised 205,551
Purchase consideration 205,651
Satisfied by:
Share consideration 205,651
205,651
Page 21
12. Intangible fixed assets
Group Goodwill
#
Cost
As at 1.4.2001 714,208
Additions 205,551
As at 31.3.2002 919,759
Amortisation
As at 1.4.2001 71,420
Charge for the year 45,998
As at 31.3.2002 117,418
Net book value
As at 31.3.2002 802,341
As at 31.3.2001 642,788
The additions to goodwill of #205,551 relates to a business acquired during the
year.
The useful economic life of goodwill in respect of the acquisitions is 20 years,
based on the directors' assessment of future income streams.
13. Tangible fixed assets
Short
Group leasehold Equipment Fittings & Motor
premises for rental equipment vehicles Total
# # # # #
Cost
As at 1.4.2001 58,109 498,628 48,179 55,943 660,859
Additions 5,000 222,829 508 - 228,337
As at 31.3.2002 63,109 721,457 48,687 55,943 889,196
Depreciation
As at 1.4.2001 18,531 234,314 16,376 12,765 281,986
Charge for the
year 31,135 289,478 8,078 10,795 339,486
As at 31.3.2002 49,666 523,792 24,454 23,560 621,472
Net Book Value
As at 31.3.2002 13,443 197,665 24,233 32,383 267,724
As at 31.3.2001 39,578 264,314 31,803 43,178 378,873
Page 22
13. Tangible fixed assets (continued)
Included above are assets held under hire purchase contracts as follows:
Motor
vehicles
#
Net book values
At 31 March 2002 32,383
At 31 March 2001 -
Depreciation charge for the year
At 31 March 2002 10,795
At 31 March 2001 -
14. Fixed asset investments
Shares in subsidiary undertakings
Company #
Cost at 1.4.2001 750,100
Additions 205,651
Cost at 31.3.2002 955,751
The additions to investments comprise #205,651 in respect of the
acquisition of Pinco 1696 Limited, as set out on note 11 above, which was
acquired during the year.
At 31 March 2002, the group held 100% of the allotted share capital of the
following subsidiary undertakings, all of which are registered in England and
Wales:
Principal
Incorporation activity
date
Public Internet Services Limited 19.2.1999 Connection of
internet units
Pubnet Limited 12.7.1999 Dormant
Pinco 1696 Limited 24.10.2001 Non-trading
Page 23
Group Company
15a. Debtors 2002 2001 2002 2001
# # # #
Amounts falling
due within one
year
Trade debtors 11,558 2,327 - -
Amounts due from
group companies - - - 2,195,993
Other debtors 38,566 84,067 1,040 -
Prepayments and
accrued income 95,371 21,921 70,164 583
145,495 108,315 71,204 2,196,576
15b. Debtors Group Company
2002 2001 2002 2001
# # # #
Amounts falling
due after more
than one year
Amounts due from
group companies - - 2,774,837 -
Group Company
16 . Creditors 2002 2001 2002 2001
# # # #
Amounts falling
due within one
year
Bank overdraft - 6,772 - -
Net obligations
under hire purchase
contracts 12,377 - - -
Trade creditors 56,605 246,613 4,506 -
Amount owed to
subsidiary - - 100 100
Taxes and social
security 55,532 35,987 - -
Directors'
current accounts - 15,455 - -
Other creditors 12,340 13,228 - -
Accruals 41,391 28,884 5,000 4,000
178,245 346,939 9,606 4,100
17. Creditors
Group Company
Amounts falling
due after 2002 2001 2002 2001
more than one year # # # #
Net obligations
under hire purchase
contracts 12,602 - - -
Convertible loan 250,000 250,000 250,000 250,000
Directors' loan
accounts 102,569 - - -
Other loan 50,000 - - -
Other creditors 124,289 - 11,750 -
539,460 250,000 261,750 250,000
Obligations under hire purchase contracts are secured over the relevant assets.
Page 24
18. Creditors
Group Company
2002 2001 2002 2001
Net obligations
under hire purchase # # # #
contracts
Repayable within
one year 15,436 - - -
Repayable between
one and five years 12,602 - - -
28,038 - - -
Finance charges
and interest
allocated
to future
accounting
periods (3,059) - - -
24,979 - - -
Included in
liabilities due
within one
year (12,377) - - -
12,602 - - -
19. Lease commitments
As at 31 March 2002, the group was committed to payments under the
following non-cancellable operating leases in respect of rent and service
charges:
2002 2001
# #
Between one and five years 22,737 68,819
20. Share capital
2002 2001
Authorised # #
50,000,000 ordinary shares of 10p each 5,000,000 2,500,000
On 9 August 2001 the company increased its authorised share capital from
25,000,000 ordinary shares of 10p each to 50,000,000 ordinary shares of
10p each.
2002 2001
Allotted, called up and fully paid # #
25,865,307 ordinary shares of 10p each 2,586,530 1,372,109
The company allotted 12,144,213 ordinary shares of 10p each during the year, of
which 4,070,600 ordinary shares of 10p each were issued at a premium of 2.5p per
share.
A loan of #250,000 made on 21 January 2000 is repayable on 31 January 2004 or
such later date as may be agreed between the parties in writing. The loan
agreement granted the lender an option of converting the loan into ordinary
shares of Public Network Plc at 12.50p per share, but by way of an amendment to
the original agreement, dated 21 October 2002, the conversion price has been
reduced to 10.0p per share.
Page 25
Group Company
2002 2001 2002 2001
21. Share premium account # # # #
As at 1.4.2001 1,297,950 1,297,950 1,297,950 1,299,962
Share premium on issue 101,765 - 101,765 -
Share issue costs (419,423) - (419,423) -
Prior year adjustment - - - (2,012)
As at 31.3.2002 980,292 1,297,950 980,292 1,297,950
Group Company
2002 2001 2002 2001
22. Profit and loss account # # # #
Balance at 1.4.2001 (2,136,849) (621,910) 22,687 8,850
(Loss)/profit for the
year (885,656) (1,514,939) (59,020) 13,837
Balance at 31.3.2002 (3,022,505) (2,136,849) (36,333) 22,687
Group Company
23. Reconciliation on
movements 2002 2001 2002 2001
of shareholders'
funds # # # #
Opening shareholders'
funds 533,210 2,048,149 2,692,746 2,678,909
(Loss)/profit for the
year (885,656) (1,514,939) (59,020) 13,837
Ordinary shares issued 1,214,421 - 1,214,421 -
Share premium on issue 101,765 - 101,765 -
Share issue costs (419,423) - (419,423) -
Closing shareholders'
funds 544,317 533,210 3,530,489 2,692,746
24. Share options
Options to subscribe for up to 5,878,333 ordinary shares have been granted to
employees, consultants and others at exercise prices between 15 pence and 30
pence per share. Options in favour of employees are exercisable between the
first and fourth anniversaries of grant on not more than two occasions. Subject
to his exercise period these options crystallise as to 1/36 of the total granted
for each complete month's service. The options lapse if not exercised when the
employee resigns or is fairly dismissed within 12 months of commencing
employment.
Page 26
25. Contingent liabilities
a. The company's liabilities as at the year end include #250,000
which relates to a convertible loan. The conversion terms include a provision
that if any part of the convertible loan is not converted to ordinary shares of
Public Network Plc by 30 July 2001, an arrangement fee in lieu of interest is
payable at a rate of 10% per annum.
b. At 31 March 2002 the share option price per share exceeded
market value. Therefore, no provision has been made for employer's National
Insurance liability arising on exercise of the options. In the event that share
options are exercised at a later date at a time when the market value of the
shares exceeds the exercise price there would be a liability to pay employer's
National Insurance.
26. Related party transactions
a. During the year Banks Cooper Associates Ltd, a company in
which Simon Banks-Cooper is a director, provided accountancy services of #23,472
(2001: Nil) to Public Internet Services Ltd. An amount of #10,415 (2001: Nil)
is owed by the company and is disclosed in note 16 under creditors.
b. During the year Pubnet Productions, a business owned by
Richard Nowacki, a director of the company supplied consultancy services of
#27,398 (2001: #Nil) to Public Internet Services Ltd.
Page 27
This information is provided by RNS
The company news service from the London Stock Exchange
END
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