RNS Number:3152L
Stentor PLC
26 May 2000
("Stentor", "the Company" or "the Group")
Chairman's Statement on the financial statements for the year ended
31 March 2000
I report to you today on your Group's results for the year ended 31
March 2000. The prospectus published by the company in November
1998 referred to the need for additional funds or borrowings over
and above those which had been arranged at that time. Despite the
provision of some short term financing, the Group has not been able
to attract a level of long term funding sufficient to finance its
development plans. I believe that the weak financial state of the
Group has prevented it from fully achieving the internal sales
targets it originally set for itself.
As announced on 20 April, 2000 the Company has been in discussions
with nevada tele.com Limited, a company established in Northern
Ireland by Energis plc and Viridian Group plc which could have,
led to an offer being made for the entire issued and to be issued
share capital of the Company with a total value of Sterling #45.8
million. This implied a price of 37p (Sterling) per ordinary share
and 481p (Sterling) per convertible preferred ordinary share and
ignored warrants and options with exercise prices in excess of 37p
(Sterling) per share.
Since then, following significant reductions in the prices of
comparable telecom company shares, further discussions which are at
an advanced stage are taking place which may, or may not, lead to
an offer being made for the entire issued share capital of the
Company at a price which reflects those changed circumstances. An
announcement is expected very soon. It is against this background
that I review the Group's performance for the year just ended.
EBITDA losses for the year ended 31 March 2000 amount to IR#3.85
million compared to IR#9.7 million in the previous year. During
the second half of the year losses of approximately IR#0.4 million
were incurred in the calling card and carrier termination markets.
Steps have since been put in place to prevent a recurrence of these
losses in the future. The EBITDA loss for the year has had a
serious impact on the Group's working capital requirements and has
meant that the Group has required additional loans from the
majority shareholder Co-operation Retirement Benefit Fund (L)
Limited.
The loss on ordinary activities before taxation for the year
amounts to IR#7.23 million compared to IR#11.17 million in the
previous year and when added to profit and loss account reserves
results in an accumulated deficit of IR#27.9 million.
The Group reported its first gross profit (turnover less payments
to other telecommunications operators) at the interim stage and has
built on this achievement in the second half of the year. Total
gross profit for the year amounted to IR#1.1 million compared to a
gross loss of IR#4.4 million in the previous year.
Turnover for the year ended 31 March 2000 while somewhat higher
than that achieved in the previous year is still disappointing. The
increases in turnover have been achieved in the call centre and
corporate services sectors both from the Group's existing customers
and from the addition of new customers during the year. The Group
now services twenty call centre companies. The Group's e-commerce
business made a substantial contribution to turnover in the second
half of the year. Turnover in the calling card division also
increased in the year but was lower in the second half of the year
than that reported in the first half of the year. These increases
in turnover were offset to some extent by a reduction in turnover
in the carrier termination market which is a low margin and
volatile business.
The Group's operating overheads for the year are at a similar level
to last year although the present year's figures include full
provision for the professional fees and other costs of IR#0.6
million incurred by the Company as part of the current discussions
with nevada tele.com Limited. Excluding those charges, underlying
operating overheads are lower than last year's comparable amounts.
The reduction in operating overheads reflects the effects of the
reorganisation undertaken in the previous year when employee
numbers were reduced, together with the decision to replace
expensive leased lines with fibre capacity owned by the Group.
As reported at the time of the Company's interim results, the
financial statements include an exceptional loss of IR#0.83
million arising from the write down of the Company's billing
systems.
The directors remain committed in the coming year to growing the
revenue stream in higher margin solution activities while
maintaining control of costs and achieving a positive EBITDA
position. However, the future growth and development of the
business is entirely dependent on the outcome of the current
discussions which are taking place with nevada tele.com Limited
or on the ability of the Group to seek alternative sources
of substantial funding.
John R Uttley
Chairman
26 May, 2000
Consolidated profit and loss account
for the year ended 31 March 2000
2000 1999
IR#'000 IR#'000 IR#'000 IR#'000
Turnover: group and share of 7,482 5,795
joint venture
Less: share of joint venture (32) -
----- -----
Group turnover - continuing 7,450 5,795
operations
Operating expenses (11,305) (15,493)
------- -------
LOSS BEFORE INTEREST, DEPRECIATION (3,855) (9,698)
AND AMORTISATION
Depreciation (1,716) (1,049)
Impairment (833) -
------- -------
GROUP OPERATING LOSS - CONTINUING (6,404) (10,747)
OPERATIONS
Share of operating loss in joint
ventures
(46) -
------- -------
LOSS ON ORDINARY ACTIVITIES BEFORE (6,450) (10,747)
INTEREST
Interest payable and similar (794) (463)
charges - Group
Interest receivable 10 43
------- -------
LOSS ON ORDINARY ACTIVITIES BEFORE (7,234) (11,167)
TAXATION
Tax - -
------- ------
LOSS ON ORDINARY ACTIVITIES AFTER (7,234) (11,167)
TAXATION
Dividends - -
------- -------
RETAINED LOSS FOR THE YEAR (7,234) (11,167)
ATTRIBUTABLE TO EQUITY
SHAREHOLDERS INCLUDING SHARE OF
JOINT VENTURES
==== ====
STATEMENT OF RETAINED LOSSES
Retained loss for the year (7,234) (11,167)
Translation adjustments on foreign (751) (88)
currency net investments
RETAINED LOSS AT THE BEGINNING OF (19,896) (8,641)
THE YEAR
------ -------
RETAINED LOSS AT THE END OF THE (27,881) (19,896)
YEAR
==== ====
Basic loss per ordinary share (6.15)p (32.35)p
==== ====
Diluted loss per ordinary share (6.26)p (32.93)p
==== ====
Dividend per ordinary share pence - -
==== ====
Consolidated statement of total recognised gains and losses
for the year ended 31 March 2000
2000 1999
IR#'000 IR#'000
Group
Loss for the financial year (7,234) (11,167)
Exchange translation adjustments on foreign
currency net investments
- subsidiaries (747) (88)
- joint ventures (4) -
------ -------
TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR (7,985) (11,255)
==== ====
Reconciliation of movements in shareholders' funds
for the year ended 31 March 2000
Group Company
2000 1999 2000 1999
IR#'000 IR#'000 IR#'000 IR#'000
Total recognised gains and losses (7,985) (11,255) (7,985) (19,306)
for the year
New share capital subscribed 2,405 4,823 2,405 4,823
(including share premium)
Shares to be issued 120 172 120 172
Warrants issued 561 417 561 417
------ ------ ------ -----
Net decrease in shareholders' (4,899) (5,843) (4,899) (13,894)
funds
Opening shareholders' funds (4,344) 1,499 (4,344) 9,550
------ ------ ------- -------
CLOSING SHAREHOLDERS' FUNDS (9,243) (4,344) (9,243) (4,344)
==== ==== ==== ====
Consolidated balance sheet
at 31 March 2000
2000 1999
IR#'000 IR#'000 IR#'000 IR#'000
FIXED ASSETS
Tangible assets 12,829 13,211
Financial assets
Investment in joint venture
- Share of gross assets 144 -
- Share of gross liabilities (194) -
------ ------
(50)
Equity loans to joint venture 122 -
------ ------
72 -
Investment of substantial 6 -
interest
------ ------
78 -
------- -------
12,907 13,211
CURRENT ASSETS
Debtors 4,015 2,199
Cash at bank and in hand
- secured deposits 126 409
- cash and liquid resources 421 158
------ ------
4,562 2,766
Creditors: amounts falling due (14,385) (10,150)
within one year
------ ------
NET CURRENT (LIABILITIES) (9,823) (7,384)
------- -------
TOTAL ASSETS LESS CURRENT 3,084 5,827
LIABILITIES
Creditors : amounts falling due (12,327) (10,171)
after more than one year
------- -------
NET (LIABILITIES) (9,243) (4,344)
==== ====
CAPITAL AND RESERVES
Called up share capital 8,526 5,589
Share premium account 8,842 9,374
Other reserves 1,270 589
Profit and loss account (27,881) (19,896)
------- -------
SHAREHOLDERS' FUNDS - EQUITY (9,243) (4,344)
Minority interests - equity - -
------- -------
(9,243) (4,344)
==== ====
Consolidated cash flow statement
for the year ended 31 March 2000
2000 1999
IR#'000 IR#'000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (3,600) (8,591)
Cash outflows to joint ventures (122) -
Returns on investments and servicing of finance (424) (93)
Capital expenditure and financial investment (774) (1,851)
------ -------
CASH OUTFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES (4,920) (10,535)
AND FINANCING
Management of liquid resources 153 482
Financing 5,280 9,633
------ -------
INCREASE/(DECREASE) IN CASH 513 (420)
==== ====
1 Basis of preparation of the financial information and the
financial position of the group
The financial information for the year ended 31 March 2000
has been extracted from the audited financial statements for
that period, on which the auditors issued an unqualified
audit opinion. This financial information does not
constitute full accounts as defined by Section 19 of the
Companies (Amendment) Act, 1986 and does not constitute
accounts, copies of which are required to be annexed to the
annual return, which return has yet to be filed.
The financial information for the year ended 31 March 1999
has been extracted from the audited financial statements for
that period which have been delivered to the Registrar of
Companies in Ireland.
At 31 March 2000 the group's liabilities exceeded its assets
by IR#9,243,000 and the group's outgoings continued to exceed
its inflows.
During the year ended 31 March 2000, the directors have
sought sources for future finance and Co-operation Retirement
Benefit Fund (L) Limited (CRBF) has continued to provide
support to the group. CRBF and Foreign and Colonial
Special Utilities Investment Trust plc have confirmed to the
directors that it is not their present intention to seek
repayment of the amounts advanced by them to the company
at the balance sheet date of IR#8,967,000 for at least
twelve months from the date of approval of these
financial statements. In the event of a successful
takeover of the group the debts would become
immediately repayable.
Detailed financial projections for the years ending 31
March 2001 and 2002 have been prepared, which indicate a
requirement for additional funding of IR#12.6 million in the
year ended 31 March 2001 for the directors preferred
business strategy, for which financing is not as yet in
place. In the year ended 31 March 2002, further
substantial funds will be required. Although the company
could reduce these requirements on a more limited business
case, the group's ability to continue its operational
activities is dependent upon raising substantial funds.
The company is presently in discussions with nevada
tele.com Limited, a company established in Northern Ireland
by Energis plc and Viridian Group plc to provide
telecommunications services to the business sector. If
successful, these discussions will lead to an offer being
made for the entire issued share capital of Stentor plc.
As these discussions are not yet complete, there
remain significant uncertainties as to whether sufficient
funds will be available to enable the group to continue
in operational existence for the foreseeable future. The
appropriateness of the going concern basis, which has been
used to prepare the financial statements, is dependant
on the company being successful in sourcing the funding
required.
The financial statements do not incorporate any adjustments
that would be required should the company fail to
obtain the necessary funds.
2 Loss per share
2000 1999
Losses Number LPS Loses Number LPS
IR#'000 of IR#'0000 of
shares shares
Average number (7,234) 14,086,861 (51.36)p (11,167) 11,772,120 (94.86)p
of ordinary
shares
in issue
Average number of 103,497,505 22,750,000
preferred
ordinary shares in
issue at
their ordinary
share
equivalent
----- ------- ------ ---------
Basic loss (7,234) 117,584,366 (6.15)p (11,167) 34,522,120 (32.35)p
per share
Dilutive effect of (2,103,107) (611,893)
share
options and
warrants
outstanding
---- ------- ----- -------
Diluted loss (7,234) 115,481,259 (6.26)p (11,167) 33,910,227 (32.93)p
per share
The calculation of the loss per share (LPS) is based upon
the loss on ordinary activities after taxation and on the
average number of shares in issue during the year. The shares
in issue comprise both the ordinary shares of IR5p each and
the preferred ordinary shares of IR#1 each. Each preferred
ordinary share of IR#1 is convertible into 13 ordinary shares
at the option of the holder and each preferred ordinary share
is entitled to 13 times any dividend declared on the
ordinary shares of IR5p. The number of shares used in
the earnings per share calculation includes the average
number of ordinary shares together with the ordinary share
equivalent of the preferred ordinary shares weighted for
their time in issue.
In calculating the diluted loss per share, share options and
warrants have been taken into account, to the extent they are
dilutive.
3 Dividends
The directors are not recommending the payment of a dividend
for the year ended 31 March 2000 (1999: Nil).
4 Approval of results
The directors approved the financial statements on 26 May
2000.
5 Report and accounts
It is anticipated that the report and accounts will be posted
to shareholders shortly and will be available at the
registered office of the Company, Hogan Place, Grand Canal
Street, Dublin 2, Ireland, John East & Partners Limited,
Crystal Gate, 28/30 Worship Street, London EC2A 2AH and
Company Announcements Office, The London Stock Exchange,
London EC2N 1HP.
END
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