TIDMCSC
RNS Number : 0554Y
cScape Group PLC
16 December 2010
16 December 2010
cScape Group plc
Preliminary results for the year ended 30 June 2010
cScape Group plc ('the Company' or 'the Group'), the digital
communications business, today announces its preliminary audited
results for the year ended 30 June 2010.
Enquiries, please contact:
Azhic Basirov / Siobhan Sergeant
Smith & Williamson Corporate Finance Limited
Tel: 020 7131 4000
CHAIRMAN'S STATEMENT
I have pleasure in announcing the results of the Group for the
year ended 30 June 2010.
Financials
2010 2009
GBP'000 GBP'000
Continuing Operations
Revenue 4,734 5,137
-------- --------
Gross profit 4,348 4,676
-------- --------
Operating profit before depreciation
and exceptional item 59 15
-------- --------
Operating loss on continuing operations (166) (144)
-------- --------
Discontinued operations 239 (151)
-------- --------
Profit/(loss) attributable to orders
of the parent 13 (319)
-------- --------
During the year, the Group disposed the publishing and digital
communication services segment, which will now allow the Group to
concentrate on its core activities.
The Group's key financial performance indicator is turnover from
continuing operations. Whilst turnover and gross profit fell
slightly from the previous year, the operating profit before
depreciation has increased due to significant reductions in the
Group's administration expenses and the Group will continue to seek
further cost savings in the future.
The operating loss on continued operations has increased from
the previous year due to a significant one off exceptional cost
incurred by the Group's internet services segment, of
GBP70,000.
The Company announced on 1 December 2010 that it is seeking to
restructure the Company's share capital which will allow the
Company to raise additional finance in order to meet the Group's
working capital requirements. This restructure will be put to the
shareholders at a general meeting for their approval on 23 December
2010.
Business Review
cScape Strategic Internet Services Limited continued to develop
its core SharePoint business within both existing clients and new
corporate clients. cScape Strategic Internet Services Limited also
acquired skills in SDL Tridion, a highly rated content management
system.
While the recession continued to dampen demand, cScape Strategic
Internet Services Limited did see activity begin to pick up towards
the end of the year, both in existing clients and in new client
acquisition, a process which has continued into the current
period.
Profitability was affected adversely by the management strategy
of holding on to key skills through periods when demand was
relatively slack. This strategy has paid off in the current period
as demand has picked up and cScape Strategic Internet Services
Limited has been able to respond quickly. The Company also
experienced losses due to a project which overran.
Blue Sky Hosting Limited was able to increase its profits over
the previous year through focusing very hard on maintaining its
existing clients as well as acquiring new ones. A key aspect of the
company period is the spread of "Cloud Hosting", which involves
both Blue Sky Hosting Limited and cScape Strategic Internet
Services Limited working on the business case, jointly.
Financing Arrangements
The Group has continued to finance itself out of cash flow, with
the aid of a GBP50,000 overdraft from the bank. We expect and plan
to bring extra finance into the Company from investors in the year
to 30 June 2011.
The outlook is for cash generation over the year to 30 June
2011.
Outlook
The Group has traded profitably since the year end and notes
continued improvement from its core clients and new clients. The
Group continues to reduce its liabilities and is actively seeking
increased profitability.
K Young
Chairman
15 December 2010
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2010
Year Ended
Year Ended 30 June
30 June 2009
Notes 2010 (as restated)
Continuing operations GBP'000 GBP'000
Revenue 1 & 4,734 5,137
Cost of sales 2 (386) (461)
----------- ---------------
Gross profit 4,348 4,676
Administrative expenses (4,305) (4,700)
Other income 16 39
----------- ---------------
Operating profit before depreciation 59 15
Depreciation (155) (159)
----------- ---------------
(Loss) from operations before
exceptional item (96) (144)
Exceptional item (70) -
----------- ---------------
(Loss) from operations after
exceptional item (166) (144)
Finance income 3 2
Finance cost
(Loss) before income tax 2 (63) (26)
----------- ---------------
(226) (168)
Income tax expense - -
----------- ---------------
(Loss) for the year from continuing
operations 2 (226) (168)
----------- ---------------
Discontinued operations Profit/(loss)
for the year from discontinued
operations 239 (151)
----------- ---------------
Profit/(loss) for the year 13 (319)
=========== ===============
Profit/(loss) attributable to:
Owners of the parent 13 (319)
=========== ===============
Earnings/(loss) per share - basic
and diluted 3
From continuing operations (1.99)p (1.50)p
From discontinued operations 2.11p (1.35)p
----------- ---------------
0.12p (2.85)p
=========== ===============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2010
30 June 2009
Notes 30 June 2010 (as restated)
GBP'000 GBP'000 GBP'000 GBP'000
Assets Non-current assets
Intangible assets
Property, plant and 1,252 1,252
equipment Trade and other 427 516
receivables 4 - -
-------- --------
Total non-current assets
Current assets
Inventories
Trade and other receivables - 73
Available-for-sale financial 985 1,248
asset 60 -
Cash and cash equivalents 188 1,679 633 1,768
--------- -------- --------- --------
Total current assets 1,233 1,954
-------- --------
Total assets 2,912 3,722
======== ========
Equity and liabilities
Capital and reserves -
equity Share capital 1,131 1,131
Share premium account 499 499
Capital redemption 6 6
reserve Other reserves 60 -
Retained earnings (1,174) (1,187)
---------- -------- --------- --------
Equity attributable to
equity owners of the parent 522 449
-------- --------
Non-current liabilities
Trade and other payables
Financial liabilities 100 -
Provision for other 65 30
liabilities and charges - 300
---------- -------- --------- --------
Total non-current liabilities 165 330
-------- --------
Current liabilities
Trade and other payables 638 826
Financial liabilities 62 621
Current tax liabilities 1,525 1,496
---------- -------- --------- --------
Total current liabilities 2,225 2,943
-------- --------
Total equity and liabilities 2,912 3,722
======== ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2010
Year Year
Notes Ended Ended
30 June 30 June 2009
2010 (as restated)
Operating activities
(Loss) from operations GBP'000 GBP'000
Depreciation - continuing operations (96) (144)
Exceptional item 155 159
Other payments (70) -
(Increase)/Decrease in trade and other (100) (100)
receivables (35) 252
Increase in trade and other payables 422 267
Decrease in stock - 4
-------- ---------------
Cash inflow from operating activities
Interest paid 276 438
Interest received (51) (11)
Interest element of finance leases 3 2
Net inflow on operating activities (12) (15)
from discontinued operations 96 (78)
-------- ---------------
Net cash generated from operating
activities 312 336
-------- ---------------
Cash flow from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Disposal of subsidiary, net of cash (106) (90)
disposed 13 -
Net outflow on investing activities (28) -
from discontinued operations (4) (27)
-------- ---------------
Net cash used in investing activities (125) (117)
-------- ---------------
Cash flow from financing activities
Capital element of finance lease
agreements Proceeds from share issue (106) (113)
Expenses in connection with share issue - 25
Repayment of bank loans Net outflow on - (15)
financing activities from discontinued 5 5 (41)
operations 5 (182) -
-------- ---------------
Net cash used in financing activities (283) (144)
-------- ---------------
Net (decrease)/increase in cash, cash
equivalents and bank overdrafts 5 (96) 75
Cash and cash equivalents at the beginning
of the year 5 284 209
-------- ---------------
Cash and cash equivalents at the end
of the year 5 188 284
======== ===============
Notes:
1 FINANCIAL INFORMATION
The Group financial statements have been prepared and approved
by the directors on the going concern basis and in accordance with
applicable accounting standards.
The consolidated financial statements have been prepared under
International Financial Reporting Standards (IFRS and IFRIC
interpretations) issued by the International Accounting Standards
Board (IASB), as adopted by the European Union and with those parts
of the Companies Act 2006 applicable to the companies preparing
their accounts under IFRS.
2 SEGMENTAL INFORMATION
For management purposes the Group is currently organised into 4
operating divisions - internet services, specialist hosting, media
and interactive technology and head office and all of the Group's
operations are carried out within the United Kingdom.
a. Continuing operations
Head Internet Specialist Media & Group
Office Services Hosting Interactive Eliminations
Total
2009 BUSINESS
SEGMENTS GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
INCOME
STATEMENT
Turnover - 3,949 899 414 (125) 5,137
-------- --------- ----------- ------------ ------------- --------
Operating
Profit/(Loss) (528) 248 120 34 (18) (144)
Finance Income - 10 - - (8) 2
Finance
Expense (11) (17) (2) (3) 7 (26)
-------- --------- ----------- ------------ ------------- --------
Profit/(loss)
before tax (539) 241 118 31 (19) (168)
Income tax - - - - - -
Profit/(Loss)
for the year (539) 241 118 31 (19) (168)
======== ========= =========== ============ ============= ========
Head Internet Specialist Media & Group
Office Services Hosting Interactive Eliminations Total
2010 BUSINESS
SEGMENTS GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
INCOME
STATEMENT
Turnover 36 3,870 1,040 18 (230) 4,734
-------- --------- ----------- ------------ ------------- --------
Inter-Group
dividends 2,025 - - - (2,025) -
-------- --------- ----------- ------------ ------------- --------
Operating
Profit/(Loss) 1,768 (45) 205 (19) (2,075) (166)
Finance Income - 2 - 1 - 3
Finance
Expense (20) (18) (8) (17) - (63)
-------- --------- ----------- ------------ ------------- --------
Profit/(loss)
before tax 1,748 (61) 197 (35) (2,075) (226)
Income tax - - - - - -
Profit/(Loss)
for the year 1,748 (61) 197 (35) (2,075) (226)
======== ========= =========== ============ ============= ========
b. Discontinued operations
The publishing and digital communication services segment is
shown under discontinued operations below as the Group disposed its
holding in the relevant subsidiaries during the year.
Publishing and Operating
digital (loss) before
communication Operating Net finance & after
services Revenue (loss) expense tax
GBP'000 GBP'000 GBP'000 GBP'000
2009 Publishing & digital
communication services 1,911 (138) (20) (158)
------- --------- ----------- --------------
2010 Publishing & digital
communication services 557 (8) (4) (12)
------- --------- ----------- --------------
c. Net assets/(liabilities) analysis
Head Internet Specialist Media & Group
Office Services Hosting Interactive Publishing Eliminations Total
2009 BUSINESS
SEGMENTS GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets 1,353 2,419 1,459 211 757 (2,477) 3,722
Liabilities (2,772) (813) (463) (324) (843) 2,476 (2,739)
Borrowings (349) - (7) - (178) - (534)
Net
Assets/(Liabilities) (1,768) 1,606 989 (113) (264) (1) 449
======== ========= =========== ============ =========== ============= ========
Head Internet Specialist Media & Group
Office Services Hosting Interactive Publishing Eliminations Total
2010 BUSINESS
SEGMENTS GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets 1,341 1,883 682 153 - (1,147) 2,912
Liabilities (1,362) (1,186) (660) (241) - 1,059 (2,390)
Net
Assets/(Liabilities) (21) 697 22 (88) - (88) 522
======== ========= =========== ============ =========== ============= ========
3 EARNINGS PER SHARE
Earnings per share statistics disclosed are calculated by
dividing the earnings attributable to ordinary holders by the
weighed average number of shares in issue during the year.
Year Ended Year Ended
30 June 30 June
Basic - continuing operations 2010 2009
Basic earning attributable to ordinary shares:
GBP'000 (226) (168)
----------- -----------
Weighted average number of shares 11,311,558 11,190,736
----------- -----------
Loss per share (1.99)p (1.50)p
=========== ===========
Basic - discontinued operations
Basic earning attributable to ordinary shares:
GBP'000 239 (151)
----------- -----------
Weighted average number of shares 11,311,558 11,190,736
----------- -----------
Earnings per share 2.11p (1.35)p
----------- -----------
Total earnings per share 0.12p (2.85)p
=========== ===========
4 INTANGIBLE ASSETS - GOODWILL
Goodwill
Year ended 30 June 2009 GBP'000
Cost
At 1 July 2008 9,693
Additions -
---------
At 30 June 2009 9,693
---------
Amortisation and impairment
At 1 July 2008 8,441
Impairment provision -
---------
At 30 June 2009 8,441
---------
Net book value
At 30 June 2009 1,252
=========
At 30 June 2008 1,252
=========
Goodwill
Year ended 30 June 2010 GBP'000
Cost
At 1 July 2009 9,693
Disposals of subsidiary (1,220)
---------
At 30 June 2010 8,473
---------
Amortisation and impairment
At 1 July 2009 8,441
Disposal of subsidiary (1,220)
---------
At 30 June 2010 7,221
---------
Net book value
At 30 June 2010 1,252
=========
At 30 June 2009 1,252
=========
The directors calculated the impairment of GBPnil in 2010 and
2009 between the carrying value and the net present value of cash
flows anticipated to be generated from each of the Group's cash
generating units, being each of its subsidiaries, on a value in use
basis.
Information relating to the impairment review in 2010:
No of years Carrying Carrying
Growth Discount of period value 2010 value 2009
rate factor of forecasts GBP'000 GBP'000
Internet
services 4% 5% 4 583 583
Specialist
hosting 4% 5% 4 649 649
Other - 20 20
1,252 1,252
Growth rates anticipated in the next twelve months for the
internet services segment are based on recent business levels and
reflect an appropriate level of new contracts, combined with cost
control. Thereafter a steady growth rate on profit of 4% is
estimated. For the specialist hosting segment the turnover has
increased over the last two years and a steady growth rate of 4% is
anticipated on turnover combined with cost control, which leads to
a 4% profit growth rate.
The management have projected the cash flows forming the basis
of the projected turnover and profitability for a four year periods
of these two segments and these cash flows have been approved by
the Group board of directors.
A discount of 5% has been applied to internet services segment,
representing the relatively stable nature of the business model,
its past performance and anticipated wins and its weighted average
cost of capital. A discount rate of 5% has been applied to the
specialist hosting segment, again representing the stable nature of
the business and it weighted average cost of capital.
The net present value of the value in use cash flows that are
forecast to be generated for the internet services segment and the
specialist hosting segment exceed the carrying value of goodwill,
by GBP629,000 and GBP176,000 respectively.
The discount factors are based on a risk weighted cost of
capital, considering each segment's risks. Factors that have been
considered in calculating the risk include trading record,
experience of management, customer profiles, and credit risk, such
as debtor payment terms and how they are complied with.
If the discount rates were increased to 10% for both segments,
it is estimated that the recoverable amount of goodwill would still
exceed carrying value by GBP498,000 for the internet services
segment and GBP88 000 for the specialist hosting segment.
There were no reasonable possible changes in the key assumptions
which would cause the carrying amount of goodwill to exceed its
recoverable amount.
5 ANALYSIS OF CHANGES IN NET CASH/(DEBT)
At 1 July Other At 30
2009 Cash flow Movements June 2010
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 633 (445) - 188
Bank overdraft (349) 349 - -
---------- ---------- ----------- -----------
284 (96) - 188
Bank loan (185) 177 (4) (12)
Obligations under finance
leases (117) 106 (104) (115)
-----------
(18) 187 (108) 61
========== ========== =========== ===========
6 RECONCILIATION OF NET CASH FLOW MOVEMENTS TO MOVEMENT IN NET
CASH/(DEBT)
30 June 30 June
2010 2009
GBP'000 GBP'000
(Decrease)/Increase in cash in year (96) 75
Repayment of loans 177 41
New loans (4) -
Repayment of finance leases 106 113
New finance leases (104) -
--------- ---------
Movement of net funds in the year 79 229
Net funds at start of year (18) (247)
--------- ---------
Net funds at end of year 61 (18)
========= =========
7 COPIES OF PRELIMINARY STATEMENT
Copies of this announcement are available on the Company's
website www.cscapegroup.com or from the company secretary at 4 Pear
Tree Court, Clerkenwell, London, EC1R 0DS. Copies of the Annual
Report and Accounts of the Company for the year ended 30 June 2010
will be sent to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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