RNS Number:2594U
PNC Telecom PLC
14 January 2004
PNC Telecom plc (in administration)
Final Results for the year ended 31 March 2003
Chairman's Statement
Negligible growth in the mobile telecommunications market coupled with a vast
over capacity in the fixed-line market resulted in the worst trading conditions
in the Group's history. On 3 May 2002 the Group announced that the results for
the year ended 31st March 2002 would be substantially below market expectations
and Mr. Darren Ridge, the then Chief Executive of PNC, resigned as a director at
that date.
On 6th June 2002 the Board appointed Mr. Ian Gray, a company turnaround
specialist, Chief Executive of the Group. Following a strategic review the
cost-base was reduced by some #5,200,000 to match the Group's trading position
in its highly competitive market. Sadly this could only be achieved by
redundancies and the closure of shops and other business premises.
Following the restructuring of the business the Group's financial advisers
informed the Directors that the Alternative Investment Market of the London
Stock Exchange ('AIM') would be a more appropriate market for a company of PNC's
size. The Directors resolved that it would be in the Group's best interest to
de-list the Group's issued ordinary shares from trading on the Official List of
The London Stock Exchange and to apply to have the shares traded on AIM. The
Group's issued securities were admitted and commenced trading on AIM on 18th
December 2002. Simultaneously with the Group's admission to AIM, the ordinary
shares were cancelled from trading on the Official List.
Review of results
The Group recorded an EBITDA pre exceptional items of #1,657,000 for the second
half of the year (compared to a negative EBITDA of #1,177,000 for the same
period of the previous year) which together with a #206,000 EBITDA for the first
half (compared to a negative EBITDA of #1,106,000 for the same period of the
previous year) made a total for the year of #1,863,000 compared with a negative
EBITDA of #2,283,000 for the previous year.
The results included several items:
*Turnover of #52,104,000 (2002: #58,842,000)
*Redundancy costs of #785,000 (2002: #104,000)
*Positive cash flow reducing net debt to #803,000 (2002: #1,543,000).
*Further goodwill impairment of #5,107,000. (2002: #20,650,000)
By October 2002 the Group was trading profitably within its means albeit at a
much reduced level.
Dividends
The Directors have resolved that no dividend be paid for the year ended 31st
March 2003.
Major Events during the Year
During November 2002, Mr. Geremy Thomas, a founder of the Group and a major
shareholder, communicated to the Company that he wished to requisition an
Extraordinary General Meeting of Shareholders. The purpose of the EGM was to
remove all the existing directors from the Board, (save for Mr. David Bradfield,
Financial Director), replacing them by himself and his nominees. When this
became generally known one of the Group's major trading partners stated clearly
that their support would be withdrawn in the event of there being a change of
management control. This had potentially disastrous repercussions for the Group
and the future looked bleak.
The requisition of the EGM raised a number of serious issues, which deflected
the management from the day-to-day running of the Group, After lengthy
discussions a compromise agreement was reached whereby Mr. Geremy Thomas and one
of his nominees, Mr. Jeffrey Pack, joined the Board. Lord Stevens of Ludgate,
resigned as Chairman and as a director of the Company.
The Board would like to express its thanks to Lord Stevens for his coolheaded
leadership of the Group throughout this very difficult period.
Unfortunately the subsequent well publicised disagreements between Mr. Geremy
Thomas and the Group resulted in many creditors wishing to withdraw their
facilities and this together with a potential reduction of network commissions
left the Group facing the prospect of running out of money. After exploring many
alternatives and taking expert advice the directors concluded that it was in the
best interest of its employees and shareholders to put the business up for sale.
The best bid for the businesses of PNC Telecom Services Limited and KJC Mobile
Phones Limited, judged by the net cash position of the Group post sale was
received from Harthall Limited, now Vanguard Group Holdings Limited. Harthall
Limited offered #2,500,000 in cash plus the assumption of further liabilities of
approximately #1,200,000. This left the Company, after repayment of bank debt,
legal and selling expenses, with #1,822,000 in cash and certain tax benefits and
certain rights of legal action relating to, amongst others, Mr. Darren Ridge and
Mr. Joe Case, where KJC Mobile Phones Limited were originally a party to the
legal action. Certain of these rights of legal action have now been settled.
The Company entered into a contract on Friday 25th April 2003 to sell its two
principal trading businesses, KJC Mobile Phones Limited, the mobile phone retail
business, PNC Telecom Services Limited, the fixed line telecom business, and
three dormant subsidiaries, Piper Tel Communications Limited, The Personal
Number Company Limited and DIS Information Services Limited, to Harthall
Limited. The dormant subsidiaries PNC Tele-Plus Limited, Teleshield Limited, PNC
Telecom St Albans Limited, Talking Ads Limited, Pensiv Technologies Limited and
PNC Tele.net Limited, were not included in the sale.
After the sale of the trading businesses the Company was left with contingent
liabilities relating to 20 leasehold shops held in the name of the Company and a
further 6 shops where parent company guarantees had been given and certain
business contract and finance lease obligations. These contracts, leases and
guarantees, which should preferably have been entered into by one or other of
the trading companies, rather than the parent company, were the result of
decisions by management prior to May 2002. Harthall indemnified the Company
against these contingent liabilities.
Administration Order
On 23rd June a petition was presented to the High Court for the granting of an
Administration Order the main purposes of which were the survival of the Group
and the whole or any part of it as a going concern; the approval of a Voluntary
Arrangement under Part 1 of the Insolvency Act 1986; and a more advantageous
realisation of the Group's assets than would be effected on a winding-up. The
Joint Administrators, Christopher Laughton and Jonathan Birch, directors of the
business recovery group of Numerica, are dealing with the assignment or novation
of the business contracts, finance leases, property leases and the removal of
the Group's guarantee obligations. The Company's shares were suspended from
trading on the AIM market on 23rd June 2003 at 1.375p.
On 12th December 2003 an application to discharge the Administration was
presented to the High Court by Geremy Thomas. After considering evidence over
hearings on 17th and 18th December, the Judge adjourned the matter until 15th
January 2004.
Prospects
It is likely that in the Company will emerge from administration either at the
end of the current Administration Order, (31st May 2004), or before. In the
opinion of the Board, the criteria for emerging from Administration should be
either that the Joint Administrators have completed their original objective of
ensuring all the Company's contingent liabilities are negated, or that the Joint
Administrators have ensured that the estimated negotiable landlord claims and
unpaid rents, plus the contingent liabilities relating to the business contracts
and finance leases, are equal to or less than the net assets of the Company.
Currently the Company has net assets in the region of #1,000,000 and potential
claims against a former trading partner of the Company and one or more of the
Company's former officers. The Company continues to have a number of contingent
liabilities outstanding, which total #4,386,000. Numerica's estimate of the
landlord's mitigated claims is currently #805,000, which in their opinion
reduces the potential outstanding contingent liabilities to #1,100,000.
.
On emerging from Administration, the Company can decide whether a further
insolvency process is required, or, if assets exceed liabilities, whether there
is a use for the corporate shell, or whether money should be returned to
shareholders.
E.J.Peett CBE
Chairman
Operational Review
The Principal Activities
During the year under review the PNC business consisted of two trading
divisions: Corporate and Retail. The trading divisions were sold after the year
end to Harthall Ltd, part of the Vanguard Group.
The Corporate division had a range of products, centered on Inbound and Outbound
telephone calls, carrying traffic on PNC's own telephone network and its other
network suppliers, including Vodafone, Opal, MCI and Your Communications. The
division offered 07 (Personal) numbers, 08 (National Rate) numbers and 09
(Premium Rate) numbers. All calls on these numbers generated revenues. The
division also offered Least Cost Routing, taking a share of outbound call
revenue. Additionally the Corporate division offered the management and supply
of fleet mobile phones.
The Retail Division had high street stores under the KJC brand based in the
South and South West of England.
Trading Summary
The pressure of overcapacity in the telecommunications market led the new
management team to focus the business, reduce overheads and costs generally.
During the year, the loss making Internet business was sold and due to the lack
of revenues, the wholesale operation of the Retail Division was closed and its
one employee made redundant.
Overheads were cut by #5,200,000, with headcount reducing by 137, returning the
group to profitability.
The comparison, excluding exceptional items, of the first and second halves of
the year is:
Six Months to Year to
30/09/02 31/03/03 31/03/03 31/03/02
#'000s #'000s #'000s #'000s
Turnover 28,523 23,581 52,104 58,842
Gross margin 8,540 7,724 16,264 18,280
Overheads (8,334) (6,067) (14,401) (20,563)
EBITDA before 206 1,657 1,863 (2,283)
exceptional items
Depreciation (658) (447) (1,105) (1,727)
Profit before (452) 1,210 758 (4,010)
exceptional items
Corporate Division
Call traffic for the year totaled 144 million minutes which was slightly up on
the previous year. Further investment was made in the PNC network. Where viable,
call traffic was routed via the PNC network. The investment and increased volume
helped to improve the PNC network margins.
The Division's revenues overall grew by 16% in the year. This was assisted by
higher rates from the third party networks used by the Division. However
significant competitive pressure in the Premium Rate business (both from
existing customers and a new competitor set up in September 2002 by four ex
senior managers) resulted in a significant portion of the improved rates being
passed onto customers. Consequently, there was a decline in gross margin
percentage. Overheads were cut. The fleet mobile office was consolidated into
the Corsley Heath headquarters.
2003 2002
#'000 #'000
Turnover 27,559 23,822
Gross Margin 5,848 5,843
Gross Margin % 21% 25%
Retail Division - Shops and Mail Order
KJC retailed mobile phone handsets and accessories, plus airtime contracts for
Vodafone, T-Mobile and Phones 4U through KJC branded high street shops in the
South and South West of England and through mail order advertisments in the
tabloid national newspapers.
During the year KJC closed seven loss making shops. In addition the logistics
and warehousing operation was outsourced and the Fareham warehouse was closed.
The KJC headquarters at Lee-on-Solent was closed and the operations consolidated
into Corsley Heath. These all contributed to substantial cost savings. Pressure
on margins continued as the networks reduced the level of support for signing
new contracts. The careful monitoring of phone sales and the introduction of
accessory lines increased margins.
From this base KJC expanded with the opening of new stores in Bristol and
Plymouth.
2003 2002
#'000 #'000
Turnover 24,545 33,786
Gross Margin 10,416 11,203
Gross Margin % 42% 33%
Retail Division - Distribution
The wholesale operation acted as a broker of mobile phones. The division entered
into an arrangement whereby it would, in exchange for loan capital, receive a
profit share on transactions.
Revenues had declined since the wholesale operation was acquired, as part of the
purchase of KJC Mobile Phones Limited. No income was received in this financial
year. Due to the lack of revenue and the absence of any business plan from the
operation's sole employee, the wholesale division was closed and its employee
made redundant.
2003 2002
#'000 #'000
Turnover - 1,234
Margin - 1,234
GP % - 100%
Exceptional and Non-Recurring Items
During the first trading quarter, the Group conducted a strategic review of the
markets the Group operated in and how the Group was organised to meet these
market demands. The strategic review indicated that the Group needed to
fundamentally reorganise the Retail Division and restructure the cost base
across all parts of the Group which was inappropriate for the highly competitive
telecommunications market in which the Group was operating in. Earnings for the
year were consequently affected by a number of exceptional costs relating to the
reorganisation and restructuring. Exceptional costs included #785,000 (2002:
#104,000) for staff termination costs; #545,000 (2002: #nil) for Retail shop and
warehouse closures; an additional #295,000 (2002: #nil) stock provision;
#207,000 (2002 #nil) on other non recurring restructuring costs and #15,000
(2002 #82,000) on abortive acquisition costs. Closure of the wholesale operation
and sale of the Internet business led to a loss on the termination of #175,000.
The costs of dealing with the requisitioned EGM detailed in the Chairman's
Statement totaled #344,000 (2002: #nil).
The Group undertook a review of all acquisitions and in 2002 recorded a Goodwill
impairment of #20,650,000. Prior to 31st March 2003 it was deemed necessary to
write down Goodwill by a further #5,881,000. Tangible fixed assets were also
impaired by #567,000 (2002: #240,000).
F
ollowing sale of its trading subsidiaries, the Group no longer has an ongoing
business and accordingly the going concern basis of preparation is no longer
appropriate and the financial statements have been prepared on a break-up basis.
A #641,000 (2002: #nil) provision has been made for the costs involved in
running the Company from 1st April 2003, through to the end of Administration.
Balance Sheet and Cash Generation
Working capital was significantly reduced due to tighter controls on stock and
cash.
Net bank debt was reduced to #24,000 at the year end (2002: #368,000) and total
net debt was #803,000 (2002: #1,543,000).
The Group made substantial advances in creditor and debt reduction in the year.
However, continued pressure from stakeholders to de-risk their position left the
Group with the prospect of running out of money.
2003 2002
#'000 #'000
Stock 614 1,274
Trade Debtors 3,615 5,213
Trade Creditors 4,765 5,771
Post Balance Sheet Events
The Group entered into a contract on Friday 25th April 2003 to sell its two
principal trading businesses, KJC Mobile Phones Limited, the mobile phone retail
business, PNC Telecom Services Limited, the fixed line telecom business, and
three dormant subsidiaries, Piper Tel Communications Limited, The Personal
Number Company Limited and DIS Information Services Limited, to Harthall
Limited. The dormant subsidiaries PNC Tele-Plus Limited, Teleshield Limited, PNC
Telecom St Albans Limited, Talking Ads Limited, Pensiv Technologies Limited and
PNC Tele.net Limited, were not included in the sale.
Immediately after the sale of the trading businesses the Company had the
following proforma balance sheet
#'000
Current Assets:
Debtors 27
Cash 1,822
-------
1,849
Creditors due within 1 year (813)
-------
Net Assets 1,036
=======
Shareholders Funds:
Share capital 2,404
Share premium account 48,033
Retained eanings (49,401)
----------
1,036
==========
After the sale of the businesses the Company was left with contingent
liabilities related to 20 leasehold shops held in the name of the Company and a
further 6 shops where parent company guarantees had been given and certain
business contract and finance lease obligations. These contracts, leases and
guarantees, which should preferably been entered into by one or other of the
trading companies rather than the parent company were the result of decisions by
management prior to May 2002.
On 23rd June a petition was presented to the High Court for the granting of an
Administration Order the main purpose of which were the survival of the Company
and the whole or any part of it as a going concern; the approval of a Voluntary
Arrangement under Part 1 of the Insolvency Act 1986; and a more advantageous
realisation of the Company's assets than would be effected on a winding-up. The
Joint Administrators, Christopher Laughton and Jonathan Birch of Numerica, are
dealing with the assignment or novation of the business contracts, finance
leases, property leases and the removal of the Company's guarantee obligations.
The Company's shares were suspended from trading on the AIM market on 23rd June
2003 at 1.375p.
At the date of the Report and Accounts, 10 out of the 26 shop leases had been
assigned or surrendered and no business contracts had been novated to Harthall
Limited or another member of the Vanguard Group. The remaining shops and
business contracts have a combined estimated contingent liability of #4,386,000.
On 12th December 2003 an application to discharge the Administration was
presented to the High Court by Geremy Thomas and Joe Case. After considering
evidence over hearings on 17th and 18th December, the Judge adjourned the matter
until 15th January 2004.
It is likely that in the Company will emerge from administration either at the
end of the current Administration Order, (31st May 2004), or before. Currently
the Company has net assets in the region of #1,000,000 and potential claims
against a former trading partner of the Company and one or more of the Company's
former officers. The Company continues to have a number of contingent
liabilities outstanding, which total #4,386,000. Numerica's estimate of the
landlord's mitigated claims is currently #805,000, which in their opinion
reduces the potential outstanding contingent liabilities to #1,100,000.
Ian Gray
Group Chief Executive
Consolidated Profit and Loss Account
Year ended 31st March 2003
31st March 2003
Before Exceptional Total
Exceptional Items
items
#'000 #'000 #'000
Group Turnover 52,104 - 52,104
______ _______ ______
52,104 - 52,104
Operating expenses
before depreciation,
amortisation and
impairment (50,241) (2,123) (52,364)
EBITDA 1,863 (2,123) (260)
Depreciation (1,105) - (1,105)
Impairment of tangible
fixed assets - (567) (567)
Profit/(Loss) before
interest, tax and
amortisation of
intangibles and
impairment of
intangibles 758 (2,690) (1,932)
Amortisation of
goodwill and
intangibles (1,375) - (1,375)
Impairment of goodwill
and intangibles - (5,881) (5,881)
Group Operating Loss (617) (8,571) (9,188)
Loss on disposal of
fixed assets - (298) (298)
Profit/(loss) on
termination of
operation - (175) (175)
Group fundamental
reorganisation costs - (726) (726)
(617) (9,770) (10,387)
Loss on ordinary
activities before
interest and tax
Interest receivable and
similar income 20 - 20
Interest payable and
similar charges (164) - (164)
Loss on ordinary
activities before tax (761) (9,770) (10,531)
Tax on loss on ordinary
activities (209) - (209)
Retained loss for the
year (970) (9,770) (10,740)
pence
(Loss)/earnings per
share (22.34)
Diluted (loss)/earnings
per share (22.34)
On Friday 25th April 2003 the Group sold its two principal trading businesses.
Following the disposal, the Company has no ongoing business and all activities
up until 31st March 2003 are classed as discontinued.
Consolidated Profit and Loss Account
Year ended 31st March 2002
31st March 2003
Before Exceptional Total
Exceptional Items
items
#'000 #'000 #'000
Group Turnover 58,842 - 58,842
______ _______ ______
58,842 - 58,842
Operating expenses before
depreciation, amortisation and
impairment (61,125) (333) (61,458)
EBITDA (2,283) (333) (2,616)
Depreciation (1,487) - (1,487)
Impairment of tangible
fixed assets (240) - (240)
Loss before interest, tax and
amortisation of intangibles and
impairment of intangibles (4,010) (333) (4,343)
Amortisation of
goodwill and
intangibles (4,207) - (4,207)
Impairment of goodwill - (20,650) (20,650)
Group Operating Loss (8,217) (20,983) (29,200)
Loss on disposal of
fixed assets - (413) (413)
Loss on termination of operation - - -
Group fundamental reorganisation
costs - - -
Loss on ordinary
activities before
interest and tax (8,217) (21,396) (29,613)
Interest receivable and
similar income 9 - 9
Interest payable and
similar charges (230) - (230)
Loss on ordinary
activities before tax (8,438) (21,396) (29,834)
Tax on loss on ordinary
activities 900 44 944
Retained loss for the
year (7,538) (21,352) (28,890)
(Loss)/earnings per share Pence
(60.08)
Diluted (loss)/earnings
per share (60.08)
On Friday 25th April 2003 the Group sold its two principal trading businesses.
Following the disposal, the Company has no ongoing business and all activities
up until 31st March 2003 are classed as discontinued.
Consolidated Balance Sheet
31st March 2003
2003 2002
#'000 #'000
Fixed Assets
Intangible assets 2,605 9,749
Tangible assets 2,264 4,030
_____ ______
4,869 13,779
Current Assets
Stock 614 1,274
Debtors 4,842 7,542
Cash at bank and in hand 408 1,155
______ ______
5,864 9,971
Creditors: Amounts falling due within one year (9,021) (11,088)
Net Current (Liabilities)/Assets (3,157) (1,117)
Total Assets less Current Liabilities 1,712 12,662
Creditors: Amounts falling due after more than one (131) (658)
year
Provision for Liabilities and Charges (545) (408)
Net Assets 1,036 11,596
===== ======
Capital and Reserves
Called up share capital 2,404 2,404
Share premium account 48,033 48,033
Profit and loss account (49,401) (38,841)
Equity Shareholders' Funds 1,036 11,596
Consolidated Cash Flow Statement
Year ended 31st March 2003
2003 2002
#'000 #'000
Net cash inflow/(outflow) from operating activities 611 1,842
Returns on investment and servicing of finance
Interest received 20 3
Interest paid (164) (183)
_____ _____
(144) (180)
Taxation
Taxation refund received 409 -
Taxation paid - (384)
____ _____
409 (384)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (304) (500)
Proceeds from the sale of tangible fixed assets 168 152
____ ____
(136) (348)
Acquisitions and Disposals - (27)
____ ____
- (27)
Financing
Hire purchase repayments (546) (425)
Supplier loan 300 -
Loan repayments (150) -
_____ ____
(396) (425)
Increase/(decrease) in cash 344 478
Notes to the Financial Statements
Year ended 31 March 2003
1. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2002 or 31 March 2003 but is
derived from these accounts. Statutory accounts for 2002 have been delivered
to the Registrar of Companies in England and Wales, and those for 2003 will
be delivered following the Company's annual general meeting.
The financial statements have been prepared on a break-up basis. The
carrying value of the investments in subsidiaries (and associated goodwill)
and intercompany balances have been written down to recoverable amounts.
Adjustments have been made to provide for all the foreseeable costs through
to the Company exiting administration
2. EARNINGS PER SHARE
The weighted average number of shares used was:
2003 2002
#'000 #'000
Basic 48,084 48,084
Diluted 48,084 48,084
In the diluted EPS calculation, share options with an exercise price of less
than the average share price for the year have not been treated as dilutive
where to do so would decrease the net loss per share.
The (losses)/profits used were:
2003 2003 2002 2002
#'000 pence #'000 pence
per share per share
Basic EPS (10,740) (22.34) (28,890) (60.08)
Loss for the year
Diluted EPS (10,740) (22.34) (28,890) (60.08)
Loss for the year and
loss per share
For diluted earnings per share, the weighted average number of ordinary
shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. These represent share options granted to employees where
the exercise price is less than the average market price of the Company's
shares during the year.
3. POST BALANCE SHEET EVENTS
The Company entered into a contract on Friday 25th April 2003 to sell its
two principal trading businesses, KJC Mobile Phones Limited, the mobile
phone retail business, PNC Telecom Services Limited, the fixed line telecom
business, and three dormant subsidiaries, Piper Tel Communications Limited,
The Personal Number Company Limited and DIS Information Services Limited, to
Harthall Limited. The dormant subsidiaries PNC Tele-Plus Limited, Teleshield
Limited, PNC Telecom St Albans Limited, Talking Ads Limited, Pensiv
Technologies Limited and PNC Tele.net Limited, were not included in the
sale.
The consideration for the disposal comprised #2.5m cash and the assumption
of a number of benefits and obligations of the Company's business and lease
contracts, including leasing finance, compromise agreement payments and all
employment contracts. Payment of #0.25m of the consideration was deferred
until 7th May 2003.
Following the disposal, the Company had no ongoing business and its
principal asset was the cash consideration, net of the expenses of the
disposal and other Company liabilities, which will be placed on deposit. The
other assets of the Company included tax benefits and certain rights of
legal action relating to amongst others, Mr. Darren Ridge and Mr. Joe Case,
where KJC Mobile Phones Limited were a party to the legal action.
Liabilities excluded from the contract were tax liabilities and liabilities
to non-executive directors. Certain leases and business contracts included
in the sale of the subsidiaries above, entered into prior to May 2002, were
not completed in the name of the relevant trading subsidiary, but completed
in the name of the PLC company, or by the granting of a PLC guarantee.
Liabilities are possible until these business and lease contracts are
assigned or novated to Harthall Limited, notwithstanding Harthall Limited's
undertaking to assume them and indemnify the company against each liability.
The value of these contingent liabilities at 23rd June 2003 were #6,138,000.
As none of the matters upon which the liabilities are contingent were under
the Company's control, it was decided to prevent the risk of the Company's
contingent liabilities crystalising at a level greater than that of its
assets and thereby creating an inevitable insolvency process. Having taken
advice from Numerica business recovery group, the Directors deemed that an
administration order was the most suitable course of action, putting in
place a statutory moratorium and protecting the Company's assets, whilst its
contingent liabilities were dealt with in the most appropriate manner.
Consequently on 23rd June 2003, the Directors applied to the High Court for
an administration order over PNC Telecom. The administration order was made
and Christopher Laughton and Jonathan Birch, directors of the business
recovery group of Numerica were appointed Joint Administrators of the
Company. The Company's shares were suspended from trading on the AIM market
on 23rd June 2003 at 1.375p.
On 12th December 2003 an application to discharge the Administration was
presented to the High Court by Geremy Thomas. After considering evidence
over hearings on 17th and 18th December, the Judge adjourned the matter
until 15th January 2004.
It is likely that in the Company will emerge from administration either at
the end of the current Administration Order, (31st May 2004), or before. In
the opinion of the Board, the criteria for emerging from Administration
should be either that the Joint Administrators have completed their original
objective of ensuring all the Company's contingent liabilities are negated,
or that the Joint Administrators have ensured that the estimated negotiable
landlord claims and unpaid rents, plus the contingent liabilities relating
to the business contracts and finance leases, are equal to or less than the
net assets of the Company. Currently the Company has net assets in the
region of #1,000,000 and potential claims against a former trading partner
of the Company and one or more of the Company's former officers. The Company
continues to have a number of contingent liabilities outstanding, which
total #4,386,000. Numerica's estimate of the landlord's mitigated claims is
currently #805,000, which in their opinion reduces the potential outstanding
contingent liabilities to #1,100,000.
.
The Directors have provided in the Accounts for the consequences of selling
the trading subsidiaries and entering into administration. The effect of
these provisions is detailed below.
Ref Prior to Group Post Total per Prior to Sale Company Total per
Sale and Balance Balance and Administra- Post Balance
Administra- Sheet Sheet tion Balance Sheet
tion Event Sheet
#'000 #'000 #'000 #'000 #'000 #'000
Fixed
Assets
Intangible
Assets and
goodwill 2,605 - 2,605 - - -
Fixed 2,264 - 2,264 - - -
Assets
_____ ____ _____ ____ ____ ____
4,869 - 4,869 - - -
Current
Assets
Stock 614 - 614 - - -
Debtors (i) 4,859 (17) 4,842 2,466 (388) 2,078
Cash 408 - 408 - - -
_____ ____ _____ _____ ____ ____
5,881 (17) 5,864 2,466 (388) 2, 078
Creditors
due (ii) (8,552) (469) (9,021) (573) (469) (1,042)
within
1 year
Net Current
Assets/
(Liabilities) (2,671) (486) (3,157) 1,893 (857) 1,036
Total Assets
less
Current
Assets/
(Liabilities) 2,198 (486) 1,712 1,893 (857) 1,036
Creditors due
in more than
1
year (131) - (131) - - -
Provision for
Liabilities
and Charges (545) - (545) - - -
Net Assets 1,522 (486) 1,036 1,893 (857) 1,036
i. Write off of non recoverable other debtors, #17,000, (Group and Company).
Write off required on preparing the accounts on a break up basis, #371,000,
(Company).
ii. Known running costs of the Company in the period 1st April 2003 to 31st
March 2004, #(641,000), (Group and Company), less amounts due on compromise
agreements novated to PNC Telecom Services Limited.
Following sale of its trading subsidiaries, the Group no longer has an ongoing
business and accordingly the going concern basis of preparation is no longer
appropriate and the financial statements have been prepared on a break-up basis.
As a result of preparing the financial statements on a break up basis a
provision has been made for running the Company in the period 1st April 2003 to
31st March 2004. This provision comprises:-
#'000
Costs of the Company from 1st April 2003 to the granting of the
Administration order on 23rd June 2003 235
Audit & taxation fees 42
Bank & finance charges 11
Joint Administrators fees to 18th December 2003 58
Estimated Joint Administrators fees to the end of the
Administration 117
period
Joint Administrators third party legal fees 62
Other costs during and to the end of Administration 36
Legal fees in relation to litigation 255
Receipt following settlement of litigation (175)
_____
641
4.Copies of the published accounts of the Company will be sent to all
shareholders and will be available during normal business hours from the offices
of Seymour Pierce Limited at Bucklersbury House, 3 Queen Victoria Street, London
EC4N 8EL.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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