RNS Number:7226Y
PC Medics Group PLC
16 July 2002
CHIEF EXECUTIVE OFFICER STATEMENT
FOR THE YEAR ENDED 31 MARCH 2002
The statement at the time of the Interims (30th September 2001), written in
early November, was upbeat and the Group had every reason for optimism however,
the second half of the year proved much more difficult with the Group suffering
a severe and unexpected fall in sales. Despite these more challenging trading
conditions I am pleased to report that the management team have taken the
necessary action to rectify this situation and we now believe that the company
is well positioned to continue to grow, albeit at a more conservative rate.
The Group has incurred a serious loss of capital as defined in section 142 of
the Companies Act 1985 and are convening an Extraordinary General Meeting to
consider this. For the avoidance of doubt the accounts are not qualified in any
respect.
The single most important challenge for the Group's future is to maintain a
thriving sales department and the Group have now in place a highly motivated and
successful team which is delivering results. The Group re-launched its
services in September last year following the introduction of its new Web-based
remote access ability, and this involved the increase of our annual membership
from £90 to £150 and the removal of our premium line telephony in lieu. The
Group expected and got some price resistance, but believes it is now attracting
a better size and quality of customer. New recruits and the development of our
reseller and affiliate programme are beginning to realise early promise and will
shortly, it believes, justify confidence in the future.
The Group's reseller programme, whereby manufacturers, retailers, software
companies and those who specialise in on-site support resell our memberships to
their customers to provide them with Smart Helpdesk support, is proving a useful
route to market. In pursuing this vigorously the Group have introduced the PC
Medics concept to a number of industry colleagues and gained many new
associations throughout the UK that should become profitable in the near future.
The Group also have in place an affiliate programme which is intended to build a
database of IT support companies and people outside the Central London area.
With the remote access capability being able to resolve some 80% of all problems
over the telephone and via the Web, we need a reliable source of on-site support
to cater to the needs of the other 20%, and allow us to sell our memberships
throughout the UK.
The delivery of remote access support via the Web is proving successful and the
Group are confident that this is the way ahead, ie the delivery of IT support
on-line rather than on-site. This method of operating has the effect of
significantly reducing our reliance on the field technical force, and we have
already been able to reduce our headcount as a result.
PC Medics remains a fledgling company with less than three years of trading
history. In that time, thanks to shareholders support both at admission to Ofex
in March 2000 and AIM in May 2001, the Group has come a long way towards
achieving its goal of becoming the IT support company of choice for smaller SMEs
and SoHo/domestic users.
Finally I thank my fellow Board members for their extraordinary support and
commitment to our business. The executive directors have taken significantly
reduced salaries, foregone bonus payments that were awarded by the remuneration
committee at the beginning of the financial year, and worked long and unsociable
hours. With shareholders support the Group can continue to press that commitment
into the service of profitable growth in the near future.
Robin Parker
Chief Executive Officer
15 July 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2002
Notes 2002 2001
£ £
Turnover 1 967,501 711,827
Cost of sales (617,457) (522,989)
350,044 188,838
Administrative expenses (1,116,504) (1,212,795)
Operating loss 2 (766,460) (1,023,957)
Interest payable and similar charges 3 (1,718) (3,544)
Interest receivable 6,210 19,984
Loss on ordinary activities before taxation (761,968) (1,007,517)
Tax on loss on ordinary activities 4 - -
Loss on ordinary activities after taxation (761,968) (1,007,517)
Loss for the financial period (761,968) (1,007,517)
Basic loss per share as previously published 6 - (6.30p)
As restated 6 (0.64p) (1.57p)
Fully diluted loss per share 6 (0.64p) (1.57p)
All income was derived from within the United Kingdom.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The group has no recognised gains or losses other than the loss for the financial year.
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2002
Notes 2002 2001
£ £ £ £
Fixed assets
Intangible assets 6,250 78,085
Tangible assets 107,279 142,717
113,529 220,802
Current assets
Stocks 4,700 4,825
Debtors 168,733 159,110
Cash at bank 128,330 101,532
301,763 265,467
Creditors: Amounts falling
due within one year 335,991 604,843
Net current liabilities (34,228) (339,376)
Total assets less current
Liabilities 79,301 (118,574)
Creditors: Amounts falling due
after more than one year (2,490) (3,262)
76,811 (121,836)
Capital and reserves
Called up share capital 8 333,380 160,000
Share premium account 9 1,705,815 918,580
Profit and loss account 9 (1,962,384) (1,200,416)
Equity shareholders' funds 76,811 (121,836)
These financial statements were approved by the Board of Directors on 15 July 2002.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD 1 APRIL 2001 TO 31 MARCH 2002
Note 2002 2001
£ £ £ £
Net cash outflow from
Operating activities 10 (910,318) (615,768)
Return on investments and
Servicing of finance
Interest received 6,210 19,984
Interest paid (462) (1,509)
Interest element of finance lease
Payments (1,256) (2,035)
Net cash inflow from 4,492 16,440
Returns on investment and
Servicing of finance
Taxation 231 6,033
Capital expenditure and financial
Investment
Purchase of intangible fixed assets - (15,000)
Purchase of tangible fixed assets (33,884) (158,839)
Sale of tangible fixed assets 6,144 4,910
Net cash (outflow) for capital
Expenditure and financial
Investment (27,740) (168,929)
Acquisitions and disposals
Purchase of subsidiary undertaking - (1)
Net cash acquired with Subsidiary - 39,127
Net cash inflow for
Acquisition and disposals - 39,126
Cash outflow before use of liquid
Resources and financing (933,335) (723,098)
Financing
Issue of equity share capital 173,380 -
Premium on issue of share capital 1,106,563
Expenses paid in connection with (319,328)
share issue
Capital repayment on finance (482) (5,490)
Leases
Net cash inflow/(outflow) from financing 960,133 (5,490)
Increase/(Decrease) in cash 11 26,798 (728,588)
ACCOUNTING POLICIES
Financial information
The financial information included in the above statement is an abridged version of the Group's accounts for the year
ended 31 March 2002, and does not constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985.
The Group's statutory accounts for the period ended 31 March 2002 have been reported on by the Company's auditors and
their report was unqualified.
Basis of accounting
The financial statements have been prepared under the historical cost convention and in accordance with applicable
accounting standards and on a going concern basis which the directors consider appropriate given their continued
support and the continued support of the Group's bankers who, as stated in the directors' report in the full
financial statements, following the year end have agreed to provide a bank overdraft facility to the Group.
The most significant accounting policies are described below.
Basis of consolidation
The consolidated financial statements incorporate the results of the Company and all its subsidiary undertakings as
if they were a single entity.
The accounts have been consolidated using the acquisition method of accounting.
Turnover
Turnover represents the invoiced amount of goods sold and services provided, and is stated net of VAT. Income from
maintenance contracts and service contracts is spread evenly over the contract term.
Intangible assets - Goodwill
Goodwill represent the excess of the cost of acquisition over the fair value of the separable net assets acquired. In
accordance with FRS10, "Goodwill and Intangible Assets," goodwill is capitalised and amortised in equal instalments
over its estimated useful economic life.
Intangible assets - Licences
Licences are valued at cost less accumulated amortisation. Amortisation is calculated to write off the cost in equal
annual instalments over their estimated useful lives.
Tangible fixed assets
Tangible fixed assets are stated at cost less provision for depreciation. Depreciation is provided on all tangible
fixed assets at rates calculated to write off the cost of each asset less its estimated residual value evenly over
its estimated useful life, as follows:
Computer equipment over three years
Office equipment over four years
Motor vehicles over two years
Stocks
Stocks are valued at the lower of cost and net realisable value
Leasing and finance lease commitments
Assets obtained under hire purchase contracts and finance leases are capitalised in the balance sheet and depreciated
over their useful lives. The interest element of the rental obligations is charged to the profit and loss account
over the period of the contract and represents a constant proportion of the balance of capital payments outstanding.
Rentals paid under operating leases are charge to the profit and loss account on a straight line basis over the term
of the lease.
Deferred taxation
Provision is made at current rates for taxation deferred in respect of all material timing differences except to the
extent that, in the opinion of the Directors, there is a reasonable probability that the liability will not
crystallise in the foreseeable future.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
Leases
Assets held for use in operating leases are included as a separate category in fixed assets at cost and depreciated
over their useful life. Rental income from operating leases are recognised on a straight line basis over the term of
the lease.
Pensions
Following the acquisition of Heed Limited, PC Medics (London) Limited took over operating its defined contribution
pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered
fund. The pension costs charged in the consolidated financial statements represent contributions payable by the
company during the period in accordance with FRS17.
Website development costs
Website development costs are written off as they are incurred in accordance with UITF 29.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2002
1 Turnover
The total turnover of the Group for the period has been derived from its principal activity wholly undertaken in the
United Kingdom.
The post acquisition results of the acquired operations have not been separately disclosed as the businesses were
integrated into the existing operations, and it is not possible to separately identify the post acquisition results.
2 Operating loss
2002 2001
£ £
Operating loss is stated after charging/(crediting):
Depreciation of tangible fixed assets:
- owned assets 55,778 44,410
- assets held under hire purchase contracts and
finance leases 2,975 4,915
Website development costs written off - 15,000
Amortisation of intangible fixed assets 71,835 65,885
Auditors' remuneration:
- audit services 21,900 12,900
- non-audit services 29,044 24,035
Operating lease payments
- land and buildings 71,881 75,468
3 Interest payable
2002 2001
£ £
On bank overdrafts and other loans 462 1,509
On finance leases 1,256 2,035
1,718 3,544
4 Taxation
No liability to corporation tax arises due to losses incurred. At 31 March 2002 the Group had corporation tax losses
of approximately £1,900,000 (31 March 2001: losses £1,200,000) to set against profits of the same trade, subject to
agreement by the Inland Revenue.
5 Loss attributable to ordinary shareholders
The Company has taken advantage of the exemption under Section 230 (1)(b), (4) of the Companies Act 1985 from
presenting its own profit and loss account. The loss dealt with in the financial statements of the Company was
£2,087,106 (31 March 2001 loss £2,447).
6 Loss per share
The calculation of the basic loss per share is based on the loss for the period after tax of £761,968 (31 March 2001
£1,007,517) and on 117,900,650 (31 March 2001 restated 64,000,000) ordinary shares, being the weighted average number
of ordinary shares in issue during the period. The previous year's loss per share has been restated to take account
of the conversion of the nominal value of ordinary shares from shares of 1p each to shares of 0.25p each in May 2001.
In calculating the fully diluted loss per share, share options and warrants have been considered to be non-dilutive
because their exercise price are above the current share price.
7. Deferred taxation
There is no liability to deferred taxation provided in the financial statements due to the trading losses incurred in
the period.
8. Share capital
2002 2001
Authorised £ £
1,000,000,000 Ordinary shares of 1p each - 10,000,000
4,000,000,000 Ordinary shares of 0.25p each 10,000,000 -
10,000,000 10,000,000
Allotted, called up and fully paid - 160,000
16,000,000 Ordinary shares of 1p each 333,380 -
133,352,152 Ordinary of 0.25p each
On 8 May 2001 the 16,000,000 ordinary 1p shares were subdivided into 64,000,000 ordinary 0.25p shares.
On 11 May 2001 55,072,152 ordinary 0.25p shares were issued through a placing and open offer at a value of 2p
per share.
On 20 November 2001 13,800,000 ordinary 0.25p shares were issued through a placing with Fitel Nominees Limited
at 1.25p per share.
A further 480,000 ordinary 0.25p shares were issued for 1.25p per share on 12 February 2002.
Warrants
On 11 May 2001, 27,536,076 warrants were issued. Registered holders of warrants have the right to subscribe for
1 ordinary share in the Company at 4p per share at any time up to and including 30 June 2003.
Share option schemes
At 31 March 2002 the following share options were outstanding:
Date options granted Number of options Description of shares Exercise price Period over which the
granted option granted upon option is exercisable
1/2/00 3,200,000* Ordinary shares of 6.25p* 5 years from date of
0.25p* grant
7/2/00 1,920,000* Ordinary shares of 6.25p* 5 years from date of
0.25p* grant
9/4/01 7,144,330 Ordinary shares of 0.25p 2p 5 years from 10/5/01
*Terms restated to reflect the subdivision of the Company's share capital which took place on 8 May 2001.
9. Reserves
Group Share premium Profit and loss account
£ £
At 31 March 2001 918,580 (1,200,416)
Premium on shares issued during the year 1,106,563 -
Issue costs (319,328) -
Loss for the year - (761,968)
At 31 March 2002 1,705,815 (1,962,384)
10. Reconciliation of operating loss to net cash
outflow from operating activities
2002 2001
£ £
Operating loss (766,460) (1,023,957)
Depreciation of tangible fixed assets 58,753 52,060
Amortisation of intangible fixed assets 71,835 65,884
Decrease/(increase) in stock 125 (2,196)
(Increase)/decrease in debtors (9,854) 71,884
(Decrease)/increase in creditors (269,142) 224,412
Profit on disposal of tangible fixed assets 4,425 (3,855)
Net cash outflow from operating activities (910,318) (615,768)
11. Reconciliation of net cashflow to movement
in net funds
2002 2001
£ £
Increase/(decrease) in cash in the period 26,798 (728,588)
Cash outflow from decrease in debt 482 5,490
Change in net debt resulting from cash flows 27,280 (723,098)
Loans and finance leases acquired with subsidiary - -
New finance leases and hire purchase contracts - (9,000)
Movement in funds in the period 27,280 (732,098)
Opening net funds 93,571 825,669
Closing net funds 120,851 93,571
12. Dividends
The directors are unable to declare a dividend because the company does not have distributable reserves (2001: £Nil).
13. Full financial statements
Full financial statements will be available at the Company's registered office and will be posted to shareholders on
22 July 2002.
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