Hello Telecom (UK) Plc. Report and Financial Statements. 30 September 2009

Transcription

1 Registered number Hello Telecom (UK) Plc Report and Financial Statements 30 September 2009

2 Report and financial statements Contents Page Company information 1 Chairman's Report 2 Chief Executive's Statement 3 Directors' report 4 Statement of directors' responsibilities 5 Independent auditors' report 6 Profit and loss account 7 Statement of total recognised gains and losses 8 Balance sheet 9 Cash flow statement 10 Notes to the financial statements 11

3 Company Information Directors K Grundy S C Jansky C Panayi R K Pedley Secretary D Papworth Auditors Just Audit Limited Chartered Accountants and Statutory Auditor Strelley Hall Strelley Nottingham Nottinghamshire NG8 6PE Registered office Musters Road West Bridgford Nottingham NG2 7PP Registered number Incorporation date 18 July

4 Chairman's Report For the year ended 30 September 2009 The previous year was an interesting and varied one for all at Hello. Our acquisition of the TelNG VoIP service capability has bedded in well and has, to the satisfaction of the Directors, proven to be a well judged and very positive development. The acquisition has also brought new distribution partners and has added revenues and profits to the company. We feel that we are well placed to benefit from a wide spread acceptance of and demand for Next Generation Network telecoms services. We anticipate that the hitherto relatively slow take up of VoIP services in the business sector will increase markedly during 2009/2010. The key to success in this area is to attract the support of the telecoms resellers and to assist them to sell our services into the market. We have made substantial progress in that endeavour and in the first quarter of the new year have signed distribution contracts with four major new partners. The board of Hello are looking forward to 2010 and the opportunities it will bring in terms of customer growth and increased profitability. Ken Grundy Chairman 2

5 Chief Executive's Statement For the year ended 30 September 2009 With talk of recession all round, 2008/9 was a difficult trading period for many UK companies. In contrast, Hello's performance was a significant improvement on the previous period and before amortisation and depreciation we returned a modest trading profit. This is in large part due to Hello's development of the new network capabilities we acquired in 2008 and the expansion into new markets. There were a number of cost reduction measures which we were unable for technical reasons to implement during the year but which are now being put in place. During the year we expanded our B2B VoIP sales operation by signing up new Dealers and Resellers for the services. These companies sell the services as their own offering under a white label arrangement. This is just the beginning of this new activity which we anticipate will grow to become the main focus of Hello's growth over the next few years. The past year also saw the addition of new members of staff to strengthen our technical base. Our VoIP offering is already among the most feature rich available at our price point and we intend that it will remain so. The company's risks and uncertainties include developing new technologies, the ability to generate revenues, competition and its dependence on key directors. These are monitored on a timely basis by the directors and business decisions adjusted accordingly. The key performance indicators of the business are turnover and gross profit percentage. These are shown on page 7. Steve Jansky Chief Executive 3

6 Directors' Report The directors present their report and financial statements. Principal activities and review of the business The company's principal activity during the year continued to be that of telecommunications services. The review of the business, including future developments and details of research and development activities is set out in the Chairman's Report on page 2 and the Chief Executive's Statement on page 3. Dividends No dividends will be distributed. Directors The following persons served as directors during the year: K Grundy S C Jansky C Panayi R K Pedley Disclosure of information to auditors Each person who was a director at the time this report was approved confirms that: so far as he is aware, there is no relevant audit information of which the company's auditor is unaware; and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information. The Statement of Directors Responsibilities is shown on page 5. This report was approved by the board on 29 January SC Jansky Director 4

7 Statement of Directors' Responsibilities The directors are responsible for preparing the report and financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial 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 UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; 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 adequate accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 5

8 Independent auditors' report to the shareholder of Hello Telecom (UK) Plc We have audited the financial statements of Hello Telecom (UK) Plc which comprise the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement, the Statement of Total Recognised Gains and Losses and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company's members, as a body, in accordance with Section 495 of the Companies Act Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. Opinion on the financial In our opinion the financial statements: give a true and fair view of the state of the company's affairs as at 30 September 2009 and of its loss for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statememts. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Rachel Davis (Senior Statutory Auditor) Strelley Hall for and on behalf of Just Audit Limited Strelley Chartered Accountants and Statutory Auditor Nottingham 29 January 2010 Nottinghamshire NG8 6PE 6

9 Profit and Loss Account Notes Turnover 2 1,159, ,700 Cost of sales (797,484) (640,244) Gross profit 361, ,456 Administrative expenses (385,757) (353,214) Overheads (343,921) (322,314) Operating profit/(loss) before amortisation of intangible assets 17,975 (12,858) Amortisation of intangible assets (41,836) (30,900) Operating loss 3 (23,861) (43,758) Interest receivable 9 1,667 Interest payable and similar charges 6 (20,844) (20,114) Loss on ordinary activities before taxation (44,696) (62,205) Tax on loss on ordinary activities 7 - (5) Loss for the financial year (44,696) (62,210) Earnings per share expressed in pence per share: Basic Diluted Continuing operations None of the company's activities were acquired or discontinued during the above two financial years. The annexed notes form part of these financial statements. 7

10 Statement of total recognised gains and losses Notes Loss for the financial year (44,696) (62,210) Total recognised gains and losses related to the year (44,696) (62,210) Prior year adjustments 25 (14,399) Total recognised gains and losses since last accounts (59,095) 8

11 Registered number Balance Sheet as at 30 September 2009 Notes Fixed assets Intangible assets 8 768, ,600 Tangible assets 9 51,167 1, , ,893 Current assets Debtors ,003 91,570 Cash at bank and in hand 33, ,258 91,570 Creditors: amounts falling due within one year 11 (196,007) (303,377) Net current liabilities (56,749) (211,807) Total assets less current liabilities 762, ,086 Creditors: amounts falling due after more than one year 12 - (123,531) Net assets 762,979 98,555 Capital and reserves Called up share capital , ,223 Share premium , ,785 Undistributable reserve 16 33,899 - Profit and loss account 17 (378,149) (333,453) Shareholder's funds ,979 98,555 These financial statements were approved and authorised for issue by the board on 29 January 2010 On behalf of the board SC Jansky Director The annexed notes form part of these financial statements. 9

12 Cash Flow Statement Reconciliation of operating profit to net cash inflow from operating activities Notes Operating loss (23,861) (43,758) Depreciation charges 2, Amortisation of goodwill and licences 41,836 30,900 Increase in debtors (14,433) (10,255) Decrease in creditors (171,870) (40,240) - Net cash outflow from operating activities (165,892) (62,707) CASH FLOW STATEMENT Net cash outflow from operating activities (165,892) (62,707) Returns on investments and servicing of finance 19 (20,835) (18,447) Taxation - 9,495 Capital expenditure 19 (17,618) - (204,345) (71,659) Financing ,631 9,331 Increase/(decrease) in cash 77,286 (62,328) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the period 77,286 (62,328) Change in net debt 20 77,286 (62,328) (Net debt)/net funds at 1 October (44,031) 18,297 Net funds/(net debt) at 30 September 33,255 (44,031) 10

13 Notes to the financial statements 1 Accounting policies Basis of preparation The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards. Intangible fixed assets Purchased goodwill, licences and other intangible fixed assets are being amortised by equal instalments over twenty years. The directors consider that the useful economic life of the assets is twenty years. Depreciation Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows: Plant and machinery 33.33% on reducing balance Deferred taxation Full provision is made for deferred taxation resulting from timing differences between the recognition of gains and losses in the accounts and their recognition for tax purposes. Deferred tax is calculated at the tax rates which are expected to apply in the periods when the timing differences will reverse, and discounted to reflect the time value of money using rates based on the post-tax yields to maturity that could be obtained at the balance sheet date on government bonds with similar maturity dates. A deferred tax asset is only recognised when there is certainty of future revenue streams. Operating leases Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease. Turnover Turnover represents net invoiced sales of goods and services, excluding value added tax, except in respect of service contracts where turnover is recognised when the company obtains the right to consideration. Research and Development Expenditure on research and development is written off in the year in which it is incurred. 2 Turnover All of the turnover of the company arises in the UK. 11

14 Notes to the financial statements 3 Operating loss This is stated after charging: Depreciation of owned fixed assets 2, Amortisation of intangible fixed assets 41,836 30,900 Hire of plant and machinery 1,035 3,731 Operating lease rentals - land buildings 20,500 12,764 Auditors' remuneration for audit services Smith Emmerson - 10,500 Auditors' remuneration for audit services Just Audit Ltd 5,500 - Auditors' remuneration for other services Smith Emmerson ,695 Auditors' remuneration for other services Just Audit Ltd Directors' emoluments Emoluments 104, ,561 5 Staff costs Wages and salaries 184, ,731 Social security costs 19,137 15, , ,007 Average number of employees during the year Number Number Administration 3 3 Executive directors 2 2 Non-executive directors Interest payable and similar charges Bank interest 2,157 2,949 Other interest 2,121 3,135 Direct debit collection costs 16,566 14,030 20,844 20,114 12

15 Notes to the financial statements 7 Taxation Analysis of charge in period Current tax: Adjustments in respect of previous periods - 5 Tax on profit on ordinary activities - 5 Factors affecting tax charge for period The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: Loss on ordinary activities before tax (44,696) (62,205) Standard rate of corporation tax in the UK 21% 21% Loss on ordinary activities multiplied by the standard rate of corporation tax (9,386) (13,063) Effects of: Expenses not deductible for tax purposes 7,633 11,189 Capital allowances for period in excess of depreciation (10,101) 18 Utilisation of tax losses 11,854 1,856 Adjustments to tax charge in respect of previous periods - 5 Current tax charge for period - 5 Factors that may affect future tax charges The company has the benefit of tax losses carried forward at 30 September 2009 amounting to 171,888 (2008: 99,255). 13

16 Notes to the financial statements 8 Intangible fixed assets Other Goodwill Licences Cost At 1 October , ,000 Additions 159, , ,797 At 30 September , , , ,797 Amortisation At 1 October , ,400 Provided during the year 2,768 30,900 8,168 41,836 At 30 September , ,300 8, ,236 Net book value At 30 September , , , ,561 At 30 September , ,600 9 Tangible fixed assets Plant and machinery Cost At 1 October ,457 Additions 52,310 At 30 September ,767 Depreciation At 1 October ,164 Charge for the year 2,436 At 30 September ,600 Net book value At 30 September ,167 At 30 September , Debtors Trade debtors 37,496 22,142 Prepayments and accrued income 68,507 69, ,003 91,570 14

17 Notes to the financial statements 11 Creditors: amounts falling due within one year Bank loans and overdrafts - 44,031 Trade creditors 68, ,942 Other taxes and social security costs 11,831 25,791 Other creditors 14,596 11,608 Accruals and deferred income 100,913 77, , , Creditors: amounts falling due after one year Other creditors - 123, Loans Analysis of maturity of debt: Within one year or on demand - 44,031 The bank loans were secured by fixed and floating charges on the assets of the company. 15

18 Notes to the financial statements 14 Share capital No No Allotted, called up and fully paid: Ordinary shares of 0.5p each 28,806,028 23,044, , ,223 On 14 December ,275 ordinary shares of 0.5p each were issued for consideration in cash of 11p per share resulting in additional share premium of 23,864. On 16 December ,800 ordinary shares of 0.5p each were issued for consideration in cash of 14p per share resulting in additional share premium of 16,983. On 6 January ,500,000 ordinary shares of 0.5p each were issued for consideration of 10p per share resulting in additional share premium of 237,500. The consideration received was a combination of assets capitalised within tangible fixed assets and licences at their fair value. On 29 January ,000 ordinary shares of 0.5p each were issued for consideration in cash of 10p per share resulting in additional share premium of 1,900. On 3 April ,833 ordinary shares of 0.5p each were issued for consideration in cash of 15p per share resulting in additional share premium of 30,571. On 18 June ,615 ordinary shares of 0.5p each were issued for consideration of 19.5p per share resulting in additional share premium of 122,857. The consideration received was the assignment of client contracts capitalised within intangible fixed assets. On 30 June ,068 ordinary shares of 0.5p each were issued for consideration in cash of 15p per share resulting in additional share premium of 70,624. On 26 August ,267 ordinary shares of 0.5p each were issued for consideration in cash of 15p per share resulting in additional share premium of 61,954. On 26 August ,666 ordinary shares of 0.5p each were issued for consideration, by converting directors loan accounts, of 15p per share resulting in additional share premium of 16,916. On 26 August ,000,000 ordinary shares of 0.5p each were issued for consideration in cash of 10p per share resulting in additional share premium of 95, Share premium 2009 At 1 October ,785 Shares issued 678,169 Expenses of issue (31,755) At 30 September , Undistributable reserve 2009 Arising in the year 33,899 At 30 September ,899 16

19 Notes to the financial statements 17 Profit and loss account 2009 At 1 October 2008 as previously stated (319,054) Prior year adjustments (14,399) At 1 October 2008 as restated (333,453) Loss for the financial year (44,696) At 30 September 2009 (378,149) 17

20 Notes to the financial statements 18 Reconciliation of movement in shareholder's funds At 1 October 98, ,434 Loss for the financial year (44,696) (62,210) Shares issued 675,221 9,331 Other undistributable reserve 33,899 At 30 September 762,979 98, Gross cash flows Returns on investments and servicing of finance Interest received 9 1,667 Interest paid (4,278) (6,084) Direct debit collection costs (16,566) (14,030) (20,835) (18,447) Capital expenditure Payments to acquire intangible fixed assets (15,308) - Payments to acquire tangible fixed assets (2,310) - (17,618) - Financing Issue of share capital 313,386 9,331 Expenses paid in connection with share issue (31,755) - 281,631 9,331 Major non cash transaction The consideration for the additions to intangible fixed assets comprised of the issue of shares. Further details are as set out in the share capital note. 20 Analysis of changes in net debt At 1 Oct Cash flows Non-cash At 30 Sep 2008 changes 2009 Cash at bank and in hand - 33,255 33,255 Overdrafts (44,031) 44,031-77,286 Total (44,031) 77,286-33,255 18

21 Notes to the financial statements 21 Other financial commitments At the year end the company had annual commitments under non-cancellable operating leases as set out below: Land and buildings Land and buildings Other Other Operating leases which expire: within two to five years 20,500 20, Related parties Included in creditors is a loan from K Grundy, who is a director, amounting to 1,847 (2008: 123,531). During the year 106,684 was repaid to Mr Grundy. The loan is unsecured, interest free and has no fixed repayment date. During the year K Grundy converted 15,000 of his loan account to 100,000 shares at 15p per share. During the year a current account existed between the company and SC Jansky, who is a director. There was 77 due from the company at the year end (2008: 4,577). During the year 2,000 was repaid to Mr Jansky. During the year SC Jansky converted 2,500 of his loan account to 16,666 shares at 15p per share. K Grundy and SC Jansky are subject to a joint personal guarantee for a principal amount of 40,000 plus interest and other costs with Lloyds TSB Bank Plc. 23 Controlling party The directors consider that the company has no single controlling interest in its shares. 19

22 Notes to the financial statements 24 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average of ordinary shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. Reconciliations are set out below: Weighted 30 September 2009 average Per share Earnings number of amount shares pence Basic EPS Earnings attributable to ordinary shareholders (44,696) 25,741,292 (0.17) Effect of dilutive securities Diluted EPS Adjusted earnings (44,696) 25,741,292 (0.17) Weighted 30 September 2008 average Per share Earnings number of amount shares pence Basic EPS Earnings attributable to ordinary shareholders (62,210) 22,951,269 (0.27) Effect of dilutive securities Diluted EPS Adjusted earnings (62,210) 22,951,269 (0.27) 25 Prior year adjustment The prior year adjustment relates to the late receipt of supplier invoices which included costs in respect of previous years. 20