For immediate release
30 September 2008
PNC TELECOM PLC
("PNC" or the "Company")
Audited Results for the year ended 31 March 2008
The Board of PNC announces that it has today posted the Report and Accounts for
the year ended 31 March 2008 to shareholders. A copy of the Report and Accounts
will be available from the Company's website, being www.telecom-plc.co.uk. Set
out below is the full text of the Report and Accounts.
Enquiries:
PNC Telecom PLC: Tel: 0207 251 3762
Leo Knifton, Chairman
Nominated Adviser: Tel: 0207 628 3396
Beaumont Cornish Limited
Michael Cornish
Chairman's Statement
for the year ended 31 March 2008
Chairman's statement
The Group made a loss of �52,000 in the year ended 31 March 2008 (2007: loss �
664,000).
Your Directors are now focused on the VAT reclaim from HMRC which is entering
its final stages.
Since the year end we have been dealing in electronic gaming consoles with the
majority of turnover being accounted for by sales of Nintendo Wii games
consoles.
In February the Company acquired the entire issued share capital of Specs and
Lenses Limited ("Specs and Lenses"), a newly incorporated company established
to develop an internet and retail consumer offering of optical glasses by
combining a town centre presence with outlet shopping mall locations, "out of
town" superstores and "in town" satellite stores and offering through its
website, www.specsandlenses.co.uk. Specs and Lenses opened its Factory outlet
store in Freeport Braintree and is now looking to open two more to complement
this.
Our investment in SIM 4 Travel is currently valued at �175,000, at the mid
price, as at 26 September 2008.
Your Directors are actively looking for other businesses to add to the group to
bring in further income.
We will keep you informed of any further developments
L.E.V. Knifton
Chairman
30 September 2008
Report of the Directors
for the year ended 31 March 2008
The Directors present their annual report and the audited financial statements
for the year ended 31 March 2008.
Principal Activities
The principal activity of the company is the export and import of mobile phones
and other electrical equipment and the sale of specs and lenses.
Business Review and Future Developments
A review of the business and future developments is contained in the Chairman's
Statement.
Key Performance Indicators
The directors consider the key performance indicators of the company to be its
loss for the period of �52,000.
Key Risks and Uncertainties
The key risks and uncertainties that currently facing the Company is the
possibility that the VAT refund may not be received.
Dividend
The Directors resolved that no dividend will be paid for the year ended 31
March 2008.
Directors and their interests
The Directors of the Company, all of whom served throughout the year except
where stated below were:-
J.W. Case
L.E.V. Knifton
Directors' Interests
The interests of the Directors and persons connected with them in the issued
share capital of the Company as notified to the Company were as follows:
Directors 31 March 2008 31 March 2007
Ordinary Shares Ordinary Shares
0.1p each 0.1p each
J.W.Case 13,850,000 13,850,000
L.E.V. Knifton - -
PNC TELECOM PLC
Report of the Directors (continued*)
for the year ended 31 March 2008
Substantial Interests
The company has been notified of the following persons (other than those
referred to in the paragraph above) who hold interests (as defined in Part VI
of the Act) in 3 per cent or more of the issued ordinary share capital of the
Company at 17 September 2008.
Number of Percentage of
0.1p Shares Ordinary Share
Capital
JIM Nominees Limited 245,596,679 37.6%
Bade Finance Limited 185,000,000 28.3%
Pershing Nominees Limited 73,364,237 11.2%
DSL Client Nominees Limited 19,500,000 3.0%
Save as disclosed above, the Directors are not aware of any other interests
that represent or will represent 3 per cent or more of the issued ordinary
share capital of the Company.
POLICY OF PAYMENT OF CREDITORS
It was the Company's normal practice to agree payments terms with all its
suppliers. Payment was made when it has been confirmed that the goods or
services had been provided in accordance with the agreed contractual terms and
conditions. Creditor days, represented by the aggregate amount of trade
creditors at the year end compared with the aggregate amount invoiced by
suppliers in the year, in 2008 were 37 days (2007 - 18 days)
Corporate Governance
The Company is not required to comply with the code of Best Practice as set out
in Section 1 of the Combined Code appended to the Listing Rules of the
Financial Services Authority as it is listed on AIM. All relevant discussions
being taken by the full board.
Publication of Accounts on Company Website
Financial statements are published on the company's website. The maintenance
and integrity of the website is the responsibility of the directors. The
directors' responsibility also extends to the financial statements contained
therein.
Indemnity of Officers
The Group may purchase and maintain, for any director or officer, insurance
against any liability and the Group does maintain appropriate insurance cover
against legal action brought against its directors and officers.
PNC TELECOM PLC
Report of the Directors (continued*)
for the year ended 31 March 2008
Statement of Directors' Responsibilities
The directors are responsible for preparing the 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 International Financial Reporting
Standards (IFRSs) as adopted for use in the European Union. The financial
statements are required by law to give a true and fair view of the state of
affairs of the company and the Group and of the profit or loss of the Group for
that Year. 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;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
- to follow IFRS as adopted by the European Union
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and the Group and to enable them to ensure that the financial
statements comply with the Companies Act 1985, and as regards the group
financial statements, article 4 of the IAS regulations. They are also
responsible for safeguarding the assets of the company and the Group and hence
for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Statement as to Disclosure of Information to Auditors
So far as the directors are aware, there is no relevant audit information (as
defined by Section 234ZA of the Companies Act 1985) of which the Group's
auditors are unaware, and each director 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 Group's auditors are aware of that
information.
Auditors
The auditors, Jeffreys Henry LLP, will be proposed for re-appointment in
accordance with Section 385 of the Companies Act 1985 in the Annual General
Meeting.
ON BEHALF OF THE BOARD:
L.E.V. Knifton
Company Director
30 September 2008
Report of the Independent Auditors to the Shareholders of
PNC TELECOM PLC
We have audited the group and parent company financial statements ("the
financial statements") of PNC Telecom Plc which include the consolidated income
statement, the consolidated and parent company balance sheets, the consolidated
and parent company cashflow statements, consolidated statement of changes in
equity for the year ended 31 March 2008 and the related notes. These financial
statements have been prepared under the accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with Section 235 of the Companies Act 1985. Our audit work has been undertaken
for no purpose other than to draw to the attention of the Company's members
those matters which we are required to include in an auditor's report addressed
to them. To the fullest extent permitted by law, we do not accept or assume
responsibility to any party other than the Company and 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 described in the Statement of Directors' responsibilities, the group's
directors are responsible for preparing the financial statements in accordance
with applicable law and International Financial Reporting Standards (IFRSs) as
adopted for use in the European Union.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985 and as regard group financial statements, Article 4 of the ISA Regulation.
We also report to you if, in our opinion, the Directors' report is not
consistent with the financial statements. The information given in the
Directors' report includes that specific information mentioned in the
Chairman's statement that is cross referred from the Review of the Business
sections of the directors' report.
In addition, we report to you if, in our opinion, the company has not kept
proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law
regarding directors' remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. The other
information comprises only the Directors' Report, the Chairman's Statement. We
consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the Directors in the preparation
of the financial statements, and of whether the accounting policies are
appropriate to the Company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Report of the Independent Auditors to the Shareholders of
PNC TELECOM PLC(continued)
Emphasis of matter - going concern
In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosure made in the accounting policies on page 22 of the financial
statements concerning the company's ability to continue as a going concern. The
Company incurred a net loss of �52,000 for the year ended 31 March 2008 and, at
that date, the company's net current assets included a VAT balance recoverable
of �1,302,000. These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the company's ability to
continue as a going concern. The financial statements do not include the
adjustments that would result if the company was unable to continue as a going
concern.
Opinion
In our opinion:
- the Group financial statements give a true and fair view, in accordance with
International Financial Reporting Standards (IFRS's) as adopted for use in the
European Union, of the state of affairs of the Group as at 31 March 2008 and of
its loss and cash flows of the Group for the year then ended;
- the parent company financial statements give a true and fair view, in
accordance with IFRS's as adopted by the European Union as applied in
accordance with provisions of the Companies Act 1985, of the state of the
parent company's affairs as at 31 March 2008;
- the financial statements have been properly prepared in accordance with the
Companies Act 1985 and, as regard the group financial statements, article 4 of
the IAS regulation; and
- the information given in the Report of the Directors is consistent with the
financial statements.
30 September 2008
Jeffreys Henry LLP Finsgate
Chartered Accountants 5-7 Cranwood Street
Registered Auditors London EC1V 9EE
PNC TELECOM PLC
Consolidated Income Statement
For the year ended 31 March 2008
Notes 31 March 31 March
2008 2007
�'000 �'000
Revenue 2 179 959
Cost of Sales (144) (855)
****** ******
Gross Profit 35 104
Operating expenses (346) (415)
****** ******
Operating Loss (311) (311)
Other operating income 314 -
****** ******
Profit/ (Loss) on ordinary 3 (311)
activities before interest and tax
Interest receivable and similar 4 96 9
income
Interest payable 4 (151) (362)
_______ ________
Loss on ordinary activities before (52) (664)
tax
Tax on loss on ordinary activities 6 - -
****** ******
Retained Loss for the year 17 (52) (664)
Pence Pence
Loss per share 7 0.02 0.37
There are no other recognised gains or losses in the year.
There is no difference between basic and diluted loss per share.
All the loss for the year is attributable to the Equity holders of the company.
PNC TELECOM PLC
Statement of Changes in Equity
for the year ended 31 March 2008
Share Capital Share Merger Retained
Ordinary Deferred Premium Relief Earnings Total
shares Reserve
of Ordinary
Shares of
0.1p 4.9p each
each
�000 �000 �000 �000 �000 �000
As at 1 April 208 2,346 48,033 - (50,796) (209)
2007
Shares issued 445 - - - - 445
Loss after tax - - - - (52) (52)
for the year
Arising on - - - 324 - 324
acquisition of
- - (20) - - (20)
Subsidiary
Share issue
costs
As at 31 March 653 2,346 48,013 324 (50,848) 488
2008
Share Capital Share Merger Retained
Ordinary Deferred Premium Relief Earnings Total
shares Reserve
of Ordinary
Shares of
0.1p 4.9p each
each
�000 �000 �000 �000 �000 �000
As at 1 April 163 2,346 48,033 - (50,132) 410
2006
Shares issued 45 - - - - 45
Loss after tax - - - - (664) (664)
for the year
Arising on - - - - - -
acquisition of
Subsidiary
As at 31 March 208 2,346 48,033 - (50,796) (209)
2007
Share capital is the amount subscribed for shares at nominal value.
Retained profit represents the cumulative deficit of the Company attributable
to equity shareholders.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of those shares net of share issue expenses. Share issue
expenses in the year comprise a proportion of the costs incurred in respect of
the initial public offering and issue of new shares on the London Stock
Exchange's Alternative Investment Market.
PNC TELECOM PLC
Consolidated Balance Sheet
As at 31 March 2008
Note 2008 2007
�'000 �'000
ASSETS
Non-Current Assets
Property, plant and equipment 8 74 10
Goodwill 9 429 -
Investments 10 100 100
****** ******
603 110
****** ******
Current Assets
Inventories 11 18 3
Trade and other receivables 12 1,326 1,289
Cash and cash equivalent 13 191 1
****** ******
1,535 1,293
****** ******
TOTAL ASSETS �2,138 �1,403
EQUITY AND LIABILITIES
Share capital 16 2,999 2,554
Share premium accounts 17 48,013 48,033
Merger reserve 17 324 -
Retained earnings 17 (50,848) (50,796)
****** ******
TOTAL EQUITY 488 (209)
****** ******
NON CURRENT LIABILITIES
Interest bearing loans and borrowings 15 385 475
Non interest bearing - -
****** ******
385 475
****** ******
CURRENT LIABILITIES
Trade and other payables 14 1,265 1,137
****** ******
1,265 1,137
****** ******
TOTAL EQUITY AND LIABILITIES �2,138 �1,403
****** ******
The financial statements were approved and authorised for issue by the Board on
30 September 2008 and signed on its behalf by:
L.E.V. Knifton
Director
PNC TELECOM PLC
Balance Sheet
As at 31 March 2008
Note 2008 2007
�'000 �'000
ASSETS
Non-Current Assets
Property, plant and equipment 8 9 10
Investments 10 609 100
****** ******
618 110
****** ******
Current Assets
Inventories 11 3 3
Trade and other receivables 12 1,424 1,289
Cash and cash equivalent 13 91 1
****** ******
1,518 1,293
****** ******
TOTAL ASSETS �2,136 �1,403
EQUITY AND LIABILITIES
Share capital 16 2,999 2,554
Share premium accounts 17 48,013 48,033
Merger reserve 17
324 -
Retained earnings 17 (50,842) (50,796)
****** ******
TOTAL EQUITY 494 (209)
****** ******
NON CURRENT LIABILITIES
Interest bearing loans and borrowings 15 385 475
Non interest bearing - -
****** ******
385 475
****** ******
CURRENT LIABILITIES
Trade and other payables 14 1,257 1,137
****** ******
1,257 1,137
****** ******
TOTAL EQUITY AND LIABILITIES �2,136 �1,403
****** ******
The financial statements were approved and authorised for issue by the Board on
30 September 2008 and signed on its behalf by:
L.E.V. Knifton
Director
PNC TELECOM PLC
Consolidated Cash Flow Statement
for the year ended 31 March 2008
2008 2007
Notes �'000 �'000
Cash flows from operating activities
Cash generated from operations 1 254 (1,358)
Finance costs (151) (362)
Corporation tax paid - -
****** ******
Net cash from operating activities 103 (1,720)
****** ******
Cash flows from investing activities
Acquisition of tangibles (65) -
Disposable of tangibles - 115
Acquisition of subsidiaries 2 - -
Interest received 2 9
****** ******
Net cash from investing activities (63) 124
****** ******
Cash flows from financing activities
Hire purchase repayments - (125)
Issue of new shares 190 45
Conversion of loans - (45)
Repayment of loans (40) -
****** ******
Net cash from financing activities 150 (125)
****** ******
Increase/(decrease) in cash and cash 190 (1,721)
equivalents
Cash and cash equivalents at beginning 1 1,721
of year
****** ******
Cash and cash equivalents at end of year 191 -
****** ******
Represented by:
Cash at bank 191 1
Bank overdraft - (1)
****** ******
191 -
****** ******
PNC TELECOM PLC
Company Cash Flow Statement
for the year ended 31 March 2008
2008 2007
Notes �'000 �'000
Cash flows from operating activities
Cash generated from operations 1 89 (1,358)
Finance costs (151) (362)
Corporation tax paid - -
****** ******
Net cash from operating activities (62) (1,720)
****** ******
Cash flows from investing activities
Acquisition of tangibles - -
Disposable of tangibles - 115
Acquisition of subsidiaries 2 - -
Interest received 2 9
****** ******
Net cash from investing activities 2 124
****** ******
Cash flows from financing activities
Hire purchase repayments - (125)
Issue of new shares 190 45
Conversion of loans - (45)
Repayment of loans (40) -
****** ******
Net cash from financing activities 150 (125)
****** ******
Increase/(decrease) in cash and cash 90 (1,721)
equivalents
Cash and cash equivalents at beginning 1 1,721
of year
****** ******
Cash and cash equivalents at end of year 91 -
****** ******
Represented by:
Cash at bank 91 1
Bank overdraft - (1)
****** ******
91 -
****** ******
PNC TELECOM PLC
Notes to the Group Cash Flow Statement
for the year ended 31 March 2008
1 RECONCILIATION OF OPERATING PROFIT TO CASH GENERATED FROM OPERATIONS
Group 2008 2007
�000 �000
Operating loss for the year (311) (311)
Adjustments for:
Depreciation of property, plant and equipment 1 20
Other operating income 314 -
Loss on disposal of tangible assets - 5
****** ******
Operating cash flows before movements in working 4 (286)
capital
(Increase)/Decrease in inventories (15) 11
(Increase)/Decrease in receivables (37) 517
(Decrease)/Increase in payables 302 (1,600)
****** ******
Cash generated from operations 254 (1,358)
****** ******
Company 2008 2007
�000 �000
Operating loss for the year (305) (311)
Adjustments for:
Depreciation of property, plant and equipment 1 20
Other operating income 314 -
Loss on disposal of tangible assets - 5
****** ******
Operating cash flows before movements in working 10 (286)
capital
(Increase)/Decrease in inventories - 11
(Increase)/Decrease in receivables (41) 517
(Decrease)/Increase in payables 120 (1,600)
****** ******
Cash generated from operations 89 (1,358)
****** ******
2 ACQUISITION OF SUBSIDIARY
During the year the Group and Company acquired the shares and net assets of
Specs and Lenses Limited, its wholly owned subsidiary, for a total
consideration of �508,750 settled by issue of new shares. The fair value of the
net assets acquired were:
2008
�000
Website 54
Fixtures, fittings and equipment 11
Goodwill 60
Inventory 15
******
Fair value of net assets acquired 140
******
PNC TELECOM PLC
Notes to the Financial Statements
for the Year Ended 31 March 2008
GENERAL INFORMATION
PNC Telecom Plc is a company incorporated in the United Kingdom under the
Companies Act 1985 and quoted on the Alternative Investment Market of the
London Stock Exchange. The address of the registered office is disclosed on
page 1 of the financial statements. The principal activity of the Group is
described in the Directors Report.
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards 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 1985 applicable to companies
reporting under IFRS. The financial statements have been prepared under the
historical cost convention. The principal accounting policies adopted are set
out below.
The company's financial statements were previously prepared in accordance with
United Kingdom Generally Accepted Accounting Principles (GAAP) until 31 March
2007. UK GAAP differs in some areas from IFRS. In preparing the Company
financial statements, management has considered certain accounting, valuation
and consolidation methods applied in the UK GAAP *nancial statements to comply
with IFRS. The comparative *gures in respect of 2007 were restated to re*ect
these adjustments, except as described in the accounting policies. The effect
of the change in accounting standards did not result in any reconciling
differences, accordingly no separate note has been provided in these accounts.
(a) Standards, amendment and interpretations effective in 2008
IFRS 7, `Financial instruments: Disclosures', and the complementary amendment
to IAS 1, `Presentation of financial statements - Capital disclosures',
introduces new disclosures relating to financial instruments and does not have
any impact on the classification and valuation of the Group's financial
instruments, or the disclosures relating to taxation, trade and other payables.
IFRIC 8, `Scope of IFRS 2', requires consideration of transactions involving
the issuance of equity instruments, where the identifiable consideration
received is less than the fair value of the equity instruments issued in order
to establish whether or not they fall within the scope of IFRS 2. This standard
does not have any impact on the Group's financial statements.
IFRIC 10, `Interim financial reporting and impairment', prohibits the
impairment losses recognized in an interim Year on goodwill and investments in
equity instruments and in financial assets carried at cost to be reversed at a
subsequent balance sheet date. This standard does not have any impact on the
Group's financial statements.
(b) Standards, amendment and interpretations effective in 2008
IFRS 1 (Amendment), First
Time Adoption of International Financial Reporting Standards;
IAS 21 (Amendment), Net Investment in a Foreign Operation;
IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intercompany
transactions;
IAS 39 (Amendment), The Fair Value Option; and
IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts;
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the Year Ended 31 March 2008
1. ACCOUNTING POLICIES (Continued)
Basis of preparation (continued)
(c)
Standards, amendments and interpretations effective in 2006 but not relevant
The following standards, amendments and interpretations are mandatory for accounting
years beginning on or after 1 April 2006 but are not relevant to the Group's operations:
IFRS 6 (Amendment), Exploration for and Evaluation of Mineral Resources;
IFRS 6, Exploration for and Evaluation of Mineral Resources;
IFRIC 4, Determining whether an Arrangement contains a Lease;
IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds; and
IFRIC 6, Liabilities arising from Participating in a Specific Market waste
Electrical and Electronic Equipment;
(d) Standards, amendments and interpretations effective in 2007 but not
relevant
The following standards, amendments and interpretations to published standards
are mandatory for accounting years beginning on or after 1 April 2007 but they
are not relevant to the Group's operations:
IFRS 4, `Insurance contracts';
IFRIC 7, `Applying the restatement approach under IAS 29, Financial reporting
in hyper-inflationary economies';
IFRIC 9, `Re-assessment of embedded derivatives', and
IFRIC 11, `IFRS 2 - Group and treasury share transactions'
(e) Interpretations to existing standards that are not yet effective and have
not been adopted early by the Group.
The following interpretations to existing standards have been published and are
mandatory for the Group's accounting years beginning on or after 1 April 2008
or later years but the Group has not adopted them:
IFRS 8, `Operating segments `(effective from 1 January 2009). IFRS 8 replaces
IAS 14 and aligns segment reporting with the requirements of the US standard
SFAS 131, `Disclosures about segments of an enterprise and related
information'. The new standard requires a `management approach', under which
segment information is presented on the same basis as that used for internal
reporting purposes. The Group will apply IFRS 8 from 1 April 2009. The expected
impact is still being assessed in detail by management, but it appears likely
that the number of reportable segments, as well as the manner in which the
segments are reported, will change in a manner that is consistent with the
internal reporting provided to the chief operating decision-maker. As goodwill
is allocated to Groups of cash-generating units based on segment level, the
change will also require management to reallocate goodwill to the newly
identified operating segments. Management does not anticipate that this will
result in any material impairment to the goodwill balance.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the Year Ended 31 March 2008
1. ACCOUNTING POLICIES (CONTINUED)
Basis of preparation (continued)
(f) Interpretations to existing standards that are not yet effective and not
relevant for the Group's operations
The following interpretations to existing standards have been published and are
mandatory for the Group's accounting Years beginning on or after 1 April 2008
or later years but are not relevant for the Group's operations:
IAS 1 Revised - Presentation of Financial Statements (effective from 1 January
2009). Key changes include, the requirement to aggregate information in the
financial statements on the basis of shared characteristics, the introduction
of a Statement of Comprehensive Income & changes in titles of some of the
financial statements.
IAS 23 (Amendment), `Borrowing costs' (effective from 1 January 2009). It
requires an entity to capitalise borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset (one that takes a
substantial Year of time to get ready for use or sale) as part of the cost of
that asset. The option of immediately expensing those borrowing costs will be
removed. IAS 23 (Amended) is not relevant to the Group as there are no
qualifying assets.
IFRIC 12, `Service concession arrangements' (effective from 1 January 2008).
IFRIC 12 applies to contractual arrangements whereby a private sector operator
participates in the development, financing, operation and maintenance of
infrastructure for public sector services. IFRIC 12 is not relevant to the
Group's operations because the Group does not provide for public sector
services.
IFRIC 13, `Customer loyalty programmes' (effective from 1 July 2008). IFRIC 13
clarifies that where goods or services are sold together with a customer
loyalty incentive (for example, loyalty points or free products), the
arrangement is a multiple-element arrangement and the consideration receivable
from the customer is allocated between the components of the arrangement in
using fair values. IFRIC 13 is not relevant to the Group's operations because
the Group does not operate any loyalty programmes.
IFRIC 14, `IAS 19 - The limit on a defined benefit asset, minimum funding
requirements and their interaction' (effective from 1 January 2008). IFRIC 14
provides guidance on assessing the limit in IAS 19 on the amount of the surplus
that can be recognised as an asset. It also explains how the pension asset or
liability may be affected by a statutory or contractual minimum-funding
requirement. IFRIC 14 is not relevant to the Group, as it does not have pension
scheme in place.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the Year Ended 31 March 2008
1. ACCOUNTING POLICIES (CONTINUED)
Consolidation
Subsidiaries
Subsidiaries are all entities over which PNC Telecom Plc has the power to
govern the financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to PNC Telecom Plc. They are de-consolidated from the date that
control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets of the
subsidiary acquired, the difference is recognised directly in the income
statement.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated
but considered an impairment indicator of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted the Group.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the net identifiable assets of the acquired
subsidiary or associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in `intangible assets'. Goodwill on acquisitions of
associates is included in `investments in associates' and is tested for
impairment as part of the overall balance. Separately recognised goodwill is
tested annually for impairment and carried at cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units or Groups of
cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The Group allocates goodwill to each
business segment in each country in which it operates.
(b) Website
Website development costs are valued at cost less accumulated amortisation.
Amortisation is calculated to write off the cost in equal annual instalments
over the estimated useful economic life of 3 years.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the Year Ended 31 March 2008
1. ACCOUNTING POLICIES (CONTINUED)
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not
subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units). Non-financial
assets other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.
Property, plant and equipment
Tangible non-current assets are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the assets carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the income
statement during the financial Year in which they are incurred. Depreciation is
provided at the following annual rates in order to write off each asset over
its estimated useful life.
Fixtures, fittings and - 15% reducing balance
equipment
The asset's residual values and useful economic lives are reviewed, and
adjusted if appropriate, at each balance sheet date. An asset's carrying amount
is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable value.
Gains and losses on disposals are determined by comparing the proceeds with the
carrying amount and are recognised within other (losses) or gains in the income
statement. When revalued assets are sold, the amounts included in other
reserves are transferred to retained earnings.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Group's
activities. Revenue is shown net of value-added tax, returns, rebates and
discounts and after eliminating sales within the Group.
Functional currency translation
i) Functional and presentation currency
The financial statements are presented in Pounds Sterling (�), which is both
the Group's presentation and functional currency.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
1. ACCOUNTING POLICIES (CONTINUED)
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on the taxable profit for the year.
Taxable profit differed from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The entity's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. However, the deferred
income tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilised.
Operating leases
Rental leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the
lessor) are charged to the income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the first-in, first-out (FIFO) method. The cost of finished
goods and work in progress comprises raw materials and other direct costs. It
excludes borrowing costs. Net realisable value is the estimated selling price
in the ordinary course of business, less applicable variable selling expenses.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
1. ACCOUNTING POLICIES (CONTINUED)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. A provision for impairment is established when there is
objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy
or financial reorganisation and default or delinquency in payments is
considered indicators that the trade receivable is impaired.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the year of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Financial Instruments
Non-derivative financial instruments comprise investments in equity and debt
securities, trade and other receivables, cash and cash equivalents, loans and
borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value
plus, for instruments not at fair value through profit or loss, any directly
attributable transactions costs, except as described below. Subsequent to
initial recognition non-derivative financial instruments are measured as
described below.
A financial instrument is recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets are derecognised if
the Group's contractual rights to the cash flows from the financial assets
expire or if the Group transfers the financial assets to another party without
retaining control or substantially all risks and rewards of the asset. Regular
way purchases and sales of financial assets are accounted for at trade date,
i.e. the date that the Group commits itself to purchase or sell the asset.
Financial liabilities are derecognised if the Group's obligations specified in
the contract expire or are discharged or cancelled.
Fair values
The carrying amounts of the financial assets and liabilities such as cash and
cash equivalents, receivables and payables of the Group at the balance sheet
date approximated their fair values, due to relatively short term nature of
these financial instruments.
The Company provides financial guarantees to licensed banks for credit
facilities extended to a subsidiary company. The fair value of such financial
guarantees is not expected to be significantly different as the probability of
the subsidiary company defaulting on the credit lines is remote.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
1. ACCOUNTING POLICIES (CONTINUED)
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
Critical accounting estimates and judgements
The preparation of consolidated financial statements requires the Group to make
estimates and assumptions that affect the application of policies and reported
amounts. Estimates and judgements are continually evaluated and are based on
historical experience and other factors including expectations of future events
that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates. The estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying amount of
assets and liabilities are discussed below:
(a) Impairment of goodwill
The Group is required to test, at least annually, whether goodwill has suffered
any impairment. The recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of future cash
flows and the choice of a suitable discount rate in order to calculate the
present value of these cash flows. Actual outcomes could vary.
(b) VAT
The VAT debtor is reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be recoverable. When a review for
impairment is conducted, the recoverable amount is determined based on current
case law.
Going concern
HMRC have withheld repayment of VAT and this has necessitated the curtailment
of the company's trade of the import and export of mobile phones. The Company
has taken legal advice and is taking action against HMRC for the repayment of
the VAT and loss of income. Ongoing overhead costs in the year have been kept
to a minimum and been financed by loans from the directors.
The directors have undertaken to provide funds for working capital purposes in
the next twelve months.
Accordingly, the directors believe that it is appropriate to prepare the
financial statements on the going concern basis. The financial statements do
not include any adjustments that would be required if this basis was not
appropriate.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
2 TURNOVER
The Directors consider it prejudicial to disclose the geographical analysis of
turnover.
3 EMPLOYEES AND DIRECTORS
Directors' remuneration 2008 2007
�'000 �'000
Salaries and fees - 10
Pension contributions - 9
******* *******
- 19
****** ******
2008 2007
�'000 �'000
Staff costs, including Directors
Wages and salaries 36 41
Social Security costs 3 5
Other pension costs 3 9
******* *******
42 55
****** ******
Please see Note 20 for fees paid to directors.
4 NET FINANCE COSTS
2008 2007
�000 �000
Finance income:
Deposit account interest 2 9
Finance costs:
Hire purchase interest - 12
Other interest 151 350
151 362
Net finance costs 149 353
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
5 OPERATING LOSS FOR THE YEAR
The operating loss for the year is stated after charging / (crediting):
2008 2007
�'000 �'000
Depreciation 1 20
Auditors' remuneration
- audit fees 10 16
- other fees 1 -
Loss on disposal of motor vehicles - 5
Recovery from claims against former directors (314) 31
******* *******
The analysis of administrative expenses in the consolidated income statement by
nature of expense:
2008 2007
�'000 �'000
Employment costs 42 36
Directors fees - 19
Rent and Rates 6 5
Travelling and entertaining 5 17
Legal and Professional Fees 170 202
Other expenses 123 136
******* ******
346 415
****** *****
Other operating income represents receipts recovered from claims against former
directors.
6 INCOME TAX EXPENSE
The tax charge on the profit for the year was as follows:
2008 2007
�000 �000
Current tax:
Corporation tax - -
********* *********
- -
Deferred tax - -
******* *******
Total - -
******* *******
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
6 INCOME TAX EXPENSE (CONTINUED)
Loss before tax (52) (664)
******* *******
2008 2007
�000 �000
Profit on ordinary activities before taxation (16) (199)
multiplied by standard rate of UK corporation
tax of 30% (2007 - 30%)
Effects of:
Non deductible expenses - -
Depreciation add back - 8
Capital allowance - (19)
Tax losses carry forward 16 210
Other tax adjustments - -
********* *********
- -
********* *********
Current tax charge - -
******* *******
The company has trading losses of �748,000 and excess management expenses of �
3,045,508 (2007 - �3,045,508) available for carry forward which are subject to
agreement with the Inland Revenue.
7 EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on earnings after tax
and the weighted average number of ordinary shares in issue during the year.
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.
Details of the adjusted earnings per share are set out below:
The weighted average number of shares used was: 2008 2007
�'000 �'000
Basic 287,442 181,016
******* *******
Diluted 287,442 181,016
****** ******
2008 2008 2007 2007
�'000 pence per �'000 pence per
share share
Basic EPS
Profit/ (Loss) for the year (52) (0.02)p (664) (0.37)p
Diluted EPS
Profit/ (Loss) for the year and loss (52) (0.02)p (664) (0.37)p
per share
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
8 PROPERTY, PLANT AND EQUIPMENT
Group Website Fixtures, Total
Fittings and
equipment
�000 �000 �000
Cost
At beginning of year - 16 16
Acquisitions 54 11 65
******* ******* *******
At end of year 54 27 81
******* ******* *******
Depreciation
At beginning of year - 6 6
Charge for year - 1 1
******* ******* *******
At end of year - 7 7
******* ******* *******
Net book value
At 31 March 2008 54 20 74
At 31 March 2007 - 10 10
Company Website Fixtures, Total
Fittings and
equipment
�000 �000 �000
Cost
At beginning and end of year - 16 16
******* ******* *******
Depreciation
At beginning of year - 6 6
Charge for year - 1 1
******* ******* *******
At end of year - 7 7
******* ******* *******
Net book value
At 31 March 2008 - 9 9
At 31 March 2007 - 10 10
The website costs are internally generated.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
9. Intangible Assets Cost Amortisation Net Book
Value
Goodwill �'000 �'000 �'000
At 1 April 2007 - - -
Acquisition of Specs and Lenses 429 - 429
Limited
******* ******* *******
At 31 March 2008 429 - 429
****** ****** ******
The group assesses at each reporting date whether there is an indication that
an asset may be impaired, by considering the net present value of discounted
cash flows forecasts. If an indication exists an impairment review is carried
out. At the period end, there was no indication of impairment of the value of
goodwill or of developments costs.
The directors have also concluded that no amortization of goodwill is
necessary, because its value has been actively maintained since it was
acquired.
10. FIXED ASSET INVESTMENTS Group Company
�000 �000
COST
At 1 April 2007 100 100
Additions - 509
******* *******
At 31 March 2008 100 609
******* *******
CARRYING AMOUNT
At 31 March 2008 100 609
******* *******
At 31 March 2007 100 100
******* *******
(a) The company owns 50 million ordinary shares in Sim4Travel Holdings Limited,
a company quoted on Plus Market; and having a cost of �100,000 the value of the
investment at the date of the annual report was �175,000 (2007: �625,000).
(b) The company acquired the entire issued share capital of Specs and Lenses
Limited on 5 March 2008 for �508,750 by the issue of 185,000,000 shares at
0.275p per share; the company is unquoted but the directors consider that no
revaluation is required.
Included within these consolidated financial statements is the loss from the
subsidiary since the date of acquisition:
2008
�'000
Subsidiary
Specs and Lenses Limited (6)
Below are the combined revenues and profit of the enlarged Group from 1 April
2007 to 31 March 2008:
2008
�'000
Revenue 179
Loss for the period (52)
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
11 INVENTORIES
GROUP 2008 2007
�'000 �'000
Group
Finished Goods 18 3
****** ******
COMPANY
Financial goods 3 3
****** ******
The directors consider that the carrying amount of inventories is at fair
value.
12 TRADE AND OTHER RECEIVABLES
GROUP 2008 2007
�'000 �'000
Due within one year
Trade receivables 21 5
Other receivables 1,305 1,284
****** ******
1,326 1,289
***** *****
In other debtors, there is an amount of �1.2 million which relates to VAT
recoverable. HMRC are withholding payments due to the Company along with
other mobile phone dealers. The Company has taken legal advice and are
preparing a case against HMRC for both repayment and loss of income. The VAT
is considered to be fully recoverable on the basis that even if there was
evasion of VAT elsewhere within the chain of transactions the Directors had
no knowledge nor should have had such knowledge.
The directors consider that the carrying amount of trade and other receivables
approximates their fair value.
COMPANY 2008 2007
�'000 �'000
Due within one year
Trade receivables 19 5
Other receivables 1,405 1,284
****** ******
1,424 1,289
***** *****
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
13 CASH AND CASH EQUIVALENTS
Group 2008 2007
�'000 �'000
Bank current account and cash 120 -
Bank deposit account 71 1
****** ******
191 1
***** *****
Company 2008 2007
�'000 �'000
Bank current account and cash 90 -
Bank deposit account 1 1
****** ******
91 1
***** *****
14 TRADE AND OTHER PAYABLES
GROUP 2008 2007
�'000 �'000
Current:
Financial liabilities - - 1
borrowings
Interest bearing loans and
borrowings
Trade payables 45 14
Other payables 686 735
Social security and other taxes 15 4
Accruals and deferred income 519 383
****** ******
1,265 1,137
***** *****
COMPANY 2008 2007
�'000 �'000
Current:
Financial liabilities - - 1
borrowings
Interest bearing loans and
borrowings
Trade payables 38 14
Other payables 685 735
Social security and other taxes 15 4
Accruals and deferred income 519 383
****** ******
1,257 1,137
***** *****
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing expenses.
The directors consider that the carrying amount of trade and other payables
approximates their fair value.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
15. FINANCIAL LIABILITIES
GROUP AND COMPANY 2008 2007
�'000 �'000
Convertible loan (a) 385 425
Convertible loan (b) - 50
****** ******
385 475
***** *****
The convertible loans `a' and `b', are convertible into ordinary shares at 0.1p
per share exercisable by 16 February 2012 and 28 April 2012 respectively. In
addition the loan gives the right to subscribe for ordinary shares at a price
of 0.1p each. See note 16 for repayments during the year.
The Company's financial instruments comprised borrowings, cash and various
items such as trade debtors and creditors that arose directly from operations.
The main purpose of these instruments was to raise finance for operations. The
Company had not entered into derivative transactions nor did it trade in
financial instruments as a matter of policy.
Short-term debtors and creditors are excluded from the disclosures which
follow.
Financial Assets
The only financial asset is cash at bank and in hand. At 31 March 2008 the
Company had cash at bank of �191,000 (2007: �1,000).
16. CALLED UP SHARE CAPITAL
2008 2007 2008 2007
No.'000 No.'000 �'000 �'000
Authorised:
Ordinary shares of 0.1p each 1,543,873 1,543,873 1,544 1,544
Deferred Ordinary shares of 4.9p each 48,084 48,084 2,356 2,356
****** ****** ****** ******
3,900 3,900
***** *****
Allotted, called up and fully paid:
Ordinary shares of 0.1p each 653,084 208,084 653 208
Deferred Ordinary shares of 4.9p each 48,084 48,084 2,346 2,346
****** ****** ****** ******
2,999 2,554
***** *****
On 27 May 2007, a further 50,000,000 ordinary shares were issued on conversion
of loan notes.
On 4 March 2008, 185,000,000 ordinary shares of 0.1p per share were issued to
the vendors or Specs and Lenses Limited. On 5 March 2008, 210,000,000 ordinary
shares of 0.1p per share were placed with shareholders. On the same day, �
40,000 of convertible loan (a) notes were repaid.
The deferred shares do not confer any voting rights.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
17.RESERVES
GROUP Retained Share Other
earnings premium reserves Totals
�000 �000 �000 �000
At 1 April 2007 (50,796) 48,033 - (2,763)
Loss for the year (52) - - (52)
Arising on acquisition of
Subsidiary - - 324 324
Share issue costs - (20) - (20)
At 31 March 2008 (50,848) 48,013 324 (2,511)
COMPANY Retained Share Other
earnings premium reserves Totals
�000 �000 �000 �000
At 1 April 2007 (50,796) 48,033 - (2,763)
Loss for the year (46) - - (46)
Arising on acquisition of
subsidiary - - 324 324
Share issue costs - (20) - (20)
At 31 March 2008 (50,842) 48,013 324 (2,505)
18RISK AND SENSITIVITY ANALYSIS
The Group's activities expose it to a variety of financial risks: interest rate
risk, liquidity risk, capital risk and credit risk. The Group's activities also
expose it to non-financial risks: market risk. The Group's overall risk
management programme focuses on unpredictability and seeks to minimise the
potential adverse effects on the Group's financial performance. The Board, on a
regular basis, reviews key risks and, where appropriate, actions are taken to
mitigate the key risks identified.
Interest rate risk
The Group does not have formal policies on interest rate risk. However, the
Group's exposure in this area (as at the balance sheet date) was minimal.
Liquidity risk
The Group prepares periodic working capital forecasts for the foreseeable
future, allowing an assessment of the cash requirements of the company, to
manage liquidity risk. The directors have considered the risk posed by
liquidity and are satisfied that there is sufficient growth and equity in the
company.
Capital risk
The Group's objectives when managing capital are to safeguard the ability to
continue as a going concern in order to provide returns for shareholders and
benefits to other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
18 RISK AND SENSITIVITY ANALYSIS (continued)
Market risk
The market may not grow as rapidly as anticipated. The Group may lose customers
to its competitors. The Group's major competitors may have significantly
greater financial resources than those available to the company. There is no
certainty that the company will be able to achieve its projected levels of
sales or profitability.
Credit risk
The Group's principal financial assets are bank balances and cash, trade and
other receivables. The credit risk on liquid funds is limited because the
counter parties are banks with high credit ratings assigned by international
credit-rating agencies. The Group's credit risk is primarily attributable to
its trade. The amounts presented in the balance sheet are net of allowance for
doubtful receivables. An allowance for impairment is made where there is an
identified loss event which, based on previous experiences, is evidence of a
reduction in the recoverability of the cash flows. The Group has no significant
concentration of credit risk, with exposure spread over a large number of
counter parties and customers.
19LOSS FOR THE PARENT COMPANY
As permitted by section 203 of the Companies Act 1985, the income statements of
the parent company is not presented as part of the financial statements.
2008 2007
�000 �000
Loss for the year 46 664
******* *******
20 RELATED PARTY TRANSACTIONS
During the year, the company paid consultancy fees of �Nil (2007: �4,950) to
Fort Knox Property Services, a business owned by a director, Mr Leo Knifton.
�65,000 (2007-�115,000) of the convertible loan notes were due to Mr Leo
Knifton.
During the year, the company paid rent of �14,913 (2007: �2,916) and
commissions of �39,500 (2007: �28,890) to Mr Joe Case, a director of the
company.
�63,000 (2007-�63,000) of the convertible loan notes were due to Mr Joe
Case.
PNC TELECOM PLC
Notes to the Financial Statements (Continued)
for the year ended 31 March 2008
21CONTINGENT LIABILITIES AND GUARANTEES
The Directors of PNC have been made aware that Vanguard Plc is being placed
into administration. This has the effect of potentially creating a liability to
PNC for a number of leases on certain properties that were indemnified by
Vanguard Plc. PNC has taken steps to mitigate these losses by attempting to
assign these leases. The directors have been advised that there may be several
claims that they may make against some of the professionals who handled the
original administration of PNC Plc which ended in January 2004.
22 CAPITAL COMMITMENTS
There was no capital expenditure contracted for at each of the balance sheet
dates but not yet incurred.
23 EXPLANATION OF TRANSITION TO IFRS
There have been no adjustments or restatements to the reported financial
position, financial performance and cash flows of the Company resulting from
the transition to IFRS from UK GAAP with effect from 1 April 2007.
24 ULTIMATE CONTROLLING PARTY
PNC Telecom Plc is listed on the AIM. At the date of the Annual report in the
directors' opinion there is no controlling party
END
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