BONH.L Regulatory News (BONH)

RNS Number : 3615N

Vitesse Media PLC

10 June 2010

 

Vitesse Media Plc

("Vitesse" or the "Company)

Preliminary Statement of Final Results for the year ending 31 January 2010 for Vitesse Media plc

 

 

Highlights for the year ending 31 January 2010

 

·; Significant improvement in profitability delivering a profit for 2009/10 of £36,706 and EBITDA of £192,742 (2008/9 loss of £(493,930) and £(306,570))

·; Online revenues held up well

·; Gross profit margin of 63.3% (2008/9 64.8%)

·; Overheads reduced by nearly 40%

·; Market leading positions and brand values maintained during a difficult trading period

·; Management team worked hard to retain good staff loyalty and morale

·; Since the year-end, the company has carried out a successful fundraising, thus reducing borrowings, improving working capital and providing funds for improvement in our database operations.

·; Improvement in profitability has continued and there is a significant turnaround for the first quarter of the financial year 2010/11

 

 

Enquiries:

 

Vitesse Media Plc Sara Williams

+44 20 7250 7010 Leslie Copeland

+ 44 20 7250 7014

 

Seymour Pierce Ltd

Nandita Sahgal

+44 207 107 8000

 

  

 

Chairman's report

 

Performance during the financial year 2009/10

 

This was undoubtedly the most difficult trading period that the Company has endured. During the year, despite having trimmed costs during the previous financial year 2008/9, the management team unfortunately had to make further cost savings and reduced the headcount again.

 

Such actions are always extremely difficult for all concerned, especially in a close-knit business such as Vitesse Media. I would like to take the opportunity to extend my appreciation to all members of staff who bore these difficult times with calmness and understanding.

 

During the year I also took the opportunity to split the role of Chairman and Chief Executive. In July, Leslie Copeland was appointed Chief Executive and Niki Baker appointed Chief Operating Officer and, along with the rest of the management team, the credit for the turnaround in results in the second half of the year is all theirs.

 

Results have tended to show a skewed performance towards the second half and this was certainly true during the financial year under review when a loss of £(91K) at the interim stage was turned into a profit of £36K for the full year.

 

Update for the first quarter

 

The improvement in profitability has continued and there is a significant turnaround for the first quarter of the financial year 2010/11. This is against a backdrop of further reductions in revenue compared to the same period last year. Some of the fall in revenue is attributed to continuing difficulties in some print areas. However, the management team has also undertaken an intense focus on existing operations and an examination of the profitability of individual sources of revenue, which has meant the discontinuation of certain activities, leading to one-off reductions in revenue.

 

Positive aspects include the improvement experienced towards the end of the quarter in our online activities which had slightly dipped in the second half of last year and a sustained increase in our subscription numbers, a change which had begun last autumn. Further investment in subscription building will be carried out during the rest of the year.

 

A summary by the management team is that the trading background for the business is healthier than it has been for many, many months.

 

 

 

During the first quarter, we were able to carry out a successful fundraising, raising £475,000 before expenses, amongst existing and new shareholders. This has provided the business with the funds to redeem the borrowings incurred last year and to repurchase SmallBusiness.co.uk, to provide adequate working capital for the group and to fund improvements in our database operations, which should lead to significant efficiency and revenue gains.

 

The year ahead

 

The second quarter of the year is traditionally the weakest for the group and this is exacerbated by our decision to move an event from June to September, a decision which has been taken by the management team to improve the group's profit in the long term. However, the team anticipate that the turnaround in profitability for the business will continue, barring the economy lurching into a second leg of a recession. There has been a sustained improvement in the level of forward bookings and we are now looking with more certainty at the figures for the rest of the year.

 

The Directors regard the business as being in the best shape for many years, both in terms of profitability and funding, and look forward with confidence to the results for the full year.

 

 

 

ESM Williams

Chairman

Consolidated statement of comprehensive income

for the year ended 31 January 2010

 

	Notes	Unaudited	Unaudited
		2010	2009
		£	£
Revenue	1	3,635,148	4,993,490
Cost of sales	2	(1,216,603)	(1,760,366)
Gross profit	1	2,418,545	3,233,124
Administrative expenses	2	(2,349,452)	(3,676,056)
Operating profit / (loss)	2	69,093	(442,932)
Finance costs	3	(33,870)	(60,694)
Finance income	3	1,483	9,696
Profit /(loss) before tax		36,706	(493,930)
Tax expense	4	-	-
Profit/(loss) for the year attributable to owners of the parent		36,706	(493,930)
Total comprehensive income for the year attributable to owners of the parent		36,706	(493,930)
Earnings per share:
Basic	5	0.14p	(1.99p)
Diluted	5	0.14p	(1.99p)

Consolidated statement of financial position

as at 31 January 2010

 

	Notes	Unaudited	Unaudited
		2010	2009
		£	£
NON-CURRENT ASSETS
Goodwill	6	1,025,806	1,025,806
Other intangible assets	6	1,467,806	1,513,075
Property, plant and equipment	7	87,685	161,065
Trade and other receivables	8	21,139	21,139
		2,602,436	2,721,085
CURRENT ASSETS
Inventories	9	18,992	17,201
Trade and other receivables	8	679,927	831,040
		698,919	848,241
TOTAL ASSETS		3,301,355	3,569,326
EQUITY
Share capital	11	2,560,379	2,560,379
Share premium account	11	2,427,617	2,427,617
Share option reserve	12	86,013	73,461
Other reserves		103,904	103,904
Retained earnings		(3,651,525)	(3,688,231)
TOTAL EQUITY ATTRIBUTABLE		1,526,388	1,477,130
TO OWNERS OF THE PARENT
NON-CURRENT LIABILITIES
Obligations under finance leases	14	3,948	14,235
Provisions	16	-	61,289
		3,948	75,524
CURRENT LIABILITIES
Trade and other payables	15	1,237,028	1,609,925
Borrowings	13	523,814	378,120
Obligations under finance leases	14	10,177	28,627
		1,771,019	2,016,672
TOTAL LIABILITIES		1,771,019	2,016,672
TOTAL EQUITY AND LIABILITIES		3,301,355	3,569,326

 

 

 

Consolidated statement of cash flows

for the year ended 31 January 2010

 

	Notes	Unaudited	Unaudited
		2010	2009
		£	£
CASH FLOWS FROM OPERATING ACTIVITIES	17	(79,570)	(35,391)
Interest received		1,483	9,696
Interest paid		(33,870)	(60,694)
NET CASH USED IN OPERATING ACTIVITIES		(111,957)	(86,389)
INVESTING ACTIVITIES
Purchases of property, plant and equipment		-	(7,458)
Purchases of intangible assets		(5,000)	(38,200)
NET CASH USED IN INVESTING ACTIVITIES		(5,000)	(45,658)
FINANCING ACTIVITIES
Proceeds from issue of share capital		-	175,714
Share issue costs		-	(7,767)
Repayments of borrowings		-	(267,198)
Repayment of obligations under finance leases		(28,737)	(48,846)
Proceeds from short-term borrowings		-	170,000
Drawdown on invoice discounting facility		5,312	316,624
NET CASH GENERATED FROM FINANCING ACTIVITIES		146,575	168,527
NET INCREASE IN CASH AND	18	29,618	36,480
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT	10	(61,496)	(97,976)
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS	10	(31,878)	(61,496)
AT END OF YEAR

 

 

Abbreviated Notes to the results

 

1. SEGMENTAL INFORMATION

 

The operating segments are based on the management reports reviewed by the Board of Directors on a monthly basis.

 

The reportable segments derive their revenue primarily as follows:

 

·; Online - Provision of online and digital services for our client and reader base

·; Print Publishing - Provision of regular publications through our leading brands

·; Events - Utilising our publishing rights to run events including awards, conferences and seminars, plus a limited number of events on behalf of third parties

 

All revenue is derived from provision of services and predominately from customers based in England, the Company's country of domicile and all assets are based in England.

The Chief Operating Decision Maker evaluates the performance and resource requirements of these segments in unison to ensure maximum efficiencies within the business and indeed resources are shared.

The Directors consider the most useful information to users of the accounts is to provide details down to the Gross Profit level only. From then on any further detail would necessitate arbitrary cost allocation that they do not use in managing the business and is not considered meaningful in terms of how resources are actually utilised.

The Chief Operating Decision Maker does not receive information on assets and liabilities in a segmental format and due to the arbitrary nature of the allocation this information has not been calculated as it is inappropriate to the running of the business.

 

 

Segment information is presented below.

 

		2010		2009
	Revenue	Profit	Revenue	Profit
	£	£	£	£
Continuing Operations
Online	1,225,713	1,074,700	1,352,042	1,300,257
Print publishing	1,494,302	816,320	2,315,432	1,287,131
Events	915,133	410,359	1,326,016	645,736
Segment revenue / profit	3,635,148	2,301,379	4,993,490	3,233,124
Central overheads and directors' salaries		(2,232,286)		(3,676,056)
Finance income		1,483		9,696
Finance costs		(33,870)		(60,694)
Profit for period		36,706		(493,930)

 

Revenue represents sales to external customers. There were no inter segment sales in the period (2009: Nil).

 

The Group generates total revenues from its largest customer of £126,745 (2009: £125,052). These revenues are derived from the print and online segments.

 

2. OPERATING PROFIT

 

(a) Operating profit for the year has been arrived at after charging/(crediting) the following items within administrative expenses:

 

	2010 £	2009 £
Depreciation of property, plant and equipment
- owned assets	36,049	49,403
- leased assets	37,331	31,507
Amortisation of website development costs	50,269	55,452
Operating lease rentals in respect of land and buildings	38,485	100,832
Onerous lease provision (see note below)	(61,289)	61,289
Share based payment	12,552	35,995

 

At 31 January 2009 a provision was made for an onerous lease in a subsidiary company. In October 2009 the subsidiary company was put into liquidation and as a result the provision has been written back.

 

 

(b) AUDITOR'S REMUNERATION

During the year, the following services were obtained from the Group's auditor at cost as detailed below:

 

	2010	2009
	£	£
Audit services
- Fees payable to Company auditor for the	25,000	25,000
audit of parent Company and consolidated accounts
Other services
Fees payable to the Company's auditor and its associates for other services:
- The audit of Company's subsidiaries pursuant to legislation	20,000	24,725
	_______	_______

 

The disclosure of auditor's remuneration stated above relates to the Company's auditor, Baker Tilly UK Audit LLP and its associates.

 

(c) ANALYSIS OF OPERATING EXPENSES BY NATURE

 

	2010 £	2009 £
Staff costs (see note 5)	1,479,885	1,920,728
Depreciation, amortisation and impairments (see notes 10 & 11)	123,649	136,362
Change in inventory	1,791	205
Magazine costs	592,397	915,765
Events costs	391,688	504,002
Premises costs	30,124	204,989
Marketing expenses	101,090	151,301
Professional fees	161,759	232,538
Other expenses	673,612	1,370,532
Total cost of sales and administrative expenses	3,566,055	5,436,422

 

3. NET FINANCE COSTS

 

	2010 £	2009 £
Bank interest receivable	1,483	9,696
Less:
Interest payable on bank loan and overdrafts	11,617	41,856
Finance lease interest	6,485	10,092
Other interest payable	5,851	8,746
Interest on other borrowings	9,917	-
	33,870	60,694
Net finance costs	(32,387)	(50,998)

 

4. TAXATION

	2010 £	2009 £
(a) Current taxation
UK corporation tax	-	-

 

Corporation tax is calculated at 28% (2009 - 28%) of the estimated assessable profit for the year.

 

(b) The tax charge for the year can be reconciled to the profit/(loss) before tax per the consolidated statement of comprehensive income as follows:-

 

	2010 £	2009 £
Factors affecting tax charge for the period:
Profit/ (Loss) before taxation	36,706	(432,641)
Profit/(Loss) before tax multiplied by the standard rate of corporation tax in the UK of 28% (2009: 28%)	10,278	(121,139)
Effects of:
Other timing differences	(18,805)	3,935
Employee share plans	3,515	10,078
Other expenses not deductible for tax purposes	1,460	5,688
Depreciation in excess of capital allowances/(accelerated capital allowances)	22,193	(5,181)
Tax losses in year (utilised)/carried forward	(18,580)	107,100
Provisions adjustments	(61)	(504)
Charges on income unutilised	-	23
Tax charge for the year	-	-

 

At the reporting date, the Group has unused tax losses of £4,318,306 (2009: £4,804,599) available for offset against future profits. No deferred tax asset has been recognised in respect of this amount due to the unpredictability of future profit streams.

 

 

 

At the reporting date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax assets and liabilities have not been recognised was a net asset of £36,133 (2009: £6,900). No deferred tax liability (2009: Nil) has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

 

5. EARNINGS PER SHARE

 

(a) Basic

 

Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year (Note 16).

 

	2010 £	2009 £
Profit/(Loss) attributable to owners of the parent	36,706	(493,930)
Weighted average number of ordinary shares in issue	25,603,787	24,698,140
Basic earnings per share (pence per share)	0.14p	(1.99p)

 

 

(b) Diluted

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share options. In the prior year the Company made a loss and the potential share options were therefore anti-dilutive.

 

	2010 £	2009 £
Profit/(Loss) attributable to owners of the parent	36,706	(493,930)
Weighted average number of ordinary shares in issue	25,603,787	24,698,140
Dilutive effect:
Share options	26,846	-
Diluted ordinary shares	25,630,633	24,698,140
Diluted earnings per share (pence per share)	0.14p	(1.99p)

 

  

6. INTANGIBLE ASSETS

 

GROUP	Website development costs £	Publishing Rights £	Sub - total £	Goodwill £	Total £
Cost
1 February 2008	283,425	1,815,813	2,099,238	1,027,999	3,127,237
Additions	38,200	-	38,200	-	38,200
Disposals	(62,230)	-	(62,230)	-	(62,230)
31 January 2009	259,395	1,815,813	2,075,208	1,027,999	3,103,207
Additions	5,000	-	5,000	-	5,000
31 January 2010	264,395	1,815,813	2,080,208	1,027,999	3,108,207
AmORTISATION AND IMPAIRMENT
1 February 2008	133,098	435,813	568,911	2,193	571,104
Amortisation charge for the year	55,452	-	55,452	-	55,452
Disposals	(62,230)	-	(62,230)	-	(62,230)
31 January 2009	126,320	435,813	562,133	2,193	564,326
Amortisation charge for the year	50,269	-	50,269	-	50,269
Disposals
31 January 2010	176,589	435,813	612,402	2,193	614,595
Net book value
31 January 2010	87,806	1,380,000	1,467,806	1,025,806	2,493,612
31 January 2009	133,075	1,380,000	1,513,075	1,025,806	2,538,881
1 February 2008	150,327	1,380,000	1,530,327	1,025,806	2,556,133

 

6. INTANGIBLE ASSETS (continued)

 

COMPANY	Website development costs £	Publishing rights £	Sub - total £	Goodwill £	Total £
Cost
1 February 2008	161,365	1,271,808	1,433,173	108,476	1,541,679
Additions	24,450	-	24,450	-	24,450
31 January 2009	185,815	1,271,808	1,457,623	108,476	1,566,099
Transferred from investments	-	-	-	461,827	461,827
31 January 2010	185,815	1,271,808	1,457,623	570,303	2,027,926
AmORTISATION AND IMPAIRMENT
1 February 2008	64,855	433,408	498,263	-	498,263
Amortisation charge for the year	34,124	-	34,124	-	34,124
31 January 2009	98,979	433,408	532,387	-	532,387
Amortisation charge for the year	31,127	-	31,127		31,127
31 January 2010	130,106	433,408	563,514	-	563,514
Net book value
31 January 2010	55,709	838,400	894,109	570,303	1,464,412
31 January 2009	86,836	838,400	925,236	108,476	1,033,712
1 February 2008	96,510	838,400	934,910	108,476	1,043,386

Goodwill

		Group		Company
	2010 £	2009 £	2010 £	2009 £
Investor All Stars	108,476	108,476	108,476	108,476
Growth Company Investor Limited	41,663	41,663	-	-
M&A Deals Limited	-	461,827	-	-
Information Age Media Limited	413,840	413,840	-	-
M&A Deals	461,827	-	461,827	-
	1,025,806	1,025,806	570,303	108,476

Publishing Rights

		Group		Company
	2010 £	2009 £	2010 £	2009 £
What Investment	625,807	625,807	625,808	625,808
Small Business Guide	212,592	212,592	212,592	212,592
Growth Company Investor	11,506	11,506	-	-
The Wrong Price	5,000	5,000	-	-
Information Age	525,095	525,095	-	-
	1,380,000	1,380,000	838,400	838,400

 

 

The Group tests goodwill and publishing rights annually for impairment or more frequently if there are indications that goodwill might be impaired.

 

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and direct costs. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on a combination of industry growth forecasts and specific business plans for each CGU. Changes in direct costs are based on past practices and expectations of future changes.

 

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for a period of eighteen months and extrapolates cash flows for the relevant period based on the estimated growth for each CGU for a further forty two months.

 

The rate used to discount the forecast cash flows for each of the CGUs was 11% (2009: 11%) and growth rates are assumed to be an average of industry expected growth rates which range from 0% to 20%.

 

During the year the trade and associated goodwill was transferred from M&A Deals Ltd and integrated into Vitesse Media plc. This decision was taken due to the downturn in the economy and the mergers and acquisitions market and it is anticipated that an upturn in the economy will result in a revival of the brand. Based on cash flow forecasts, no impairment is deemed necessary.

 

7. PROPERTY, PLANT AND EQUIPMENT

 

GROUP	Short leasehold improvements £	Fixtures, fittings and equipment £	Total £
Cost
1 February 2008	89,398	325,829	415,227
Additions	-	33,081	33,081
Disposals	(66,746)	(113,240)	(179,986)
31 January 2009 and 31 January 2010	22,652	245,670	268,322
Depreciation
1 February 2008	72,330	134,003	206,333
Charge for the year	4,530	76,380	80,910
Disposals	(66,746)	(113,240)	(179,986)
31 January 2009	10,114	97,143	107,257
Charge for the year	4,530	68,850	73,380
31 January 2010	14,644	165,993	180,637
Net book value
31 January 2010	8,008	79,677	87,685
31 January 2009	12,538	148,527	161,065
1 February 2008	17,068	191,826	208,894

 

The net book value of fixtures, fittings and equipment includes £53,696 (2009: £91,027) of assets held under finance lease agreements.

 

7. PROPERTY, PLANT AND EQUIPMENT (continued)

 

COMPANY	Short leasehold improvements £	Fixtures, fittings and equipment £	Total £
COST
1 February 2008	89,398	191,426	280,824
Additions	-	3,858	3,858
Disposals	(66,746)	(5,961)	(72,707)
31 January 2009	22,652	189,323	211,975
Transfer from subsidiary	-	17,989	17,989
31 January 2010	22,652	207,312	229,964
Depreciation
1 February 2008	72,330	19,213	91,543
Charge for the year	4,530	58,106	62,636
Disposals	(66,746)	(5,961)	(72,707)
31 January 2009	10,114	71,358	81,472
Charge for the year	4,530	59,379	63,909
31 January 2010	14,644	130,737	145,381
Net book value
31 January 2010	8,008	76,575	84,583
31 January 2009	12,538	117,965	130,503
1 February 2008	17,068	172,213	189,281

 

The net book value of fixtures, fittings and equipment includes £53,696 (2009: £68,471) of assets held under finance lease agreements.

 

 

 

8. TRADE AND OTHER RECEIVABLES

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Current:
Trade receivables	576,995	706,093	256,379	329,925
Provision for doubtful debts	(21,902)	(45,778)	(17,777)	(16,428)
	555,093	660,315	238,602	313,497
Other receivables	6,556	9,389	-	4,508
Prepayments and accrued income	118,278	161,336	41,412	37,068
	679,927	831,040	280,014	355,073
Non-current:
Deposits	21,139	21,139	21,139	21,139

 

The Groups financial assets are fairly short term in nature. In the opinion of the directors the book values equate to their fair value.

 

 

9 INVENTORIES

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Raw materials	18,992	17,201	15,259	13,578

The amount of inventories recognised as an expense and charged to cost of sales was £114,342 (2009: £132,741). In the opinion of the directors the book values equate to their fair value.

 

10 CASHAND CASH EQUIVALENTS

Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash

flow statement:

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Cash and cash equivalents	-	-	-	6,298
Bank overdrafts (Note 18)	(31,878)	(61,496)	(10,236)	-
	(31,878)	(61,496)	(10,236)	6,298

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

 

11 CALLED UP SHARE CAPITAL

 

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Authorised:
30,000,000 Ordinary shares of
10p each	3,000,000	3,000,000	3,000,000	3,000,000
	Number of  shares	Share capital £	Share premium £	Total £
Issued and fully paid
As at 1 February 2008	24,505,577	2,450,558	2,369,491	4,820,049
Shares issued	1,098,210	109,821	65,893	175,714
Issue costs	-	-	(7,767)	(7,767)
As at 31 January 2009 and 31 January 2010	25,603,787	2,560,379	2,427,617	4,987,996

Shares issued during the previous year were for a cash injection for brand development and additional working capital.

 

11 CALLED UP SHARE CAPITAL (continued)

The Company has granted options to subscribe for ordinary shares of 10p each, as follows:

 

	Subscription price	Period within which	Number of shares for which rights are exercisable
Grant date	per share	options are exercisable	2010	2009
31.05.2000	50.00p	30.05.2003 - 30.05.2010	16,000	26,000
11.07.2000	12.56p	23.01.2002 - 24.01.2011	119,394	119,394
31.01.2001	30.00p	01.02.2001 - 31.01.2011	20,833	20,833
23.01.2001	12.56p	03.10.2001 - 22.01.2011	64,394	64,394
25.01.2001	12.56p	03.10.2001 - 24.01.2011	119,394	119,394
31.01.2001	40.50p	03.10.2001 - 30.01.2011	6,000	6,000
31.01.2001	40.50p	31.01.2005 - 31.01.2011	29,628	41,973
26.09.2001	26.50p	03.10.2001 - 25.09.2011	1,500	1,500
03.10.2001	30.00p	03.10.2001 - 02.10.2009	83,333	83,333
08.11.2002	14.00p	08.11.2002 - 07.11.2012	5,000	5,000
08.11.2002	14.00p	08.11.2005 - 07.11.2012	30,000	30,000
31.07.2003	14.50p	31.07.2006 - 30.07.2013	15,000	15,000
14.08.2003	14.50p	14.08.2006 - 13.08.2013	100,000	100,000
18.08.2003	14.50p	18.08.2006 - 17.08.2013	10,000	10,000
31.07.2003	14.50p	31.07.2003 - 30.07 2013	5,000	5,000
30.04.2004	32.00p	30.04.2007 - 29.04.2014	35,000	35,000
05.10.2004	24.50p	05.10.2007 - 04.10.2014	-	-
16.05.2005	30.50p	16.05.2009 - 15.05.2015	50,000	50,000
17.10.2005	22.50p	17.10.2009 - 17.10.2015	20,000	25,000
02.06.2006	24.50p	02.06.2010 - 01.06.2016	65,000	70,000
28.02.2007	22.50p	01.03.2010 - 28.02.2017	340,000	345,000
28.02.2008	30.50p	01.03.2011 - 28.02.2018	160,000	315,000
22.06.2009	14.00p	22.06.2012 - 21.06.2019	550,000	-
			1,845,476	1,487,821

 

12 EQUITY-SETTLED SHARE OPTION SCHEMES

 

For details of share option schemes in place during the year, see note 16.

 

Details of the number of share options and the weighted average exercise price (WAEP) during the year are as follows:

		2010		2009
	No.	WAEP  (pence)	No.	WAEP  (pence)
Outstanding at the beginning of the year	1,487,821	25.4p	1,389,821	23.6p
Granted during the year	550,000	14.0p	365,000	30.5p
Forfeited during the year	(192,345)	31.6p	(267,000)	25.5p
Outstanding at the end of the year	1,845,476	19.8p	1,487,821	25.4p
Exercisable at the end of the year	730,476	20.1p	824,821	24.6p

 

The market price of the Company's shares on 31 January 2010 was 11p (2009: 16p).

12. EQUITY-SETTLED SHARE OPTION SCHEMES (continued)

 

The range of exercise price during the year was between 8p and 17p (2009: 16p and 37p).

 

The fair values were calculated using the Black-Scholes valuation method. The inputs to the model were as follows:

	2010	2009
Weighted average share price (pence)	14	25
Expected volatility (%)	41.4	131
Expected life (years)	10	10
Risk-free rate (%)	4.62	4.62
Dividend yield (%)	0	0
Vesting condition (%)	37	37

 

Expected volatility was determined by calculating the historic volatility of the Group's share price over the period since flotation.

 

The weighted average remaining contractual life is six years (2009: six years).

 

The charge for the year for options granted was £12,552 (2009: £35,995) which is included in administrative expenses. Fair value of the options granted during the year was £29,106 (2009: £35,713).

 

Options granted have a vesting period of three years. The exercise of options will normally be conditional on the holder being in Group's employment at the end of the vesting period.

13 BORROWINGS

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Bank overdrafts	31,878	61,496	10,236	-
Bank and invoice discounting loans	321,936	316,624	146,260	184,846
Other borrowings	170,000	-	170,000	-
	523,814	378,120	326,496	184,846
Disclosed within current liabilities	523,814	378,120	326,496	184,846
Disclosed as non-current liabilities	-	-	-	-

 

All borrowings are due on demand or within one year. Following the fundraising in April 2010 other borrowings of £170,000 were repaid.

 

Bank overdrafts and loans disclosed within current liabilities are arranged at floating rates, exposing the group to cash flow interest rate risk.

 

The weighted average interest rates paid were as follows:

	2010	2009
	%	%
Bank overdrafts	3.05	6.84
Bank and invoice discounting loans	2.22	6.20
Other borrowings	10.00	-
The Directors estimate the fair value of the Group's borrowings as follows:
	2010	2009
	£	£
Bank and invoice discounting loans	318,397	314,223
Other borrowings	127,724	-
	446,121	314,223

 

Sensitivity analysis on the level of interest rates has not been undertaken as the Directors believe that any increase / decrease in interest rates during the current and previous year would have had no material impact on the level of interest payable. The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant.

 

 

The other principal features of the Group's borrowings are as follows:

 

(i) Bank overdrafts are repayable on demand. Overdrafts have been secured by a debenture over the group's assets. The average effective interest rate on bank overdrafts approximates to 3.05% (2009: 6.84%) per annum and is determined based on 2.5% plus Lloyds TSB plc bank base rate.

(ii) Net obligations under finance leases contracts are secured on the assets concerned. The net book value of secured assets is disclosed in note 11

(iii) Bank loans are repayable on one to three months notice. This represents invoice discounting advances against trade receivables and are secured by a debenture over trade receivables. The net book value is disclosed in Note 13. The average effective rate approximates to 2.22% per annum and is determined based on 1.4 to 2% above bank base rates.

(iv) Other borrowings of £170,000 relate to a transaction undertaken whereby the Group sold a website to a related party (see note 26). The terms of the agreement are such that the Group continues to use the asset in exchange for a monthly fee. The Group has the ability to repurchase the asset within three years and based on the substance of the transaction, this has been treated as a loan. The term of the borrowing is over three years at an interest rate of 10% per annum.

 

For details of the bank loans in the prior year, please refer to details (i) and (ii) above

 

At 31 January 2010, the Group has available £nil (2009: £Nil) of undrawn committed borrowing facilities, in respect of which all conditions precedent have been met.

 

14. NET OBLIGATIONS UNDER FINANCE LEASES

 

		Minimum lease payments
		Group		Company
Amounts payable under finance leases		2010 £	2009 £	2010 £	2009 £
	Within one year	13,112	35,322	13,112	24,650
	In the second to fifth years inclusive	4,972	18,097	4,972	2,440
		18,084	53,419	18,084	27,090
	Less: future finance charges	(3,959)	(10,557)	(3,959)	(5,050)
	Present value of lease obligations	14,125	42,862	14,125	22,040
	Less: Amount due to settlement within 12 months (shown under current liabilities)	10,177	28,627	10,177	20,165
	Amount due to settlement after 12 months	3,948	14,235	3,948	1,875

 

It is the Group's policy to lease certain items of fixtures, fittings and equipment under finance leases. The average lease term is 3 years. For the year ended 31 January 2010, the average effective borrowing rate was 23.8%. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

 

 

15. TRADE AND OTHER PAYABLES

 

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Current:
Trade payables	442,630	524,382	280,754	300,525
Taxation and social security	216,117	279,443	81,774	123,705
Other payables	26,978	37,417	3,924	22,295
Accruals	210,169	310,913	125,949	159,325
Deferred income	341,134	457,770	90,274	92,216
	1,237,028	1,609,925	582,675	698,066
Non-current:
Amounts owed to subsidiary undertakings	-	-	154,611	-

 

The Group's financial liabilities are fairly short term in nature. In the opinion of the directors the book values equate to their fair value.

 

16. PROVISIONS

 

GROUP	Onerous lease provision £	Total £
At 31 January 2008	-	-
Onerous lease	61,289	61,289
31 January 2009	61,289	61,289
Onerous lease provision released	(61,289)	(61,289)
31 January 2010	-	-

 

The Company did not have any provisions at 31 January 2010, 31 January 2009 or 31 January 2008

 

17. NOTES TO THE CASH FLOW STATEMENT

 

		Group		Company
	2010	2009	2010	2009
	£	£	£	£
Profit/ (Loss) before tax	36,706	(493,930)	(398,218)	(834,289)
Adjustments for:
Finance income	(1,483)	(9,696)	(923)	(177)
Finance costs	33,870	60,694	25,663	37,453
Amortisation	50,269	55,452	31,127	34,124
Depreciation of property, plant and equipment	73,380	80,910	63,909	62,636
Provisions on loans released	-	-	(111,666)	(52,122)
Onerous lease provision	(61,289)	61,289	-	-
Share option costs	12,552	35,995	12,552	35,995
Operating cash flows before movements in working capital	144,005	(209,286)	(377,556)	(716,380)
Increase in inventories	(1,791)	(205)	(1,681)	(13,578)
Decrease in receivables	151,113	416,499	75,059	227,330
Decrease in payables	(372,897)	(242,399)	(115,390)	(21,682)
CASH FLOWS USED IN OPERATING ACTIVITIES	(79,570)	(35,391)	(419,568)	(524,310)

Additions to fixtures and equipment during the year amounting to £nil (2009: £25,623) were financed by new finance leases.

 

 

 

18. RECONCILIATION OF NET CASH FLOW TO MOVEMENTS IN NET FUNDS AND ANALYSIS OF NET FUNDS

 

Group		At 1 Feb 2009 £	Cash flow £	At 31 Jan 2010 £
Cash in hand and at bank		-	-	-
Overdrafts		(61,496)	29,618	(31,878)
		(61,496)	29,618	(31,878)
Company		At 1 Feb 2009 £	Cash flow £	At 31 Jan 2010 £
Cash in hand and at bank		6,298	(6,298)	-
Overdrafts		-	(10,236)	(10,236)
		6,298	(16,534)	(10,236)

 

 

 

 

 

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