CBUY.L Regulatory News (CBUY)

20 Apr 2009 10:39



FOR IMMEDIATE RELEASE

20 April 2009

@UK PLC

("@UK" or the "Company")

Audited Results for the year ended 31 December 2008

@UK PLC (AIM:ATUK.L), a provider of software solutions that facilitate eCommerce and eProcurement in the government, health and private sectors, today announces its audited results for the year ended 31 December 2008.  The 2008 Annual Report and Accounts will be emailed to shareholders on 30 April 2009 and will be available from the company's website www.uk-plc.net

Financial Highlights:

Adjusted loss before tax down from £ 2,258,000 to £ 1,340,000 - a 40% reduction

Costs reduced from £ 3,889,000 to £ 2,869,000  - a 26% reduction

Turnover down from £ 2,330,000 to £2,172,000  - a 7% reduction

Gross Margin up from 63% to 70%

Year end cash £ 553,000  (2007: £1,791,000 )

Commenting on the results, Ronald Duncan, Chairman said:

"2008 has been a difficult year for @UK. We have made progress in our entry into the NHS market, albeit at a slower rate than we had expected, and continue to act decisively to reduce costs. We are moving towards a channel sales model. A new service, spend analysis, has been brought to market and started to generate revenues, since the year end.

We believe our services which help public sector organisations to identify and achieve cost savings are attractive in the current economic conditions, and that prompt payment to suppliers in conjunction with Barclaycard is also attractive in the current conditions. This together with continued attention to our costs, and support from our investors leaves us confident for the Company's future."

For further information, please contact:

@UK PLC

Ronald Duncan

Chairman

Tel 0118 963 7000

Beaumont Cornish Limited

Roland Cornish

Tel 0207 628 3396

Notes to Editors

@UK PLC

Is a leading UK electronic marketplace provider that has formed over 170,000 companies using its SiteGenerator ecommerce engine and is providing ecommerce to NHS Suppliers as part of NHS Cat with NHS Supply Chain.

@UK PLC have an OGC Buying Solutions framework contract for the provision of its new Spend Analysis services.

@UK's software provides a secure internet eMarketplace enabling buyers such as local authorities, schools and hospitals to buy online from commercial suppliers ranging from large corporations to small to medium enterprises (SMEs). This allows buying and selling to take place with no paperwork and eliminating transposition errors, achieving major savings throughout the supply chain.

@UK PLC also offers services to new businesses, including incorporation, company secretarial services and filing annual returns. 

@UK is included in the Software and Computer Services Sector (9530). For further information please visit www.uk-plc.net.

Chairman's Statement

Introduction

2008 has been a difficult year for @UK. We have made progress in our entry into the NHS market, albeit at a slower rate than we had expected, and continue to act decisively to reduce costs. We are moving towards a channel sales model. A new service, spend analysis, has been brought to market and started to generate revenues, since the year end.

Financial Results

In the year ended 31 December 2008, @UK achieved revenue of £2,172,000, a decrease of 7% compared to the previous year (£2,330,000).

Sales of web and eCommerce services recorded a decrease of 11% to £910,000 in the year ended 31 December 2008 compared to £1,025,000 in the prior year. This reflects the end of a large coding contract in the year and a slowdown in the Group's traditional Local Authority market. Revenue from company formation services decreased by 3% to £1,262,000 in the year ended 31 December 2008 compared to £1,305,000 in the prior year.

As a result of continued cost reductions gross margin rose to 70% from 63%, and operating expenses before exceptional items and share based payments reduced from £3,889,000to £2,869,000.

Loss before taxation (adjusted for exceptional items and share based payments) in 2008 was £1,340,000 compared to £2,258,000 in the prior year.

£13,000 was credited as the "cost" calculated under IFRS 2 of share options granted to employees (2007: charge of £26,000). Staff numbers were reduced further during the year, and by the year end had fallen by 6 to 37. An exceptional cost of £132,000 was incurred in making this reduction and the loss on disposal of fixed assets when vacating offices. A provision of £96,000 has been made, as an exceptional item, for impairment of the goodwill which arose on the acquisition of Coding International.

After taking account of exceptional costs and share based payments the loss before tax for 2008 was £1,340,000, compared to £2,367,000 in the prior year.

At 31 December 2008 the Group had cash of £553,000 (2007: £1,791,000).

Operational review

Marketplace

NHS

2008 has seen progress in developing our opportunity in the NHS market, albeit at a slower rate than your Board had anticipated. At the year end we had 3 healthcare providers signed up for our market place:

Basingstoke and North Hampshire NHS Foundation Trust;

Nottingham University Hospitals NHS Trust, and

St Andrews Healthcare, the UK's largest not-for-profit mental health care charity.

 The systems for these are now going live and they will shortly be acting as reference sites. Nottingham was signed up through a channel partner - our first such sale.

We have recently integrated our marketplace with two of the largest shared services providers to NHS Trusts, who together support around 25% of NHS Trusts. We believe these integrations will make our offering more attractive to these trusts.

We have been in discussions with Barclaycard about the provision of our market-place as part of its purchasing card solution for the public sector. We expect an announcement of the first pilot schemes in the NHS shortly. The pilot is planned to cover 5 trusts in the first and second round followed by a further 10 trusts in due course, and has been agreed in principle with the participating NHS region. This is an exciting development for the company and would continue our move to a channel approach to sales. 

Other buyside

During the year we signed up our first University marketplace client, University of Bristol. This site is now going live, and we believe this may open up other opportunities in the Further Education sector.

Spend analysis

In October 2008 @UK announced the award of an OGCbuying.solutions (OGC) framework for data manipulation and spend analysis. Since the year end we have started invoicing on our first spend analysis contract, with London Procurement Programme ("LPP"). This programme has been put in place to drive collaboration in procurement across London's NHS Trusts which together generate some 25% of the NHS's total spend. The number of enquiries and tenders we are currently responding indicates this area is likely to be a significant new contributor to revenue from 2009 on.

 

Company Formations

The market for our Company Formations department has been difficult, as the total number of companies formed in Great Britain declined by 18% in 2008 reflecting gloomy economic conditions. Against this background we see a fall in our sales of 3% as a good performance.

Operating costs

Throughout the year we have continued to review costs wherever possible. This attention to costs has continued since the year end with some further redundancies announced earlier this month.

Share issue

The Board has decided to raise £150,000 by the issue of new ordinary shares to provide additional working capital for the Group, at a price to be set post results announcement. The directors have indicated that they will subscribe £100,000. The investors in this share round have provided a conditional undertaking to provide a further £ 150,000 on the same terms should the company have a further requirement for working capital. 

People

On behalf of the Board I would like to thank all our employees for their hard work and effort during the year.

Dividend policy

The Board is not recommending the payment of a dividend for 2008. In the immediate future, the Board is committed to building the Group's business and accordingly all the Group's financial resources are being applied to this end. In the longer term, the Directors intend to adopt a progressive dividend policy appropriate to the Group's financial performance.

Summary and outlook

We have moved to a channel sales model and engaged with key channel partners NHS Supply Chain and Barclaycard to drive eProcurement and eCommerce sales with a strong focus on maximising opportunities in the NHS. Our Spend Intelligence solution is available to all Public Sector Bodies via an OGC national framework and OGC are actively marketing the framework across the all of the Public Sector effectively providing a 3rd channel to market for our services.

We believe our services which help public sector organisations to identify and achieve cost savings are attractive in the current economic conditions, and that prompt payment to suppliers in conjunction with Barclaycard is also attractive in the current conditions. This together with continued attention to our costs, and support from our investors leaves us confident for the Company's future.

Consolidated Income Statement For the year ended 31 December 2008		2008	2007
	Notes	£	£
Revenue	4	2,172,278	2,329,600
Cost of sales		(643,005)	(851,118)
Gross profit		1,529,273	1,478,482
Administrative expenses		(2,868,938)	(3,889,181)
Share based payments	21	12,672	(26,075)
Operating loss before exceptional item	5	(1,326,993)	(2,436,774)
Exceptional items	5	(228,079)	(83,485)
Operating loss		(1,555,072)	(2,520,259)
Investment income	8	40,915	159,680
Finance costs	9	(7,554)	(6,869)
Loss on ordinary activities before taxation		(1,521,711)	(2,367,448)
Taxation	10	181,330	­-
Loss for the year attributable to equity shareholders of the parent		(1,340,381)	(2,367,448)
Loss per share
Basic and diluted	11	3.5p	6.3p

Revenue and operating loss for the year all derive from continuing operations. 

Balance Sheet 31 December 2008		Group	Company
		2008	2007	2008	2007
	Notes	£	£	£	£
Assets
Non-current assets
Goodwill	12	-	96,274	-	-
Other intangible assets	13	16,847	46,926	16,847	46,926
Property, plant and equipment	14	228,794	501,955	228,317	501,395
Investments	15	-	-	31,377	61,771
		245,641	645,155	276,541	610,092
Current assets
Trade and other receivables	16	534,971	311,739	500,589	329,615
Cash and cash equivalents	17	553,376	1,791,189	550,529	1,784,156
		1,088,347	2,102,928	1,051,118	2,113,771
Total assets		1,333,988	2,748,083	1,327,659	2,723,863
Liabilities
Current liabilities
Trade and other payables	18	(540,685)	(586,349)	(503,279)	(546,179)
Current tax liabilities		-	(2,878)	-	-
Financial liabilities - borrowings	19	(12,500)	(12,500)	(12,500)	(12,500)
		(553,185)	(601,727)	(515,779)	(558,679)
Non current liabilities
Financial liabilities - borrowings	19	(42,300)	(54,800)	(849,965)	(862,465)
		(42,300)	(54,800)	(849,965)	(862,465)
Total liabilities		(595,485)	(656,527)	(1,365,744)	(1,421,144)
Total net assets		738,503	2,091,556	(38,085)	1,302,719
Shareholders' equity
Called up share capital	20	377,798	377,798	377,798	377,798
Share premium account	20	10,113,881	10,113,881	10,113,881	10,113,881
Other reserve		630,030	630,030	-	-
Share-based payment reserve		64,581	77,253	64,581	77,253
Accumulated losses		(10,447,787)	(9,107,406)	(10,594,345)	(9,266,213)
Total equity attributable to equity shareholders of the parent		738,503	2,091,556	(38,085)	1,302,719

Ronald Duncan 

Executive Chairman

Cash Flow Statements For the year ended 31 December 2008		Group	Company
		2008	2007	2008	2007
	Notes	£	£	£	£
Cash flows from operating activities
Loss before taxation		(1,521,711)	(2,367,448)	(1,506,241)	(2,339,473)
Adjustments for:
Finance income (net)		(33,361)	(152,811)	(33,361)	(152,404)
Depreciation of property, plant & equipment		253,645	262,238	252,488	260,551
Amortisation of other intangible assets		30,079	28,328	30,079	28,328
Share based payments		(12,672)	26,075	(12,672)	26,075
Goodwill impairment provision		96,274	-	-	-
Provision against investment		-	-	30,094	-
Loss on disposal of fixed assets		25,057	-	­25,057	-
Changes in working capital
Trade and other receivables		(44,824)	85,928	7,435	61,508
Trade and other payables		(45,620)	(264,347)	(42,900)	(252,735
Net cash used by operations		(1,253,133)	(2,382,037)	(1,250,021)	(2,368,150)
Tax paid		­-	-		-
Net cash outflow from operating activities		(1,253,133)	(2,382,037)	(1,250,021)	(2,368,150)
Cash flows from investing activities
Interest received		40,915	159,680	40,915	159,273
Interest paid		(7,554)	(6,869)	(7,554)	(6,869)
Purchase of intangible assets		-	(15,320)	-	(15,320)
Purchase of property, plant and equipment		(7,855)	(71,646)	(6,781)	(71,646)
Proceeds from sale of property, plant and equipment		2,314	-	2,314
Cash inflow/(outflow) from investing activities		27,820	65,845	28,894	65,438
Cash flows from financing activities
Repayment of borrowings		(12,500)	(11,867)	(12,500)	(11,867)
Net cash outflow from financing		(12,500)	(11,867)	(12,500)	(11,867)
Net decrease in cash and cash equivalents		(1,237,813)	(2,328,059)	(1,233,627)	(2,314,579)
Cash and cash equivalents at beginning of period		1,791,189	4,119,248	1,784,156	4,098,735
Cash and cash equivalents at end of period	17	553,376	1,791,189	550,529	1,784,156

Statement Of Changes In Shareholders Equity For the year ended 31 December 2008	Share capital	Share premium	Other reserve	Share based payments reserve	Accumulated losses	Shareholders' equity
Group	£	£	£	£	£	£
At 31 December 2006	376,074	10,113,881	606,754	51,178	(6,739,958)	4,407,929
Shares issued in the year	1,724	-	23,276	-	-	25,000
Share based payments	-	-	-	26,075	-	26,075
Retained loss for the year	-	-	-	-	(2,367,448)	(2,367,448)
At 31 December 2007	377,798	10,113,881	630,030	77,253	(9,107,406)	2,091,556
Share based payments	-	-	-	(12,672)	-	(12,672)
Retained loss for the year	-	-	-	-	(1,340,381)	(1,340,381)
At 31 December 2008	377,798	10,113,881	630,030	64,581	(10,447,787)	738,503
Company
At 31 December 2006	376,074	10,113,881		51,178	(6,926,740)	3,614,393
Shares issued in the year	1,724	-		-	-	1,724
Share based payments	-	-		26,075	-	26,075
Retained loss for the year	-	-		-	(2,339,473)	(2,339,473)
At 31 December 2007	377,798	10,113,881		77,253	(9,266,213)	1,302,719
Share based payments	-	-		(12,672)	-	(12,672)
Retained loss for the year	-	-		-	(1,328,132)	(1,328,132)
At 31 December 2008	377,798	10,113,881		64,581	(10,594,345)	(38,085)

The other reserve arises because shares issued on the acquisition of subsidiaries have been recorded at par value and no share premium recognised as allowed by the Companies Act 1985.

 

Notes to the Preliminary Announcement

 

1. Basis of preparation

The preparation of financial statements requires the estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although the estimates are based on management's best knowledge of the amounts, events or actions, actual results may differ from those estimates.

The financial information set out does not constitute statutory accounts for the purposes of section 240 of the Companies Act 1985. The Company's statutory accounts for the year ended 31 December 2008 will be delivered to the Registrar of Companies following the Annual General Meeting. The Company's statutory accounts for the year ended 31 December 2007, have been delivered to the Registrar of Companies. The auditors' report on both those accounts was unqualified and does not contain a statement under Companies Act 1985 sections 237(2) or (3) and or an emphasis of matter paragraph.

Copies of the annual report for the year ended 31 December 2008 will be sent to all shareholders, and will also be available on the company's website at www.ukplc.net. Copies of the accounts for the year ended 31 December 2007 can be obtained by writing to the Company Secretary, @UK PLC, 5 Jupiter House, Calleva Park, Aldermaston, Berkshire RG7 8NN.

This announcement was approved by the board of @UK PLC and authorised for issue on 20 April 2009.

 

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated, and in preparing an opening IFRS balance sheet at 1 January 2006 for the purpose of transition to IFRS. 

2.1 Basis of accounting

These financial statements have been prepared in accordance with IFRS 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 preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements are disclosed in note 3.

A separate income statement for the parent company has not been presented as permitted by section 230(4) of the Companies Act 1985. 2.2 Going concern

The Directors have reviewed the projections for the forthcoming 12 month period from the date of signing of these financial statements and based on the level of existing cash, the intention of certain parties including the Directors to subscribe for new shares following the publication of this Report and Accounts, and projected income and expenditure, the Directors are satisfied that the Company and Group have adequate resources to continue in business for the foreseeable future. In reaching this conclusion the Directors have taken into account that whilst there is uncertainty that sales projected will occur and of the timing of the receipts relating thereto, the Group is currently receiving significant tendering opportunities. Should sales fall below expected levels they anticipate that it will be possible to raise additional capital and/or to reduce the Group and Company's costs to offset the shortfall. Accordingly the going concern basis has been used in preparing the financial statements. 2.3 Consolidation

Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies so as to obtain benefit from their activities. Subsidiaries are fully consolidated from the date on which control is transferred until the date control ceases. 

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The investment in subsidiaries in the Company's balance sheet are shown at cost less provision for diminution in value.

Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated. 2.4 Goodwill

Goodwill arising on acquisitions represents the excess of the consideration given plus any associated costs for investments in subsidiary undertakings over the fair value of the identifiable assets and liabilities acquired. Adjustments are made to fair values to bring the accounting policies of acquired businesses into alignment with those of the Group. Provision is made for any impairment in the value of goodwill. The costs of integrating and reorganising acquired businesses are charged to the post acquisition income statement.

In accordance with IFRS1, the Group has applied the exemption from retrospectively recalculating goodwill which arose on acquisitions prior to 1 January 2006. This goodwill is included at its deemed cost, being the amount recorded under UK GAAP as at 1 January 2006. Goodwill is carried at cost less accumulated impairment losses. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Goodwill is allocated to cash generating units for the purpose of impairment testing. Each of these cash generating units represents the group's investment in each country of operation by primary reporting segment. Goodwill is tested for impairment annually. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 2.5 Other intangible assets

Other intangible assets are shown at historical cost less accumulated amortisation and impairment losses.

Amortisation is charged to administrative expense in the income statement on a straight-line basis over the estimated useful lives of the intangible asset unless such lives are indefinite. Intangible assets with an indefinite useful life are tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The useful lives are as follows:

• Software - 3 years

Amortisation periods and methods are reviewed annually and adjusted if appropriate.

Research and development expenditure is written-off to the income statement in the year in which it is incurred unless the costs are directly associated with the development of identifiable and unique software products controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year, when they are recognised as intangible assets and amortised over their estimated useful lives. 2.6 Property, plant and equipment

All are stated at cost less accumulated depreciation.

Depreciation of property, plant and equipment is provided to write each asset down to its estimated residual value on a straight-line basis over its estimated useful life, as follows:

Computer equipment 3 years

Fixtures, fittings and equipment 3 to 5 years

Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

Gains or losses on disposal are included in the income statement.

2.7 Impairment of assets

The Group assess at each balance sheet date whether there is any indication that any of its assets have been impaired. If such indication exists, the asset's recoverable amount is estimated and compared to its carrying value.

For goodwill and intangible assets that have an indefinite life and intangible assets not yet available for use, the recoverable amount is estimated at each balance sheet date and whenever there is an indication of impairment.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment losses are recognised in the income statement. 2.8 Financial instruments

Financial assets and financial liabilities are recognised on the group's balance sheet when the group has become a party to the contractual provisions of the instrument. 2.8.1. Trade receivables

Trade receivables are initially recognised at fair value and then subsequently measured at amortised cost using the effective interest rate method. Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. 2.8.2 Trade payables

Trade payables are initially recognised at fair value and then subsequently measured at amortised cost using the effective interest rate method. Trade payables are not interest bearing and are stated at their nominal value. 2.8.3. Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest rate basis. 2.8.4. Equity Instruments

Equity instruments are recorded at the proceeds received, net of direct issue costs. 2.9 Share based payments

The group has applied the requirements of IFRS 2: Share-based Payments.

The group issues equity-settled share-based payments to its employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest.

Fair value is measured by use of a Black Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. 2.10 Pensions

All pension schemes operated by the Group are defined contribution schemes. The costs are charged to the income statement in the year in which they are incurred. 2.11 Revenue

Revenue is measured at fair value of consideration received or receivable for goods sold and services provided to customers outside the Group, net of Value Added Tax and any discounts. Where invoices are raised in advance of the income being earned through the performance of the service, the unearned portion is included in the accounts as deferred income, and released to the Profit and Loss Account as earned. 2.12. Leases

Rentals payable under operating leases are charged against income on a straight line basis over the lease term. The Group does not hold any assets under hire purchase contracts or finance leases and has not received any benefits as an incentive to sign a lease of whatever type. 2.13. Current and deferred taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The current tax is based on taxable profit for the year. Taxable profit differs 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 group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in jointly controlled entities, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. 2.14. ProvisionsProvisions are recognised in the balance sheet when there is a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

2.15. Standards and interpretations not applied

At that date of authorisation of these Financial Statements, the following Standards and Interpretations (International Financial Reporting Interpretation Committee - IFRIC), which have not been applied in these Financial Statements, were in issue but not yet effective:

Revised IAS 1  Presentation of financial statements (effective date year beginning 1 January 2009) Revised IAS 27  Consolidated and separate financial statements (effective date year beginning 1 January 2009) Amendment to IAS 32 Financial instruments: Presentation (effective date year beginning 1 January 2009) Amendment to IFRS 2  Share-based payment (effective date year beginning 1 January 2009)Revised IFRS 3  Business Combinations (effective date year beginning 1 July 2009)Amendment to IAS 23  Borrowing Costs (effective from 1 January 2009)IFRIC 14  The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective from 1 Oct 2008)IAS 39  Eligible Hedged Items (effective from 1 July 2009)

The Directors have considered the above new standards, interpretations and amendments to published standards that are not yet effective and concluded that, except for the amendments to IAS 1 and IFRS 2, they are either not relevant to the Group or that they would not have a material impact on the Group's financial statements..

 

3. Accounting estimates and judgements

Estimates and judgments 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.

 

3.1. Critical accounting estimates and judgments

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Goodwill has been tested for impairment by comparing the amount of goodwill against future forecast results including cash flows expected to be generated in the future by the appropriate asset, cash-generating unit, or business segment.

The fair value of share-based payments is measured using a binomial model which inherently makes use of significant estimates and assumptions concerning the future applied by the directors.

 

4. Revenue 

For management purposes, the Group is currently organised into one operating division - e-commerce. This is the basis on which the Group reports its primary segment information. Set out below is an analysis of revenue recognised between principal product categories, which the Directors use to assess future revenue flows from customers.

 

	2008	2007
Revenue	£	£
Company formation services	1,262,289	1,304,812
Web and eCommerce services	909,989	1,024,788
	2,172,278	2,329,600

The above elements within the operating division have the same risks and returns and as such no further analysis is considered to be necessary. All of the revenue derives from services provided in the United Kingdom.

 

5. Operating loss

	2008	2007
	£	£
This is stated after the following:
Staff costs (see note 7)	1,375,361	2,312,904
Depreciation of property, plant and equipment (see note 14)	253,645	262,238
Amortisation of other intangible assets	30,079	28,328
Research and development costs	277,671	207,855
Exceptional items
- reorganisation costs (see note below)	131.805	83,485
- provision for impairment of goodwill	96,274	-
	228,079	83,485

Reorganisation costs represent the costs incurred in reducing staff numbers and in 2008 the loss on disposal of assets when vacating offices.

 

6. Auditors remuneration

Amounts payable to Menzies LLP (2007: Baker Tilly UK Audit LLP) in respect of audit and non-audit services

	2008	2007
	£	£
Audit of Company and consolidated accounts	20,000	29,050
Audit of subsidiaries	1,500	4,250
Other assurance services - interim review	-	5,500
Other services relating to:
Taxation	1,500	4,350

 

7. Employees

	2008	2007
	£	£
Staff costs including directors comprised:
Wages and salaries	1,244,055	2,057,845
Pension	-	2,256
Social security costs	144,248	226,728
Share based payments	(12,672)	26,075
	1,375,361	2,312,904

	2008	2007
	No.	No.
The average monthly number of persons (including Directors)
employed by the Group during the year was:
Management and administration	11	15
Technical and delivery	25	39
Sales and marketing	1	15
	37	69

Directors remuneration

		2008	2007
Emoluments for qualifying services:		£	£
RJ Duncan		87,500	80,000
HL Duncan		76,250	80,000
DJ Holloway (appointed 1 October 2008)		5,000	-
WJ Aiken (resigned 30 September 2008)		58,731	80,000
JL Connell (resigned 31 March 2008)		6,250	25,000
BR Fisher		15,000	36,000
GA Oliver (appointed 30 January 2007, resigned 31 March 2008)		30,000	110,000
M Tobin (resigned 31 March 2008)		6,250	25,000
31 December 2008		284,981	436,000

All of the payments above relate to salary or fees. None of the Directors receives any benefits or is accruing benefits under a Company pension scheme.

In addition to the payments shown above, in 2008 GA Oliver received £60,000 and WJ Aiken received £40,000 as compensation for loss of office and in lieu of notice.

 

8. Investment income

	2008	2007
	£	£
Interest on short term deposits	40,915	159,680

9. Finance costs

	2008	2007
	£	£
Interest on borrowings	4,753	6,869
Other interest	2,801	-
	7,554	6,869

10. Taxation

	2008	2007
	£	£
R&D tax credit	178,409	­-
Adjustment in respect of prior years	2,921	­-
Tax credit for the year	181,330	-
Factors affecting tax charge for the year
Loss on ordinary activities before taxation	(1,521,711)	(2,367,448)
Loss on ordinary activities before taxation multiplied by
standard rate of UK corporation tax of 28% (2007: 28%)	(426,079)	(662,885)
Effects of:
Expenses not deductible for tax purposes	5,104	73
Share based payments	(3,548)	7,301
Capital allowances less than/(in excess) of depreciation	50,811	31,192
Loss on disposal of fixed assets	7,024	-
R&D tax credit claim in respect of current year	(8,333)	-
R&D tax relief claim in respect of prior years	(128,409)	-
Other adjustment in respect of prior years	(2,921)	-
Carry forward of tax losses	325,031	624,319
	244,749	662,885
Total tax credit	(181,330)	-

The Group has estimated tax losses of £9,700,000 (2007: £9,500,000) available for carry forward against future trading profit. No deferred tax asset has been recognised in respect of the losses given the uncertainty regarding available future taxable profits.

 

11. Loss per share

The calculations for loss per share are based on the weighted average number of shares in issue during the year 37,779,822 (2007: 37,723,138) and the following losses:

	2008	2007
	£	£
Unadjusted earnings:
Loss for the year attributable to equity shareholders of the parent	(1,340,381)	(2,367,448)
Add back: Exceptional reorganisation costs Share-based payments	228,079 (12,672)	83,485 26,075
Adjusted earnings	(1,124,974)	(2,257,888)

The share options and warrants are non-dilutive as they would not increase the loss per share in the year.

The basic and diluted loss per share calculated on the adjusted earnings is 3.0p (2007: 6.0p).

 

12. Goodwill

	Cost		Provision for impairment	Carrying value
Group	£		£	£
1 January 2007 and 2008	96,274		-	96,274
Impairment provision			(96,274)	(96,274)
31 December 2008		96,274	(96,274)	-

 

13. Other intangible assets

			Computer software
Group and Company			£
Cost:
1 January 2007			74,917
Additions			15,320
1 January 2008			90,237
Additions			­-
31 December 2008			90,237
Amortisation:
1 January 2007			14,983
Charge for the year			28,328
1 January 2008			43,311
Charge for the year			30,079
31 December 2008			73,390
Carrying value at 1 January 2007			59,934
Carrying value at 1 January 2008			46,926
Carrying value at 31 December 2008			16,847

  14. Property, plant and equipment

	Fixtures, fittings and equipment	Computer equipment	Total
Group	£	£	£
Cost:
1 January 2007	292,878	610,849	903,727
Additions	15,220	56,426	71,646
1 January 2008	308,098	667,275	975,373
Additions	-	7,855	7,855
Disposals	(52,550)	­-	(52,550)
31 December 2008	255,548	675,130	930,678
Depreciation:
1 January 2007	42,849	168,331	211,180
Additions	65,114	197,124	262,238
1 January 2008	107,963	365,455	473,418
Disposals	(25,179)	-	(25,179)
Charge for the year	62,099	191,546	253,645
31 December 2008	144,883	557,001	701,884
Carrying value at 1 January 2007	250,029	442,518	692,547
Carrying value at 1 January 2008	200,135	301,820	501,955
Carrying value at 31 December 2008	110,665	118,129	228,794
	Fixtures, fittings and equipment	Computer equipment	Total
Company	£	£	£
Cost:
1 January 2007	292,020	608,486	900,506
Additions	15,220	56,427	71,647
1 January 2008	307,240	664,913	972,153
Additions	-	6,781	6,781
Disposals	(52,550)	­-	(52,550)
31 December 2008	254,690	671,694	926,384
Depreciation:
1 January 2007	42,670	167,537	210,207
Additions	64,994	195,557	260,551
1 January 2008	107,664	363,094	470,758
Disposals	(25,179)	-	(25,179)
Charge for the year	62,016	190,472	252,488
31 December 2008	144,501	553,566	698,067
Carrying value at 1 January 2007	249,350	440,949	690,299
Carrying value at 1 January 2008	199,576	301,819	501,395
Carrying value at 31 December 2008	110,189	118,128	228,317

15. Investments

Company			£
Subsidiary undertakings (at cost):
1 January 2007			85,047
Adjustment			(23,276)
1 January 2008 and 31 December 2008			61,771
Provision for impairment:
1 January 2008			-
Charge in the year			30,394
31 December 2008			30,394
Carrying value at 1 January 2007			85,047
Carrying value at 1 January 2008			61,771
Carrying value at 31 December 2008			31,377

The investments represent the Company's 100% holding in the ordinary shares of @Software PLC and its wholly owned subsidiary Software Limited (incorporated in the United Kingdom; non-trading) and Coding International Limited (incorporated in the United Kingdom; provides coding services for use in procurement). The adjustment to cost in 2007 arose when an amount of £25,000 payable for deferred consideration and included in the cost of subsidiaries at 1 January 2007 was settled by the issue of shares which were recorded in the accounts at par value, no premium being recognised as a result of merger relief. As Coding International Limited's balance sheet shows net liabilities provision has been made for impairment in the value of the investment in 2008.

 

16. Trade and other receivables

	Group		Company
	2008	2007	2008	2007
	£	£	£	£
Prepayments and accrued income	101,869	128,859	90,105	117,021
Amounts owed by related undertakings	-	-	12,764	51,941
Taxation recoverable	178,409	-	178,409	­-
Other receivables	22,663	7,353	22,363	7,090
Trade receivables	232,031	175,527	196,948	153,563
	534,971	311,739	500,589	329,615

The Group's financial assets are fairly short term in nature. The directors consider that the carrying value of trade and other receivables approximates to the fair value.

A provision of £96,733 has been made in 2008 against amounts due from Coding International Limited included within amounts owed by related undertakings above.

 

17. Notes to the cash flow statement

Analysis of changes in net funds/debt 

	Group		Company
	31 December	1 January	31 December	1 January
	2008	2008	2008	2008
Cash at bank and in hand	43,100	118,183	40,253	111,150
Money market deposits	510,276	1,673,006	510,276	1,673,006
	553,376	1,791,189	550,529	1,784,156

Cash and cash equivalents (which are presented as a single class of asset 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.

 

18. Trade and other payables

 

	Group		Company
	2008	2007	2008	2007
	£	£	£	£
Trade creditors	151,393	228,194	139,542	211,332
Other taxation and social security	88,011	117,075	79,779	102,483
Other creditors	5,963	-	5,913	-
Accruals and deferred income	295,318	241,080	278,045	232,364
	540,685	586,349	503,279	546,179

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

 

19. Borrowings

	Group		Company
	2008	2007	2008	2007
	£	£	£	£
Non current:
Bank loan	42,300	54,800	42,300	54,800
Amounts owed to Group undertakings	-	-	807,665	807,665
	42,300	54,800	849,965	862,465
Current:
Bank loan	12,500	12,500	12,500	12,500
	12,500	12,500	12,500	12,500
Analysis of maturity of bank loan
Amounts payable within one year	12,500	12,500	12,500	12,500
Amounts payable within one to two years	12,500	12,500	12,500	12,500
Amounts payable within two to five years	29,800	37,500	29,800	37,500
Amounts payable after five years	-	4,800	-	4,800
	54,800	67,300	54,800	67,300

The bank loan is repayable by instalments until 2013 and bears interest at a rate of 2½% over the banks base rate. The bank loan is secured by a fixed and floating charge over the Company's assets. The amount owed to Group undertakings has no fixed repayment schedule.

 

20. Share capital and share premium

	Number of shares	Ordinary shares	Share premium
		£	£
At 1 January 2007	37,607,409	376,074	10,113,881
Shares issued in connection with acquisition	172,413	1,724	-
At 31 December 2007 and at 31 December 2008	37,779,822	377,798	10,113,881

The total authorised number of ordinary shares is 250 million (2007: 250 million) with a par value of 1p each.

During 2007 172,413 ordinary shares were issued at 14.5p in satisfaction of £25,000 of deferred consideration for the acquisition of Coding International Limited.

During 2008 the number of options granted under the @UK PLC Share Option Scheme to subscribe for ordinary shares in the Company changed as follows:

	2008		2007
	Number	Weighted average exercise price	Number	Weighted average exercise price
At 1 January 2008	2,308,304	32.4p	1,465,178	53.6p
Options granted during the year	-	-	1,367,000	14.2p
Options lapsed during the year	(1,352,518)	24.0p	(523,874)	44.2p
At 31 December 2008	955,786	44.3p	2,308,304	32.4p

The options at 31 December 2008 are as follows:

Number of options under grant	Subscription price per share	Exercise period
500,000	45p	December 2008 to December 2015
273,095	63p	January 2009 to January 2016
5,691	61.5p	June 2009 to June 2016
177,000	13p	June 2010 to June 2017

 

 

21. Share based payments

The Group has a share option scheme under which the Remuneration Committee can grant options over shares in the Company to employees of the Group. Options are granted with a fixed option price equal to the market price of the shares under option at the date of grant. The contractual life of an option is 10 years. The scheme allows for performance criteria or market conditions to be attached to the options, but this has not generally been done. Options are valued using the Black Scholes option pricing model. The fair value of options granted and the assumptions used in the calculations are as follows:

Grant Date	31 January 2006	30 June 2006	26 June 2007
Share price at grant date	63p	61.5p	13p
Exercise price	63p	61.5p	13p
Number of employees	31	20	2
Shares originally under option	644,121	270,895	367,000
Vesting period (years)	3	3	3
Expected volatility	31%	31%	100%
Expected life (years)	4	4	4
Risk free rate	4.30%	4.78%	4.78%
Rate ceasing employment before vesting (total)	57%	98%	50%
Fair value per option	£0.15	£0.15	£0.06

No dividends were assumed. The expected volatility is based on the historical volatility of the Company's shares to the extent information was available and of the shares of similar entities. In addition to the grant above on 8 December 2005, options over 500,000 shares were also granted to former directors of the Company at an exercise price of 45p per share. As part of the terms of their compensation for loss of office in 2006 they were allowed to retain those options. These were valued at the date on which the directors ceased to be employees and the value written off as it was in respect of past services.

 

22. Financial instruments

	2008	2007
	£	£
Financial assets
Floating rate interest bearing - cash	553,376	1,791,189

Cash is held on short-term money market deposit or interest bearing deposit. All other finance assets are non-interest bearing.

Financial liabilities

Floating rate interest bearing - bank loan (see note 19)

54,800

67,300

There is no material difference between the book value of financial assets and liabilities noted above, and the fair value.

The main objective of the Groups treasury policy is to protect post-tax cash flows of the business from the adverse effects of financial risks.

The Groups financial assets and liabilities comprise cash and liquid resources, and various items, such as trade receivables and trade payables that arise directly from its operations. The Group has no undrawn borrowing facilities. The Group is not exposed to significant foreign exchange risk. 

The Group does not enter into instruments for speculative purposes. The Group is exposed to credit risk predominantly from trade receivables and cash and cash equivalents held with banks. The group's exposure to bad debts is reduced as its major customers tend to be public sector bodies.

The Group finances its operations through funds raised from share issues. The Group is exposed to falling interest rates, but has considered the potential impact of the risk of falling interest rates and do not consider this to have a material impact on the results. The Group uses a combination of fixed and floating deposits for its cash balances. The Group has not hedged the exposure to interest rate fluctuations through the use of derivative instruments. Funds on deposit bear interest rates related to LIBOR.

 

23. Financial commitments

	2008	2007
	£	£
Group Future commitments under non-cancellable operating leases:
Land and buildings
- within one year	47,751	92,333
- between one and two years	28,600	28,600
- over two years	-	28,600
	76,351	149,533
Company Future commitments under non-cancellable operating leases:
Land and buildings, with expiry d
- within one year	23,918	68,500
- between one and two years	-	-
	23,918	68,500

24. Related party transactions

Mr RJ Duncan and Mrs HL Duncan are the landlords of a property which is occupied by the Group. The annual rent is currently £24,000. Isabella M Deas Limited, a company owned by Mr Duncan's parents and in which he has a minority interest, is the landlord of a property which is occupied by the Group. The annual rent is currently £24,000.

At the end of the year Mr RJ Duncan had an advance of £4,382 against expenses. This balance, which represents principal, was also the maximum balance outstanding.

There is no party which has Ultimate control of the Group.

Key management compensation

		2008	2007
		£	£
Salaries		390,814	549,438
Compensation for loss of office and in lieu of notice		100,000	­5,000
31 December 2008		490,814	554,438

ENDFR SEISUSSUSEFL