CBUY.L Regulatory News (CBUY)

31 Mar 2008 07:01

@UK PLC31 March 2008 Embargoed until 7am 31 March 2008 @UK plc ("@UK" or "the Group") Audited Preliminary results for the year ended 31 December 2007 @UK plc (AIM: ATUK), a provider of software solutions that facilitate eCommerceand eProcurement in the government, health and private sectors, today announcesits audited Preliminary results for the year ended December 2007. Financial Highlights: • Turnover £2,330,000, an increase of 8% (2006: £2,163,000). • Loss before taxation (adjusted for exceptional items and share based payments) of £2,258,000 (2006: £3,223,000) • After exceptional costs and share based payments loss before tax was £2,367,000 (2006: £3,495,000) • Loss per share of 6.3p (2006: loss per share of 9.3p) • Loss before tax in the second half of 2007 down 58% from the comparative period and 35% from the loss in the first half • At 31 December 2007 the Group had cash balances of £1,791,000 (2006: £4,119,000) • Cash burn continues to reduce and will be under £100,000 per month going forward Commenting on the Preliminary results, Bernard Fisher, Chairman said: "Activity in our target markets continues to be slow and whilst there is noindication that this will change in 2008 we will continue to address our newbusiness pipeline within the NHS and Local Authorities. The further cost savings achieved has reduced our monthly cash burn and willhelp to reduce losses in the current year. Notwithstanding the lack of visibility in our markets, the Board remainspositive about the quality of @UK's offering." For further information, please contact: @UK 0118 963 7000John Aiken, Chief Financial Officer Shore Capital, Nominated Adviser to @UK 020 7408 4090Dru Danford Smithfield 020 7360 4900Tania Wild / Reg Hoare Notes to Editors: @UK is a leading UK eMarketplace providers. @UK's software provides a secureinternet eMarketplace enabling buyers such as local authorities, schools andhospitals to buy online from commercial suppliers ranging from largecorporations to small to medium enterprises (SMEs). This allows buying andselling to take place with no paperwork and transposition reduced chance oferrors, achieving major savings throughout the supply chain. @UK PLC also offers services to new businesses, including incorporation, companysecretarial services and filing annual returns. Over 150,000 companies have beenincorporated using @UK's online company formation service. @UK is included in the Software and Computer Services Sector (9530). For furtherinformation please visit www.ukplc.net. Chairman's Statement Introduction This is @UK's third report to shareholders as an AIM listed company. 2007 has been another challenging year for @UK, with a lack of impetus in ourtraditional markets. We have made progress in our entry into the NHS market andcontinue to act decisively to reduce costs. Financial ResultsThis is our first preliminary announcement prepared under IFRS, with comparisonsagainst restated 2006 results. The reconciliation of the loss and net assetsunder UK GAAP to IFRS is set out in note 22 to the Preliminary Announcement. Asanticipated in previous announcements, the change to IFRS had no material impacton the results. In the year ended 31 December 2007, @UK achieved revenue of £2,330,000, anincrease of 8% compared to the previous year (£2,163,000). Sales of web and eCommerce services recorded an increased of 9% to £1,025,000 inthe year ended 31 December 2007 compared to £940,000 in the prior year, whilerevenue from company formation services increased by 7% to £1,305,000 in theyear ended 31 December 2007 compared to £1,223,000 in the prior year. Gross margin rose to 63% from 59% reflecting the reductions in the number ofstaff carrying out implementation work for Supply-side customers. Operatingexpenses before exceptional items and share based payments reduced from£4,780,000 to £3,889,000. The reduction reflects the impact of cost savings. Loss before taxation (adjusted for exceptional items and share based payments)in 2007 was £2,258,000 compared to £3,223,000 in the prior year. £26,000 was charged as the cost calculated under IFRS 2 of share options grantedto employees (2006: £51,000). Staff numbers were reduced further during theyear, and by the year end had fallen by 41 to 44. An exceptional cost of £83,000was incurred in making this reduction. At the peak in 2006 there were 115employees. Following the Board changes referred to below the number of employeeswill shortly be 37. After taking account of exceptional costs and share based payments the lossbefore tax for 2007 was £2,367,000, compared to £3,495,000 in the prior year. At 31 December 2007 the Group had cash of £1,791,000 (2006: £4,119,000)available to take the Group through to profitability. Half year on half year the run-rate of losses is being reduced: with the lossbefore tax in the second half of 2007 down 58% from the comparative period and35% from the loss in the first half. After the Board changes the monthly cashburn will reduce to £100,000 per month. Business focus @UK's traditional market for its eCommerce solution was Local Authorities, andit was to service anticipated demand in this market that the Company raisedfunds in the AIM listing in December 2005. However activity in this market hasbeen low throughout 2007 and there is no indication that this will change in2008. Central Government has failed to follow through the mandated changes foreach local authority to become "e"-enabled. As a result many authorities are notachieving the significant savings and benefits which eProcurement has brought tothose which have embraced the concept fully. We were pleased to win the contract from NHS Supply Chain for a new catalogue/content platform as part of the e-enablement strategy within the NHS. Thisprovides us with a valuable entry into this market. In 2008 we will continue to focus on developing the opportunity in the NHSmarket and on reducing our costs much as possible. Board changes With our smaller size and clearer focus we have decided it is now appropriate tosimplify our Board structure to achieve cost savings and to better reflect theneeds of the business. Today, following completion of our restructuringprogramme, our Chief Executive Officer Grant Oliver will be leaving the Group,and Jo Connell and Mike Tobin will be standing down as Non-Executive Directors.John Aiken, our Chief Financial Officer, will be taking on the additionalresponsibilities of Chief Executive Officer. The changes will leave me as the sole Non-Executive Director: in due course ifthe Group's size and resources warrant it we will consider appointing additionalNon-Executives. I would like to thank Grant, Jo and Mike for the contributions they have made tothe development of the Group. People On behalf of the Board I would like to thank all our employees for their hardwork and effort during the year. Dividend policy The Board is not recommending the payment of a dividend for 2007. In theimmediate future, the Board is committed to building the Group's business andaccordingly all the Group's financial resources are being applied to this end.In the longer term, the Directors intend to adopt a progressive dividend policyappropriate to the Group's financial performance. Summary and outlook Activity in our target markets continues to be slow and whilst there is noindication that this will change in 2008 we will continue to address our newbusiness pipeline within the NHS and Local Authorities. The further cost savings achieved has reduced our monthly cash burn and willhelp to reduce losses in the current year. Notwithstanding the lack of visibility in our markets, the Board remainspositive about the quality of @UK's offering. Bernard R. FisherChairman31 March 2008 Notes £ £------------------------------ ------------ ---------- ---------Revenue 4Existing operations 2,329,600 2,018,004Acquisitions - 144,976------------------------------ ------------ ---------- --------- 2,329,600 2,162,980Cost of sales (851,118) (891,124)------------------------------ ------------ ---------- ---------Gross profit 1,478,482 1,271,856Administrative expenses (3,889,181) (4,780,165)Share based payments 20 (26,075) (51,178)------------------------------ ------------ ---------- ---------Operating loss before exceptional item 5 (2,436,774) (3,559,487)Exceptional reorganisation costs 5 (83,485) (219,962)------------------------------ ------------ ---------- ---------Operating lossExisting operations (2,520,259) (3,771,930)Acquisitions - (7,519)------------------------------ ------------ ---------- --------- (2,520,259) (3,779,449)Investment income 8 159,680 290,901Finance costs 9 (6,869) (5,989)------------------------------ ------------ ---------- ---------Loss on ordinary activities before (2,367,448) (3,494,537)taxationTaxation 10 -- ------------------------------- ------------ ---------- ---------Loss for the year attributable to equityshareholders of the parent (2,367,448) (3,494,537)------------------------------ ------------ ---------- ---------Loss per shareBasic and diluted 11 6.3p 9.3p------------------------------ ------------ ---------- --------- Consolidated Income StatementFor the year ended 31 December 2007 Revenue and operating loss for the year all derive from continuing operations. ------------------------------- --------- ---------- ---------- 2007 2006 Notes £ £------------------------------- --------- ---------- ----------AssetsNon-current assetsGoodwill 12 96,274 96,274Other intangible assets 13 46,926 59,934Property, plant and equipment 14 501,955 692,547------------------------------- --------- ---------- ---------- 645,155 848,755------------------------------- --------- ---------- ----------Current assetsTrade and other receivables 15 311,739 397,667Cash and cash equivalents 16b 1,791,189 4,119,248------------------------------- --------- ---------- ---------- 2,102,928 4,516,915------------------------------- --------- ---------- ----------Total assets 2,748,083 5,365,670------------------------------- --------- ---------- ---------- LiabilitiesCurrent liabilitiesTrade and other payables 17 (586,349) (875,696)Current tax liabilities (2,878) (2,878)Financial liabilities - borrowings 18 (12,500) (12,500)------------------------------- --------- ---------- ---------- (601,727) (891,074)------------------------------- --------- ---------- ----------Non current liabilitiesFinancial liabilities - borrowings 18 (54,800) (66,667)------------------------------- --------- ---------- ---------- (54,800) (66,667)------------------------------- --------- ---------- ----------Total liabilities (656,527) (957,741)------------------------------- --------- ---------- ----------------------------------------- --------- ---------- ----------Total net assets 2,091,556 4,407,929------------------------------- --------- ---------- ----------Shareholders' equityCalled up share capital 19 377,798 376,074Share premium account 19 10,113,881 10,113,881Other reserve 630,030 606,754Share-based payment reserve 77,253 51,178Accumulated losses (9,107,406) (6,739,958)------------------------------- --------- ---------- ----------Total equity attributable to equityshareholders of the parent 2,091,556 4,407,929------------------------------- --------- ---------- ---------- Consolidated Balance Sheet31 December 2007 2007 2006 Notes £ £----------------------------- ----------- ---------- ----------Cash flows from operating activities----------------------------- ----------- ---------- ----------Loss before taxation (2,367,448) (3,494,537)Adjustments for:Interest (152,811) (284,912)Depreciation of property, plant & 262,238 140,207equipmentAmortisation of other intangible assets 28,328 14,983Share based payments 26,075 51,178Changes in working capitalTrade and other receivables 85,928 (149,323)Trade and other payables (264,347) (195,471)----------------------------- ----------- ---------- ----------Net cash used by operations (2,382,037) (3,917,875)Tax paid - (65,783)----------------------------- ----------- ---------- ----------Net cash outflow from operating activities (2,382,037) (3,983,658)Cash flows from investing activitiesInterest received 159,680 290,901Interest paid (6,869) (5,989)Acquisition of subsidiary 16a - (21,994)Purchase of intangible assets (15,320) (74,917)Purchase of property, plant and equipment (71,646) (716,941)----------------------------- ----------- ---------- ----------Cash inflow/(outflow) from investing 65,845 (528,940)activitiesCash flows from financing activitiesRepayment of borrowings (11,867) (12,500)----------------------------- ----------- ---------- ----------Net cash outflow from financing (11,867) (12,500)----------------------------- ----------- ---------- ----------Net decrease in cash and cash equivalents (2,328,059) (4,525,098)Cash and cash equivalents at beginning of 4,119,248 8,644,346period ----------- ---------- ---------------------------------------Cash and cash equivalents at end of period 16b 1,791,189 4,119,248----------------------------- ----------- ---------- ---------- Consolidated Cash Flow StatementFor the year ended 31 December 2007 Share Share Other Share Accumulated Shareholders' capital premium reserve based losses equity payments reserve £ £ £ £ £ £------------- --------- --------- --------- --------- --------- ----------At 31December 375,654 10,113,881 582,174 - (3,245,421) 7,826,2882005Shares issuedin the year 420 - 24,580 - - 25,000Share basedpayments - - - 51,178 - 51,178Retained lossfor the year - - - - (3,494,537) (3,494,537)------------- --------- --------- --------- --------- --------- ----------At 31December 376,074 10,113,881 606,754 51,178 (6,739,958) 4,407,9292006Shares issuedin the year 1,724 - 23,276 - - 25,000Share basedpayments - - - 26,075 - 26,075Retained lossfor the year - - - - (2,367,448) (2,367,448)------------- --------- --------- --------- --------- --------- ----------At 31December 377,798 10,113,881 630,030 77,253 (9,107,406) 2,091,5562007 --------- --------- --------- --------- --------- ----------------------- Consolidated Statement Of Changes In Shareholders EquityFor the year ended 31 December 2007 The other reserve arises because shares issued on the acquisition ofsubsidiaries have been recorded at par value and no share premium recognised asallowed by the Companies Act 1985. Notes to the Preliminary Announcement 1. Basis of preparation The Group's consolidated financial statements were prepared in accordance withthe United Kingdom Generally Accepted Accounting Principles ("UK GAAP") until 31December 2006. For the year ended 31 December 2007 the Group is required toprepare its financial statements in accordance with EU Endorsed InternationalFinancial Reporting Standards and IFRIC interpretations (collectively "IFRS").As such those financial statements take account of the requirements and optionsof IFRS1 'First-time Adoption of International Financial Reporting Standards ('IFRS') as they relate to the 2006 comparatives included therein. Reconciliations and descriptions of the effect of the transition from UK GAAP toIFRS on the Group's equity and its net income and cash flows are provided inNote 23. The preparation of financial statements requires the estimates and assumptionsthat affect the reported amounts of assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses duringthe reporting period. Although the estimates are based on management's bestknowledge of the amounts, events or actions, actual results may differ fromthose estimates. The financial information set out does not constitute statutory accounts for thepurposes of section 240 of the Companies Act 1985. The Company's statutoryaccounts for the year ended 31 December 2007 will be delivered to the Registrarof Companies following the Annual General Meeting. The Company's statutoryaccounts for the year ended 31 December 2006, prepared under UK GAAP, have beendelivered to the Registrar of Companies. The auditors' report on both thoseaccounts was unqualified and does not contain a statement under Companies Act1985 sections 237(2) or (3). Copies of the annual report for the year ended 31 December 2007 are being sentto all shareholders and to the AIM Team and will also be available on thecompany's website at www.ukplc.net. Copies of the accounts for the year ended 31December 2006 can be obtained by writing to the Company Secretary, @UK PLC, 5Jupiter House, Calleva Park, Aldermaston, Berkshire RG7 8NN. This announcement was approved by the board of @UK PLC and authorised for issueon 31 March 2008. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financialstatements are set out below. These policies have been applied consistently toall the years presented, unless otherwise stated, and in preparing an openingIFRS balance sheet at 1 January 2006 for the purpose of transition to IFRS. 1.1. Basis of accounting These financial statements have been prepared for the first time in accordancewith IFRS as adopted by the European Union, and with those parts of theCompanies Act 1985 applicable to companies reporting under IFRS. The disclosuresrequired by IFRS 1 concerning the transition from UK GAAP to IFRS are given innote 23. The financial statements have been prepared under the historical costconvention. The preparation of financial statements in conformity with IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts in the financial statements. Theareas involving a higher degree of judgement or complexity, or areas whereassumptions or estimates are significant to the financial statements aredisclosed in note 3. A separate income statement for the parent company has not been presented aspermitted by section 230(4) of the Companies Act 1985. 1.2. Going concern The Directors have reviewed the projections for the forthcoming 12 month periodfrom the date of signing of these financial statements and based on the level ofexisting cash, projected income and expenditure, the Directors are satisfiedthat the Company and Group have adequate resources to continue in business forthe foreseeable future. Accordingly the going concern basis has been used inpreparing the financial statements. 1.3. Consolidation Subsidiary undertakings are all entities over which the Group has the power togovern the financial and operating policies so as to obtain benefit from theiractivities. Subsidiaries are fully consolidated from the date on which controlis transferred until the date control ceases. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The investment in subsidiaries in the Company'sbalance sheet are shown at cost less provision for diminution in value.Inter-company transactions, balances and unrealised gains and losses ontransactions between Group companies are eliminated. 1.4. Goodwill Goodwill arising on acquisitions represents the excess of the considerationgiven plus any associated costs for investments in subsidiary undertakings overthe fair value of the identifiable assets and liabilities acquired. Adjustmentsare made to fair values to bring the accounting policies of acquired businessesinto alignment with those of the Group. Provision is made for any impairment inthe value of goodwill. The costs of integrating and reorganising acquiredbusinesses are charged to the post acquisition income statement. In accordance with IFRS1, the Group has applied the exemption fromretrospectively recalculating goodwill which arose on acquisitions prior to 1January 2006. This goodwill is included at its deemed cost, being the amountrecorded under UK GAAP as at 1 January 2006. Goodwill is carried at cost lessaccumulated impairment losses. Goodwill is tested for impairment annually. Anyimpairment is recognised immediately in the income statement and is notsubsequently reversed. Goodwill is allocated to cash generating units for thepurpose of impairment testing. Each of these cash generating units representsthe group's investment in each country of operation by primary reportingsegment. Gains and losses on the disposal of an entity include the carryingamount of goodwill relating to the entity sold. 1.5. Other intangible assets Other intangible assets are shown at historical cost less accumulatedamortisation and impairment losses.Amortisation is charged to administrative expense in the income statement on astraight-line basis over the estimated useful lives of the intangible assetunless such lives are indefinite. Intangible assets with an indefinite usefullife are tested for impairment at each balance sheet date. Other intangibleassets are amortised from the date they are available for use. The useful livesare as follows: Software - 3 years Amortisation periods and methods are reviewed annually and adjusted ifappropriate. Research and development expenditure is written-off to the income statement inthe year in which it is incurred unless the costs are directly associated withthe development of identifiable and unique software products controlled by theGroup and that will probably generate economic benefits exceeding costs beyondone year, when they are recognised as intangible assets and amortised over theirestimated useful lives. 1.6. Property, plant and equipment All are stated at cost less accumulated depreciation. Depreciation of property, plant and equipment is provided to write each assetdown to its estimated residual value on a straight-line basis over its estimateduseful life, as follows: Computer equipment 3 yearsFixtures, fittings and equipment 3 to 5 years Residual values, remaining useful lives and depreciation methods are reviewedannually and adjusted if appropriate.Gains or losses on disposal are included in the income statement. 1.7. Impairment of assets The Group assess at each balance sheet date whether there is any indication thatany of its assets have been impaired. If such indication exists, the asset'srecoverable amount is estimated and compared to its carrying value.For goodwill and intangible assets that have an indefinite life and intangibleassets not yet available for use, the recoverable amount is estimated at eachbalance sheet date and whenever there is an indication of impairment.An impairment loss is recognised for the amount by which the asset's carryingamount exceeds its recoverable amount. Impairment losses are recognised in theincome statement. 1.8. Financial instruments Financial assets and financial liabilities are recognised on the group's balancesheet when the group has become a party to the contractual provisions of theinstrument. 1.8.1. Trade receivables Trade receivables are initially recognised at fair value and then subsequentlymeasured at amortised cost using the effective interest rate method. Tradereceivables do not carry any interest and are stated at their nominal value asreduced by appropriate allowances for estimated irrecoverable amounts 1.8.2. Trade payables Trade payables are initially recognised at fair value and then subsequentlymeasured at amortised cost using the effective interest rate method. Tradepayables are not interest bearing and are stated at their nominal value. 1.8.3. Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value lessattributable transaction costs. Subsequent to initial recognition,interest-bearing borrowings are stated at amortised cost with any differencebetween cost and redemption value being recognised in the income statement overthe period of the borrowings on an effective interest rate basis. 1.9. 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 ofgrant. The fair value determined at the grant date of equity-settled share-basedpayments is expensed on a straight-line basis over the vesting period, based onthe group's estimate of shares that will eventually vest. Fair value is measured by use of a binomial model. The expected life used in themodel has been adjusted, based on management's best estimate, for the effect ofnon-transferability, exercise restrictions, and behavioural considerations. 1.10. Pensions All pension schemes operated by the Group are defined contribution schemes. Thecosts are charged to the income statement in the year in which they areincurred. 1.11. Revenue Revenue is measured at fair value of consideration received or receivable forgoods sold and services provided to customers outside the Group, net of ValueAdded Tax and any discounts. Where invoices are raised in advance of the incomebeing earned through the performance of the service, the unearned portion isincluded in the accounts as deferred income, and released to the Profit and LossAccount as earned. 1.12. Leases Rentals payable under operating leases are charged against income on a straightline basis over the lease term. The Group does not hold any assets under hirepurchase contracts or finance leases and has not received any benefits as anincentive to sign a lease of whatever type. 1.13. Current and deferred taxation The tax expense represents the sum of the tax currently payable and deferredtax. The current tax is based on taxable profit for the year. Taxable profit differsfrom net profit as reported in the income statement because it excludes items ofincome or expense that are taxable or deductible in other years and it furtherexcludes items that are never taxable or deductible. The group's liability forcurrent tax is calculated by using tax rates that have been enacted orsubstantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amount of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from the initial recognition of goodwill or from the initialrecognition (other than in a business combination) of other assets andliabilities in a transaction which affects neither the tax profit nor theaccounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and associates, and interests in jointlycontrolled entities, except where the group is able to control the reversal ofthe temporary difference and it is probable that the temporary difference willnot reverse in the foreseeable future. Deferred tax is calculated at the tax rates (and tax laws) that have beenenacted or substantively enacted by the balance sheet date. Deferred tax ischarged or credited in the income statement, except when it relates to itemscredited or charged directly to equity, in which case the deferred tax is alsodealt with in equity. 1.14. Provisions Provisions are recognised in the balance sheet when there is a present legal orconstructive obligation as a result of a past event, and it is probable that anoutflow of economic benefits will be required to settle the obligation. 1.15. Standards and interpretations not applied At that date of authorisation of these Financial Statements, the followingStandards and Interpretations (International Financial Reporting InterpretationCommittee - IFRIC), which have not been applied in these Financial Statements,were in issue but not yet effective: IFRS 2 Share-based payment - Amendment relating to vesting conditions andcancellations.IFRS 3 Business Combinations - Comprehensive revision on applying theacquisition method.IFRS 8 Operating segments.IAS 1 Presentation of Financial Statements - Comprehensive revision includingrequiring a statement of comprehensive income.IAS 23 Borrowing Costs - Comprehensive revision to prohibit immediate expensing.IAS 27 Consolidated and Separate Financial Statements - Consequential amendmentsarising from amendments to IFRS 3.IAS 28 Investments in Associates - Consequential amendments arising fromamendments to IFRS 3.IAS 31 Investments in Joint Ventures - Consequential amendments arising fromamendments to IFRS 3.IAS 32 Financial Instruments: Presentation - Amendments relating to puttableinstruments and obligations arising on liquidation.IFRIC 11 IFRS 2 : Group and Treasury Share Transactions.IFRIC 12 Service Concession Arrangements.IFRIC 13 Customer Loyalty Programmes.IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their Interaction. The directors anticipate that the adoption of these Standards andInterpretations in future periods will have no material impact on the financialstatements of the Group when the relevant standards and interpretations comeinto effect. 3. Accounting estimates and judgementsEstimates and judgments are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances. 1.16. Critical accounting estimates and judgments The Group makes estimates and assumptions concerning the future. The resultingaccounting estimates will, by definition, seldom equal the related actualresults. The estimates and assumptions that have a significant risk of causing amaterial adjustment to the carrying amounts of assets and liabilities within thenext 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. RevenueFor management purposes, the Group is currently organised into one operatingdivisions - e-commerce. This is the basis on which the Group reports its primarysegment information. Set out below is an analysis of revenue recognised betweenprincipal product categories, which the Directors use to assess future revenueflows from customers. 2007 2006 £ £----------------------------------- ------------ -------------RevenueCompany formation services 1,304,812 1,223,130Web and eCommerce services 1,024,788 939,850----------------------------------- ------------ ------------- 2,329,600 2,162,980----------------------------------- ------------ -------------All of the revenue derives from services provided in the United Kingdom. 5. Operating loss 2007 2006 £ £---------------------------------- ------------- ------------This is stated after the following:Staff costs (see note 7) 2,312,904 2,688,615Depreciation of property, plant and equipment (seenote 14) 262,238 140,207Amortisation of other intangible assets (see note 13) 28,328 14,983Research and development costs 207,855 291,407Exceptional item - reorganisation costs (see notebelow) 83,485 219,962In relation to acquisitions:Costs of sales - -Administrative expenses - 152,495---------------------------------- ------------- ------------ Reorganisation costs represent the costs incurred in reducing staff numbers. 6. Auditors remuneration Amounts payable to Baker Tilly UK Audit LLP (2006: Baker Tilly) in respect ofaudit and non-audit services 2007 2006 £ £---------------------------------- ------------- ------------Audit of Company and consolidated accounts 29,050 26,050Audit of subsidiaries 4,250 4,500Other assurance services - interim review 5,500 4,750Other services relating to:Taxation 4,350 4,000---------------------------------- ------------- ------------ 7. Employees 2007 2006 £ £---------------------------------- ------------- ------------Staff costs including directors comprised:Wages and salaries 2,057,845 2,386,246Pension 2,256 2,556Social security costs 226,728 248,635Share based payments 26,075 51,178------------------------------------ ----------- ------------- 2,312,904 2,688,615------------------------------------ ----------- ------------- 2007 2006 No. No.------------------------------------ ----------- -------------The average monthly number of persons (includingDirectors)employed by the Group during the year was:Management and administration 15 16Technical and delivery 39 38Sales and marketing 15 29------------------------------------ ----------- ------------- 69 83------------------------------------ ----------- ------------- Directors' remuneration 2007 2006 £ £------------------------------------ ----------- -------------Emoluments for qualifying services 436,000 472,667Compensation for loss of office - 120,000------------------------------------ ----------- ------------- 436,000 592,667------------------------------------ ----------- ------------- The emoluments of the highest paid Director were £110,000 (2006: £80,000). NoDirectors were accruing benefits under a company pension scheme. 8. Investment income 2007 2006 £ £---------------------------------- ------------ -------------Interest on short term deposits 159,680 290,901---------------------------------- ------------ ------------- 9. Finance costs 2007 2006 £ £---------------------------------- ------------ -------------Interest on borrowings 6,869 5,989---------------------------------- ------------ ------------- 10. Taxation 2007 2006 £ £----------------------------------- ------------ -------------Tax charge for the year - ------------------------------------ ------------ -------------Factors affecting tax charge for the yearLoss on ordinary activities before taxation (2,367,448) (3,494,537)----------------------------------- ------------ -------------Loss on ordinary activities before taxationmultiplied bystandard rate of UK corporation tax of 28% (2006:30%) (662,885) (1,048,361)----------------------------------- ------------ -------------Effects of:Expenses not deductible for tax purposes 73 11,637Share based payments 7,301 15,353Capital allowances less than/(in excess) ofdepreciation 31,192 (55,201)Carry forward of tax losses 624,319 1,076,572----------------------------------- ------------ ------------- 662,885 1,048,361----------------------------------- ------------ -------------Total tax expense - ------------------------------------ ------------ ------------- The Group has estimated tax losses of £9,500,000 (2006: £7,200,000) availablefor carry forward against future trading profit. No deferred tax asset has beenrecognised in respect of the losses given the uncertainty regarding availablefuture taxable profits. 11. Loss per shareThe calculations for loss per share are based on the weighted average number ofshares in issue during the year 37,723,138 (2006: 37,593,941) and the followinglosses: 2007 2006 £ £--------------------------------- ----------------- ---------Unadjusted earnings:Loss for the year attributable to equityshareholders of the parent (2,367,448) (3,494,537)--------------------------------- ----------------- ---------Add back: 83,485 219,962Exceptional reorganisation costs 26,075 -51,178Share-based payments--------------------------------- ----------------- ---------Adjusted earnings (2,257,888) (3,223,397)--------------------------------- ----------------- --------- The share options and warrants are non-dilutive as they would not increase theloss per share in the year.The basic and diluted loss per share calculated on the adjusted earnings is 6.0p(2006: 8.6p). 12. Goodwill Group £------------------------------- ---------- ---------1 January 2006 Acquisition of Coding International Limited - 96,274------------------------------- ---------- ---------Cost and carrying value at 31 December 2007 and 2006 96,274------------------------------- ---------- --------- 13. Other intangible assets Computer software £------------------------ ----------Cost:1 January 2006 -Additions 74,917------------------------ ----------1 January 2007 74,917Additions 15,320------------------------ ----------31 December 2007 90,237------------------------ ----------Amortisation:1 January 2006 -Charge for the year 14,983------------------------ ----------1 January 2007 14,983Charge for the year 28,328------------------------ ----------31 December 2007 43,311------------------------ ----------Carrying value at 1 January 2006 ------------------------- ----------Carrying value at 1 January 2007 59,934------------------------ ----------Carrying value at 31 December 2007 46,926------------------------ ---------- 14. Property, plant and equipment Fixtures, fittings Computer Total and equipment equipment £ £ £---------------------------------- --------- ---------- ---------Cost:1 January 2006 28,105 156,935 185,040Acquisitions 858 888 1,746Additions 263,915 453,026 716,941---------------------------------- --------- ---------- ---------1 January 2007 292,878 610,849 903,727Additions 15,220 56,426 71,646---------------------------------- --------- ---------- ---------31 December2007 308,098 667,275 975,373---------------------------------- --------- ---------- ---------Depreciation:1 January 2006 4,596 66,377 70,973Additions 38,253 101,954 140,207---------------------------------- --------- ---------- ---------1 January 2007 42,849 168,331 211,180Charge for theyear 65,114 197,124 262,238---------------------------------- --------- ---------- ---------31 December2007 107,963 365,455 473,418---------------------------------- --------- ---------- ------------------------------------------- --------- ---------- ---------Carrying valueat 1 January2006 23,509 90,558 114,067---------------------------------- --------- ---------- ---------Carrying valueat 1 January2007 250,029 442,518 692,547---------------------------------- --------- ---------- ---------Carrying valueat 31 December2007 200,135 301,820 501,955---------------------------------- --------- ---------- --------- 15. Trade and other receivables --------- --------- 2007 2006 £ £--------------------------- --------- ---------Prepayments and accrued income 128,859 70,417Amounts owed by related undertakings - -Other receivable 7,353 13,829Trade receivables 175,527 313,421--------------------------- --------- --------- 311,739 397,667--------------------------- --------- ---------The directors consider that the carrying value of trade and other receivableswhich approximates to the fair value. 16. Notes to the cash flow statementa. Analysis of cash flows Group 2007 2006 £ £--------------------------- --------- ---------AcquisitionsPurchase of subsidiary undertaking - (28,250)Cash in subsidiary acquired - 6,256--------------------------- --------- ---------Net cash outflow for acquisitions - (21,994)--------------------------- --------- --------- b. Analysis of changes in net funds 31 December 1 January 2007 2007--------------------------- --------- ---------Net cash:Cash at bank and in hand 118,183 204,272Money market deposits 1,673,006 3,914,976--------------------------- --------- --------- 1,791,189 4,119,248--------------------------- --------- ---------Money market deposits are restated at fair value. 17. Trade and other payables 2007 2006 £ £--------------------------- --------- ---------Trade payables 228,194 268,929Other taxation and social security 117,075 230,188Other payables - 25,000Accruals and deferred income 241,080 351,579--------------------------- --------- --------- 586,349 875,696--------------------------- --------- ---------The directors consider that the carrying value of trade and other payablesapproximates to the fair value. 18. Borrowings 2007 2006 £ £----------------------------- --------- --------Non current:Bank loan 54,800 66,667----------------------------- --------- -------- 54,800 66,667----------------------------- --------- --------Current:Bank loan 12,500 12,500----------------------------- --------- -------- 12,500 12,500----------------------------- --------- --------Analysis of maturity of bank loanAmounts payable within one year 12,500 12,500Amounts payable within one to two years 12,500 12,500Amounts payable within two to five years 37,500 37,500Amounts payable after five years 4,800 16,667----------------------------- --------- -------- 67,300 79,167----------------------------- --------- -------- The bank loan is repayable by instalments until 2013 and bears interest at arate of 21/2% over the bank's base rate. The bank loan is secured by a fixed andfloating charge over the Company's assets. 19. Share capital and share premium Number of Ordinary Share shares shares premium £ £---------------------------------- --------- --------- ---------At 1 January 2006 37,565,394 375,654 10,113,881Shares issued inconnection withacquisition 42,015 420 ----------------------------------- --------- --------- ---------At 31 December 2006 37,607,409 376,074 10,113,881Shares issued inconnection withacquisition 172,413 1,724 ----------------------------------- --------- --------- ---------At 31 December 2007 37,779,822 377,798 10,113,881---------------------------------- --------- --------- --------- The total authorised number of ordinary shares is 250 million (2006: 250million) with a par value of 1p each. During the year 172,413 ordinary shares were issued at 14.5p in satisfaction of£25,000 of deferred consideration for the acquisition of Coding InternationalLimited. During 2007 the number of options granted under the @UK PLC Share Option Schemeto subscribe for ordinary shares in the Company changed as follows: Number of options under grant------------------------------------ ------------At 1 January 2007 1,465,178Options granted during the year 1,367,000Options lapsed during the year (523,874)------------------------------------ ------------At 31 December 2007 2,308,304------------------------------------ ------------ The options which have been granted at 31 December 2007 are as follows: Number of options under grant Subscription price per share Exercise period750,000 45p December 2008 to December 2015373,174 63p January 2009 to January 20168,130 61.5p June 2009 to June 20161,000,000 14.75p January 2008 to January 2017177,000 13p June 2010 to June 2017 The Company has granted to Shore Capital a warrant to subscribe for 375,654ordinary shares at 60p per share. The warrant is exercisable, in whole or inpart, at any time for a period up to 14 December 2008. 20. Share based payments The Group has a share option scheme under which the Remuneration Committee cangrant options over shares in the Company to employees of the Group. Options aregranted with a fixed option price equal to the market price of the shares underoption at the date of grant. The contractual life of an option is 10 years. Thescheme allows for performance criteria or market conditions to be attached tothe options, but this has not generally been done. Options are valued using theBlack Scholes option pricing model. The fair value of options granted and theassumptions used in the calculations are as follows: Grant Date 8 December 31 January 30 June 26 June 2005 2006 2006 2007-------------------- --------- --------- --------- ---------Share price atgrant date 60p 63p 61.5p 14.75pExercise price 45p 63p 61.5p 14.75pNumber ofemployees 1 31 20 2Sharesoriginallyunder option 250,000 644,121 270,895 367,000Vesting period(years) 3 3 3 3Expectedvolatility 31% 31% 31% 100%Expected life(years) 4 4 4 4Risk free rate 4.30% 4.30% 4.78% 4.78%Rate ceasingemploymentbefore vesting(total) 0% 50% 95% 50%Fair value peroption £0.17 £0.15 £0.15 £0.06 No dividends were assumed. The expected volatility is based on the historicalvolatility of the Company's shares to the extent information was available andof the shares of similar entities. In addition to the grant above on 8 December2005, options over 500,000 shares were also granted to former directors of theCompany on the same terms. As part of the terms of their compensation for lossof office in 2006 they were allowed to retain those options. These were valuedat the date on which the directors ceased to be employees and the value writtenoff as it was in respect of past services. A grant of 1 million shares on 30January 2007 is not included above as the rate ceasing employment before vestingis 100%. 21. Financial instruments 2007 2006 £ £--------------------------------------- ---------- ----------Financial assetsFloating rate interest bearing - cash 1,791,189 4,119,248--------------------------------------- ---------- ---------- Cash is held on short-term money market deposit or interest bearing deposit. Financial liabilities Floating rate interest bearing - bank loan (see note 18) 67,300 79,167--------------------------------------- ---------- ---------- There is no material difference between the book value of financial assets andliabilities noted above, and the fair value. The main objective of the Group's treasury policy is to protect post-tax cashflows of the business from the adverse effects of financial risks. The Group's financial assets and liabilities comprise cash and liquid resources,and various items, such as trade debtors and trade creditors that arise directlyfrom its operations. The Group has no undrawn borrowing facilities. The Group isnot exposed to significant foreign exchange risk. The Group does not enter intoinstruments for speculative purposes. The Group finances its operations through funds raised from share issues. TheGroup is exposed to falling interest rates. The Group uses a combination offixed and floating deposits for its cash balances. The Group has not hedged theexposure to interest rate fluctuations through the use of derivativeinstruments. Funds on deposit bear interest rates based on LIBOR. 22. Financial commitments 2007 2006Group £ £------------------------------------ ------------ ------------Future commitments under non-cancellable operatingleases:Land and buildings, with expiry date- within one year 68,500 11,750- between two and five years - 153,000------------------------------------ ------------ ------------ 23. Reconciliation of Loss and Net Assets under UK GAAP to IFRS In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1 "First Time Adoption of International Financial Reporting Standards",which in general requires IFRS accounting policies to be applied fullyretrospectively in deriving the opening balance sheet at the date of transition.In the Group's case this is 1 January 2006 being the start of the previousperiod that has been presented as comparative information. IFRS 1 containscertain mandatory exceptions and some optional exemptions to this principle ofretrospective application. Where the Group has taken advantage of the exemptionsthey are noted below. The adoption of IFRS represents an accounting change onlyand does not affect the operations or cash flows of the Group. The principalareas of impact are described below. 2007 2006 £ £---------------------------- ------------ ------------Operating loss under UK GAAP (2,517,122) (3,792,285)Change in amortisation period of goodwill (note(a) below) 19,255 12,836---------------------------- ------------ ------------Operating loss under IFRS (2,497,867) (3,779,449)---------------------------- ------------ ------------Retained loss under UK GAAP (2,358,728) (3,507,373) Change in amortisation period of goodwill (note(a) below) 19,255 12,836---------------------------- ------------ ------------Retained loss under IFRS (2,339,473) (3,494,537)---------------------------- ------------ ------------ 31 December 2006 UK GAAP Effect of IFRS change £ £ £AssetsNon-current assetsGoodwill (note (a) below 83,438 12,836 96,274Intangible assets (note (b) below) - 59,934 59,934Property, plant and equipment (note(b) 752,481 (59,934) 692,547below) ---------- ---------- ---------- 835,919 12,836 848,755 ---------- ---------- ----------Current assetsTrade and other receivables 397,667 - 397,667Cash and cash equivalents 4,119,248 - 4,119,248 ---------- ---------- ---------- 4,516,915 - 4,516,915 ---------- ---------- ---------- Total assets 5,352,834 12,836 5,365,670 ---------- ---------- ----------LiabilitiesCurrent liabilitiesTrade and other payables (875,696) - (875,696)Current tax liabilities (2,878) - (2,878)Financial liabilities - borrowings (12,500) - (12,500) ---------- ---------- ---------- (891,074) - (891,074) ---------- ---------- ----------Non-current liabilitiesFinancial liabilities - borrowings (66,667) - (66,667) ---------- ---------- ---------- (66,667) - (66,667) ---------- ---------- ----------Total liabilities (957,741) - (957,741) ---------- ---------- ---------- Net assets 4,395,093 12,836 4,407,929 ========== ========== ==========Shareholders' equityCalled up share capital 376,074 - 376,074Share premium 10,113,881 - 10,113,881Other reserve 606,754 - 606,754Share based payments reserve 51,178 - 51,178Accumulated losses (6,752,794) 12,836 (6,739,958) ---------- ---------- ----------Total shareholders' equity 4,395,093 12,836 4,407,929 ========== ========== ========== There is no difference between UK GAAP and IFRS for the balance sheet as at 1January 2006. Explanation of reconciling differences between UK GAAP and IFRS (a) The goodwill arising from the acquisition of Coding InternationalLimited was previously amortised under UK GAAP on a straight-line basis over itsestimated useful life of 5 years. This goodwill is no longer amortised, but issubject to reviews for impairment. The Group has taken advantage of theexemption not to apply IFRS 3 retrospectively to business combinations occurringprior to the date of transition to IFRS. (b) Purchased computer software costs were previously recorded as property,plant and equipment as permitted by UK GAAP. In accordance with IAS 38, allpurchased computer software is recorded as an intangible asset. This information is provided by RNS The company news service from the London Stock Exchange