Last checked at 1 Sep 2014 07:00
IPPlus PLC
(the "Company" or the "Group")
Final Results for the Year Ended 30 June 2014
IPPlus PLC today announces its audited results for the year ended 30 June 2014.
Financial Highlights
· Group revenues increased by 13 per cent. to £9,123,387 (2013: £8,076,158)
· Profit before taxation of £212,483 (2013: £345,856)
· Profit on lease surrender of £352,367
· Impairment of CallScripter intangible assets of £322,974
· Underlying operating profit of £348,882 (2013: £429,796) when lease surrender profit, CallScripter impairment and CallScripter reorganisation costs are excluded (see below)
· Closing cash and cash equivalents balance of £459,693 (2013: £559,574)
· A maiden dividend of 0.3 pence per share was paid in November 2013
· Dividend proposed of 0.15 pence per share for the year ended 30 June 2014 (subject to shareholder approval)
Operational Highlights
· Ansaback revenues increased by 27 per cent. to £7,292,026 (2013: £5,759,218)
· IP3 Telecom and PCI-PAL win prestigious business contracts
· CallScripter reported revenues of £1,099,867 (2013: 1,490,042)
· CallScripter divisional re-organisational costs incurred of £120,510
· Ancora reported revenues of £731,494 (2013: £826,898)
Extracts of the final results appear below and the full version of the Company's annual report and accounts will shortly be made available on the Company's website, www.ipplusplc.com.
Commenting on the results, CEO, William Catchpole, said: "The Group has had a mercurial year which has seen the significant increase in call centre traffic being adversely affected by the poor performance of the software division. Management changes have been implemented, and whilst the year ahead is likely to be a significant challenge, we have confidence that our experienced team will recover the forward momentum."
For further information, please contact:
IPPLUS PLC | Tel: +44 (0)1473 321 800 |
William Catchpole, Chief Executive Officer Stuart Gordon, Chief Financial Officer
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N+1 Singer (Nomad & Broker) | Tel: +44 (0)20 7496 3000 |
Aubrey Powell Alex Wright
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CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2014
Financial Summary
The individual performance of the Group's businesses has been mixed. Whilst revenue grew to £9,123,387, operating profit declined to £257,765 for the full year (2013: £8,076,158 and £358,544 respectively). The 2014 results do, however, include a one-off profit on lease surrender of £352,367 arising from the purchase of the Group's main office in Ipswich, an impairment charge on the CallScripter intangible assets of £322,974 and non-recurring CallScripter reorganisation costs of £120,510. This gives an underlying operating profit of £348,882 (2013: £429,796) (see below).
| 2014 | 2013 | |
| £ | £ | |
Operating Profit |
| 257,765 | 358,544 |
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| |
Impairment of intangible assets |
| 322,974 | - |
Profit on lease surrender |
| (352,367) | - |
CallScripter reorganisation costs |
| 120,510 | - |
PCI non-recurring costs |
| - | 71,252 |
| ──────── | ──────── | |
Underlying operating profit | 348,882 | 429,796 | |
| ──────── | ──────── | |
The overall result reflects: a reasonably strong performance of the Group's contact centre division (Ansaback incorporating IP3 Telecom), which continued to perform in line with the Board's expectations (with growth in both revenue and new contracts wins); a weaker than expected performance for CallScripter, the Group's software division; and a loss for Ancora, the Group's archiving and removals division.
CallScripter sales show a reduction of £390,175. This sales shortfall, as well as additional software division staffing and restructuring costs of £120,510, contributed to the overall decline in Group profitability.
Cash and cash equivalents at 30 June 2014 of £459,693 (2013: £559,574) remained healthy.
On 1 July 2013 the Group purchased the freehold of its principal place of business at 1-2 Melford Court, The Havens, Ransomes Europark, Ipswich IP3 9SJ for the sum of £1,550,000. This purchase was funded by a mortgage of £1,192,500 from NatWest Bank PLC and existing cash resources.
The Group has occupied the ground floor of this building since May 2000 and was at the stage where more space was required.
Whilst annual overheads increased marginally, reflecting increased business rates on the enlarged property use, the Group's floor space has almost doubled to 15,500 square feet and the mortgage repayments for the entire building are less than the previous rent for the ground floor.
In addition, and subsequent to the purchase of the freehold, the sub-tenant of the upper floor agreed to the early termination of its lease in consideration of which it paid the Group the sum of £352,367. This early termination payment is recorded as a profit in the results for the year ended 30 June 2014. These funds were utilised by the Group to assist in the purchase of the freehold.
Impairment of Intangible Assets
Despite the poor performance of CallScripter in the year, the Board still has confidence in the prospects of the division, as indicated by the reorganisation and recruitment expenditure mentioned below. However the division has continued not to fulfil its potential and as the division was cash negative in the year the Board did not feel that the carrying value reflected the future cashflows from the asset. As such the Board decided to write the CallScripter intangible asset down to nil.
In the year ended 30 June 2014, £322,974 was charged to the income statement as impairment. This charge, whilst non-cash affecting, is a corollary of the lower than expected performance from CallScripter.
Business Summary
Ansaback
Ansaback recorded excellent growth during the year with a 27% increase in revenue and commensurate profit. A major element of this came from successfully securing a short term fixed seat contract with a major utility company which saw good use of the new upper floor in the year. A major part of this contract comes to an end in August 2014. The additional space provides capacity to grow the contact centre business and the opportunity to take on additional disaster recovery clients.
IP3 Telecom reported last year that it spent considerable resources in launching its PCI compliant offering PCI-PAL and that it achieved Level 1 PCI accreditation. The pipeline for our PCI solutions is growing daily and we are seeing a steady stream of orders being placed by blue chip clients eager to achieve compliance using our cloud based solution.
CallScripter
CallScripter had a testing 12 months and revenue fell by 26% in the year. The division has required some re-organising and leadership and new staff have been appointed. This incurred a reorganisation cost of £120,510.
The Original Equipment Manufacturer (OEM) agreement with Interactive Intelligence Inc. (ININ) has been revised and their client base now has the ability to buy the full CallScripter software rather than a reduced EasyScripter version. This revision provides a better solution for the client and it is expected to increase revenues for the division.
Ancora Solutions
Ancora Solutions' archiving and secure destruction market is focused on the Eastern Region and London. Overall year-on-year Ancora sales were 12% lower, which adversely affected divisional profitability. The Board continues to review Ancora's operations.
Dividend
Subsequent to shareholder approval at the 2013 Annual General Meeting, a maiden dividend of 0.3 pence per share was paid in November 2013.
Each year the Board decides whether to declare a dividend or return capital to shareholders or purchase shares in the market to be held as treasury stock. This decision is taken principally in the light of: the Group's present net cash balance; its future working capital requirements; investment plans for the future development of the Group; and, the banking climate, with particular regard to their willingness to support SME's.
Taking these factors into consideration against the background of the result in the year, the Board will be proposing the payment of a dividend of 0.15 pence per share in respect of the year ended 30 June 2014, which if approved at the 2014 Annual General Meeting, will be paid on 5 November 2014 to those shareholders on the register on 10 October 2014.
Board changes
I am pleased to report that Chris Fielding, has joined the Group as a Non-Executive Director. Chris is currently Head of Corporate Finance at W H Ireland and brings with him over 30 years' experience of corporate and financial skills.
Previous to this role Chris worked at Arden Partners and, prior to that, spent eleven years at Hoare Govett as director of Corporate Finance. He qualified as a chartered accountant with Price Waterhouse and then held appointments at Thomas Cook, Cadbury Schweppes and Barclays de Zoete Wedd.
I have also advised the board of my intention to stand down at the end of 2014, having served the company for 9 years, and it is expected that Chris will take over the Chairman's role on my departure.
After nearly four year's service Bernard Waldron has stated his intention to stand down from the Board on 30 September 2014. The Board wishes to express its gratitude to Bernie for his service to the Company and extends its best wishes to him in his future endeavours.
People
I would like to thank each of the directors and employees for all of their efforts during the past year. Their commitment, loyalty and support are appreciated and are vital to achieving further positive progress.
Outlook
The Group faces a number of challenges in the coming year as: Ansaback adjusts to the expiry of the utility contract with a commensurate decrease in turnover and margin; the new CallScripter team gains momentum; and the Board continues its active review of the Ancora division. Accordingly, the current year will be a tough one for the Group.
Ansaback, however, is a resilient business with significant growth opportunities, particularly with PCI-PAL as data security and compliance is recognised as a major risk to organisations. Our capacity for growth and strong balance sheet means that we are well placed to meet these challenges.
Philip Dayer
29 August 2014
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2014
Business Summary
IPPlus PLC operates through two principal subsidiaries, IPPlus (UK) Limited and CallScripter Limited.
The Group trades under six trading styles namely Ansaback, IP3 Telecom, PCI-PAL, CallScripter, Ancora Solutions and Suffolk Disaster Recovery. For management purposes these are administered as three operating divisions.
Ansaback is a 24 hours a day, 7 days a week bureau telephony service providing overflow and out of hours call handling, emergency cover, dedicated phone resource, non-geographic, low call and Freephone telephone facilities as well as disaster recovery lines and other ancillary telecommunication services.
IP3 Telecom, the telecommunications arm of Ansaback, is a cutting edge provider of hosted "Cloud" telephony technology, providing bespoke automated IVR solutions to the banking and financial sectors, hosted contact centre services, telephone numbers, campaign response, call recording, reporting and lone worker staff lines. The triple sited network ensures a robust infrastructure capable of handling high volumes and peaks in call traffic, within one of the most reliable intelligent telephony networks in the UK.
PCI-PAL, part of IP3 Telecom, offers a PCI (Payment Card Industry) solution which allows contact centres and telephone agents to take payments in a PCI compliant fashion with customer service unaffected and existing operational processes maintained. PCI-PAL makes contact centre payment collection easy and secure, de-scoping the operation from the requirements of PCI DSS.
CallScripter is an enhanced customer interaction software suite specifically developed for contact centres, telesales and telemarketing operations. Our clients gain major benefits by introducing CallScripter's dynamic scripting environment and advanced reporting software into their organisations. The software facilitates the rapid set-up, handling and reporting of sophisticated inbound calls, outbound calls and e-mail campaigns.
Suffolk Disaster Recovery provides physical workstations to a number of businesses in the Ipswich area from its two locations. The facilities have their own generators and are available on a 24 hour basis, 7 days a week.
Ancora Solutions provides secure document archiving, confidential shredding, library moves and specialist removals serving many leading blue chip companies within the legal, medical, property, and transportation sectors.
The Market
The necessity for businesses to offer better services around the clock seven days a week lends itself to an outsourced model such as Ansaback. Ansaback was successful in securing a short term fixed seat contract with a major utility company which saw good use of the new upper floor in the year. A large part of this contract comes to an end in August 2014. Ansaback continues to win prestige accounts who seek a cost effective UK customer facing solution. We have increased our dedicated fixed seats and we continue to prospect for larger clients who seek a mix of dedicated and bureau desks.
The IP3 Telecom market is principally in the UK although it does have international clients. Whilst the market for advanced telephony services is enormous the specialist nature of complex IVR continues to provide us with excellent prospects for growth.
The PCI market is emerging as a new area for many businesses driven by compliance, a risk of being fined heavily for a data breach with the attendant increase in their card processing charges. The operational risk is that companies lose their payment processing contracts and are then forced to pay large premiums to become compliant by the main credit card processors. There are some recent examples of high profile data losses which all push companies handling credit card data to review their payment processes.
The market for our CallScripter software is not bounded by the UK with 56% of our business now conducted abroad, mainly in the United States. Further strategic recruitment to specifically develop the channel partnerships is now in place.
Ancora Solutions' archiving and secure destruction market is focused on the Eastern Region and London.
The Ipswich region is poorly served with disaster recovery providers and with our contact centre and telephony knowledge we are well placed to assist those companies that need to have a backup facility in place.
Review of Operations
A summary of the operational highlights in the year to June 2014 follows:
Ansaback
The past year was particularly industrious for Ansaback with sales increasing by 27%, from £5,759,218 to £7,292,026. The majority of this rise came from fixed seat revenue which grew by 55% from £2,142,000 to £3,325,000, whilst the bureau grew by 8% from £3,862,000 to £4,114,000
We were successful in securing a short term fixed seat contract with a major utility company which saw good use of the new upper floor in the year. A major part of this contract comes to an end in August 2014.
Call minutes into the main bureau increased by 3% in the year and we have recruited new sales and senior sales personnel to focus on our core sectors for both bureau and fixed seat business.
There have been no significant bad debts in the year and we will continue to vet new clients and exercise continued vigilance. The Ansaback website has been updated and re-launched with the aim of appealing to corporate business prospects but retaining interest for smaller potential bureau clients.
Suffolk Disaster Recovery is a part of the Ansaback division which utilises our capacity of agent's seats and re-sells the facility to other local businesses which have a need to provide agent positions at extremely short notice. The dark facility at Martlesham has 60 seats and with the new space upstairs the Ransomes site has over 100 seats ready and available.
A new generator, which is large enough to power the entire building, and significant new wiring of the 1st floor of the building has provided additional resilience and capacity to the services we provide.
As demonstrated in the table below, our traditional market sectors have held up well. Apart from the major utility contract, our mix is predominately unchanged, providing a degree of stability, whilst certain fluctuations do occur when there is a major sporting event such as the world cup or the St Jude storms.
Utilities - 44%
Call Centre Partners - 11%
Telecoms - 10%
Direct Response TV - 8%
Other 6%
R/etail - 6%
Charity - 5%
Service Industry - 4%
Financial Services - 3%
Accident Management - 3%
IP3 Telecom & PCI-PAL
Our PCI solution is one of only a few services in the market place to be fully compliant. It is currently processing millions of pounds worth of transactions with volumes accelerating as new clients come on stream.
The hosted PCI solution has significant advantages in descoping the compliance for businesses in contrast to an in house solution with its associated costs. However the time lapse from enquiry to order and subsequent implementation is considerably longer than anticipated. This has been similarly reported by other PCI solution vendors. This delay in decision making is inevitable until the credit card companies tighten the compliance issue and make it compulsory to use a PCI accepted solution.
The existing IP3 business continues to grow. The refreshed IP3 website is now generating a steady flow of new business enquiries, and the sales team has been expanded contributing towards the growth of the IP3 direct client base.
CallScripter
CallScripter had a testing second half of the year culminating in a substantial reorganisation with the associated costs of termination and recruitment. After three successive years of growth in turnover, sales fell from £1,490,042 in the year to June 2013 to £1,099,867 in the year ended June 2014. We do however believe that the forward momentum that the division was enjoying in the past 3 years will recover in the current year following the reorganisation and the sales pipeline is encouraging. Similarly to the previous year approximately 56% of revenue is now from the international market.
The refreshed integration with our OEM partner, Interactive Intelligence Inc., has taken longer than expected but this is a major step forwards in providing the full CallScripter suite to a wider audience with a commensurate increase in the list price. The prospect of winning larger international deals through this channel is most encouraging.
In the same vein, securing certification of the Avaya Proactive Contact Integration solution has enabled us to secure a prestigious 450 agent seat sale for a major US insurer and phase 1 for an International Cruise business which comprises 100 agent seats out of a potential 500 agent requirement.
We have continued to enhance the product and the next release of the software will include new features keeping us at the forefront of agent scripting tools.
Ancora Solutions
Overall year-on-year Ancora sales were 12% lower, which adversely affected divisional profitability. This is mainly due to a reduction in successful removals tenders, particularly in the first half of the year. Second half revenue was up by 21%, compared to the previous year, and with warehouse occupancy starting to peak, we have taken on additional warehouse space, as well as extending terms on existing premises.
On a positive note, Ancora has won two major Public Sector Framework agreements contracts, having been approved for the Eastern Shires Purchasing Organisation (ESPO) framework. Ancora is also now a preferred supplier with a major Strategic Outsourcing Company. We look forward to extending these relationships during the next year.
Risks
Principal business risks and uncertainties
The principal risks facing the Group and discussed by the Board relate broadly to its market place and competitive environment, dependence on key people, information technology acquisition strategy, and intellectual property:
Market place and competition: The sector in which the Group's CallScripter division operates in and/or routes to market may undergo rapid and unexpected changes or not develop at a pace in line with the directors' expectations. It is also possible that competitors will develop similar products; the Group's technology may become obsolete or less effective; or that consumers use alternative channels of communications, which may reduce demand for the Group's products and services. In addition, the Group's success depends upon its ability to develop new, and enhance existing products, on a timely and cost effective basis, that meet changing customer requirements and incorporate technological advancements. The directors review the market movements, client requirements and competitive suppliers to ensure that the current portfolio is as required. The Ansaback and Ancora markets are wide and diverse, and while other competitors may enter the arena, divisional success rests with the sales team.
Key personnel: The Group depends on the services of its key technical, operations, sales and management personnel. The loss of the services of any one or more of these persons could have a materially adverse effect on the Group's business. The Group maintains an active policy to identify, hire, train, motivate and retain highly skilled personnel in key functions.
Information technology: Data security and business continuity pose inherent risks for the Group. The Group invests in and keeps under review formal data security and business continuity policies which are independently audited.
The risks to the CallScripter division remain unchanged - principally the ability of our sales team and the partner resellers to achieve market penetration. The channels to market, be they via OEM (Original Equipment Manufacturer) arrangements, or integrated with a dialler as part of a tailored call handling solution need constant attention to preserve existing market share.
Intellectual property rights ('IPR'): The Group is reliant on IPR surrounding its internally generated and licensed-in software. Whilst it relies upon IPR protections including patents, copyrights, trademarks and contractual provisions it may be possible for third parties to obtain and use the Group's intellectual property without its authorisation. Third parties may also challenge the validity and/or enforceability of the Group's IPR. In addition, the directors are aware of the supply risk of losing key software partners. As these are not a significant part of the core products, this would only have a short-term impact on the Group as it sought to identify and then train staff in alternative products.
Acquisitions: The Group's strategy includes seeking acquisitions of companies or businesses that are complementary to its businesses. As a consequence there is a risk that management's attention may be diverted and the Group's ongoing business may be disrupted or the Group may fail to retain key acquired personnel, or encounter difficulties in integrating acquired operations. The directors remain aware of this disruption and plan to ensure that the main business is not affected.
The main risk within Ansaback is the exposure to the failure of a major client, as the top 20 clients represent 75% of turnover. However, apart from the Utility client which has a unique contract and an extremely strong credit limit, no individual client accounts for more than 8% of the total Ansaback turnover. Continued vigilance is taken with credit control and new clients to minimise exposure.
Additional risks include the technology utilised in the contact centre and we have a modern telephone switch. This switch includes fail-over systems to further increase our business continuity/disaster recovery readiness whilst also enabling us to offer additional services to clients. It is also split across two locations to further reduce the risk of failure.
To reduce the operational risks we have a Disaster Recovery and Data Centre facility at an office 5 miles away from the main building. This office can accommodate 60 agents and has independent telephone lines, phone switch and computer data systems synchronised to the main building that can automatically fail-over in the event of a major incident occurring. Looking at other risks within the contact centre, to lower our susceptibility to power outages, we have a standby generator in case of power cuts, while our main computer systems have been upgraded to improve their resilience and minimise any down-time should a problem arise.
IP3 Telecom uses a network telephony platform with triple redundancy (sites in London, Birmingham and Manchester), but could be affected if there was a major carrier breakdown affecting the entire network.
PCI-PAL is hosted within our UK based telephone network. High level security and 5 nines availability which is the same level as the banks and emergency services. The security is vetted by QSA officers to ensure we meet the highest level of compliance. The risk of this being penetrated by hackers is limited as no data is stored - the risk would be disruptive to the processing of cards.
The risk to Ancora Solutions is mainly within the archiving component of the division. This risk is a combination of the impact of a loss of a significant customer and the inability to replace such a customer quickly. Digital storage solutions and document scanning are becoming more prevalent as a means of document storage and the division is currently developing its digital offering. Legislative changes affecting document record retention dates may affect the number of records held and the division needs to ensure that it complies with all relevant data protection requirements. Security of records, the pulping of these records and compliance with current legislation may force changes in working practice.
Financial risk management objectives and policies
The principal financial instruments used by the Group, from which financial risk arises, are trade receivables, cash at bank and trade and other payables. The Group has no significant net foreign currency monetary assets or liabilities nor any significant hedged transactions or positions. The Board has overall responsibility for the determination of the Group's financial risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated the authority for designing, operating and reporting thereof to the Group's finance function. The overall objective is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk: Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meets it contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers before entering into contracts and it has a frequent and proactive collections process. The concentration of credit risk is limited due to the large and unrelated customer base comprising mainly blue chip companies and public sector organisations. Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. At the year-end the Group's cash at bank was held with two major UK clearing banks.
Market risk: The directors consider that exposure to market risk, arising from the Group's use of foreign currency financial instruments, is not significant. This is assessed in note 21 to these financial statements.
Interest Rate Risk: Interest rate risk arises from the Group's mortgage facility which has a fixed margin above LIBOR for the remaining four years.
Liquidity risk: Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The directors review an annual 12 month cash flow projection as well as information regarding cash balances on a monthly basis. At the year end, liquidity risk was considered to be low given the fact the Group is cash generative and cash and cash equivalents are considered to be at acceptable levels.
Key performance indicators
The Group monitors a number of key performance indicators, using both financial and non-financial metrics, on a daily and monthly basis. The most important of these are as follows:
· Cash on a daily basis
· Contact centre billable minutes on a daily basis
· Dedicated desk margins on a daily basis
· Divisional sales and results against budget on a monthly basis
· Divisional sales pipeline on a monthly basis
Employee Relations and Social Responsibilities
The Group continues to advocate a healthy staff policy via its participation in Investors in People together with pursuing a Health and Well-being policy for encouraging healthy practices. The IT team is actively engaged with Carbon Champions for its ecological and green initiatives regarding technology and we have policies including a Low Carbon and Environmental Purchasing Policy, while the Group encourages car sharing, bus usage and the cycle to work initiative.
The Group's employees support a designated charity each year and raised £1,475 for The Ipswich Soup Kitchen.
NVQ Qualification and apprentices
17 staff are currently involved in non-vocational qualification (NVQ) study and an additional two IT technicians are undertaking apprenticeships. In recognition of this the contact centre director and a manager recently attended an NVQ/apprenticeship day and spoke at length to Princess Anne, patron of Catch 22, a national charity. Catch 22 works with young people who find themselves in difficult situations, helping them to stay healthy, find opportunities to learn, earn a living, find a safe place to live and to give something back to their community.
Summary and Outlook
The Group has had a disappointing end to the year, particularly in CallScripter where a change of leadership and reorganisation has now been carried out. The Company has a sound business base and now needs to rebuild the performance of each division. Ansaback is a resilient business but will require a commitment and focus to replace the lost utility business, whilst the outlook for our PCI product offers exciting growth prospects. The Directors believe that the Group is well placed to meet these challenges in the year ahead.
BY ORDER OF THE BOARD
William A Catchpole
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
| Note | 2014 | 2013 |
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| £ | £ |
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Revenue |
| 9,123,387 | 8,076,158 |
Cost of sales |
| (5,691,397) | (4,715,865) |
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| ──────── | ──────── |
Gross profit |
| 3,431,990 | 3,360,293 |
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|
|
|
Impairment of intangible assets | 12 | (322,974) | - |
Profit on lease surrender | 5 | 352,367 | - |
Trading administrative expenses |
| (3,203,618) | (3,001,749) |
|
| ──────── | ──────── |
Administrative expenses |
| (3,174,225) | (3,001,749) |
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|
| |
Administrative expenses |
| (3,174,225) | (3,001,749) |
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| ──────── | ──────── |
Operating profit |
| 257,765 | 358,544 |
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|
|
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Finance income | 6 | 3,439 | 3,105 |
Finance expenditure | 7 | (48,721) | (15,793) |
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| ──────── | ──────── |
Profit before taxation | 5 | 212,483 | 345,856 |
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|
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Income tax credit | 11 | 4,701 | 127,000 |
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| ──────── | ──────── |
Profit and total comprehensive income attributable to equity holders of the parent company |
|
217,184 |
472,856 |
|
| ════════ | ════════ |
Basic and diluted earnings per share | 10 | 0.69p | 1.49p |
All activities of the Group are classed as continuing.
The accompanying accounting policies and notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
| Note | 2014 | 2013 |
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| £ | £ |
ASSETS |
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|
|
Non-current assets |
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|
|
Land and buildings | 14 | 1,692,769 | 62,482 |
Plant and equipment | 13 | 421,256 | 390,058 |
Intangible assets | 12 | 221,167 | 548,828 |
Deferred taxation | 18 | 280,000 | 373,000 |
| ──────── | ──────── | |
Non-current assets |
| 2,615,192 | 1,374,368 |
| ──────── | ──────── | |
Current assets |
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|
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Trade and other receivables | 15 | 1,678,166 | 1,604,583 |
Current tax assets |
| 30,131 | 20,759 |
Cash and cash equivalents |
| 459,693 | 559,574 |
| ──────── | ──────── | |
Current assets |
| 2,167,990 | 2,184,916 |
| ──────── | ──────── | |
Total assets |
| 4,783,182 | 3,559,284 |
| ──────── | ──────── | |
LIABILITIES |
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|
|
Current liabilities |
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|
|
Trade and other payables | 16 | (994,272) | (905,543) |
Current portion of long-term borrowings | 16 | (85,274) | (92,163) |
| ──────── | ──────── | |
Current liabilities |
| (1,079,546 ) | (997,706) |
| ──────── | ──────── | |
Non-current liabilities |
|
|
|
Long term borrowings | 17 | (1,152,185) | (37,900) |
Deferred taxation | 18 | - | (65,000) |
| ──────── | ──────── | |
Non-current liabilities |
| (1,152,185) | (102,900) |
| ──────── | ──────── | |
Total liabilities |
| (2,231,731) | (1,100,606) |
| ──────── | ──────── | |
Net assets |
| 2,551,451 | 2,458,678 |
| ════════ | ════════ |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
| Note | 2014 | 2013 | ||
|
| £ | £ | ||
EQUITY |
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|
|
| |
Equity attributable to equity holders of the parent |
|
|
|
| |
Share capital | 20 | 317,212 | 317,212 | ||
Share premium |
| 89,396 | 89,396 | ||
Other reserves |
| 18,396 | 18,396 | ||
Profit and loss account |
| 2,126,447 | 2,033,674 | ||
| ──────── | ──────── | |||
Total equity |
| 2,551,451 | 2,458,678 | ||
| ════════ | ════════ | |||
The accompanying accounting policies and notes form an integral part of these financial statements.
The Board of Directors approved and authorised the issue of the financial statements on 29 August 2014.
W A Catchpole |
| Director |
R S M Gordon |
|
Director |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
|
| 2014 | 2013 |
|
| £ | £ |
Cash flows from operating activities |
|
|
|
Profit after taxation |
| 217,184 | 472,856 |
Adjustments for: |
|
|
|
Depreciation |
| 274,062 | 212,217 |
Amortisation of intangible assets |
| 162,374 | 153,883 |
Impairment of intangible assets |
| 322,974 | - |
Interest income |
| (3,439) | (3,105) |
Interest expense |
| 38,674 | 3,126 |
Interest element of finance leases |
| 6,675 | 9,295 |
Other interest |
| 3,372 | 3,372 |
Income taxes |
| (32,701) | (22,590) |
Deferred tax provision |
| 28,000 | (104,410) |
Loss/(profit) on sale of plant and equipment |
| 1,625 | (600) |
Increase in trade and other receivables |
| (92,666) | (169,506) |
Increase/decrease in trade and other payables |
|
113,338 |
(12,657) |
| ──────── | ──────── | |
Cash generated from operations |
| 1,039,472 | 541,881 |
|
|
| |
Dividend paid |
| (94,661) | - |
Income taxes received |
| 20,474 | 55,387 |
Interest element of finance leases |
| (6,675) | (9,295) |
Interest paid |
| (38,674) | (3,126) |
| ──────── | ──────── | |
Net cash generated from operating activities | 919,936 | 584,847 | |
| ──────── | ──────── | |
|
|
| |
Cash flows from investing activities |
|
|
|
Deferred consideration for acquisition of Ancora business |
|
(24,000) |
(24,000) |
Deferred consideration from sale of Commercial Finance Brokers (UK ) Limited |
|
16,000 |
11,000 |
Purchase of land, buildings, plant and equipment |
|
(1,883,666) |
(133,977) |
Capitalisation of development costs |
| (157,687) | (157,972) |
Interest received |
| 3,439 | 3,105 |
Proceeds from sale of plant and equipment |
| - | 600 |
|
| ──────── | ──────── |
Net cash used in investing activities |
| (2,045,914) | (301,244) |
|
| ──────── | ──────── |
|
|
|
|
Cash flows from financing activities |
|
|
|
Loan received |
| 1,192,500 | - |
Repayment of borrowings |
| (61,212) | (50,000) |
Buy-back of Treasury Shares |
| (29,750) | (9,887) |
Capital element of finance lease rentals |
| (75,441) | (60,659) |
|
| ──────── | ──────── |
Net cash generated/used in financing activities |
|
1,026,097 |
(120,546) |
|
| ──────── | ──────── |
Net (decrease)/increase in cash |
| (99,881) | 163,057 |
|
| ════════ | ════════ |
|
| 2014 | 2013 |
|
| £ | £ |
Cash and cash equivalents at beginning of year |
|
559,574 |
396,517 |
Net (decrease)/increase in cash |
| (99,881) | 163,057 |
|
| ──────── | ──────── |
Cash and cash equivalents at end of year |
| 459,693 | 559,574 |
|
| ════════ | ════════ |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
|
Share capital |
Share premium |
Other reserves | Profit and loss account |
Total Equity |
| £ | £ | £ | £ | £ |
|
|
|
|
|
|
Balance at 1 July 2012 | 317,212 | 89,396 | 18,396 | 1,570,705 | 1,995,709 |
|
|
|
|
|
|
Shares placed into Treasury | - | - | - | (9,887) | (9,887) |
| ─────── | ─────── | ─────── | ─────── | ─────── |
Transactions with owners | - | - | - | (9,887) | (9,887) |
|
|
|
|
|
|
Profit and total recognised income and expense for the year |
- |
- |
- |
472,856 |
472,856 |
| ─────── | ─────── | ─────── | ─────── | ─────── |
Balance at 30 June 2013 | 317,212 | 89,396 | 18,396 | 2,033,674 | 2,458,678 |
|
|
|
|
|
|
Shares placed into Treasury | - | - | - | (29,750) | (29,750) |
Dividend paid | - | - | - | (94,661) | (94,661) |
| ─────── | ─────── | ─────── | ─────── | ─────── |
Transactions with owners | - | - | - | (124,411) | (124,411) |
|
|
|
|
|
|
Profit and total recognised income and expense for the year |
- |
- |
- |
217,184 |
217,184 |
| ─────── | ─────── | ─────── | ─────── | ─────── |
Balance at 30 June 2014 | 317,212 | 89,396 | 18,396 | 2,126,447 | 2,551,451 |
| ═══════ | ═══════ | ═══════ | ═══════ | ═══════ |
The accompanying accounting policies and notes form an integral part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
1. AUTHORISATION OF FINANCIAL STATEMENTS
The Group's consolidated financial statements (the "financial statements") of IPPlus PLC (the "Company") and its subsidiaries (together the "Group") for the year ended 30 June 2014 were authorised for issue by the Board of Directors on 29 August 2014 and the Chief Executive, William Catchpole, and the Chief Financial Officer, R. Stuart Gordon, signed the balance sheet.
2. NATURE OF OPERATIONS AND GENERAL INFORMATION
IPPlus PLC is the Group's ultimate parent company. It is a public limited company incorporated and domiciled in the United Kingdom. IPPlus PLC's shares are quoted and publicly traded on the AIM division of the London Stock Exchange. The address of IPPlus PLC's registered office is also its principal place of business.
The Company operates principally as a holding company. The main subsidiaries are engaged in the provision of a 24 hours a day, 7 days a week out of hours and overflow telephony service, the development and sale of contact centre contact relationship management software and the provision of secure storage and destruction of documents.
3. STATEMENT OF COMPLIANCE WITH IFRS
These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The principal accounting policies adopted by the Group are set out in note 4. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these financial statements.
Standards and interpretations in issue, not yet effective
New standards and interpretations currently in issue but not effective for accounting periods commencing on 1 July 2013 are:
· IFRS 10 Consolidated Financial Statements (effective 1 January 2014)
· IFRS 11 Joint Arrangements (effective 1 January 2014)
· IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)
· IAS 27 (Revised) Separate Financial Statements (effective 1 January 2014)
· Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)
· IAS 28 (Revised) Investments in Associates and Joint Ventures (effective 1 January 2014)
· Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014)
The directors anticipate that the adoption of these standards and interpretations in future periods will have no material effect on the financial statements of the Group.
4. PRINCIPAL ACCOUNTING POLICIES
a) Basis of preparation
The financial statements have been prepared on a going concern basis in accordance with the accounting policies set out below. These are based on the International Financial Reporting Standards ("IFRS") issued in accordance with the Companies Act 2006 applicable to those companies reporting under IFRS as adopted by the European Union ("EU").
The financial statements are presented in pounds sterling (£), which is also the functional currency of the parent company, and under the historical cost convention.
b) Basis of consolidation
The Group financial statements consolidate those of the Company and its subsidiary undertakings (see note 19) drawn up to 30 June 2014. A subsidiary is a company controlled directly by the Group and all of the subsidiaries are 100% owned by the Group. Control is achieved where the Group has the power to govern the financial and operating policies of the investee entity to obtain benefits from its activities.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
The Group has utilised the exemption (within IFRS 1) not to apply IFRS to pre-transition business combinations. The results of IPPlus (UK) Limited are consolidated using merger accounting principles. All other subsidiaries are accounted for using the acquisition method.
c) Revenue
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for services provided, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or the transfer of risk to the customer.
Contact centre turnover is recognised based on billable minutes in the month, along with standing monthly charges and any specific supplementary service charges.
Software turnover is recognised at the point of sale for contracts sold in perpetuity, as it is at this point that the Group has performed all of its obligations. Turnover from annual software licences and maintenance contracts may be received in a single amount or in monthly instalments. Such turnover is recognised evenly over the period to which it relates, reflecting the performance of obligations over time.
Ancora turnover is recognised based on the services provided in the month, along with standing monthly charges and any specific supplementary service charges.
d) Significant judgements and estimates
The Group makes estimates concerning the future in assessing the carrying amounts of capitalised development costs. To substantiate the carrying amount the directors have applied the criteria of IAS 38 and considered the future economic benefit likely as a result of the investment.
Careful judgement by the directors is applied when deciding whether the recognition requirements for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each balance sheet date. In addition, all internal activities related to the research and development of new software products are continuously monitored by the directors.
The calculation of the deferred tax asset involved the estimation of future taxable profits.
In calculating the value in use of the capitalised internal salaries in the CallScripter division, management make judgements and estimates of future cash flows. In the current year, due to these negative cash flow forecasts, the directors have fully impaired the Intangible Assets in this division.
Management applied judgements regarding the profit based performance criteria of the Employee Share Options and do not expect these to vest.
e) Intangible assets
Goodwill
Goodwill was created on the purchase of Ancora Solutions. This Goodwill is not amortised but is subject to annual impairment review to ensure the value is recoverable.
Customer contracts
Customer contracts are included at cost, and cost less estimated residual amount is amortised on a straight-line basis over their useful economic lives. The amortisation charge is shown within administrative expenses. The rates applicable are:
· Customer contracts 20%
· Ancora client relationships 10%
· Ancora brand 10%
Research and development
Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred.
Development costs incurred are capitalised when all of the following conditions are satisfied:
· completion of the intangible asset is technically feasible so that it will be available for use or sale
· the Group intends to complete the intangible asset
· the Group is able to use or sell the intangible asset
· the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits
· there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
· the expenditure attributable to the intangible asset during the development can be measured reliably
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include development engineer's salary and on-costs incurred on software development. The cost of internally generated software developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired software. However, until completion of the development project, the assets are subject to impairment testing only.
Amortisation commences upon completion of the asset, and is shown within administrative expenses in the statement of comprehensive income. Amortisation is calculated to write down the cost less estimated residual value of all intangible assets by equal annual instalments over their expected useful lives. The rates generally applicable are:
· Development costs 33%
Ancora Customer Relationships
Upon review of the Ancora Solutions' business the directors' opinion was that the Client Sales Relationships, once won, were likely to remain for the long term due to:
a) Once the boxes were put into storage and not on view to the client, the services tended to roll along
b) A majority of the clients have long term storage requirements (legal and health records) which require documents to be retained and then called out of storage as required
c) There are significant costs in moving the boxes to another storage unit. As such customers are more likely to start using another supplier whilst maintaining the existing operation rather than completely transferring the business
At acquisition, the sales and on-going costs of the existing operation were forecast and were discounted back using the Group's Weighted Average Cost of Capital. This gave a valuation of £280,000, which is amortised over 10 years on a straight-line basis, being the estimated life of these assets. The amortisation charge is shown within administrative expenses.
Ancora Solutions Brand Valuation
The relief from royalty valuation method assumes that if a business did not own the Ancora Solutions' brand it would have to pay a royalty to the owners of the brand for its use. The value of the brand is the capitalised value of the royalties that the owner is relieved from paying as a result of the ownership of the asset. The royalty attributed to the purchase was valued using a similar basis to the Customer Relationships and applying a 0.25% royalty rate. At acquisition this gave a valuation of £3,000, which is amortised over 10 years on a straight-line basis, being the estimated life of these assets. The amortisation charge is shown within administrative expenses.
f) Land, building, plant and equipment
Land, buildings, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Leased plant is included in plant and equipment only where it is held under a finance lease.
Disposal of assets
The gain or loss arising on disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation
Depreciation is calculated to write down the cost less estimated residual value of all plant and equipment assets by equal annual instalments over their expected useful lives. The rates generally applicable are:
· Land not depreciated
· Buildings 2%
· Motor vehicles 33%
· Fixtures and fittings 20% to 50%
· Plant 20% to 50%
· Computer equipment 33%
Material residual value estimates are updated as required, but at least annually.
g) Impairment testing of goodwill, other intangible assets, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows ("cash-generating units"). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.
Goodwill and intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less cost to sell, and value in use based on an internal discounted cash flow evaluation. Any impairment loss is first applied to write down goodwill to nil and then is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised no longer exists.
h) Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.
The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.
All other leases are regarded as operating leases and the payments made under them are charged to profit or loss on a straight-line basis over the lease term. Lease incentives are spread over the term of the lease.
i) Taxation
Current tax is the tax payable based on the profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the year end.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited to other comprehensive income or directly to equity in which case the related tax charge is also charged or credited directly to other comprehensive income or equity.
j) Dividends
Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the dividends are approved in general meeting prior to the year end.
k) Financial assets and liabilities
The Group's financial assets comprise cash and trade and other receivables, which under IAS 39 are classed as "loans and receivables". Financial assets are recognised on inception at fair value plus transaction costs. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in profit or loss in the year.
Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the assets' carrying amount and the present value of estimated future cash flows.
The Group has a number of financial liabilities including trade and other payables and bank borrowings. These are classed as "financial liabilities measured at amortised cost" in IAS 39. These financial liabilities are carried on inception at fair value net of transaction costs, and are thereafter carried at amortised cost under the effective interest method.
l) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
m) Equity
Equity comprises the following:
· "Share capital" represents the nominal value of equity shares
· "Share premium" represents the difference between the nominal and issued share price
· "Other reserves" represents the Merger Reserve resulting from the demerger from KDM International PLC in November 1999 and represents the difference between the value of the shares acquired (nominal value plus related share premium) and the nominal value of shares issued
· "Profit and loss account" represents retained profits
n) Contribution to defined contribution pension schemes
The pension costs charged against profits represent the amount of the contributions payable to the schemes in respect of the accounting period.
o) Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the year end.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise.
p) Share options
The directors do not consider that the amounts involved are material and, as the performance criteria are not expected to be met, no charge has been recognised as explained in Note 20.
q) Capital management
The capital structure of the Group consists of debt, cash, loans and equity. The Group's objective when managing capital is to maintain the cash position to protect the future on-going profitable growth which will reflect in shareholder value.
At 30 June 2014 the Group had a closing cash balance of £459,693 (2013: £559,574) and an outstanding mortgage of £1,160,455 (2013: outstanding loan of £29,167).
5. PROFIT BEFORE TAXATION
Profit on ordinary activities is stated after:
| 2014 | 2013 |
| £ | £ |
Auditors' remuneration
|
|
|
Fees payable to the Company's auditors for the audit of the Company's annual accounts |
9,000 |
8,500 |
Fees payable to the Group's auditors for other services
|
|
|
The audit of the company's subsidiaries pursuant to legislation | 12,000 | 11,000 |
Taxation services | 6,250 | 4,200 |
All other services | 1,100 | 3,313 |
Depreciation and amortisation - charged in administrative expenses |
|
|
Buildings | 49,265 | - |
Intangible assets - amortisation | 162,374 | 153,883 |
Intangible assets - impairment | 322,974 | - |
Plant and equipment - owned | 162,894 | 164,218 |
Plant and equipment - leased | 61,903 | 47,999 |
Rents payable | 75,483 | 187,695 |
Foreign exchange cost | 22,403 | 5,212 |
(Loss)/profit on sale of fixed asset | (1,625) | 600 |
| ══════ | ══════
|
Subsequent to the purchase of the freehold, the sub-tenant of the upper floor agreed to the early termination of its lease in consideration of which it paid the Group the sum of £352,367.
6. FINANCE INCOME
| 2014 £ | 2013 £ |
Bank interest receivable | 3,439 | 3,105 |
| ══════ | ══════ |
7. FINANCE EXPENDITURE
| 2014 £ | 2013 £ |
Interest on bank borrowings | 38,674 | 3,126 |
Finance charges in respect of finance leases | 6,675 | 9,295 |
Other | 3,372 | 3,372 |
| ────── | ────── |
| 48,721 | 15,793 |
| ══════ | ══════ |
8. DIRECTORS AND EMPLOYEES
Staff costs of the Group, including the directors who are considered to be part of the key management personnel, during the year were as follows:
| 2014 £ | 2013 £ |
Wages and salaries | 6,056,388 | 5,096,151 |
Social security costs | 473,500 | 426,358 |
Other pension costs | 85,278 | 78,390 |
| ─────── | ─────── |
| 6,615,166 | 5,600,899 |
| ═══════ | ═══════ |
| 2014 Heads | 2013 Heads |
Average number of employees during the year | 302 | 248 |
| ══════ | ══════ |
Remuneration in respect of directors was as follows:
| 2014 £ | 2013 £ |
Emoluments | 461,065 | 471,771 |
Pension contributions to money purchase pension schemes | 35,871 | 38,210 |
| ─────── | ─────── |
| 496,936 | 509,981 |
| ═══════ | ═══════ |
During the year 3 (2013: 3) directors participated in money purchase pension schemes.
The amounts set out above include remuneration in respect of the highest paid director as follows:
| 2014 | 2013 |
| £ | £ |
Emoluments | 162,979 | 169,449 |
Pension contributions to money purchase pension schemes | 14,734 | 14,568 |
| ═══════ | ═══════ |
A detailed breakdown of the Directors' Emoluments, in line with the AIM rules, appears in the
Directors' Report.
Key management compensation:
| 2014 £ | 2013 £ |
Short term employee benefits | 754,178 | 758,787 |
Post employment benefits | 51,871 | 53,063 |
| ─────── | ─────── |
| 806,049 | 811,850 |
| ═══════ | ═══════ |
9. SEGMENTAL INFORMATION
IPPlus PLC operates three business sectors, Ansaback, CallScripter and Ancora. These divisions are the basis on which the Group reports its segment information. IP3 Telecom and PCI-PAL are part of the Ansaback division. The results of these two activities are not reported separately to management and are not treated as separate segments. The inter-segment sales are insignificant. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated assets comprise items such as cash and cash equivalents, taxation and borrowings. All liabilities, other than the bank loan, are unallocated. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one period.
| Ansaback | CallScripter | Ancora | Unallocated | Total |
| £ | £ | £ | £ | £ |
2014 |
|
|
|
|
|
Revenue | 7,292,026 | 1,099,867 | 731,494 | - | 9,123,387 |
| ─────── | ─────── | ─────── | ─────── | ─────── |
Segment result* | 1,030,197 | (678,653) | (93,779) | - | 257,765 |
| ─────── | ─────── | ─────── | ─────── |
|
Finance income |
|
|
|
| 3,439 |
Finance costs | (48,721) | ||||
| ─────── | ||||
Profit before tax | 212,483 | ||||
Taxation | 4,701 | ||||
| ─────── | ||||
Profit for the year from continuing operations |
217,184 | ||||
| ═══════ | ||||
| |||||
Segment assets | 3,280,204 | 411,242 | 257,938 | 833,798 | 4,783,182 |
Segment liabilities | (1,160,455) | - | - | (1,071,276) | (2,231,731) |
| |||||
Other segment items: | |||||
Capital Expenditure | |||||
- Plant and Equipment | 224,370 | 2,069 | 31,181 | - | 257,620 |
- Intangible Assets | - | 157,687 | - | - | 157,687 |
Depreciation (note 13) |
178,244 |
8,481 |
38,072 |
- |
224,797 |
Amortisation of intangible assets (note 12) |
- |
134,074 |
28,300 |
- |
162,374 |
Impairment of intangible assets (note 12) |
- |
322,974 |
- |
- |
322,974 |
Depreciation of Buildings (note 14) | 49,265 | - | - | - | 49,265 |
|
|
|
|
|
|
* included within the segment result of Ansaback is the profit on lease surrender of £352,367 and of CallScripter is the loss on impairment of Intangible Assets of £322,974.
| Ansaback | CallScripter | Ancora | Unallocated | Total |
| £ | £ | £ | £ | £ |
2013 |
|
|
|
|
|
Revenue | 5,759,218 | 1,490,042 | 826,898 | - | 8,076,158 |
| ─────── | ─────── | ─────── | ─────── | ─────── |
Segment result | 458,456 | (49,936) | (49,976) | - | 358,544 |
| ─────── | ─────── | ─────── | ─────── |
|
Finance income |
|
|
|
| 3,105 |
Finance costs |
|
|
|
| (15,793) |
|
|
|
|
| ─────── |
Profit before tax |
|
|
|
| 345,856 |
Taxation |
|
|
|
| 127,000 |
|
|
|
|
| ─────── |
Profit for the year from continuing operations |
|
|
|
|
472,856 |
|
|
|
|
| ═══════ |
|
|
|
|
|
|
Segment assets | 1,428,658 | 632,309 | 437,969 | 1,060,348 | 3,559,284 |
Segment liabilities | - | - | - | (1,100,606) | (1,100,606) |
|
|
|
|
|
|
Other segment items: |
|
|
|
|
|
Capital Expenditure |
|
|
|
|
|
- Plant and Equipment | 115,468 | 16,651 | 24,872 | - | 156,991 |
- Intangible Assets | - | 157,972 | - | - | 157,972 |
Depreciation (note 13) |
144,251 |
6,837 |
61,129 |
- |
212,217 |
Amortisation of intangible assets (note 12) |
2,505 |
123,078 |
28,300 |
- |
153,883 |
|
|
|
|
|
|
Revenue can be split by location of customers as follows:
| 2014 | 2013 |
| £ | £ |
Ansaback |
|
|
United Kingdom | 7,251,254 | 5,733,104 |
United States | 5,360 | 3,758 |
Ireland | 5,476 | 8,336 |
Hong Kong | 9,505 | 3,285 |
Luxembourg | 9,880 | - |
Other countries | 10,551 | 10,735 |
| ─────── | ─────── |
| 7,292,026 | 5,759,218 |
| ─────── | ─────── |
|
|
|
Ancora |
|
|
United Kingdom | 731,494 | 826,898 |
| ─────── | ─────── |
| 731,494 | 826,898 |
| ─────── | ─────── |
CallScripter |
|
|
United Kingdom | 480,270 | 621,490 |
United States | 521,797 | 624,261 |
Ireland | 12,557 | 29,356 |
Australia | 50,817 | 59,239 |
Nigeria | - | 22,080 |
Luxembourg | - | 20,306 |
Belgium | 16,857 | 10,610 |
Netherlands | 3,416 | 6,427 |
Denmark | 8,237 | 87,892 |
Cyprus | 5,916 | 5,960 |
Other countries | - | 2,421 |
| ─────── | ─────── |
| 1,099,867 | 1,490,042 |
| ─────── | ─────── |
| 9,123,387 | 8,076,158 |
| ═══════ | ═══════ |
One single external customer generates 41% (£3,023k) of the Ansaback division's revenues.
All non-current assets are located in the United Kingdom.
10. EARNINGS PER SHARE
The calculation of the earnings per share is based on the profit after taxation added to reserves divided by the weighted average number of ordinary shares in issue during the relevant period. No diluted profit per share is shown because all options are non-dilutive as the vesting conditions are not met at the year end. Details of potential share options are disclosed in note 20.
|
| 12 months ended 30 June 2014 | 12 months ended 30 June 2013 |
Profit after taxation added to reserves |
| £217,184 | £472,856 |
Weighted average number of ordinary shares in issue during the period |
| 31,579,732 | 31,714,825 |
Basic and diluted earnings per share |
| 0.69p | 1.49p |
11. TAXATION
| 2014 | 2013 |
| £ | £ |
Analysis of charge in the year | ||
Current tax: |
|
|
In respect of the year: |
|
|
UK Corporation tax based on the results for the year |
|
|
at 22.5% (2013:23.75%) | (222) | - |
Adjustments in respect of prior periods | 32,923 | 22,590 |
| ─────── | ─────── |
Total current tax credited | 32,701 | 22,590 |
| ─────── | ─────── |
Deferred tax: |
|
|
Origination and reversal of temporary differences | (28,000) | 93,000 |
Movement on capitalised intangibles | - | 11,410 |
| ─────── | ─────── |
Total deferred tax (charged)/credited | (28,000) | 104,410 |
| ─────── | ─────── |
Credit | 4,701 | 127,000 |
| ═══════ | ═══════ |
Factors affecting current tax charge
The tax assessed on the profit on ordinary activities for the year was lower than the standard rate of corporation tax in the UK of 22.5% (2013: 23.75%).
2014 2013
£ £
Profit on ordinary activities before tax 212,483 345,856
═══════ ═══════
Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK of 22.5% (2013: 23.75%) 47,809 82,141
Expenses not deductible for tax purposes 11,148 4,272
Depreciation (less than)/in excess of capital allowances
for the year (6,155) 1,737
Utilisation of tax losses (98,600) (90,432)
Other 46,304 2,282
Research and Development claim (33,207) (22,590)
Movement on deferred tax timing differences 28,000 (93,000)
Liability on capitalised intangibles - (11,410)
─────── ───────
Total tax credit for the year (4,701) (127,000)
═══════ ═══════
During the year to 30 June 2014 the Group submitted a Research and Development claim to HMRC relating to the year ended 30 June 2013 of £33,207. This credit was recognised in the Income Statement and included in Debtors.
12. INTANGIBLE ASSETS
The Directors have not considered the carrying value of the Ancora division goodwill as it is not considered material.
In calculating the value in use of the capitalised internal salaries in the CallScripter division, management make judgements and estimates of future cash flows. In the current year, due to these negative cash flow forecasts, the directors have fully impaired the Intangible Assets in this division.
2014
Cost |
Goodwill £ | Purchased intangibles £ | Capitalised development costs £ | Total £ |
Goodwill | 32,500 | - | - | 32,500 |
Ancora brand | - | 3,000 | - | 3,000 |
Ancora client relationships | - | 280,000 | - | 280,000 |
CallScripter internal salaries | - | - | 926,024 | 926,024 |
──────── | ──────── | ──────── | ─────── | |
Cost at 1 July 2013 | 32,500 | 283,000 | 926,024 | 1,241,524 |
──────── | ──────── | ──────── | ─────── | |
Goodwill | - | - | - | - |
Ancora brand | - | - | - | - |
Ancora client relationships | - | - | - | - |
CallScripter internal salaries | - | - | 157,687 | 157,687 |
──────── | ──────── | ──────── | ──────── | |
Additions | - | - | 157,687 | 157,687 |
──────── | ──────── | ──────── | ──────── | |
Goodwill | - | - | - | - |
Ancora brand | - | - | - | - |
Ancora client relationships | - | - | - | - |
CallScripter internal salaries | - | - | - | - |
──────── | ──────── | ──────── | ─────── | |
Disposals | - | - | - | - |
──────── | ──────── | ──────── | ─────── | |
Goodwill | 32,500 | - | - | 32,500 |
Ancora brand | - | 3,000 | - | 3,000 |
Ancora client relationships | - | 280,000 | - | 280,000 |
CallScripter internal salaries | - | - | 1,083,711 | 1,083,711 |
──────── | ──────── | ──────── | ──────── | |
Cost at 30 June 2014 | 32,500 | 283,000 | 1,083,711 | 1,399,211 |
──────── | ──────── | ──────── | ──────── | |
2014
|
Goodwill £ | Purchased intangibles £ | Capitalised development costs £ | Total £ |
| |
Amortisation and impairment (included within administrative expenses): | ||||||
Goodwill | - | - | - | - | ||
Ancora brand | - | 700 | - | 700 | ||
Ancora client relationships | - | 65,333 | - | 65,333 | ||
CallScripter internal salaries | - | - | 626,663 | 626,663 | ||
──────── | ──────── | ──────── | ─────── | |||
Amortisation at 1 July 2013 | - | 66,033 | 626,663 | 692,696 | ||
──────── | ──────── | ──────── | ─────── | |||
Goodwill | - | - | - | - | ||
Ancora brand | - | - | - | - | ||
Ancora client relationships | - | 28,300 | - | 28,300 | ||
CallScripter internal salaries - amortisation |
- |
- |
134,074 |
134,074 | ||
CallScripter internal salaries - impairment |
- |
- |
- |
- | ||
──────── | ──────── | ──────── | ─────── | |||
Charge for the year | - | 28,300 | 134,074 | 162,374 | ||
──────── | ──────── | ──────── | ──────── | |||
Goodwill | - | - | - | - | ||
Ancora brand | - | - | - | - | ||
Ancora client relationships | - | - | - | - | ||
CallScripter internal salaries - amortisation |
- |
- |
- |
- | ||
CallScripter internal salaries - impairment |
- |
- |
322,974 |
322,974 | ||
──────── | ──────── | ──────── | ────── | |||
Written out in the year | - | - | 322,974 | 322,974 | ||
──────── | ──────── | ──────── | ────── | |||
Goodwill | - | - | - | - | ||
Ancora brand | - | 700 | - | 700 | ||
Ancora client relationships | - | 93,633 | - | 93,633 | ||
CallScripter internal salaries - amortisation |
- |
- |
760,737 |
760,737 | ||
CallScripter internal salaries - impairment |
- |
- |
322,974 |
322,974 | ||
──────── | ──────── | ──────── | ──────── | |||
Amortisation at 30 June 2014 | - | 94,333 | 1,083,711 | 1,178,044 | ||
──────── | ──────── | ──────── | ──────── | |||
Net book amount
|
Goodwill £ | Purchased intangibles £ | Capitalised development costs £ | Total £ |
|
| |||||
Goodwill | 32,500 | - | - | 32,500 |
|
Ancora brand | - | 2,300 | - | 2,300 |
|
Ancora client relationships | - | 186,367 | - | 186,367 |
|
CallScripter internal salaries | - | - | - | - |
|
──────── | ──────── | ──────── | ──────── |
| |
Net book amount at 30 June 2014 | 32,500 | 188,667 | - | 221,167 |
|
════════ | ════════ | ═════════ | ═══════ |
| |
2013
Cost | |||||
Goodwill | 32,500 | - | - | 32,500 | |
Customer contracts | - | 15,038 | - | 15,038 | |
Ancora brand | - | 3,000 | - | 3,000 | |
Ancora client relationships | - | 280,000 | - | 280,000 | |
CallScripter internal salaries | - | - | 768,053 | 768,053 | |
──────── | ──────── | ──────── | ─────── | ||
Cost at 1 July 2012 | 32,500 | 298,038 | 768,053 | 1,098,591 | |
──────── | ──────── | ──────── | ─────── | ||
Goodwill | - | - | - | - | |
Customer contracts | - | - | - | - | |
Ancora brand | - | - | - | - | |
Ancora client relationships | - | - | - | - | |
CallScripter internal salaries | - | - | 157,972 | 157,972 | |
──────── | ──────── | ──────── | ──────── | ||
Additions | - | - | 157,972 | 157,972 | |
──────── | ──────── | ──────── | ──────── | ||
Goodwill | - | - | - | - | |
Customer contracts | - | (15,038) | - | (15,038) | |
Ancora brand | - | - | - | - | |
Ancora client relationships | - | - | - | - | |
CallScripter internal salaries | - | - | - | - | |
──────── | ──────── | ──────── | ─────── | ||
Disposals | - | (15,038) | - | (15,038) | |
──────── | ──────── | ──────── | ─────── | ||
Goodwill | 32,500 | - | - | 32,500 | |
Customer contracts | - | - | - | - | |
Ancora brand | - | 3,000 | - | 3,000 | |
Ancora client relationships | - | 280,000 | - | 280,000 | |
CallScripter internal salaries | - | - | 926,025 | 926,025 | |
──────── | ──────── | ──────── | ─────── | ||
Cost at 30 June 2013 | 32,500 | 283,000 | 926,025 | 1,241,525 | |
──────── | ──────── | ──────── | ─────── | ||
2013
|
Goodwill £ | Purchased intangibles £ | Capitalised development costs £ | Total £ | ||
Amortisation (included within administrative expenses): |
| |||||
| ||||||
Goodwill | - | - | - | - |
| |
Customer contracts | - | 12,533 | - | 12,533 |
| |
Ancora brand | - | 400 | - | 400 |
| |
Ancora client relationships | - | 37,333 | - | 37,333 |
| |
CallScripter internal salaries | - | - | 503,586 | 503,586 |
| |
──────── | ──────── | ──────── | ─────── |
| ||
Amortisation at 1 July 2012 | - | 50,266 | 503,586 | 553,852 |
| |
──────── | ──────── | ──────── | ─────── |
| ||
| ||||||
Goodwill | - | - | - | - |
| |
Customer contracts | - | 2,505 | - | 2,505 |
| |
Ancora brand | - | 300 | - | 300 |
| |
Ancora client relationships | - | 28,000 | - | 28,000 |
| |
CallScripter internal salaries | - | - | 123,078 | 123,078 |
| |
──────── | ──────── | ──────── | ──────── |
| ||
Charge for the year | - | 30,805 | 123,078 | 153,883 |
| |
──────── | ──────── | ──────── | ──────── |
| ||
| ||||||
Goodwill | - | - | - | - | ||
Customer contracts | - | (15,038) | - | (15,038) | ||
Ancora brand | - | - | - | - | ||
Ancora client relationships | - | - | - | - | ||
CallScripter internal salaries | - | - | - | - | ||
──────── | ──────── | ──────── | ────── |
| ||
Written out in the year | - | (15,038) | - | (15,038) |
| |
──────── | ──────── | ──────── | ────── |
| ||
| ||||||
| ||||||
Goodwill | - | - | - | - |
| |
Customer contracts | - | - | - | - |
| |
Ancora brand | - | 700 | - | 700 |
| |
Ancora client relationships | - | 65,333 | - | 65,333 |
| |
CallScripter internal salaries | - | - | 626,664 | 626,664 |
| |
──────── | ──────── | ──────── | ──────── |
| ||
Amortisation at 30 June 2013 | - | 66,033 | 626,664 | 692,697 |
| |
──────── | ──────── | ──────── | ──────── |
| ||
| ||||||
Net book amount
|
| |||||
Goodwill | 32,500 | - | - | 32,500 |
| |
Customer contracts | - | - | - | - |
| |
Ancora brand | - | 2,300 | - | 2,300 |
| |
Ancora client relationships | - | 214,667 | - | 214,667 |
| |
CallScripter internal salaries | - | - | 299,361 | 299,361 |
| |
──────── | ──────── | ──────── | ──────── |
| ||
Net book amount at 30 June 2013 | 32,500 | 216,967 | 299,361 | 548,828 |
| |
════════ | ════════ | ═════════ | ═══════ |
| ||
13. PLANT AND EQUIPMENT
2014
|
Plant £ | Motor Vehicles £ | Fixtures and Fittings £ | Computer Equipment £ | Total £ |
Cost:
| - | - | - | ||
At 1 July 2013 | 135,621 | 58,113 | 400,238 | 448,038 | 1,042,010 |
Additions | 36,881 | 9,995 | 51,053 | 159,691 | 257,620 |
Disposals | - | (6,000) | (4,073) | (1,200) | (11,273) |
──────── | ──────── | ──────── | ──────── | ──────── | |
At 30 June 2014 | 172,502 | 62,108 | 447,218 | 606,529 | 1,288,357 |
──────── | ──────── | ──────── | ──────── | ──────── | |
Depreciation (Included within administrative expenses):
| |||||
At 1 July 2013 | 56,426 | 36,003 | 298,425 | 261,098 | 651,952 |
Charge for the year | 28,774 | 11,199 | 63,568 | 121,256 | 224,797 |
Disposals | - | (4,625) | (3,823) | (1,200) | (9,648) |
──────── | ──────── | ──────── | ──────── | ──────── | |
At 30 June 2014 | 85,200 | 42,577 | 358,170 | 381,154 | 867,101 |
──────── | ──────── | ──────── | ──────── | ──────── | |
Net book amount at 30 June 2014 | 87,302 | 19,531 | 89,048 | 225,375 | 421,256 |
════════ | ════════ | ════════ | ════════ | ════════ |
2013
|
Plant £ | Motor Vehicles £ | Fixtures and Fittings £ | Computer Equipment£ | Total £ |
Cost: | |||||
At 1 July 2012 | 121,756 | 56,113 | 394,874 | 474,700 | 1,047,443 |
Additions | 21,865 | 10,000 | 9,945 | 115,181 | 156,991 |
Disposals | (8,000) | (8,000) | (4,581) | (141,843) | (162,424) |
──────── | ──────── | ──────── | ──────── | ──────── | |
At 30 June 2013 | 135,621 | 58,113 | 400,238 | 448,038 | 1,042,010 |
──────── | ──────── | ──────── | ──────── | ──────── | |
Depreciation (Included within administrative expenses): | |||||
At 1 July 2012 | 35,716 | 31,690 | 232,844 | 301,909 | 602,159 |
Charge for the year | 28,710 | 12,313 | 70,162 | 101,032 | 212,217 |
Disposals | (8,000) | (8,000) | (4,581) | (141,843) | (162,424) |
──────── | ──────── | ──────── | ──────── | ──────── | |
At 30 June 2013 | 56,426 | 36,003 | 298,425 | 261,098 | 651,952 |
──────── | ──────── | ──────── | ──────── | ──────── | |
Net book amount at 30 June 2013 |
79,195 |
22,110 |
101,813 |
186,940 |
390,058 |
════════ | ════════ | ════════ | ════════ | ════════ |
Included within the net book amount of £421,256 (2013: £390,058) is £109,315 (2013: £108,100) relating to assets held under finance leases. The depreciation charged to the financial statements in the year in respect of such assets amounted to £61,903 (2013: £47,999).
14. LAND AND BUILDINGS
2014
|
| Land £ |
Buildings £ | Total £ | ||||
Cost:
| ||||||||
At 1 July 2013 | 54,182 | 8,300 | 62,482 | |||||
Additions | 374,165 | 1,305,387 | 1,679,552 | |||||
──────── | ──────── | ──────── | ||||||
At 30 June 2014 | 428,347 | 1,313,687 | 1,742,034 | |||||
──────── | ──────── | ──────── | ||||||
Depreciation (Included within administrative expenses):
| ||||||||
At 1 July 2013 | - | - | - | |||||
Charge for the year | - | 49,265 | 49,265 | |||||
──────── | ──────── | ──────── | ||||||
At 30 June 2014 | - | 49,265 | 49,265 | |||||
──────── | ──────── | ──────── | ||||||
Net book amount at 30 June 2014 |
428,347 |
1,264,422 |
1,692,769 | |||||
════════ | ════════ | ════════ | ||||||
2013
| Land £ |
Buildings £ | Total £ | |||||
Cost: | ||||||||
At 1 July 2012 | 52,832 | - | 52,832 | |||||
Additions | 1,350 | 8,300 | 9,650 | |||||
──────── | ──────── | ──────── | ||||||
At 30 June 2013 | 54,182 | 8,300 | 62,482 | |||||
──────── | ──────── | ──────── | ||||||
Depreciation (Included within administrative expenses):
| ||||||||
At 1 July 2012 | - | - | - | |||||
Charge for the year | - | - | - | |||||
──────── | ──────── | ──────── | ||||||
At 30 June 2013 | - | - | - | |||||
──────── | ──────── | ──────── | ||||||
Net book amount at 30 June 2013 |
54,182 |
8,300 |
62,482 | |||||
════════ | ════════ | ════════ | ||||||
15. TRADE AND OTHER RECEIVABLES
2014 2013
£ £
Trade receivables 1,372,920 1,364,065
Other receivables 16,595 61,845
Prepayments and accrued income 288,651 178,673
──────── ────────
Trade and other receivables 1,678,166 1,604,583
════════ ════════
All amounts fall due within one year and therefore the fair value is considered to be approximately equal to the carrying value. All of the Group's trade and other receivables are denominated in pounds sterling. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group holds £27,575 (2013: £13,981) of deposits as security against certain accounts.
Trade receivables have been reviewed for indicators of impairment and a provision has been recorded as follows:
| 2014 | 2013 |
| £ | £ |
Opening provision at 30 June 2013 | 12,697 | 4,899 |
Charged to income | 4,303 | 7,798 |
| ────── | ────── |
Closing provision at 30 June 2014 | 17,000 | 12,697 |
| ══════ | ══════ |
In addition some of the non-impaired trade receivables are past due at the reporting date:
| 2014 | 2013 |
| £ | £ |
0-30 days past due | 43,687 | 15,223 |
30-60 days past due | 15,135 | 13,381 |
Over 60 days past due | 5,311 | 496 |
| ──────── | ──────── |
| 64,133 | 29,100 |
| ════════ | ════════ |
Amounts which are not impaired, whether past due or not, are considered to be recoverable at their carrying value.
16. CURRENT LIABILITIES
2014 2013
£ £
Trade payables 286,235 162,259
Social security and other taxes 403,656 390,868
Other payables 304,381 352,416
──────── ────────
Trade and other payables 994,272 905,543
──────── ────────
Bank loans (note 17) 33,284 29,167
Amounts due under finance leases 51,990 62,996
──────── ────────
Current portion of long-term borrowings 85,274 92,163
──────── ────────
Current liabilities 1,079,546 997,706
════════ ════════
Amounts due under finance leases are secured on the related assets.
17. NON-CURRENT LIABILITES
2014 2013 £ £
Bank loans 1,127,171 -
Amounts due under finance leases 25,014 35,900
Other payables - 2,000
──────── ────────
Long term borrowings 1,152,185 37,900
Deferred taxation - 65,000
──────── ────────
1,152,185 102,900
════════ ════════
Borrowings
Bank loans are repayable as follows:
2014 2013
£ £
Within one year 33,284 29,167
After one year and within two years 69,695 -
After two years and within five years 74,084 -
Over five years 983,392 -
──────── ────────
1,160,455 29,167
════════ ════════
On 1 July 2013 the Group obtained a loan of £1,192,500, secured over Melford Court, The Havens, Ransomes Europark, Ipswich IP3 9SJ repayable over 25 years with a 5 year fixed rate of 2.55% above the three month LIBOR rate from the NatWest Bank PLC.
On 21 January 2012 the Group obtained an unsecured loan of £150,000 repayable over 36 months in equal monthly instalments of £4,167. Interest on the loan is payable at 3.5% above the bank base rate.
Interest on the bank loan falls due as follows:
2014 2013 £ £
Within one year 35,106 338
After one year and within two years 67,084 -
After two and within five years 60,173 -
Over five years 318,631 -
──────── ────────
480,994 338
════════ ════════
Amounts due under finance leases are secured on the related assets.
Amounts due under finance leases fall due as follows:
2014 2013
£ £
Within one year 55,374 68,297
After one year and within two years 26,238 37,161
──────── ────────
81,612 105,458
════════ ════════
The above table includes interest of £3,384 (2013: £5,301) due within one year and £1,224 (2013: £1,261) due after one year but within two years.
18. DEFERRED TAXATION
Deferred taxation is calculated at a rate of 22.5% (2013: 23%).
Tax losses £ | Capitalised intangibles £ |
Total £ |
| ||
Opening balance at 1 July 2013 | 280,000 | (76,410) | 203,590 | ||
|
|
|
| ||
Charged through the statement of comprehensive income in the year | 93,000 | 11,410 | 104,410 | ||
──────── | ─────── | ──────── | |||
At 30 June 2013 | 373,000 | (65,000) | 308,000 | ||
(Charged)/credited through the statement of comprehensive income in the year |
(93,000) |
65,000 |
(28,000) | ||
──────── | ─────── | ─────── | |||
At 30 June 2014 | 280,000 | - | 280,000 | ||
════════ | ═══════ | ═══════ | |||
2014 2013
£ £
Unprovided deferred tax assets
Accelerated capital allowances 4,000 14,000
Trading losses 64,000 39,000
──────── ────────
68,000 53,000
════════ ════════
The deferred tax asset of £280,000 in respect of carried forward tax losses has been recognised on the basis that the directors believe that it is more likely than not to be realised against future taxable profits of the Group. This has been increased to recognise the losses which will be utilised in relation to the early surrender of the tenant lease.
There are unprovided deferred tax losses of £320,000.
The unprovided deferred tax assets are calculated at a rate of 20% (2013: 23%). The unprovided deferred tax assets attributable to losses should be recoverable against future profits.
19. GROUP UNDERTAKINGS
At 30 June 2014, the Group included the following subsidiary undertakings, which are included in the consolidated accounts:
Name |
Country of Incorporation | Class of share capital held |
Proportion held |
Nature of business |
IPPlus (UK) Limited | England | Ordinary | 100% | Out of hours and overflow telephony services, document storage and destruction and software company |
CallScripter Limited | England | Ordinary | 100% | Software reseller |
Ancora Solutions Limited | England | Ordinary | 100% | Dormant |
Ansaback Limited | England | Ordinary | 100% | Dormant |
CallScripter (U.K.) Limited | England | Ordinary | 100% | Dormant |
EasyScripter Limited | England | Ordinary | 100% | Dormant |
Fault Solutions 365 Limited | England | Ordinary | 100% | Dormant |
IP3 Telecom Limited | England | Ordinary | 100% | Dormant |
PCI-PAL Limited | England | Ordinary | 100% | Dormant |
The Number Experts Limited | England | Ordinary | 100% | Dormant |
Vital Contact (UK) Limited | England | Ordinary | 100% | Dormant |
20. SHARE CAPITAL
Group
| 2014 Number | 2014 £ | 2013 Number | 2013 £ |
Authorised: |
|
|
|
|
Ordinary shares of 1p each | 100,000,000 | 1,000,000 | 100,000,000 | 1,000,000 |
| ════════ | ════════ | ════════ | ════════ |
Allotted called up and fully paid: |
|
|
|
|
Ordinary shares of 1p each | 31,721,178 | 317,212 | 31,721,178 | 317,212 |
| ════════ | ════════ | ════════ | ════════ |
The Group acquired 119,000 of its own shares on 18 September 2013 at a cost of £29,750 (2013: 48,229 shares at a cost of £9,887) and these are held as Treasury Shares. This value is deducted in the Consolidated Statement of Changes in Equity and is reflected in the weighted average number of shares in issue during the period (Note 10).
Contingent rights to the allotment of shares
The Group has granted the following share options, in respect of ordinary shares of 1p each, which were still valid and unexercised at 30 June 2014.
Date of grant | Number of shares | Exercise price | Period exercisable |
1 July 2005 | 400,000 | 12.36p | See below * |
27 November 2012 | 675,000 | 1.00p | See below ** |
4 November 2013 | 600,000 | 1.00p | See below *** |
11 March 2014 | 50,000 | 1.00p | See below *** |
During the year, the share price fluctuated between 19.625 pence and 30.75 pence and closed at 20.00 pence on 30 June 2014.
* These options can be realised on the following formula between three and ten years from their grant:
If the share price is at or above | Percentage of options Realisable | ||||
| 25p |
|
| 25% |
|
| 40p |
|
| 50% |
|
| 65p |
|
| 75% |
|
| 100p |
|
| 100% |
|
The fair value of the share options granted after 7 November 2002 and not vested at 1 July 2006 has been assessed in accordance with IFRS 2. The directors do not consider that the amounts involved are material and therefore no charge has been recognised.
** These options were granted at an exercise price of 1 pence each on 27 November 2012. The options are conditional on certain vesting criteria including an annual Group Profit before tax target for the year ended 30 June 2015.
*** These options were granted at an exercise price of 1 pence each on 4 November 2013 and 11 March 2014. The options are conditional on certain vesting criteria including an annual Group Profit before tax target for the year ended 30 June 2016.
The weighted average fair value of the November 2013 and March 2014 LTIP granted during the period, determined using the Black-Scholes valuation model, was 27.25 pence per option. The significant inputs into the model were mid-market share price of 28.25 pence at the grant date; exercise price shown above; an expected 10 year time to expiry; an annual risk- free interest rate of 0.5%; dividend yield of nil; volatility of share price of nil.
The weighted average fair value of the November 2013 LTIP granted during the period, determined using the Black-Scholes valuation model, was 15.375 pence per option. The significant inputs into the model were mid-market share price of 16.375 pence at the grant date; exercise price shown above; an expected 10 year time to expiry; an annual risk- free interest rate of 0.5%; dividend yield of nil; volatility of share price of nil.
No share options are currently exercisable. The Weighted Average Exercise Price of share options outstanding at 30 June 2014 was 3.6p, with a weighted average life of 17 months and at 30 June 2013 was 4.2p, with a weighted average life of 15 months.
No share option charge has been recognised during the year because management are of the opinion that the performance conditions will not be met.
2014 2013
Share Share
Options Options
Amounts in issue at beginning of year 1,884,425 5,560,425
Granted in period 650,000 700,000
Expirations in period (809,425) (4,376,000)
─────── ───────
Amounts in issue at year end 1,725,000 1,884,425
─────── ───────
21. FINANCIAL INSTRUMENTS
The Group uses various financial instruments including cash, trade receivables, trade payables, other payables, loans and leasing that arise directly from its operations. The main purpose of these financial instruments is to maintain adequate finance for the Group's operations. The existence of these financial instruments exposes the Group to a number of financial risks, which are described in detail below. The directors do not consider price risk to be a significant risk. The directors review and agree policies for managing each of these risks, as summarised below, and these remain unchanged from previous years.
Financial risk management and objectives
The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The directors achieve this by regularly preparing and reviewing forecasts based on the trends shown in the monthly management accounts.
Interest rate risk
The total loan balance at 30 June 2014 is £1,160,455 (2013: £29,167). Interest is payable at 2.55% above the three month LIBOR rate (2013: 3.5% above the bank's base rate) (note 17).
The Group finances its operations through a mixture of cash and loans and has some risk to interest rate movements which are not deemed significant in the short term.
Credit risk
The Group's principal financial assets are cash and trade receivables, with the principal credit risk arising from trade receivables. In order to manage credit risks the Group conducts third party credit reviews on all new clients, takes deposits where this is deemed necessary and collects payment by direct debit on all new Ansaback and Ancora accounts, limiting the exposure to a build up of a large outstanding debt. The Group also conducts third party credit reviews on CallScripter accounts, which also have an agreed payment plan tailored to the risk of the individual client.
Liquidity risk
The Group aims to mitigate liquidity risk by closely monitoring cash generation and expenditure. Cash is monitored daily and forecasts are regularly prepared to ensure that the movements are in line with the directors' strategy.
Trade payables and loans fall due as follows:
| Less than one year £ | One to two years £ | Two to five years £ | Over five years £ | Total
£ |
2014 |
|
|
|
|
|
Trade payables | 286,235 | - | - | - | 286,235 |
Other payables | 304,381 | - | - | - | 304,381 |
Lease capital and interest | 55,374 | 26,238 | - | - | 81,612 |
Loans | 68,390 | 136,780 | 130,047 | 1,306,142 | 1,641,359 |
| ──────── | ──────── | ──────── | ──────── | ──────── |
At 30 June 2014 | 714,380 | 163,018 | 130,047 | 1,306,142 | 2,313,587 |
| ════════ | ════════ | ════════ | ════════ | ════════ |
| Less than one year £ | One to two years £ | Two to five years £ | Total
£ |
2013 |
|
|
|
|
Trade payables | 162,259 | - | - | 162,259 |
Other payables | 352,416 | 2,000 | - | 354,416 |
Lease capital and interest | 68,297 | 37,099 | - | 105,396 |
Loans | 29,505 | - | - | 29,505 |
| ──────── | ──────── | ──────── | ──────── |
At 30 June 2013 | 612,477 | 39,099 | - | 651,576 |
| ════════ | ════════ | ════════ | ════════ |
Foreign currencies
During the year exchange differences of £22,403 (2013: £5,212) have arisen and at the year-end £nil (2013: £nil) was held in foreign currency bank accounts. It is the Group's policy to hold limited amounts in foreign currency in order to reduce exposure to currency risk. The Group does not sell or buy any currency forward or enter into any hedging contracts.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction and monetary assets and liabilities in foreign currencies are translated at the rates ruling at the year end. At present foreign exchange is minimal and hedging and risk management is not deemed necessary.
Financial assets by category
| Loans and receivables £ | Non financial assets £ | Total £ |
2014 |
|
|
|
Cash at bank | 459,693 | - | 459,693 |
Trade receivables - current | 1,372,920 | - | 1,372,920 |
Other receivables | 16,595 | - | 16,595 |
Current tax asset | - | 30,131 | 30,131 |
Prepayments and accrued income | - | 288,651 | 288,651 |
| ──────── | ──────── | ──────── |
| 1,849,208 | 318,782 | 2,167,990 |
| ════════ | ════════ | ════════ |
| Loans and receivables £ | Non financial assets £ | Total £ |
2013 |
|
|
|
Cash at bank | 559,574 | - | 559,574 |
Trade receivables - current | 1,364,065 | - | 1,364,065 |
Other receivables | 61,845 | - | 61,845 |
Current tax asset | - | 20,759 | 20,759 |
Prepayments and accrued income | - | 178,673 | 178,673 |
| ──────── | ──────── | ──────── |
| 1,985,484 | 199,432 | 2,184,916 |
| ════════ | ════════ | ════════ |
The fair values of loans and receivables are considered to be approximately equal to the carrying values.
Financial liabilities by category
Financial
liabilities
measured at Non
amortised financial
cost liabilities Total £ £ £
2014
Trade payables 286,235 - 286,235
Accruals 290,247 - 290,247
Other payables 12,134 - 12,134
VAT and tax payable - 403,656 403,656
Deferred payments - 2,000 2,000
Loans 33,284 - 33,284
Leases - 51,990 51,990
──────── ──────── ────────
621,900 457,646 1,079,546 ════════ ════════ ════════
Financial
liabilities
measured at Non
amortised financial
cost liabilities Total
£ £ £
2013
Trade payables 162,259 - 162,259
Accruals 314,026 - 314,026
Other payables 14,390 - 14,390
VAT and tax payable - 390,868 390,868
Deferred payments - 24,000 24,000
Loans 29,167 - 29,167
Leases - 62,996 62,996
──────── ──────── ────────
519,842 477,864 997,706
════════ ════════ ════════
The fair values of financial liabilities are considered to be approximately equal to the carrying values.
22. CAPITAL COMMITMENTS
The Group has no capital commitments at 30 June 2014 or 30 June 2013.
23. CONTINGENT ASSETS
The Group has no contingent assets at 30 June 2014 or 30 June 2013.
24. CONTINGENT LIABILITIES
The Group has no other contingent liabilities at 30 June 2014 or 30 June 2013.
25. OPERATING LEASE COMMITMENTS
| 2014 £ | 2013 £ |
Total future lease payments:
|
|
|
Less than one year | 67,156 | 125,077 |
After one and within two years | 71,504 | 76,497 |
After two and within five years | 196,910 | 3,466 |
| ════════ | ════════ |
Operating lease commitments relate to the lease of buildings at Martlesham and Bentwaters which expire in March 2019 (with a break clause in June 2015), January 2016, January 2019 respectively.
26. TRANSACTIONS WITH DIRECTORS
There were no transactions with directors in the year to June 2014 or June 2013 other than the dividends noted below.
27. DIVIDENDS
The directors have proposed a dividend of 0.15 pence per share post year end (subject to shareholder approval). As this was proposed post year end no liability has been recognised in the accounts.
During the year dividends of 0.3 pence per share were paid.
The following directors received dividend payments as follows:
| Dividend 2014 £ | Dividend 2013 £ |
|
|
|
W A Catchpole | 7,775 | - |
R S M Gordon | 2,904 | - |
G Forsyth | 2,974 | - |
P J Dayer | 880 | - |