1Spatial Holdings Regulatory News (SPA)

30 Jun 2009 07:00



IQ Holdings plc

30 June 2009:

IQ Holdings Plc ("IQH" or "the Company") announces its interim results for the period ended 31 March 2009.

Contacts:

Julian Green

IQ Holdings plc

Tel: 0208 099 0560

Fiona Kindness / Gerry Beaney

Grant Thornton UK LLP (Nomad)

Tel: 0207 7383 5100

Ian Callaway

SVS Securities plc (Broker)

Tel: 0207 638 5600

Bishopsgate Communications Ltd Tel: +44 (0)20 7562 3350

Robyn Samuelson

Gemma O'Hara 

Email: iqholdings@bishopsgatecommunications.com 

Chairman's Report for 6 Months Ended 31st March 2009

I am pleased to announce the results of IQ Holdings plc ("IQH" or "the Company") for the six months ended 31st March 2009. The interim figures include the results of Viewpoint Services Limited ("Viewpoint") and The Wire Services (UK) Limited ("The Wire") since their acquisition on 29 January 2009 and show a loss, in line with expectation. The acquisition of Viewpoint is expected to contribute positively in the financial year 2010.

The period has seen a number of significant developments and decisive actions taken by the Board, in line with bringing IQH into profitability in the shortest possible timeframe. Cessation of trading at the loss-making The Wire, eliminating costs at IQ Research Limited ("IQ Research") and the appointment of Ms Gale Blears to the Board have all contributed to increased management focus on developing the business of the Company, which should begin to bear fruit in the coming months.

Commentary by Business

The focus for IQ Research has been on reducing costs, the net effect of which should be a business reduced in size, but operationally profitable moving forward subject to market conditions.

Rosslyn Research Ltd ("Rosslyn") has returned to profitability after a range of cost efficiencies were realised throughout the period. Rosslyn's trading has been below expectation but significant contracts have been awarded for which the benefit will be seen in the next financial year. Management have concentrated on more effective communication with Rosslyn's core client and potential client base and is enjoying buoyant levels in demand for quotations. 

Viewpoint's business is robust and will drive the immediate and future revenues of the Company. Integration with Rosslyn is working well with a number of projects already being undertaken employing the resources of each other. There is an increased focus on business development for Viewpoint and the appointment of Ms Gale Blears to the Board of IQH is regarded as a move to strengthen the Board.

Towards the end of the period the directors took the decision to scale back The Wire's business operations, resulting in considerable cost savings for the Company.

Summary

The Company has been affected by the economic downturn and is likely to experience downward pressure on sales, but the Directors have taken decisive actions to control costs to enable IQH to benefit from opportunities and the acquisitions made during the period. There is a strong foundation for the Company to build upon towards the end of this year and moving into next year.

Whilst the Board feels that the Group can achieve market expectations for full year results, current market conditions remain very challenging.

UNAUDITED CONSOLIDATED INCOME STATEMENT 

six months ended 31 MARCH 2009

		6 months ended 31 March 2009	6 months ended 31 March  2008	12 months ended 30 September 2008
	Note	Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Continuing operations
Revenue		980	461	908
Cost of sales		(577)	(252)	(461)
Gross profit		403	209	447
				-
Other administrative expenses		(697)	(465)	(878)
Loss from operating activities		(294)	(256)	(431)
Finance income		-	1	2
Finance expenses		(4)	(3)	(11)
Net finance expense		(4)	(2)	(9)
Loss before taxation		(298)	(258)	(440)
Income tax expense		-	-	-
Loss from continuing operations		(298)	(258)	(440)
Basic and diluted loss per ordinary share	5	(0.05)p	(0.4)p	(0.6)p

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

six months ended 31 MARCH 2009

	Called up share capital	Share premium account	Profit and loss account	Total equity
	£'000	£'000	£'000	£'000
At start of period	346	984	(898)	432
Issue of shares (net of issue costs)	113	849	-	962
Loss for the period	-	-	(298)	(298)
At end of period	459	1,833	(1,196)	1,096

For the six months ended 31 March 2008

	Called up share capital	Share premium account	Profit and loss account	Total equity
	£'000	£'000	£'000	£'000
At start of period	99	194	(458)	(165)
Issue of shares (net of issue costs)	246	789	-	1,035
Loss for the period	-	-	(258)	(258)
At end of period	345	983	(716)	612

For the 12 months ended 30 September 2008 (Audited)

	Called up share capital	Share premium account	Profit and loss account	Total equity
		£'000	£'000	£'000
At start of year	99	194	(458)	(165)
Issue of shares (net of issue costs)	247	790	-	1037
Loss for the year	-	-	(440)	(440)
At end of period	346	984	(898)	432

 

UNAUDITED CONSOLIDATED BALANCE SHEET 

AS AT 31 MARCH 2009

	At 31 March 2009 Unaudited	At  31 March 2008 Unaudited	At 30 September 2008 Audited
	£'000	£'000	£'000
Non current assets
Property, plant and equipment	223	5	-
Intangible assets	2,931	1,004	1,122
Total non current assets	3,154	1,009	1,122
Current assets
Trade and other receivables	1,009	325	224
Cash and cash equivalents	161	50	13
Total current assets	1,170	375	237
Total assets	4,324	1,384	1,359
Current liabilities
Short-term borrowings	(290)	(78)	(169)
Trade and other payables	(1,794)	(694)	(745)
Total current liabilities	(2,084)	(772)	(914)
Non current liabilities
Provisions	(444)	-	-
Long term borrowings	(700)	-	(13)
Total non current liabilities	(1,144)	-	(13)
Total liabilities	(3,228)	(772)	(927)
Net assets	1,096	612	432
Capital and reserves
Called up share capital	459	345	346
Share premium account	1,833	983	984
Profit and loss account	(1,196)	(716)	(898)
Equity attributable to equity holders of the parent	1,096	612	432

UNAUDITED CONSOLIDATED CASHFLOW STATEMENT 

FOR THE 6 MONTH PERIOD TO 31 MARCH 2009

	Note	6 months ended 31 March 2009 Unaudited	6 months ended 31 March 2008 Unaudited	12 months ended 30 September 2008 Audited
		£’000	£’000	£’000
Net cash flow generated from operations	7	147	(138)	(198)
Interest paid		(4)	(2)	(11)
Net cashflow from operating activities		143	(140)	(209)
Cashflow from investing activities
Acquisition of assets & trade		(669)	(540)	(625)
Fixed asset acquisition		(20)
Interest received		-	-	2
Net cash outflow from investing activities		(689)	(540)	(623)
Financing
Proceeds from issue of shares		481	964	966
Costs of share issue		-	(129)	(130)
Repayments of director’s loans		-	-	(4)
Debt acquired on acquisition of subsidiary undertakings		-	(129)	(129)
Repayment of bank loans		(18)	-	(12)
Increase in finance leases		5	-	-
New bank loans		150	-	-
Net cash inflow from financing		618	706	691
Increase /(Decrease)in cash and cash equivalents		72	26	(141)
Cash and cash equivalents at beginning of period		(138)	(54)	3
Cash and cash equivalents at end of period		(66)	(28)	(138)

 

 

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT 

for the 6 months ended 31 march 2009

 

The information for the interim accounts for the six month period ended 31 March 2009 has neither been audited or reviewed by the auditors, and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985 (section 435 of the Companies Act 2006). The figures and financial information for the year ended 30 September 2008 do not constitute financial statements for that year. Those financial statements have been delivered to the Registrar and included an audit report which was unqualified, contained no statements under either section 237(2) or (3) of the 1985 Act (section 498(2) or (3) of the 2006 act). The audit report in those financial statements ended 30 September 2008 did however contain the following emphasis of matter:

"Without qualifying our opinion, we draw attention to Note 1 in the financial statements. The Group incurred a net loss of £440,000 during the year ended 30 September 2008 and, as of that date, the Group's current liabilities exceeded its current assets by £677,000. These conditions, along with other matters explained in Note 1 to the financial statements and in the Chairman's Report on page 3, indicate the existence of a material uncertainty which may cast significant doubt about the Company's and Group's ability to continue as a going concern. The financial statements do not include the adjustments, to the balance sheet that would result if the Company or Group was unable to continue as a going concern."

 

2. ACCOUNTING POLICIES

Basis of Accounting

The Interim financial report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) for the first time. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 6. 

The report has been prepared on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") at 30 September 2008 as well as all interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") at 30 September 2008 as adopted by the EU and applicable law. The group has not availed itself of early adoption options in such standards and interpretations. 

The Directors have considered the financial projections for the period to 30 September 2010. These indicate that whilst the Group is expected to be profitable, the ability of the group to meet its financial commitments will be dependent on the success of the management team in continuing to secure new contacts, the continued support of creditors and financiers and/or additional support from shareholders. The Board has received positive indications that this support will be available and that sufficient funds will be available to meet these requirements and has, consequently, prepared this report on a going concern basis. These matters do, though, constitute a fundamental uncertainty. The report does not contain any adjustment to the carrying value of assets or liabilities that might arise if the Group were not to be a going concern.

The report has been prepared under the historical cost basis and are presented in Sterling rounded to the nearest thousand. The principal accounting policies adopted are set out below:

Basis of consolidation

The consolidated report incorporates the financial information of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

The purchase method of accounting is used for all acquired businesses as defined by IFRS 3 - Business Combinations. 

As a result of the application of the purchase method of accounting, goodwill is initially recognised as an asset being the excess at the date of acquisition of the fair value of the purchase consideration plus directly attributable costs of acquisition over the net fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries acquired.

Where fair values are estimated on a provisional basis they are finalised within 12 months of acquisition with consequent changes to the amount of goodwill.

Intangible assets acquired as part of a business combination

Identifiable intangible assets acquired as part of a business combination are initially recognised separately from goodwill if the asset's fair value can be measured reliably, irrespective of whether the asset had been recognised by the acquiree before the business combination. An intangible asset is considered identifiable only if it is separable or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. 

Goodwill

Goodwill arising on consolidation represents the excess cost of acquisition over the group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.

Goodwill arising on acquisition before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Revenue recognition

Revenue represents amounts earned under contracts to provide professional services. Revenue is recognised as earned when, and to the extent that, the firm obtains the right to consideration in exchange for its performance under these contracts. It is measured at the fair value of the right to consideration, which represents amounts chargeable to clients, including expenses and disbursements but excluding VAT. Revenue is generally recognized as contract activity progresses so that for incomplete contracts it reflects the partial performance of the contractual obligations by reference to the value of work performed. Revenue not billed to clients is included in debtors and invoices on account in excess of the relevant amount of revenue are included in deferred income.

Taxation 

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

The tax currently payable is based on taxable profits for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

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

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

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that is no longer probable that sufficient taxable profits will be available to allow all, or part, of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives on the following bases:

Office equipment 20% reducing balance

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

Leased Assets

Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases.

Assets and liabilities deriving from finance lease contracts are initially recognised in the balance sheet at the lower of their fair value and the present value of the minimum future lease rentals.

After initial recognition, the depreciation policy applied is consistent with that for depreciable assets that are owned. As a result, the depreciation recognised is calculated in accordance with the useful life stated for property, plant and equipment. In cases where there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.

The interest element of rental obligations is charged to the income statement over the period of the lease at a constant rate on the balance of finance lease obligations outstanding.

Rentals payable under non-onerous operating leases are expensed in the income statement on a straight-line basis over the lease term. 

Incentives to take out operating leases are credited to the income statement on a straight-line basis over the lease term. 

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair values less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimate of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets are classified in accordance with the nature and purposes of the financial assets and are determined at the time of initial recognition. 

Cash and cash equivalents

Cash and cash equivalents comprise of cash on hand and demand deposits that are subject to an insignificant risk of changes in value.

  Trade receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit and loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate compound at initial recognition.

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Loans and other receivables

Loan and other receivables that have fixed or determinable payments that are not quoted on active markets are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short term receivables when recognition would be immaterial.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual agreements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recognised at the amount of proceeds received net of costs directly attributable to the transaction. To the extent that those proceeds exceed the par value of the shares issued they are credited to a share premium account. 

Bank borrowings

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on a n accrual basis in profit or loss using effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade payables

Trade payables are not interest-bearing, are fair valued at initial recognition, stated at their nominal value and then recorded at amortised cost.

3. SEGMENTAL ANALYSIS

The primary reporting format is by business segment and the second reporting format is by geographical area.

For management purposes the group is organised into one operating segment which is that of providers of market research and market information. All sales revenue, costs, assets and liabilities of the group are attributable to the principal activities of the group.

 

4. Dividends

The Company is not in a position to declare an interim dividend.

5. loss per share 

The calculation is based on the loss attributable to equity shareholders divided by the weighted average number of ordinary shares in issue during the period as follows:

	6 months ended 31 March 2009	6 months ended 31 March 2008	12 months ended 30 September 2008
	£'000	£'000	£'000
Numerators; loss attributable to equity shareholders	298	258	440
	No. '000	No. '000	No. '000
Denominators; weighted average number of equity shares
Basic and diluted	607,330	64,237	74,983

 

On 30 January 2009 the company completed the purchase of the businesses of Viewpoint and The Wire for an aggregate consideration of £1,500,000. Intangible assets arising on the acquisition have provisionally been calculated at £1,809,000. These are provisional values only and further details will be contained in the financial statements for the year to 30 September 2009. The directors have considered the carrying value of intangible assets at 31 March 2009 and are satisfied that there has been no impairment in value at that date 

On 30 January 2009, IQ Holdings plc acquired the businesses know as Viewpoint Field, Viewpoint Studios and The Wire from Illuminas Ltd, a subsidiary of Media square plc . Total consideration was £1,500,000 (£600,000 cash, £600,000 deferred cash and £300,000 in shares). A further £497,000 of professional fees and expenses were incurred during the transaction.

The assembled workforce, profitability and the synergies that the Group will obtain all contributed to the amount paid. 

The fair values shown below for all businesses acquired during the year are provisional as the hindsight period allowed by financial reporting has not yet expired. 

  

	Viewpoint Field and Viewpoint Studios				The Wire
	Book value	Provisional fair value adjustments	Provisional fair value		Book value	Provisional fair value adjustments	Provisional fair value
	£'000	£'000	£'000		£'000	£'000	£'000
Assets
Property, plant & equipment	177	-	177		34	-	34
Receivables	520	(63)	457		238	(24)	214
	697	(63)	634		272	(24)	248
Liabilities
Trade and other   payables	(189)	-	(189)		(61)	-	(61)
Provisions	-	(403)	(403)		-	(41)	(41)
	(189)	(403)	(592)		(61)	(41)	(102)
Net assets acquired	508	(466)	42		211	(65)	146
Total net assets acquired							188

Satisfied by:
Shares					300
Cash					600
Deferred cash					600
Costs of acquisition					497
						1,997
Intangible assets recognised in connection with acquisitions during the period						1,809

Provisional fair value adjustments include provisions for doubtful debts and provisions for dilapidations on all of the Group's leased properties. 

 

7. CASH USED IN OPERATIONS

	6 months ended 31 March 2009	6 months ended 31 March 2008	12 months ended 30 September 2008
	£'000	£'000	£'000
Loss from operating activities	(294)	(256)	(431)
Depreciation of property, plant and equipment	10	1	7
Decrease/(increase) in receivables	(87)	34	128
Increase/(decrease) in payables	518	83	98
Cash inflow / (outflow) from operations	147	(138)	(198)

ENDIR FLMPTMMMTBAL