Last checked at 24 Jun 2009 07:00
24 June 2009 Totally plc ("Totally" or the "Company") Final results for the year ended 31 December 2008
CHAIRMAN'S STATEMENT
Group Overview
The Group comprises two UK based business divisions; a digital marketing agency, Totally Communications and a publishing division, Jewish News & Media Group.
Totally Communications has three main service sectors:
1. Website and software design & development
2. Consultancy & systems integration
3. Online marketing
Jewish News & Media Group publishes on and offline media for the UKs Jewish community including:
1. A weekly newspaper `Jewish News'
2. A quarterly lifestyle magazine, `Pulse'
3. An annual Celebrations magazine, `TotallyJewishSimchas'
4. A community portal, `www.TotallyJewish.com'
Disposal of Trading Subsidiary
As a result of a strategic review the company chose to focus primarily on its core UK businesses and in September 2008 disposed of its US based publishing business, Jewish Advocate Publishing Corporation, to the Grand Rebbe Korff. The board believed that its financial position had worsened from prior years. During the period under review it incurred an operating loss of £43,000 for the period to 31 August 2008.. The Independent Directors believed that a long term decline in the business of Jewish Advocate would have a serious effect on the financial prospects of the Company and would be a major distraction to the management.
In consideration for the sale, 20,500,000 million ordinary shares, which were held by the Grand Rebbe Korff, were redesignated as deferred shares and warrants to subscribe for 4,394,350 ordinary shares, which were also held by the Grand Rebbe Korff, were cancelled. The deferred shares are for all practical purposes worthless and have no voting rights, they carry no entitlement to attend general meetings of the Company nor do they have the right to receive dividends.
The disposal was carried out in a tax efficient manner but created a loss of £968,000 in the group income statement as the group was obliged to cancel the ordinary shares from the Grand Rebbe and recognise the deferred shares at nominal value therefore no consideration has been recognised in respect of the disposal.
Financial Summary
- During the period under review the Group's turnover from continuing operations was £1.68 million (2007: £1.84 million).
- Operating loss from continuing operations improved by £0.39 million to £0.064million (2007: £0.45 million)
- Administrative expenses for continuing operations before non-cash charges for amortisation and depreciation reduced by £0.28 million to £1.29million (2007: £1.55 million).
- Wages and staff costs reduced by £0.21 million to £1.12 million (2207: £1.34 million)
- Head office charges reduced by £0.21 million from £0.53 million to £0.32 million.
- Operating profit for the group's publishing division improved by £0.15 million to £0.073 million (2007: loss £0.078 million)
- Operating profit for the group's digital marketing division improved by £0.02 million to £0.18 million (2007: £0.16 million)
- Combined operating profit for the group's continuing operations minus head office charges improved by £0.17 million to £0.26 million (2007: £0.09 million).
- Group EBITDA from continuing operations for the period before head office charges was £0.29 million (2007: £0.35 million).
- Cash generated from continuing operations improved by £0.096 million to £0.023million (2007: loss £0.019 million).
- Basic loss per share on continuing operations improved by 0.3p per share to £0.1p (2007: £0.4p)
The group's balance sheet does not attribute any goodwill to the titles of the Publishing division. The board believes that this does not show an accurate representation of their true position.
Board, Staff and Clients
I would like to thank Totally's board and staff for their efforts over the period under review as well as our clients.
Prospects
Trading since the beginning of the current financial year has, despite the general economic climate, been stable and the Board anticipates a positive outcome for the full year.
Dr Michael SinclairNon-Executive Chairman24 June 2009FURTHER ENQUIRIESTotally Plc www.totallyplc.comDaniel Assor CEO 020 7692 6929 John East & Partners LimitedSimon Clements 020 7628 2200Virginia Bull
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007 Note £000 £000Continuing operationsRevenue 1,684 1,836 Cost of Sales (430) (462) Gross profit 1,254 1,374 Administrative expenses (1,287) (1,555) Loss before interest, tax, depreciationand amortisation (33) (181) Depreciation (9) (6)Amortisation (22) (89)Impairment - (176) Operating loss (64) (452) Finance costs (40) (39) Loss before taxation (104) (491) Income tax 2 18 24 Loss for the year from continuing (86) (467)
operations
Discontinued operations
(Loss)/Profit for the year fromdiscontinued operations (1,000) 124 Loss for the year attributable toEquity shareholders (1,086) (343) Loss per share BasicContinuing operations 4 0.1p 0.4pDiscontinued operations 4 0.9p (0.1p) 1.0p 0.3p DilutedContinuing operations 4 0.1p 0.4pDiscontinued operations 4 0.9p (0.1p) 1.0p 0.3p
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008
2008 2007 £000 £000 £000 £000Non current assetsGoodwill and intangible fixed assets 51 1,014Property, plant and equipment 7 27 58 1,041 Current assetsInventories - 8Trade and other receivables 290 433Cash and cash equivalents 14 94 304 535Total assets 362 1,576 Current liabilitiesTrade and other payables (338) (475)Borrowings - financial liabilities (561) (542) (899) (1,017) Non current liabilitiesInvestment in joint venture - (28) Total Liabilities (899) (1,045) Net (liabilities)/assets (537) 531 Shareholders' Equity Called up share capital 4 1,124 1,124Share premium account 4 3,353 3,353Translation reserve 4 - 1Retained earnings 4 (5,014) (3,947) Equity shareholders (deficit)/funds (537) 531
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
Notes 2008 2007 £000 £000 Cash flows from operating activitiesOperating loss from continuing operations (64) (349)Option charge 18 21Share of joint venture loss - (4)Amortisation and depreciation 31 270Increase in inventories 1 1Decrease/(Increase) in trade and otherreceivables 69 (21)Decrease in trade and other payables (32) (37) Cash generated/(utilised) from continuingoperations 23 (119) Loss/Profit before taxation from discontinuedoperations (43) 31Depreciation 3 4Movement in working capital from discontinuedoperations 32 (9) Cash (utilised)/generated from discontinuedoperations 3 (8) 26 R&D tax credit 18 24Foreign tax on subsidiary profit (5) (7) Net cash generated/(utilised) by operatingactivities 28 (76) Cash flows from investing activitiesPurchase of non current asset (8) (80)Cash disposed with subsidiary 3 (35) -Costs on disposal of subsidiary (44) - Net cash utilised by investing activities (87) (80) Cash outflow before financing (59) (156) Cash flows from financing activitiesInterest paid (40) (38)Issue of ordinary share capital - 467Receipt for exercise of share options - 2 Net cash (utilised)/generated from financingactivities (40) 431 Net (decrease)/increase in cash and cashequivalents (99) 275
Cash and cash equivalents at beginning of year (448) (723)
Cash and cash equivalents at 31 December 3 (547) (448)
Cash and cash equivalents comprise:-Cash and short term deposits 14 94Bank overdrafts (561) (542) (547) (448)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2008 Equity Share Profit share- Share premium Translation and loss holders' capital account Reserve account funds £000 £000 £000 £000 £000 At 31 December 2006 901 3,107 2 (3,625) 385Loss for the year - - - (343) (343)Share capital issued 223 246 - - 469Currency translationdifferences on foreigncurrency net investments - - (1) - (1)Credit on issue of share - - - 15 15optionsCredit on issue of - - - 6 6warrants At 31 December 2007 1,124 3,353 1 (3,947) 531Loss for the year - - - (1,086) (1,086)Currency translationdifferences on foreigncurrency net investments - - (1) 1 -Credit on issue of share - - - 12 12optionsCredit on issue of - - - 6 6warrants At 31 December 2008 1,124 3,353 - (5,014) (537)
NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMEBR 2008
1. BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by European Union ("adopted IFRSs"), and are in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2007 and 2008, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified and did not contain statements under the Companies Act 1985, sections 237(2) or (3).
The Group has confirmed the availability of a facility of £700,000 with Bank Hapoalim which was renewed on 22 September 2008 until 30 June 2009. As security for the facility, the bank has obtained the unlimited Joint and Several Guarantees of Dr Michael J. Sinclair (non-executive Chairman), and Mr Leo Noe.
In addition, a working capital facility of £50,000 has been agreed with Natwest which is secured on the Group's debtor book. This facility is due for renewal on 30 September 2009.
The Directors have prepared projected cash flow information for the period ending 12 months from the date of their approval of these financial statements.
On the basis of cash flow forecasts and discussions with the Group's bankers, the Directors consider that the Group will be able to operate within the facilities currently agreed.
Inherently, there can be no certainty in relation to these matters, but the Directors believe that the going concern basis of preparation continues to be appropriate.
2. TAXATIONa) Taxation charge 2008 2007 £000 £000 Overseas income tax on - 7subsidiary undertakingsResearch and development tax credit (18) (24)Total current income tax credit (18) (17)
charged in the income statement
b) Taxation reconciliation
The current income tax credit for the period is explained below:
2008 2007 £000 £000 Loss before tax (1,086) (360)Taxation at the standard UK incometax rate of 28 per cent. (2007: 30 per cent.) (304) (108) Research and Development tax credit (18) (24)Deferred Tax movement not provided for 304 108Foreign tax adjustment - 7 Total income tax credit charged in the incomestatement (18) (17)
b) Deferred tax
Tax losses of £3,861,000 (2007: £3,776,000) are available to relieve future profits of the Group. A deferred tax asset has not been recognised in respect of these losses on the grounds of uncertainty in respect of when and the rate the losses will be recovered at.
3. NOTES TO THE CASH FLOW STATEMENT
(i) Cash flows relating to discontinued operations
2008 2007 £000 £000 Cash flows from operating activitiesProfit before taxation from discontinuedoperations (43) 31Depreciation 3 4Increase in inventories 6 (4)Increase in trade and other receivables 28 10Decrease in trade and other payables (2) (15) (8) 26 Foreign tax on subsidiary profit (5) (1) Net cash (utilised)/generated byoperating activities (13) 25 Cash flows from investing activitiesPurchase of non current assets - (10)Cash disposed with subsidiary (35) - Net cash (utilised)/generated byinvesting activities (35) (10) Cash outflow before financing (48) 15 Cash flows from financing activitiesInterest received - 1 Net cash from financing activities - 1 Net increase/(decrease) in cash and cashequivalents (48) 16Cash and cash equivalents at beginning ofyear 48 32 Cash and cash equivalents at 31 December - 48
4. LOSS PER SHARE
The calculation of the basic loss per share is based on the loss of £1,086,000 (2007: £343,000) and on 107,322,909 (2007: 107,135,514) ordinary shares being the weighted average number of shares in issue during the period. The diluted loss per share is the same as the basic loss per share, in accordance with IAS33 which prescribes that potential ordinary shares should only be used as dilutive when, and only when, their conversion to ordinary shares would decrease net profit or increase net loss per share from continuing operations.
5. DIVIDEND
The Directors do not propose the payment of a dividend.
6. RELATED PARTY TRANSACTIONS
The Group has taken advantage of the exemption available under IAS 24, "Related Party Disclosures", not to disclose details of transactions with its subsidiary undertakings.
The following related party transactions have been carried out at arms length and are required to be disclosed in accordance with IAS24.
As set out in note 1, Dr Michael Sinclair, and Mr Leo Noe have provided guarantees in respect of the Group's current overdraft facility.
In 2008, purchases of £nil (2007: £3,714), on an arm's length basis were made from N Assor, wife of D Assor who is a board member of this Company. A balance of £nil (2007: £nil) is included in trade creditors at year end.
In 2008, purchases of £4,270 (2007: £3,030), on an arm's length basis were made from J Margolis, mother of A Margolis who is a director of Totallyjewish.com Limited. A balance of £1,000 (2007: £80) is included in trade creditors at year end.
Included in trade debtors is an amount of £30,194 (2007: £65,952) due from Totally Jewish Travel Inc., a company in which the Group had a joint venture interest, that was sold during the year. Sales of £53,515 (2007: £59,553) relating to the recharge of services to Totally Jewish Travel Inc have been made in the year. Balances of £17,584 due from Totally Jewish Travel Inc. (2007: £nil) have been written off during the year.
Included in trade debtors is an amount due of £nil (2007: £1,439) from Friends of Laniado UK, a registered charity of which Dr Michael Sinclair is also the chairman. Sales during the year amounted to £nil (2007: £734). At the year end a bad debt provision of £nil (2007: £1,439) was made in the accounts against outstanding trade debtor balances.
In 2008 fees of £25,000 (2007: £nil) have been charged by BDS Limited, a company where Dr Michael Sinclair is a director.
7. COPIES OF THE REPORT & ACCOUNTS
Copies of the Report and Accounts will be posted to shareholders shortly, will be available from the Company's registered office Unit 611 Highgate Studios, 53-79 Highgate Road, London NW5 1TL and are available from the Company's website www.totallyplc.com.
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