Vitesse Media Plc
(“Vitesse” or the “Company)
Preliminary Statement of Final Results for the year ending 31 January 2010 for Vitesse Media plc
Highlights for the year ending 31 January 2010
• Significant improvement in profitability delivering a profit for 2009/10 of £36,706 and EBITDA of £192,742 (2008/9 loss of £(493,930) and £(306,570))
• Online revenues held up well
• Gross profit margin of 63.3% (2008/9 64.8%)
• Overheads reduced by nearly 40%
• Market leading positions and brand values maintained during a difficult trading period
• Management team worked hard to retain good staff loyalty and morale
• Since the year-end, the company has carried out a successful fundraising, thus reducing borrowings, improving working capital and providing funds for improvement in our database operations.
• Improvement in profitability has continued and there is a significant turnaround for the first quarter of the financial year 2010/11
Chairman’s report
Performance during the financial year 2009/10
This was undoubtedly the most difficult trading period that the Company has endured. During the year, despite having trimmed costs during the previous financial year 2008/9, the management team unfortunately had to make further cost savings and reduced the headcount again.
Such actions are always extremely difficult for all concerned, especially in a close-knit business such as Vitesse Media. I would like to take the opportunity to extend my appreciation to all members of staff who bore these difficult times with calmness and understanding.
During the year I also took the opportunity to split the role of Chairman and Chief Executive. In July, Leslie Copeland was appointed Chief Executive and Niki Baker appointed Chief Operating Officer and, along with the rest of the management team, the credit for the turnaround in results in the second half of the year is all theirs.
Results have tended to show a skewed performance towards the second half and this was certainly true during the financial year under review when a loss of £(91K) at the interim stage was turned into a profit of £36K for the full year.
Update for the first quarter
The improvement in profitability has continued and there is a significant turnaround for the first quarter of the financial year 2010/11. This is against a backdrop of further reductions in revenue compared to the same period last year. Some of the fall in revenue is attributed to continuing difficulties in some print areas. However, the management team has also undertaken an intense focus on existing operations and an examination of the profitability of individual sources of revenue, which has meant the discontinuation of certain activities, leading to one-off reductions in revenue.
Positive aspects include the improvement experienced towards the end of the quarter in our online activities which had slightly dipped in the second half of last year and a sustained increase in our subscription numbers, a change which had begun last autumn. Further investment in subscription building will be carried out during the rest of the year.
A summary by the management team is that the trading background for the business is healthier than it has been for many, many months.
During the first quarter, we were able to carry out a successful fundraising, raising £475,000 before expenses, amongst existing and new shareholders. This has provided the business with the funds to redeem the borrowings incurred last year and to repurchase SmallBusiness.co.uk, to provide adequate working capital for the group and to fund improvements in our database operations, which should lead to significant efficiency and revenue gains.
The year ahead
The second quarter of the year is traditionally the weakest for the group and this is exacerbated by our decision to move an event from June to September, a decision which has been taken by the management team to improve the group’s profit in the long term. However, the team anticipate that the turnaround in profitability for the business will continue, barring the economy lurching into a second leg of a recession. There has been a sustained improvement in the level of forward bookings and we are now looking with more certainty at the figures for the rest of the year.
The Directors regard the business as being in the best shape for many years, both in terms of profitability and funding, and look forward with confidence to the results for the full year.
ESM Williams
Chairman
Consolidated statement of comprehensive income
for the year ended 31 January 2010
| Notes | Unaudited | Unaudited | |
| 2010 | 2009 | ||
| £ | £ | ||
| Revenue | 1 | 3,635,148 | 4,993,490 |
| Cost of sales | 2 | (1,216,603) | (1,760,366) |
| Gross profit | 1 | 2,418,545 | 3,233,124 |
| Administrative expenses | 2 | (2,349,452) | (3,676,056) |
| Operating profit / (loss) | 2 | 69,093 | (442,932) |
| Finance costs | 3 | (33,870) | (60,694) |
| Finance income | 3 | 1,483 | 9,696 |
| Profit /(loss) before tax | 36,706 | (493,930) | |
| Tax expense | 4 | – | – |
Profit/(loss) for the year attributable to owners of the parent |
36,706 | (493,930) | |
| Total comprehensive income for the year attributable to owners of the parent |
36,706 | (493,930) | |
| Earnings per share: | |||
| Basic | 5 | 0.14p | (1.99p) |
| Diluted | 5 | 0.14p | (1.99p) |
Consolidated statement of financial position
as at 31 January 2010
| Notes | Unaudited | Unaudited | |
| 2010 | 2009 | ||
| £ | £ | ||
| NON-CURRENT ASSETS | |||
| Goodwill | 6 | 1,025,806 | 1,025,806 |
| Other intangible assets | 6 | 1,467,806 | 1,513,075 |
| Property, plant and equipment | 7 | 87,685 | 161,065 |
| Trade and other receivables | 8 | 21,139 | 21,139 |
| 2,602,436 | 2,721,085 | ||
| CURRENT ASSETS | |||
| Inventories | 9 | 18,992 | 17,201 |
| Trade and other receivables | 8 | 679,927 | 831,040 |
| 698,919 | 848,241 | ||
| TOTAL ASSETS | 3,301,355 | 3,569,326 | |
| EQUITY | |||
| Share capital | 11 | 2,560,379 | 2,560,379 |
| Share premium account | 11 | 2,427,617 | 2,427,617 |
| Share option reserve | 12 | 86,013 | 73,461 |
| Other reserves | 103,904 | 103,904 | |
| Retained earnings | (3,651,525) | (3,688,231) | |
| TOTAL EQUITY ATTRIBUTABLE | 1,526,388 | 1,477,130 | |
| TO OWNERS OF THE PARENT | |||
| NON-CURRENT LIABILITIES | |||
| Obligations under finance leases | 14 | 3,948 | 14,235 |
| Provisions | 16 | – | 61,289 |
| 3,948 | 75,524 | ||
| CURRENT LIABILITIES | |||
| Trade and other payables | 15 | 1,237,028 | 1,609,925 |
| Borrowings | 13 | 523,814 | 378,120 |
| Obligations under finance leases | 14 | 10,177 | 28,627 |
| 1,771,019 | 2,016,672 | ||
| TOTAL LIABILITIES | 1,771,019 | 2,016,672 | |
| TOTAL EQUITY AND LIABILITIES | 3,301,355 | 3,569,326 |
Consolidated statement of cash flows
for the year ended 31 January 2010
| Notes | Unaudited | Unaudited | |
| 2010 | 2009 | ||
| £ | £ | ||
| CASH FLOWS FROM OPERATING ACTIVITIES | 17 | (79,570) | (35,391) |
| Interest received | 1,483 | 9,696 | |
| Interest paid | (33,870) | (60,694) | |
| NET CASH USED IN OPERATING ACTIVITIES | (111,957) | (86,389) | |
| INVESTING ACTIVITIES | |||
| Purchases of property, plant and equipment | - | (7,458) | |
| Purchases of intangible assets | (5,000) | (38,200) | |
| NET CASH USED IN INVESTING ACTIVITIES | (5,000) | (45,658) | |
| FINANCING ACTIVITIES | |||
| Proceeds from issue of share capital | - | 175,714 | |
| Share issue costs | - | (7,767) | |
| Repayments of borrowings | - | (267,198) | |
| Repayment of obligations under finance leases | (28,737) | (48,846) | |
| Proceeds from short-term borrowings | - | 170,000 | |
| Drawdown on invoice discounting facility | 5,312 | 316,624 | |
| NET CASH GENERATED FROM FINANCING ACTIVITIES | 146,575 | 168,527 | |
| NET INCREASE IN CASH AND | 18 | 29,618 | 36,480 |
| CASH EQUIVALENTS | |||
| CASH AND CASH EQUIVALENTS AT | 10 | (61,496) | (97,976) |
| BEGINNING OF YEAR | |||
| CASH AND CASH EQUIVALENTS | 10 | (31,878) | (61,496) |
| AT END OF YEAR |
Abbreviated Notes to the results
1. SEGMENTAL INFORMATION
The operating segments are based on the management reports reviewed by the Board of Directors on a monthly basis.
The reportable segments derive their revenue primarily as follows:
• Online – Provision of online and digital services for our client and reader base
• Print Publishing – Provision of regular publications through our leading brands
• Events – Utilising our publishing rights to run events including awards, conferences and seminars, plus a limited number of events on behalf of third parties
All revenue is derived from provision of services and predominately from customers based in England, the Company’s country of domicile and all assets are based in England.
The Chief Operating Decision Maker evaluates the performance and resource requirements of these segments in unison to ensure maximum efficiencies within the business and indeed resources are shared.
The Directors consider the most useful information to users of the accounts is to provide details down to the Gross Profit level only. From then on any further detail would necessitate arbitrary cost allocation that they do not use in managing the business and is not considered meaningful in terms of how resources are actually utilised.
The Chief Operating Decision Maker does not receive information on assets and liabilities in a segmental format and due to the arbitrary nature of the allocation this information has not been calculated as it is inappropriate to the running of the business.
Segment information is presented below.
| 2010 | 2009 | |||
| Revenue | Profit | Revenue | Profit | |
| £ | £ | £ | £ | |
| Continuing Operations | ||||
| Online | 1,225,713 | 1,074,700 | 1,352,042 | 1,300,257 |
| Print publishing | 1,494,302 | 816,320 | 2,315,432 | 1,287,131 |
| Events | 915,133 | 410,359 | 1,326,016 | 645,736 |
| Segment revenue / profit | 3,635,148 | 2,301,379 | 4,993,490 | 3,233,124 |
| Central overheads and directors’ salaries | (2,232,286) | (3,676,056) | ||
| Finance income | 1,483 | 9,696 | ||
| Finance costs | (33,870) | (60,694) | ||
| Profit for period | 36,706 | (493,930) | ||
Revenue represents sales to external customers. There were no inter segment sales in the period (2009: Nil).
The Group generates total revenues from its largest customer of £126,745 (2009: £125,052). These revenues are derived from the print and online segments.
2. OPERATING PROFIT
(a) Operating profit for the year has been arrived at after charging/(crediting) the following items within administrative expenses:
| 2010 | 2009 | |
| £ | £ | |
| Depreciation of property, plant and equipment | ||
| - owned assets | 36,049 | 49,403 |
| - leased assets | 37,331 | 31,507 |
| Amortisation of website development costs | 50,269 | 55,452 |
| Operating lease rentals in respect of land and buildings | 38,485 | 100,832 |
| Onerous lease provision (see note below) | (61,289) | 61,289 |
| Share based payment | 12,552 | 35,995 |
At 31 January 2009 a provision was made for an onerous lease in a subsidiary company. In October 2009 the subsidiary company was put into liquidation and as a result the provision has been written back.
(b) AUDITOR’S REMUNERATION
During the year, the following services were obtained from the Group’s auditor at cost as detailed below:
| 2010 | 2009 | |
| £ | £ | |
| Audit services | ||
| - Fees payable to Company auditor for the | 25,000 | 25,000 |
| audit of parent Company and consolidated accounts | ||
| Other services | ||
| Fees payable to the Company’s auditor and its associates for other services: | ||
| – The audit of Company’s subsidiaries pursuant to legislation | 20,000 | 24,725 |
| _______ | _______ |
The disclosure of auditor’s remuneration stated above relates to the Company’s auditor, Baker Tilly UK Audit LLP and its associates.
(c) ANALYSIS OF OPERATING EXPENSES BY NATURE
| 2010 | 2009 | |
| £ | £ | |
| Staff costs (see note 5) | 1,479,885 | 1,920,728 |
| Depreciation, amortisation and impairments (see notes 10 & 11) | 123,649 | 136,362 |
| Change in inventory | 1,791 | 205 |
| Magazine costs | 592,397 | 915,765 |
| Events costs | 391,688 | 504,002 |
| Premises costs | 30,124 | 204,989 |
| Marketing expenses | 101,090 | 151,301 |
| Professional fees | 161,759 | 232,538 |
| Other expenses | 673,612 | 1,370,532 |
| Total cost of sales and administrative expenses | 3,566,055 | 5,436,422 |
3. NET FINANCE COSTS
| 2010 | 2009 | |
| £ | £ | |
| Bank interest receivable | 1,483 | 9,696 |
| Less: | ||
| Interest payable on bank loan and overdrafts | 11,617 | 41,856 |
| Finance lease interest | 6,485 | 10,092 |
| Other interest payable | 5,851 | 8,746 |
| Interest on other borrowings | 9,917 | - |
| 33,870 | 60,694 | |
| Net finance costs | (32,387) | (50,998) |
4. TAXATION
| 2010 | 2009 | |
| £ | £ | |
| (a) Current taxation | ||
| UK corporation tax | - | - |
Corporation tax is calculated at 28% (2009 – 28%) of the estimated assessable profit for the year.
(b) The tax charge for the year can be reconciled to the profit/(loss) before tax per the consolidated statement of comprehensive income as follows:-
| 2010 | 2009 | |
| £ | £ | |
| Factors affecting tax charge for the period: | ||
| Profit/ (Loss) before taxation | 36,706 | (432,641) |
| Profit/(Loss) before tax multiplied by the standard rate of corporation tax in the UK of 28% (2009: 28%) | 10,278 | (121,139) |
| Effects of: | ||
| Other timing differences | (18,805) | 3,935 |
| Employee share plans | 3,515 | 10,078 |
| Other expenses not deductible for tax purposes | 1,460 | 5,688 |
| Depreciation in excess of capital allowances/(accelerated capital allowances) | 22,193 | (5,181) |
| Tax losses in year (utilised)/carried forward | (18,580) | 107,100 |
| Provisions adjustments | (61) | (504) |
| Charges on income unutilised | - | 23 |
| Tax charge for the year | - | - |
At the reporting date, the Group has unused tax losses of £4,318,306 (2009: £4,804,599) available for offset against future profits. No deferred tax asset has been recognised in respect of this amount due to the unpredictability of future profit streams.
At the reporting date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax assets and liabilities have not been recognised was a net asset of £36,133 (2009: £6,900). No deferred tax liability (2009: Nil) has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.
5. EARNINGS PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year (Note 16).
| 2010 | 2009 | |
| £ | £ | |
| Profit/(Loss) attributable to owners of the parent | 36,706 | (493,930) |
| Weighted average number of ordinary shares in issue | 25,603,787 | 24,698,140 |
| Basic earnings per share (pence per share) | 0.14p | (1.99p) |
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share options. In the prior year the Company made a loss and the potential share options were therefore anti-dilutive.
| 2010 | 2009 | |
| £ | £ | |
| Profit/(Loss) attributable to owners of the parent | 36,706 | (493,930) |
| Weighted average number of ordinary shares in issue | 25,603,787 | 24,698,140 |
| Dilutive effect: | ||
| Share options | 26,846 | - |
| Diluted ordinary shares | 25,630,633 | 24,698,140 |
| Diluted earnings per share (pence per share) | 0.14p | (1.99p) |
6. INTANGIBLE ASSETS
| GROUP | Website development costs £ |
Publishing Rights £ |
Sub - total £ |
Goodwill £ |
Total £ Cost |
| COST | |||||
| 1 February 2008 | 283,425 | 1,815,813 | 2,099,238 | 1,027,999 | 3,127,237 |
| Additions | 38,200 | - | 38,200 | - | 38,200 |
| Disposals | (62,230) | - | (62,230) | - | (62,230) |
| 31 January 2009 | 259,395 | 1,815,813 | 2,075,208 | 1,027,999 | 3,103,207 |
| Additions | 5,000 | - | 5,000 | - | 5,000 |
| 31 January 2010 | 264,395 | 1,815,813 | 2,080,208 | 1,027,999 | 3,108,207 |
| AMORTISATION AND IMPAIRMENT | |||||
| 1 February 2008 | 133,098 | 435,813 | 568,911 | 2,193 | 571,104 |
| Amortisation charge for the year | 55,452 | - | 55,452 | - | 55,452 |
| Disposals | (62,230) | - | (62,230) | - | (62,230) |
| 31 January 2009 | 126,320 | 435,813 | 562,133 | 2,193 | 564,326 |
| Amortisation charge for the year | 50,269 | - | 50,269 | - | 50,269 |
| Disposals | |||||
| 31 January 2010 | 176,589 | 435,813 | 612,402 | 2,193 | 614,595 |
| Net book value | |||||
| 31 January 2010 | 87,806 | 1,380,000 | 1,467,806 | 1,025,806 | 2,493,612 |
| 31 January 2009 | 133,075 | 1,380,000 | 1,513,075 | 1,025,806 | 2,538,881 |
| 1 February 2008 | 150,327 | 1,380,000 | 1,530,327 | 1,025,806 | 2,556,133 |
| Cost | |||||
| 1 February 2008 | 161,365 | 1,271,808 | 1,433,173 | 108,476 | 1,541,679 |
| Additions | 24,450 | - | 24,450 | - | 24,450 |
| 31 January 2009 | 185,815 | 1,271,808 | 1,457,623 | 108,476 | 1,566,099 |
| Transferred from investments | - | - | - | 461,827 | 461,827 |
| 31 January 2010 | 185,815 | 1,271,808 | 1,457,623 | 570,303 | 2,027,926 |
| AMORTISATION AND IMPAIRMENT | |||||
| 1 February 2008 | 64,855 | 433,408 | 498,263 | - | 498,263 |
| Amortisation charge for the year | 34,124 | - | 34,124 | - | 34,124 |
| 31 January 2009 | 98,979 | 433,408 | 532,387 | - | 532,387 |
| Amortisation charge for the year | 31,127 | - | 31,127 | 31,127 | |
| 31 January 2010 | 130,106 | 433,408 | 563,514 | - | 563,514 |
| Net book value | |||||
| 31 January 2010 | 55,709 | 838,400 | 894,109 | 570,303 | 1,464,412 |
| 31 January 2009 | 86,836 | 838,400 | 925,236 | 108,476 | 1,033,712 |
| 1 February 2008 | 96,510 | 838,400 | 934,910 | 108,476 | 1,043,386 |
6. INTANGIBLE ASSETS (continued)
Goodwill
| Group | Company | |||
| 2010 | 2009 | 2010 | 2009 | |
| £ | £ | £ | £ | |
| Investor All Stars | 108,476 | 108,476 | 108,476 | 108,476 |
| Growth Company Investor Limited | 41,663 | 41,663 | - | - |
| M&A Deals Limited | - | 461,827 | - | - |
| Information Age Media Limited | 413,840 | 413,840 | - | - |
| M&A Deals | 461,827 | - | 461,827 | - |
| 1,025,806 | 1,025,806 | 570,303 | 108,476 | |
| Group | Company | |||
| 2010 | 2009 | 2010 | 2009 | |
| £ | £ | £ | £ | |
| What Investment | 625,807 | 625,807 | 625,808 | 625,808 |
| Small Business Guide | 212,592 | 212,592 | 212,592 | 212,592 |
| Growth Company Investor | 11,506 | 11,506 | - | - |
| The Wrong Price | 5,000 | 5,000 | - | - |
| Information Age | 525,095 | 525,095 | - | - |
| 1,380,000 | 1,380,000 | 838,400 | 838,400 |
The Group tests goodwill and publishing rights annually for impairment or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and direct costs. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on a combination of industry growth forecasts and specific business plans for each CGU. Changes in direct costs are based on past practices and expectations of future changes.
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for a period of eighteen months and extrapolates cash flows for the relevant period based on the estimated growth for each CGU for a further forty two months.
The rate used to discount the forecast cash flows for each of the CGUs was 11% (2009: 11%) and growth rates are assumed to be an average of industry expected growth rates which range from 0% to 20%.
During the year the trade and associated goodwill was transferred from M&A Deals Ltd and integrated into Vitesse Media plc. This decision was taken due to the downturn in the economy and the mergers and acquisitions market and it is anticipated that an upturn in the economy will result in a revival of the brand. Based on cash flow forecasts, no impairment is deemed necessary.
7. PROPERTY, PLANT AND EQUIPMENT
| GROUP | Short leasehold improvements £ |
Fixtures, fittings and equipment £ |
Total £ |
| Cost | |||
| 1 February 2008 | 89,398 | 325,829 | 415,227 |
| Additions | - | 33,081 | 33,081 |
| Disposals | (66,746) | (113,240) | (179,986) |
| 31 January 2009 and 31 January 2010 | 22,652 |
245,670 | 268,322 |
| Depreciation | |||
| 1 February 2008 | 72,330 | 134,003 | 206,333 |
| Charge for the year | 4,530 | 76,380 | 80,910 |
| Disposals | (66,746) | (113,240) | (179,986) |
| 31 January 2009 | 10,114 | 97,143 | 107,257 |
| Charge for the year | 4,530 | 68,850 | 73,380 |
| 31 January 2010 | 14,644 | 165,993 | 180,637 |
| Net book value | |||
| 31 January 2010 | 8,008 | 79,677 | 87,685 |
| 31 January 2009 | 12,538 | 148,527 | 161,065 |
| 1 February 2008 | 17,068 | 191,826 | 208,894 |
The net book value of fixtures, fittings and equipment includes £53,696 (2009: £91,027) of assets held under finance lease agreements.
7. PROPERTY, PLANT AND EQUIPMENT (continued)
| COMPANY | Short leasehold improvements £ |
Fixtures, fittings and equipment £ |
Total £ |
| COST | |||
| 1 February 2008 | 89,398 | 191,426 | 280,824 |
| Additions | - | 3,858 | 3,858 |
| Disposals | (66,746) | (5,961) | (72,707) |
| 31 January 2009 | 22,652 | 189,323 | 211,975 |
| Transfer from subsidiary | - | 17,989 | 17,989 |
| 31 January 2010 | 22,652 | 207,312 | 229,964 |
| Depreciation | |||
| 1 February 2008 | 72,330 |
19,213 | 91,543 |
| Charge for the year | 4,530 | 58,106 | 62,636 |
| Disposals | (66,746) | (5,961) | (72,707) |
| 31 January 2009 | 10,114 | 71,358 | 81,472 |
| Charge for the year | 4,530 | 59,379 | 63,909 |
| 31 January 2010 | 14,644 | 130,737 | 145,381 |
| Net book value | |||
| 31 January 2010 | 8,008 | 76,575 | 84,583 |
| 31 January 2009 | 12,538 | 117,965 | 130,503 |
| 1 February 2008 | 17,068 | 172,213 | 189,281 |
The net book value of fixtures, fittings and equipment includes £53,696 (2009: £68,471) of assets held under finance lease agreements.
8. TRADE AND OTHER RECEIVABLES
| Group | Company | |||
| 2010 | 2009 | 2010 | 2009 | |
| £ | £ | £ | £ | |
| Current: | ||||
| Trade receivables | 576,995 | 706,093 | 256,379 | 329,925 |
| Provision for doubtful debts | (21,902) | (45,778) | (17,777) | (16,428) |
| 555,093 | 660,315 | 238,602 | 313,497 | |
| Other receivables | 6,556 | 9,389 | - | 4,508 |
| Prepayments and accrued income | 118,278 | 161,336 | 41,412 | 37,068 |
| 679,927 | 831,040 | 280,014 | 355,073 | |
| Non-current: | ||||
| Deposits | 21,139 | 21,139 | 21,139 | 21,139 |
The Groups financial assets are fairly short term in nature. In the opinion of the directors the book values equate to their fair value.
9 INVENTORIES
Group
Company
2010
2009
2010
2009
£
£
£
£
Raw materials
18,992
17,201
15,259
13,578
The amount of inventories recognised as an expense and charged to cost of sales was £114,342 (2009: £132,741). In the opinion of the directors the book values equate to their fair value.
10 CASH AND CASH EQUIVALENTS
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash
flow statement:
Group
Company
2010
2009
2010
2009
£
£
£
£
Cash and cash equivalents
-
-
-
6,298
Bank overdrafts (Note 18)
(31,878)
(61,496)
(10,236)
-
(31,878)
(61,496)
(10,236)
6,298
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.
11 CALLED UP SHARE CAPITAL
Group
Company
2010
2009
2010
2009
£
£
£
£
Authorised:
30,000,000 Ordinary shares of
10p each
3,000,000
3,000,000
3,000,000
3,000,000
Number of
shares
Share
capital
£
Share
premium
£
Total
£
Issued and fully paid
As at 1 February 2008
24,505,577
2,450,558
2,369,491
4,820,049
Shares issued
1,098,210
109,821
65,893
175,714
Issue costs
-
-
(7,767)
(7,767)
As at 31 January 2009 and 31 January 2010
25,603,787
2,560,379
2,427,617
4,987,996
Shares issued during the previous year were for a cash injection for brand development and additional working capital.
11 CALLED UP SHARE CAPITAL (continued)
The Company has granted options to subscribe for ordinary shares of 10p each, as follows:
Subscription
price
Period within which
Number of shares for which rights are exercisable
Grant date
per share
options are exercisable
2010
2009
31.05.2000
50.00p
30.05.2003 - 30.05.2010
16,000
26,000
11.07.2000
12.56p
23.01.2002 - 24.01.2011
119,394
119,394
31.01.2001
30.00p
01.02.2001 - 31.01.2011
20,833
20,833
23.01.2001
12.56p
03.10.2001 - 22.01.2011
64,394
64,394
25.01.2001
12.56p
03.10.2001 - 24.01.2011
119,394
119,394
31.01.2001
40.50p
03.10.2001 - 30.01.2011
6,000
6,000
31.01.2001
40.50p
31.01.2005 - 31.01.2011
29,628
41,973
26.09.2001
26.50p
03.10.2001 - 25.09.2011
1,500
1,500
03.10.2001
30.00p
03.10.2001 - 02.10.2009
83,333
83,333
08.11.2002
14.00p
08.11.2002 - 07.11.2012
5,000
5,000
08.11.2002
14.00p
08.11.2005 - 07.11.2012
30,000
30,000
31.07.2003
14.50p
31.07.2006 - 30.07.2013
15,000
15,000
14.08.2003
14.50p
14.08.2006 - 13.08.2013
100,000
100,000
18.08.2003
14.50p
18.08.2006 - 17.08.2013
10,000
10,000
31.07.2003
14.50p
31.07.2003 - 30.07 2013
5,000
5,000
30.04.2004
32.00p
30.04.2007 - 29.04.2014
35,000
35,000
05.10.2004
24.50p
05.10.2007 - 04.10.2014
-
-
16.05.2005
30.50p
16.05.2009 - 15.05.2015
50,000
50,000
17.10.2005
22.50p
17.10.2009 - 17.10.2015
20,000
25,000
02.06.2006
24.50p
02.06.2010 - 01.06.2016
65,000
70,000
28.02.2007
22.50p
01.03.2010 - 28.02.2017
340,000
345,000
28.02.2008
30.50p
01.03.2011 - 28.02.2018
160,000
315,000
22.06.2009
14.00p
22.06.2012 – 21.06.2019
550,000
-
1,845,476
1,487,821
12 EQUITY-SETTLED SHARE OPTION SCHEMES
For details of share option schemes in place during the year, see note 16.
Details of the number of share options and the weighted average exercise price (WAEP) during the year are as follows:
2010
2009
No.
WAEP
(pence)
No.
WAEP
(pence)
Outstanding at the beginning of the year
1,487,821
25.4p
1,389,821
23.6p
Granted during the year
550,000
14.0p
365,000
30.5p
Forfeited during the year
(192,345)
31.6p
(267,000)
25.5p
Outstanding at the end of the year
1,845,476
19.8p
1,487,821
25.4p
Exercisable at the end of the year
730,476
20.1p
824,821
24.6p
The market price of the Company’s shares on 31 January 2010 was 11p (2009: 16p).
12. EQUITY-SETTLED SHARE OPTION SCHEMES (continued)
The range of exercise price during the year was between 8p and 17p (2009: 16p and 37p).
The fair values were calculated using the Black-Scholes valuation method. The inputs to the model were as follows:
2010
2009
Weighted average share price (pence)
14
25
Expected volatility (%)
41.4
131
Expected life (years)
10
10
Risk-free rate (%)
4.62
4.62
Dividend yield (%)
0
0
Vesting condition (%)
37
37
Expected volatility was determined by calculating the historic volatility of the Group’s share price over the period since flotation.
The weighted average remaining contractual life is six years (2009: six years).
The charge for the year for options granted was £12,552 (2009: £35,995) which is included in administrative expenses. Fair value of the options granted during the year was £29,106 (2009: £35,713).
Options granted have a vesting period of three years. The exercise of options will normally be conditional on the holder being in Group’s employment at the end of the vesting period.
13 BORROWINGS
Group
Company
2010
2009
2010
2009
£
£
£
£
Bank overdrafts
31,878
61,496
10,236
-
Bank and invoice discounting loans
321,936
316,624
146,260
184,846
Other borrowings
170,000
-
170,000
-
523,814
378,120
326,496
184,846
Disclosed within current liabilities
523,814
378,120
326,496
184,846
Disclosed as non-current liabilities
-
-
-
-
All borrowings are due on demand or within one year. Following the fundraising in April 2010 other borrowings of £170,000 were repaid.
Bank overdrafts and loans disclosed within current liabilities are arranged at floating rates, exposing the group to cash flow interest rate risk.
The weighted average interest rates paid were as follows:
2010
2009
%
%
Bank overdrafts
3.05
6.84
Bank and invoice discounting loans
2.22
6.20
Other borrowings
10.00
-
The Directors estimate the fair value of the Group’s borrowings as follows:
2010
2009
£
£
Bank and invoice discounting loans
318,397
314,223
Other borrowings
127,724
-
446,121
314,223
Sensitivity analysis on the level of interest rates has not been undertaken as the Directors believe that any increase / decrease in interest rates during the current and previous year would have had no material impact on the level of interest payable. The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant.
The other principal features of the Group’s borrowings are as follows:
(i) Bank overdrafts are repayable on demand. Overdrafts have been secured by a debenture over the group’s assets. The average effective interest rate on bank overdrafts approximates to 3.05% (2009: 6.84%) per annum and is determined based on 2.5% plus Lloyds TSB plc bank base rate.
(ii) Net obligations under finance leases contracts are secured on the assets concerned. The net book value of secured assets is disclosed in note 11
(iii) Bank loans are repayable on one to three months notice. This represents invoice discounting advances against trade receivables and are secured by a debenture over trade receivables. The net book value is disclosed in Note 13. The average effective rate approximates to 2.22% per annum and is determined based on 1.4 to 2% above bank base rates.
(iv) Other borrowings of £170,000 relate to a transaction undertaken whereby the Group sold a website to a related party (see note 26). The terms of the agreement are such that the Group continues to use the asset in exchange for a monthly fee. The Group has the ability to repurchase the asset within three years and based on the substance of the transaction, this has been treated as a loan. The term of the borrowing is over three years at an interest rate of 10% per annum.
For details of the bank loans in the prior year, please refer to details (i) and (ii) above
At 31 January 2010, the Group has available £nil (2009: £Nil) of undrawn committed borrowing facilities, in respect of which all conditions precedent have been met.
14. NET OBLIGATIONS UNDER FINANCE LEASES
Minimum lease payments
Group
Company
Amounts payable under finance leases
2010
£
2009
£
2010
£
2009
£
Within one year
13,112
35,322
13,112
24,650
In the second to fifth years inclusive
4,972
18,097
4,972
2,440
18,084
53,419
18,084
27,090
Less: future finance charges
(3,959)
(10,557)
(3,959)
(5,050)
Present value of lease obligations
14,125
42,862
14,125
22,040
Less: Amount due to settlement within 12
months (shown under current liabilities)
10,177
28,627
10,177
20,165
Amount due to settlement after 12 months
3,948
14,235
3,948
1,875
It is the Group’s policy to lease certain items of fixtures, fittings and equipment under finance leases. The average lease term is 3 years. For the year ended 31 January 2010, the average effective borrowing rate was 23.8%. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
15. TRADE AND OTHER PAYABLES
Group
Company
2010
2009
2010
2009
£
£
£
£
Current:
Trade payables
442,630
524,382
280,754
300,525
Taxation and social security
216,117
279,443
81,774
123,705
Other payables
26,978
37,417
3,924
22,295
Accruals
210,169
310,913
125,949
159,325
Deferred income
341,134
457,770
90,274
92,216
1,237,028
1,609,925
582,675
698,066
Non-current:
Amounts owed to subsidiary undertakings
-
-
154,611
-
The Group's financial liabilities are fairly short term in nature. In the opinion of the directors the book values equate to their fair value.
16. PROVISIONS
GROUP
Onerous lease provision
£
Total
£
At 31 January 2008
-
-
Onerous lease
61,289
61,289
31 January 2009
61,289
61,289
Onerous lease provision released
(61,289)
(61,289)
31 January 2010
-
-
The Company did not have any provisions at 31 January 2010, 31 January 2009 or 31 January 2008
17. NOTES TO THE CASH FLOW STATEMENT
Group
Company
2010
2009
2010
2009
£
£
£
£
Profit/ (Loss) before tax
36,706
(493,930)
(398,218)
(834,289)
Adjustments for:
Finance income
(1,483)
(9,696)
(923)
(177)
Finance costs
33,870
60,694
25,663
37,453
Amortisation
50,269
55,452
31,127
34,124
Depreciation of property, plant and equipment
73,380
80,910
63,909
62,636
Provisions on loans released
-
-
(111,666)
(52,122)
Onerous lease provision
(61,289)
61,289
-
-
Share option costs
12,552
35,995
12,552
35,995
Operating cash flows before movements in working capital
144,005
(209,286)
(377,556)
(716,380)
Increase in inventories
(1,791)
(205)
(1,681)
(13,578)
Decrease in receivables
151,113
416,499
75,059
227,330
Decrease in payables
(372,897)
(242,399)
(115,390)
(21,682)
CASH FLOWS USED IN OPERATING ACTIVITIES
(79,570)
(35,391)
(419,568)
(524,310)
Additions to fixtures and equipment during the year amounting to £nil (2009: £25,623) were financed by new finance leases.
18. RECONCILIATION OF NET CASH FLOW TO MOVEMENTS IN NET FUNDS AND ANALYSIS OF NET FUNDS
Group
At 1 Feb
2009
£
Cash
flow
£
At 31 Jan
2010
£
Cash in hand and at bank
-
-
-
Overdrafts
(61,496)
29,618
(31,878)
(61,496)
29,618
(31,878)
Company
At 1 Feb
2009
£
Cash
flow
£
At 31 Jan
2010
£
Cash in hand and at bank
6,298
(6,298)
-
Overdrafts
-
(10,236)
(10,236)
6,298
(16,534)
(10,236)