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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Business Direct | LSE:BDG | London | Ordinary Share | GB00B02KK416 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.365 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:9119F
Business Direct Group Plc
18 October 2007
Thursday 18 October 2007
BUSINESS DIRECT GROUP PLC
INTERIM STATEMENT
The half year to 31 July 2007 was a period of transition. This reflected the
appointment of Paul Carvell as Chief Executive in September 2006 and the related
appointments towards the end of the first quarter of new Managing Directors of
the two principal Divisions, In-Night and Specialist.
The financial results for the period are disappointing. The period started
poorly, with contract losses worth #2m p.a. and with confidence further dented
by the prolonged fundraising operation at the end of the previous financial
year. Only towards the end of the period did the financial results improve
materially. This trend has continued in the first two months of the second half,
whose financial result is confidently expected to represent a very substantial
improvement on the first half.
BUSINESS REVIEW
Business Direct is the leading specialist provider of logistics solutions to the
field based engineer/personnel market. Since February 2007, it has been
organised into three Divisions, In-Night, Specialist and Worldwide Licensing.
In-Night
The In-Night Division comprises ParcelXchange, direct engineer delivery
("In-Boot"), and direct vendor trunking/delivery to forward stock locations,
providing logistics solutions for the final mile delivery.
In the period, the In-Night Division revenue reduced to #3.21m (2006: #3.67m),
despite an increase in ParcelXchange revenue.
Encouragingly for the future, in June, a European in-bound freight solution was
launched. Operations commenced with Jungheinrich, the German mechanical handling
organisation, worth #1.4m p.a. for five years; with Siemens Medical,
manufacturer of medical equipment, worth #1.2m for two years; and with Claas,
the agricultural machinery manufacturer, worth #0.3m for one year. Additionally,
starting next month, a national P.U.D.O. (manned Pick Up Drop Off points)
network will be trialled with a leading trade distributor of building supplies.
Together, the two developments will enable Business Direct to offer a total
in-night solution, giving pre-8 a.m. delivery of UK and European freight to the
field engineering market.
Also primarily benefiting the future, in the period, Metapack, the leader in
delivery management solutions, joined DHL/Exel and TNT as strategic partners,
account management was improved and delivery cost reductions were put in place.
The appointment in April of Richard Martin as Managing Director of the In-Night
Division and the appointment of a new In-Night Division sales team can also be
expected primarily to benefit future periods.
ParcelXchange
Business Direct owns a national network of award-winning ParcelXchanges,
providing a secure deposit and collection environment, using sophisticated
technology, with end-to-end track-and-trace. ParcelXchanges are typically used
to service the field-engineer market, delivering parts into a secure locker in a
convenient location, normally at petrol stations and supermarkets.
In the period, the number of ParcelXchanges was 307 (2006: 300). The occupancy
rate increased to 53% (2006: 45%). Revenue increased to #2.2m (2006: #1.9m).
During October, Business Direct is testing, with Ebuyer (UK) Limited, a B2C
ParcelXchange solution aimed at consumers ordering goods online.
In-Boot Delivery & Direct Vendor Trunking
In-Boot is a service that supplies direct into engineers' vehicles during the
night and collects returned parts. Direct Vendor Trunking enables dedicated
delivery and collection to major vendors and repair agents on a daily basis.
Revenue from these services totalled #1.0m (2006: #1.6m).
This revenue decrease principally reflected In Boot losses incurred in the prior
year. As a result, monthly revenue in each of the five months from February to
June was substantially down on the previous year. Since July, however, monthly
revenues have been ahead, and the outlook for the rest of the year is promising.
Specialist
The principal services offered by the Specialist Division are two-man delivery,
same-day delivery, next-day delivery, technical/swap-out, and partsbank.
In the period, Specialist Division revenue increased to #4.28m (2006: #4.09m).
Following his appointment as Managing Director of the Specialist Division at the
end of March 2007, Martyn Wilson conducted a review of the business. This
resulted in an overall increase in revenues and a change to the business model,
moving from a fixed to variable cost model, resulting in further reductions in
overheads, which will lead to increased profitability.
Worldwide Licensing
Worldwide licensing comprises the leasing of ParcelXchanges internationally.
Following the appointment of Tim Houston as Managing Director of the Worldwide
Licensing Division in February 2007, the business was launched officially in
October 2007 at the Post-Expo Exhibition in Barcelona. Interest has been
expressed, ahead of expectations, by OEMs, national postal services and major
in-night providers, and trials are taking place in Ireland, Sweden, Singapore
and Taiwan. The use of lease financing means that the development of this
business should have no material adverse affect on the Balance Sheet or cash
flow.
FINANCIAL REVIEW
The figures have, for the first time, been prepared under International
Financial Reporting Standards ("IFRS") and those for 2006 have been restated on
a comparable basis. The effect of the adoption of IFRS on the Income Statement
was to increase the pre-tax loss by #0.1m (2006: nil). That on the Balance Sheet
was a reduction in equity of #0.2m (2006 #0.1m).
Following the change in year end to 31 January from 31 December, the figures
cover the six months to 31 July 2007, whilst the comparative figures are for the
six months to 30 June 2006.
On revenue 3.5% lower at #7.49m (2006: #7.76m), the gross profit was marginally
higher at #2.49m (2006: #2.48m), representing a gross margin of 33.3% (2006:
32.0%).
The operating loss of #1.47m (2006: #0.66m) reflects the increase in
administrative expenses to #3.97m (2006: #3.14m) as the Group prepared for
expansion. After virtually unchanged net finance costs of #0.12m (2006: #0.11m),
the loss before tax was #1.59m (2006: #0.77m).
The reduced loss per share of 0.91p (2006: 2.22p) reflects an increase in the
weighted average number of shares in issue to 174.3m (2006: 34.7m). There was
again a nil tax charge.
No interim dividend is proposed.
At the period end, net debt totalled #3.38m (2006: #4.39m) and total
shareholders' equity was #2.78m (2006: #0.84m). These figures take into account
placings to raise (gross) #3.00m in January 2007 and #1.25m in June 2007; the
net figures were #2.70m and #1.13m, respectively.
BOARD
In the period and as reported in the Second Interim Announcement of 28 March
2007, Martyn Wilson and Martin Wright joined the Board, the former as Managing
Director of the Specialist Division and the latter as Finance Director. In the
period, Derek O'Neill and David Whittaker resigned from the Board.
Subsequent to the period end, in September, Richard Martin, Managing Director of
the In-Night Division, was appointed an executive Director and Richard Hunt a
non-executive Director. Richard Hunt has wide experience in the logistics
industry, with leading companies, with an industry body and as an advisor to
Government.
NOMAD AND STOCKBROKER
Subsequent to the period end, in September, Arden Partners were appointed the
Company's NOMAD and broker.
OUTLOOK
Following the commercial progress made during and subsequent to the period and
the improvement in financial results experienced since July, the second half is
confidently expected to represent a very considerable improvement on the first
half. At last, profitability and cash neutrality are in sight. Whilst much
remains to be done, the Board continues to believe that Business Direct has the
potential to be a much larger business.
Russell Hodgson 18 October 2007
Chairman
Enquiries:
Business Direct Group plc 01788-821 200
Paul Carvell (Chief Executive) 07702-916 000
Martin Wright (Finance Director) 07949-079 580
Arden Partners plc 0121-423 8943
Steven Douglas
Bankside Consultants Limited
Charles Ponsonby 020-7367 8851
Group Condensed Income Statement - unaudited
Six months Thirteen months Six months
ended ended ended
31 July 31 January 30 June
2007 2007 2006
Notes #'000 #'000 #'000
------------------------------------------------------------------------------
Revenue 2 7,490 15,945 7,763
Cost of sales (4,996) (10,500) (5,281)
------------------------------------------------------------------------------
Gross profit 2,494 5,445 2,482
Administrative expenses (3,970) (6,960) (3,138)
------------------------------------------------------------------------------
Operating loss before
exceptional items (1,476) (1,515) (656)
Administrative expenses -
exceptional items 3 - (422) -
------------------------------------------------------------------------------
Operating loss after
exceptional items (1,476) (1,937) (656)
Finance revenues 1 12 -
Finance costs (115) (305) (114)
------------------------------------------------------------------------------
(114) (293) (114)
------------------------------------------------------------------------------
Loss before taxation (1,590) (2,230) (770)
Taxation 4 - - -
------------------------------------------------------------------------------
Retained loss for the
period attributable
to equity shareholders (1,590) (2,230) (770)
------------------------------------------------------------------------------
Earnings per share
Loss per share
- basic and diluted 5 (0.91p) (6.23p) (2.22p)
------------------------------------------------------------------------------
Group Condensed Balance Sheet - unaudited
As at As at As at
31 July 31 January 30 June
2007 2007 2006
Notes #'000 #'000 #'000
------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and
equipment 2,317 2,255 2,113
Goodwill 2,159 2,159 2,159
Other intangible assets 352 282 205
------------------------------------------------------------------------------
4,828 4,696 4,477
Current assets
Trade and other
receivables 3,514 3,431 3,413
Cash and cash equivalents 6 2 714 354
------------------------------------------------------------------------------
3,516 4,145 3,767
------------------------------------------------------------------------------
TOTAL ASSETS 8,344 8,841 8,244
------------------------------------------------------------------------------
LIABILITIES
Current liabilities
Borrowings 6 1,593 950 1,503
Trade and other payables 2,088 2,862 2,516
------------------------------------------------------------------------------
3,681 3,812 4,019
Non-current liabilities
Borrowings 6 1,791 1,791 3,274
Provisions 92 99 109
------------------------------------------------------------------------------
1,883 1,890 3,383
------------------------------------------------------------------------------
TOTAL LIABILITIES 5,564 5,702 7,402
SHAREHOLDERS' EQUITY
Share capital 3,169 2,751 806
Share premium account 7,609 6,893 5,142
Other reserves 184 87 26
Retained earnings (8,182) (6,592) (5,132)
------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 7 2,780 3,139 842
------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES 8,344 8,841 8,244
------------------------------------------------------------------------------
Group Condensed Cash Flow Statement - unaudited
Six months Thirteen months Six months
ended ended ended
31 July 31 January 30 June
2007 2007 2006
Notes #'000 #'000 #'000
------------------------------------------------------------------------------
Cash flows from operating
activities
Loss for the period (1,590) (2,230) (770)
Depreciation and other
non-cash items:
Depreciation 272 434 192
Amortisation of government
grants (7) (17) (8)
Share-based payments 97 61 -
Increase in operating
receivables (83) (452) (433)
(Decrease)/increase in
operating payables (774) 992 755
Finance costs 114 294 113
------------------------------------------------------------------------------
Net cash flows from
operating activities (1,971) (918) (151)
------------------------------------------------------------------------------
Cash flows from investing
activities
Payment of contingent
consideration (36) (168) (71)
Purchase of property,
plant and equipment (405) (780) (319)
------------------------------------------------------------------------------
Net cash flows from
investing activities (441) (948) (390)
------------------------------------------------------------------------------
Cash flows from financing
activities
Proceeds from borrowings 680 370 754
Repayment of borrowings
(net of debt issue costs) - (700) (200)
Interest received 1 11 5
Interest paid (115) (305) (118)
Issue of share capital 1,134 2,910 160
------------------------------------------------------------------------------
Net cash flows from financing
activities 1,700 2,286 601
------------------------------------------------------------------------------
(Decrease)/increase in cash
and cash equivalents
for the period (712) 420 60
Cash and cash equivalents
at start of period 714 294 294
------------------------------------------------------------------------------
Cash and cash equivalents at
end of period 6 2 714 354
------------------------------------------------------------------------------
Statement of Condensed Group Total Recognised Income and Expense - unaudited
Six months Thirteen months Six months
ended ended ended
31 July 31 December 30 June
2007 2007 2006
#'000 #'000 #'000
------------------------------------------------------------------------------
Loss for the period and
income and expense recognised
directly in equity (1,590) (2,230) (770)
------------------------------------------------------------------------------
Total recognised income and
expense for the period
attributable to equity shareholders (1,590) (2,230) (770)
------------------------------------------------------------------------------
Notes to the Interim Report
1 Significant accounting policies
Business Direct Group ("the Company") is a company domiciled in the United
Kingdom. The consolidated interim financial statements of the Company for the
six months ended 31 July 2007 comprise the Company and its subsidiaries
(together referred to as the "Group" or "Business Direct").
The Group's interim financial statements for the six months ended 31 July 2007
were authorised for issue by the Board of Directors on 18 October 2007.
The comparative financial information for the period ended 31 January 2007 has
been extracted from the published financial statements of the Company. The
comparative financial information for the period ended 30 June 2006 has been
extracted from the unaudited interim financial statements of Business Direct.
The consolidated interim financial information does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. These
interim results are unaudited. The statutory accounts for the period ended 31
January 2007 have been reported on by the Group's auditors and delivered to the
registrar of companies. The report of the auditors was unqualified and did not
contain the statements under section 237(2) or (3) of the Companies Act 1985.
(a) Statement of compliance
These are the Group's first IFRS condensed consolidated interim financial
statements for part of the period covered by the first IFRS annual financial
statements and IFRS1 First-time adoption of International Financial Reporting
Standards has been applied. The condensed consolidated interim financial
statements do not include all of the information required for full annual
financial statements.
An explanation of how the transition to IFRSs has affected the reported
financial position, financial performance and cash flows of the Group is
provided in note 8. This note includes reconciliations of equity and profit or
loss for comparative periods reported under UK GAAP as previously used to those
reported for those periods under IFRSs.
(b) Basis of preparation
The financial statements are presented in sterling, rounded to the nearest
thousand and are prepared on the historical cost basis.
The AIM Rules require that the next annual consolidated financial statements of
the company, for the year ending 31 January 2008 be prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU
("adopted IFRSs").
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRS as at 31 July 2007 that
are effective (or available for early adoption) at 31 January 2008, the Group's
first annual reporting date at which it is required to use adopted IFRSs. Based
on these adopted IFRSs, the directors have applied the accounting policies, as
set out below, which they expect to apply when the first annual IFRS financial
statements are prepared for the year ending 31 January 2008. However, the
adopted IFRSs that will be effective (or available for early adoption) in the
annual financial statements for the year ending 31 January 2008 are still
subject to change and to additional interpretations and therefore cannot be
determined with certainty. Accordingly, the accounting policies for that annual
period will be determined finally only when the annual financial statements are
prepared for the year ending 31 January 2008.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the condensed consolidated interim financial statements from the
date that control commences until the date that control ceases.
Acquisitions prior to 31 December 2004 are accounted for under the reverse
acquisition method as set out in International Financial Reporting Standard 3 -
Business Combinations and Mergers ("IFRS 3") in relation to the acquisition of
Business Direct Limited in 2004. This treatment does not comply with Companies
Act 1985 which requires merger accounting to be adopted. However, the directors
are of the view that the reverse acquisition method should be adopted to give a
true and fair view of the group restructuring. The financial effect of this
departure is not considered to be material to the group balance sheet.
Acquisitions since 1 January 2005 are accounted for under the acquisition
method. The results of companies acquired or disposed of are included in the
profit and loss account after or up to the date that control passes
respectively.
(ii) Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the condensed
consolidated interim financial statements.
(d) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated
depreciation (see below) and impairment losses (see accounting policy j).
When parts of an item of property, plant and equipment have different useful
lives, those components are accounted for as separate items of property, plant
and equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all of the risks and
rewards of ownership are classified as finance leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits embodied within the item
will flow to the Group and the cost of the item can be measured reliably. All
other costs are recognised in profit or loss as an expense as incurred.
(iv) Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment.
The estimated useful lives are as follows:
Leasehold buildings over the remaining life of the lease
Plant and equipment 4 years
IT equipment 4 years
Parcel Xchanges 10 years
The residual value, depreciation method and useful lives are reassessed
annually.Notes to the Interim Report
(e) Intangible assets
(i) Goodwill
All business combinations are accounted for by applying the purchase method.
Goodwill has been recognised in acquisitions of subsidiaries. In respect of
business acquisitions that have occurred since 1 January 2006, goodwill
represents the difference between the cost of the acquisition and the fair value
of the net identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is no longer amortised but is tested
annually for impairment (see accounting policy i).
(ii) Research and development
Expenditure on research activities undertaken with the prospect of gaining new
scientific or technical knowledge and understanding, is recognised in profit or
loss as an expense as incurred.
Development expenditure capitalised includes the cost of materials, direct
labour and an appropriate proportion of direct overheads. Other development
expenditure is recognised in the income statement as an expense as incurred.
Capitalised development expenditure is stated at cost less accumulated
amortisation (see below) and impairment losses (see accounting policy i).
(iii) Other intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated
at cost less accumulated amortisation (see below) and impairment losses (see
accounting policy i).
(iv) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when
it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is expensed as incurred.
(v) Amortisation
Amortisation is charged to profit or loss on a straight-line basis over the
estimated useful lives of intangible assets unless such lives are indefinite.
Goodwill and intangible assets with an indefinite useful life are tested
systematically for impairment at each annual balance sheet date. Other
intangible assets are amortised from the date that they are available for use.
(f) Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses (see
accounting policy i).
(g) Inventories
Inventories are stated at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
(h) Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash and cash equivalents for the purpose of the statement of
cash flows.
(i) Impairment
The carrying amounts of the Group's assets are reviewed at each balance sheet
date to determine whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in profit or loss unless the asset is recorded at a revalued amount
in which case it is treated as a revaluation decrease.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the
cash-generating unit (group of units) and then, to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
Goodwill will be reviewed for impairment at 31 January 2008.
When a decline in the fair value of an available-for-sale financial asset has
been recognised directly in equity and there is objective evidence that the
asset is impaired, the cumulative loss that had been recognised directly in
equity is recognised in profit or loss even though the financial asset has not
been derecognised. The amount of the cumulative loss that is recognised in
profit or loss is the difference between the acquisition cost and current fair
value, less any impairment loss on that financial asset previously recognised in
profit or loss.
(i) Calculation of recoverable amount
The recoverable amount of assets is the greater of their net selling price 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 an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
(ii) Reversals of impairment
An impairment loss in respect of a held-to-maturity security or receivable
carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment
loss was recognised.
An impairment loss in respect of an investment in an equity instrument
classified as available-for-sale is not reversed through profit or loss. If the
fair value of a debt instrument classified as available-for-sale increases and
the increase can be related objectively to an event occurring after the
impairment loss was recognised in profit or loss, then the impairment loss is
reversed, with the amount of the reversal recognised in profit or loss.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
(j) Exceptional items
The Group presents as exceptional items on the face of the income statement
those material items of income and expenditure which because of their nature and
/or expected infrequency of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the elements of
financial performance in the period, so as to facilitate comparison with prior
periods.
(k) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in profit or loss over the
period of the borrowings on an effective interest basis.
(l) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in profit or loss as incurred.
(ii) Share-based payment transactions
The share option programme allows Group employees to acquire shares of the
Company. The fair value of options granted is recognised as an employee expense
with a corresponding increase in equity. The fair value is measured at grant
date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted
is measured using a Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest
except where forfeiture is only due to share prices not achieving the threshold
for vesting.
(m) Revenue
(i) Goods sold and services rendered
Revenue represents the amounts receivable for services provided in the ordinary
course of business less trade discounts, returns and allowances, VAT and other
sales related taxes.
The Group records transactions as sales when the performance of services has
taken place in accordance with the terms of trade.
No revenue is recognised if there are significant uncertainties regarding
recovery of the consideration due, associated costs or the possible return of
goods.
Licensing income is recognised at the point when monies are received.
There is no seasonality or cyclicality which impacts on interim operations.
(n) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in profit or loss on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in profit or loss as an integral part of the total lease expense.
(ii) Finance costs
Financing costs comprise interest payable on borrowings calculated using the
effective interest rate method, interest receivable on funds invested, dividend
income, foreign exchange gains and losses, and gains and losses on hedging
instruments that are recognised in profit or loss.
Interest income is recognised in profit or loss as it accrues, using the
effective interest method. The interest expense component of finance lease
payments is recognised in profit or loss using the effective interest rate
method.
(o) Income tax
Income tax on the profit or loss for the periods presented comprises current and
deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill on initial
recognition for tax purposes, the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit, and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
(p) Deferred government grants
Government grants on capital expenditure are credited to deferred income and
released to the profit and loss account by equal annual measurements over the
expected useful life of the asset to which they relate.
Grants of a revenue nature are credited to the profit and loss account in the
period to which they relate.
(q) Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
(r) Going concern
The group has incurred losses of #1,590,000 for the period (2006: #770,000). The
directors have prepared financial projections covering the three years ending 31
January 2010 which indicate that the group will continue to operate within the
facilities arranged with its bankers. On this basis, the directors have adopted
the going concern basis in the preparation of these financial statements.
2 Segmental analysis
The Group's business segments are the primary basis of segment reporting. The
business segment reporting format reflects the Group's management and internal
reporting structure.
For management purposes the Group is currently organised into three business
divisions, In Night, Specialist and Worldwide Licensing. These divisions are the
basis on which the Group reports its primary segment information.
Period ended 31 July 2007
------------------------------------------------------------------------------
Worldwide
Segment In Night Specialist Licensing Total
------------------------------------------------------------------------------
Revenue 3,211 4,279 - 7,490
Operating loss
pre-exceptional items (745) (655) (76) (1,476)
Exceptional items - - - -
------------------------------------------------------------------------------
Operating loss (745) (655) (76) (1,476)
------------------------------------------------------------------------------
Finance costs (114)
Loss for the period from
continuing operations (1,590)
------------------------------------------------------------------------------
Thirteen months ended 31 January 2007
------------------------------------------------------------------------------
Worldwide
Segment In Night Specialist Licensing Total
------------------------------------------------------------------------------
Revenue 7,519 8,426 - 15,945
Operating loss
pre-exceptional items (841) (674) - (1,515)
Exceptional items - (422) - (422)
------------------------------------------------------------------------------
Operating loss (841) (1,096) - (1,937)
------------------------------------------------------------------------------
Finance costs (293)
------------------------------------------------------------------------------
Loss for the period from
continuing operations (2,230)
------------------------------------------------------------------------------
Period ended 30 June 2006
------------------------------------------------------------------------------
Worldwide
Segment In Night Specialist Licensing Total
------------------------------------------------------------------------------
Revenue 3,670 4,093 - 7,763
Operating (loss)/profit
pre-exceptional items (427) (229) (656)
Exceptional items - - - -
------------------------------------------------------------------------------
Operating loss (427) (229) - (656)
------------------------------------------------------------------------------
Finance costs (114)
------------------------------------------------------------------------------
Loss for the period from
continuing operations (770)
------------------------------------------------------------------------------
3 Exceptional items
All exceptional items are included within administrative expenses.
Period ended Period ended Period ended
31 July 31 January 30 June
2007 2007 2006
#'000 #'000 #'000
------------------------------------------------------------------------------
Restructuring costs - (422) -
------------------------------------------------------------------------------
4 Taxation
The Group has unrelieved tax losses available to carry forward and set against
future profits totalling #7.7million.
5 Loss per share
The calculation of loss per share is based on losses of #1,590,000 (31 January
2007: #2,230,000, 30 June 2006: #770,000) and 174,333,582 shares (31 January
2007: 35,775,917, 30 June 2006: 34,697,976), being a daily average of shares in
issue during the period. The share options are considered non-dilutive due to
the loss in the period.
6 Net borrowings - analysis of movement in net borrowings
Period ended 31 July 2007 At At
1 February Non-cash 31 July
2007 Cash flow changes 2007
#'000 #'000 #'000 #'000
-------------------------------------------------------------------------------
Cash at bank and in hand 714 (712) - 2
Borrowings - current (950) (643) - (1,593)
Borrowings - non-current (1,791) - - (1,791)
-------------------------------------------------------------------------------
Total (2,027) (1,355) - (3,382)
-------------------------------------------------------------------------------
Period ended 31 January 2007 At At
1 January Non-cash 31 January
2006 Cash flow changes 2007
#'000 #'000 #'000 #'000
-------------------------------------------------------------------------------
Cash at bank and in hand 294 420 - 714
-------------------------------------------------------------------------------
Borrowings - current (814) (202) 66 (950)
-------------------------------------------------------------------------------
Borrowings - non-current (3,436) 700 945 (1,791)
-------------------------------------------------------------------------------
Total (3,956) 918 1,011 (2,027)
-------------------------------------------------------------------------------
Period ended 30 June 2006 At At
1 January Non-cash 30 June
2006 Cash flow changes 2006
#'000 #'000 #'000 #'000
-------------------------------------------------------------------------------
Cash at bank and in hand 294 60 - 354
Borrowings - current (888) (570) (6) (1,464)
Borrowings - non-current (3,362) 87 - (3,275)
-------------------------------------------------------------------------------
Total (3,956) (423) (6) (4,385)
-------------------------------------------------------------------------------
7 Reconciliation of movements in equity
Share
based
Share Share payment Retained Total
capital premium reserve earnings equity
#'000 #'000 #'000 #'000 #'000
-------------------------------------------------------------------------------
Balance at 30 June 2006 806 5,142 26 (5,132) 842
Total recognised income
and expense - - - (1,460) (1,460)
Issue of shares 1,945 1,751 - - 3,696
Equity settled share-based
payment transactions - - 61 - 61
-------------------------------------------------------------------------------
Balance at 31 January 2007 2,751 6,893 87 (6,592) 3,139
Total recognised income
and expense - - - (1,590) (1,590)
Issue of shares 418 716 - - 1,134
Equity settled share-based
payment transactions - - 97 - 97
-------------------------------------------------------------------------------
Balance at 31 July 2007 3,169 7,609 184 (8,182) 2,780
-------------------------------------------------------------------------------
8 Explanation of transition to IFRSs
As stated in note 1, these are the Group's first condensed consolidated interim
financial statements for part of the period covered by the first IFRS annual
consolidated financial statements prepared in accordance with IFRSs.
In preparing its opening IFRS balance sheet comparative information for the six
months ended 30 June 2006 and financial statements for the period ended 31
January 2007, the Group has adjusted amounts reported previously in financial
statements prepared in accordance with previous GAAP.
An explanation of how the transition from previous GAAP to IFRSs has affected
the Group's financial position, financial performance and cash flows is set out
in the following tables and the notes that accompany the tables.
Reconciliation of equity
1 January 2006 31 January 2007
Previous GAAP Effect of transition IFRSs Previous GAAP Effect of transition IFRSs
to IFRSs to IFRSs
#'000 #'000 #'000 #'000 #'000 #'000
-----------------------------------------------------------------------------------------------------------------
Assets
Property, plant and
equipment 2,191 (156) (a) 2,035 2,537 282 (a) 2,255
Goodwill 2,159 - 2,159 1,968 191 (b) 2,159
Other intangible
assets - 156 (a) 156 282 (a) 282
-----------------------------------------------------------------------------------------------------------------
Total non-current
assets 4,350 - 4,350 4,505 191 4,696
-----------------------------------------------------------------------------------------------------------------
Trade and other
receivables 2,980 - 2,980 3,431 - 3,431
Cash and cash
equivalents 294 - 294 714 - 714
-----------------------------------------------------------------------------------------------------------------
Total current assets 3,274 - 3,274 4,145 - 4,145
-----------------------------------------------------------------------------------------------------------------
Total assets 7,624 - 7,624 8,650 191 8,841
-----------------------------------------------------------------------------------------------------------------
Reconciliation of equity
1 January 2006 31 January 2007
Previous GAAP Effect of transition IFRSs Previous GAAP Effect of transition IFRSs
to IFRSs to IFRSs
#'000 #'000 #'000 #'000 #'000 #'000
-----------------------------------------------------------------------------------------------------------------
Equity
Issued capital 763 - 763 2,751 - 2,751
Share premium 5,025 - 5,025 6,893 - 6,893
Reserves - 20 (c) 20 68 19 (c) 87
Retained earnings (4,342) 20 (c) (4,362) (6,745) 153 (6,592)
-----------------------------------------------------------------------------------------------------------------
Total equity 1,446 - 1,446 2,967 172 3,139
-----------------------------------------------------------------------------------------------------------------
Liabilities
Interest-bearing
loans and borrowings 3,362 - 3,362 1,790 - 1,790
Provisions 116 - 116 100 - 100
-----------------------------------------------------------------------------------------------------------------
Total non-current
liabilities 3,478 - 3,478 1,890 - 1,890
-----------------------------------------------------------------------------------------------------------------
Interest-bearing
loans and borrowings 200 - 200 950 - 950
Trade and other payables 2,500 - 2,500 2,843 19 (d) 2,862
-----------------------------------------------------------------------------------------------------------------
Total current
liabilities 2,700 - 2,700 3,793 19 3,812
-----------------------------------------------------------------------------------------------------------------
Total liabilities 6,178 - 6,178 5,683 19 5,702
-----------------------------------------------------------------------------------------------------------------
Total equity and
liabilities 7,624 - 7,624 8,650 191 8,841
-----------------------------------------------------------------------------------------------------------------
Reconciliation of loss for period ended 31 January 2007
Previous Effect of IFRSs
GAAP transition
to IFRSs
#'000 #'000 #'000
------------------------------------------------------------------------------
Revenue 15,945 - 15,945
Cost of sales (10,500) - (10,500)
------------------------------------------------------------------------------
Gross profit 5,445 - 5,445
Administrative expenses (7,555) 173 (e) (7,382)
------------------------------------------------------------------------------
Operating loss before financing costs (2,110) 173 (1,937)
Net finance costs (293) - (293)
------------------------------------------------------------------------------
Loss before tax (2,403) 173 (2,230)
Income tax expense - - -
------------------------------------------------------------------------------
Loss for the period (2,403) 173 (2,230)
------------------------------------------------------------------------------
Basic and diluted loss per share (6.23p)
------------------------------------------------------------------------------
Notes to the reconciliation of equity
An explanation of how the transition from UK GAAP to IFRS has affected the
Group's financial position and financial performance is set out below:
(a) IAS 38 "Intangible assets" requires that internally generated software costs
are included within intangible fixed assets.
(b) Under IFRS 3 "Business combinations" goodwill arising on acquisitions made
since 1 January 2006 is not subject to amortisation but is tested for impairment
annually and whenever there is an indication that it may be impaired. Goodwill
was tested for impairment at 31 July 2007 and no impairment adjustments were
identified. Non-amortisation of goodwill results in a net increase in pre tax
profits of #15,000 for the period ended 31 July 2007 and #191,000 for the period
ended 31 January 2007. IFRS 3 requires an acquirer to recognise separately at
the acquisition date any intangible assets which meet the definition of an
intangible asset in IAS 38 "Intangible Assets" providing its fair value can be
measured reliably.
(c) IFRS 2 - Share-based Payment, requires that an expense for share-based
payments be recognised in the income statement based on the fair value,
determined by reference to appropriate option pricing models, on the date of
grant. This expense is recognised over the vesting period of the options. The
Group has granted share-based payments in 2006 and 2007.
The adoption of IFRS 2 is equity-neutral for equity-settled transactions. The
expense recognised for the consumption of employee services received as
consideration for share options granted will be deductible for tax purposes when
the share options are exercised.
The company adopted FRS 20 for the period ended 31 January 2007. The increased
charge for the six months ended 31 July 2007 is a result of new share options
granted in the period.
(d) IAS 19 "Employee benefits" requires that provision is made for compensated
absences such as annual leave. An amount of #19,000 was charged for the period
ended 31 January 2007.
(e) #'000
Reversal of goodwill amortisation 191
Holiday pay accrual (19)
Additional IFRS 2 charge 1
------
173
------
This interim report is being sent to all shareholders and is available to the
public from the Company's registered office at Xchange House, 1 Great Central
Way, Rugby, CV21 3XH
Registered Number 5125353
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KDLFFDBBBFBX
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