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Share Name Share Symbol Market Type Share ISIN Share Description
Coretx Hldgs LSE:COR London Ordinary Share GB00B4NJ4984 ORD 2.5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 29.75 29.50 30.00 0.00 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 43.4 -4.1 -1.9 - 57

Cupid PLC Half Yearly Report

24/09/2013 7:00am

UK Regulatory (RNS & others)


TIDMCUP

RNS Number : 6984O

Cupid PLC

24 September 2013

 
 Date:              24 September 2013 
 On behalf of:      Cupid plc ('Cupid', the 'Company' or the 'Group') 
 Embargoed until:   0700hrs 
 

Cupid plc

Half Yearly Report

Cupid plc (AIM: CUP), the internet dating operator, is pleased to announce its half year results for the six months ended 30 June 2013 ("H1 2013").

The sale of the casual assets(4) of the business for GBP45.1m took place on 15 July 2013, after the period end and therefore the H1 2013 results include the trading performance of the casual assets and exclude the gain on the sale. The results do however show the financial performance of the continuing(5) and discontinued(6) businesses separately.

Financial highlights

   --      Revenues increased by 12.4% to GBP43.4m (H1 2012: GBP38.6m) 
   --      Adjusted EBITDA(1) of GBP2.6 m (H1 2012: GBP5.9m) 
   --      Revenues from Established Markets(2) increased by 12% to GBP17.8m (H1 2012: GBP16.0m) 
   --      Revenues from New Markets(3) increased by 9% to GBP24.1m (H1 2012: GBP22.2m) 
   --      Marketing spend increased by 18% to GBP27.4m (H1 2012: GBP23.2m) 
   --      Gross profit margin of 17% (H1 2012: 22%) 
   --      Adjusted diluted Earnings per Share of 0.80p (H1 2012: 5.13 p) 
   --      Strong cash position of GBP12.7m at 30 June 2013 (31 Dec 2012: GBP14.1m) 

Post period highlights and outlook

-- Successful disposal of casual assets completed in July 2013 for GBP45.1m further strengthens the balance sheet

   --      Robust continuing business which is expected to return to growth and profitability in 2014 
   --      Reinvesting in continuing business based on product quality and customer experience 
   --      Completed consumer research project as basis for brand investment 
   --      Cost cutting programme being implemented to align resources with continuing business 
   --      2013 dividend expected to be maintained at 2012 level 

(1) Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, share based payment charges, exceptional costs and acquisition related costs.

(2) Established Markets are the UK, Australia, New Zealand, South Africa and Ireland.

(3) New Markets are mainly the USA, Canada, France, Italy, Spain, Germany and any newly entered countries.

(4) The casual assets consist of a portfolio of brands based around BeNaughty, Flirt, CheekyLovers, WildBuddies, Click&Flirt and QuickFlirt and their international equivalents.

(5) Continuing business is the trading of the dating assets retained post disposal. These include Cupid, GirlsDateForFree, UniformDating, MatureDatingUK, IndianDating, Serencontrer DatingforParents and Canoodle.

(6) Discontinued business refers to the casual assets.

Commenting on the results, Bill Dobbie, Chief Executive of Cupid plc, said:

"We have had a number of distractions in the first half of 2013, however, we have commenced a streamlining and refocusing of the business, which will provide us with an excellent opportunity going forward to take more of the opportunities the sector has to offer. We have a robust business and strong brands upon which to build.

The remainder of 2013 will be a transitional period as we complete the separation of the divested casual assets and reshape our continuing business for the future. We have a strong, differentiated strategy in place, which we firmly believe will benefit both shareholders and product users, and are focused on delivering this. We are now reinvesting our considerable experience and expertise in developing our portfolio of brands based around a distinctive positioning and the quality of the customer experience. We expect to deliver a stronger financial performance in 2014 from the foundation of a leaner more focused organisation."

For further information please contact:

 
 Cupid plc                                  Tel: +44 (0)131 526 3600 
 Bill Dobbie, CEO 
  Niall Stirling, CFO 
 
 Peel Hunt (Nominated Adviser and Broker)   Tel: +44 (0)207 418 8900 
 Richard Kauffer 
  Daniel Harris 
 
 Redleaf Polhill                            Tel: +44 (0)207 382 4730 
 Rebecca Sanders-Hewett                     cupid@redleafpr.com 
  Dwight Burden 
  David Ison 
 

Notes to Editors

-- Cupid plc listed on AIM in June 2010 and is an international provider of online dating services operating market leading brands.

-- Cupid plc offers a wide variety of online dating services allowing members to interact with each other and access the content available on the Group's websites. These websites are intended to appeal to dating users of diverse ages, cultures and social interest groups. The Group's most heavily visited websites include www.cupid.com, www.uniformdating.com and www.girlsdateforfree.com. The Group also promotes niche brands such as www.datingforparents.com, www.indiandating.com and www.maturedating.co.uk.

-- Further information on the Company can be found at www.cupidplc.com.

Chief Executive Officer's Statement

The future remains positive for online dating. On both sides of the Atlantic and in developing economies we see continuing evidence of growth fuelled by an ever-growing social acceptance of the offering and the ubiquity of mobile. The UK market is now estimated at GBP170m, with over 5m people using online dating and one in five dates beginning online. In the US it is estimated that a third of marriages start online.

The first half of 2013 has undoubtedly been a challenging period for Cupid, but we emerge from that period with renewed focus and a more tightly defined strategy. Our business model and operating practices were criticised publicly and, as was later categorically proven by an independent review (announced 1 July 2013), without substance. This was a deeply frustrating experience, but the business has gained strength from it. However, this, coupled with the work required to achieve the successful disposal of our casual assets, was a significant drain on the resources of our management team.

Review of the first half

The sale of the casual assets for GBP45.1m was announced on 15 July 2013, after the period end. Therefore the H1 2013 results include the trading performance of the casual assets and exclude the impact of the sale. The second half results will include a substantial gain on the disposal of the casual assets.

I am pleased to announce that the interim results are marginally ahead of guidance provided in our last trading update in June 2013, with an Adjusted EBITDA of GBP2.6m.

Financial results of continuing business

Following the disposal of the casual assets the following results illustrate the performance of the continuing business:

   --      Revenue of GBP16.5m, an increase of 32% (H1 2012: GBP12.4m). 
   --      AGL and Uniform Dating contributed new revenue of GBP4.3m. 

-- Marketing investment increased to GBP9.4m (H1 2012: GBP5.5m). Of this GBP3.1m was invested in AGL and Uniform Dating, with an increase of 15% on the underlying business.

-- Other direct costs increased by 43% to GBP3.6m (H1 2012: GBP2.5m) due to higher volumes of traffic, an expanded customer support team, investment in product tools and the inclusion of AGL and Uniform Dating.

   --      Gross profit of GBP3.5m (H1 2012: GBP4.4m) giving a margin of 21%. 

-- Administrative expenses increased to GBP4.0m, GBP0.8m of which is non-recurring, as we expanded our operations overseas and made provision against non-recoverable debtors.

-- Strong net cash position of GBP12.7m at 30 June 2013 (31 Dec 2012: GBP14.1m) after share buy-back of GBP3m.

Disposal of casual assets

Earlier this year we took the strategic decision to sell the casual assets. It was clear that they did not fit well with our mainstream sites, where customers are demanding increasingly higher quality products and levels of service. We believe that focusing on meeting these needs will generate better longer-term returns and sustainable value for our shareholders, as well as providing what our customers want. Additionally it was evident that the casual business was much less attractive to public company investors. Having created an opportunity to divest, we achieved a good price for the business based on market comparables.

On 15 July we successfully completed the sale of this portion of our business to Grendall Investments for GBP45.1m. The disposal strengthens our balance sheet considerably. Deferred consideration of GBP28.5m is due in monthly instalments (of which GBP2.5m is due in 2013, GBP7m in 2014, GBP10m in 2015 and GBP9m in 2016). At the date of disposal both mainstream and casual assets were held in one database and operating platform. It is anticipated that the separation of the database and platform will be completed by the end of Q1 2014.

Cupid following the disposal

The successful disposal of the casual assets gives us the resources and focus to execute our strategy for the growth of our retained business. The drivers of that success will be operational effectiveness (based on our proven and scalable platform and skill base); the quality of our product offering and how well we serve our customers; a highly differentiated mainstream dating product; a number of strong niche offerings; and well targeted acquisitions to broaden our base and fill gaps in our capability.

Our business is now focused on four key product areas; Cupid (Cupid.com and related mainstream sites), Uniform Dating, Mature Dating and a network of niche sites. Our six key markets are the UK, US, France, Canada, Australia and Germany which together account for 90% of our monthly revenue.

Our priorities over the next six to nine months are to successfully complete the separation of the casual assets and to complete the reshaping of the retained businesses to deliver more profitable growth. We will realign the cost base to accurately reflect the scale of the continuing business and, to that end, a cost reduction programme is already underway. This will support reinvestment in our brands and the product offering and will generate positive returns for shareholders. In addition this will allow us to position ourselves to leverage our skills and assets in other related attractive markets.

To help successfully implement the strategy, the Group is keen to improve the strength in depth of employees in key areas of our operations and we have recruited a new senior management team in the UK as a first step in this process.

Our brands

The consumer research we undertook earlier this year clearly illustrated that our current and potential members are looking for a relevant and differentiated product, whether that be in the mainstream or in niche offerings. Quality of service, a feeling of security and a sense of community are important to them.

In the months following the completion of the disposal we have been severing all marketing links with the casual sites and preparing to relaunch our brands with a new personality and a brand promise that sets out what consumers should expect from us. Severing the casual links will have a negative impact on our revenue in the short term but will allow us to build a strong, principled business with good long term financial merits. Each of the core areas, Cupid.com, Uniform Dating and a revitalised mature product, will feature a new brand image and enhancements to content and product features that will create a clearly defined proposition, higher levels of engagement and ultimately a higher customer life time value. We also expect to broaden our marketing mix; we will place less emphasis on online affiliate-based marketing and more on offline marketing, PR and more effective SEO (search engine optimisation). We will also produce a new set of KPIs that allows us to track the quality as well as quantity of our membership.

Operations

The Group has invested heavily to improve the customer experience. In 2013 we have enhanced the measures we take to detect and deter scammers by requiring added levels of verification. We have also pioneered what we call "Safe Mode" which allows members to restrict their communication to other fully verified members. The Group has invested in building enhanced anti-fraud measures. We have also upgraded our terms and conditions to make them more transparent and to encourage a positive opt in from consumers. We are fully committed to making online dating safer, simpler, fairer and trusted.

Dividend

Against this background I am pleased to announce that the directors have decided to maintain the 2013 dividend at the 2012 level. Accordingly, when the full year results are announced, we anticipate declaring a dividend of 3p per share, to be paid in the summer of 2014.

Looking ahead

We have a busy period ahead of us but I am confident that we remain well positioned to become a significant player in the growing online dating market. The Group is well funded; it has a flexible and accomplished team and new management with additional skills being added in the UK. We are now reinvesting in a business based on product quality and customer experience. Building on these robust foundations I am confident that the continuing business will deliver growth and profitability in 2014 and our balance sheet will allow us to investigate more growth opportunities in our dating business and related online activities.

Bill Dobbie

Chief Executive Officer

Cupid plc

Interim results FY2013

Consolidated interim statement of comprehensive income

for the six months ended 30 June 2013

Unaudited

 
                                   Continuing          Discontinued                Total   Continuing   Discontinued      Total 
                     Notes         operations            operations                        operations     operations 
                                      H1 2013               H1 2013                   H1      H1 2012        H1 2012    H1 2012 
                                       GBP000                GBP000                 2013       GBP000         GBP000     GBP000 
                                                                                  GBP000 
 
 Revenue            2                  16,454                26,906               43,360       12,435         26,179     38,614 
 Cost of sales                       (12,958)              (23,095)             (36,053)      (8,047)       (21,979)   (30,026) 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 
 Gross profit                           3,496                 3,811                7,307        4,388          4,200      8,588 
 
 Administrative 
  expenses                            (4,034)                 (645)              (4,679)      (2,294)          (422)    (2,716) 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 
 Adjusted EBITDA                        (538)                 3,166                2,628        2,094          3,778      5,872 
 
 Depreciation of 
  plant 
  and equipment                         (200)                 (164)                (364)        (123)           (97)      (220) 
 Amortisation of 
  intangible 
  assets                              (1,298)               (2,984)              (4,282)        (495)        (1,066)    (1,561) 
 Acquisition and 
  restructuring 
  costs                                  (50)                     -                 (50)        (280)              -      (280) 
 Exceptional 
  costs             3                   (389)                 (254)                (643)            -              -          - 
 Share based 
  payments                               (71)                  (30)                (101)        (130)           (56)      (186) 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 Operating 
  (loss)/profit                       (2,546)                 (266)              (2,812)        1,066          2,559      3,625 
 Finance income                            43                     -                   43           25              -         25 
 (Loss)/ profit 
  before 
  taxation                            (2,503)                 (266)              (2,769)        1,091          2,559      3,650 
 Taxation 
  credit/(charge)   5                     635                     1                  636        (114)          (632)      (746) 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 
   (Loss)/profit 
   for 
   the period                         (1,868)                 (265)              (2,133)          977          1,927      2,904 
 Other 
 comprehensive 
 income: 
 Foreign exchange 
  translation 
  differences 
  - equity 
  accounted 
  investments                             117                     -                  117            -              -          - 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 (Loss)/profit 
  for 
  the period and 
  total 
  comprehensive 
  income 
  all 
  attributable 
  to equity 
  holders 
  of the parent                       (1,751)                 (265)              (2,016)          977          1,927      2,904 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 
 Basic and 
  diluted 
  earnings per 
  share               7 
 Basic (p per 
  share)                               (2.23)                (0.32)            (2.55)            1.20           2.37       3.57 
 Diluted (p per 
  share)                               (2.23)                (0.32)            (2.55)            1.17           2.31       3.48 
-----------------  -------  -----------------  --------------------  -------------------  -----------  -------------  --------- 
 

Cupid plc

Interim results FY2013

Consolidated interim balance sheet at 30 June 2013

Unaudited

 
                                             H1 2013       H1 2012              FY 2012 
                                    Notes                (restated 
                                                         - note 1) 
                                              GBP000        GBP000               GBP000 
--------------------------------  -------  ---------  ------------  ------------------- 
 Non-current assets 
 Intangible assets                 6           6,682        13,082               24,674 
 Plant and equipment                             709         1,017                1,062 
--------------------------------  -------  ---------  ------------  ------------------- 
                                               7,391        14,099               25,736 
--------------------------------  -------  ---------  ------------  ------------------- 
 Current assets 
 Trade and other receivables       8           2,451        11,028               10,481 
 Taxation                                         38             -                    - 
 Cash and cash equivalents                    12,716         7,666               14,127 
 Assets classified as held for 
  sale                             10         20,441             -                    - 
--------------------------------  -------  ---------  ------------  ------------------- 
                                              35,646        18,694               24,608 
--------------------------------  -------  ---------  ------------  ------------------- 
 
 Total assets                                 43,037        32,793               50,344 
--------------------------------  -------  ---------  ------------  ------------------- 
 
 Non-current liabilities 
 Other interest-bearing loans                      -             2                    - 
  and borrowings 
 Deferred taxation                               713           249                2,506 
--------------------------------  -------  ---------  ------------  ------------------- 
                                                 713           251                2,506 
--------------------------------  -------  ---------  ------------  ------------------- 
 Current liabilities 
 Trade and other payables                      3,901         7,444               12,913 
 Other interest-bearing loans 
  and borrowings                                   2            21                   13 
 Taxation                                          -           579                1,417 
 Liabilities classified as held 
  for sale                         10         10,256             -                    - 
--------------------------------  -------  ---------  ------------  ------------------- 
                                              14,159         8,044               14,343 
--------------------------------  -------  ---------  ------------  ------------------- 
 
 Total liabilities                            14,872         8,295               16,849 
--------------------------------  -------  ---------  ------------  ------------------- 
 
   Net assets                                 28,165        24,498               33,495 
--------------------------------  -------  ---------  ------------  ------------------- 
 
 Equity attributable to equity 
  holders of the parent 
 Called up share capital           9           2,085         2,045                2,127 
 Share premium account                        18,026        13,255               18,021 
 Share options reserve                         1,113         1,321                1,447 
 Foreign currency translation 
  reserve                                      (256)             6                (373) 
 Merger reserve                              (1,261)       (1,261)              (1,261) 
 Capital redemption reserve                       42             -                    - 
 Retained earnings                             8,200         8,916               13,318 
--------------------------------  -------  ---------  ------------  ------------------- 
 Equity attributable to the 
  equity holders of the parent                27,949        24,282               33,279 
--------------------------------  -------  ---------  ------------  ------------------- 
 Non-controlling interests                       216           216                  216 
--------------------------------  -------  ---------  ------------  ------------------- 
 
   Total equity                               28,165        24,498               33,495 
--------------------------------  -------  ---------  ------------  ------------------- 
 

Cupid plc

Interim results FY2013

Consolidated interim statement of changes in equity for the six months ended 30 June 2013

Unaudited

 
                             Share      Share      Share    Retained        Foreign     Merger       Capital 
                           capital    premium    options    earnings       currency    reserve    redemption     Total 
                                                 reserve                translation                  reserve 
                                                                            reserve 
                            GBP000     GBP000     GBP000      GBP000         GBP000     GBP000        GBP000    GBP000 
-----------------------  ---------  ---------  ---------  ----------  -------------  ---------  ------------  -------- 
 At 1 January 2012 
  (restated - note 
  1)                         2,028     13,183      1,161       7,849              -    (1,261)             -    22,960 
 Share based payments            -          -        186           -              -          -             -       186 
 Retained profit 
  for period                     -          -          -       2,904              -          -             -     2,904 
 Dividend                        -          -          -     (1,837)              -          -             -   (1,837) 
 Issue of ordinary 
  shares                        17         72          -           -              -          -             -        89 
 Deferred tax on 
  share based payments           -          -       (26)           -              -          -             -      (26) 
 Exchange rate 
  differences                    -          -          -           -              6          -             -         6 
-----------------------  ---------  ---------  ---------  ----------  -------------  ---------  ------------  -------- 
 
 At 30 June 2012             2,045     13,255      1,321       8,916              6    (1,261)             -    24,282 
  (restated - note 
   1) 
 Share based payments            -          -        242           -              -          -             -       242 
 Retained profit 
  for period                     -          -          -       4,402              -          -             -     4,402 
 Issue of ordinary 
  shares                        82      4,766          -           -              -          -             -     4,848 
 Deferred tax on 
  share based payments           -          -      (116)           -              -          -             -     (116) 
 Exchange rate 
  differences                    -          -          -           -          (379)          -             -     (379) 
-----------------------  ---------  ---------  ---------  ----------  -------------  ---------  ------------  -------- 
 
 At 31 Dec 2012              2,127     18,021      1,447      13,318          (373)    (1,261)             -    33,279 
 Share based payments            -          -        101           -              -          -             -       101 
 Loss for period                 -          -          -     (2,133)              -          -             -   (2,133) 
 Options exercised               -          5          -           -              -          -             -         5 
 Share buybacks               (42)          -          -     (2,985)              -          -            42   (2,985) 
 Deferred tax on 
  share based payments           -          -      (435)           -              -          -             -     (435) 
 Exchange rate 
  differences                    -          -          -           -            117          -             -       117 
-----------------------  ---------  ---------  ---------  ----------  -------------  ---------  ------------  -------- 
 At 30 June 2013             2,085     18,026      1,113       8,200          (256)    (1,261)            42    27,949 
-----------------------  ---------  ---------  ---------  ----------  -------------  ---------  ------------  -------- 
 

Cupid plc

Interim results FY2013

Consolidated interim cashflow statement for the six months ended 30 June 2013

Unaudited

 
                                           H1 2013    H1 2012    FY 2012 
                                            GBP000     GBP000     GBP000 
---------------------------------------  ---------  ---------  --------- 
 
 (Loss)/ profit for the period             (2,133)      2,904      7,306 
 Amortisation and depreciation               4,646      1,781      5,891 
 Financial income                             (43)       (25)       (61) 
 Decrease/ (increase) in trade 
  receivables                                3,550    (1,417)         36 
 Increase in trade payables                  2,190      1,986      1,852 
 Equity settled share-based payment 
  expenses                                     101        186        428 
 Taxation                                    (636)        746      1,925 
 Other reserve movements                       117          -      (373) 
 Cash flow from operations                   7,792      6,161     17,004 
 Taxation paid                             (1,408)      (762)    (1,901) 
 Net cash from operating activities          6,384      5,399     15,103 
---------------------------------------  ---------  ---------  --------- 
 
   Cash flow from investing activities 
 Interest received                              43         25         61 
 Acquisition of plant and equipment          (602)      (566)      (835) 
 Acquisition of subsidiary/balance 
  of consideration, net of cash 
  acquired                                 (2,300)          -    (5,275) 
 Capitalised development expenditure       (1,873)    (1,256)    (2,822) 
 Acquisition of other intangible 
  assets                                      (72)    (1,954)    (2,961) 
---------------------------------------  ---------  ---------  --------- 
 Net cash used in investing activities     (4,804)    (3,751)   (11,832) 
---------------------------------------  ---------  ---------  --------- 
 
 Cash flows from financing activities 
 (Share buyback)/ Issue of shares 
  (net)                                    (2,980)         89      4,937 
 Payment of finance lease liabilities         (11)       (11)       (21) 
 Dividends paid                                  -    (1,837)    (1,837) 
---------------------------------------  ---------  ---------  --------- 
 Net cash used in financing activities     (2,991)    (1,759)      3,079 
---------------------------------------  ---------  ---------  --------- 
 
 Net (decrease)/ increase in 
  cash and cash equivalents                (1,411)      (111)      6,350 
 Cash and cash equivalents at 
  1 January 2013                            14,127      7,777      7,777 
 
 Cash and cash equivalents at 
  30 June 2013                              12,716      7,666     14,127 
---------------------------------------  ---------  ---------  --------- 
 

The net cash flows attributable to the operating, investing and financing activities of discontinued operations are presented in note 10.

Cupid plc

Interim results FY2013

Notes to the accounts

1. Basis of preparation

The condensed interim financial statements set out above contain the interim financial information of Cupid plc (the "Company") for the six month period ended 30 June 2013.

These interim financial statements were authorised for issue by the Board of Directors on 24 September 2013. A copy of this half-yearly financial report is available on the Company's website at www.cupidplc.com.

The comparative figures for the financial year ended 31 December 2012 do not constitute the Company's statutory accounts for that financial year. The auditors have reported on those accounts and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

The interim financial information for the six month period ended 30 June 2013 is unaudited but has been reviewed by the auditors and their report to the Company is set out at the end of the statement.

The Group's projections, taking into account all risks and uncertainties outlined in note 11 to the interim statement indicate that the Group will continue to be self-funding. As a result, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Restatement of certain prior year comparatives

The directors have restated the reported Group and Company comparatives for the six months ended 30 June 2012 in respect of the acquisition of the trade and assets of Easydate Limited ("the Easydate Acquisition") by the Company and the Group in 2009. In the 2009 financial statements, goodwill of GBP1,261,000 was recognised in respect of the Easydate Acquisition. This represented the difference between the value of the shares issued by the Company as consideration and the book value of the net assets acquired. This acquisition was a common control transaction effected through the insertion of a new holding company and the directors have concluded that it is appropriate to restate the comparatives in respect of this acquisition on the basis that the Company and Group have applied book value accounting in respect of the Easydate Acquisition. Consequently, the goodwill of GBP1,261,000 has been eliminated and the excess between the consideration paid and the book value of the net assets acquired has been recognised in a Merger Reserve. The impact of this as at 1 January 2012 and 30 June 2012 is to reduce intangible assets and net assets by GBP1,261,000.

Cupid plc

Interim results FY2013

Notes to the accounts cont'd

2. Accounting Policies

The Financial Statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the twelve months to 31 December 2012. Where new policies have been applied these are set out below.

The condensed interim financial statements are prepared applying the recognition and measurement requirements of IFRSs as adopted by the EU. The Company has elected not to prepare the interim statement in accordance with IAS 34 as adopted by the EU.

The interim statement does not include all the information required for full annual financial statements and should be read in conjunction with the financial statements of the Company as at and for the year ended 31 December 2012 which were prepared in accordance with IFRS as adopted by the EU.

Although there have been a number of new interpretations and amendments to existing standards in the period, these are not applicable to the Group and therefore have not had any impact on the net assets or results.

In the process of applying the Group's accounting policies, management necessarily makes judgements and estimates that have a significant effect on the amounts recognised in the condensed interim financial statements. Changes in the assumptions underlying the estimates could result in a significant impact to the interim financial statements. The most critical of these accounting judgement and estimation areas were noted in the Company's consolidated financial statements for the year ended 31 December 2012.

Exceptional costs

The Group has disclosed additional information in respect of exceptional items on the face of the consolidated statement of comprehensive income in order to aid understanding of the Group's financial performance. An item is treated as exceptional if it is considered that by virtue of its nature, scale, or incidence it is of such significance that separate disclosure is required for the financial statements to be properly understood. These items are not part of the Group's normal ongoing operations.

Assets classified as held for sale

A non-current asset or group of assets containing a non-current asset (a disposal group) is classified as held for sale if its carrying amount will be recovered principally though sale rather than through continuing use, it is available for immediate sale and a sale is highly probable within one year. On initial classification as held for sale, non-current assets or components of a disposal group are measured at the lower of previous carrying amount and fair value less costs to sell, with any adjustments taken to profit and loss. The same applies to gains and losses on subsequent remeasurement.

Cupid plc

Interim results FY2013

Notes to the accounts cont'd

2. Accounting policies cont'd

Discontinued operations

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation has been discontinued from the start of the comparative period.

3. Exceptional Costs

Exceptional costs relating to continuing operations consist of legal and professional fees incurred following allegations made against the Group (GBP289,000) and the costs of an employee tribunal case (GBP100,000). Exceptional costs relating to discontinued operations consist of legal and professional fees associated with the disposal of the Group's casual websites as announced on 15 July 2013.

4. Segmental Analysis

The chief operating decision-maker has been identified as the Chief Executive officer ("CEO") of the Company. The CEO reviews the Group's internal reporting in order to assess performance and to allocate resources. The Company has determined its operating segments based on these reports.

The Group currently has three reportable segments, which are based upon geographical territories. The location

of the user is the basis for determining the segment.   The three segments are: 
   --     Established markets (UK, Australia, New Zealand, Ireland and South Africa) 
   --     New markets (USA, Canada, France, Italy, Spain, Germany plus any newly entered countries) 
   --     Developing territories (Brazil, India) 

Each of the three segments has different performance characteristics within its Key Performance Indicators as they are at different levels of maturity and critical mass for the Group. The CEO transitioned to this basis of assessing progress from the previous basis due to the increasing volume of countries in which the Group operates, and the characteristics being better aligned by maturity rather than international region.

Information regarding the operation of the reportable segments is included below. The CEO assesses the performance of the business at the operating segment level based on revenue and revenue less direct marketing costs, which gives a measure of the effectiveness and contribution. The segment information is prepared using accounting policies consistent with those of the Group as a whole.

The assets and liabilities of the Group are not reviewed by the CEO on a segment basis. Therefore none of the Group's assets and liabilities are segmental assets and liabilities and all are unallocated for

Cupid plc

Interim results FY2013

Notes to the accounts cont'd

4. Segmental analysis cont'd

segmental disclosure purposes. Segmental assets and liabilities are not presented to the CEO and therefore the Group has not disclosed details of segmental assets and liabilities.

All segments are presented on a basis consistent with the prior year. No customer accounts for more than 10%

of external revenues.   There are no inter-segment transactions. 
 
                                          Established        New     Developing 
   June 2013                                  Markets    Markets    Territories         Total 
                                               GBP000     GBP000         GBP000        GBP000 
 Revenue                                       17,850     24,052          1,458        43,360 
 Direct marketing costs                      (10,049)   (16,254)        (1,065)      (27,368) 
----------------------------------  ---  ------------  ---------  -------------  ------------ 
 Revenue less direct 
  marketing cost                                7,801      7,798            393        15,992 
----------------------------------  ---  ------------  ---------  -------------  ------------ 
 
 Other direct costs                                                                   (8,685) 
----------------------------------  ---  ------------  ---------  -------------  ------------ 
 Gross profit                                                                           7,307 
 Administrative expenses                                                              (4,679) 
 Adjusted EBITDA                                                                        2,628 
 
   Depreciation, amortisation, 
   share based payments, 
   acquisition costs and 
   exceptional costs                                                                  (5,440) 
 Operating loss                                                                       (2,812) 
 Finance income                                                                            43 
 Loss before tax                                                                      (2,769) 
----------------------------------  ---  ------------  ---------  -------------  ------------ 
                                          Established        New     Developing 
   June 2012                                  Markets    Markets    Territories         Total 
                                               GBP000     GBP000         GBP000        GBP000 
 Revenue                                       15,991     22,159            464        38,614 
 Direct marketing costs                       (8,456)   (14,465)          (246)      (23,167) 
---------------------------------------  ------------  ---------  -------------  ------------ 
 Revenue less direct marketing 
  cost                                          7,535      7,694            218        15,447 
---------------------------------------  ------------  ---------  -------------  ------------ 
 
 Other direct costs                                                                   (6,859) 
---------------------------------------  ------------  ---------  -------------  ------------ 
 Gross profit                                                                           8,588 
 Administrative expenses                                                              (2,716) 
 Adjusted EBITDA                                                                        5,872 
 Depreciation, amortisation, 
  share based payments 
  and acquisition costs                                                               (2,247) 
 Operating profit                                                                       3,625 
 Finance income                                                                            25 
 Profit before tax                                                                      3,650 
---------------------------------------  ------------  ---------  -------------  ------------ 
 
 

Cupid plc

Interim results FY2013

Notes to the accounts cont'd

5. Taxation

 
 Recognised in the income statement                 Unaudited   Unaudited 
                                                      H1 2013     H1 2012 
                                                       GBP000      GBP000 
-------------------------------------------------  ----------  ---------- 
 
   Current tax (credit)/expense 
 Current year                                            (17)         625 
 Adjustments for prior years                             (30)          61 
-------------------------------------------------  ----------  ---------- 
 Current tax (credit)/ expense                           (47)         686 
-------------------------------------------------  ----------  ---------- 
 
 Deferred tax expense 
 Deferred tax (credit)/expense                          (589)          60 
-------------------------------------------------  ----------  ---------- 
 
 Total tax (credit)/expense                             (636)         746 
-------------------------------------------------  ----------  ---------- 
 
 Tax recognised directly in equity                  Unaudited   Unaudited 
                                                      H1 2013     H1 2012 
                                                       GBP000      GBP000 
 Current tax recognised directly in equity                  -           - 
 Deferred tax recognised directly in equity             (435)        (26) 
 Total tax recognised directly in equity                (435)        (26) 
 
 Reconciliation of effective tax rate               Unaudited   Unaudited 
                                                      H1 2013     H1 2012 
                                                       GBP000      GBP000 
-------------------------------------------------  ----------  ---------- 
 (Loss)/profit for the year                           (2,133)       2,904 
 Total tax (credit)/expense                             (636)         746 
-------------------------------------------------  ----------  ---------- 
 (Loss)/profit before taxation                        (2,769)       3,650 
-------------------------------------------------  ----------  ---------- 
 
 Tax using the UK corporation tax rate of 23.25% 
  (2012: 24.5%)                                         (644)         894 
 Non-deductible expenses                                   81          22 
 Timing differences                                       (1)          11 
 (Over)/Under provided in prior years                    (29)          61 
 Share option relief                                        -       (242) 
 Difference due to profit taxed overseas                 (43)           - 
 
 Total tax (credit)/expense                             (636)         746 
-------------------------------------------------  ----------  ---------- 
 
 

Cupid plc

Interim results FY2013

Notes to the accounts cont'd

 
 6. Intangible assets         Internally 
                               generated                  Intellectual      Customer 
                                     R&D     Goodwill         property     Databases      Total 
                                  GBP000       GBP000           GBP000        GBP000     GBP000 
 Cost 
 Balance at 1 January 
  2012 (restated - note 
  1)                               2,487        4,029            6,036         3,717     16,269 
 Acquisitions - externally 
  purchased                            -            -              637         1,502      2,139 
 Internally generated              1,256            -                -             -      1,256 
 Balance at 30 June 
  2012                             3,743        4,029            6,673         5,219     19,664 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 Acquisitions - externally 
  purchased                            -            -              458           201        659 
 Internally generated              1,566            -                -             -      1,566 
 Acquisitions through 
  business combinations                -        1,610            3,643         7,999     13,252 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 Balance at 31 December 
  2012                             5,309        5,639           10,774        13,419     35,141 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 Acquisitions - externally 
  purchased                            -            -               72             -         72 
 Internally generated              1,873            -                -             -      1,873 
 Deferred consideration 
  adjustment                           -        (285)                -             -      (285) 
 Classified as held 
  for sale                       (5,006)      (3,732)          (7,560)       (9,353)   (25,651) 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 Balance at 30 June 
  2013                             2,176        1,622            3,286         4,066     11,150 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 Amortisation 
 Balance at 1 January 
  2012                               898            -            1,836         2,287      5,021 
 Amortisation charge                 197            -              616           748      1,561 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 Balance at 30 June 
  2012                             1,095            -            2,452         3,035      6,582 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 Amortisation charge                 796            -              952         2,137      3,885 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 Balance at 31 December 
  2012                             1,891            -            3,404         5,172     10,467 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 Amortisation charge                 773            -            1,752         1,757      4,282 
 Classified as held 
  for sale                       (1,857)                       (3,594)       (4,830)   (10,281) 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 Balance at 30 June 
  2013                               807            -            1,562         2,099      4,468 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 Net book value 
 At 30 June 2013                   1,369        1,622            1,724         1,967      6,682 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 At 31 December 2012               3,418        5,639            7,370         8,247     24,674 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 At 30 June 2012                   2,648        4,029            4,221         2,184     13,082 
---------------------------  -----------  -----------  ---------------  ------------  --------- 
 
 

No impairment charges have been booked.

Cupid plc

Interim results FY2013

Notes to the accounts cont'd

7. Earnings per share

 
 Continuing operations    Earnings         Weighted      Earnings per     Earnings          Weighted      Earnings per 
                                     average no. of             share                 average no. of             share 
                                             shares             Pence                         shares             Pence 
                           H1 2013          H1 2013           H1 2013      H1 2012           H1 2012           H1 2012 
 
 Basic earnings per 
  share                    (1,868)           83,683            (2.23)          977            81,286              1.20 
 Dilution for options                           400              0.01                          2,194            (0.03) 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Diluted earnings per 
  share                    (1,868)           84,083            (2.22)          977            83,480              1.17 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Diluted earnings per                                          (2.23)                                                - 
 share capped 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjustments: 
 Amortisation of 
  intangible assets (ex 
  R&D)                       1,064                                             432 
 Acquisition and 
  restructuring costs           50                                             280 
 Share based payments           71                                             130 
 Tax impact of adjusted 
  items                      (276)                                           (206) 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted earnings for 
  the period                 (959)                                           1,613 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted basic 
  earnings per share         (959)           83,683            (1.15)        1,613            81,286              1.98 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted diluted 
  earnings per share         (959)           84,083            (1.14)        1,613            83,480              1.93 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted diluted                                              (1.15)                                                - 
 earnings per share 
 capped 
-----------------------  ---------  ---------------  ----------------  ------  ---------------------  ---------------- 
 
 Total Group              Earnings         Weighted      Earnings per     Earnings          Weighted      Earnings per 
                                     average no. of             share                 average no. of             share 
                                             shares             Pence                         shares             Pence 
                           H1 2013          H1 2013           H1 2013      H1 2012           H1 2012           H1 2012 
 
 Basic earnings per 
  share                    (2,133)           83,683            (2.55)        2,904            81,286              3.57 
 Dilution for options                           400              0.01                          2,194            (0.09) 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Diluted earnings per 
  share                    (2,133)           84,083            (2.54)        2,904            83,480              3.48 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Diluted earnings per                                          (2.55)                                                - 
 share capped 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjustments: 
 Amortisation of 
  intangible assets (ex 
  R&D)                       3,509                                           1,364 
 Acquisition and 
  restructuring costs           50                                             280 
 Share based payments          101                                             186 
 Tax impact of adjusted 
  items                      (851)                                           (448) 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted earnings for 
  the period                   676                                           4,286 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted basic 
  earnings per share           676           83,683              0.81        4,286            81,286              5.27 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 Adjusted diluted 
  earnings per share           676           84,083              0.80        4,286            83,480              5.13 
-----------------------  ---------  ---------------  ----------------  -----------  ----------------  ---------------- 
 
 

The measure of adjusted earnings per share, as calculated above, is a non-statutory measure which we believe is useful to investors and is commonly used to evaluate the performance of businesses where M&A activity is significant. The calculation of adjusted earnings per share for H1 2012 has been restated to exclude amortisation on internally generated R&D on the same basis as FY 2012.

Cupid plc

Interim results FY 2013

Notes to the accounts cont'd

8. Related parties

Included in trade and other receivables is a balance due from related parties amounting to GBP107,000. This includes cash that was processed through one of the payment gateways of Interactive Dating and Entertainment Ltd (formerly Amorix Ltd) as this was deemed the most effective method for ensuring a high collection rate. The corresponding figures for December 2012 and June 2012 are GBP2,228,000 and GBP2,527,000 respectively.

9. Called up share capital

 
                           30 June       30 June       30 June   30 June     31 Dec 2012    31 Dec 
                              2013          2013          2012      2012                      2012 
                            Number    GBP000            Number    GBP000          Number    GBP000 
 Authorised 
 Equity share 
  capital 
 Ordinary shares 
  of 2.5p each         108,866,736     2,722       108,866,736     2,722     108,866,736     2,722 
 
 Allotted, called 
  up and fully 
  paid 
 Equity share 
  capital 
 Ordinary shares 
  of 2.5p each          83,371,971     2,085        81,777,260     2,045      85,091,971     2,127 
 
 
   10.   Assets and liabilities classified as held for sale 

On 30 June 2013, the casual websites met the criteria for classification as a non-current asset held for sale under IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations. As such, the relevant carrying values have been reclassified to Assets classified as held for sale orLiabilities classified as held for sale from the following categories (the table below shows the effect of the discontinuing operation on the financial position):

 
 Category                                   30 June 2013 
                                                  GBP000 
 Plant & equipment                                   591 
 Intangible assets                                15,370 
 Trade and other receivables                       4,480 
-----------------------------------------  ------------- 
 Assets classified as held for sale               20,441 
-----------------------------------------  ------------- 
 Deferred Taxation                               (1,639) 
 Trade and other payables                        (8,617) 
-----------------------------------------  ------------- 
 Liabilities classified as held for sale        (10,256) 
-----------------------------------------  ------------- 
 Net assets classified as held for sale           10,185 
-----------------------------------------  ------------- 
 

Cupid plc

Interim results FY 2013

Notes to the accounts cont'd

   10.   Assets and liabilities classified as held for sale cont'd 

Cash Flows from discontinued operations

 
 Category                                 H1 2013   H1 2012 
                                           GBP000    GBP000 
 Net cash from operating activities         5,717     3,518 
 Net cash used in investing activities    (3,296)   (2,494) 
---------------------------------------  --------  -------- 
                                            2,421     1,024 
---------------------------------------  --------  -------- 
 

All cash flows from financing activities are attributable to continuing operations.

11. Principal risks and uncertainties

The directors believe that the principal risks and uncertainties to the business are:

Staff

As with any service organisation the Group is dependent on the skill, experience and commitment of its employees and especially a relatively small number of senior staff. The Group seeks to recruit and retain suitably skilled and experienced staff by offering a challenging and rewarding work environment. This includes competitive and innovative reward packages, including stock option plans and a strong commitment to training and development.

With a large volume of Cupid operational staff concentrated in two locations in Ukraine, there is an added risk to the Group should there be any political, environmental, economic or fiscal changes within Ukraine. The Group continues to identify key Ukraine based staff and has a policy of encouraging their development e.g. transfers to other Group offices, such as the UK and Germany.

Datacentre operation

Any downtime experienced at our datacentres would immediately have an impact on the Group's ability to provide customers with the level of service they demand. The Group's continuing investment in preventative maintenance and lifecycle replacement programme ensures its datacentres continue to deliver operational efficiency and effectiveness.

Reputation

The Group operates a number of dating sites which are mainly marketed through the internet. In the event of the reputation of one or all of the sites being damaged, this would have an impact on consumer confidence in the Group's products and the Group's ability to generate revenues. As the business has been growing rapidly there has been significant investment in customer relationship systems and customer service staffing to meet the growing business demands.

Cupid plc

Interim results FY 2013

Notes to the accounts cont'd

11. Principal risks and uncertainties cont'd

Credit card processing

The Group relies on recurring billing for ongoing generation of revenue from customers via credit cards. Changes to credit card billing rules could impact upon the Group's ability to automatically rebill these customers. The Group has revenue in a wide range of countries which mitigates some of this risk should changes be made in specific countries. This risk affects many internet subscription services.

Key suppliers

The Group is dependent on certain key suppliers for the continued generation of internet marketing. The Group actively seeks to maintain good relationships with these suppliers. The Group also seeks to maintain an increasingly diversified range of other marketing partners to mitigate some of this risk.

Banking relationships

The Group relies on relationships with credit card processing companies, banks and other payment processors to enable it to continue to receive customer payments. The Group actively manages these relationships through a dedicated in-house team and has a wide spread of payment processing relationships to mitigate the risk of reliance on any particular provider.

Community

The Group seeks to be a good corporate citizen respecting the laws of the countries in which it operates and adheres to best social practice where feasible. It aims to be sensitive to the local community's cultural, social and economic needs.

Environment

The Group recognises that the nature of its business has inherently limited impact on the environment. However, every effort is made to ensure the environmental impact of the Group's operational practices is kept to a minimum, including strict adherence to all statutory requirements. To this end, a policy of minimising and recycling waste and conserving energy is pursued wherever it is viable to do so.

12. Post balance sheet events

On 15 July 2013 it was announced that the Group had entered in to an agreement to sell its casual websites to Grendall Investment Limited, for a total consideration of GBP43.1m. The Group also entered in to a separate software licensing agreement with Grendall Investment Limited worth GBP2.0m, bringing the total value of the transaction to GBP45.1m.

INDEPENDENT REVIEW REPORT TO Cupid PLC

 
Introduction 
 We have been engaged by the company to review the condensed set of financial statements in 
 the half-yearly report for the six months ended 30 June 2013 which comprises the consolidated 
 statement of comprehensive income, the consolidated statement of financial position, the consolidated 
 cash flow statement, the consolidated statement of changes in equity and the related explanatory 
 notes. We have read the other information contained in the half-yearly report and considered 
 whether it contains any apparent misstatements or material inconsistencies with the information 
 in the condensed set of financial statements. 
 
 This report is made solely to the company in accordance with the terms of our engagement. 
 Our review has been undertaken so that we might state to the company those matters we are 
 required to state to it in this report and for no other purpose. To the fullest extent permitted 
 by law, we do not accept or assume responsibility to anyone other than the company for our 
 review work, for this report, or for the conclusions we have reached. 
 
 Directors' responsibilities 
 The half-yearly report is the responsibility of, and has been approved by, the directors. 
 The directors are responsible for preparing the half-yearly report in accordance with the 
 AIM Rules. The annual financial statements of the Group are prepared in accordance with IFRSs 
 as adopted by the EU. The condensed set of financial statements included in this half-yearly 
 report has been prepared in accordance with the recognition and measurement requirements of 
 IFRSs as adopted by the EU. 
 
 Our responsibility 
 Our responsibility is to express to the company a conclusion on the condensed set of financial 
 statements in the half-yearly report based on our review. 
 
 Scope of review 
 We conducted our review in accordance with International Standard on Review Engagements (UK 
 and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor 
 of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim 
 financial information consists of making enquiries, primarily of persons responsible for financial 
 and accounting matters, and applying analytical and other review procedures. A review is substantially 
 less in scope than an audit conducted in accordance with International Standards on Auditing 
 (UK and Ireland) and consequently does not enable us to obtain assurance that we would become 
 aware of all significant matters that might be identified in an audit. Accordingly, we do 
 not express an audit opinion. 
 
 Conclusion 
 Based on our review, nothing has come to our attention that causes us to believe that the 
 condensed set of financial statements in the half-yearly report for the six months ended 30 
 June 2013 is not prepared, in all material respects, in accordance with the recognition and 
 measurement requirements of IFRSs as adopted by the EU and the AIM Rules. 
 
 
 Bruce Marks 
 For and on behalf of KPMG Audit Plc 
 Chartered Accountants 
 191 West George Street 
 Glasgow 
 G2 2LJ 
 24 September 2013 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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