TIDMINFS
RNS Number : 1714E
Infoserve Group PLC
16 December 2009
Infoserve Group plc
("Infoserve", the "Company" or, together with its subsidiaries, the "Group")
Unaudited Condensed Consolidated Financial Statements for the six months ended
30 September 2009
Infoserve Group plc (AIM:INFS), one of the leading online local search
specialists in the UK, is pleased to announce its half-year results for the
six-month period to 30 September 2009. Infoserve provides UK businesses, mainly
SMEs, with sophisticated online marketing products that deliver, through the
Group's partnership with Yahoo!, its own extensive product range and Google
AdWords campaigns, online solutions that enable businesses to be found when
consumers are searching for the goods and services they provide in specific
locations. It is estimated that 60% of all online searches are local in nature,
and Infoserve aims to bring buyers and sellers together online.
OPERATING HIGHLIGHTS
* Maintained tight control of costs and continued to improve operational
efficiencies.
* Further improvement in renewals and customer numbers as SMEs grow their online
presence.
* Continued Yahoo! relationship.
* Further opportunities for growth through search engine optimisation and keyword
management products.
* Development of internal customer and data management system to increase
targeting and focus in sales campaigns.
FINANCIAL HIGHLIGHTS
* Turnover GBP2.95m (restated H1 2008: GBP2.64m), up 12%.
* Gross profit GBP0.99m (restated H1 2008: GBP0.84m), up 18%.
* EBITDA pre IAS 18 adjustment GBP69k profit (restated loss H1 2008: GBP377k), an
increase of GBP446k.
* Loss before tax GBP0.20m (restated loss H1 2008: GBP0.61m), a reduction of
GBP0.41m.
* Loss per share 1.02p (restated H1 2008: 3.19p).
* Net cash balance GBP188k (H1 2008: GBP18k).
POST PERIOD HIGHLIGHTS
* Agreement in principle reached with D R Hood to provide funds for next growth
phase.
James Newman, Chairman of Infoserve Group plc, commented: "The first half of
2009, whilst operationally challenging, was encouraging as we saw the continued
benefits of our overhead reduction programme and increases in revenues and gross
margin combine to produce a dramatic improvement in our financial performance."
Steve Barnes, CEO of Infoserve Group plc, added: "The second half has started
well and we remain confident that the second half results will reflect continued
higher average daily sales and cost control. As I said last year, "Although the
overall economic climate is very difficult, we believe that local paid-for
search will continue to grow and will fuel the ongoing market share increase of
online advertising versus traditional media". The IAB recently announced that
internet advertising had exceeded even TV advertising; SMEs now know they need
to market themselves online and are increasingly open to online advertising
across our various value for money platforms. We have seen continued
improvements in sales per day and productivity of sales executives, and we have
further supplemented this by improvements to our internal operating systems,
driven by our newly enhanced end to end GEMS system that brings together a
sophisticated CRM system, a sales tool, a production driver and a management
information provider."
For further information, please contact:
+------------------------------------+------------------------------------------+
| Infoserve Group plc | |
+------------------------------------+------------------------------------------+
| Steve Barnes, Chief Executive | Tel: +44 (0)113 238 6200 |
| Officer | www.infoservegroup.com |
| steve.barnes@infoserve.com | |
+------------------------------------+------------------------------------------+
| Jonathan Simpson, Finance Director | Tel: +44 (0)113 238 6200 |
| jonathan.simpson@infoserve.com | www.infoservegroup.com |
| | |
+------------------------------------+------------------------------------------+
| | |
+------------------------------------+------------------------------------------+
| Nominated Adviser | |
| | |
+------------------------------------+------------------------------------------+
| WH Ireland Limited | |
+------------------------------------+------------------------------------------+
| Robin Gwyn | Tel: +44 (0)161 832 2174 |
| robin.gwyn@wh-ireland.co.uk | |
+------------------------------------+------------------------------------------+
| | |
+------------------------------------+------------------------------------------+
| Media Enquiries | |
| | |
+------------------------------------+------------------------------------------+
| Source Marketing Communications | |
+------------------------------------+------------------------------------------+
| Peter Downey | Tel: +44 (0)113 380 1644 |
| peter@sourcemc.co.uk | |
+------------------------------------+------------------------------------------+
| | |
+------------------------------------+------------------------------------------+
| | |
+------------------------------------+------------------------------------------+
CHAIRMAN'S STATEMENT
I am delighted to report that the Group has made good progress over the last six
months and is now achieving a breakeven trading performance on a monthly basis.
Results
Turnover in the period increased to GBP2.95 million (restated H1 2008: GBP2.64
million), a 12% increase over the same period in 2008. This growth has been
achieved mainly through the improved efficiencies of the sales team.
Productivity per sales person continues to rise as a result of the improved
productivity and a revised pricing structure, gross margins have increased and a
gross profit of GBP994,000 has been achieved against a gross profit last year of
GBP843,000.
I am delighted to report that administrative expenses have continued to reduce
for the second year in succession. The reduction in the first half of the year
was GBP149,000, without any effect on day-to-day operations or customer service.
The combination of increased sales and lower costs has led to a much-reduced
operating loss after amortisation of GBP0.15 million compared to GBP0.51
million, as restated, last year. After taking into account net financing costs,
there was a loss before taxation of GBP0.20 million (restated H1 2008: GBP0.61
million).
The loss per share was 1.02p compared to 3.19p, as restated, in 2008.
Cash
As a result of the continuing growth in sales revenues, a reduction in overhead
costs, and careful working capital management, the Group achieved a small cash
inflow from trading and investing activities of GBP28k, significantly better
than the GBP311k outflow for the same period last year.
Dividend
The Board is not recommending a dividend, as all funds are required for the
development of the business.
Funding discussions
As announced on 20 November 2009, the Company has reached agreement in principle
with David Hood, the Company's major shareholder and a non-executive director of
the Company, on the terms by which David Hood will provide additional funding
for Infoserve and for the conversion of part of the Company's existing
indebtedness to David Hood into new equity in the Company (the "Proposals").
The Proposals are subject to the negotiation and execution of legally binding
contractual documentation. A further announcement will be made when these
agreements have been finalised.
Under the Proposals, David Hood will provide additional funding to the Company
amounting to GBP0.8 million, comprising a loan, which would be available for
immediate drawdown, of GBP0.55 million and a further facility of GBP0.25 million
to be made available in the event of the Company's existing overdraft facility
being withdrawn. The interest rate on both the new loan and the further
facility would be 10% per annum. In addition, David Hood has agreed to the
continued deferment of payments due to himself and his associate companies,
amounting to GBP0.30 million and the writing off of other sundry trading
liabilities amounting to GBP50,000.
These new funding arrangements will enable the Group to continue to fund its
ongoing and improving trading activities and to pursue other growth
opportunities available to it.
As part of the Proposals, the Company is proposing to issue 40 million new
ordinary shares of 5p each in the capital of the Company ("Ordinary Shares") to
David Hood at an issue price of 5p per share in satisfaction of loans to the
value of GBP2 million, currently owing by the Company to David Hood.
The effect of the Proposals will be to increase David Hood's interest in the
ordinary share capital of the Company from 46.86% to 82.84% and to reduce the
value of the loans outstanding from David Hood to the Company, which at 31
October 2009 amounted to GBP3.52 million, by GBP1.45 million (or GBP1.2 million
if the further facility is taken up).
The Company intends to seek a waiver from the Panel on Takeovers and Mergers
(the "Panel") of the obligation that would otherwise arise, as a result of the
issue of the new Ordinary Shares, for David Hood to make an offer to acquire all
of the Ordinary Shares not already owned by him. If granted, any such waiver
would be subject to approval of independent shareholders.
Going concern
As mentioned above, the Group has recently agreed in principle to enter into a
further loan facility agreement with D R Hood which, if completed, would provide
access to additional funding of up to GBP0.8m. Alongside this new loan, D R Hood
has conditionally agreed to convert GBP2m of his existing loans into ordinary
shares at 5p per share. The Proposals are conditional upon the Company obtaining
a waiver from the Panel and the waiver being approved by independent
shareholders.
Whilst the directors remain confident of continuing to operate within the
current bank overdraft and of securing additional funding from Mr Hood, there
can be no certainty in these respects.
Accordingly the directors believe that this represents a material uncertainty
that may cast significant doubt upon the Group's and the Company's ability to
continue as a going concern and it may therefore be unable to realise assets and
discharge liabilities in the ordinary course of business. Nevertheless, after
making full enquiries, and considering all the uncertainties described above,
the directors have no reason to believe that the Group and the Company will be
unable to continue in operational existence for the foreseeable future. For
these reasons, they continue to adopt the going concern basis in preparing the
Interim report and financial statements. The financial statements do not include
any adjustments that would result from the basis of preparation being
inappropriate.
Business developments
The relationship with Yahoo!, both commercial and technical, continues to
develop, and sales of Yahoo!Local listings continue to grow compared to the same
period last year. The Group is discussing plans with both Yahoo! and Microsoft
to continue to offer local business listings once the two companies have
completed their discussions.
Having announced that the Group will cease to be an Authorised Google AdWords
Reseller from 7 January 2010, we are delighted that our working relationship
with Google remains strong. As such, we will continue to organise and sell
Google AdWords campaigns to our customers, utilising the comprehensive back-end
and campaign management systems that we have jointly developed with Google, as
part of our full range of online services.
The Group believes that SMEs see great value in a combined advertising product
that covers traditional local newspaper advertising and online exposure across
major search engines. The Group is trialling a new development based on this
concept with a possible wider roll out during 2010 in conjunction with a
newspaper group.
Current trading
Since the half-year end, revenues have continued to grow in line with the
Board's expectations. Retention levels of sales staff have continued to be
stable, thereby increasing productivity per head.
Outlook
The Group has continued to increase its revenues every half year despite the
ongoing macro-economic conditions that prevail. Margins are increasing and
overhead costs remain under tight control, thus improving the monthly cash flow.
The strong relationship enjoyed by the Group with Yahoo! and the continued
strength of the existing wholly-owned product portfolio puts the Group in a
strong position to take advantage of the growth in the paid-for online local
search market.
James H Newman
Chairman
15 December 2009
OPERATIONAL REVIEW
Market drivers
Paid-for search continues to dominate online marketing expenditure (59.8% of all
online advertising in H1 2009), with an estimated 60% of all online searches now
appearing to be local in nature. Despite the credit crunch, online advertising
grew in H1 2009 by 6.8% year on year, continuing, albeit at a slower rate, the
extraordinary transition from outdoor, radio, press, and even television, to
online in general and paid-for search in particular.
According to the bi-annual online advertising expenditure study from the
Internet Advertising Bureau (IAB) - the trade body for digital marketing - in
partnership with PricewaterhouseCoopers (PwC) and the World Advertising Research
Centre (WARC), "the internet has now overtaken TV advertising to become the UK's
single biggest advertising medium. The UK remains the world leader in terms of
market share for online, with the medium accounting for 23.5% in the first half
of 2009. The results signal a significant restructure of marketing budgets as
advertisers follow their audiences online and look to the internet for even more
measureable and accountable methods."
The local element of that search is growing fastest, and this performance
particularly in the context of the decline of traditional paper directories,
with the largest UK directory experiencing a 19.7% decline in paper revenues and
the major local newspaper groups continuing to announce declines in advertising
revenues throughout 2009, illustrates the timely opportunity within online local
search.
Trading performance
The unaudited results for the six months ended 30 September 2009 are in line
with the trading statement made at the AGM on 23 October and continue to reflect
the Group's improving performance. Top line sales* increased to GBP3.1m in the
six months ended 30 September 2009 from GBP2.6m, an increase of 18%, whilst
gross profit* increased to GBP1.1m from GBP0.8m (+40%). Continued tight control
of administrative costs contributed to a GBP69k EBITDA* profit compared to a
loss of GBP377k in the comparable period last year.
(* Excludes IAS 18 revenue recognition adjustment of (GBP113k) 2009 and +GBP51k
2008. The IAS 18 accounting adjustment spreads sales evenly over the life of the
directory listing as opposed to top line sales which refers to cash received in
any such period).
On an underlying basis, the Group is now performing at or around breakeven
EBITDA, with small cash inflows from trading. Subject to completion of the new
loans from David Hood, the Group is well placed to continue to take advantage of
the growth opportunities available in this growing sector.
Our collaboration with Yahoo! in both technical and marketing areas continues to
be strong. Yahoo!'s recent heavyweight TV advertising campaign has boosted
awareness and usage levels, and advertising renewal rates have shown further
improvement, illustrating SMEs' confidence that they are getting good returns on
investment.
The focus on training and development has contributed to improved productivity
per sales person leading to growth of 18% in top line sales in the first half of
the year. Although we will maintain rigour in our personnel selection, we are
benefitting from the larger and more professional recruitment pool available
during the current wider economic downturn.
Systems developments
We have further supplemented last year's extensive software system developments
by improvements to our internal operating systems, driven by our newly enhanced
end to end GEMS system that brings together a sophisticated CRM system, a sales
tool, a production driver and a management information provider.
FINANCIAL REVIEW
The financial performance of the Group continues to reflect our decision to
invest in the training and development of our sales force as well as
enhancements to our product portfolio and has increased our performance per
sales executive from GBP54,900 to GBP61,900 on an annualised basis.
At the same time the focus on our cost base has led to an increase in our gross
margins to almost 34% and a reduction in our administrative expenses by 15%
compared to the same period 12 months ago, to GBP1.1m.
Capital expenditure on tangible and intangible assets has been reduced
substantially with expenditure of GBP19,000 compared to GBP93,000 for the six
months to 30 September 2008. The majority of expenditure was used to further
tailor our sales focused data management software to the changing needs of the
business.
As a result of the improved sales performance and improved profitability, the
Group generated cash without external investment for the first time in a
six-month period. The cash inflow for the six months to 30 September 2009 was
GBP28k. In the comparable period in 2008 the business used GBP311k.
The Group continues to carry a deferred tax asset of GBP0.84m, the same as at 31
March 2009, which is based only on post-acquisition losses.
CURRENT TRADING AND OUTLOOK
Sales continue at an improved level with November being the third successive
month in which Group telesales were greater than GBP500k and the fourth such
month in 2009. As we work closely with both VSEs (Very Small Enterprises) and
SMEs, we are fully in tune with small business' levels of economic optimism, and
there has been a discernable decline in confidence amongst small businesses
about 2010 prospects over the past three months.
Some of our customers will continue to be deeply affected by the recession, and
we will have to be mindful of targeting with accuracy the business categories
and geographic locations that offer the most potential over the next twelve
months in order to maintain our revenue growth. Whilst I am optimistic that
online marketing in general, and local search advertising in particular, will
continue to grow for the next two years, we must ensure that we evolve our
marketing campaigns and our product range in line with the wider structural,
social changes taking place.
Most SMEs recognise that they must have their business found when a consumer is
searching online for goods and services. As most consumers spend more than 90%
on goods and services within 20 miles of where they live or work, the Group both
continues to work hard to offer outstanding value for money and high levels of
return on investment to our customers, and also to enable our business customers
to be found when consumers are searching.
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties to which the Group is exposed are listed
below. They have not changed from those detailed on pages 2-3 and 32-35 of our
Annual Report and Financial Statements for the year ended 31 March 2009. The
Annual Report can be found on the company's website www.infoservegroup.com.
* Market price risk
* Liquidity risk
* Interest rate risk
* Credit risk
* Capital risk
* Maturity of financial liabilities
* Requirements for further funds
* Management of growth
* Dependence on senior management and employees
* Recruitment and retention
* Technology
* Partners
+---------------------------------------+---------------------------------------+
| Stephen M Barnes | Jonathan P Simpson |
| Chief Executive Officer | Finance Director |
+---------------------------------------+---------------------------------------+
| | |
+---------------------------------------+---------------------------------------+
Infoserve Group plc
Condensed Consolidated Income Statement (unaudited)
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | Six months | | Six months | | Year |
| | | to 30 | | to 30 | | ended 31 |
| | | September | | September | | March |
| | | 2009 | | 2008 | | 2009 |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | (unaudited) | | (unaudited) | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| |Note | | | Restated | | Restated |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Revenue - continuing | | 2,948 | | 2,641 | | 5,495 |
| operations | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Cost of sales | | (1,954) | | (1,798) | | (3,785) |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Gross profit | | 994 | | 843 | | 1,710 |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Amortisation of intangible | | (46) | | (102) | | (174) |
| assets | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Administrative expenses | | (1,097) | | (1,246) | | (2,448) |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Total administrative | | (1,143) | | (1,348) | | (2,622) |
| expenses | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Operating loss - continuing | | (149) | | (505) | | (912) |
| operations | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Financial income | | 7 | | 2 | | 3 |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Financial expenses | | (53) | | (106) | | (183) |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Net financing costs | | (46) | | (104) | | (180) |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Loss before tax | | (195) | | (609) | | (1,092) |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Taxation | 5 | - | | - | | - |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Loss for the period | | (195) | | (609) | | (1,092) |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| Basic and diluted loss per | 6 | (1.02p) | | (3.19p) | | (5.72p) |
| share | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
| | | | | | | |
+------------------------------+------+-------------+---+-------------+--+-----------+
The loss for the period is attributable to the equity holders of the
parent. Infoserve Group plc
Condensed Consolidated Balance Sheet (unaudited)
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | As at 30 | | As at 30 | | As at 31 |
| | | September | | September | | March 2009 |
| | | 2009 | | 2008 | | |
| | | (unaudited) | | (unaudited) | | |
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | Restated | | Restated |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Non-current assets | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Property, plant and equipment | | 193 | | 328 | | 251 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Intangible assets | | 506 | | 577 | | 534 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Deferred tax assets | | 838 | | 838 | | 838 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | 1,537 | | 1,743 | | 1,623 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Current assets | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Trade and other receivables | | 288 | | 253 | | 345 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Cash and cash equivalents | | 438 | | 18 | | 410 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | 726 | | 271 | | 755 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Total assets | | 2,263 | | 2,014 | | 2,378 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Current liabilities | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Bank overdraft | | (250) | | - | | (250) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Interest-bearing loans and | | (3,262) | | (2,839) | | (3,278) |
| borrowings | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Trade and other payables | | (3,617) | | (3,301) | | (3,568) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Provisions | | (80) | | (80) | | (80) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | (7,209) | | (6,220) | | (7,176) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Non-current liabilities | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Interest-bearing loans and | | (350) | | (408) | | (287) |
| borrowings | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Trade and other payables | | (19) | | (21) | | (20) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | (369) | | (429) | | (307) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Total liabilities | | (7,578) | | (6,649) | | (7,483) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Net liabilities | | (5,315) | | (4,635) | | (5,105) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Equity attributable to equity | | | | | | |
| holders of the parent | | | | | | |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Share capital | | 954 | | 954 | | 954 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Share premium | | 3,846 | | 3,871 | | 3,871 |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Retained earnings | | (10,115) | | (9,460) | | (9,930) |
+--------------------------------+------+-------------+--+-------------+--+------------+
| Total equity | | (5,315) | | (4,635) | | (5,105) |
+--------------------------------+------+-------------+--+-------------+--+------------+
These financial statements were approved by the Board of Directors on 15
December 2009 and were signed on its behalf by:
+---------------------------------------+---------------------------------------+
| Stephen M Barnes | James H Newman |
| Director | Director |
+---------------------------------------+---------------------------------------+
Infoserve Group plc
Condensed Consolidated Statement of Cash Flows (unaudited)
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | Six months | | Six months | | Year |
| | | to 30 | | to 30 | | ended 31 |
| | | September | | September | | March |
| | | 2009 | | 2008 | | 2009 |
| | | (unaudited) | | (unaudited) | | |
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | Restated | | Restated |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Cash flow from operating | | | | | | |
| activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Loss for the period | | (195) | | (609) | | (1,092) |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Adjustments for: | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Depreciation | | 59 | | 77 | | 151 |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Amortisation | | 46 | | 102 | | 174 |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Financial | | (7) | | (2) | | (3) |
| income | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Financial | | 53 | | 106 | | 183 |
| expense | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Loss on sale | | - | | - | | 10 |
| of property, | | | | | | |
| plant and | | | | | | |
| equipment | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Equity-settled | | 10 | | 24 | | 37 |
| share-based | | | | | | |
| payment | | | | | | |
| expenses | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Operating loss before changes in | | (34) | | (302) | | (540) |
| working capital | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| (Increase)/decrease | | 57 | | 29 | | (63) |
| in trade and other | | | | | | |
| receivables | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Increase in | | 47 | | 55 | | 320 |
| trade and other | | | | | | |
| payables | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Change in | | (1) | | (1) | | (1) |
| deferred | | | | | | |
| government grant | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Cash inflow (outflow) from | | 69 | | (219) | | (284) |
| operating activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Interest paid | | (4) | | (1) | | (9) |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Net cash from operating | | 65 | | (220) | | (293) |
| activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Cash flows from investing | | | | | | |
| activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Interest | | 7 | | 2 | | 3 |
| received | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Acquisition of | | (1) | | (8) | | (15) |
| property, plant | | | | | | |
| and equipment | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Acquisition of | | (18) | | (85) | | (114) |
| other intangible | | | | | | |
| assets | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Net cash from investing | | (12) | | (91) | | (126) |
| activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Cash flows from financing | | | | | | |
| activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Advance of loans | | - | | - | | 250 |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Costs of | | (25) | | - | | - |
| unsuccessful | | | | | | |
| share placing | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Net cash from financing | | (25) | | - | | 250 |
| activities | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Net (decrease)/increase in cash | | 28 | | (311) | | (169) |
| and cash equivalents | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Cash and cash | | 160 | | 329 | | 329 |
| equivalents at | | | | | | |
| the beginning of | | | | | | |
| the period | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| Cash and cash equivalents at the | | 188 | | 18 | | 160 |
| end of the period | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
| | | | | | | |
+-------------------------------------+-----+-------------+--+-------------+--+-----------+
Cash and cash equivalents in the Consolidated Statement of Cash Flows are after
the netting off of the bank overdraft.
Infoserve Group plc
Condensed Consolidated Statement of Changes in Shareholders' Equity (unaudited)
+----------------------------------+----------+--+---------+--+----------+--+---------+
| | Share | | Share | | Retained | | Total |
| | capital | | premium | | earnings | | equity |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Balance at 1 April 2008 | 954 | | 3,871 | | (8,875) | | (4,050) |
| (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Total recognised income and | - | | - | | (609) | | (609) |
| expense (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Equity-settled share-based | - | | - | | 24 | | 24 |
| payment transactions | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Balance at 30 September 2008 | 954 | | 3,871 | | (9,460) | | (4,635) |
| (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Balance at 1 April 2009 | 954 | | 3,871 | | (9,930) | | (5,105) |
| (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Total recognised income and | - | | - | | (195) | | (195) |
| expense | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Equity-settled share-based | - | | - | | 10 | | 10 |
| payment transactions | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Costs of unsuccessful share | - | | (25) | | - | | (25) |
| placing | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Balance at 30 September 2009 | 954 | | 3,846 | | (10,115) | | (5,315) |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Balance at 1 April 2008 | 954 | | 3,871 | | (8,875) | | (4,050) |
| (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Total recognised income and | - | | - | | (1,092) | | (1,092) |
| expense (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Equity-settled share-based | - | | - | | 37 | | 37 |
| payment transactions | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| Balance at 31 March 2009 | 954 | | 3,871 | | (9,930) | | (5,105) |
| (restated) | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
| | | | | | | | |
+----------------------------------+----------+--+---------+--+----------+--+---------+
Infoserve Group plc
Notes to the Condensed Consolidated Financial Statements (unaudited)
1.Significant accounting policies
Infoserve Group plc is a company domiciled in the UK. The address of the
Company's registered office is South Side Aviation, Leeds Bradford International
Airport, Leeds, LS19 7UG.
The condensed consolidated financial statements of the Group for the six months
ended 30 September 2009 comprise the financial statements of Infoserve Group plc
and its subsidiaries (together referred to as the "Group").
(a) Basis of preparation
These condensed consolidated financial statements have been prepared in
accordance with the accounting policies set out in the Annual Report of
Infoserve Group plc for the year ended 31 March 2009. The only change to these
accounting policies is in the application of IAS18, the affects of which are
detailed in part (c). The Annual Report and Financial Statements of the Group
are prepared in accordance with the IFRSs as adopted by the EU. The prior year
comparatives are derived from audited financial information for Infoserve Group
plc as set out in the Annual Report and Financial Statements for the year ended
31 March 2009 and the unaudited financial information in the consolidated
financial statements for the six months ended 30 September 2008. These condensed
consolidated financial statements have been prepared under the historical cost
convention, except in respect to certain financial instruments. The condensed
set of financial statements has been prepared applying the accounting policies
and presentation that were applied in the preparation of the Group's published
consolidated Annual Report and Financial Statements for the year ended 31 March
2009. They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the consolidated
Annual Report and Financial Statements of the Group as at and for the year ended
31 March 2009.
The condensed consolidated financial statements for the six months ended 30
September 2009 are unaudited and were approved by the directors on 15 December
2009.
The comparative figures for the financial year ended 31 March 2009 are not the
Group's statutory accounts for that financial year. The unaudited financial
information contained herein does not constitute statutory financial statements
within the meaning of section 434 of the Companies Act 2006. Statutory accounts
for the year ended 31 March 2009 were approved by the Board of Directors on 15
July 2009 and delivered to the Registrar of Companies. The audit opinion on the
statutory accounts for the year ended 31 March 2009 was unqualified, and
contained an emphasis of matter paragraph on going concern. It did not contain
any statement under section 498 of the Companies Act 2006.
The financial information herein should be read in conjunction with the Group's
2009 annual report published in July 2009, which includes the audited
consolidated financial statements the Group for the year ended 31 March 2009.
The directors note that the Group has net liabilities, net current liabilities
and sustained trading losses in the period.
(b) Estimates
The preparation of financial statements in conformity with IFRSs requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgment in the process of applying the Group's accounting
policies. Although these estimates are based on management's best knowledge of
the amount, event or actions, actual results ultimately may differ from those
estimates.
The preparation of the condensed consolidated financial statements requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, and income and expenses. In preparing these condensed consolidated
financial statements, the significant judgements made by the management in
applying the Group's accounting policies and key source of estimation
uncertainty were the same as those applied to the audited consolidated Annual
Report and Financial Statements as at 31 March 2009.
(c) Prior year restatement
As previously reported within the Annual Report and Financial Statements for the
year ended 31 March 2009, the Group historically recognised a proportion of its
online advertising revenue on new business at the point of sale and spread the
remainder of the revenue over the term of the agreement and spread the revenue
of its online advertising revenue on renewals evenly over the term of the
agreement. Following a review all online advertising revenue is spread evenly
over the term of the agreement.
The change to the treatment of new business has the following impact on the
financial results of the Group:
+-----------------------------------+--------------+--+---------------+--+-----------+
| | | | Six months | | Year |
| | | | ended | | ended |
| | | | 30 September | | 31 March |
| | | | 2009 | | 2009 |
| | | | (unaudited) | | GBP'000 |
| | | | GBP'000 | | |
+-----------------------------------+--------------+--+---------------+--+-----------+
| | | | | | |
+-----------------------------------+--------------+--+---------------+--+-----------+
| Decrease in revenue | | | (10) | | (100) |
+-----------------------------------+--------------+--+---------------+--+-----------+
| Increase in deferred revenue | | | 10 | | 100 |
| (within trade and other payables) | | | | | |
+-----------------------------------+--------------+--+---------------+--+-----------+
| Increase in losses | | | 10 | | 100 |
+-----------------------------------+--------------+--+---------------+--+-----------+
(d) Going concern
As announced on 20 November 2009 the Group has recently agreed in principle to
enter into a further loan facility agreement with D R Hood which, if completed,
would provide access to additional funding of up to GBP0.8m. Alongside this new
loan, D R Hood has conditionally agreed to convert GBP2m of his existing loans
into ordinary shares at 5p per share. The Proposals are conditional upon the
Company obtaining a waiver from the Panel and the waiver being approved by
independent shareholders. Whilst the directors remain confident of continuing
to operate within the current bank overdraft and of securing additional funding
from Mr Hood, there can be no certainty in these respects. Accordingly the
directors believe that this represents a material uncertainty that may cast
significant doubt upon the Group's and the Company's ability to continue as a
going concern and it may therefore be unable to realise assets and discharge
liabilities in the ordinary course of business. Nevertheless after making full
enquiries, and considering all the uncertainties described above, the directors
have no reason to believe that the Group and the Company will be unable to
continue in operational existence for the foreseeable future. For these reasons,
they continue to adopt the going concern basis in preparing the Interim report
and financial statements. The financial statements do not include any
adjustments that would result from the basis of preparation being inappropriate.
2.Segmental information
The directors consider that the Group only has one business segment being the
provision of e-marketing services; other income is ancillary and does not
constitute a segment in its own right. The turnover, operating loss and net
liabilities of the Group are attributable to the one class of business.
3.Directors' remuneration
+--------------------------------+---------------+---+--------------+---+-----------+
| | Six months | | Six months | | Year |
| | ended | | ended | | ended |
| | 30 September | | 30 September | | 31 March |
| | 2009 | | 2008 | | 2009 |
| | (unaudited) | | (unaudited) | | GBP'000 |
| | GBP'000 | | GBP'000 | | |
+--------------------------------+---------------+---+--------------+---+-----------+
| | | | | | |
+--------------------------------+---------------+---+--------------+---+-----------+
| Directors' emoluments | 163 | | 207 | | 432 |
+--------------------------------+---------------+---+--------------+---+-----------+
| Company contributions to money | 22 | | 26 | | 59 |
| purchase pension plans | | | | | |
+--------------------------------+---------------+---+--------------+---+-----------+
| Share based payments | 5 | | 24 | | 8 |
+--------------------------------+---------------+---+--------------+---+-----------+
| Compensation for loss of | - | | - | | 30 |
| office | | | | | |
+--------------------------------+---------------+---+--------------+---+-----------+
| | | | | | |
+--------------------------------+---------------+---+--------------+---+-----------+
4.Related party transactions
The remuneration of the directors, who are the key management personnel of the
Group, is disclosed in note 3. A number of key management personnel or their
related parties, hold positions in other entities that result in them having
control or significant influence over the financial or operating policies of
those entities.
A number of these entities transacted with the Group in the reporting period.
The terms and conditions of those transactions with key management personnel and
their related parties were no more favourable than those available, or which
might have reasonably be expected to be available, on similar transactions to
non-key management personnel related entities on an arm's length basis.
Directors of the Company and their immediate relatives control 66.27 per cent
(30 September 2008: 66.27 per cent) of the voting shares of the Company.
At 30 September 2009, an amount of GBP2,911,552 (30 September 2008:
GBP2,661,552) (being the principal loan excluding interest) was owed by
Infoserve Limited to D R Hood, a director and principal shareholder of Infoserve
Group plc. Mr Hood has not sought repayment of the capital and interest on his
loans and Mr Hood has indicated that he will not enforce loan repayments in the
short term whilst discussions over refinancing the Group are in progress.
Interest is charged on the first GBP2,661,552 at a rate of 2.5% above Barclays
Bank plc base rate and at 5.0% above Barclays Bank plc base rate on the
remaining GBP250,000. Interest charged on the loans during the year amounted to
GBP46,927 (30 September 2008: GBP100,246) and GBP600,588 (30 September 2008:
GBP485,291) remained unpaid at the period end and is included within
interest-bearing loans and borrowings.
Infoserve Limited entered into a lease agreement to rent property from Amerdale
Investments LLP, a business in which D R Hood has an interest. The
administrative expenses incurred from Amerdale Investments LLP amounted to
GBP132,233 (30 September 2008: GBP137,876). The amount owed by Infoserve Limited
at the balance sheet date was GBP283,087 (30 September 2008: GBP86,094) and
represents four quarters of rent deferral. Repayments commenced in October 2009.
The lease is for a term of fifteen years at GBP246,405 per annum, with the first
year being rent free. The period between rent reviews is five years.
During the period, Infoserve Limited made sales of GBP16,531 (30 September 2008:
GBP16,698) to and purchases of GBP30,913 (30 September 2008: GBP40,492) from
Multiflight Limited, a company in which D R Hood is a director and principal
shareholder. At 30 September 2009 Infoserve Limited owed GBP54,067 (30 September
2008: GBP29,421) to Multiflight Limited.
Trade and other payables in the Group's balance sheet includes an amount of
GBP116,460 (30 September 2008: GBP62,270) which represents salaries owed to the
non-executive directors and the social security costs thereon.
5.Taxation
The tax position for the period is based on the anticipated effective tax rate
for the year to 31 March 2010.
The Board has prepared forecasts and continues to believe that the Group will
become profitable in the future and therefore utilise the considerable tax
losses built up over the last few years. It has accordingly carried forward a
proportion of this recovery as a deferred tax asset in the balance sheet.
6.Earnings per share
The calculation of earnings per share is based upon the loss after taxation of
GBP194,615 (30 September 2008 (restated): GBP608,359) divided by 19,073,441 (30
September 2008: 19,073,441), being the number of ordinary shares in issue during
the period. Share options in issue did not have a dilutive impact on the loss
per share calculation.
A copy of this announcement is available from the Company's website,
www.infoservegroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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