TIDMSKC
Stockcube preliminary results for 2009
Stockcube Plc
Preliminary Results for the year ended 31 December 2009
HIGHLIGHTS
2009 2008
?'000 ?'000
Turnover 2,254 2,586
Profit before tax 22 192
Profit after tax 75 82
Earnings - pence per share - basic 0.78p 0.86p
Normalised Earnings - pence per share - basic 0.89p 1.86p
Earnings - pence per share - diluted 0.78p 0.86p
Group turnover 12.8% down on 2008
Profit before tax down to ?22,000 from ?192,000
Normalised earnings per share in 2009 (before share options charge of ?62,000 and R&D tax credits of
?51,000) down to 0.89p from 1.86p in 2008 (before share options charge of ?41,000 and deferred tax
charge of ?55,000)
Balance sheet with net assets of 27.3p per share, with 26.6p per share in cash and marketable bonds
No dividend will be proposed for the year (2008: 0.75p per share)
Julian Burney, Chief Executive Officer, said:
"As was stated in our interim statement for 2009 we did not foresee an immediate increase in stock
market activity and the trading outlook for the year ended 31 December 2009 was uncertain.
Stockcube's costs are largely fixed so that the group's operating profitability is highly sensitive
to variations in our turnover. Turnover for 2009 was 12.8% below that achieved in 2008 and, although
the Company remained profitable, the reduction in turnover was directly reflected in a drop of 52% in
earnings per share on a like for like basis from 2008.
We believe that confidence and market activity will take some years to return to pre-2008 levels.
With this background in mind, the board of Stockcube has been actively reviewing how to balance
shareholders' interests with the need to maximise cashflows and remunerate staff competitively. The
Board has concluded that continuing to have the Company's shares admitted to trading on AIM is no
longer appropriate and that the interests of non-management shareholders and their associates would
be better served by a tender offer to buy back and cancel their holdings. Proposals to this effect
are being made to shareholders today."
For further information:
Stockcube plc Julian Burney 020-7352-4001
Shirley Yeoh
Astaire Securities plc William Vandyk 020-7448-4400
Chairman's Statement
Introduction
The well-publicised economic shocks of the previous two years are still being absorbed and 2009 saw a
continuation of investor reluctance or inability to invest. We expect that the downturn in investment
activity, particularly by institutional investors, will take some years to return to pre-2008 levels.
Overheads continued to be closely monitored during the year.
Financial review
Turnover showed a net decrease of 12.8% from ?2.586m in 2008 to ?2.254m for the year ended 31
December 2009. Profit before tax was ?22,000, a decrease of 89% from 2008 (?192,000). Normalised
profit after tax for 2009 was ?86,000, after adjusting for the apportioned employee benefits arising
from the grant of share options during the year and R&D tax credits, a decrease of 52% from 2008.
There was a profit per share of 0.78p compared to a profit of 0.86p per share in 2008. The like for
like decrease in normalised EPS between 2009 and 2008 was 52% from 1.86p to 0.89p.
Business review
Stockcube Research, our institutional consultancy service, suffered a 31% drop in revenues compared
to 2008 directly reflecting the impact of the economic downturn in global markets and the sharp drop
in stock turnover. The impact of lost turnover in our institutional business outweighed the gains
made elsewhere in the group.
Our Fullermoney service recorded a 14% decrease in income.
More positively, Investors Intelligence showed a 7% increase in revenues due to increases in the
provision of business to business data and analysis services and Chartcraft recorded a 12% increase
in revenues in US dollar terms over 2008 and a similar increase in pounds sterling.
Ecube, our in-house software business, which develops and supports the group's technology needs,
recorded an increase of 42% in revenues from third parties in 2009 as new customers were gained in
the financial services sector and as existing customers commissioned further systems work.
Our Treasury activities were stepped up during the year to generate return of 4.6% on cash and
available-for-sale investments.
Key performance indicators
The Board measure the Group's performance, principally using the following financial indicators:
2009 2008
?'000 ?'000 % (decrease)
Normalised operating (loss)/profit (34) 115 (130%)
Normalised profit before tax 84 233 (64%)
Normalised earnings per share 0.89p 1.86p (52%)
Dividend (proposed and paid) - 0.75p -
Normalised profit before tax of ?84,000 for 2009 is profit before the share option charge of ?62,000
and for 2008 is profit before the share options charge of ?41,000 .
Staff
I should like to thank all our staff for their contributions during the year.
Dividend
In view of the results for 2009, the company will not be proposing a final dividend for the year
(2008: 0.75p).
Proposals for a reduction of capital, tender offer by Astaire Securities Plc, purchase of own shares
and "de-listing" from AIM.
The Directors have concluded that for the reasons outlined below, admission of the Company's shares
to trading on AIM (the "Listing") does not fulfil the Company's aim of conferring liquidity to the
Company's shares or providing a means of expanding the Company's activities:
* since the Listing, the directors have been seeking acquisitions which would have synergy with
Stockcube's businesses, would enhance shareholder value and would be available at what the
directors consider appropriate values. The directors have now concluded that such
acquisitions are very unlikely to be achieved;
* the directors have also concluded that the niche nature of the Company's methodologies and
services regarding investment analysis and the method of their distribution are more suited
to organic growth rather than growth by acquisition;
* this means that a key justification for the Listing, to provide a currency for growth by
acquisition, is no longer considered applicable by the directors and is aggravated by poor
levels of share liquidity;
* the market capitalisation of the Company is considerably below the level when it floated in
May 2000 and its shares have traded in the last three months at a discount to net tangible
assets and to cash and investment holdings of between 40% and 51%;
* the Company's shares suffer from a lack of liquidity and in practical terms a relatively
small free float, which the board believes reduces demand. Trades in small volumes of shares
tend to have a disproportionate effect on the share price and hence market capitalisation of
the Company;
* low liquidity is coupled with high costs associated with the Listing relative to the
Company's market capitalisation (approximately ?143,000 per year); and
* recent and current uncertainty within the investment community has led to a significant
reduction in the Group's income particularly from institutional customers and the directors
believe that this necessitates a reorganisation of the Group's products and operational
structure to remove surplus costs so that its cost base is more in line with the lower growth
environment the directors see for the investment industry.
In the light of a number of these factors, the Company repaid ?2,402,657.50 of surplus cash (in
aggregate) to shareholders in 2007 and 2008.
The directors have formed the view that for the foreseeable future any benefits to the Company of the
Listing are outweighed by the cost and resources required (i) to manage the Group in the public
arena; and (ii) for an entity of its current size, to comply with increasingly complex financial
reporting requirements.
Accordingly, the directors now firmly believe that the Company should seek cancellation of the
admission of the its shares to trading on AIM. It is anticipated that, subject to shareholder
approval and other conditions being met, the Company's ordinary shares will be cancelled from trading
on AIM.
In addition, the directors have decided that they do not intend to provide, seek or support any
arrangements whereby the Company's shares can be bought and sold on a market or on a matched bargain
basis. As such, the directors believe that the Company's shares will be unlikely to be readily
capable of sale and where a buyer is identified, it will be difficult to place a fair value on any
such sale.
The directors recognise that many shareholders will not be able or willing to continue to own shares
in the Company following the proposed de-Listing, particularly in view of the directors' intention of
increasing the emphasis on staff incentivisation by results-driven remuneration, coupled with a nil
dividend policy for the foreseeable future. Accordingly, the board has arranged for the Company to
apply to Court to reduce its share premium account, for Astaire Securities Plc to make a tender offer
to shareholders to buy their shares for cash and for such shares to then be bought back by the
Company and cancelled (all subject to court approval and the approval of shareholders at a general
meeting of the Company). Holders of shares totaling 57.6% of the issued shares have confirmed that
they do not wish to participate in the tender offer which will be made to the holders of the
remaining 42.4% of issued shares. A circular setting out the above proposals is being issued by the
Company today.
Edward Forbes,
Chairman,
London
30 March 2010
Consolidated Income Statement
for the year ended 31 December 2009
2009 2008
?000 ?000
Continuing Operations
Revenue 2,254 2,586
Cost of sales (287) (328)
------- -------
Gross Profit 1,967
2,258
Administrative expenses (2,063) (2,184)
------- -------
Operating(loss)/ profit (96) 74
Finance income 118 118
------- -------
Profit before taxation 22 192
Taxation 53 (110)
------- -------
Profit for the year attributable to equity holders of the parent 75 82
------- -------
Basic earnings per share 0.78p 0.86p
Diluted earnings per share 0.78p 0.86p
Consolidated Statement of Financial Position
At 31 December 2009
Company Number 3838579
2009 2008
?000 ?000
Non current assets
Intangible assets 17 17
Available for sale investments 1,059 700
Property, plant and equipment 300 329
------- -------
1,376 1,046
------- -------
Current assets
Trade and other receivables 338 229
Available for sale investments 727 515
Cash and cash equivalents 774 1,413
------- -------
Total current assets 1,839 2,157
------- -------
Current liabilities
Trade and other payables (588) (603)
Current tax payable - (60)
------- -------
Total current liabilities (588) (663)
------- -------
Net current assets 1,251 1,494
------- -------
Net assets 2,627 2,540
------- -------
Equity
Share capital 961 961
Share premium account 1,294 1,294
Merger reserve 568 568
Share options reserve 103 41
Available for sale investments reserve 11 9
Translation reserve - (20)
Retained earnings (310) (313)
------- -------
Total equity 2,627 2,540
------- -------
Consolidated Statement of Cash Flows
for the year ended 31 December 2009
2009 2008
?000 ?000
Net cash(outflow)/ inflow from operating activities (105) 526
-------- --------
Cash flows from investing activities
Interest and other income received 118 118
Sales of available-for-sale investments 1,601 668
Purchases of property, plant and equipment (9) (10)
Purchase of available-for-sale investments (2,172) (1,874)
-------- --------
Net cash used in investing activities (462) (1,098)
-------- --------
Cash flows from financing activities
Capital reorganisation - cash repaid to shareholders and
associated expenses - (203)
Equity dividends paid (72) (120)
-------- --------
Net cash used in financing activities (72) (323)
-------- --------
Net decrease in cash and cash equivalents (639) (895)
Cash and cash equivalents at beginning of year 1,413 2,308
-------- --------
Cash and cash equivalents at end of year 774 1,413
-------- --------
Notes
1. Nature of financial information
This financial statements does not constitute financial statements under Section 434 of the Companies
Act 2006. The results of the year ended 31 December 2008 are extracts from the Group financial
statements which have been delivered to the Registrar of Companies. They carry an unqualified
auditor's report and did not contain a statement under Section 495 of the Companies Act 2006and did
not include references to any matters to which the auditor drew attention by way of emphasis. The
statutory accounts for the year ended 31 December 2009 have not yet been delivered to the Registrar
of Companies nor have the auditors reported on them. They will be finalised on the basis of the
information presented by the Directors in this preliminary announcement.
2. Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently
throughout the period covered by these financial statements.
Basis of preparation
The financial information has been prepared in accordance with International Financial Reporting
Standards ("IFRS"), as adopted by the EU.
The financial statements have been prepared on a historical cost basis, except for available for sale
assets which are measured at fair value.
Basis of consolidation
The group financial statements incorporate the financial statements of Stockcube PLC and all of its
subsidiary undertakings for the year to 31 December 2009.
All subsidiaries are controlled by Stockcube Plc. Control is achieved where the Company has the power
to govern the financial and operating policies of than investing entity so as to obtain benefits from
its activities.
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-
group transactions are eliminated in preparing the consolidated financial statements.
3. Revenue
Revenue, which is stated net of value added tax, represents the sales value of work done in the
year.
Revenue is attributable mainly to the continuing activity of the provision of research and
analysis of price trends in stocks, commodities, currencies and interest rates.
4. Operating segments
Segmental information is presented in the consolidated financial statements based on how information
is reported to the Chief Operating Decision Maker. The Group derives its revenues from three separate
streams and these have formed the basis of the reportable segments.
All inter-segment sales are transacted at arms-length basis. The results of each segment have been
prepared using accounting policies consistent with the Group as a whole.
Consultancy Subscriptions Technology Total Consultancy Subscriptions Technology Total
31Dec 31Dec 31Dec 31 Dec 31Dec 31Dec 31Dec 31 Dec
2009 2009 2009 2009 2008 2008 2008 2008
?000 ?000 ?000 ?'000 ?000 ?000 ?000 ?000
External 894 1,153 207 2,254 1,303 1,137 146 2,586
Revenue
Inter-segment - - 179 179 - - 273 273
sales - - - -
Eliminations (179) (179) (273) (273)
Total Revenue 894 1,153 207 2,254 1,303 1,137 146 2,586
Segment 20 96 (12) 104 175 121 (40) 256
Results
Unallocated
Expenses (200) (182)
Group
Operating
(Loss)/profit (96) 74
Net Financing
income 118 118
Profit before 22 192
tax
Income
tax(repayment)
/ Expense 53 (110)
Profit for the
year 75 82
Consultancy Subscriptions Technology Total Consultancy Subscriptions Technology Total
31Dec 31Dec 31 Dec 31Dec 31Dec 31Dec 31 Dec
2009 31Dec 2009 2009 2008 2008 2008 2008
2009
?000 ?000 ?000 ?'000 ?000 ?000 ?000 ?000
Segment Assets 1,275 1,645 295 3,215 1,614 1,408 180 3,203
Segment (233) (301) (54) (588) (334) (291) (37) (663)
Liabilities
Net assets 1,042 1,344 241 2,627 1,280 1,117 143 2,540
Group assets and liabilities have been allocated to segments based on turnover.
The Group's operations are in two geographical segments, the United Kingdom and United States.
UK US UK US
2009 2009 Total 2008 2008 Total
?000 ?000 ?000 ?000 ?000 ?000
External turnover 1,765 489 2,254 2,237 349 2,586
------ ------ ------ ------ ------ ------
No customer accounts for more than 10% of group revenue.
All non-current assets are located in the UK.
5. Earnings per share
2009 2008
Earnings ?000 ?000
Earnings for the purposes of basic and diluted earnings per share being
net profit attributable to equity shareholders 75 82
-------- --------
Number of shares '000 '000
Weighted average number of ordinary shares for the purposes of basic
earnings per share 9,611 9,611
-------- --------
Profit per ordinary share (pence):
Basic 0.78p 0.86p
Normalised basic 0.89p 1.86p
Diluted 0.78p 0.86p
Normalised diluted 0.89p 1.86p
Normalised earnings per share is calculated by adding back the share option benefits charge of
?62,000 and adjusted R&D tax credits of ?51,000 (2008: share options benefits charge of ?41,000 and
deferred tax charge of ?55,000), to give an adjusted earnings after tax of ?86,000 (2008: ?178,000).
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. A calculation is done to
determine the number of shares that could have been acquired at fair value (determined as the average
annual market share price of the company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares calculated as above is compared
with the number of shares that would have been issued assuming the exercise of the share options.
Based on these calculations there were no dilutive potential ordinary shares in 2009 (2008: nil) as
the market price is less than the grant price of the options. 1,564,647 options were potentially
dilutive at 31 December 2009.
6 . Cash (used in)/generated from operations
Group 2009 2008
?000 ?000
Operating (loss)/profit (96) 74
Depreciation 38 20
Exchange differences 20 (27)
Share options charge 62 41
Available for sale investments revaluations 2 -
(Increase)/decrease in trade receivables (109) 562
Increase/(decrease) in trade payables 25 (95)
-------- --------
Cash (used in) generated from operations (58) 575
Tax paid (47) (49)
-------- --------
Net cash (outflow)/inflow from operating activities (105) 526
-------- --------
Company 2009 2008
?000 ?000
Operating loss (475) (181)
Provision for amounts due from group undertaking 275 -
Share options charge 62 41
Available for sale investments revaluations 2 -
Decrease in trade and other receivables 7 198
Increase in trade and other payables 25 354
-------- --------
Net cash (outflow)/inflow from operating activities (104) 412
-------- --------
7. Post Balance Sheet Event
Recent and current uncertainty within the investment community has led to a significant reduction in
the Group's income, particularly from institutional customers.
The Directors now firmly believe that the Company should seek cancellation of the admission of the
Ordinary Shares to trading on AIM.
The proposal to Shareholders to delist the Company's shares to trading on AIM will constitute a post
balance sheet event.
8. Annual report and accounts
The annual report and accounts will be posted to shareholders on 31 March 2010 and copies will be
available free of charge during normal business hours on any day (except Saturdays, Sundays and
public holidays) at the offices of the Company at Unit 1.23 Plaza 535, King's Road, London SW10 0SZ.
Stockcube PLC
Stockcube (LSE:SKC)
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