1
Stockcube plc
Interim Report 2007
The Stockcube group produces research and technical analysis of the relative strengths and weaknesses
of price trends of stocks, stock and sector indices, currencies and bonds and financial data to
assist institutional and private investors with the timing of investment transactions.
Highlights for the six months ended 30 June, 2007
* Turnover of �1,439,000 (2006: �1,371,000)
* Operating profit up 7% to �208,000 (2006: �195,000)
* Profit before tax up 13% to �339,000 (2006: �302,000)
* Earning per share up 13% to 2.6p (2006: 2.3p)
"While we are not able to report the same strong growth for the first six months of this year as we
did in 2006 we have made steady progress with all of our business elements beginning to pay for
themselves.
"We expect this to be the pattern for the remainder of the year and, certainly, the quality of our
analysis and the value of the services we perform for our clients have never been better, in these
particularly choppy times.
"At the end of June we repaid to shareholders the just over half of our cash holdings as we
considered them to be surplus to our main focus of concentrating on organic growth in operating
income and profits."
Julian Burney
Chief Executive of Stockcube,
22 August, 2007
Enquiries:
Julian Burney Chief Executive Officer +44 (0)20 7352 4001
Shirley Yeoh Finance Director +44 (0)20 7352 4001
William Vandyk/David Seal Blue Oar Securities plc +44 (0) 20 7448 4400
Our website is: www.stockcube.com
Chairman's Statement
Introduction
We are pleased to report that our reputation for providing clear and timely research and analysis of
the world's major financial markets continues to generate tangible reward.
Financial review
Turnover for the six months ended 30 June, 2007 was up 5% to �1,439,000 (2006: �1,371,000) and group
operating profit increased by 7% to �208,000 from �195,000 in 2006.
Profit before tax amounted to �339,000 an increase of 13% over �302,000 in 2006.
Basic earnings per share of 2.6p compare to 2.3p in 2006, an increase of 13%
Interest income rose 19% from 2006.
We had cash balances of �2,263,000 at 30 June, 2007 compared with �4,185,000 at the beginning of the
year, after repaying �2,233,000 of capital on 27 June, 2007 under the terms of our capital
reorganisation. Shareholders with redeemable capital amounting to �170,071 elected to defer repayment
until June 2008. Total net assets per share amounted to 26.7p per share (2006: 47.0p) of which 'free'
cash (net of the sum required to repay outstanding redeemable capital) represented 21.8p per share
(2006: 44.1p).
In accordance with the scheme rules, the Board reduced the exercise prices under the Founder's and
the Executive No. 2 option schemes from 85p to 60p in recognition of the impact of the capital
reorganisation and cash repayment of 27June 2007.
Review of operations
Our institutional investor consultancy showed a net 3% drop in income during the first six months of
the year, more a reflection of a particularly strong result in 2006 than weakness in 2007.
While the growth in the number of subscriptions for Fullermoney, our global investment strategy
service, slowed to a more modest 3% in the first six months, due in some large measure to the
weakness of the US dollar, we are showing a 12% increase year on year. Moreover, closer attention to
pricing the service is reflected in a 29% increase in comparable revenues. Fullermoney's bi-annual
Chart Seminars continue to be sold -out.
The benefits of re-positioning our wider market services under the Investors Intelligence brand from
individual subscriptions to institutional customers on a business to business basis are reflected in
a 15% increase in income over the same period in 2006. However, the 9% increase in Chartcraft's net
contribution to group profit in US dollar terms was cancelled out, almost exactly, by the adverse
movement in the US$/� exchange rate.
Ecube continues to show promise as a software developer, website designer and host for third parties
within the financial services sector with a 70% increase in third party revenues. While heavily
dependent on project development income, which can be erratic, we expect to see more stable growth in
hosting and maintenance income as we extend and build increasingly complex applications for
customers.
Sportcal continues to trade profitably each month and contributed �13,000 to group profits in the
first six months.
Trading outlook
Whereas we foresee a decrease in interest income following repayment of over half the group's cash
holdings on 27 June, 2007, we are confident that the steady progress in the group's trading
activities in the first six months will continue throughout the remainder of 2007.
Edward Forbes,
Chairman
London
22 August 2007
Stockcube Plc
Consolidated Interim Income Statement
Unaudited Unaudited Audited
Six Months to Six Months to Year to
30 June 30 June 31 Dec
2007 2006 2006
�'000 �'000 �'000
Continuing Operations
Revenue 1,439 1,371 2,713
Cost of sales (172) (182) (319)
-------- -------- --------
Gross Profit 1,267 1,189 2,394
Administrative expenses (1,059) (994) (2,104)
-------- -------- -------
Group operating profit 208 195 290
Investment revenues 118 99 205
Share of operating profit of associate 13 8 11
-------- ------- -------
Profit on ordinary activities before taxation 339 302 506
Income Tax Expense (85) (78) (144)
-------- ------- ------- Profit on ordinary
activities after taxation 254 224 362
-------- ------- -------
Earnings per share
Basic 2.6p 2.3p 3.8p
Diluted 2.3p 2.3p 3.3p
Stockcube Plc
Consolidated Balance Sheet
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 Dec
2007 2006 2006
�'000 �'000 �'000
Non Current Assets
Intangible assets 17 17 17
Property, plant and equipment 346 324 336
Investment in associates 250 234 237
-------- -------- --------
613 575 590
-------- -------- --------
Current assets
Trade and other receivables 628 506 719
Cash and cash equivalents 2,263 4,242 4,185
-------- -------- --------
Total Current Assets 2,891 4,748 4,904
-------- -------- --------
Total Assets 3,504 5,323 5,494
-------- -------- --------
Equity
Called up share capital - Ordinary shares of 10p each 961 961 961
Share premium account 1,350 3,774 3,774
Merger reserve 568 568 568
Translation reserve 2 (8) 5
Retained earnings (481) (778) (639)
-------- -------- --------
Total equity attributable to equity holders of the parent 2,400 4,517 4,669
-------- -------- --------
Current Liabilities
Trade and other payables 934 806 825
Financial liabilities - 'B' shares of 5p each 170 - -
-------- -------- --------
Total current liabilities 1,104 806 825
-------- -------- --------
Total equity and liabilities 3,504 5,323 5,494
-------- -------- --------
Approved by Order of the Board on 22 August 2007
Julian Burney
Director
Stockcube Plc
Consolidated Statement of changes in shareholders' equity
At 30 June 2007
Group Share Share Merger Translation Retained Total
capital premium reserve reserve Earnings equity
Ordinary account account
shares
�'000 �'000 �'000 �'000 �'000 �'000
At 31 December 2005 961 3,774 568 (28) (929) 4,346
Retained profit for the period - - - - 223 223
to 30 June 2006
Exchange difference on
translating foreign operations - - - 20 - 20
Dividends paid - - - - (72) (72)
------- ------- ------ ------- ------- ------
At 30 June 2006 961 3,774 568 (8) (778) 4,517
Retained profit for the year - - - - 139 139
Exchange difference on _ _ _
translating foreign operations 13 - 13
------- ------- ------ ------- ------- ------
At 31 December 2006 961 3,774 568 5 (639) 4,669
Retained profit for the period - - - - 254 254
Exchange difference on _ _ _
translating foreign operations (3) - (3)
Capital reorganisation
"B" Shares issued - (2,403) - - - (2,403)
Associated costs - (21) - - - (21)
Dividends paid - - - - (96) (96)
------- ------- ------ ------- ------- -------
At 30 June 2007 961 1,350 568 2 (481) 2,400
------- ------- ------ ------- ------- -------
Stockcube Plc
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six Months to Six Months to Year to
30 June 30 June 31 Dec
2007 2006 2006
�'000 �'000 �000
Cash flows from operating activities
Operating profit 208 195 290
Depreciation 8 7 18
-------- -------- --------
Operating profit before changes in working capital 216 202 308
Decrease/(increase) in trade and other receivables 90 (60) (293)
Increase in trade and other payables 11 142 280
-------- -------- --------
Cash generated from operations 317 284 295
Income taxes refunded/(paid) 12 36 (116)
-------- -------- --------
Net cash inflow from operating activities 329 320 179
-------- -------- --------
Cash flows from investing activities
Interest received 118 99 205
Purchases of property, plant and equipment (19) (5) (27)
-------- -------- --------
Net cash generated from investing activities 99 94 178
-------- -------- --------
Cash flows from financing activities
Dividends paid (96) (72) (72)
Repayment of capital and associated costs (2,254) - -
-------- -------- --------
Net cash (used in) financing activities (2,350) (72) (72)
-------- -------- --------
Net (decrease)/increase in cash and cash equivalents (1,922) 342 285
Cash and cash equivalents at beginning of period 4,185 3,900 3,900
-------- -------- --------
Cash and cash equivalents at end of period 2,263 4,242 4,185
-------- -------- --------
Stockcube Plc
Notes to the Interim Report
for the six months ended 30 June 2007
1. Statement of Compliance
The condensed consolidated interim financial information has been prepared using accounting policies consistent
with International Financial Reporting Standards ("IFRS") as adopted for use in the EU. These are the
Group's first IFRS condensed consolidated interim financial statements for part of the period covered
by the first IFRS annual financial statements and IFRS 1 First Time Adoption of International
Financial Reporting Standards has been applied. The condensed consolidated interim financial
statements do not include all of the information required for full annual financial statements
The disclosures required by IFRS 1 concerning the transition from UK GAAP (Generally Accepted Accounting
Standards) to IFRS are given in note 8. It has not been necessary to restate any of the comparative
financial information as a consequence of this change.
The transitional arrangements for IFRS are set out in IFRS 1 "First-time Adoption of International Financial
Reporting Standards." The Group's transition date to IFRS is 1 January 2006 being the first day of
the comparative period to 31 December 2006, and accordingly the interim financial report together
with the comparative information have been prepared using accounting policies consistent with IFRS.
2. Accounting Policies
Basis of preparation of interim financial statements
The interim financial information has been prepared using accounting policies consistent with IFRS. The
Directors expect these IFRS to be applicable as at 31 December 2007.
IFRS transition
IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements
of IFRS in the transition period. The interim financial information has been prepared on the basis of
the following exemption:
* Business combinations prior to 1 January 2006 have not been restated to comply with IFRS3
"Business Combinations."
Basis of Consolidation
The financial information incorporates the results of the Company and entities controlled by the Company.
Control is achieved where the Company has the power to govern the financial and operating policies of
an investee entity to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income
statement from the effective date of acquisition, or from the date of disposal, as appropriate.
Where necessary, adjustments are made to the results of the subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions are eliminated on consolidation.
Goodwill
Goodwill arising on consolidation is recognised as an asset and reviewed for impairment at least annually. Any
impairment is recognised immediately in profit or loss and is not subsequently reversed.
Taxation
The taxation charge is based on the Directors' best estimate of the annual tax rate on the profit for the period
and represents the sum of current tax payable and deferred tax.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Deferred Tax is calculated at tax rates that are expected to apply in the period when the liability is settled
or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates
to equity items, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current assets and liabilities on a net basis.
Share based payment
The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form
of shares or share options, is recognised as an employee benefit expense in the income statement.
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to
the contractual provisions of the instruments.
Investments are classified as either held for trading or available for sale at initial recognition and this
designation is re-evaluated at each balance sheet date. Investments are initially measured at cost
including transaction costs. At subsequent reporting dates, investments available for sale are
measured at fair value or at cost where fair value is not readily ascertainable. Gains and losses
arising from changes in fair value are recognised directly in equity until the investment is disposed
of or is determined to be impaired, at which time the cumulative gain or loss recognised previously
in equity is included in the profit or loss for the period.
Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at
amortised cost using the effective interest method. A provision is established if there is objective
evidence that the Group will not be able to recover all amounts due. This provision is recognised in
the income statement.
Cash and cash equivalents comprise cash held by the Group and short-term deposits with an original maturity of
three months or less.
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost
using the effective interest method.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial information in conformity with generally accepted accounting practice requires
management to make estimates and judgements that affect the reported amounts of current and
contingent assets and liabilities and the reported amounts of revenues and expenses during the
reporting period.
Estimates and judgements are continually reviewed and are based on historical experience and other factors, and
expectations of future events that are believed to be reasonable under the circumstances. The
judgements made by management in applying the Group's accounting policies and the key sources of
estimation uncertainty are:
* Property, plant and equipment
These are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is provided at rates calculated to write off the value of each asset over its estimated useful
life. The value of the assets is reviewed for impairment if events or circumstances indicate the
carrying values may not be recoverable.
* Impairment of Goodwill - Intangibles and Investment in Associate
Determining whether goodwill is impaired requires an estimation of the value in use, which is calculated by
estimating the future cash flow expected to arise from the cash-generating unit and discounted by a
suitable discount rate in order to calculate the present value. No provision for impairment was made
in the period and the carrying value at the balance sheet date was �250,000.
* Share based payments
In determining the fair value of equity settled share based payments and the related charge to the income
statement, the Group makes assumptions about future events and market conditions. The fair value is
determined using a valuation model, which is dependent on future estimates including timing with
which the options will be exercised and the future volatility of the Group's share price. These
assumptions are based on publicly available information and reflect market expectations and the
advice of qualified experts. Different assumptions about these factors could affect the reported
value of share-based payments.
3. Turnover
Turnover, which is stated net of value added tax, represents the sales value of work done in the period.
Turnover is attributable mainly to the continuing activity of the provision of research and analysis of price
trends in stocks, commodities, currencies and interest rates.
An analysis of turnover by geographical market is given below:
By Origin Unaudited Unaudited Audited
Six Months to Six Months to Year to
30 June 30 June 31 Dec
2007 2006 2006
�'000 �'000 �'000
United Kingdom 1,321 1,247 2,483
United States of America 118 124 230
-------- -------- --------
1,439 1,371 2,713
-------- -------- --------
Segment Reporting
Segment information is presented in the consolidated interim financial statements in respect of the Group's
geographical segments, which are the primary basis of segment reporting.
By Segment UK USA Total UK USA Total
30 June 30 June 30 June 30 June 30 June 30 June
2007 2007 2007 2006 2006 2006
�'000 �'000 �'000 �'000 �'000 �'000
Segment Revenue 1,321 118 1,439 1,247 124 1,371
------------------------------ ------------------------------
Segment Results 268 43 311 304 43 347
Unallocated expenses (103) (152)
----- -----
Group operating Profit 208 195
Net Financing Income 118 99
Share of associate's
profits 13 8
----- -----
339 302
Income tax expense (85) (78)
----- -----
Profit for the period 254 224
----- -----
There is no material seasonality associated with the group's activities.
4. Earnings per share
The calculation of the basic earnings per ordinary share is based on profits after tax of �254,000 (December
2006: �362,000 and June 2006: �223,000) and on 9,610,630 ordinary shares.
The diluted earnings per share is based on 10,914,331 (Dec 2006: 10,952,135) ordinary shares which take into
account theoretical ordinary shares that would have been issued based on the exercise prices if all
outstanding options were exercised. There were no dilutive potential ordinary shares at 30 June 2006.
5. Dividends and other appropriations
Unaudited Unaudited Audited
Six Months to Six Months to Year to
30 June 30 June 31 Dec
2007 2006 2006
�'000 �'000 �000
Equity dividends on ordinary shares -Paid 96 72 72
-------- -------- --------
6. Capital reorganisation
On 20 June 2007, the Company was granted court approval to repay part of its capital by way of capitalisation of
part of the share premium account. For each one Ordinary share, five 'B' shares of 5p each were
credited as fully paid at par. Each 'B' share was then cancelled and repaid to shareholders on 27
June 2007, unless subject to an election to defer cancellation until 2008. The nominal value of 'B'
shares subject to this election as at 30 June 2007 was �170,071 and is shown as a financial liability
in the Balance sheet.
Total 'B' shares issued 48,053,150 shares at 5p each �2,402,657
Total 'B' shares redeemed on 27 June 2007 44,651,725 shares at 5p each �2,232,586
----------
Balance of 'B' shares to be redeemed in June 2008 3,401,425 shares at 5p each � 170,071
----------
7. Publication of non-statutory accounts
The results for the year ended 31 December 2006 have been audited whilst the results for the six months ended 30
June 2006 and 30 June 2007 are un-audited. The financial information contained in this interim
report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The statutory accounts for the previous year, which were prepared under UK GAAP, have been delivered
to the Registrar of Companies. The auditors' opinion on those accounts was unqualified and did not
contain a statement made under s237 (2) or s237 (3) of the Companies Act 1985.
The financial information for the six months ended 30 June 2007 has not been reviewed in accordance with the
guidance contained in Bulletin 1999/4 "Review of interim financial information" issued by the
Auditing Standards Board.
8. Reconciliation to equity and statement of recognised income and expense
In preparing the opening IFRS balance sheet, comparative information for the six months ended 30 June 2006 and
the financial statements for the year ended 31 December 2006, the Group has adjusted amounts
previously reported in financial statements prepared in accordance to UK GAAP.
* Explanation of transition to International Financial Reporting Standards
Reconciliation of equity UK GAAP Effect of IFRS
------------------------ transition of IFRS
Total equity �'000 �'000 �'000
At 1 January 2006 4,346 0 4,346
At 30 June 2006 4,502 15 4,517
At 31 December 2006 4,651 18 4,669
Reconciliation of Profit UK GAAP Effect of IFRS
------------------------- transition of IFRS
Net Profit after tax �'000 �'000 �'000
For the period ended 30 June 2006 208 16 224
For the year ended 31 December 2006 344 18 362
Effect of transition of IFRS
----------------------------
The equity and retained earnings have been adjusted by adding back goodwill previously amortised to
the Income statement under UK GAAP
A separate reserve called the Translation reserve has been set up to show the effect of exchange
differences.
Cashflow statement
------------------
The Group's consolidated cash flow statement was presented in accordance with IAS7. The statements
present substantially the same information as that required under UK GAAP, with the following
exceptions:
* Under UK GAAP, cash flows are presented under nine standard headings, whereas under IFRS, cash
flows are required to be classified under operating, investing and financing activities.
* Under UK GAAP, cash and cash equivalents, which include cash and short term deposits, were
shown as cash in hand and deposits repayable on demand.
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