TIDMWSAG
RNS Number : 4868J
Woodburne Square AG PLC
30 June 2011
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30 June 2011
Woodburne Square Ag plc
("Woodburne Square" or the "Company")
Final Results for the year ended 31 December 2010
The Board of Woodburne Square, the silver and precious metals
focused investment company, is delighted to announce its final
results for the year ended 31 December 2010.
Financial and Operational Highlights
-- Net assets increased by 1.4million to GBP1.458 million
(compared to GBP95,000 in 2009);
-- Profit increased to GBP1.272 million (compared to a loss of
GBP823,000 in 2009);
-- Earnings per share of 2.5 pence (compared to a loss of 1.6
pence in 2009)
-- Cash and cash equivalents increased by 323% to GBP1.576
million (compared to a GBP488,000 in 2009)
-- Successfully shifted the strategic direction of the business
to focus on investment opportunities in the precious metals
securities market with a particular focus on silver.
Post-period Updates
-- Raised GBP605,000, before expenses, on 28 February 2011. This
funding will be used to make further investments in high quality
silver companies listed on the TSX and ASX;
-- Fully diluted NAV increased by 34% from 2.52p on 7 January
2011, to 3.37p on 7 April 2011, within three months of the
implementation of the new strategy;
-- Next NAV update to be announced to the market on 7 July
2011.
Martin Kiersnowski, Chairman of Woodburne Square, commented:
"2010 saw a transformation of the Company, including directorate
changes and a business strategy overhaul reflected in the name
change to Woodburne Square AG Plc. Changing the strategic focus of
the Company to seek value in precious metals securities markets,
paying particularly attention to silver, has been a key driver
during the period. The restructuring of the Group's activities has
been vindicated with the positive financial highlights reported
above.
"Whilst there will continue to be high level of volatility in
commodity stock valuation, the Board remains positive about the
outlook for silver in terms of price, silver equities and our
portfolio in particular. Operational gearing means that shares in
the high quality silver plays in which we have invested should
prosper, and we therefore view the short and medium term outlook
with extreme confidence."
Forward looking information
This financial report contains certain forward looking
statements with respect to the financial condition, results,
operations and business of the Group. These statements and
forecasts involve risk and uncertainty because they relate to
events that depend on circumstances in the future. There are a
number of factors that could cause actual results or developments
to differ from those expressed or implied by these forward looking
statements.
For further information please contact
Woodburne Square Ag plc
Martin Kiersnowski, Chairman
Tel: 0207 562 3350
Tom Winnifrith, Chief Investment Officer Tel: 01624 676848
Libertas Capital Corporate Finance Limited
Sandy Jamieson
Tel: 0207 569 9650
Rivington Street Corporate Finance
Dru Edmonstone
Tel: 020 7562 3350
Bishopsgate Communications
Laura Stevens/Giang Nguyen
Tel: 0207 562 3350
Chairman's Statement
Introduction
I would like to introduce myself as your new Chairman and am
pleased to announce the results for Woodburne Square AG plc ("The
Company" or "Woodburne Square"), covering the 12 month period ended
31 December 2010. This report will discuss the Company's strategic
change in direction to focus on investment opportunities in the
precious metals securities market, particularly focused on silver,
and will provide post period updates to give an indication of
expectations for 2011.
Overview
On 9 November 2010, I was appointed Chairman of the Board
following Jonathan Lander's resignation. Subsequently, upon
shareholder approval, the investment focus of the Company was
changed with a mandate to invest in precious metal securities,
namely silver, in companies quoted on stock exchanges in the UK,
Canada and Australia. Additionally, the Company disposed of the
majority of its non-core operations during the period.
This strategic change in business direction followed the SF t1ps
Smaller Companies funds - Growth and Gold - acquiring a 21%
shareholding in the Company on 5 November 2010.
The Company's French subsidiaries, Directinet SA and
Netcollections SAS were sold in January 2010 to Bisnode AB.
Following these disposals, the Company settled a lease obligation
in respect of its London offices and repaid bank debt. A final
consideration of EUR460,097 was agreed with Bisnode in July 2010 in
accordance with calculations set out in the Sale and Purchase
Agreement.
Additionally, ongoing costs associated with the running of the
Company were significantly reduced with full time staff being
replaced by non-executive directors and part-time advisors in
France.
During the year, the principal activity of the Company was
dealing with post-completion issues in relation to the sale of
Directinet and Netcollections and building a new investment
strategy designed to increase shareholder value.
Investing Policy
Going forward, our investment strategies will focus on:
-- Investing in companies involved in the exploration,
development and production of precious metals, with a focus on
silver;
-- A diversified spread of investments made into a number of
different companies;
-- Target companies that are predominately quoted on stock
exchanges, however, if we see value in unquoted companies, we will
review and potentially invest;
-- Passive investments, with no monies being allocated to
managed funds or active managed investment vehicles;
-- A minimum level of cash being held by the Company in the UK
at all times, to cover day to day running costs.
Additionally:
-- Mr. Tom Winnifrith, manager of the SF t1ps Smaller Companies
Gold Fund, has been appointed as the Company's Chief Investment
Officer pursuant to the Investment Adviser's Agreement which has
been entered into with t1ps Investment Management (IoM)
Limited.
-- The Company will not take on any debt to finance the
investments;
-- The Board, may from time to time, decide to hold assets of
the Company, via the French Branch, if the Board considers that
this may assist the Branch to utilise any tax losses it may benefit
from;
Current Activities and Outlook
Upon shareholders' approval at the General Meeting held on 7
January 2011, the Company has embarked on a new investment strategy
with the aim of obtaining significant investment returns arising
from the increasing adoption of precious metals as a store of value
by international investors.
As UK exposure to the exciting Silver market is limited,
Woodburne Square's investment strategy is focused on high quality
silver companies listed on the TSX and ASX, together with some
special situations in gold. Silver's outperformance of Gold over
the past year has been heavily covered, but operational gearing
means that the high quality silver mining equities that the Company
holds should result in a continuation of outperformance.
The new direction has been accompanied by a change of name,
effective from 7 February 2011, from Directex Realisations plc to
Woodburne Square AG plc.
The Company continues to manage its remaining French interests
via its wholly owned subsidiary Direct Excellence Limited and is
working to secure any possible repayment of historical tax losses
in France. The branch holds a 12.2% interest stake in the ordinary
share capital of Web-Clubs Limited.
On 28 February 2011, following increasing demand from
institutional investors, Woodburne Square raised GBP605,000, before
expenses. Under the guidance of new Chief Investment Officer, Mr
Tom Winnifrith, the new funds have been used to make further
investments in high quality silver companies listed on the TSX and
ASX.
On 8 April 2011, Woodburne Square announced that within only
three months of implementing the new strategy its fully diluted NAV
increased from 2.52p on 07 January 2011, to 3.37p on 7 April 2011,
an increase of 34%.
The Company will next provide shareholders with a NAV update on
7 July 2011.
The Board remains positive about the outlook for silver in terms
of price, silver equities and our portfolio in particular.
Operational gearing means that shares in the high quality silver
plays in which we have invested should prosper, and we therefore
view the short and medium term outlook with extreme confidence.
Martin Kiersnowski
Chairman
30 June 2011
Consolidated income statement
For the year to 31 December 2010
2010 2009
Notes GBP'000 GBP'000
Continuing operations
Revenue 5 - -
Cost of sales - -
Gross profit - -
Administrative expenses (338) (1,337)
Operating loss (338) (1,337)
Finance costs
- Interest on bank overdraft and
loans (6) (234)
- Foreign exchange gain on loan
payable - 308
Loss before tax (344) (1,263)
Tax 9 - -
Loss for the year from continuing
operations 6 (344) (1,263)
Discontinued operations
Profit for the year from discontinued
operations 20 1,616 440
Profit / (loss) for the period 1,272 (823)
Profit / (loss) attributable to
equity holders of the parent 1,272 (823)
Earnings /(loss) per share 11
From continuing operations
Basic (pence) (0.7) (2.5)
Diluted (pence) (0.7) (2.5)
From continuing and discontinued
operations
Basic (pence) 2.5 (1.6)
Diluted (pence) 2.5 (1.6)
Consolidated statement of comprehensive
income 2010 2009
For the year to 31 December 2010 GBP'000 GBP'000
Profit /(loss) for the year 1,272 (823)
Exchange differences on translation of foreign
operations 91 (1,729)
Other comprehensive income / (loss) for
the period 91 (1,729)
Total comprehensive income for the year
attributable to equity holders of the parent 1,363 (2,552)
Consolidated statement of financial position 2010 2009
At 31 December 2010 Notes GBP'000 GBP'000
Current assets
Trade and other receivables 13 24 84
Cash and cash equivalents 13 1,576 488
Assets held for sale 20 - 11,019
Total current assets and Total assets 1,600 11,591
Total assets 1,600 11,591
Current liabilities
Bank loans and overdrafts 14 - (3,509)
Trade and other payables 15 (142) (1,114)
Provisions 16 - (965)
Liabilities directly associated with assets
classified as held for sale 20 - (5,908)
Total liabilities (142) (11,496)
Net current assets 1,458 95
Equity
Share capital 19 202 202
Share premium 26,680 26,680
Other reserve 2,372 2,372
Retained earnings (27,796) (29,159)
Total equity 1,458 95
Consolidated
statement of
changes in Share Share Other Retained
equity At 31 capital premium reserve earnings Total
December 2010 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Changes in
equity
Loss for the
year - - - (823) (823)
Other
comprehensive
loss for the
period - - - (1,729) (1,729)
Total
comprehensive
income for
the year - - - (2,552) (2,552)
Balance at 1
January 2009 202 26,680 2,372 (26,607) 2,647
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Balance at 31
December
2009 202 26,680 2,372 (29,159) 95
Profit for the
year - - - 1,272 1,272
Other
comprehensive
income for
the period - - - 91 91
Total
comprehensive
income for
the year - - - 1,363 1,363
Balance at 1
January 2010 202 26,680 2,372 (29,159) 95
Balance at 31
December
2010 202 26,680 2,372 (27,796) 1,458
The Company acquired the entire issued share capital of Direct
Excellence Limited (previously known as Interactive Prospect
Targeting Limited) pursuant to a share for share exchange on 1
December 2004. The Other reserve reflects the difference between
the nominal value of the shares issued to acquire Direct Excellence
Limited and the cumulative value of the Company's share capital and
share premium at the date of acquisition.
Consolidated statement of cash flows
For the year to 31 December 2010 2010 2009
Notes GBP'000 GBP'000
Profit/(loss) for the year
From continuing operations (344) (1,263)
From discontinued Operations 1,616 440
Adjusted for:
Finance expense 6 234
Gain arising on disposal of discontinued
operations (1,616) (273)
Income tax expense - 323
Depreciation and amortisation - 530
Foreign exchange revaluation gain - (308)
Decrease in provisions (965) (807)
Decrease in trade and other receivables 60 5,912
Decrease in trade and other payables (972) (5,706)
Cash used in operations (2,215) (918)
Taxation received - 535
Interest paid (6) (477)
Net cash used in operating activities (2,221) (860)
Investing activities
Disposal of subsidiary 20 6,780 2,079
Net cash generated from investing
activities 6,780 2,079
Financing activities
Repayment of borrowings (3,509) (2,901)
Net cash used in financing activities (3,509) (2,901)
Net decrease in cash and cash equivalents 1,050 (1,682)
Cash and cash equivalents at beginning
of year 488 3,704
Effect of foreign exchange rate changes 38 (535)
Cash balance held within assets held
for sale - (999)
Cash and cash equivalents at end
of year 1,576 488
Notes to the consolidated financial statements
For the year to 31 December 2010
1. General information
Woodburne Square AG plc (the "Company") is a company
incorporated in the United Kingdom under the Companies Act 2006.
The principal activity of the Group was the provision of
permission-based online direct marketing services and management
services. As reported in the Chairman's statement, the Group
disposed of some of its trading operations during the year, with
the remainder disposed of subsequent to the year end. The group is
now trading as an investment company with a mandate to invest in
low risk securities.
The financial information for the year ended 31 December 2010 or
2009 does not constitute statutory accounts as defined in section
435 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2009 have been delivered to the Registrar of
Companies and the 2010 accounts will be delivered to Registrar of
Companies following the Company's Annual General Meeting. The
auditors reported on those accounts, their report was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
2. Adoption of new and revised Standards
In the current year, the following new and revised Standards and
Interpretations have been adopted and have affected the amounts
reported in these financial statements.
Standards affecting the financial statements
IFRS 3(2008) Business These standards have introduced a number
Combinations; of changes in the accounting for business
IAS 27(2008) Consolidated combinations when acquiring a subsidiary
and Separate Financial or an associate. IFRS 3(2008) has also
Statements; introduced additional disclosure requirements
IAS 28(2008) Investments for acquisitions. See note 3 for more
in Associates details.
The following amendments were made as part of Improvements to
IFRSs (2009).
Amendment to IFRS IFRS 2 has been amended, following the
2 Share-based Payment issue of IFRS 3(2008), to confirm that
the contribution of a business on the
formation of a joint venture and common
control transactions are not within the
scope of IFRS 2.
Amendment to IAS 17 IAS 17 has been amended such that it may be
Leases possible to classify a lease of land as a
finance lease if it meets the criteria for
that classification under IAS 17. The
amendment has been applied retrospectively in
accordance with the relevant transitions.
Amendment to IAS 39 IAS 39 has been amended to state that
Financial Instruments: options contracts between an acquirer
Recognition and Measurement and a selling shareholder to buy or sell
an acquiree that will result in a business
combination at a future acquisition date
are not excluded from the scope of the
standard.
Standards not affecting the reported results nor the financial
position.
The following new and revised Standards and Interpretations have
been adopted in the current year. Their adoption has not had any
significant impact on the amounts reported in these financial
statements but may impact the accounting for future transactions
and arrangements.
Notes to the company financial statements
At 31 December 2010
2. Adoption of new and revised Standards (continued)
IFRIC 17 Distributions The Interpretation provides guidance
of on when an entity should recognise a
Non-cash Assets to non-cash dividend payable, how to measure
Owners the dividend payable and how to account
for any difference between the carrying
amount of the assets distributed and
the carrying amount of the dividend
payable when the payable is settled.
IFRS 2 (amended) The amendment clarifies the accounting
Group Cash-settled for share-based payment transactions
Share-based Payment between group entities.
Transactions
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU):
IFRS 9 Financial Instruments
IAS 24 (amended) Related Party Disclosures
IAS 32 (amended) Classification of Rights Issues
IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments
IFRIC 14 (amended) Prepayments of a Minimum Funding
Requirement
Other improvements to IFRSs (May 2010)
The adoption of IFRS 9 which the Group plans to adopt for the
year beginning on 1 January 2013 will impact both the measurement
and disclosures of Financial Instruments.
The directors do not expect that the adoption of the other
standards listed above will have a material impact on the financial
statements of the Group in future periods.
3. Accounting policies
The principal accounting policies adopted are set out below.
Basis of accounting
The financial statements have been prepared in on the historic
cost basis and in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union and
therefore comply with Article 4 of the EU IAS Regulation.
Going concern
The financial statements have been prepared on a going concern
basis. At 31 December 2010, the Group had cash of GBP1,576,000, no
borrowings and net assets of GBP1,458,000.
The French subsidiaries, Directinet SA and Netcollections SAS
were sold in January 2010. Following the disposal, the Group
settled a lease obligation in respect of its London offices and
repaid bank debt. The principal assets following the Directinet and
Netcollections disposals were an unquoted investment in Webclubs
Limited, and cash.
The Company has embarked on a new investment strategy focused on
high quality silver companies listed on the TSX and ASX, together
with some special situations in gold. Since year end, the Group has
invested the majority of its previous cash holdings in accordance
with this strategy. The Directors consider these investments to be
highly liquid.Having assessed the ongoing level of expenditure and
taking account of reasonably possible changes in trading
performance, the Directors consider that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
The Company has embarked on a new investment strategy focused on
high quality silver companies listed on the TSX and ASX, together
with some special situations in gold. Since year end, the Group has
invested the majority of its previous cash holdings in accordance
with this strategy. The Directors consider these investments to be
highly liquid.
3. Accounting policies (continued)
Basis of preparation
The consolidated financial statements incorporate the financial
statements of the Group and entities controlled by the Company (its
subsidiaries). Control is achieved where the Company has the power
to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities.
The results of subsidiaries disposed of during the year are
included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquirer, plus
any costs directly attributable to the business combination. The
acquirer's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date, except
for non-current assets (or disposal groups) that are classified as
held for resale in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations, which are recognised and
measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquirer's identifiable
assets, liabilities and contingent liabilities exceed the cost of
the business combination, the excess is recognised immediately in
profit or loss.
Goodwill
Goodwill arising on business combinations represents the excess
of the cost of acquisition over the Group's interest in the fair
value of the identifiable assets and liabilities of a subsidiary,
associate or jointly controlled entity at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment
losses. Goodwill, which is recognised as an asset, is reviewed for
impairment at least annually. Any impairment is recognised
immediately in the income statement and is not subsequently
reversed.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units that is expected to
benefit from the synergies of the combination. Cash-generating
units to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled
entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
3. Accounting policies (continued)
Acquisition related intangible assets and other intangible
assets
Acquisition related intangible assets, which comprise of
existing unfulfilled orders at acquisition date, non-contractual
customer relationships and trade names, relate to identifiable
assets that meet the conditions for recognition under IFRS 3 at the
acquisition date.
Other intangible assets, which comprise licences, computer
software and data acquisition costs, are stated at cost, net of
amortisation and any recognised impairment loss. Computer software
is amortised over two years. Data acquisition costs comprise the
external purchase costs of data used by customers for marketing
purposes and are amortised over three years.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation
of assets less residual value, over their estimated useful lives,
using the straight-line method, on the following basis:
Computer equipment 33% on cost
Plant and equipment 20% on cost
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or, where
shorter, over the term of the relevant lease.
Internally-generated intangible assets
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally-generated intangible asset arising from the
Group's website developments is recognised only if all of the
following conditions are met:
-- an asset is created that can be identified (such as software
and new processes);
-- it is probable that the asset created will generate future
economic benefits; and
-- the development costs of the asset can be measured
reliably.
Internally-generated intangible assets are amortised on a
straight-line basis over their useful lives. Where no
internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period
in which it is incurred.
Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are recognised as assets of the
Group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the
lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are
apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged
directly against income.
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease. Benefits
received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease
term.
3. Accounting policies (continued)
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
Sales of goods are recognised when goods are delivered and title
has passed. Revenue is recognised when the significant risks and
rewards associated with ownership of the goods have been
transferred. Sales of services are recognised with reference to the
stage of completion.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in Pounds Sterling,
which is the functional currency of the Company, and the
presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period, except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period. Exchange differences arising are classified
as equity and transferred to the Group's translation reserve. Such
translation differences are recognised as income or as expenses in
the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Operating profit
Operating profit is stated before investment income and finance
costs.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
3. Accounting policies (continued)
Taxation (continued)
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. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it related to items charged or credited
directly to equity, 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 where they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its property, plant and equipment and intangible assets
to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss, if any. Where the asset does not
generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset or cash-generating unit is
estimated to be less than its carrying amount, the carrying amount
of the asset or cash-generating unit is reduced to its recoverable
amount and the impairment loss is recognised as an expense
immediately.
When an impairment loss subsequently reverses, the carrying
amount of the asset or cash-generating unit is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset or cash-generating unit in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
3. Accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Investments
Investments, other than investments in subsidiaries, joint
ventures and associates are financial asset investments and are
initially recorded at fair value. Investments other than those
classified as held to maturity or loans and receivables are
classified as either at fair value through profit or loss (which
includes investments held for trading) or available for sale
investments. Both sub-categories are measured at each reporting
date at fair value. Where investments are held for trading
purposes, unrealised gains and losses for the period are included
in the income statement within other gains and losses. For
available for sale investments, unrealised gains and losses are
recognised in equity until the investment is disposed or impaired,
at which time the cumulative gain or loss previously recognised in
equity is included in the income statement.
Trade receivables
Trade receivables do not carry any interest and are measured at
their nominal value as reduced by any appropriate allowances for
irrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges are
accounted for on an accruals basis in profit or loss using the
effective interest rate method and are added to the carrying amount
of the instrument to the extent that they are not settled in the
period in which they arise.
Trade payables
Trade payables are not interest bearing and are stated at their
nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date and are
discounted to present value where the effect is material.
3. Accounting policies (continued)
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based
payments. In accordance with the transitional provisions, IFRS 2
has been applied to all grants of equity instruments after 7
November 2002 that were unvested at 1 January 2005.
The Group operates a number of equity-settled share-based
payment schemes under which share options are issued to certain
employees. Equity-settled share-based payments are measured at fair
value (excluding the effect of non market-based vesting conditions)
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the
effect of non market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
Assets held for sale
Assets (and disposal groups) classified as held for sale are
measured at the lower of carrying amount and fair value less costs
to sell.
Assets and disposal groups are classified as held for sale if
their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the asset (or
disposal group) is available for immediate sale in its present
condition. Management must be committed to the sale which should be
expected to qualify for recognition as a completed sale within one
year from the date of classification.
4. Revenue
An analysis of the Group's revenue is as follows:
Year ended 31 December 2010
Continuing Total Discontinued
operations operations
2010 2010 2010
GBP'000 GBP'000 GBP'000
Revenue from the supply of - - -
online direct marketing
products and services
Investment revenue - - -
Total - - -
Year ended 31 December 2009
Continuing Discontinued
operations Total operations
2009 2009 2009
GBP'000 GBP'000 GBP'000
Revenue from the supply of
online direct marketing
products and services - - 14,997
Investment revenue - - -
Total - - 14,997
5. Segmental information
Business segments
Segmental information is presented in respect of the Group's
primary business segments.
Segmental results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Continuing operations comprise mainly head
office expenses.
Segmental capital expenditure is the total cost incurred during
the year to acquire property, plant and equipment, and intangible
assets other than goodwill and those arising on business
combinations.
The Group currently has no trading segments and its activities
are investment management and management services.
Results - year ended 31 December 2010
Discontinued
Continuing operations
operations (Note 11)
GBP'000 GBP'000
Revenue - -
Operating (loss)/profit from operations (338) -
Finance costs (6) -
Gain on disposal - 1,616
(Loss)/profit for the year before
taxation (344) 1,616
Taxation - -
(Loss)/profit for the year (344) 1,616
Results - year ended 31 December 2009
Discontinued
Continuing operations
operations (Note 11)
GBP'000 GBP'000
Revenue - 14,997
Operating (loss)/profit from operations (1,337) 490
Gain on disposal - 273
Finance income, net 74 -
(Loss)/profit for the year before
taxation (1,263) 763
Taxation - (323)
(Loss)/profit for the year (1,263) 440
6. Loss for the year
Loss for the year has been arrived at after
charging/(crediting):
Continuing Discontinued
Year ended 31 December 2010 operations operations Total
2010 2010 2010
GBP'000 GBP'000 GBP'000
Staff costs (see note 8) 264 - 264
Continuing Discontinued
Year ended 31 December 2009 operations operations Total
2009 2009 2009
GBP'000 GBP'000 GBP'000
Foreign exchange gain (308) - (308)
Amortisation of intangible
assets (note 15) - 530 530
Staff costs (see note 8) 532 5,274 5,806
7. Auditor's remuneration
The analysis of auditor's remuneration is as follows:
2010 2009
GBP'000 GBP'000
Fees payable to the Company's auditor for the
audit of the Company's annual accounts 25 30
Fees payable to the Company's auditor and their
associates for the audit of the Company's subsidiaries
pursuant to legislation - 5
Total audit fees 25 35
Fees payable to the Company's auditor and their
associates for other services to the Group:
- Tax services 13 33
38 68
8. Staff costs
The average monthly number of employees (including executive
directors) for the continuing operations was:
2010 2009
No. No.
Administration 3 6
2010 2009
GBP'000 GBP'000
Wages and salaries (including Directors'
emoluments) 230 446
Social security costs 34 86
264 532
Directors' emoluments were as follows:
2010 2009
GBP'000 GBP'000
Nicholas Ward 115 190
David Cicurel 9 30
Barton L. Faber - 25
Stephane Zittoun - 13
Martin Kiersnowski 19 104
Jonathan Lander 23 -
Nick Lander 23 -
Nicholas Hall 1 -
Russell Davill 1 -
191 362
Nicholas Ward resigned on 1 March 2010. An agreement was entered
into with Nicholas Ward in April 2009, under which he was
potentially entitled to certain payments if the French subsidiaries
(being Directinet SA, NP6 SAS and Netcollections SAS) were all
disposed of during his tenure as a director. Following the
completion of these transactions in January 2010, a payment of
GBP100,000 was made and is included in the directors' emoluments
above.
In addition, Nicholas Ward claims that the disposals triggered
an obligation to pay him an amount equal to 5% of any Relevant
Value defined as being any and all dividends or other capital or
revenue distributions and payments for any rights, proceeds of sale
or other consideration or whatsoever nature received at any time or
times by shareholders in relation to the Company. The payment would
be in the same form (whether shares, cash or other) as is received
by the shareholders. However, if any consideration received is not
in cash or traded securities, a portion will be paid in cash in
order to allow payment of the personal tax liability arising on the
payment. The current directors are seeking legal advice as to the
extent (if any) of his entitlement.
As the above potential right to future cash flows is linked to
the value of future dividends, the economic interest is consistent
with the holding of shares. For accounting purposes, this
arrangement would therefore fall to be accounted for as an equity
settled share based payment under IFRS 2 - "Share based payments".
This requires a charge to be recognised over the vesting period
(between grant date to the completion of the disposals of the
French subsidiaries) equal to the fair value of the award at grant.
The amount is not subsequently revalued. There is significant
uncertainty over the value of the arrangement, such that no charge
has been recognised, but the Directors are satisfied that the
accounting fair value of the award at grant was not material.
9. Taxation
There is no tax charge/credit in 2009 or 2010.
The UK corporation tax rate applicable for 2010 is 28% (2009:
28%).
Reconciliation of tax charge:
2010 2010 2009 2009
GBP'000 % GBP'000 %
Loss on ordinary activities before
tax (344) (1,263)
Tax at the UK corporation tax
rate of 28% (2009: 28%) 96 28% 354 28%
Effects of:
Tax effect of expenses that are
not deductible in determining
taxable profit (48) (14%) (280) (22%)
Creation of losses (48) (14%) (74) (6%)
Tax charge for period - -
10. Discontinued operations
Discontinued operations relate to the activities of
Netcollections and Directinet (and in 2009 also NP6, which was sold
in April 2009). Netcollections and Directinet were sold in January
2010 for an initial consideration of EUR7,350,000, which was
subject to a net assets adjustment. Following some negotiation with
the buyer in relation to the treatment of certain items included in
the buyer's proposed net assets determination, the final
consideration has been agreed as EUR7,560,000, all of which has now
been received. Discontinued operations are more fully disclosed in
note 20. The effect of discontinued operations on segment results
is disclosed in note 5.
11. Earnings/(loss) per share
2010 2009
Number Pence Number Pence
Profit/ of per Profit/ of per
(loss) shares share (loss) shares share
GBP'000 '000 GBP'000 '000
Basic and
diluted
earnings/(loss)
per share 1,272 50,518 2.5 (823) 50,518 (1.6)
from continuing
operations (344) 50,518 (0.7) (1,263) 50,518 (2.5)
from
discontinued
operations 1,616 50,518 3.2 440 50,518 0.9
The outstanding share options described in note 21 are out of
the money such that diluted and basic earnings per share are the
same.
12. Subsidiaries
All principal subsidiaries of the Group are consolidated into
the financial statements. At 31 December 2010 the subsidiaries were
as follows
Subsidiary Country of Principal
undertakings registration activity Holding %
Direct Intermediate
Excellence holding Ordinary
Limited UK company shares 100%
Netcollections Ordinary
Limited* UK Dormant shares 100%
Direct Dormant Ordinary
No. 4 Limited UK Dormant shares 100%
*Held through subsidiary undertaking.
13. Other financial assets
Trade and other receivables
2010 2009
GBP'000 GBP'000
Prepayments and accrued income 10 20
VAT recoverable 14 64
24 84
Investments
The Group holds a 12.2% interest in the ordinary share capital
of Web-Clubs Ltd, an online marketing business. The Directors
consider that the fair value cannot be reliably measured such that
the investment is held at its original cost of GBPnil (2009:
GBPnil).
Movement in the provision for doubtful debts
2010 2009
GBP'000 GBP'000
Balance at the beginning of the year - 456
Impairment losses reversed - (456)
Balance at the end of the year - -
Cash and cash equivalents
2010 2009
GBP'000 GBP'000
Cash and cash equivalents 1,576 488
Cash and cash equivalents comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less. The Directors consider that the carrying amount of these
assets approximates their fair value.
14. Borrowings
2010 2009
GBP'000 GBP'000
Secured borrowing at amortised cost
Bank loans due for settlement within
12 months - 3,509
In January 2010, the remaining loan balance was fully repaid
from the proceeds of sale of Directinet and Netcollections.
15. Trade and other payables
2010 2009
GBP'000 GBP'000
Current
Trade payables 52 573
Accruals and deferred income 90 541
142 1,114
The Directors consider the carrying amount of trade payables
approximates to their fair value.
16. Provisions
Restructuring Provision GBP'000
As at 1 January 2010 965
Utilisation of provision in the year (965)
At 31 December 2010 -
On 11 December 2009 the Company agreed terms with the landlord
of the Group's head offices at Vincent Square under which the Group
has acquired an option to assign the Vincent Square leases to the
landlord's ultimate parent company shortly after the completion of
the proposed sale of Directinet and Netcollections, thereby
extinguishing all the Group's obligations under those leases. The
net cost of these assignments was approximately GBP965,000 which
was satisfied out of the sale proceeds of Directinet and
Netcollections in January 2010.
17. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, (previously includes the borrowings) cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings,
all as disclosed in the statement of financial position.
Gearing ratio
The company has no external debt therefore no ratio is
relevant.
18. Financial instruments (continued)
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in note 3 to the
financial statements.
Financial risk management objectives
The Group monitors risks include market risk, credit risk and
liquidity risk.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates. The Group has
historically entered into net investment hedges to manage its
exposure to foreign currency risk arising on translation of the
Group's borrowings. The Group's requirement for this has diminished
following the reduction in activities undertaken in foreign
currency and the repayment of its borrowings.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations
arise.
The Group's approach to managing this exposure is to fund
investments in Euro-denominated operations with debt that is
denominated in the same currency as the operations. Refer to note
19 for further information on the bank loan.
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of France (Euro
currency).
At 31 December 2010 the net assets of the Group were
GBP1,458,000 (2009: GBP95,000) of which GBP68,000 were denominated
in Euros (2009: GBP5,111,000).
The effect of a 5% increase in the value of the Euro compared to
Sterling would increase the net assets of the Group as at 31
December 2010 by GBP3,400 (2009: GBP255,000). The effect of a 5%
decrease in the value of the Euro compared to Sterling would
decrease the net assets of the Group as at 31 December 2010 by
GBP3,400 (2009: GBP255,000).
Interest rate risk management
The Group's exposures to interest rates on financial assets and
financial liabilities are detailed in the liquidity risk management
section of this note.
The sensitivity analyses below have been determined based on the
exposure to interest rates for both derivatives and non-derivative
instruments during the year.
Increase/(decrease)
in
profit before
tax
Group Group
2010 2009
GBP'000 GBP'000
Increase interest rate by 1% 16 52
Decrease interest rate by 1% (16) (52)
There would have been no effect on amounts recognised directly
in equity.
18. Financial instruments (continued)
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in a financial loss to the
Group.
The Group's maximum exposure to credit risk is GBP1,600,000
(2009: GBP572,000) comprising trade receivables, other receivables
and cash. The Group has no principal credit risk as trade
receivables are nil (2009: GBPnil, principal risk being trade
receivables).
Potential customers are evaluated for creditworthiness and where
necessary collateral is secured. There is no particular industry
concentration of credit risk within the customer base as no one
customer accounts for more than 3% of gross receivables.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which monitors the Group's short, medium
and long-term funding and liquidity management requirements on an
appropriate basis. The Group manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing
facilities. In January 2010, the group sold its remaining trading
segment and repaid in full all loans and settled its lease
obligations. Minimal liquidity risk remains in the group.
18. Deferred tax
At the balance sheet date, the Group had estimated unused tax
losses of GBP2,171,000 (2009: GBP2,000,000) available for offset
against future profits. No deferred tax asset has been recognised
in respect of these losses (2009: GBPnil) due to the
unpredictability of future profit streams.
At 31 December 2010, the aggregate amount of temporary
differences associated with undistributed earnings of the Group for
which deferred tax liabilities have not been recognised was GBPnil
(2009: GBPnil).
19. Called up share capital
2010 2009
GBP'000 GBP'000
Authorised
60 million ordinary shares of 0.4p each 240 240
Called up, allotted and fully paid
50.5 million (2009: 50.5 million) ordinary
shares of 0.4p each 202 202
The former Chairman, Nicholas Ward claims an obligation to pay
him an amount equal to 5% of any Relevant Value defined as being
any and all dividends or other capital or revenue distributions and
payments for any rights, proceeds of sale or other consideration or
whatsoever nature received at any time or times by shareholders in
relation to the Company. The payment will be in the same form
(whether shares, cash or other) as is received by the shareholders.
However, if any consideration received is not in cash or traded
securities, a portion will be paid in cash in order to allow
payment of the personal tax liability arising on the payment.
20. Disposal of subsidiaries
On the 6 January 2010, the Group disposed of its interest in
Directinet and its subsidiary Netcollections.
At disposal
date
GBP'000
Goodwill 4,450
Other intangible assets 1,167
Trade and other receivables 4,198
Property, plant and equipment 205
Cash and cash equivalents 999
Trade and other payables (5,050)
Tax liabilities (858)
Net assets disposed of 5,111
Other costs of disposal 53
Gain on disposal 1,616
Total consideration 6,780
Satisfied by:
Cash 6,780
Net cash inflows arising from on disposal
Cash consideration 6,780
Cash disposed (999)
5,781
Net profit
Effective on disposal
Subsidiary sold date GBP'000
Directinet including its subsidiary 6 January
Netcollections 2010 1,616
21. Share-based payments
Equity-settled share option schemes
The Group has granted options to certain directors and
employees. Options are exercisable at a price equal to the average
quoted market price of the Company's shares on the date of grant.
The vesting period is generally 3 years. If the options remain
unexercised after a period of 10 years from the date of grant the
options expire. Options are forfeited if the employee leaves the
Group before the options vest.
Details of the options and warrants outstanding during the year
are as follows:
2010 2009
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
'000s GBP '000s GBP
Outstanding at the
beginning of the
year 258 1.55 2,265 0.87
Forfeited during
the year (158) 1.91 (2,007) 1.27
Outstanding at the
end of the year 100 0.93 258 1.55
Exercisable at the - -
end of the year
Warrants issued - -
during the year
The options outstanding at 31 December 2010 had a weighted
average exercise price of GBP0.93 and a weighted average remaining
contractual life of 5.6 years.
In the year ended 31 December 2008 warrants were issued on 24
October 2008. The aggregate of the estimated fair values of the
warrants granted on that date was GBP180,000. On the 24 October
2010 in accordance with the deed of termination the warrants were
cancelled for cash consideration of GBP24,000.
As a consequence of the businesses and companies disposal in
2010, 158,000 options have expired in the year ended 31 December
2010.
22. Events after the balance sheet date
On 28 February 2011, the Company raised GBP365,000 via the issue
of 6,952,831 shares of 0.4p in the Company at 5.25p a share and an
additional GBP240,000 via the issuance of new convertible loan
notes. The loan notes do not carry a coupon, are redeemable in
December 2012 and are convertible at any time, at the discretion of
the note holder, into ordinary shares at 5.25p per share. The new
funds will be used to make further investments in high quality
silver companies listed on the TSX and ASX, together with some
special situations in gold.
23. Related party transactions
Transactions between the Company and its subsidiaries which are
related parties have been eliminated on consolidation and are not
disclosed in these financial statements.
The remuneration of the Directors, who are the key management
personnel of the Group, is set out in note 8.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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