TIDMINFS
RNS Number : 9601X
Infoserve Group PLC
15 December 2010
Infoserve Group plc
("Infoserve", the "Company" or, together with its subsidiaries,
the "Group")
Unaudited Condensed Consolidated Financial Statements for the
six months ended
30 September 2010
Infoserve Group plc (AIM:INFS), one of the leading online local
search specialists in the UK, is pleased to announce its half-year
results for the six-month period to 30 September 2010. Infoserve
provides UK businesses, mainly SMEs, with sophisticated online
marketing products that deliver, through the Group's partnership
with Yahoo! and its own extensive product range, online solutions
that enable businesses to be found when consumers are searching for
the goods and services they provide in specific locations. It is
estimated that 60% of all online searches are local in nature, and
Infoserve aims to bring buyers and sellers together online.
OPERATING HIGHLIGHTS
-- May 2010 - Following a successful trial, Infoserve signs a
joint venture agreement to bring combined online and print offering
to SMEs.
-- August 2010 - Infoserve opens a city centre sales office in
Leeds.
-- Summer 2010 - Infoserve launches a new Keysite product.
-- October 2010 - Infoserve acquires access to up to 7,000
customers in a revenue share deal with Web Business Power.
FINANCIAL HIGHLIGHTS
-- Turnover GBP2.90m (H1 2009: GBP2.95m), down 1.8%.
-- Gross profit GBP1.07m (H1 2009: GBP0.95m), an increase of
12.8%.
-- Operating profit GBP0.06m (H1 2009 loss: GBP0.15m), an
increase of GBP0.21m.
-- Net cash balance GBP310k (H1 2009: GBP188k).
-- Current liabilities GBP3.0m (H1 2009: GBP7.2m), a decrease of
GBP4.2m mainly due to debt restructuring.
Steve Barnes, Executive Chairman of Infoserve Group plc,
commented:
"We have seen many of our SME customers go through difficult
trading times so far this year, and I am proud that we have adapted
our product offering and value proposition to maintain volumes and
revenues. We have seen little improvement in confidence levels even
from those business sectors that are experiencing growth, and
discretionary marketing spend by SMEs, even in the online sector
has been affected. I am therefore pleased with the results, the
revenue figures, and the continued driving down of costs. These
successes are a testament to the entire team at Infoserve.
Although I see little change in macro economic circumstances in
the economy as a whole, we have not completely shut the door on
growth and we have adapted our business to the current economic
climate. Our new Joint Venture with Iliffe Newspapers and our
opening of a further sales office in the centre of Leeds
demonstrate our continued plans to grow, but we will do so slowly
and in a planned, steady and risk averse way in keeping with the
current economic climate."
For further information, please contact:
Infoserve Group plc
Steve Barnes, Executive Chairman Tel: +44 (0)113 238 6200
steve.barnes@infoserve.com www.infoservegroup.com
Jonathan Simpson, Finance Director Tel: +44 (0)113 238 6200
jonathan.simpson@infoserve.com www.infoservegroup.com
Nominated Adviser
WH Ireland
Robin Gwyn Tel: +44 (0)161 832 2174
robin.gwyn@wh-ireland.co.uk
Media Enquiries
Source Marketing Communications
Peter Downey Tel: +44 (0)113 380 1644
peter@sourcemc.co.uk
Executive Chairman's Statement and Financial Review
Infoserve Group plc is an e-marketing company, specialising in
local search. The Company helps businesses, particularly SMEs, to
maximise their performance through online marketing.
We are pleased with the half year results which represent
continued progress in difficult economic circumstances.
Six months Six months
to 30 to 30
September September
2010 2009
(unaudited) (unaudited)
GBP'000 GBP'000
Revenue 2,895 2,948
Cost of sales (1,826) (2,000)
----------- -----------
Gross profit 1,069 948
Administrative expenses (1,013) (1,097)
----------- -----------
Operating profit/(loss) 56 (149)
Net financing costs (39) (46)
----------- -----------
Share of loss of equity accounted investee
(net of tax) (117) -
----------- -----------
Loss before tax (100) (195)
----------- -----------
Revenue
Revenue for the period has decreased by 1.8% as the Company has
consolidated its position by focusing on becoming profitable and
opening up new avenues for growth. The performance per sales
executive increased from GBP29k to GBP32k, a rise of 9% on 2009.
The small decline in sales is directly as a result of a reduced
number of sales people through the period and is not a reflection
on the online advertising market generally, which continues to
grow.
Margins
Gross margins have improved from 32% in H1 2009 to 37% in H1
2010, slightly fewer sales made with less people leading to a
GBP121k increase in gross profit.
Results
The increased gross profit contributed to operating profits of
GBP56k and pre tax profits of GBP17k, up GBP205k and GBP212k
respectively on last half year, as cost control remains tight.
Infoserve's 50% share of 2i Local Limited's pre tax losses were
GBP117k which was as expected and relates to the costs of growing
and training a new sales force.
Cash flow
There has been an increase in the net cash position of GBP122k,
although this includes a GBP250k draw down on a new loan facility
provided by D R Hood, the Company's principal shareholder, in
February 2010 which was used to repay the NatWest overdraft. A
further GBP160k draw down on the loan account was loaned directly
to 2i Local Limited, a joint venture company. The remaining GBP190k
of the February loan facility remains available for draw down for
development and growth expenditure.
Going concern
The directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Market developments
-- Google's results continue to be increasingly local in nature
with Google Places becoming integrated within organic search. This
presents both a challenge to keep our own websites ranking highly,
and an opportunity to build revenues from SMEs wanting assistance
for their own web presence, as prominent first page Google
positions become harder to achieve.
-- The Internet Advertising Bureau (IAB) confirmed that online
marketing expenditure increased by 10% in H1 2010 and the same
period in 2009, characterised by increased investment by major
brands.
-- Online marketing reached the GBP2bn mark (IAB).
-- According to data from the UK Online Measurement Company
(UKOM) and Nielsen, the UK's active online user base had grown from
36.8 million in April 2009 to 40.5 million in April 2010
(representing an increase of 3.7 million active internet users in
just 12 months.)
-- 92% of the UK online population now has broadband with 69%
enjoying speeds of over 2MB.
Business developments
Our Darlington sales office has now approached maturity and we
are continuing to achieve improvements in sales per sales
executive. The future growth of the Company relies on three key
pillars: new sales office locations, commercial alliances and new
products. The Company has made progress in all these areas during
the first half of the financial year.
Locations
In August 2010, Infoserve opened a sales office in Leeds city
centre to add to the existing salesforce scale and capability,
using the expansion to validate the efficiencies of a more compact
and controllable stand alone business unit.
Commercial alliances
The Company sees value in key alliances in an increasingly more
competitive market place and has signed a joint venture agreement
with Iliffe News and Media Limited ("INML"), the media arm of
Yattendon Investment Trust, with interests in local media including
newspaper publishing and television, and a revenue sharing
agreement with Web Business Power.
Under the agreement with INML, signed in May 2010, a joint
venture company ("2i Local") offers SMEs the opportunity to
purchase a combined internet and print advertising package. This
gives businesses guaranteed exposure to their target market through
online local search and local newspaper coverage. Infoserve and
INML each own 50% of the issued share capital of 2i Local.
The October 2010 agreement with Web Business Power gives
Infoserve access to 7,000 new customers on a revenue share
basis.
The Group's exclusive partnership with Yahoo! continues to offer
a point of difference from all competitors and Infoserve will
continue to use this unique relationship to offer its SME customers
prominent positions on the Yahoo! search engine. The Group's
relationship with the Football League (FLi) now covers 71 separate
football club websites.
Products
During the summer, the Company launched Keysites, a new two page
website product designed to rank prominently in major search
engines for specific local searches directly related to the SME's
business. Deferred tax asset
The Board has prepared appropriate forecasts and continues to
believe that the Group will be profitable in the future and
therefore utilise the considerable tax losses built up over the
last few years. It has accordingly carried forward a proportion of
this recovery as a deferred tax asset in the statement of financial
position for the interim accounts.
Dividend
The Group has insufficient distributable reserves, and therefore
the directors do not recommend the payment of a dividend (2009 :
GBPnil).
Outlook and summary
The macro economic difficulties which have affected most
businesses in the UK remain, and the Group is taking great care to
ensure it adapts to this reality, consolidating its current
operations to maintain profits whilst seeking growth through
cautious and controlled investment and exploration in new locations
as well as in new commercial alliances and products.
The Company expects to continue to invest in these areas through
the remainder of 2010 and throughout 2011, with a view to
generating even greater value for its existing and new
customers.
Statement of Principal Risks and Uncertainties
The principal risks and uncertainties to which the Group is
exposed are listed below. They have not changed from those detailed
on pages 7-8 and 49-51 of our Annual Report and Financial
Statements for the year ended 31 March 2010. The Annual Report can
be found on the company's website www.infoservegroup.com.
-- Market price risk
-- Liquidity risk
-- Interest rate risk
-- Credit risk
-- Capital risk
-- Maturity of financial liabilities
-- Requirements for further funds
-- Management of growth
-- Dependence on senior management and employees
-- Recruitment and retention
-- Technology
-- Partners
Stephen M Barnes Jonathan P Simpson
Executive Chairman Finance Director
14 December 2010 14 December 2010
Infoserve Group plc
Condensed Consolidated Statement of Comprehensive Income
(unaudited)
Six months Six months
to 30 to 30 Year ended
September September 31
2010 2009 March 2010
(unaudited) (unaudited)
Note GBP'000 GBP'000 GBP'000
Revenue - continuing operations 2,895 2,948 6,119
Cost of sales (1,826) (2,000) (3,836)
----------- ----------- -----------
Gross profit 1,069 948 2,283
Administrative expenses (1,013) (1,097) (2,184)
----------- ----------- -----------
Operating profit/(loss) -
continuing operations 56 (149) 99
Financial income - 7 7
Financial expenses (39) (53) (100)
----------- ----------- -----------
Net financing costs (39) (46) (93)
Share of loss of equity accounted
investee (net of tax) (117) - -
----------- ----------- -----------
(Loss)/profit before tax
- continuing operations (100) (195) 6
Taxation 5 - - -
(Loss)/profit for the period (100) (195) 6
Basic and diluted (loss)/earnings
per share 6 (0.17p) (1.02p) 0.03p
The Group has no other comprehensive income for the period.
Infoserve Group plc
Condensed Statement of Financial Position (unaudited)
As at 30 As at 30
September September
2010 2009 As at 31
(unaudited) (unaudited) March 2010
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 154 193 177
Intangible assets 471 506 485
Equity accounted investments 43 - -
Deferred tax assets 838 838 838
------------ ------------ -----------
1,506 1,537 1,500
------------ ------------ -----------
Current assets
Trade and other receivables 245 288 267
Cash and cash equivalents 310 438 363
------------ ------------ -----------
555 726 630
Total assets 2,061 2,263 2,130
Current liabilities
Bank overdraft - (250) (250)
Interest-bearing loans and
borrowings (112) (3,262) (37)
Trade and other payables (2,839) (3,592) (2,885)
Provisions (80) (80) (80)
(3,031) (7,184) (3,252)
Non-current liabilities
Interest-bearing loans and
borrowings (2,184) (350) (1,816)
Trade and other payables (17) (19) (143)
(2,201) (369) (1,959)
Total liabilities (5,232) (7,553) (5,211)
------------ ------------ -----------
Net liabilities (3,171) (5,290) (3,081)
------------ ------------ -----------
Equity attributable to equity
holders of the parent
Share capital 2,954 954 2,954
Share premium 3,871 3,871 3,871
Retained earnings (9,996) (10,115) (9,906)
Total equity (3,171) (5,290) (3,081)
------------ ------------ -----------
These financial statements were approved by the Board of
Directors on 14 December 2010 and were signed on its behalf by:
Stephen M Barnes Jonathan P Simpson
Director Director
Infoserve Group plc
Condensed Consolidated Statement of Cash Flows (unaudited)
Six months Six months
to 30 September to 30 September Year ended
2010 2009 31 March
(unaudited) (unaudited) 2010
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Profit/(loss) for the period 17 (195) 6
Adjustments for:
Depreciation 33 59 102
Amortisation 44 74 122
Financial income - (7) (7)
Financial expense 39 53 100
Loss/(profit) on sale of
property, plant and
equipment 6 - (21)
Equity-settled
share-based payment
expenses 10 10 18
---------------- ---------------- ----------
Operating profit/(loss) before
changes in working capital 149 (6) 320
Decrease in trade and
other receivables 21 57 78
(Decrease)/increase in
trade and other
payables (172) 22 (542)
Change in deferred
government grant (1) (1) (2)
---------------- ---------------- ----------
Cash (outflow)/inflow from
operating activities (3) 72 (146)
Interest paid (4) (4) (7)
Net cash from operating
activities (7) 68 (153)
---------------- ---------------- ----------
Cash flows from investing
activities
Interest received - 7 7
Acquisition of property,
plant and equipment (16) (1) (28)
Acquisition of other
intangible assets (30) (46) (73)
Net cash from investing
activities (46) (40) (94)
---------------- ---------------- ----------
Cash flows from financing
activities
Advance of loans 410 - 200
Loan to jointly
controlled entity (160) - -
Net cash from financing
activities 250 - 200
---------------- ---------------- ----------
Net increase/(decrease) in
cash and cash equivalents 197 28 (47)
Cash and cash equivalents
at the beginning of the
period 113 160 160
Cash and cash equivalents at
the end of the period 310 188 113
---------------- ---------------- ----------
Cash and cash equivalents in the Consolidated Statement of Cash
Flows are disclosed net of the bank overdraft (applicable to the
comparative periods).
Infoserve Group plc Condensed Consolidated Statement of Changes
in Equity (unaudited)
Share Share Retained Total
capital premium earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2009 954 3,871 (9,930) (5,105)
--------- --------- ---------- --------
Total comprehensive income
for the period:
Loss for the financial period
attributable to equity
shareholders of the Parent
Company - - (195) (195)
--------- --------- ---------- --------
Total comprehensive income
for the period - - (195) (195)
--------- --------- ---------- --------
Transactions with owners recorded
directly in equity:
Equity-settled share-based
payment transactions - - 10 10
--------- --------- ---------- --------
Total contributions by and
distributions to owners - - 10 10
--------- --------- ---------- --------
Balance at 30 September 2009 954 3,871 (10,115) (5,290)
--------- --------- ---------- --------
Balance at 1 April 2010 2,954 3,871 (9,906) (3,081)
--------- --------- ---------- --------
Total comprehensive income
for the period:
Loss for the financial period
attributable to equity
shareholders of the Parent
Company - - (100) (100)
--------- --------- ---------- --------
Total comprehensive income
for the period - - (100) (100)
--------- --------- ---------- --------
Transactions with owners recorded
directly in equity:
Equity-settled share-based
payment transactions - - 10 10
--------- --------- ---------- --------
Total contributions by and
distributions to owners - - 10 10
--------- --------- ---------- --------
Balance at 30 September 2010 2,954 3,871 (9,996) (3,171)
--------- --------- ---------- --------
Balance at 1 April 2009 954 3,871 (9,930) (5,105)
Total comprehensive income
for the year:
Profit for the financial period
attributable to equity
shareholders of the Parent
Company - - 6 6
--------- --------- ---------- --------
Total comprehensive income
for the period - - 6 6
--------- --------- ---------- --------
Transactions with owners recorded
directly in equity:
Equity-settled share-based
payment transactions - - 18 18
Proceeds from issue of shares 2,000 - - 2,000
--------- --------- ---------- --------
Total contributions by and
distributions to owners 2,000 - 18 2,018
--------- --------- ---------- --------
Balance at 31 March 2010 2,954 3,871 (9,906) (3,081)
--------- --------- ---------- --------
Infoserve Group plc
Notes to the Condensed Consolidated Financial Statements
(unaudited)
1. Significant accounting policies
Infoserve Group plc is a company domiciled in the UK. The
address of the Company's registered office is South Side Aviation,
Leeds Bradford International Airport, Leeds, LS19 7UG.
The condensed consolidated financial statements of the Group for
the six months ended 30 September 2010 comprise the financial
statements of Infoserve Group plc and its subsidiaries (together
referred to as the "Group") and the Group's interests in a jointly
controlled entity.
(a) Basis of preparation
The Annual Report and Financial Statements of the Group are
prepared in accordance with the IFRSs as adopted by the EU. The
prior year comparatives are derived from audited financial
information for Infoserve Group plc as set out in the Annual Report
and Financial Statements for the year ended 31 March 2010 and the
unaudited financial information in the consolidated financial
statements for the six months ended 30 September 2009. These
condensed consolidated financial statements have been prepared
under the historical cost convention, except in respect to certain
financial instruments. With the exception of a new accounting
policy, Investment in a Jointly Controlled Entity, the condensed
set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the
preparation of the Group's published consolidated Annual Report and
Financial Statements for the year ended 31 March 2010. They do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the Group's 2010
Annual Report published in June 2010, which includes the
consolidated financial statements of the Group as at and for the
year ended 31 March 2010. For the new accounting policy in relation
to the Jointly Controlled Entity, refer to note (c) below.
The condensed consolidated financial statements for the six
months ended 30 September 2010 are unaudited and were approved by
the directors on 14 December 2010.
The unaudited financial information contained herein does not
constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 March 2010 were approved by the Board of directors on
21 June 2010 and delivered to the Registrar of Companies. The audit
opinion on the statutory accounts for the year ended 31 March 2010
was unqualified. It did not contain any statement under Section 498
of the Companies Act.
The directors note that the Group has net liabilities, net
current liabilities and sustained trading losses in the period.
However, the Group has greater profitability and certainty of
funding than in the prior period and the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the financial statements.
(b) Estimates
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the process of
applying the Group's accounting policies. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
The preparation of the condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
In preparing these condensed consolidated financial statements, the
significant judgements made by the management in applying the
Group's accounting policies and key source of estimation
uncertainty were the same as those applied to the audited
consolidated Annual Report and Financial Statements as at 31 March
2010.
(c) Investment in a jointly controlled entity
Joint ventures are those entities over whose activities the
Group has joint control, established by contractual agreement and
requiring unanimous consent for strategic financial and operating
decisions.
Investments in jointly controlled entities are accounted for
using the equity method (equity-accounted investees) and are
recognised initially at cost.
The consolidated financial statements include the Group's share
of the loss of equity-accounted investees, from the date that joint
control commences until the date that joint control ceases.
When the Group's share of losses exceeds its interest in an
equity-accounted investee, the carrying amount of that interest,
including any long-term investments, is reduced to zero, and the
recognition of further losses is discontinued except to the extent
that the Group has an obligation or has made payments on behalf of
the investee.
(d) Amortisation
As at 31 March 2010 data refreshes of GBP28,000 were classified
as amortisation rather than other cost of sales. The cashflow for
the six months to 30 September 2009 has been restated to reflect
this.
Additionally, at 31 March 2010 year end, non data amortisation
was shown within cost of sales rather than administrative expenses
where it had previously been shown. Amortisation of GBP46,000 for
the six months to 30 September 2009 has been reallocated within
cost of sales.
(e) Leases
The Group has considered its property leases and has determined
that all its property leases are operating leases. In arriving at
this conclusion the Group considered that the length of the leases
are relatively short, rent paid can be increased to market value at
regular intervals, the Group does not participate in the residual
value of the building and that substantially all the risks and
rewards of the Group's buildings are with the landlords.
2. Segmental information
At Infoserve the Board is regarded as the CODM (Chief Operating
Decision Maker). The Board sees Infoserve as offering a 'suite' of
web based advertising products. This 'suite' is mostly made up of
new websites, enhancements to websites and online directory
listings. While there are differing products/services, often these
are sold in varying bundles according to customer requirements.
Accordingly the Board allocates resources with the view that
Infoserve is a 'one-stop shop' for web based advertising and
measures performance against this key business objective. For this
reason the Board has concluded that Infoserve has one reportable
segment. The turnover, operating profit/loss and net liabilities of
the Group are all attributable to the one class of business.
3. Directors' remuneration
Six months Six months
ended ended
30 September 30 September Year ended
2010 2009 31 March
(unaudited) (unaudited) 2010
GBP'000 GBP'000 GBP'000
Directors' emoluments:
Executive Directors:
S M Barnes 38 45 86
D I J Oliver 44 39 79
M A Riley 42 38 71
J P Simpson 42 - 41
Non Executive Directors:
D R Hood - 12 (36)
J H Newman 3 18 35
A R Thirkill 11 11 21
180 163 297
------------ ------------- ----------
Company contributions to money
purchase pension plans:
Executive Directors:
S M Barnes 7 10 26
D I J Oliver 6 6 13
M A Riley 6 6 18
J P Simpson 6 - 1
25 22 58
------------ ------------- ----------
Equity-settled share-based
payments:
Executive Directors:
S M Barnes 2 - -
D I J Oliver 2 - -
M A Riley 2 2 3
Non Executive Directors:
J H Newman - 2 4
A R Thirkill 3 1 3
9 5 10
------------ ------------- ----------
Acting in his capacity as a non-executive director, D R Hood
waived his right, during the year to 31 March 2010, to receive his
unpaid non-executive director's fees for the financial years 2009
and 2010. An amount of GBP36,000 was credited to the consolidated
statement of comprehensive income in the year to 31 March 2010 in
respect of the non payment of these fees.
4. Related Party Transactions
The remuneration of the directors, who are the key management
personnel of the Group is disclosed in note 3. A number of key
management personnel or their related parties, hold positions in
other entities that result in them having control or significant
influence over the financial or operating policies of those
entities.
A number of these entities transacted with the Group in the
reporting period. The terms and conditions of those transactions
with key management personnel and their related parties were no
more favourable than those available, or which might have
reasonably be expected to be available, on similar transactions to
non-key management personnel related entities on an arm's length
basis.
Directors of the Company and their immediate relatives control
88.8 per cent (30 September 2009: 66.27 per cent) of the voting
shares of the Company.
At 30 September 2010, an amount of GBP911,552 (30 September
2009: GBP2 911,552) (being the principal loan excluding interest)
was owed by Infoserve Limited to D R Hood, a director and principal
shareholder of Infoserve Group plc. The GBP2,000,000 reduction in
the amount of the loan was as a result of the debt to equity
conversion which took place on 19 February 2010. For further
details refer to page 45 of our Annual Report and Financial
statements for the year ended 31 March 2010. Interest is charged on
the loan at a rate of 2.5% above Barclays Bank plc base rate.
Interest charged on the loan during the period amounted to
GBP13,711 (30 September 2009: GBP40,033) and GBP635,516 (30
September 2009: GBP587,889) remained unpaid at the period end and
is included within interest-bearing loans and borrowings.
On 19 February 2010 an amount of GBP250,000 owed by Infoserve
Limited to D R Hood was repaid in full as a result of the debt to
equity conversion. Interest was charged on the loan at a rate of 5%
above Barclays Bank plc base rate. Interest charged on the loan
during the period amounted to GBPnil (30 September 2009: GBP6,894)
and GBP18,011 remained unpaid at the period end (30 September 2009:
GBP12,699) and is included within interest-bearing loans and
borrowings.
The existing loan agreement with D R Hood has been amended,
suspending any repayments of capital and interest due on the loans
between 28 January 2010 and 31 January 2011. The Company is due to
make repayments of GBP12,500 per month commencing on 31 January
2011 until the principal loan and any outstanding interest is
repaid.
D R Hood agreed to make available a new loan facility of up to
GBP550 000 with a further GBP250,000 should the Group's overdraft
facility need to be repaid. By the period end, GBP610,000 had been
loaned to the Company (30 September 2009: GBPnil), of which
GBP250,000 had been used to repay the Group's overdraft facility.
Interest is charged on the loan at a rate of 10%. Interest charged
on the loan during the period amounted to GBP19,041 (2009: GBPnil)
and GBP21,123 remained unpaid at the period end (2009: GBPnil) and
is included within interest-bearing loans and borrowings. The loan
will be repaid in equal monthly instalments of GBP12,500 commencing
on 31 January 2012 until the capital balance and the outstanding
interest is repaid in full.
Infoserve Limited entered into a lease agreement to rent
property from Amerdale Investments LLP, a business in which D R
Hood has an interest. The administrative expenses incurred from
Amerdale Investments LLP amounted to GBP130,492 (30 September 2009:
GBP132,233). The amount owed by Infoserve Limited at the balance
sheet date was GBP273,798 (30 September 2009: GBP283,087) and
represents the current rent quarter and eight months of rent
deferral. The lease is for a term of fifteen years at GBP246,405
per annum, with the first year being rent free. The period between
rent reviews is five years.
During the period, Infoserve Limited made sales of GBP16,531 (30
September 2009: GBP16,531) to and purchases of GBP29,846 (30
September 2009: GBP30,913) from Multiflight Limited, a company in
which D R Hood is a director and principal shareholder. At 30
September 2010 Infoserve Limited owed GBP67,508 (30 September 2009:
GBP54,067) to Multiflight Limited.
During the period, Infoserve Limited made sales of GBP229,179
(30 September 2009: GBPnil) to 2iLocal Limited, a jointly
controlled entity, which Infoserve Limited owns 50% of the issued
share capital. The sales relate to monthly charges and recharges of
property costs, staff costs, product costs and other sundry costs
incurred by Infoserve Limited, recharged at the rate actually
incurred by Infoserve or at rates agreed by the independent
directors of 2iLocal Limited (being those appointed by Iliffe News
and Media). Infoserve Limited received and paid across monies due
to 2iLocal from its customers. At 30 September 2010 Infoserve
Limited owed GBP439 (30 September 2009: GBPnil) to 2iLocal
Limited.
Trade and other payables in the Group's statement of financial
position includes an amount of GBPnil (30 September 2009:
GBP116,460) which represents salaries owed to the non-executive
directors and the social security costs thereon.
5. Taxation
The tax position for the period is based on management's best
estimate of the anticipated effective tax rate for the full year to
31 March 2011.
Since 2004, Infoserve has grown the sales force, as well as
developing products and systems. Large losses were incurred during
this growth phase. In the last 3 years Infoserve has seen revenues
grow substantially year on year, whilst margins have increased and
administrative expenses have declined, resulting in a GBP3m swing
from losses to profitability. The Board are committed to continuing
to invest in the long term, and furthering growth of the business,
and consider that the achievement of reaching profitability is a
major milestone. The market within which Infoserve operates
continues to grow, and the Group believe that further advances in
profitability will probably follow. At 31 March 2010 the Board had
prepared forecasts which indicated that significant tax losses
would probably be utilised over a 6 year period with the remaining
losses utilised further into the future. The board elected to
continue to carry forward a proportion of the unutilised tax
losses, in respect of this short to medium term anticipated
recovery, as a deferred tax asset in the statement of financial
position.
During the six months to 30 September 2010 revenue growth was
marginally slower than anticipated. The Board have considered the
implications of this in respect of the continued recognition of the
deferred tax asset, which may require adjustment at the year end
should the previously anticipated growth not return in the second
half of the trading year.
6. (Loss)/earnings per share
The calculation of (loss)/earnings per share is based upon the
loss after taxation of GBP100,093 (30 September 2009: GBP194,615)
divided by 59,073,241 (30 September 2009: 19,073,241), being the
number of ordinary shares in issue during the period. Share options
in issue did not have a dilutive impact on the loss/(earnings) per
share calculation.
7. Jointly controlled entity
On 10 May 2010 the Company entered into a joint venture
agreement with Iliffe News and Media Limited ("INML"), the media
arm of Yattendon Investment Trust with interests in local media
including newspaper publishing and television.
Under the agreement, the joint controlled entity ("2i Local")
offers SMEs the opportunity to purchase a combined internet and
print advertising package. This gives businesses guaranteed
exposure to their target market through online local search and
local newspaper coverage. Infoserve Limited and INML each own 50%
of the issued share capital of 2i Local Limited.
Infoserve's share of the losses incurred up to 30 September 2010
of GBP117,000 are on plan. Nevertheless, the original loan to 2i
Local Limited of GBP160,000 has been written down by a
corresponding amount leaving the carrying value of the loan in the
statement of financial position of GBP43,000.
A copy of this announcement is available from the Company's
website, www.infoservegroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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