TIDMWFCA
RNS Number : 6565P
WFCA PLC
06 October 2011
WFCA plc
("WFCA", the"Company" or the "Group")
AUDITED RESULTS FOR THE YEAR ENDED 30 June 2011
WFCA plc (AIM: WFCA.L), a leading regional advertising and
marketing agency, today announces its final results for the year
ended ended 30 June 2011
Highlights
-- Net loss before tax and exceptional items of GBP189,427
(FY2010: Profit of GBP802,738);
-- Revenue of GBP11.1m (FY2010: GBP26.5m)
-- GBP1,673,308 after costs raised by way of placing of ordinary
shares in April;
-- Gross Margin increased to 25.0% (2010: 18.7%);
-- Acquisition of Williams Blake Reay Limited a specialist
health care agency;
-- Group net assets of GBP8.9 million (2010: GBP7.8 million);
and
-- Long term debt of GBP662,500 (2010: GBP700,000).
Further enquiries:
WFCA plc
Stephen Latter, Financial Director Tel: 01892 511 085
Daniel Stewart & Company plc
Oliver Rigby/James Felix Tel: 020 7776 6550
Chairman's and Chief Executive's Statement
BUSINESS REVIEW AND SUMMARY
In a very difficult trading period for the year ended 30(th)
June 2011, WCFA recorded a net loss before taxation and
discontinued operations of GBP592,815, which compares to a profit
of GBP677,149 in the previous financial year. The result includes
substantial exceptional items amounting to GBP403,388, which are
detailed in the Financial Summary below. The underlying operating
loss therefore, amounted to GBP120,310, which compares to an
operating profit of GBP846,518 in the previous year. The principal
reason for the negative result was the loss of two major clients
during 2010 which were reported to the market at the time. In
addition, the marketing budgets of some of our retained clients
were materially less than in previous years.
As a result of the above, the directors organised a share
placing in April raising GBP1,673,308 after costs to provide
sufficient working capital to allow the company to reduce debt,
strengthen its liquidity and provide the funds to allow small
acquisitions.
On the 29(th) July 2011, the company completed a small
acquisition when it purchased the entire share capital of Williams
Blake Reay Limited 'WBR', a specialist health care agency also
based in Tunbridge Wells. WBR specialises in the promotion of
products and services in all sectors of the healthcare market
including prescriptions, over the counter medicines and patient
education material. It is best known for its work on Sudocrem, the
nation's favourite nappy rash cream. In order to maximise the
associated financial opportunities and to benefit from the wider
WFCA infrastructure, WBR has moved into the WFCA premises and is
now operating as a division within the company, while maintaining
its own corporate identity. The acquisition allows WFCA to expand
out of its traditional heartland of retail which has experienced
difficult trading conditions over the past two years.
The acquisition involved the payment of an initial cash
consideration of GBP50,000. Deferred consideration, limited to a
maximum of GBP450,000, will be payable based on a multiple of two
times the profit after tax for the year ending 30th June 2012,
payable in September 2012 and four times the profit after tax for
the year ending 30th June 2013 which is payable in September 2013.
Seventy per cent of any additional consideration will be payable in
cash and thirty per cent in equity. The initial consideration is
deductable from any deferred consideration payable.
The Company remains committed to further strategic moves and is
in dialogue with other larger acquisition opportunities. In this
challenging trading environment, new business opportunities have
been limited but since our interim statement further wins have been
made for Trading Sources, TGA Mobility and Attwoods.
There have been significant management changes since the interim
statement. Michael Richards stepped downas Group Chief Executive
Officer with effect from the 31(st) August 2011 and as outlined in
the interim statement, Rob Hamer continues to act as Group Chief
Executive Officer on an interim basis and until a full time
successor is appointed. Within WFCA Integrated Limited, the major
operating company in the Group, Nick Radley (previously Planning
Director) and Greg Phitidis (previously Creative Director) have
been promoted to be joint Managing Directors. Katie Scott stepped
up to become Head of Client Services and Chris Wright has been
appointed Media Director.
The continued support of our staff remained crucial throughout
this difficult trading period and the commitment they continue to
provide to the company remains a source of strength and we thank
them accordingly.
FINANCIAL SUMMARY
The result, while disappointing, was as predicted in the interim
statement. The company has recently introduced further cost cutting
measures that will reduce underlying overheads by a further
GBP500,000 per annum.
Turnover in the year ended 30(th) June 2011was GBP11,145,221, a
58% decrease to that achieved in the year ended 30(th) June 2010
although gross profit decreased by only 44% to GBP2,782,685 as a
higher percentage of the company business related to non media
services. Gross Margin increased from 18.7% to 25.0%. This movement
in the profile of business should not be considered a strategic
change of direction and the company is looking to rebuild its media
activity under a newly branded division called 'Wayfarer'.
Following the refinancing exercise referred to earlier, the
company now has positive working capital of GBP573,351 compared to
a deficit in working capital of GBP602,725 as at June 2010. Group
net assets have increased from GBP7.8 million to GBP8.9 million.
Long term debt has been reduced by GBP37,500 from GBP700,000 to
GBP662,500 and should be further reduced in the new financial
year.
During the year and as reported in the interim statement, the
company incurred a substantial bad debt which, inclusive of legal
costs, amounted to GBP235,391 which is included in exceptional
costs. The company has a first charge over all debts owed to the
defaulting company and all such debts have accordingly been
assigned to WFCA. Whilst the directors are hopeful of future
recoveries for the bad debts there is uncertainty about both the
quantum and timing due to the nature of the debts. The directors
therefore considered it would be prudent to make full provision in
the current year. The building owned by the company in Gravesend
was impaired during the year resulting in a further GBP48,000
exceptional cost. It is anticipated that this building will be sold
in the first half of the new financial year. The balance of the
exceptional costs relate to staff redundancies and severance costs
connected with the senior management changes and the financial
restructuring necessary following the loss of the major client
referred to earlier.
The directors do not propose the payment of a dividend for the
year.
OUTLOOK
Client marketing budgets remain depressed with very few signs of
a return to the expenditure levels experienced before the 2008
financial crisis, particularly within the retail sector. The
company has however continued to reduce costs, has acquired new
clients and is looking forward to a return to profitability in the
new financial year. The board remains committed to organic growth
and will continue to seek strategic opportunities in high margin
niches within marketing communications.
Rob Hamer
Chief Executive
Group Income Statement
Notes 2011 2010
Before
Exceptional Exceptional
Items Items
GBP GBP GBP GBP
Revenue 1 11,145,221 - 11,145,221 26,458,225
Direct Costs (8,362,536) - (8,362,536) (21,504,575)
Gross Profit 2,782,685 - 2,782,685 4,953,650
Other
Operating
Income 2 - - - 6,513
Operating Costs
before Share Option
charge (2,844,067) (403,388) (3,247,455) (4,141,073)
Share Option Charge (4,992) - (4,992) (7,600)
---------------------- ------------ ------------ ------------ -------------
Total
Operating
Costs (2,849,059) (403,388) (3,252,447) (4,148,673)
Depreciation (53,936) - (53,936) (90,561)
Operating
(Loss) /
Profit (120,310) (403,388) (523,698) 720,929
Net Finance
Cost 3 (69,117) - (69,117) (43,780)
(Loss) /
Profit
before Tax (189,427) (403,388) (592,815) 677,149
Income Tax 6 83,806 - 83,806 (167,676)
(Loss) /
Profit
before
Discontinued
Operations (105,621) (403,388) (509,009) 509,473
(Loss) /
Profit from
Discontinued
Operations (3,569) - (3,569) 46,526
(Loss) / Profit for
the year
attributable to
Equity Holders of
the Parent (109,190) (403,388) (512,578) 555,999
============ ============ ============ =============
EARNINGS PER
SHARE
Basic
Earnings Per
Share 13 (0.17)p 0.21p
Diluted
Earnings Per
Share 13 (0.16)p 0.19p
No Group Statement of Comprehensive Income has been prepared
because there were no material gains or losses for the year
other than those recognised in the Income Statement.
Group and Company Balance Sheets
GROUP COMPANY
Notes 2011 2010 2011 2010
GBP GBP GBP GBP
ASSETS
NON CURRENT
ASSETS
Property,
Plant and
Equipment 7 92,872 143,517 - -
Goodwill 8 8,497,907 8,497,909 -
Investment in
Subsidiaries 8 - - 10,100,509 10,100,509
Corporate
Income Tax
recoverable 9 423,509 420,716 350,233 420,716
9,014,288 9,062,142 10,450,742 10,521,225
=========== =========== =========== ===========
CURRENT ASSETS
Trade and
Other
Receivables 9 862,187 2,417,987 169,420 847,018
Cash and
Short Term
Deposits 704,217 105,719 717 2,359
Assets Held
for Sale 142,000 190,000 142,000 190,000
1,708,404 2,713,706 312,137 1,039,377
=========== =========== =========== ===========
TOTAL ASSETS 10,722,692 11,775,848 10,762,879 11,560,602
=========== =========== =========== ===========
EQUITY AND
LIABILITIES
ISSUED CAPITAL
AND RESERVES
Issued Share
Capital 12 4,459,660 2,684,660 4,459,660 2,684,660
Share Premium 15 1,332,706 1,434,398 1,332,706 1,434,398
Retained
Earnings 16 3,132,773 3,640,359 2,921,439 2,942,890
TOTAL EQUITY 8,925,139 7,759,417 8,713,805 7,061,948
=========== =========== =========== ===========
NON CURRENT
LIABILITIES
Long Term
Borrowings 18 662,500 700,000 - -
662,500 700,000 - -
=========== =========== =========== ===========
CURRENT
LIABILITIES
Trade and
Other
Payables 17 1,135,045 3,193,942 2,049,074 4,489,060
Provisions
for
liabilities
and charges 21 - 46,594 - 9,594
Corporate
Income Tax
Payable 8 75,895 - -
1,135,053 3,316,431 2,049,074 4,498,654
=========== =========== =========== ===========
TOTAL EQUITY
AND
LIABILITIES 10,722,692 11,775,848 10,762,879 11,560,602
=========== =========== =========== ===========
Group and Company Statement of Changes in Equity
Issued
Share Share Retained Total
Capital Premium Earnings Equity
GROUP GBP GBP GBP GBP
Balance
at 1st July 2009 2,657,809 1,383,648 3,076,760 7,118,217
Profit for
the year - - 555,999 555,999
Charge of
Share
Options - - 7,600 7,600
Issue of
Share
Capital 26,851 50,750 - 77,601
Balance 30th June
at 2010 2,684,660 1,434,398 3,640,359 7,759,417
Loss for the
year - - (512,578) (512,578)
Issue of
Share
Capital 1,775,000 (101,692) - 1,673,308
Charge of
Share
Options - - 4,992 4,992
Balance 30th June
at 2011 4,459,660 1,332,706 3,132,773 8,925,139
========== ========== ========== ==========
Issued
Share Share Retained Total
Capital Premium Earnings Equity
COMPANY GBP GBP GBP GBP
Balance
at 1st July 2009 2,657,809 1,383,648 2,627,316 6,668,773
Profit for
the year - - 307,974 307,974
Charge of
Share
Options - - 7,600 7,600
Issue of
Share
Capital 26,851 50,750 - 77,601
Balance 30th June
at 2010 2,684,660 1,434,398 2,942,890 7,061,948
Loss for the
year - - (26,443) (26,443)
Issue of
Share
Capital 1,775,000 (101,692) - 1,673,308
Charge of
Share
Options - - 4,992 4,992
Balance 30th June
at 2011 4,459,660 1,332,706 2,921,439 8,713,805
========== ========== ========== ==========
Group and Company Cash Flow Statement
GROUP COMPANY
2011 2010 2011 2010
GBP GBP GBP GBP
Cash Flows from
Operating Activities
(Loss) / Profit from
Operations (592,815) 677,149 47,609 382,496
Share Option Charge 4,992 7,600 4,992 7,600
Discontinued Operations (3,569) 46,526 (3,569) 46,526
Depreciation of
Property, Plant and
Equipment 53,936 90,561 - -
Operating cash flows
before movement in
working capital (537,456) 821,836 49,032 436,622
Loss on sale of
Property, Plant and
Equipment - 17,805 - -
Diminution in value of
property 48,000 (33,659) 48,000 (33,659)
Decrease / (Increase)
in Receivables 1,555,800 744,689 677,598 (281,837)
Decrease in Payables (1,794,707) (1,800,119) (2,301,361) (172,393)
Cash consumed by
operations (728,363) (249,448) (1,526,731) (51,267)
Income Tax Paid - (21,949) - -
Net cash from operating
activities (728,363) (271,397) (1,526,731) (51,267)
------------ ------------ ------------ ----------
Cash Flows from
Investing Activities
Purchase of Property,
Plant and Equipment (3,291) (116,371) - -
Net cash from investing
activities (3,291) (116,371) - -
------------ ------------ ------------ ----------
Cash Flows from
Financing Activities
Proceeds on issue of
shares 1,775,000 77,601 1,775,000 77,601
Cost for share issue (101,692) - (101,692) -
Net cash from investing
activities 1,673,308 77,601 1,673,308 77,601
------------ ------------ ------------ ----------
Net Increase in Cash
and Cash Equivalents 941,654 (310,167) 146,577 26,334
Cash and Cash
Equivalents at 1st
July 2010 (949,937) (639,780) (145,860) (172,194)
Cash and Cash
Equivalents at 30th
June 2011 (8,283) (949,947) 717 (145,860)
============ ============ ============ ==========
Represented by:
Cash and short term
deposits 704,217 105,719 717 2,359
Bank loans, overdraft
and similar
facitities (712,500) (1,055,666) - (148,219)
(8,283) (949,947) 717 (145,860)
============ ============ ============ ==========
Notes to the Financial Statements
A) Significant accounting policies
WFCA plc (the company) is a company domiciled in the United
Kingdom and incorporated in England and Wales. The consolidated
financial statements of the company for the year ended 30th June
2011 comprise the company and its subsidiary (together referred to
as the Group).
B) Statement of compliance
The following new and revised IFRSs have been adopted in these
consolidated financial statements. The application of these new and
revised IFRSs has not had any material impact on the amounts
reported for the current and prior years but may affect the
accounting for future transactions or arrangements. Other new
standards and interpretations have no significant impact on the
Group.
-- IFRS 2 Group Cash-settled Share-based Payment Transactions.
The amendments clarify the scope of IFRS 2 as well as the
accounting for group cash-settled share-based payment transactions
in the separate (or individual) financial statements of an entity
receiving the goods or services when another group entity or
shareholder has the obligation to settle the award.
-- IFRS 3 (revised) Business Combinations requires significant
changes to the way business combinations are accounted for. All
costs associated with business combinations are expensed directly
to the Income Statement. Additionally any changes to contingent
consideration classified as debt must now be dealt with through the
Income Statement subsequent to acquisition.
-- Improvements to IFRSs in April 2009 the International
Accounting Standards Board issued its second omnibus of amendments
to its standards, primarily with a view to removing inconsistencies
and clarify wording. The adoption of these amendments, which are
effective from 1(st) January 2010, did not have any impact on the
reporting of the financial position or performance of the
Group.
-- Amendments to IAS 32 - Classification of Rights Issues.
Changes to disclosure and treatment not expected to affect the
Group.
-- IFRIC 19 - Extinguishing Financial Liabilities with Equity
Instruments. Guidance issued on how to treat financial liabilities
renegotiated and then settled by the issue of Equity
Instruments.
-- The Group has not applied the following revised IFRS that is
EU endorsed but is not yet effective:
o IAS 24 (revised in 2009) - Related Party Disclosures.
Effective for annual periods beginning on or after 1(st) January
2011.
The Group is currently considering the implications of these
standards and interpretations. They are not expected to have a
material impact on the Group's financial statements.
C) Basis of preparation
The financial statements have been prepared under the historical
cost convention. Non-current assets are stated at the lower of
carrying amount and fair value less costs to sell.
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results may
ultimately differ from those estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision
affects only that period, or in a period of the revision and future
periods if the revision affects both current and future
periods.
Judgements made by management in the application of IFRS that
have a significant effect on the financial statements and estimates
with a significant risk of material adjustment in the next year are
discussed where appropriate. Specific areas where judgments have
been made by management relate to the carrying value of the Group's
goodwill over the company's investment in subsidiary
undertakings.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements and in preparing an opening IFRS balance sheet
at 1(st) July 2004 for the purposes of the transition to IFRS.
The accounting policies have been applied consistently by Group
entities.
D) Basis of consolidation
i. Subsidiaries
Subsidiaries are entities controlled by the Company. Control
exists when a Company has the power, directly or indirectly, to
govern the financial and operational policies of an entity so as to
obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control
ceases.
ii. Transactions eliminated on consolidation
Intra group balances and any unrealised gains and losses or
income and expenses arising from intra group transactions, are
eliminated in preparing the consolidated financial statements.
E) Foreign currencies
Transactions in foreign currencies are initially recorded at the
rates of exchange prevailing on the dates of the transactions.
Monetary assets and liabilities denominated in such currencies are
retranslated at the rates prevailing at the balance sheet date.
Profits and losses arising on exchange are included in the net
profit or loss for the period.
F) Property, plant and equipment
i. Owned assets
Items of property, plant and equipment are stated at cost less
accumulated depreciation (see below) and impairment losses (see
accounting policy K).
ii. Leased assets
Leases in terms of which the Group assumes substantially all the
risks and rewards of ownership are classified as finance
leases.
iii. Depreciation
Depreciation is charged to the income statement over the
estimated useful lives of each part of an item of property, plant
and equipment. The estimated useful lives are as follows:
Leaseholds Over the term of the lease or life of the asset, if
shorter
Fixtures and fittings 20% on a straight line basis
Computer equipment 33% on a straight line basis
G) Intangible assets
Goodwill
All business combinations are accounted for by applying the
purchase method. Goodwill represents the amount arising on
acquisition of subsidiaries. In respect of business acquisitions,
goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets
acquired.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is
tested annually for impairment (see accounting policy K).
Negative goodwill arising on acquisition is recognised directly
in profit or loss.
H) Investments
Investments in debt and equity securities
The group classifies its investments depending on the purpose
for which the investments were acquired. The Directors determine
the classification of its investment at initial recognition and
re-evaluates this designation at every reporting date.
The fair value of unquoted investments is based on valuation
techniques. The Group assesses at each balance sheet date whether
there is objective evidence that a financial asset or a group of
financial assets is impaired.
I) Trade and other receivables
Trade and other receivables are started at their cost less
impairment losses (see accounting policy K).
J) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
K) Impairment
The carrying amounts of the Group's assets are reviewed at each
balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable
amount is estimated.
For goodwill, assets that have an indefinite useful life and
intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash- generating unit exceeds its recoverable
amount. Impairment losses are recognised in the income
statement.
The recoverable amount of other assets is the greater of their
net selling price and the 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 an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. An impairment loss
in respect of a receivable carried at amortised cost is reversed if
the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was
recognised.
In respect of other assets, an impairment loss is reversed if
there has been a change in the estimates used to determine the
recoverable amount.
An impairment loss is only reversed to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss has been recognised.
L) Share capital
Dividends on ordinary share capital are recognised as a
liability in the period in which they are declared.
M) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between
proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the
borrowings using the effective interest rate method.
N) Employee benefits
Share-based payment transactions
The fair value of employee share option schemes is measured by a
Black-Scholes pricing model. Further details are set out in note 15
in accordance with IFRS 2 'Share-based Payments'. The resulting
cost is charged to the income statement over the vesting period of
the options. The value of the charge is adjusted to reflect
expected and actual levels of options vesting.
O) Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the liability.
P) Trade and other payables
Trade payables are stated at cost.
Q) Revenue recognition
Revenue from services rendered is recognised in the income
statement in proportion to the stage of completion of the
transaction at the balance sheet date. The stage of completion is
assessed by reference to a review of work performed. No revenue is
recognised if there are significant uncertainties concerning the
recovery of the consideration due or associated costs.
R) Expenses
i. Operating lease payments
Payments made under operating leases are recognised in the
income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the income
statement as an integral part of the total lease expense.
ii. Finance lease payments
Minimum lease payments are apportioned between the finance
charge and the reduction of the outstanding liability. The finance
charge is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining
balance of the liability.
iii. Net financing costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method and interest
received on funds invested.
Interest income is recognised in the income statement as it
accrues, using the effective interest rate method. The interest
expense component of finance lease payments is recognised in the
income statement using the effective interest rate method.
S) Income tax
The charge for current tax is based on the results for the year
as adjusted for items which are non-assessable or disallowed. It is
calculated using rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is accounted for using the liability method in
respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial
statements and the corresponding tax basis used in the computation
of taxable profit. In principle, deferred tax liabilities are
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 goodwill
(or negative goodwill) or from the initial recognition (other than
in a business combination) of other assets and liabilities in a
transaction which 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 interest 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.
Deferred tax is calculated at the rates that are expected to
apply when the asset or liability is settled. Deferred tax is
charged or credited in the income statement, except when it relates
to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when 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.
T) Financial Risk Management
The Group uses a limited number of financial instruments,
comprising cash, short-term deposits, bank loans and facilities and
various items such as trade receivables and payables, which arise
directly from operations. The Group does not trade in financial
instruments.
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risk), credit risk, liquidity risk and cash ow interest rate risk.
The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
i. Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Euro and US dollar. Foreign exchange risk
arises from future commercial transactions, recognised assets and
liabilities and net investments in foreign operations. Foreign
exchange risk arises when future commercial transactions or
recognised assets or liabilities are denominated in a currency that
is not the Group's functional currency.
ii. Credit risk
The Group has policies in place to ensure that sales are made to
customers with an appropriate credit history.
iii. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and available funding through an adequate amount of committed
credit facilities. The Group ensures it has adequate cover through
the availability of bank overdraft and loan facilities.
iv Cash flow and interest rate risk
The Group finances its operations through a mix of cash flow
from current operations, bank facilities and other borrowings.
Borrowings are generally at floating rates of interest and no use
of interest rate swaps has been made.
1. SEGMENTAL REPORTING: Notes GROUP
2011 2010
GBP GBP
United Kingdom 8,374,531 24,971,149
Rest of Europe 51,829 147,776
North America 2,704,946 1,274,942
Other 13,915 64,358
11,145,221 26,458,225
=========== ===========
2. OTHER OPERATING INCOME GROUP
2011 2010
GBP GBP
Rents receivable on
leased property - 6,513
- 6,513
=========== ===========
3. OPERATING COSTS
GROUP
2011 2010
GBP GBP
Total Staff Costs 5. 2,248,120 3,270,106
Establishment Costs 197,654 180,211
Other Operating Costs 806,673 698,356
3,252,447 4,148,673
=========== ===========
Other Operating Costs
include:
Loss on Disposal of Plant and
Equipment - 17,085
Release of provision
for impairment - (33,659)
- (16,574)
=========== ===========
Operating Lease Rentals:
Property 94,608 137,872
Plant and Equipment 74,508 36,294
169,116 174,166
=========== ===========
Auditor's Remuneration:
Audit Fees payable to
Brebners 19,000 20,500
Other services - tax 9,001 10,871
Other services - other
assurance 6,000 5,500
34,001 36,871
=========== ===========
Net Finance Cost:
Interest Payable 69,117 43,780
69,117 43,780
=========== ===========
Exceptional Item:
The exceptional item comprises staff termination costs
resulting from the loss of a major client, the write off
of a significant bad debt with associated costs and the
impairment of the valuation of a freehold property held
for resale.
4. DIRECTORS' REMUNERATION GROUP
Basic Loss
Salary Company of
& Fees Pension Benefits Office 2011 2010
GBP GBP GBP GBP GBP GBP
Bob Morton 10,500 - - - 10,500 20,500
Michael
Richards 96,696 - 1,318 60,000 158,014 178,412
Steve Latter 100,000 20,304 1,740 - 122,044 120,345
Rodger
Braidwood 19,054 - 1,984 - 21,038 38,718
John Foley 11,265 - - - 11,265 21,250
Rob Hamer 38,750 - 1,984 - 40,734 21,250
---------- ------------ ----------- ------- ---------- ----------
276,265 20,304 7,027 60,000 363,596 400,475
========== ============ =========== ======= ========== ==========
Additional disclosures relating to
directors' remuneration: 2011 2010
GBP GBP
Remuneration of highest
paid director 100,000 177,193
Non-executive directors'
fees 69,069 79,449
Non-executive chairman's
fees 10,500 20,500
Compensation for director's
loss of office 60,000 -
2011 2010
No. No.
Number of directors accruing benefits under
defined contribution schemes
1 1
5. PERSONNEL EXPENSES GROUP
2011 2010
GBP GBP
Wages and salaries 1,840,422 2,724,136
Compulsory social securities 191,380 276,285
Contributions of defined
pension plans 42,624 29,001
Share option charge 4,992 7,600
Staff training, recruitment
and welfare 48,705 107,495
Redundancy costs 119,997 125,589
---------- ----------
2,248,120 3,270,106
========== ==========
OUR PEOPLE
The average monthly number of employees during the
year was made up as follows:
2011 2010
No. No.
Account Handlers 15 17
Media 10 13
Creative and Digital 10 12
Production and
Studio 7 11
IT 1 1
Administration and Accounts 5 6
Non-executive directors 4 4
---------- ----------
52 64
========== ==========
6. INCOME TAX
GROUP
2011 2010
GBP GBP
Current Income Tax
Current Income tax charge @ 25%,
(2010: 28%) (117,829) 175,678
Effect of change in corporation tax rate
on recognised losses 42,925 -
Under / (Over) provision
in prior year 4,128 (1,620)
---------- --------
Taxation attributable to the company
and its subsidiary (70,776) 174,058
Deferred tax credit:
Relating to origination and reversal of
temporary differences (13,030) (6,382)
---------- --------
Corporate Income Tax (Credit) / Expense reported
in Income Statement (83,806) 167,676
========== ========
Factors affecting current
tax charge
% rate 2011 % rate 2010
Profit Before Tax 25.0 (592,815) 28.0 677,149
======= ========== ========== ========
Profit before tax
at rate of tax (148,204) 189,602
Expenses not deductible 17,957 (6,110)
Capital allowances in excess of
depreciation 13,310 267
Non-trade relief (892) (193)
Marginal relief - (7,888)
---------- --------
Current
tax (117,829) 175,678
========== ========
Factors affecting future
tax charges
As at 30th June 2011 the group had trading losses to carry
forward amounting to GBP1,582,060 (2010: GBP1,430,838) which
have been recognised as an asset on the consolidated balance
sheet.
7. PROPERTY, PLANT AND EQUIPMENT
GROUP
Fixtures
Leasehold & IT
Improvements Fittings Equipment Total
GBP GBP GBP GBP
Cost
1st July 2010 59,582 44,900 174,074 278,556
Additions 2,597 - 694 3,291
------------- --------- ---------- --------------
30th June 2011 62,179 44,900 174,768 281,847
============= ========= ========== ==============
Depreciation
1st July 2010 5,792 8,008 121,239 135,039
Charge for the
year 5,980 9,015 38,941 53,936
------------- --------- ---------- --------------
30th June 2011 11,772 17,023 160,180 188,975
============= ========= ========== ==============
Net Book value
30th June 2010 53,790 36,892 52,835 143,517
============= ========= ========== ==============
30th June 2011 50,407 27,877 14,588 92,872
============= ========= ========== ==============
8. GOODWILL AND INVESTMENTS
Shares
in
Subsidiary
GBP
COMPANY
At 1st July 2010 and 30th
June 2011 10,100,509
==============
Goodwill
on
Consolidation
GBP
GROUP
At 1st July 2010 and 30th
June 2011 8,497,907
==============
Subsidiary
The Group consolidates the results of the entities which
are under its control. The significant entity which is
included in the consolidated accounts is as follows:
Business Shares Voting
Activity Owned Power Incorporated
WFCA Integrated England &
Limited Advertising 100% 100% Wales
9. OTHER FINANCIAL ASSETS
GROUP COMPANY
2011 2010 2011 2010
GBP GBP GBP GBP
Trade receivables 603,022 2,022,937 163,334 845,351
Other receivables:
Inventories - work in
progress 51,722 33,042 - -
Other debtors 65,054 163,110 2,778 1,667
Prepayments and accrued
income 142,389 198,898 3,308 -
-------- ---------- --------- ----------
862,187 2,417,987 169,420 847,018
======== ========== ========= ==========
The movement in the deferred taxation account
during the year was:
1st July 2010 415,598 534,907 420,716 541,764
Profit and loss account
movement during the
year 7,911 (119,309) (70,483) (121,048)
-------- ---------- --------- ----------
30th June 2011 423,509 415,598 350,233 420,716
======== ========== ========= ==========
Shown as non-current
asset 423,509 420,716 350,233 420,716
Shown as current
liability - (5,118) - -
======== ========== ========= ==========
The balance of the deferred taxation account consists of
the tax effect of timing differences in respect of:
Excess of depreciation
over taxation
allowances 27,994 14,964 17,931 20,082
Tax losses available 395,515 400,634 332,302 400,634
-------- ---------- --------- ----------
423,509 415,598 350,233 420,716
======== ========== ========= ==========
10. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash and short-term deposits
held by the Group treasury function. The carrying amount of these
assets approximates to their fair value.
11. CREDIT RISK
The Group's credit risk is primarily attributable to its trade
receivables. The amounts presented in the balance sheet are net of
any allowances for doubtful receivables, estimated by the Group's
management on prior experience, current information and the current
economic environment.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit-rating agencies.
12. SHARE CAPITAL
2011 2010
No. GBP No. GBP
Authorised:
Ordinary shares
of 1p 500,000,000 5,000,000 500,000,000 5,000,000
============== ========== ============ ==========
Issued and Fully
Paid:
Balance at 1st
July 2010 268,466,008 2,684,660 265,780,908 2,657,809
Share options
exercised - - 77,700 777
Other allotment
in year 177,500,000 1,775,000 2,607,400 26,074
-------------- ---------- ------------ ----------
Balance at 30th
June 2011 445,966,008 4,459,660 268,466,008 2,684,660
============== ========== ============ ==========
During the year 177,500,000 ordinary shares of 1p each were
allotted and issued at par to provide working capital.
SHARE OPTIONS
At 30th June 2011, options over 18,100,000 ordinary shares under
the WFCA Enterprise Management Incentive (EMI) Plan and unapproved
options were outstanding.
30th June 30th June Exercise Expiry
2010 Granted Forfeited 2011 Price Date Date
Options 05 Apr 04 Apr
4 2,850,000 - - 2,850,000 2p 2010 2018
Options 01 Jul 30 Jun
5 1,000,000 - - 1,000,000 2p 2010 2018
Options 26 Jul 25 Jul
6 9,250,000 - (1,750,000) 7,500,000 2p 2010 2018
Options 30 Sep 29 Sep
7 2,000,000 - (2,000,000) - 2p 2011 2019
Options 31 Mar 30 Mar
8 7,250,000 - (2,500,000) 4,750,000 2p 2012 2020
Options 01 Nov 31 Oct
9 - 2,000,000 - 2,000,000 1.75p 2012 2020
22,350,000 2,000,000 (6,250,000) 18,100,000
=========== ========== ============ ===========
13. EARNINGS PER SHARE GROUP
2011 2010
GBP GBP
Basic
EPS
Reported earnings (512,578) 555,999
Reported EPS (0.17)p 0.21p
============ ============
Diluted EPS
Reported diluted
earnings (512,578) 555,999
Reported diluted
EPS (0.16)p 0.19p
============ ============
No. No.
Weighted average number of ordinary
shares:
Issued ordinary shares
at 1st July 2010 268,466,008 265,780,908
Effect of shares issued
during the year 41,335,616 705,625
Weighted average number of shares
for basic EPS 309,801,624 266,486,533
Dilutive share options
4 outstanding 2,850,000 2,850,000
Dilutive share options
5 outstanding 1,000,000 1,000,000
Dilutive share options
6 outstanding 7,500,000 9,250,000
Dilutive share options
7 outstanding - 2,000,000
Dilutive share options
8 outstanding 4,750,000 7,250,000
Dilutive share options
9 outstanding 2,000,000 -
Weighted average number of shares
for diluted EPS 327,901,624 288,836,533
============ ============
14. SHARE-BASED PAYMENTS
During the period ending 30th June 2011 the Company had
share-based payment arrangements settled in equities in operation,
as described below.
Employee Share Options
Options over shares in the holding company are awarded to
eligible employees and directors of WFCA plc.
The options exercise period commences on the second anniversary
of the date of the grant of the option and ends on the day which is
the day before the tenth such anniversary. Exceptionally and
subject to the discretion of the board options may be exercised
earlier than two years following grant on the cessation of the
option holder's employment.
The estimated fair value of each option granted in the EMI share
option plan was calculated by applying the Black-Scholes option
pricing model. All options issued prior to 1st July 2009 have
lapsed. The assumptions used in the calculation are as follows:
Share Options
9 8 6 5 4
01 Nov 01 Apr 27 Jul 27 Jul 27 Jul
Grant Date 2010 2010 2009 2009 2009
Notional Share
price 1.75p 1.75p 1.75p 1.75p 1.75p
Exercise price 1.75p 2.00p 2.00p 2.00p 2.00p
Shares under
option 2.00m 4.75m 7.50m 1.00m 2.85m
Expected volatility 20.00% 20.00% 20.00% 20.00% 20.00%
Expected dividend - - - - -
Contractural
life 2 yrs 2 yrs 2 yrs 12 mths 8 mths
Risk free rate 5% 5% 5% 5% 5%
Estimated fair 0.17p 0.17p 0.17p 0.17p 0.17p
value
2011 2010
Weighted Weighted
average average
exercise exercise
No. price No. price
Outstanding at 1st July
2010 22,350,000 2.00p 5,627,700 5.90p
Granted during
year 2,000,000 1.75p 25,100,000 2.00p
Forfeited (6,250,000) 2.00p (8,300,000) 4.70p
Exercised - (77,700) 2.10p
------------ ------------
Outstanding at 30th June
2011 18,100,000 1.97p 22,350,000 2.00p
============ ============
Exercisable at 30th June
2011 11,350,000 1.97p 2,850,000 2.00p
============ ============
The amounts charged to the Income Statement in the year in
respect of share based payments were GBP4,992 (2010: GBP7,600).
15. SHARE PREMIUM
GROUP
2011 2010
GBP GBP
Balance at 1st
July 2010 1,434,398 1,383,648
Arising on issue of
share capital - 53,036
Issue costs (101,692) (2,286)
---------- ----------
Balance at 30th
June 2011 1,332,706 1,434,398
========== ==========
16. RETAINED EARNINGS GROUP COMPANY
2011 2010 2011 2010
GBP GBP GBP GBP
Balance at 1st
July 2010 3,640,359 3,076,760 2,942,890 2,627,316
Net (loss) / profit
for the year (512,578) 555,999 (26,443) 307,974
Charge on share
options 4,992 7,600 4,992 7,600
---------- ---------- ---------- ----------
Balance at 30th
June 2011 3,132,773 3,640,359 2,921,439 2,942,890
========== ========== ========== ==========
TRADE AND OTHER
17. PAYABLES
Trade and other payables comprise amounts outstanding for
purchases and outgoing costs.
The directors consider that the carrying amount of trade
payables approximates to their fair value.
GROUP COMPANY
2011 2010 2011 2010
GBP GBP GBP GBP
Trade payables 416,277 1,161,916 8,868 16,477
Other payables:
Bank overdraft and similar
facilities - 305,666 - 148,219
Bank
loan 50,000 50,000 - -
Social security and other
taxes 55,107 233,079 - 1,563
Deferred taxation - 5,118 - -
Other payables - - 2,023,289 4,308,174
Accruals and deferred
income 613,661 1,438,163 16,917 14,627
1,135,045 3,193,942 2,049,074 4,489,060
========== ========== ========== ==========
18. FINANCIAL INSTRUMENTS
The Group's financial instruments comprise cash, bank borrowings
and various items, such as trade receivables and trade payables
that arise directly from its operations.
The main purpose of these financial instruments is to raise
finance for the Group's operations.
The principal financial risks to which the Group is exposed
relate to foreign exchange risk, credit risk and liquidity risk as
well as cash flow and interest rate risk (as disclosed under
accounting policies).
The bank loans, overdraft and similar facilities are secured on
a group basis by a fixed charge over the trade receivables shown in
note 11 and by fixed and floating charges over the trade, assets
and undertakings of the Group.
GROUP Due Due Due
within between between
1 year 1 and 2 and
2 years 5 years Total
GBP GBP GBP GBP
Bank overdraft and similar
facilities - - - -
Bank loans 50,000 12,500 650,000 712,500
50,000 12,500 650,000 712,500
Trade and other
payables 416,277 - - 416,277
466,277 12,500 650,000 1,128,777
======== ======== ======== ==========
COMPANY Due Due Due
within between between
1 year 1 and 2 and
2 years 5 years Total
GBP GBP GBP GBP
Bank overdraft and similar
facilities - - - -
Bank loans - - - -
- - - -
Trade and other
payables 8,868 - - 8,868
8,868 - - 8,868
======== ======== ======== ==========
19. OPERATING LEASE COMMITMENTS
GROUP
2011 2010
Lessee Activity GBP GBP
Minimum total future lease payments under
operating leases 808,307 859,787
Amounts paid in
the year 169,116 174,166
======== ========
The minimum total future lease payments under operating
leases fall due as follows:
In the next year 174,274 129,384
In the second to fifth
years inclusive 634,033 730,403
-------- --------
808,307 859,787
======== ========
20. RELATED PARTY TRANSACTIONS
During the year GBP11,554 (2010: GBP16,949) was paid to Mr. R
Braidwood (Director) for consultancy services.
During the year GBP10,500 (2010: GBP20,500) was paid to Hawk
Consulting Limited, a company in which Mr. B Morton (Non executive
Chairman) is deemed to have an interest.
Within "other payables" relating to the company are amounts due
to WFCA Integrated Limited amounting to GBP2,023,289 (2010:
GBP4,308,174).
During the year WFCA PLC was reimbursed by the subsidiary
undertaking an amount of GBP110,000 (2010; GBP360,000) in respect
of recharged expenditure.
All intra group transactions have been eliminated on
consolidation.
No entity is in a position of control or ultimate control of the
company.
PROVISIONS FOR LIABILITES AND
21. CHARGES
GROUP COMPANY
2011 2010 2011 2010
GBP GBP GBP GBP
At 1st July 2010 46,594 192,376 9,594 111,780
Utilised (46,594) (145,782) (9,594) (102,186)
------------ ----------- -------- -----------
At 30th June 2011 - 46,594 - 9,594
============ =========== ======== ===========
The provision in 2010 comprised restructuring and reorganisation
costs together with provisions for onerous leases, all
of which were settled during the year.
22. ACCOUNTING ESTIMATES AND JUDGEMENTS
Management has discussed with the Audit Committee the
development, selection and disclosure of the Group's critical
accounting policies and estimates and the application of these
policies and estimates.
23. PARENT COMPANY PROFIT AND LOSS ACCOUNT
As permitted by Section 408 of the Companies Act 2006, the
profit and loss account of the parent Company is not presented as
part of these financial statements. The parent Company's loss after
taxation for the financial year amounted to GBP26,443.
24. REPORT AND ACCOUNTS
The Company's report and accounts together with the notice of
the Annual General Meeting will be sent to shareholders in due
course. The Company will make a further announcement once these
have been sent to shareholders and are available on the
website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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