Preliminary Statement
On-Line PLC
14 December 2001
Release to Companies Announcement Office
Embargoed to: 1:30pm Friday 14 December 2001
ON-LINE PLC
Preliminary Statement for the year ended 30 June 2001
Chairman's statement
Review of the period
2001 has been a remarkable year. Against the harshest of backgrounds, On-line
has been able to carry on with its plans during the period and has achieved a
great deal.
Since our previous year-end we have floated another company of the group,
Akaei, onto the AIM market; ADVFN has become the leader in its field and
AdvertWizard has gone from concept to an exciting business with significant
prospects.
The value of the listed companies within the group is not fully reflected in
our accounts as these investments are stated at cost rather than market value.
It seems perverse to us that at time of writing these are worth about
£12,000,000 to the group, £8,000,000 more than Online's present total market
cap. However considering the market conditions since the .com crash it appears
there is some logic to this, as there remains so much uncertainty and
consternation in the Technology and Internet sectors, that such simple
arithmetic is overshadowed. We look forward to the passing of this unhappy
state of affairs.
Advfn.com Plc (http://www.advfn.com)
ADVFN has continued to grow and is now market leader in its industry. During
November of 2001 ADVFN was able to announce a very positive trading statement
as it introduced new products and revised pricing levels on its core UK
website ADVFN.COM. This was a crucial moment for ADVFN as it represented a
culmination of significant change with the introduction of a new more
sophisticated offering to its customers and its successful acquisition of
UK-Invest.
The numbers of subscribers and subscription income have exceeded forecasts and
in October 2001, ADVFN's subscription revenue cleared the £1,000,000 a year
run rate, up 67% since the end of July 2001. In September, the first full
month of operation under the new offering, ADVFN was Number.1 provider of UK
Share Information according to Hitwise.com which tracks 3 million UK users
each day.
ADVFN represented 27% of audience market share, which includes online Brokers
such as Etrade and the like, as well as its direct competition. This is almost
a third more market share than our nearest rival Interactive Investor and over
250% more than third place rival Yahoo Finance.
Akaei Plc (http://www.akaei.com)
In July of this year we were able to bring to the market Akaei Plc our
computer games publishing business. Akaei is headed by Rod Cobain, an industry
veteran of nearly 20 years experience.
Akaei is publishing computer games on PC and consoles and recently had a
number 1 in the EB PC chart. Publishing licensed games from around the world,
is a less risky way of publishing than the 'hit driven' model adopted by
others, as it allows Akaei to see finished games before deciding to publish or
commit any funds to them.
In October Akaei announced that it had acquired the exclusive licensed
Worldwide Rights to Rangers Football Club, which will allow it to develop,
manufacture, sell and market a football management computer game using the
Rangers endorsement. This game is in an advanced stage of development and is
due to be released in March of 2002.
AdvertWizard Limited (http://advertwizard.com)
AdvertWizard is progressing well and is the only on line company providing
internet marketing solutions to both large branded clients and SMEs. The
automated online advertising platform that forms the heart of the AdvertWizard
technology now serves 70m ads to over 4m people worldwide every month. This
already makes it one of the largest web properties in the UK. Growth rates are
currently running at around 40% a month.
AdvertWizard's recent expansion into offering internet marketing solutions to
large branded clients has proved a success and will provide strong revenue
streams over the next year. While the period to the year-end was an initial
release phase, AdvertWizard has since begun to generate significant revenues,
which we are expecting to grow strongly.
Prospects
In summary we believe that we have weathered the harsh economic climate of the
past eighteen months and are now well positioned for the future and therefore
look forward to the coming year with enthusiasm.
So to finish I would like to thank you for your support and I ask you to view
our companies by visiting their websites to see them in action.
Michael Hodges
Chairman
14 December 2001
For further information please contact:
On-line plc 020 8591 1125
Michael Hodges, Managing Director
Grant Thornton 020 7383 5100
Graeme Thom
Consolidated Profit and Loss Account
for the year ended 30 June 2001
Notes 2001 2000
£'000 £'000 £'000 £'000
Turnover 1,464 748
Cost of sales (946) (86)
Gross profit 518 662
Administrative expenses
Exceptional item - impairment review (434) -
Other (3,452) (1,557)
(3,886) (1,557)
Operating loss (3,368) (895)
Exceptional item: profit on part
disposal of subsidiary - 3,402
Net interest 66 69
(Loss)/profit on ordinary
activities before taxation (3,302) 2,576
Tax on (loss)/profit on ordinary 2 (2)
activities
(Loss)/profit on ordinary
activities after taxation (3,300) 2,574
Minority interest 384 2
(Loss sustained)/profit retained
for the year (2,916) 2,576
(Loss)/earnings per ordinary share 4
Basic (54.3p) 55.4p
Diluted (54.3p) 55.1p
There were no recognised gains or losses other than the loss or profit for the
financial year.
Balance Sheets
at 30 June 2001
Group Group Company Company
2001 2000 2001 2000
Notes £'000 £'000 £'000 £'000
Fixed Assets
Intangible assets 870 834 24 235
Tangible assets 3,154 1,564 113 260
Investments 207 482 1,662 1,887
4,231 2,880 1,799 2,382
Current Assets
Stocks 24 42 - 42
Debtors 632 266 1,666 537
Cash at bank and in hand 589 4,156 81 866
1,245 4,464 1,747 1,445
Creditors: amounts falling
due within one year (1,690) (933) (726) (348)
Net current (445) 3,531 1,021 1,097
(liabilities)/assets
Total assets less current 3,786 6,411 2,820 3,479
liabilities
Creditors: amounts falling
due after more
than one year (100) (63) (94) (63)
Provision for liabilities - - - -
and charges
Minority interests (646) (1,030) - -
Net assets 3,040 5,318 2,726 3,416
Capital and Reserves
Called up share capital 2,904 2,603 2,904 2,603
Share premium account 1,928 1,591 1,928 1,591
Profit and loss account (1,792) 1,124 (2,106) (778)
Shareholders' funds - equity 5 3,040 5,318 2,726 3,416
The financial statements were approved by the Board of Directors on 14
December 2001
Consolidated Cash Flow Statement
for the year ended 30 June 2001
2001 2000
Notes £'000 £'000
Net cash outflow from
operating activities 6 (1,396) (85)
Returns on investment and
servicing of finance
Interest received 97 87
Interest paid (31) (18)
66 69
Corporation tax paid (7) -
Capital expenditure
Sale of tangible fixed assets - 16
Payments to acquire intangible fixed assets (969) (586)
Payments to acquire tangible fixed assets (2,425) (1,571)
Receipts from sale of investments 18 (450)
(3,376) (2,591)
Acquisitions and disposals
Purchase of subsidiary undertaking - (350)
Part disposal of subsidiary - 4,792
- 4,442
Net cash (outflow)/inflow before financing (4,713) 1,835
Financing
Issue of ordinary share capital 638 1,550
Capital element of new finance leases and
hire purchase contracts 152 65
Capital element of finance leases and hire
purchase contracts repaid (65) (69)
Net cash inflow from financing 725 1,546
(Decrease)/increase in cash 7 (3,988) 3,381
Notes for the year ended 30 June 2001
1. General
The financial information herein does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985.
The financial information has been extracted from the group's 2001 statutory
financial statements upon which the auditors reported on 14 December 2001.
Their opinion is unqualified and does not include any statement under section
237 of the Companies Act 1985, but refers to the uncertainties surrounding the
ability of the Group to continue as a going concern (as described in note 2).
The accounts have been prepared in accordance with applicable accounting
standards and under the historical cost convention.
The principal accounting policies of the group have remained unchanged from
the previous annual report, except that Website development costs have been
treated as tangible fixed assets following the issue of UITF29 'Website
development costs'. They were previously treated as intangible fixed assets
and the comparatives have been restated accordingly.
Copies of the annual report are being posted to shareholders and copies will
be available from the company's registered office at Crown House, Linton Road,
Barking, Essex, IG11 8HJ.
2. Basis of preparing the financial statements
The group has incurred losses in the year, due mainly to costs associated with
developing the group's product range. As set out in note 3, the company raised
a further £250,000 subsequent to the year end by means of share issues.
The group meets its day to day working capital requirements through an
overdraft facility of £500,000 which is repayable on demand and is due for
renewal in May 2002; the directors consider that this will be renewed. The
company's brokers have indicated that they may be able to raise further funds.
The nature of the group's business is such that there can be considerable
unpredictable variation in the timing of cash inflows. Bearing this in mind,
the directors' have prepared projected cash flow information for the period
ending 31 December 2002.
On the basis of this cash flow information and discussions with the company's
bankers, the directors consider that the group will continue to operate within
the facility currently agreed and within that which they expect to be renewed
in May 2002. However, the margin of facilities over requirements is not large
and, inherently there can be no certainty in relation to these matters. On
this basis, the directors consider it is appropriate to prepare the financial
statements on the going concern basis. The financial statements do not include
any adjustments that would result if the group should be unable to raise the
required funding.
3. Post balance sheet events
On 25 July 2001, a subsidiary, Akaei plc was admitted to the Alternative
Investment Market following the issue of 4,150,000 0.5p ordinary shares at 10p
per share for cash. On-line's holding in Akaei was reduced to 84.3% as a
result of this transaction.
On 30 July 2001, a subsidiary, ADVFN issued a further 37.5 million ordinary
shares of 1p each at 4p per share in consideration for the purchase of the 'UK
invest' website and business.
On 30 August 2001, ADVFN issued a further 4.6 million ordinary shares of 1p
each at 3.25p per share to provide further working capital.
On 28 September 2001, the company raised £250,000 from the issue of 427,350
ordinary shares of 50p each at 58.5p per share for cash. The company has used
the funds to provide working capital for the development of its product range.
4. (Loss)/earnings per ordinary share
2001 2000
Number of Loss Number of Earnings
Loss shares per share Earnings shares per share
£'000 '000 p £'000 '000 p
(Loss)/profit (2,916) 2,576
for the year
Weighted 5,366 4,648
average number
of shares
Basic (54.3p) 55.4p
(loss)/earnings
per share
Number of
shares under
option at
less than
average share
price during
the year of 359p 53
Number of
shares that
would have
been issued at (30)
fair value
Diluted 2,576 4,671 55.1p
earnings per
share
5. Reconciliation of movements in shareholders' funds
Group Group
2001 2000
£'000 £'000
(Loss)/profit for the financial year (2,916) 2,576
Receipts from issue of shares 638 1,550
Goodwill previously written off to reserves - 358
Net (decrease)/increase in shareholders funds in the year (2,278) 4,484
Shareholders' funds at 1 July 5,318 834
Shareholders' funds at 30 June 3,040 5,318
6. Reconciliation of operating loss to net cash outflow from operating
activities
2001 2000
£'000 £'000
Operating loss (3,368) (895)
Amortisation 933 98
Depreciation 835 149
Provision against investment 243 (6)
Loss/(profit) on sale of fixed asset investment 14 (10)
Decrease/(increase) in stocks 18 (30)
Increase in debtors (366) (9)
Increase in creditors 295 618
Net cash outflow from operating activities (1,396) (85)
7. Reconciliation of net cash flow to movement in net (debt)/ funds
2001 2000
£'000 £'000
(Decrease)/increase in cash for the year (3,988) 3,381
Cash acquired on acquisition of subsidiary - 13
New finance leases and hire purchase agreements (152) (65)
Cash outflow from capital repayments of hire
purchase and finance lease agreements 65 69
Movement in net funds in the year (4,075) 3,398
Net funds at 1 July 4,058 660
Net (debt)/funds at 30 June (17) 4,058
8. Analysis of net funds
2001 2000
£'000 £'000
Cash at bank 589 4,156
Bank overdrafts (421) -
Finance lease and hire purchase agreements (185) (98)
Total (17) 4,058
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