Final Results

RNS Number : 4561Q
IPPlus PLC
01 September 2014
 



IPPlus PLC

(the "Company" or the "Group")

 

Final Results for the Year Ended 30 June 2014

 

IPPlus PLC today announces its audited results for the year ended 30 June 2014.

 

Financial Highlights

·     Group revenues increased by 13 per cent. to £9,123,387 (2013: £8,076,158)

·     Profit before taxation of £212,483 (2013: £345,856)

·     Profit on lease surrender of £352,367

·     Impairment of CallScripter intangible assets of £322,974

·     Underlying operating profit of £348,882 (2013: £429,796) when lease surrender profit, CallScripter impairment and CallScripter reorganisation costs are excluded (see below)

·     Closing cash and cash equivalents balance of £459,693 (2013: £559,574)

·     A maiden dividend of 0.3 pence per share was paid in November 2013

·     Dividend proposed of 0.15 pence per share for the year ended 30 June 2014 (subject to shareholder approval)

 

Operational Highlights

 

·     Ansaback revenues increased by 27 per cent. to £7,292,026 (2013:  £5,759,218)

·     IP3 Telecom and PCI-PAL win prestigious business contracts 

·     CallScripter reported revenues of £1,099,867 (2013: 1,490,042)

·     CallScripter divisional re-organisational costs incurred of £120,510

·     Ancora reported revenues of £731,494 (2013: £826,898)

 

Extracts of the final results appear below and the full version of the Company's annual report and accounts will shortly be made available on the Company's website, www.ipplusplc.com.

 

Commenting on the results, CEO, William Catchpole, said: "The Group has had a mercurial year which has seen the significant increase in call centre traffic being adversely affected by the poor performance of the software division. Management changes have been implemented, and whilst the year ahead is likely to be a significant challenge, we have confidence that our experienced team will recover the forward momentum."

 

For further information, please contact:

IPPLUS PLC

Tel: +44 (0)1473 321 800

William Catchpole, Chief Executive Officer

Stuart Gordon, Chief Financial Officer

 

 

 

 

N+1 Singer (Nomad & Broker)

Tel: +44 (0)20 7496 3000

Aubrey Powell

Alex Wright

 

 



 

CHAIRMAN'S STATEMENT

 

FOR THE YEAR ENDED 30 JUNE 2014

 

Financial Summary

The individual performance of the Group's businesses has been mixed. Whilst revenue grew to £9,123,387, operating profit declined to £257,765 for the full year (2013: £8,076,158 and £358,544 respectively).  The 2014 results do, however, include a one-off profit on lease surrender of £352,367 arising from the purchase of the Group's main office in Ipswich, an impairment charge on the CallScripter intangible assets of £322,974 and non-recurring CallScripter reorganisation costs of £120,510. This gives an underlying operating profit of £348,882 (2013: £429,796) (see below).


 

2014

2013


 

£

£

Operating Profit

 

257,765

358,544


 

 

 

Impairment of intangible assets

 

322,974

-

Profit on lease surrender

 

(352,367)

-

CallScripter reorganisation costs

 

120,510

-

PCI non-recurring costs

 

-

71,252


 

────────

────────

Underlying operating profit

348,882

429,796


 

────────

────────

The overall result reflects: a reasonably strong performance of the Group's contact centre division (Ansaback incorporating IP3 Telecom), which continued to perform in line with the Board's expectations (with growth in both revenue and new contracts wins); a weaker than expected performance for CallScripter, the Group's software division; and a loss for Ancora, the Group's archiving and removals division. 

CallScripter sales show a reduction of £390,175. This sales shortfall, as well as additional software division staffing and restructuring costs of £120,510, contributed to the overall decline in Group profitability.

Cash and cash equivalents at 30 June 2014 of £459,693 (2013: £559,574) remained healthy.

On 1 July 2013 the Group purchased the freehold of its principal place of business at 1-2 Melford Court, The Havens, Ransomes Europark, Ipswich IP3 9SJ for the sum of £1,550,000. This purchase was funded by a mortgage of £1,192,500 from NatWest Bank PLC and existing cash resources. 

The Group has occupied the ground floor of this building since May 2000 and was at the stage where more space was required.

Whilst annual overheads increased marginally, reflecting increased business rates on the enlarged property use, the Group's floor space has almost doubled to 15,500 square feet and the mortgage repayments for the entire building are less than the previous rent for the ground floor. 

In addition, and subsequent to the purchase of the freehold, the sub-tenant of the upper floor agreed to the early termination of its lease in consideration of which it paid the Group the sum of £352,367. This early termination payment is recorded as a profit in the results for the year ended 30 June 2014. These funds were utilised by the Group to assist in the purchase of the freehold.

Impairment of Intangible Assets

 

Despite the poor performance of CallScripter in the year, the Board still has confidence in the prospects of the division, as indicated by the reorganisation and recruitment expenditure mentioned below. However the division has continued not to fulfil its potential and as the division was cash negative in the year the Board did not feel that the carrying value reflected the future cashflows from the asset. As such the Board decided to write the CallScripter intangible asset down to nil.

 

In the year ended 30 June 2014, £322,974 was charged to the income statement as impairment. This charge, whilst non-cash affecting, is a corollary of the lower than expected performance from CallScripter.

 

Business Summary

 

Ansaback

 

Ansaback recorded excellent growth during the year with a 27% increase in revenue and commensurate profit. A major element of this came from successfully securing a short term fixed seat contract with a major utility company which saw good use of the new upper floor in the year. A major part of this contract comes to an end in August 2014. The additional space provides capacity to grow the contact centre business and the opportunity to take on additional disaster recovery clients.

 

IP3 Telecom reported last year that it spent considerable resources in launching its PCI compliant offering PCI-PAL and that it achieved Level 1 PCI accreditation. The pipeline for our PCI solutions is growing daily and we are seeing a steady stream of orders being placed by blue chip clients eager to achieve compliance using our cloud based solution.

 

CallScripter

 

CallScripter had a testing 12 months and revenue fell by 26% in the year. The division has required some re-organising and leadership and new staff have been appointed. This incurred a reorganisation cost of £120,510.

 

The Original Equipment Manufacturer (OEM) agreement with Interactive Intelligence Inc. (ININ) has been revised and their client base now has the ability to buy the full CallScripter software rather than a reduced EasyScripter version. This revision provides a better solution for the client and it is expected to increase revenues for the division.

 

Ancora Solutions

 

Ancora Solutions' archiving and secure destruction market is focused on the Eastern Region and London. Overall year-on-year Ancora sales were 12% lower, which adversely affected divisional profitability. The Board continues to review Ancora's operations.

 

Dividend

 

Subsequent to shareholder approval at the 2013 Annual General Meeting, a maiden dividend of 0.3 pence per share was paid in November 2013.

 

Each year the Board decides whether to declare a dividend or return capital to shareholders or purchase shares in the market to be held as treasury stock. This decision is taken principally in the light of: the Group's present net cash balance; its future working capital requirements; investment plans for the future development of the Group; and, the banking climate, with particular regard to their willingness to support SME's.

 

Taking these factors into consideration against the background of the result in the year, the Board will be proposing the payment of a dividend of 0.15 pence per share in respect of the year ended 30 June 2014, which if approved at the 2014 Annual General Meeting, will be paid on 5 November 2014 to those shareholders on the register on 10 October 2014.

 

Board changes

 

I am pleased to report that Chris Fielding, has joined the Group as a Non-Executive Director. Chris is currently Head of Corporate Finance at W H Ireland and brings with him over 30 years' experience of corporate and financial skills.

Previous to this role Chris worked at Arden Partners and, prior to that, spent eleven years at Hoare Govett as director of Corporate Finance. He qualified as a chartered accountant with Price Waterhouse and then held appointments at Thomas Cook, Cadbury Schweppes and Barclays de Zoete Wedd.

I have also advised the board of my intention to stand down at the end of 2014, having served the company for 9 years, and it is expected that Chris will take over the Chairman's role on my departure.

After nearly four year's service Bernard Waldron has stated his intention to stand down from the Board on 30 September 2014. The Board wishes to express its gratitude to Bernie for his service to the Company and extends its best wishes to him in his future endeavours.

People

 

I would like to thank each of the directors and employees for all of their efforts during the past year. Their commitment, loyalty and support are appreciated and are vital to achieving further positive progress.

 

 

Outlook

 

The Group faces a number of challenges in the coming year as: Ansaback adjusts to the expiry of the utility contract with a commensurate decrease in turnover and margin; the new CallScripter team gains momentum; and the Board continues its active review of the Ancora division. Accordingly, the current year will be a tough one for the Group.

 

Ansaback, however, is a resilient business with significant growth opportunities, particularly with PCI-PAL as data security and compliance is recognised as a major risk to organisations. Our capacity for growth and strong balance sheet means that we are well placed to meet these challenges.

 

 

 

 

 

 

 

 

 

 

Philip Dayer

29 August 2014

STRATEGIC REPORT

 

FOR THE YEAR ENDED 30 JUNE 2014

 

Business Summary

 

IPPlus PLC operates through two principal subsidiaries, IPPlus (UK) Limited and CallScripter Limited.

 

The Group trades under six trading styles namely Ansaback, IP3 Telecom, PCI-PAL, CallScripter, Ancora Solutions and Suffolk Disaster Recovery. For management purposes these are administered as three operating divisions.

 

Ansaback is a 24 hours a day, 7 days a week bureau telephony service providing  overflow and out of hours call handling, emergency cover, dedicated phone resource, non-geographic, low call and Freephone telephone facilities as well as disaster recovery lines and other ancillary telecommunication services.

 

IP3 Telecom, the telecommunications arm of Ansaback, is a cutting edge provider of hosted "Cloud" telephony technology, providing bespoke automated IVR solutions to the banking and financial sectors, hosted contact centre services, telephone numbers, campaign response, call recording, reporting and lone worker staff lines. The triple sited network ensures a robust infrastructure capable of handling high volumes and peaks in call traffic, within one of the most reliable intelligent telephony networks in the UK.

 

PCI-PAL, part of IP3 Telecom, offers a PCI (Payment Card Industry) solution which allows contact centres and telephone agents to take payments in a PCI compliant fashion with customer service unaffected and existing operational processes maintained.  PCI-PAL makes contact centre payment collection easy and secure, de-scoping the operation from the requirements of PCI DSS.

 

CallScripter is an enhanced customer interaction software suite specifically developed for contact centres, telesales and telemarketing operations. Our clients gain major benefits by introducing CallScripter's dynamic scripting environment and advanced reporting software into their organisations. The software facilitates the rapid set-up, handling and reporting of sophisticated inbound calls, outbound calls and e-mail campaigns.

Suffolk Disaster Recovery provides physical workstations to a number of businesses in the Ipswich area from its two locations. The facilities have their own generators and are available on a 24 hour basis, 7 days a week.

Ancora Solutions provides secure document archiving, confidential shredding, library moves and specialist removals serving many leading blue chip companies within the legal, medical, property, and transportation sectors.

The Market

 

The necessity for businesses to offer better services around the clock seven days a week lends itself to an outsourced model such as Ansaback. Ansaback was successful in securing a short term fixed seat contract with a major utility company which saw good use of the new upper floor in the year. A large part of this contract comes to an end in August 2014. Ansaback continues to win prestige accounts who seek a cost effective UK customer facing solution.  We have increased our dedicated fixed seats and we continue to prospect for larger clients who seek a mix of dedicated and bureau desks.

 

The IP3 Telecom market is principally in the UK although it does have international clients. Whilst the market for advanced telephony services is enormous the specialist nature of complex IVR continues to provide us with excellent prospects for growth. 

 

The PCI market is emerging as a new area for many businesses driven by compliance, a risk of being fined heavily for a data breach with the attendant increase in their card processing charges. The operational risk is that companies lose their payment processing contracts and are then forced to pay large premiums to become compliant by the main credit card processors. There are some recent examples of high profile data losses which all push companies handling credit card data to review their payment processes.

 

The market for our CallScripter software is not bounded by the UK with 56% of our business now conducted abroad, mainly in the United States. Further strategic recruitment to specifically develop the channel partnerships is now in place.

 

Ancora Solutions' archiving and secure destruction market is focused on the Eastern Region and London.

 

The Ipswich region is poorly served with disaster recovery providers and with our contact centre and telephony knowledge we are well placed to assist those companies that need to have a backup facility in place.

 

Review of Operations

 

A summary of the operational highlights in the year to June 2014 follows:

 

Ansaback

 

The past year was particularly industrious for Ansaback with sales increasing by 27%, from £5,759,218 to £7,292,026. The majority of this rise came from fixed seat revenue which grew by 55% from £2,142,000 to £3,325,000, whilst the bureau grew by 8% from £3,862,000 to £4,114,000

 

We were successful in securing a short term fixed seat contract with a major utility company which saw good use of the new upper floor in the year. A major part of this contract comes to an end in August 2014.

 

Call minutes into the main bureau increased by 3% in the year and we have recruited new sales and senior sales personnel to focus on our core sectors for both bureau and fixed seat business.

 

There have been no significant bad debts in the year and we will continue to vet new clients and exercise continued vigilance. The Ansaback website has been updated and re-launched with the aim of appealing to corporate business prospects but retaining interest for smaller potential bureau clients.

 

Suffolk Disaster Recovery is a part of the Ansaback division which utilises our capacity of agent's seats and re-sells the facility to other local businesses which have a need to provide agent positions at extremely short notice. The dark facility at Martlesham has 60 seats and with the new space upstairs the Ransomes site has over 100 seats ready and available.

 

A new generator, which is large enough to power the entire building, and significant new wiring of the 1st floor of the building has provided additional resilience and capacity to the services we provide.

 

As demonstrated in the table below, our traditional market sectors have held up well. Apart from the major utility contract, our mix is predominately unchanged, providing a degree of stability, whilst certain fluctuations do occur when there is a major sporting event such as the world cup or the St Jude storms.

 

Utilities - 44%

Call Centre Partners - 11%

Telecoms - 10%

Direct Response TV - 8%

Other 6%

R/etail - 6%

Charity - 5%

Service Industry - 4%

Financial Services - 3%

Accident Management - 3%

 

 IP3 Telecom & PCI-PAL

 

Our PCI solution is one of only a few services in the market place to be fully compliant. It is currently processing millions of pounds worth of transactions with volumes accelerating as new clients come on stream.

 

The hosted PCI solution has significant advantages in descoping the compliance for businesses in contrast to an in house solution with its associated costs. However the time lapse from enquiry to order and subsequent implementation is considerably longer than anticipated. This has been similarly reported by other PCI solution vendors. This delay in decision making is inevitable until the credit card companies tighten the compliance issue and make it compulsory to use a PCI accepted solution.

 

The existing IP3 business continues to grow. The refreshed IP3 website is now generating a steady flow of new business enquiries, and the sales team has been expanded contributing towards the growth of the IP3 direct client base.

 

CallScripter

 

CallScripter had a testing second half of the year culminating in a substantial reorganisation with the associated costs of termination and recruitment. After three successive years of growth in turnover, sales fell from £1,490,042 in the year to June 2013 to £1,099,867 in the year ended June 2014. We do however believe that the forward momentum that the division was enjoying in the past 3 years will recover in the current year following the reorganisation and the sales pipeline is encouraging. Similarly to the previous year approximately 56% of revenue is now from the international market.

 

The refreshed integration with our OEM partner, Interactive Intelligence Inc., has taken longer than expected but this is a major step forwards in providing the full CallScripter suite to a wider audience with a commensurate increase in the list price. The prospect of winning larger international deals through this channel is most encouraging. 

 

In the same vein, securing certification of the Avaya Proactive Contact Integration solution has enabled us to secure a prestigious 450 agent seat sale for a major US insurer and phase 1 for an International Cruise business which comprises 100 agent seats out of a potential 500 agent requirement.

 

We have continued to enhance the product and the next release of the software will include new features keeping us at the forefront of agent scripting tools.

 

Ancora Solutions

 

Overall year-on-year Ancora sales were 12% lower, which adversely affected divisional profitability. This is mainly due to a reduction in successful removals tenders, particularly in the first half of the year. Second half revenue was up by 21%, compared to the previous year, and with warehouse occupancy starting to peak, we have taken on additional warehouse space, as well as extending terms on existing premises.

 

On a positive note, Ancora has won two major Public Sector Framework agreements contracts, having been approved for the Eastern Shires Purchasing Organisation (ESPO) framework. Ancora is also now a preferred supplier with a major Strategic Outsourcing Company. We look forward to extending these relationships during the next year.

 

Risks

 

Principal business risks and uncertainties

 

The principal risks facing the Group and discussed by the Board relate broadly to its market place and competitive environment, dependence on key people, information technology acquisition strategy, and intellectual property:

 

Market place and competition: The sector in which the Group's CallScripter division operates in and/or routes to market may undergo rapid and unexpected changes or not develop at a pace in line with the directors' expectations. It is also possible that competitors will develop similar products; the Group's technology may become obsolete or less effective; or that consumers use alternative channels of communications, which may reduce demand for the Group's products and services. In addition, the Group's success depends upon its ability to develop new, and enhance existing products, on a timely and cost effective basis, that meet changing customer requirements and incorporate technological advancements. The directors review the market movements, client requirements and competitive suppliers to ensure that the current portfolio is as required. The Ansaback and Ancora markets are wide and diverse, and while other competitors may enter the arena, divisional success rests with the sales team.

 

Key personnel: The Group depends on the services of its key technical, operations, sales and management personnel. The loss of the services of any one or more of these persons could have a materially adverse effect on the Group's business. The Group maintains an active policy to identify, hire, train, motivate and retain highly skilled personnel in key functions.

 

Information technology: Data security and business continuity pose inherent risks for the Group. The Group invests in and keeps under review formal data security and business continuity policies which are independently audited.

 

The risks to the CallScripter division remain unchanged - principally the ability of our sales team and the partner resellers to achieve market penetration. The channels to market, be they via OEM (Original Equipment Manufacturer) arrangements, or integrated with a dialler as part of a tailored call handling solution need constant attention to preserve existing market share.

 

Intellectual property rights ('IPR'): The Group is reliant on IPR surrounding its internally generated and licensed-in software. Whilst it relies upon IPR protections including patents, copyrights, trademarks and contractual provisions it may be possible for third parties to obtain and use the Group's intellectual property without its authorisation. Third parties may also challenge the validity and/or enforceability of the Group's IPR. In addition, the directors are aware of the supply risk of losing key software partners. As these are not a significant part of the core products, this would only have a short-term impact on the Group as it sought to identify and then train staff in alternative products.

 

Acquisitions: The Group's strategy includes seeking acquisitions of companies or businesses that are complementary to its businesses. As a consequence there is a risk that management's attention may be diverted and the Group's ongoing business may be disrupted or the Group may fail to retain key acquired personnel, or encounter difficulties in integrating acquired operations. The directors remain aware of this disruption and plan to ensure that the main business is not affected.

 

The main risk within Ansaback is the exposure to the failure of a major client, as the top 20 clients represent 75% of turnover. However, apart from the Utility client which has a unique contract and an extremely strong credit limit, no individual client accounts for more than 8% of the total Ansaback turnover. Continued vigilance is taken with credit control and new clients to minimise exposure.

 

Additional risks include the technology utilised in the contact centre and we have a modern telephone switch. This switch includes fail-over systems to further increase our business continuity/disaster recovery readiness whilst also enabling us to offer additional services to clients. It is also split across two locations to further reduce the risk of failure.

 

To reduce the operational risks we have a Disaster Recovery and Data Centre facility at an office 5 miles away from the main building. This office can accommodate 60 agents and has independent telephone lines, phone switch and computer data systems synchronised to the main building that can automatically fail-over in the event of a major incident occurring. Looking at other risks within the contact centre, to lower our susceptibility to power outages, we have a standby generator in case of power cuts, while our main computer systems have been upgraded to improve their resilience and minimise any down-time should a problem arise.

 

IP3 Telecom uses a network telephony platform with triple redundancy (sites in London, Birmingham and Manchester), but could be affected if there was a major carrier breakdown affecting the entire network.

 

PCI-PAL is hosted within our UK based telephone network. High level security and 5 nines availability which is the same level as the banks and emergency services. The security is vetted by QSA officers to ensure we meet the highest level of compliance. The risk of this being penetrated by hackers is limited as no data is stored - the risk would be disruptive to the processing of cards.

 

The risk to Ancora Solutions is mainly within the archiving component of the division. This risk is a combination of the impact of a loss of a significant customer and the inability to replace such a customer quickly. Digital storage solutions and document scanning are becoming more prevalent as a means of document storage and the division is currently developing its digital offering. Legislative changes affecting document record retention dates may affect the number of records held and the division needs to ensure that it complies with all relevant data protection requirements. Security of records, the pulping of these records and compliance with current legislation may force changes in working practice.

 

Financial risk management objectives and policies

 

The principal financial instruments used by the Group, from which financial risk arises, are trade receivables, cash at bank and trade and other payables. The Group has no significant net foreign currency monetary assets or liabilities nor any significant hedged transactions or positions. The Board has overall responsibility for the determination of the Group's financial risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated the authority for designing, operating and reporting thereof to the Group's finance function. The overall objective is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

 

Credit risk: Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meets it contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers before entering into contracts and it has a frequent and proactive collections process. The concentration of credit risk is limited due to the large and unrelated customer base comprising mainly blue chip companies and public sector organisations. Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. At the year-end the Group's cash at bank was held with two major UK clearing banks.

 

Market risk: The directors consider that exposure to market risk, arising from the Group's use of foreign currency financial instruments, is not significant. This is assessed in note 21 to these financial statements.

 

Interest Rate Risk: Interest rate risk arises from the Group's mortgage facility which has a fixed margin above LIBOR for the remaining four years.

 

Liquidity risk: Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The directors review an annual 12 month cash flow projection as well as information regarding cash balances on a monthly basis. At the year end, liquidity risk was considered to be low given the fact the Group is cash generative and cash and cash equivalents are considered to be at acceptable levels.

 

Key performance indicators

 

The Group monitors a number of key performance indicators, using both financial and non-financial metrics, on a daily and monthly basis. The most important of these are as follows:

 

·     Cash on a daily basis

·     Contact centre billable minutes on a daily basis

·     Dedicated desk margins on a daily basis

·     Divisional sales and results against budget on a monthly basis

·     Divisional sales pipeline on a monthly basis

 

Employee Relations and Social Responsibilities

 

The Group continues to advocate a healthy staff policy via its participation in Investors in People together with pursuing a Health and Well-being policy for encouraging healthy practices. The IT team is actively engaged with Carbon Champions for its ecological and green initiatives regarding technology and we have policies including a Low Carbon and Environmental Purchasing Policy, while the Group encourages car sharing, bus usage and the cycle to work initiative.  

 

The Group's employees support a designated charity each year and raised £1,475 for The Ipswich Soup Kitchen.

 

NVQ Qualification and apprentices

 

17 staff are currently involved in non-vocational qualification (NVQ) study and an additional two IT technicians are undertaking apprenticeships. In recognition of this the contact centre director and a manager recently attended an NVQ/apprenticeship day and spoke at length to Princess Anne, patron of Catch 22, a national charity. Catch 22 works with young people who find themselves in difficult situations, helping them to stay healthy, find opportunities to learn, earn a living, find a safe place to live and to give something back to their community.

 

Summary and Outlook

 

The Group has had a disappointing end to the year, particularly in CallScripter where a change of leadership and reorganisation has now been carried out. The Company has a sound business base and now needs to rebuild the performance of each division. Ansaback is a resilient business but will require a commitment and focus to replace the lost utility business, whilst the outlook for our PCI product offers exciting growth prospects. The Directors believe that the Group is well placed to meet these challenges in the year ahead.

 

 

 

 

BY ORDER OF THE BOARD

 

William A Catchpole

 

 



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE YEAR ENDED 30 JUNE 2014

 

 

Note

2014

2013

 

 

£

£

 

 

 

 

Revenue

 

9,123,387

8,076,158

Cost of sales

 

(5,691,397)

(4,715,865)

 

 

────────

────────

Gross profit

 

3,431,990

3,360,293

 

 

 

 

Impairment of intangible assets

12

(322,974)

-

Profit on lease surrender

5

352,367

-

Trading administrative expenses

 

(3,203,618)

(3,001,749)

 

 

────────

────────

Administrative expenses

 

(3,174,225)

(3,001,749)

 

 


 

Administrative expenses

 

(3,174,225)

(3,001,749)

 

 

 

 

 

 

────────

────────

Operating profit

 

257,765

358,544

 

 

 

 

Finance income

6

3,439

3,105

Finance expenditure

7

(48,721)

(15,793)

 

 

────────

────────

Profit before taxation

5

212,483

345,856

 

 

 

 

Income tax credit

11

4,701

127,000

 

 

────────

────────

Profit and total comprehensive income attributable to equity holders of the parent company

 

 

 

217,184

 

 

472,856

 

 

════════

════════

Basic and diluted earnings per share

10

0.69p

 1.49p

 

 

 

All activities of the Group are classed as continuing.

 

The accompanying accounting policies and notes form an integral part of these financial statements.

 

 



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

AS AT 30 JUNE 2014

 

 

 

Note

2014

2013

 

 

£

£

ASSETS

 

 

 

 

Non-current assets

 

 

 

Land and buildings

14

1,692,769

62,482

Plant and equipment

13

421,256

390,058

Intangible assets

12

221,167

548,828

Deferred taxation

18

280,000

373,000


 

────────

────────

Non-current assets

 

2,615,192

1,374,368


 

────────

────────

Current assets

 

 

 

Trade and other receivables

15

1,678,166

1,604,583

Current tax assets

 

30,131

20,759

Cash and cash equivalents

 

459,693

559,574


 

────────

────────

Current assets

 

2,167,990

2,184,916


 

────────

────────

Total assets

 

4,783,182

3,559,284


 

────────

────────

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

(994,272)

(905,543)

Current portion of long-term borrowings

16

(85,274)

(92,163)


 

────────

────────

Current liabilities

 

(1,079,546 )

(997,706)


 

────────

────────

Non-current liabilities

 

 

 

Long term borrowings

17

(1,152,185)

(37,900)

Deferred taxation

18

-

(65,000)


 

────────

────────

Non-current liabilities

 

(1,152,185)

(102,900)


 

────────

────────

Total liabilities

 

(2,231,731)

(1,100,606)


 

────────

────────

Net assets

 

2,551,451

2,458,678


 

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═══════



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

AS AT 30 JUNE 2014

 

 

 

Note

2014

2013

 

 

£

£

EQUITY

 

 

 

 

 

Equity attributable to equity holders of the parent

 

 

 

 

Share capital

20

317,212

317,212

Share premium

 

89,396

89,396

Other reserves

 

18,396

18,396

Profit and loss account

 

2,126,447

2,033,674


 

────────

────────

Total equity

 

2,551,451

2,458,678


 

═══════

═══════

 

 

 

The accompanying accounting policies and notes form an integral part of these financial statements.

 

The Board of Directors approved and authorised the issue of the financial statements on 29 August 2014.

 

W A Catchpole

 

Director

 

R S M Gordon

 

 

Director



 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 30 JUNE 2014

 

 

 

2014

2013

 

 

£

£

Cash flows from operating activities

 

 

 

Profit after taxation

 

217,184

472,856

Adjustments for:

 

 

 

Depreciation

 

274,062

212,217

Amortisation of intangible assets

 

162,374

153,883

Impairment of intangible assets

 

322,974

-

Interest income

 

(3,439)

(3,105)

Interest expense

 

38,674

3,126

Interest element of finance leases

 

6,675

9,295

Other interest

 

3,372

3,372

Income taxes

 

(32,701)

(22,590)

Deferred tax provision

 

28,000

(104,410)

Loss/(profit) on sale of plant and equipment

 

1,625

(600)

Increase in trade and other receivables

 

(92,666)

(169,506)

Increase/decrease in trade and other payables

 

 

113,338

 

(12,657)


 

────────

────────

Cash generated from operations

 

1,039,472

541,881


 

 

 

Dividend paid

 

(94,661)

-

Income taxes received

 

20,474

55,387

Interest element of finance leases

 

(6,675)

(9,295)

Interest paid

 

(38,674)

(3,126)


 

────────

────────

Net cash generated from operating activities  

919,936

584,847


 

────────

────────


 

 

 

Cash flows from investing activities

 

 

 

Deferred consideration for

acquisition of Ancora business

 

 

(24,000)

 

(24,000)

Deferred consideration from sale  of Commercial Finance Brokers (UK ) Limited

 

 

16,000

 

11,000

Purchase of land, buildings, plant and equipment

 

 

(1,883,666)

 

(133,977)

Capitalisation of development costs

 

(157,687)

(157,972)

Interest received

 

3,439

3,105

Proceeds from sale of plant and equipment

 

-

600

 

 

────────

────────

Net cash used in investing activities

 

(2,045,914)

(301,244)

 

 

────────

────────

 

 

 

 

Cash flows from financing activities

 

 

 

Loan received

 

1,192,500

-

Repayment of borrowings

 

(61,212)

(50,000)

Buy-back of Treasury Shares

 

(29,750)

(9,887)

Capital element of finance lease rentals

 

(75,441)

(60,659)

 

 

────────

────────

Net cash generated/used in financing activities

 

 

1,026,097

 

(120,546)

 

 

────────

────────

Net (decrease)/increase in cash

 

(99,881)

163,057

 

 

 

════════

════════

 

 

 

2014

2013

 

 

£

£

Cash and cash equivalents at beginning of year

 

 

559,574

 

396,517

Net (decrease)/increase in cash

 

(99,881)

163,057

 

 

────────

────────

Cash and cash equivalents at end of year

 

459,693

559,574

 

 

════════

════════

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 30 JUNE 2014

 

 

 

Share capital

 

Share

premium

 

Other reserves

Profit and loss account

 

Total

Equity

 

£

£

£

£

£

 

 

 

 

 

 

Balance at 1 July 2012

317,212

89,396

18,396

1,570,705

1,995,709

 

 

 

 

 

 

Shares placed into Treasury

-

-

-

(9,887)

(9,887)

 

───────

───────

───────

───────

───────

Transactions with owners

-

-

-

(9,887)

(9,887)

 

 

 

 

 

 

Profit and total recognised income and expense for the year

 

 

-

 

 

-

 

 

-

 

 

472,856

 

 

472,856

 

───────

───────

───────

───────

───────

Balance at 30 June 2013

317,212

89,396

18,396

2,033,674

2,458,678

 

 

 

 

 

 

Shares placed into Treasury

-

-

-

(29,750)

(29,750)

Dividend paid

-

-

-

(94,661)

(94,661)

 

───────

───────

───────

───────

───────

Transactions with owners

-

-

-

(124,411)

(124,411)

 

 

 

 

 

 

Profit and total recognised income and expense for the year

 

 

-

 

 

-

 

 

-

 

 

217,184

 

 

217,184

 

───────

───────

───────

───────

───────

Balance at 30 June 2014

317,212

89,396

18,396

2,126,447

2,551,451

 

═══════     

═══════

═══════     

═══════

═══════

The accompanying accounting policies and notes form an integral part of these financial statements.



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 30 JUNE 2014

 

1.         AUTHORISATION OF FINANCIAL STATEMENTS

 

The Group's consolidated financial statements (the "financial statements") of IPPlus PLC (the "Company") and its subsidiaries (together the "Group") for the year ended 30 June 2014 were authorised for issue by the Board of Directors on 29 August 2014 and the Chief Executive, William Catchpole, and the Chief Financial Officer, R. Stuart Gordon, signed the balance sheet.

 

2.         NATURE OF OPERATIONS AND GENERAL INFORMATION

 

IPPlus PLC is the Group's ultimate parent company. It is a public limited company incorporated and domiciled in the United Kingdom. IPPlus PLC's shares are quoted and publicly traded on the AIM division of the London Stock Exchange. The address of IPPlus PLC's registered office is also its principal place of business.

 

The Company operates principally as a holding company. The main subsidiaries are engaged in the provision of a 24 hours a day, 7 days a week out of hours and overflow telephony service, the development and sale of contact centre contact relationship management software and the provision of secure storage and destruction of documents.

 

3.         STATEMENT OF COMPLIANCE WITH IFRS

 

These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

The principal accounting policies adopted by the Group are set out in note 4. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these financial statements.

 

Standards and interpretations in issue, not yet effective

 

New standards and interpretations currently in issue but not effective for accounting periods commencing on 1 July 2013 are:

 

·     IFRS 10 Consolidated Financial Statements (effective 1 January 2014)

·     IFRS 11 Joint Arrangements (effective 1 January 2014)

·     IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)

·     IAS 27 (Revised) Separate Financial Statements (effective 1 January 2014)

·     Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)

·     IAS 28 (Revised) Investments in Associates and Joint Ventures (effective 1 January 2014)

·     Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014)

 

The directors anticipate that the adoption of these standards and interpretations in future periods will have no material effect on the financial statements of the Group.

 

4.         PRINCIPAL ACCOUNTING POLICIES

 

a)   Basis of preparation

 

The financial statements have been prepared on a going concern basis in accordance with the accounting policies set out below. These are based on the International Financial Reporting Standards ("IFRS") issued in accordance with the Companies Act 2006 applicable to those companies reporting under IFRS as adopted by the European Union ("EU").

 

The financial statements are presented in pounds sterling (£), which is also the functional currency of the parent company, and under the historical cost convention.

 

b)   Basis of consolidation

 

The Group financial statements consolidate those of the Company and its subsidiary undertakings (see note 19) drawn up to 30 June 2014. A subsidiary is a company controlled directly by the Group and all of the subsidiaries are 100% owned by the Group. Control is achieved where the Group has the power to govern the financial and operating policies of the investee entity to obtain benefits from its activities.

 

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

 

Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

The Group has utilised the exemption (within IFRS 1) not to apply IFRS to pre-transition business combinations. The results of IPPlus (UK) Limited are consolidated using merger accounting principles. All other subsidiaries are accounted for using the acquisition method.

 

c)   Revenue

 

Revenue is measured by reference to the fair value of consideration received or receivable by the Group for services provided, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or the transfer of risk to the customer.

 

Contact centre turnover is recognised based on billable minutes in the month, along with standing monthly charges and any specific supplementary service charges.

 

Software turnover is recognised at the point of sale for contracts sold in perpetuity, as it is at this point that the Group has performed all of its obligations. Turnover from annual software licences and maintenance contracts may be received in a single amount or in monthly instalments. Such turnover is recognised evenly over the period to which it relates, reflecting the performance of obligations over time.

 

Ancora turnover is recognised based on the services provided in the month, along with standing monthly charges and any specific supplementary service charges.

 

d)   Significant judgements and estimates

 

The Group makes estimates concerning the future in assessing the carrying amounts of capitalised development costs. To substantiate the carrying amount the directors have applied the criteria of IAS 38 and considered the future economic benefit likely as a result of the investment.

 

Careful judgement by the directors is applied when deciding whether the recognition requirements for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each balance sheet date. In addition, all internal activities related to the research and development of new software products are continuously monitored by the directors.

 

The calculation of the deferred tax asset involved the estimation of future taxable profits.

 

In calculating the value in use of the capitalised internal salaries in the CallScripter division, management make judgements and estimates of future cash flows. In the current year, due to these negative cash flow forecasts, the directors have fully impaired the Intangible Assets in this division.

 

Management applied judgements regarding the profit based performance criteria of the Employee Share Options and do not expect these to vest.

 

e)   Intangible assets

 

Goodwill

 

Goodwill was created on the purchase of Ancora Solutions. This Goodwill is not amortised but is subject to annual impairment review to ensure the value is recoverable.

 

Customer contracts

 

Customer contracts are included at cost, and cost less estimated residual amount is amortised on a straight-line basis over their useful economic lives. The amortisation charge is shown within administrative expenses. The rates applicable are:

 

·   Customer contracts                       20%

·   Ancora client relationships       10%

·   Ancora brand                                   10%

 

Research and development

 

Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred.

 

Development costs incurred are capitalised when all of the following conditions are satisfied:

 

·   completion of the intangible asset is technically feasible so that it will be available for use or sale

·   the Group intends to complete the intangible asset

·   the Group is able to use or sell the intangible asset

·   the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits

·   there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset

·   the expenditure attributable to the intangible asset during the development can be measured reliably

The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include development engineer's salary and on-costs incurred on software development. The cost of internally generated software developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired software. However, until completion of the development project, the assets are subject to impairment testing only.

 

Amortisation commences upon completion of the asset, and is shown within administrative expenses in the statement of comprehensive income. Amortisation is calculated to write down the cost less estimated residual value of all intangible assets by equal annual instalments over their expected useful lives. The rates generally applicable are:

 

·   Development costs                       33%

 

Ancora Customer Relationships

 

Upon review of the Ancora Solutions' business the directors' opinion was that the Client Sales Relationships, once won, were likely to remain for the long term due to:

 

a)    Once the boxes were put into storage and not on view to the client, the services tended to roll along

b)    A majority of the clients have long term storage requirements (legal and health records) which require documents to be retained and then called out of storage as required

c)    There are significant costs in moving the boxes to another storage unit. As such customers are more likely to start using another supplier whilst maintaining the existing operation rather than completely transferring the business

 

At acquisition, the sales and on-going costs of the existing operation were forecast and were discounted back using the Group's Weighted Average Cost of Capital. This gave a valuation of £280,000, which is amortised over 10 years on a straight-line basis, being the estimated life of these assets. The amortisation charge is shown within administrative expenses.

 

Ancora Solutions Brand Valuation

 

The relief from royalty valuation method assumes that if a business did not own the Ancora Solutions' brand it would have to pay a royalty to the owners of the brand for its use. The value of the brand is the capitalised value of the royalties that the owner is relieved from paying as a result of the ownership of the asset. The royalty attributed to the purchase was valued using a similar basis to the Customer Relationships and applying a 0.25% royalty rate. At acquisition this gave a valuation of £3,000, which is amortised over 10 years on a straight-line basis, being the estimated life of these assets. The amortisation charge is shown within administrative expenses.

 

f)    Land, building, plant and equipment

 

Land, buildings, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Leased plant is included in plant and equipment only where it is held under a finance lease.

 

Disposal of assets

 

The gain or loss arising on disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in profit or loss.

 

Depreciation

 

Depreciation is calculated to write down the cost less estimated residual value of all plant and equipment assets by equal annual instalments over their expected useful lives. The rates generally applicable are:

 

·   Land                                                    not depreciated

·   Buildings                                            2%

·   Motor vehicles                                 33%

·   Fixtures and fittings                      20% to 50%

·   Plant                                                    20% to 50%

·   Computer equipment                  33%

 

Material residual value estimates are updated as required, but at least annually.

 

g)   Impairment testing of goodwill, other intangible assets, plant and equipment

 

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows ("cash-generating units"). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

 

Goodwill and intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

 

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less cost to sell, and value in use based on an internal discounted cash flow evaluation. Any impairment loss is first applied to write down goodwill to nil and then is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised no longer exists.

 

h)  Leased assets

 

In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.

 

The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.

 

All other leases are regarded as operating leases and the payments made under them are charged to profit or loss on a straight-line basis over the lease term. Lease incentives are spread over the term of the lease.

 

i)    Taxation

 

Current tax is the tax payable based on the profit for the year.

 

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit.  In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

 

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the year end.

 

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited to other comprehensive income or directly to equity in which case the related tax charge is also charged or credited directly to other comprehensive income or equity.

 

j)    Dividends

Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the dividends are approved in general meeting prior to the year end.

 

k)   Financial assets and liabilities

 

The Group's financial assets comprise cash and trade and other receivables, which under IAS 39 are classed as "loans and receivables". Financial assets are recognised on inception at fair value plus transaction costs. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in profit or loss in the year.

 

Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference between the assets' carrying amount and the present value of estimated future cash flows.

 

The Group has a number of financial liabilities including trade and other payables and bank borrowings. These are classed as "financial liabilities measured at amortised cost" in IAS 39. These financial liabilities are carried on inception at fair value net of transaction costs, and are thereafter carried at amortised cost under the effective interest method.

 

l)    Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

 

m)  Equity

 

Equity comprises the following:

·   "Share capital" represents the nominal value of equity shares

·   "Share premium" represents the difference between the nominal and issued share price

·   "Other reserves" represents the Merger Reserve resulting from the demerger from KDM International PLC in November 1999 and represents the difference between the value of the shares acquired (nominal value plus related share premium) and the nominal value of shares issued

·   "Profit and loss account" represents retained profits

 

n) Contribution to defined contribution pension schemes

 

The pension costs charged against profits represent the amount of the contributions payable to the schemes in respect of the accounting period.

 

o)  Foreign currencies

 

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the year end.

 

Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise.

 

p) Share options

 

The directors do not consider that the amounts involved are material and, as the performance criteria are not expected to be met, no charge has been recognised as explained in Note 20.

 

q) Capital management

 

The capital structure of the Group consists of debt, cash, loans and equity. The Group's objective when managing capital is to maintain the cash position to protect the future on-going profitable growth which will reflect in shareholder value.

 

At 30 June 2014 the Group had a closing cash balance of £459,693 (2013: £559,574) and an outstanding mortgage of £1,160,455 (2013: outstanding loan of £29,167).

 

5.         PROFIT BEFORE TAXATION

 

Profit on ordinary activities is stated after:

 

 

2014

2013

 

£

£

Auditors' remuneration

 

 

 

Fees payable to the Company's

auditors for the audit of the Company's annual accounts

 

9,000

 

8,500

 

Fees payable to the Group's auditors for other services

 

 

 

The audit of the company's subsidiaries pursuant to legislation

12,000

11,000

Taxation services

6,250

4,200

All other services

1,100

3,313

 

Depreciation and amortisation - charged in administrative expenses

 

 

Buildings

49,265

-

Intangible assets - amortisation

162,374

153,883

Intangible assets - impairment

322,974

-

Plant and equipment - owned

162,894

164,218

Plant and equipment - leased

61,903

47,999

Rents payable

75,483

187,695

Foreign exchange cost

22,403

5,212

(Loss)/profit on sale of fixed asset

(1,625)

600

 

══════

══════

 

Subsequent to the purchase of the freehold, the sub-tenant of the upper floor agreed to the early termination of its lease in consideration of which it paid the Group the sum of £352,367.

 

6.   FINANCE INCOME

 

 

2014

£

2013

£

Bank interest receivable

3,439

3,105

 

══════

══════

 

7.   FINANCE EXPENDITURE

 

2014

£

2013

£

Interest on bank borrowings

38,674

3,126

Finance charges in respect of finance leases

6,675

9,295

Other

3,372

3,372

 

──────

──────

 

48,721

15,793

 

══════

══════

 

8.   DIRECTORS AND EMPLOYEES

 

Staff costs of the Group, including the directors who are considered to be part of the key management personnel, during the year were as follows:

 

2014

£

2013

£

Wages and salaries

6,056,388

5,096,151

Social security costs

473,500

426,358

Other pension costs

85,278

78,390

 

───────

───────

 

6,615,166

5,600,899

 

═══════

═══════

 

 

2014

Heads

2013

Heads

Average number of employees during the year

302

248

 

══════

══════

 

 
                Remuneration in respect of directors was as follows:

 

2014

£

2013

£

Emoluments

461,065

471,771

Pension contributions to money purchase pension schemes

35,871

38,210

 

───────

───────

 

496,936

509,981

 

═══════

═══════

 

During the year 3 (2013: 3) directors participated in money purchase pension schemes.

 

The amounts set out above include remuneration in respect of the highest paid director as follows:

 

2014

2013

 

£

£

Emoluments

162,979

169,449

Pension contributions to money purchase pension schemes 

14,734

14,568

 

═══════

═══════

 

 

A detailed breakdown of the Directors' Emoluments, in line with the AIM rules, appears in the

Directors' Report.

 

Key management compensation:

 

2014

£

2013

£

Short term employee benefits

754,178

758,787

Post employment benefits

51,871

53,063

 

───────

───────

 

806,049

811,850

 

═══════

═══════

 

9.   SEGMENTAL INFORMATION

 

IPPlus PLC operates three business sectors, Ansaback, CallScripter and Ancora. These divisions are the basis on which the Group reports its segment information. IP3 Telecom and PCI-PAL are part of the Ansaback division. The results of these two activities are not reported separately to management and are not treated as separate segments. The inter-segment sales are insignificant. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated assets comprise items such as cash and cash equivalents, taxation and borrowings. All liabilities, other than the bank loan, are unallocated. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one period.

 

 

Ansaback

CallScripter

Ancora

Unallocated

Total

 

£

£

£

£

£

2014

 

 

 

 

 

Revenue

7,292,026

1,099,867

731,494

-

9,123,387

 

───────

───────

───────

───────

───────

Segment result*

1,030,197

(678,653)

(93,779)

-

257,765

 

───────

───────

───────

───────

 

Finance income

 

 

 

 

3,439

Finance costs





(48,721)

 





───────

Profit before tax





212,483

Taxation





4,701

 





───────

Profit for the year from continuing operations





 

217,184

 





═══════

 






Segment assets

3,280,204

411,242

257,938

833,798

4,783,182

Segment liabilities

(1,160,455)

-

-

(1,071,276)

(2,231,731)

 






Other segment items:






Capital Expenditure






-  Plant and Equipment

224,370

2,069

31,181

-

257,620

- Intangible Assets

-

157,687

-

-

157,687

Depreciation

(note 13)

 

178,244

 

8,481

 

38,072

 

-

 

224,797

Amortisation

of intangible assets

(note 12)

 

-

 

134,074

 

28,300

 

-

 

162,374

Impairment

of intangible assets

(note 12)

 

-

 

322,974

 

-

 

-

 

322,974

Depreciation of Buildings (note 14)

49,265

-

-

-

49,265

 

 

 

 

 

 

*      included within the segment result of Ansaback is the profit on lease surrender of £352,367 and of CallScripter is the loss on impairment of Intangible Assets of £322,974.

 

 

Ansaback

CallScripter

Ancora

Unallocated

Total

 

£

£

£

£

£

2013

 

 

 

 

 

Revenue

5,759,218

1,490,042

826,898

-

8,076,158

 

───────

───────

───────

───────

───────

Segment result

458,456

(49,936)

(49,976)

-

358,544

 

───────

───────

───────

───────

 

Finance income

 

 

 

 

3,105

Finance costs

 

 

 

 

(15,793)

 

 

 

 

 

───────

Profit before tax

 

 

 

 

345,856

Taxation

 

 

 

 

127,000

 

 

 

 

 

───────

Profit for the year from continuing operations

 

 

 

 

 

472,856

 

 

 

 

 

═══════

 

 

 

 

 

 

Segment assets

1,428,658

632,309

437,969

1,060,348

3,559,284

Segment liabilities

-

-

-

(1,100,606)

(1,100,606)

 

 

 

 

 

 

Other segment items:

 

 

 

 

 

Capital Expenditure

 

 

 

 

 

-  Plant and Equipment

115,468

16,651

24,872

-

156,991

- Intangible Assets

-

157,972

-

-

157,972

Depreciation

(note 13)

 

144,251

 

6,837

 

61,129

 

-

 

212,217

Amortisation

of intangible assets

(note 12)

 

2,505

 

123,078

 

28,300

 

-

 

153,883

 

 

 

 

 

 

Revenue can be split by location of customers as follows:

 

 

2014

2013

 

£

£

Ansaback

 

 

United Kingdom

7,251,254

5,733,104

United States

5,360

3,758

Ireland

5,476

8,336

Hong Kong

9,505

3,285

Luxembourg

9,880

-

Other countries

10,551

10,735

 

───────

───────

 

7,292,026

5,759,218

 

───────

───────

 

 

 

Ancora

 

 

United Kingdom

731,494

826,898

 

───────

───────

 

731,494

826,898

 

───────

───────

CallScripter

 

 

United Kingdom

480,270

621,490

United States

521,797

624,261

Ireland

12,557

29,356

Australia

50,817

59,239

Nigeria

-

22,080

Luxembourg

-

20,306

Belgium

16,857

10,610

Netherlands

3,416

6,427

Denmark

8,237

87,892

Cyprus

5,916

5,960

Other countries

-

2,421

 

───────

───────

 

1,099,867

1,490,042

 

───────

───────

 

9,123,387

8,076,158

 

═══════

═══════

 

One single external customer generates 41% (£3,023k) of the Ansaback division's revenues.

 

All non-current assets are located in the United Kingdom.

 

10.            EARNINGS PER SHARE

 

The calculation of the earnings per share is based on the profit after taxation added to reserves divided by the weighted average number of ordinary shares in issue during the relevant period. No diluted profit per share is shown because all options are non-dilutive as the vesting conditions are not met at the year end. Details of potential share options are disclosed in note 20.

 

 

 

12 months

ended

30 June

2014

12 months

 ended

30 June

2013

Profit after taxation added to reserves

 

 

£217,184

£472,856

Weighted average number of ordinary shares

in issue during the period

 

 

 

31,579,732

31,714,825

Basic and diluted earnings per share

 

 

0.69p

1.49p

 

11.            TAXATION

 

 

2014

2013

 

£

£

Analysis of charge in the year

 

 

 

 

 

Current tax:

 

 

In respect of the year:

 

 

UK Corporation tax based on the results for the year

 

 

at 22.5% (2013:23.75%)

(222)

-

Adjustments in respect of prior periods

32,923

22,590

 

───────

───────

Total current tax credited

32,701

22,590

 

───────

───────

Deferred tax:

 

 

Origination and reversal of temporary differences

(28,000)

93,000

Movement on capitalised intangibles

-

11,410

 

───────

───────

Total deferred tax (charged)/credited

(28,000)

104,410

 

───────

───────

Credit

4,701

127,000

 

═══════

═══════

 

Factors affecting current tax charge

 

The tax assessed on the profit on ordinary activities for the year was lower than the standard rate of corporation tax in the UK of 22.5% (2013: 23.75%).

                                                                                                                                     2014                                   2013

                                                                                                                                            £                                          £

                                                                                                                                                                                         

Profit on ordinary activities before tax                                                  212,483                             345,856

                                                                                                                             ═══════                       ═══════

Profit on ordinary activities multiplied by standard

rate of corporation tax in the UK of 22.5% (2013: 23.75%)                  47,809                               82,141

Expenses not deductible for tax purposes                                               11,148                                 4,272

Depreciation (less than)/in excess of capital allowances

for the year                                                                                                             (6,155)                                1,737

Utilisation of tax losses                                                                                   (98,600)                            (90,432)

Other                                                                                                                         46,304                                 2,282

Research and Development claim                                                              (33,207)                            (22,590)

Movement on deferred tax timing differences                                       28,000                            (93,000)

Liability on capitalised intangibles                                                                          -                             (11,410)

                                                                                                                             ───────                       ───────

Total tax credit for the year                                                                             (4,701)                          (127,000)

                                                                                                                            ═══════                       ═══════

 

During the year to 30 June 2014 the Group submitted a Research and Development claim to HMRC relating to the year ended 30 June 2013 of £33,207. This credit was recognised in the Income Statement and included in Debtors.

 

12.            INTANGIBLE ASSETS

 

The Directors have not considered the carrying value of the Ancora division goodwill as it is not considered material.

 

In calculating the value in use of the capitalised internal salaries in the CallScripter division, management make judgements and estimates of future cash flows. In the current year, due to these negative cash flow forecasts, the directors have fully impaired the Intangible Assets in this division.

 

 

2014

 

Cost

 

 

Goodwill

£

Purchased intangibles

£

Capitalised development costs

£

                Total

                £











Goodwill

32,500

-

-

32,500

Ancora brand

-

3,000

-

   3,000

Ancora client relationships

-

280,000

-

     280,000

CallScripter internal salaries

-

-

926,024

926,024


────────

────────

────────

───────

Cost at 1 July 2013

32,500

283,000

926,024

1,241,524


────────

────────

────────

───────






Goodwill

-

-

-

-

Ancora brand

-

-

-

-

Ancora client relationships

-

-

-

-

CallScripter internal salaries

-

-

157,687

157,687


────────

────────

────────

────────

Additions

-

-

157,687

157,687


────────

────────

────────

────────






Goodwill

-

-

-

-

Ancora brand

-

-

-

-

Ancora client relationships

-

-

-

-

CallScripter internal salaries

-

-

-

-


────────

────────

────────

───────

Disposals

-

-

-

-


────────

────────

────────

───────






Goodwill

32,500

-

-

32,500

Ancora brand

-

3,000

-

3,000

Ancora client relationships

-

280,000

-

280,000

CallScripter internal salaries

-

-

1,083,711

1,083,711


────────

────────

────────

────────

Cost at 30 June 2014

32,500

283,000

1,083,711

1,399,211


────────

────────

────────

────────






 

 

2014

 

 

 

Goodwill

£

Purchased intangibles

£

Capitalised development costs

£

  Total

  £

 

Amortisation and impairment

(included within administrative expenses):










Goodwill

-

-

-

-

Ancora brand

-

700

-

700

Ancora client relationships

-

65,333

-

65,333

CallScripter internal salaries

-

-

626,663

626,663


────────

────────

────────

───────

Amortisation at 1 July 2013

-

66,033

626,663

692,696


────────

────────

────────

───────






Goodwill

-

-

-

-

Ancora brand

-

-

-

-

Ancora client relationships

-

28,300

-

28,300

CallScripter internal salaries - amortisation

 

-

 

-

 

134,074

 

134,074

CallScripter internal salaries - impairment

 

-

 

-

 

-

 

-


────────

────────

────────

───────

Charge for the year

-

28,300

134,074

162,374


────────

────────

────────

────────






Goodwill

-

-

-

-

Ancora brand

-

-

-

-

Ancora client relationships

-

-

-

-

CallScripter internal salaries - amortisation

 

-

 

-

 

-

 

-

CallScripter internal salaries - impairment

 

-

 

-

 

322,974

 

322,974


────────

────────

────────

──────

Written out in the year

-

-

322,974

322,974


────────

────────

────────

──────











Goodwill

-

-

-

-

Ancora brand

-

700

-

700

Ancora client relationships

-

93,633

-

93,633

CallScripter internal salaries - amortisation

 

-

 

-

 

760,737

 

760,737

CallScripter internal salaries - impairment

 

-

 

-

 

322,974

 

322,974


────────

────────

────────

────────

Amortisation at 30 June 2014

-

94,333

1,083,711

1,178,044


────────

────────

────────

────────






 

Net book amount

 

 

 

Goodwill

£

Purchased intangibles

£

Capitalised development costs

£

                Total

                £

 






 

Goodwill

32,500

-

-

32,500

 

Ancora brand

-

2,300

-

2,300

 

Ancora client relationships

-

186,367

-

186,367

 

CallScripter internal salaries

-

-

-

-

 


────────

────────

────────

────────

 

Net book amount at 30 June 2014

32,500

188,667

-

221,167

 


════════

════════

═════════

═══════

 

 

2013

 

Cost










Goodwill

32,500

-

-

32,500

Customer contracts

-

15,038

-

   15,038

Ancora brand

-

3,000

-

   3,000

Ancora client relationships

-

280,000

-

     280,000

CallScripter internal salaries

-

-

768,053

768,053


────────

────────

────────

───────

Cost at 1 July 2012

32,500

298,038

768,053

1,098,591


────────

────────

────────

───────






Goodwill

-

-

-

-

Customer contracts

-

-

-

-

Ancora brand

-

-

-

-

Ancora client relationships

-

-

-

-

CallScripter internal salaries

-

-

157,972

157,972


────────

────────

────────

────────

Additions

-

-

157,972

157,972


────────

────────

────────

────────






Goodwill

-

-

-

                -

Customer contracts

-

(15,038)

-

(15,038)

Ancora brand

-

-

-

                -

Ancora client relationships

-

-

-

                -

CallScripter internal salaries

-

-

-

                -


────────

────────

────────

  ───────

Disposals

-

(15,038)

-

(15,038)


────────

────────

────────

───────






Goodwill

32,500

-

-

32,500

Customer contracts

-

-

-

                -

Ancora brand

-

3,000

-

3,000

Ancora client relationships

-

280,000

-

280,000

CallScripter internal salaries

-

-

926,025

926,025


────────

────────

────────

 ───────

Cost at 30 June 2013

32,500

283,000

926,025

1,241,525


────────

────────

────────

───────






 

 

2013

 

 

 

Goodwill

£

Purchased intangibles

£

Capitalised development costs

£

                Total

                £

Amortisation

(included within administrative expenses):





 






 

Goodwill

-

-

-

-

 

Customer contracts

-

12,533

-

12,533

 

Ancora brand

-

400

-

400

 

Ancora client relationships

-

37,333

-

37,333

 

CallScripter internal salaries

-

-

503,586

503,586

 


────────

────────

────────

───────

 

Amortisation at 1 July 2012

-

50,266

503,586

 553,852

 


────────

────────

────────

───────

 






 

Goodwill

-

-

-

-

 

Customer contracts

-

2,505

-

2,505

 

Ancora brand

-

300

-

300

 

Ancora client relationships

-

28,000

-

28,000

 

CallScripter internal salaries

-

-

123,078

123,078

 


────────

────────

────────

────────

 

Charge for the year

-

30,805

123,078

153,883

 


────────

────────

────────

────────

 






 

Goodwill

-

-

-

-

Customer contracts

-

(15,038)

-

(15,038)

Ancora brand

-

-

-

-

Ancora client relationships

-

-

-

-

CallScripter internal salaries

-

-

-

  -


────────

────────

────────

──────

 

Written out in the year

-

(15,038)

-

(15,038)

 


────────

────────

────────

──────

 






 






 

Goodwill

-

-

-

-

 

Customer contracts

-

-

-

-

 

Ancora brand

-

700

-

700

 

Ancora client relationships

-

65,333

-

65,333

 

CallScripter internal salaries

-

-

626,664

626,664

 


────────

────────

────────

────────

 

Amortisation at 30 June 2013

-

66,033

626,664

692,697

 


────────

────────

────────

────────

 






 

Net book amount

 





 

Goodwill

32,500

-

-

32,500

 

Customer contracts

-

-

-

-

 

Ancora brand

-

2,300

-

2,300

 

Ancora client relationships

-

214,667

-

214,667

 

CallScripter internal salaries

-

-

299,361

299,361

 


────────

────────

────────

────────

 

Net book amount at 30 June 2013

32,500

216,967

299,361

548,828

 


════════

════════

═════════

 ═══════

 

 

13.            PLANT AND EQUIPMENT

     

 

2014

 

 

Plant

£

Motor Vehicles

£

Fixtures and Fittings

£

Computer Equipment

              £ 

                Total

                £







Cost:

 


-

-


-

At 1 July 2013

135,621

58,113

400,238

448,038

1,042,010

Additions

36,881

9,995

51,053

159,691

257,620

Disposals

-

(6,000)

(4,073)

(1,200)

(11,273)


────────

────────

────────

────────

────────

At 30 June 2014

172,502

62,108

447,218

606,529

1,288,357


────────

────────

────────

────────

────────







Depreciation (Included within administrative expenses):

 






At 1 July 2013

56,426

36,003

298,425

261,098

651,952

Charge for the year

28,774

11,199

63,568

121,256

224,797

Disposals

-

(4,625)

(3,823)

(1,200)

(9,648)


────────

────────

────────

────────

────────

At 30 June 2014

85,200

42,577

358,170

381,154

867,101


────────

────────

────────

────────

────────

Net book amount

 at 30 June 2014

87,302

19,531

89,048

225,375

421,256


════════

════════

════════

════════

════════

 

 

               

 

2013

 

 

Plant

£

Motor Vehicles

£

Fixtures and Fittings

£

Computer Equipment£

Total

£







Cost:






At 1 July 2012

121,756

56,113

394,874

474,700

1,047,443

Additions

21,865

10,000

9,945

115,181

156,991

Disposals

(8,000)

(8,000)

(4,581)

(141,843)

(162,424)


────────

────────

────────

────────

────────

At 30 June 2013

135,621

58,113

400,238

448,038

1,042,010


────────

────────

────────

────────

────────







Depreciation (Included within administrative expenses):






At 1 July 2012

35,716

31,690

232,844

301,909

602,159

Charge for the year

28,710

12,313

70,162

101,032

212,217

Disposals

(8,000)

(8,000)

(4,581)

(141,843)

(162,424)


────────

────────

────────

────────

────────

At 30 June 2013

56,426

36,003

298,425

261,098

651,952


────────

────────

────────

────────

────────

Net book amount

 at 30 June 2013

 

79,195

 

22,110

 

101,813

 

186,940

 

390,058


════════

════════

════════

════════

════════

 

Included within the net book amount of £421,256 (2013: £390,058) is £109,315 (2013: £108,100) relating to assets held under finance leases. The depreciation charged to the financial statements in the year in respect of such assets amounted to £61,903 (2013: £47,999).

 

14.            LAND AND BUILDINGS          

 

2014

 

 

 

 


Land

£

 

Buildings

£ 

                Total

                £







Cost:

 






At 1 July 2013



54,182

8,300

62,482

Additions



374,165

1,305,387

1,679,552




────────

────────

────────

At 30 June 2014



428,347

1,313,687

1,742,034




────────

────────

────────







Depreciation (Included within administrative expenses):

 






At 1 July 2013



-

-

-

Charge for the year



-

49,265

49,265




────────

────────

────────

At 30 June 2014



-

49,265

49,265




────────

────────

────────

Net book amount

 at 30 June 2014



 

428,347

 

1,264,422

 

1,692,769




════════

════════

════════

 

2013

 



Land

£

 

Buildings

£ 

  Total

£







Cost:






At 1 July 2012



52,832

-

52,832

Additions



1,350

8,300

9,650




────────

────────

────────

At 30 June 2013



54,182

8,300

62,482




────────

────────

────────







Depreciation (Included within administrative expenses):

 






At 1 July 2012



-

-

-

Charge for the year



-

-

-




────────

────────

────────

At 30 June 2013



-

-

-




────────

────────

────────

Net book amount

 at 30 June 2013



 

54,182

 

8,300

 

62,482




════════

════════

════════

 

15.       TRADE AND OTHER RECEIVABLES

                                                                                                                                                       2014                  2013

                                                                                                                                                              £                         £

 

Trade receivables                                                                                                        1,372,920         1,364,065

Other receivables                                                                                                              16,595               61,845

Prepayments and accrued income                                                                           288,651            178,673

                                                                                                                                        ────────       ────────

Trade and other receivables                                                                                   1,678,166         1,604,583

                                                                                                                                        ════════       ════════

 

All amounts fall due within one year and therefore the fair value is considered to be approximately equal to the carrying value. All of the Group's trade and other receivables are denominated in pounds sterling. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group holds £27,575 (2013: £13,981) of deposits as security against certain accounts.

 

Trade receivables have been reviewed for indicators of impairment and a provision has been recorded as follows:

 

 

           2014

2013

 

£

£

Opening provision at 30 June 2013

12,697

         4,899

Charged to income

4,303

         7,798

 

──────

──────

Closing provision at 30 June 2014

       17,000

       12,697

 

══════

══════

 

In addition some of the non-impaired trade receivables are past due at the reporting date:

 

 

2014

2013

 

£

£

0-30 days past due

43,687

15,223

30-60 days past due

15,135

13,381

Over 60 days past due

5,311

496

 

────────

────────

 

64,133

29,100

 

════════

════════

 

Amounts which are not impaired, whether past due or not, are considered to be recoverable at their carrying value.

 

16.       CURRENT LIABILITIES

                                                                                                                                                       2014                  2013

                                                                                                                                                              £                         £

 

Trade payables                                                                                                                     286,235            162,259

Social security and other taxes                                                                                     403,656            390,868

Other payables                                                                                                                    304,381            352,416

                                                                                                                                           ────────    ──────── 

Trade and other payables                                                                                               994,272            905,543

                                                                                                                                           ────────    ────────

 

Bank loans (note 17)                                                                                                           33,284               29,167

Amounts due under finance leases                                                                              51,990               62,996

                                                                                                                                           ────────    ────────

Current portion of long-term borrowings                                                                 85,274               92,163

                                                                                                                                           ────────    ────────

Current liabilities                                                                                                           1,079,546            997,706

                                                                                                                                           ════════    ════════

Amounts due under finance leases are secured on the related assets.

 

17.            NON-CURRENT LIABILITES

                                                                                                                                                       2014                2013                                                                                                                                                                £                       £

Bank loans                                                                                                                       1,127,171                        -

Amounts due under finance leases                                                                           25,014               35,900

Other payables                                                                                                                              -                 2,000

                                                                                                                                          ────────      ────────

Long term borrowings                                                                                                1,152,185               37,900

Deferred taxation                                                                                                                         -               65,000

                                                                                                                                          ────────      ────────

                                                                                                                                             1,152,185            102,900

                                                                                                                                           ════════     ════════

Borrowings

 

Bank loans are repayable as follows:                             

                                                                                                                                                       2014                  2013 

                                                                                                                                                             £                         £

Within one year                                                                                                                  33,284               29,167

After one year and within two years                                                                         69,695                          -

After two years and within five years                                                                       74,084                          -

Over five years                                                                                                                  983,392                          -

                                                                                                                                           ────────      ────────

                                                                                                                                             1,160,455               29,167

                                                                                                                                           ════════      ════════

 

On 1 July 2013 the Group obtained a loan of £1,192,500, secured over Melford Court, The Havens, Ransomes Europark, Ipswich IP3 9SJ repayable over 25 years with a 5 year fixed rate of  2.55% above the three month LIBOR rate from the NatWest Bank PLC.

 

On 21 January 2012 the Group obtained an unsecured loan of £150,000 repayable over 36 months in equal monthly instalments of £4,167. Interest on the loan is payable at 3.5% above the bank base rate.

 

Interest on the bank loan falls due as follows:

 

                                                                                                                                                        2014                  2013                                                                                                                                                  £                        £

Within one year                                                                                                                    35,106                     338

After one year and within two years                                                                           67,084                          -

After two and within five years                                                                                     60,173                          -

Over five years                                                                                                                   318,631                          -

                                                                                                                                          ────────      ────────

                                                                                                                                                 480,994                     338

                                                                                                                                           ════════    ════════

Amounts due under finance leases are secured on the related assets.

 

Amounts due under finance leases fall due as follows:                    

                                                                                                                                                       2014                  2013

                                                                                                                                                              £                         £

Within one year                                                                                                                   55,374               68,297

After one year and within two years                                                                           26,238               37,161

                                                                                                                                           ────────      ────────

                                                                                                                                                   81,612             105,458

                                                                                                                                           ════════      ════════

 

The above table includes interest of £3,384 (2013: £5,301) due within one year and £1,224 (2013: £1,261) due after one year but within two years.

 

18.       DEFERRED TAXATION

 

Deferred taxation is calculated at a rate of 22.5% (2013: 23%). 

 


Tax

 losses

£

Capitalised intangibles

£

 

Total

£

 

Opening balance at 1 July 2013

280,000

(76,410)

203,590

 

 

 

 

Charged through the statement of comprehensive income in the year

93,000

11,410

104,410


────────

───────

────────

At 30 June 2013

373,000

(65,000)

308,000





(Charged)/credited through the statement of comprehensive income in the year

 

(93,000)

 

65,000

 

(28,000)


────────

───────

───────

At 30 June 2014

280,000

-

280,000


════════

═══════

═══════

 

                                                                                                                                    2014                     2013

                                                                                                                                                           £                            £

Unprovided deferred tax assets

 

Accelerated capital allowances                                                                                    4,000                 14,000

Trading losses                                                                                                                    64,000                 39,000

                                                                                                                                        ────────        ────────

                                                                                                                                                 68,000                 53,000

                                                                                                                                        ════════        ════════

 

The deferred tax asset of £280,000 in respect of carried forward tax losses has been recognised on the basis that the directors believe that it is more likely than not to be realised against future taxable profits of the Group. This has been increased to recognise the losses which will be utilised in relation to the early surrender of the tenant lease.

 

There are unprovided deferred tax losses of £320,000.

 

The unprovided deferred tax assets are calculated at a rate of 20% (2013: 23%). The unprovided deferred tax assets attributable to losses should be recoverable against future profits.

 

19.       GROUP UNDERTAKINGS

 

At 30 June 2014, the Group included the following subsidiary undertakings, which are included in the consolidated accounts:

 

 

 

Name

 

Country of

Incorporation

Class of share

capital held

 

Proportion

held

 

Nature of

business

IPPlus (UK) Limited

England

Ordinary

100%

Out of hours and overflow  telephony services, document storage and destruction and software company

CallScripter Limited

England             

Ordinary

100%

Software reseller

Ancora Solutions Limited

England             

Ordinary

100%

Dormant

Ansaback Limited

England             

Ordinary

100%

Dormant

CallScripter (U.K.) Limited

England             

Ordinary

100%

Dormant

EasyScripter Limited

England             

Ordinary

100%

Dormant

Fault Solutions 365 Limited

England             

Ordinary

100%

Dormant

IP3 Telecom Limited

England             

Ordinary

100%

Dormant

PCI-PAL Limited

England             

Ordinary

100%

Dormant

The Number Experts Limited

England             

Ordinary

100%

Dormant

Vital Contact (UK) Limited

England             

Ordinary

100%

Dormant

 

20.       SHARE CAPITAL

 

Group     

 

2014

Number

2014

£

2013

Number

2013

£

Authorised:

 

 

 

 

Ordinary shares of 1p each

100,000,000

1,000,000

100,000,000

1,000,000

 

════════

════════

════════

════════

Allotted called up and fully paid:

 

 

 

 

Ordinary shares of 1p each

31,721,178

317,212

31,721,178

317,212

 

════════

════════

════════

════════

The Group acquired 119,000 of its own shares on 18 September 2013 at a cost of £29,750 (2013: 48,229 shares at a cost of £9,887) and these are held as Treasury Shares. This value is deducted in the Consolidated Statement of Changes in Equity and is reflected in the weighted average number of shares in issue during the period (Note 10).

 

Contingent rights to the allotment of shares

 

The Group has granted the following share options, in respect of ordinary shares of 1p each, which were still valid and unexercised at 30 June 2014.

 

Date of grant

Number of shares

Exercise

price

Period exercisable

1 July 2005

400,000

12.36p

See below *

27 November 2012

675,000

1.00p

See below **

4 November 2013

600,000

1.00p

See below ***

11 March 2014

50,000

1.00p

See below ***

 

During the year, the share price fluctuated between 19.625 pence and 30.75 pence and closed at 20.00 pence on 30 June 2014.

 

* These options can be realised on the following formula between three and ten years from their grant:

 

If the share price

is at or above

Percentage of options

Realisable

 

25p

 

 

25%

 

 

40p

 

 

50%

 

 

65p

 

 

75%

 

 

100p

 

 

100%

 

 

The fair value of the share options granted after 7 November 2002 and not vested at 1 July 2006 has been assessed in accordance with IFRS 2. The directors do not consider that the amounts involved are material and therefore no charge has been recognised.

 

** These options were granted at an exercise price of 1 pence each on 27 November 2012. The options are conditional on certain vesting criteria including an annual Group Profit before tax target for the year ended 30 June 2015.

 

*** These options were granted at an exercise price of 1 pence each on 4 November 2013 and 11 March 2014. The options are conditional on certain vesting criteria including an annual Group Profit before tax target for the year ended 30 June 2016.

 

The weighted average fair value of the November 2013 and March 2014 LTIP granted during the period, determined using the Black-Scholes valuation model, was 27.25 pence per option. The significant inputs into the model were mid-market share price of 28.25 pence at the grant date; exercise price shown above; an expected 10 year time to expiry; an annual risk- free interest rate of 0.5%; dividend yield of nil; volatility of share price of nil.

 

The weighted average fair value of the November 2013 LTIP granted during the period, determined using the Black-Scholes valuation model, was 15.375 pence per option. The significant inputs into the model were mid-market share price of 16.375 pence at the grant date; exercise price shown above; an expected 10 year time to expiry; an annual risk- free interest rate of 0.5%; dividend yield of nil; volatility of share price of nil.

 

No share options are currently exercisable. The Weighted Average Exercise Price of share options outstanding at 30 June 2014 was 3.6p, with a weighted average life of 17 months and at 30 June 2013 was 4.2p, with a weighted average life of 15 months.

 

No share option charge has been recognised during the year because management are of the opinion that the performance conditions will not be met.

 

                                                                                                                                                         2014                   2013

                                                                                                                                                       Share                  Share

                                                                                                                                                   Options            Options

Amounts in issue at beginning of year                                                                   1,884,425         5,560,425

Granted in period                                                                                                                650,000             700,000

Expirations in period                                                                                                        (809,425)      (4,376,000)

                                                                                                                                               ───────       ───────

Amounts in issue at year end                                                                                     1,725,000         1,884,425

                                                                                                                                              ───────       ───────

 

21.       FINANCIAL INSTRUMENTS

 

The Group uses various financial instruments including cash, trade receivables, trade payables, other payables, loans and leasing that arise directly from its operations. The main purpose of these financial instruments is to maintain adequate finance for the Group's operations. The existence of these financial instruments exposes the Group to a number of financial risks, which are described in detail below. The directors do not consider price risk to be a significant risk. The directors review and agree policies for managing each of these risks, as summarised below, and these remain unchanged from previous years.

 

Financial risk management and objectives

 

The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The directors achieve this by regularly preparing and reviewing forecasts based on the trends shown in the monthly management accounts.

 

Interest rate risk

 

The total loan balance at 30 June 2014 is £1,160,455 (2013: £29,167). Interest is payable at 2.55% above the three month LIBOR rate (2013: 3.5% above the bank's base rate) (note 17).

 

The Group finances its operations through a mixture of cash and loans and has some risk to interest rate movements which are not deemed significant in the short term.

 

Credit risk

 

The Group's principal financial assets are cash and trade receivables, with the principal credit risk arising from trade receivables. In order to manage credit risks the Group conducts third party credit reviews on all new clients, takes deposits where this is deemed necessary and collects payment by direct debit on all new Ansaback and Ancora accounts, limiting the exposure to a build up of a large outstanding debt. The Group also conducts third party credit reviews on CallScripter accounts, which also have an agreed payment plan tailored to the risk of the individual client.

 

Liquidity risk

 

The Group aims to mitigate liquidity risk by closely monitoring cash generation and expenditure. Cash is monitored daily and forecasts are regularly prepared to ensure that the movements are in line with the directors' strategy.

 

Trade payables and loans fall due as follows:

 

 

Less than one year

£

One to two years

£

Two to five years

£

Over five years

£

Total

 

£

2014

 

 

 

 

 

Trade payables

286,235

-

-

-

286,235

Other payables

304,381

-

-

-

304,381

Lease capital and interest

55,374

26,238

-

-

81,612

Loans

68,390

136,780

130,047

1,306,142

1,641,359

 

────────

────────

────────

────────

────────

At 30 June 2014

714,380

163,018

130,047

1,306,142

2,313,587

 

════════

════════

════════

════════

════════

 

 

Less than one year

£

One to two years

£

Two to five years

£

Total

 

£

2013

 

 

 

 

Trade payables

162,259

-

-

162,259

Other payables

352,416

2,000

-

354,416

Lease capital and interest

68,297

37,099

-

105,396

Loans

29,505

-

-

29,505

 

────────

────────

────────

────────

At 30 June 2013

612,477

39,099

-

651,576

 

════════

════════

════════

════════

 

Foreign currencies

 

During the year exchange differences of £22,403 (2013: £5,212) have arisen and at the year-end £nil (2013: £nil) was held in foreign currency bank accounts. It is the Group's policy to hold limited amounts in foreign currency in order to reduce exposure to currency risk. The Group does not sell or buy any currency forward or enter into any hedging contracts.

 

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction and monetary assets and liabilities in foreign currencies are translated at the rates ruling at the year end. At present foreign exchange is minimal and hedging and risk management is not deemed necessary.

 

Financial assets by category

 

Loans and

receivables

£

Non financial assets

£

Total

£

2014

 

 

 

Cash at bank

459,693

-

459,693

Trade receivables - current

1,372,920

-

1,372,920

Other receivables

16,595

-

16,595

Current tax asset

-

30,131

30,131

Prepayments and accrued income

-

288,651

288,651

 

────────

────────

────────

 

1,849,208

318,782

2,167,990

 

════════

════════

════════

 

 

Loans and

receivables

£

Non financial assets

£

Total

£

2013

 

 

 

Cash at bank

559,574

-

559,574

Trade receivables - current

1,364,065

-

1,364,065

Other receivables

61,845

-

61,845

Current tax asset

-

20,759

20,759

Prepayments and accrued income

-

178,673

178,673

 

────────

────────

────────

 

1,985,484

199,432

2,184,916

 

════════

════════

════════

The fair values of loans and receivables are considered to be approximately equal to the carrying values.

 

Financial liabilities by category

                                                                                                                  Financial

                                                                                                                 liabilities

                                                                                                          measured at                   Non                           

                                                                                                               amortised          financial                           

                                                                                                                            cost         liabilities               Total                                                                                                                                   £                          £                       £

2014

Trade payables                                                                                      286,235                          -            286,235

Accruals                                                                                                    290,247                          -            290,247

Other payables                                                                                        12,134                          -              12,134

VAT and tax payable                                                                                         -            403,656            403,656

Deferred payments                                                                                           -                2,000                 2,000

Loans                                                                                                           33,284                          -              33,284

Leases                                                                                                                    -               51,990              51,990

                                                                                                            ────────    ────────     ────────

                                                                                                                    621,900            457,646         1,079,546                                                                                                               ════════    ════════    ════════

 

                                                                                                                  Financial

                                                                                                                 liabilities

                                                                                                          measured at                   Non                           

                                                                                                               amortised          financial                           

                                                                                                                            cost         liabilities               Total

                                                                                                                                  £                          £                       £

2013

Trade payables                                                                                      162,259                          -            162,259

Accruals                                                                                                    314,026                          -            314,026

Other payables                                                                                        14,390                          -               14,390

VAT and tax payable                                                                                         -             390,868            390,868

Deferred payments                                                                                          -                24,000              24,000

Loans                                                                                                           29,167                          -               29,167

Leases                                                                                                                   -               62,996                62,996

                                                                                                               ────────    ────────    ────────

                                                                                                                 519,842             477,864               997,706

                                                                                                               ════════    ════════    ════════

 

The fair values of financial liabilities are considered to be approximately equal to the carrying values.

 

22.       CAPITAL COMMITMENTS

           

The Group has no capital commitments at 30 June 2014 or 30 June 2013.

 

23.       CONTINGENT ASSETS

 

The Group has no contingent assets at 30 June 2014 or 30 June 2013.

 

24.             CONTINGENT LIABILITIES

 

The Group has no other contingent liabilities at 30 June 2014 or 30 June 2013.

 

25.       OPERATING LEASE COMMITMENTS

 

2014

£

2013

£

Total future lease payments:

 

 

 

Less than one year

67,156

125,077

After one and within two years

71,504

76,497

After two and within five years

196,910

3,466

 

════════

════════

 

Operating lease commitments relate to the lease of buildings at Martlesham and Bentwaters which expire in March 2019 (with a break clause in June 2015), January 2016, January 2019 respectively.

 

26.             TRANSACTIONS WITH DIRECTORS

 

There were no transactions with directors in the year to June 2014 or June 2013 other than the dividends noted below.

 

27.             DIVIDENDS

 

The directors have proposed a dividend of 0.15 pence per share post year end (subject to shareholder approval). As this was proposed post year end no liability has been recognised in the accounts.

 

During the year dividends of 0.3 pence per share were paid.

 

The following directors received dividend payments as follows:

 

 

Dividend

2014

£

Dividend 2013

£

 

 

 

W A Catchpole

7,775

-

R S M Gordon

2,904

-

G Forsyth

2,974

-

P J Dayer

880

-

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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