TIDMMES
RNS Number : 4288G
Messaging International Plc
29 June 2012
Messaging International Plc ('the Company')
Final Results
Notice of AGM
Messaging International Plc, the AIM traded provider of
innovative messaging services, announces its results for the year
ended 31 December 2011 and gives notice of its AGM to be held at
the offices of Montpelier Chartered Accountants, 58-60 Berners
Street, London W1T 3JS on 7 August 2012 at 3 p.m. The report and
accounts for the year ended 31 December 2011 will be sent to
shareholders on 29 June 2012 and will be available on the Company's
website at www.telemessage.com.
Overview
-- Continued revenue growth - increased by 26.6% to GBP3,673,747 (2010: GBP2,901,985)
-- Pre tax profit for the year - GBP361,226 (2010 Profit:
GBP357,245) with positive cash flow generated
-- Strengthening offering and investing in new products to offer
creative and user friendly messaging products and services to
existing and new clients
-- New Messaging Gateway gaining traction and being adopted by
an increasing number of operators and enterprises
-- Blue-chip client list - seven new telecom operator customers added during the year
-- Healthy new business pipeline
For further information Messaging International Tel: + 972 3 9225252
visit www.telemessage.com Plc
or contact: Guy
Levit
Mark Percy Seymour Pierce Limited Tel: +44 (0) 20
7107 8000
Catherine Leftley Seymour Pierce Limited Tel: +44 (0) 20
7107 8000
Chairman's statement
Operational Review
Trading has been solid for Messaging during 2011 and into 2012,
as we continue to focus on developing converged messaging
solutions, through our subsidiary TeleMessage, to improve the way
users manage messages across various communication mediums. We have
close relationships with our blue-chip client base, a highly
creative R&D team and innovative messaging solutions which
ensure that the company retains its place as a leading provider in
this sector.
Our converged messaging products and services are provided to
carriers and enterprises to deliver text, voice, video and
multimedia messages to and from any communication device. Users can
send, receive, and manage SMS, MMS, IP, Voice, Fax and E-mail
messages from the Internet, E-Mail clients, iOS/Android Smartphones
and Tablets, Fixed or Mobile phones and APIs.
Our clients include, among others, companies such as Sprint in
the US, Rogers Wireless, Bell Mobility and Telus in Canada, USI in
Russia and T-Mobile in Macedonia. We ensure stable revenues by
either hosting messaging services for a per-message fee or by
selling software licences, which are usually linked to the number
of messages that can be sent through the system or to the number of
active users.
As the messaging world is changing, from SMS/MMS to IP
messaging, we have increased our R&D capacity to stay ahead in
the market and to continue to seize opportunities in the messaging
space. Specifically, we are investing in the new standards and the
emerging devices (e.g. smartphones, tablets etc) and interfaces
consumers and enterprises use to send and receive messages. We have
already soft launched our new Android Messenger on Google Play and
our new iPad Messenger on the Apple Store to be able to demonstrate
these new capabilities to our customers.
Sales of our 'Messaging Gateway' product to Mobile operators and
directly to enterprises, offering a range of interfaces for content
providers, enterprises and Facebook developers, continue to
increase. The product enables enterprises to manage messages
(mainly SMS/MMS, but also voice, fax and email) for customers and
employees on a wide scale and uptake is gaining momentum
particularly as more clients understand its convenience and
cost-saving benefits.
Financial Results
Messaging continues to show growth and maintain profitability.
For the year ended 31 December 2011, we are reporting a pre-tax
profit of GBP361,226 (2010: GBP357,245) based on gross revenues of
GBP3,673,747 (2010: GBP2,901,985).
The group's cash balances at 31 December 2011 totalled
GBP543,684 (2010: GBP357,319).
In February 2012, the company completed the buyback of
80,007,853 ordinary shares in the company from Pacific Continental
Securities UK Limited '(Pacific)' for GBP127,500. The acquired
shares were cancelled leaving the company with 155,872,147 ordinary
shares of 0.5 pence each in issue.
As part of the agreement and following completion of the
buyback, Pacific were granted options to subscribe for up to
10,000,000 new ordinary shares at 0.5 pence per share exercisable
in whole or in part, which will lapse on the earlier of three years
from the date of grant or the date on which Pacific is dissolved.
Details of the capital cancellation can be found in the circular to
shareholders dated 23 November 2011. The financial effect of this
capital cancelation and reorganisation is illustrated by way of
pro-forma financial statements set out in the annual report.
In June 2012, the company's subsidiary, TeleMessage Ltd, signed
an agreement for a loan of US$1,000,000 from Mizrahi Tefahot Bank
Ltd. This loan will be used for the development of new innovative
products and services as well as assisting the group's working
capital requirements.
Under the terms of the agreement, repayments will be over 36
equal monthly instalments with an interest rate based on the London
Interbank Offered Rate plus 5.5%.
In addition, as part of the agreement, the company will grant to
Mizrahi Tefahot Bank Ltd 3,896,804 warrants exercisable at any time
from grant until 17 June 2017. The warrants are exercisable at a
price of 0.63p per share, although in certain circumstances the
exercise price might be subject to adjustment.
Outlook
Our focus remains on increasing our presence within the telecom
sector both geographically and technologically. We are a profitable
company with a growing team of technical experts that has again
proven its ability to provide innovative messaging services that
add value to our blue chip customers, thus positioning the Company
for continued growth.
I would like to thank our team for their hard work and
dedication over the past year, and our shareholders for their
continued support. I look forward to reporting another successful
period of trading at our interims.
H Furman
Chairman
28 June 2012
Consolidated statement of comprehensive income for the year
ended 31 December 2011
2011 2010
Notes GBP GBP
Continuing operations:
Revenues 3,673,747 2,901,985
Cost of revenues (1,507,492) (1,142,621)
-------------- ----------------
Gross profit 2,166,255 1,759,364
-------------- ----------------
Operating expenses
Research and development (676,923) (482,741)
Selling and marketing (606,382) (494,328)
General and administrative (480,264) (410,760)
Total operating expenses (1,763,569) (1,387,829)
-------------- ----------------
Operating profit 402,686 371,535
Finance costs (net) (41,460) (14,290)
Profit before taxation 361,226 357,245
Taxation (36,850) -
Comprehensive profit for the year attributable
to equity holders of the parent company 324,376 357,245
============== ================
Other comprehensive profit/(loss)
Foreign exchange difference on translation
of foreign operations 3,009 (48,686)
Foreign exchange difference arising
from restating the carrying value of
goodwill associated with foreign operations 4,538 106,348
-------------- ----------------
7,547 57,662
============== ================
Total comprehensive profit attributable
to equity holders of the parent company 331,923 414,907
============== ================
Earnings per share
Earnings per share from operations 0.14p 0.15p
=============== ===================
Diluted earnings per share from operations 0.12p 0.13p
=============== ===================
Statement of changes in equity for the year ended 31 December
2011
The Group
Foreign
Share capital Share exchange Revenue
premium reserve reserves Total
As at 1 January 2010 1,179,400 4,298,727 336,730 (1,881,674) 3,933,183
Profit for the year - - - 357,245 357,245
Foreign currency translation
changes for goodwill - - 106,348 - 106,348
Other foreign currency translation
changes - - (52,517) - (52,517)
Share based payments for
employee share options - - - 3,831 3,831
At 31 December 2010 1,179,400 4,298,727 390,561 (1,520,598) 4,348,090
Profit for the year - - - 324,376 324,376
Foreign currency translation
changes for goodwill - - 4,538 - 4,538
Other foreign currency translation
changes - - 3,009 - 3,009
Share based payments for
employee share options - - - 1,496 1,496
At 31 December 2011 1,179,400 4,298,727 398,108 (1,194,726) 4,681,509
=============== ============ ============ ============== ===========
The company
Share Share Revenue
capital premium reserves Total
As at 1 January 2010 1,179,400 4,298,727 (67,431) 5,410,696
Loss for the year - - (9,373) (9,373)
At 31 December 2010 1,179,400 4,298,727 (76,804) 5,401,323
Profit for the year - - 33,204 33,204
At 31 December 2011 1,179,400 4,298,727 (43,600) 5,434,527
=========== =========== ============= =============
The following describes the nature and purpose of each reserve
within owners' equity.
Share capital: The amount subscribed for shares at nominal
value.
Share premium: The amount subscribed for share capital in excess
of nominal value.
Foreign exchange reserve: The effect of changes in exchange
rates arising from translating the financial statements of
subsidiary undertakings into the company's reporting currency.
Revenue reserves: Cumulative realised profits less losses and
distributions attributable to equity holders of the group.
Consolidated statement of financial position at 31 December
2011
Pro- forma
2011 2011 2010
GBP GBP GBP
Non-current assets
Intangible assets 3,673,203 3,673,203 3,668,665
Property, plant and equipment 118,807 118,807 57,148
Other investments 238,230 238,230 206,362
------------------------
Total non-current assets 4,030,240 4,030,240 3,932,175
------------------------ ------------ ------------
Current assets
Trade and other receivables 1,144,714 1,144,714 845,225
Cash and cash equivalents 416,184 543,684 357,319
------------------------ ------------ ------------
Total current assets 1,560,898 1,688,398 1,202,544
------------------------ ------------ ------------
Total assets 5,591,138 5,718,638 5,134,719
------------------------ ------------ ------------
Current liabilities
Trade and other payables (706,348) (706,348) (464,449)
Borrowings - - (44,737)
------------------------ ------------ ------------
Total current liabilities (706,348) (706,348) (509,186)
------------------------ ------------ ------------
Non-current liabilities
Other payables (58,100) (58,100) (39,582)
Provisions (272,681) (272,681) (237,861)
------------------------ ------------ ------------
Total non-current liabilities (330,781) (330,781) (277,443)
------------------------ ------------ ------------
Total liabilities (1,037,129) (1,037,129) (786,629)
------------------------ ------------ ------------
Net assets 4,554,009 4,681,509 4,348,090
========================
Equity attributable to
owners of the parent company
Share capital 779,361 1,179,400 1,179,400
Share premium - 4,298,727 4,298,727
Capital redemption reserve 400,039 - -
Foreign currency translation
reserve 398,108 398,108 390,561
Revenue reserves 2,976,501 (1,194,726) (1,520,598)
Total Equity 4,554,009 4,681,509 4,348,090
======================== ============ ============
The group pro-forma statement of financial position represents
the balance sheet at 31 December 2011 subsequent to the capital
reorganisation approved by shareholders on 16 December 2011 and by
the High Court on 25 January 2012 and illustrates the financial
position at 31 December 2011 had the reorganisation taken place at
that date. The pro-forma statement of financial position does not
form part of the statutory financial statements
Consolidated statement of cash flows for the year ended at 31
December 2011
2011 2010
GBP GBP
Cash flow from operating activities
Operating profit 402,686 371,535
---------- ----------
Adjustments for:
Share based payments 12,056 21,331
Depreciation and amortisation 36,803 30,756
Foreign currency differences (29,152) (8,169)
---------- ----------
19,707 43,918
---------- ----------
Operating cash inflow before
working capital movements 422,393 415,453
Increase in receivables (299,489) (236,619)
Increase in payables 235,679 190,849
Increase in provisions 34,820 57,628
---------- ----------
(28,990) 11,858
---------- ----------
Cash inflow from operating
activities 393,403 427,311
Investing activities
Interest received 6,687 -
Interest and related costs (15,762) (22,130)
Investments (31,868) (48,800)
Purchase of tangible assets (98,686) (30,163)
---------- ----------
Net cash used in investing
activities (139,629) (101,093)
---------- ----------
Taxation (12,112) -
Financing activities
Bank loan repayments (55,297) (171,590)
Net cash used from financing
activities (55,297) (171,590)
---------- ----------
Net change in cash and cash
equivalents 186,365 154,628
Cash and cash equivalents
and bank overdraft at the
beginning of the year 357,319 202,691
Cash and cash equivalents
and bank overdraft at the
end of the year 543,684 357,319
========== ==========
Company statement of cash flows for the year ended at 31
December 2011
2011 2010
GBP GBP
Cash flow from operating activities
Operating profit/(loss) 5,466 (38,568)
Share based payments - 17,500
-------- ---------
Operating cash flow before
working capital movements 5,466 (21,068)
Decrease/(increase) in receivables 120,249 (9,416)
Increase in payables 7,881 2,699
Cash flow from operating activities 133,596 (27,785)
Finance income 27,738 29,195
Net cash inflow from operating
activities 161,334 1,410
-------- ---------
Net cash from financing activities - -
Net change in cash and cash
equivalents 161,334 1,410
Cash and cash equivalents
and bank overdraft at the
beginning of the year 15,452 14,042
Cash and cash equivalents
and bank overdraft at the
end of the year 176,786 15,452
======== =========
Notes to the group and financial statements
1. General information
Messaging International Plc is a company incorporated in the UK
and its activities are as described in the chairman's
statement.
The financial information is a preliminary announcement for the
years ended 31 December 2011 and 2010 and does not comprise
statutory accounts for the purposes of Section 434 of the Companies
Act 2006.
The statutory accounts have been audited by Jeffreys Henry LLP,
incorporate an unqualified auditors report and do not contain an
emphasis of matter paragraph or any statement under Section 498 of
the Companies Act 2006.
The preliminary announcement of the results for the year ended
31 December 2011 was approved by the boards of directors on 28 June
2012.
Whilst the information in this preliminary announcement has been
prepared in accordance with the recognition and measurement
criteria of IFRS's, this announcement does not itself contain
sufficient information to comply with IFRS's.
The statutory accounts will be sent to those shareholders who
have elected to receive a paper copy shortly. Further copies will
be available to the public from the Company's registered office
58-60 Berners Street, London W1T 3JS.
Statutory accounts will be available on the Company's website
www.telemessage.com.
2. Basis of Accounting
The consolidated financial statements of the company for the
year ended 31 December 2011 have been prepared on a historical cost
basis and are in accordance with International Financial Reporting
Standards ('IFRS") as adopted by the EU. These have been applied
consistently except where otherwise stated.
The group has adopted the following new and amended IFRSs as of
1 January 2011:
IAS 32 (amendment), 'Financial instruments: presentation -
classification of rights issue', is effective from annual periods
beginning on or after 1 February 2010 and amended the definition of
a financial liability in order to classify rights issues (and
certain options or warrants) as equity instruments in cases where
such rights are given pro-rata to all of the existing owners of the
same class of an entity's non-derivative equity instruments, or to
acquire a fixed number of the entity's own equity instruments for a
fixed amount in any currency. This amendment will have no impact on
the company after initial application.
IAS 24 (Amendment), 'Related party transactions'. The amended
standard is effective for annual periods beginning on or after 1
January 2011. It clarified definition of a related party to
simplify the identification of such relationships and to eliminate
inconsistencies in its application. The revised standard introduces
a partial exemption of disclosure requirements for
government-related entities. The company does not expect any impact
on its financial position or performance.
IFRIC 14 (Amendment), 'Prepayments of a minimum funding
requirement'. The amendment to IFRIC 14 is effective for annual
periods beginning on or after 1 January 2011 with retrospective
application. The amendment provides guidance on assessing the
recoverable amount of a net pension asset. The amendment permits an
entity to treat the prepayment of a minimum funding requirement as
an asset. The amendment is deemed to have no impact on the
financial statements of the company.
IFRIC 19, 'Extinguishing financial liabilities with equity
instruments', is effective for annual periods beginning on or after
1 July 2010. The interpretation clarifies that equity instruments
issued to a creditor to extinguish a financial liability qualify as
consideration paid. The equity instruments issued are measured at
their fair value. In case that this cannot be reliably measured,
the instruments are measured at the fair value of the liability
extinguished. Any gain or loss is recognised in profit or loss. The
adoption of this interpretation will have no effect on the
financial statements of the company.
Standards, interpretations and amendments to published standards
that are not yet effective
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 January 2011 and have not been early
adopted:
IFRS 9, 'Financial instruments: classification and measurement',
as issued reflects the first phase of the IASB work on the
replacement of IAS 39 and applies to classification and measurement
of financial assets as defined in IAS 39. The standard is effective
for annual periods beginning on or after 1 January 2015. In
subsequent phases, the IASB will address classification and
measurement of financial liabilities and hedge accounting. The
adoption of the first phase of IFRS 9 might have an effect on the
classification and measurement of the company's assets. At this
juncture it is difficult for the company to comprehend the impact
on its financial position and performance.
IFRS 7, 'Financial instruments: disclosures (amendment), is
effective for annual periods beginning on or after 1 July 2011. The
amendments requires additional quantitative and qualitative
disclosures relating to transfers of financial assets, where
financial assets are derecognised in their entirety, but where the
entity has a continuing involvement in them and where financial
assets are not derecognised in their entirety. In addition to the
above there has been a subsequent amendment effective for annual
periods beginning on or after 1 January 2013 related to the
offsetting of financial assets and financial liabilities. The
adoption of these will have no effect on the financial statements
of the company.
IAS 12, 'Income taxes (amendment) - Deferred taxes: recovery of
underlying assets', is effective for annual periods beginning on or
after 1 January 2012. It introduces a rebuttable presumption that
deferred tax on investment properties measured at fair value will
derecognised on a sale basis, unless an entity has a business model
that would indicate the investment property will be consumed in the
business. If consumed a use basis would need to be adopted. The
amendments also introduce the requirement that deferred tax on
non-depreciable assets measured using the revaluation model in IAS
16 should always be measured on a sale basis. The adoption of this
interpretation will have no effect on the financial statements of
the company.
IFRS 11 joint Arrangements is effective from 1 January 2013. The
core principle of the standard is that a party to a joint
arrangement determines type of joint arrangements in which it is
involved by assessing the rights and obligations and accounts for
those rights and obligations in accordance with the type of joint
arrangement. Joint ventures now must be accounted for using the
equity method. Joint operator which is a newly defined term
recognises its assets, liabilities, revenues and expenses and
relative shares thereof. The adoption of this will have no effect
on the financial statements of the company.
IFRS 12 Disclosures of Interests with Other Entities is
effective from 1 January 2013. It requires increased disclosure
about the nature, risks and financial effects of an entity's
relationship with other entities along with its involvement with
other entities. The adoption of this will have no effect on the
financial statements of the company.
IFRS 13 Fair Value Measurement is effective from 1 January 2013.
It defines fair value, sets out in a single IFRS a framework for
measuring fair value and requires disclosures about fair value
measurements. It includes a three-level fair value hierarchy which
priorities the inputs in a fair value measurement. The adoption of
this will have no effect on the financial statements of the
company.
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint
Arrangements, IFRS 12 Disclosures of Interests with Other Entities
along with related amendments to IAS 27 Separate Financial
Statements and IAS 28 Investments in Associates and Joint Ventures
will have an effective date of 1 January 2013. Early adoption of
these standards is permitted, but only if all five are early
adopted together.
IFRS 10 does not change consolidation procedures but changes
whether an entity is consolidated by revising the definition of
control and provides a number of clarifications on applying the new
definition of control. The adoption of this will have no effect on
the financial statements of the company.
IFRS 1 First-time Adoption of International Financial Reporting
Standards (amendment) -Severe Hyperinflation and removal of Fixed
Dates for First-time adopters has an effective date for annual
periods beginning on or after 1 July 2011. This provides further
guidance on how an entity should resume presenting IFRS financial
statements when its functional currency ceases to be subject to
severe hyperinflation. Early adoption of these standards is
permitted. The adoption of this will have no effect on the
financial statements of the company.
IAS 1 Presentation of Items of Other Comprehensive Income -
Amendments to IAS 1 is effective for annual periods beginning on or
after 1 July 2012. Items that would be reclassified to the profit
and loss at a future point would be presented separately from items
that will never be capitalised. The adoption of this will have no
effect on the financial statements of the company.
AS19 Employee Benefits (Revised) effective for annual periods
beginning on or after 1 January 2013. For defined benefit plans the
ability to defer recognition of actuarial gains and losses has been
removed. There are new objectives for disclosure stated in the
revised standard along with new or revised disclosure requirements.
Plus the recognition of termination benefits and the distinction of
short-term and other long-term employee benefits have changed. The
adoption of this will have no effect on the financial statements of
the company.
3. Presentational currency
These financial statements are presented in pounds sterling
because the parent is an AIM traded company on the London Stock
Exchange.
4. Significant accounting policies
(a) Going concern
These financial statements have been prepared on the assumption
that the group is a going concern.
When assessing the foreseeable future, the directors have looked
at a period of twelve months from the date of approval of this
report. The forecast cash-flow requirements of the business are
contingent upon the ability of the group to retain revenues from
existing contracts and generate future revenues from future
business.
As the directors have reasonable expectations that the group has
adequate resources to continue trading for the foreseeable future
they continue to adopt the going concern basis in preparing the
financial statements.
Were the group unable to continue as a going concern,
adjustments would have to be made to the statement of financial
position of the group to reduce the value of assets to their
recoverable amounts, to provide for future
liabilities that might arise and to reclassify non-current
assets and long-term liabilities as current assets and
liabilities.
(b) Revenue recognition
The group generates revenue primarily from licensing its
messaging services to service providers, corporations and other
distributors as well as from hosting and maintenance fees and from
the use of messaging services by end users.
The group recognise revenue when delivery of the product has
occurred, a fee can be reliably measured and the ability to collect
such revenues is probable.
Deferred revenue includes amounts received from customers for
which revenue has not yet been recognised.
(c) Research and development costs
Research costs are expensed to operations as incurred.
Development costs are also expensed to operations as incurred if
such costs do not meet the criteria for capitalisation as set forth
in IAS 38, "Intangible assets".
In the years ended 31 December 2011 and 2010 no development
costs have been capitalised.
(d) Goodwill and impairment
The carrying amounts of assets are reviewed at each reporting
date to determine whether there is any indication of
impairment.
If any such indication exists then the asset's recoverable
amount is estimated. For goodwill that has an indefinite useful
life, recoverable amount is estimated at each reporting date or
more frequently when indications of impairment are identified.
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount
unless the asset is carried at a revalued amount, in which case the
impairment loss is recognised directly against any revaluation
surplus for the asset to the extent that the impairment loss does
not exceed the amount in the revaluation surplus for that same
asset. A cash-generating unit is the smallest identifiable asset
group that generates cash flows that are largely independent from
other assets and groups. Impairment losses are recognised in the
income statement in the period in which it arises. Impairment
losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to
the units and then to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
Impairment loss on goodwill is not reversed in a subsequent
period. An impairment loss for an asset other than goodwill is
reversed if, and only if, there has been a change in the estimates
used to determine the asset's recoverable amount since the last
impairment loss was recognised. The carrying amount of an asset
other than goodwill is increased to its revised recoverable amount,
provided that this amount does not exceed the carrying amount that
would have been determined (net of amortisation or depreciation)
had no impairment loss been recognised for the asset in prior
years. A reversal of impairment loss for an asset other than
goodwill is recognised in the income statement unless the asset is
carried at revalued amount, in which case, such reversal is treated
as a revaluation increase.
(e) Investment in subsidiary undertakings
The investment in subsidiary undertakings is stated in the
balance sheet at cost less any provision for impairment. Impairment
is recognised immediately in the income statement and is not
subsequently reversed.
(f) Property, plant and equipment
Property, plant, and equipment are stated at cost net of
accumulated depreciation. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets
at the following annual rates:
%
Computers 33
Electronic equipment 15-25
Furniture and office equipment 7-15
Leasehold improvements 10
The carrying value of property plant and equipment is reviewed
for impairment when events or changes indicate the carrying value
may not be recoverable. If any such indication exists and carrying
values exceed recoverable amounts such assets are written down to
their recoverable amounts.
(g) Operating leases
Rentals applicable to operating leases, where substantially all
of the benefits and risks of ownership remain with the lessor, are
charged against income as and when incurred.
(h) Share options:
Employee share options
The group has applied the requirements of IFRS 2 "Share-based
Payments".
The group issues equity-settled and cash-settled share-based
payments to certain employees. Equity-settled share-based payments
are measured at fair value at the date of grant. The fair value
determined at the grant date is expensed on a straight-line basis
over the vesting period, based on the group's estimate of shares
that will eventually vest.
Fair value is measured by use of a Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
A liability equal to the portion of the goods or services
received is recognised at the current fair value determined at each
balance sheet date for cash-settled share-based payments.
Other share options and equity instruments:
Where equity instruments are granted to persons other than
employees the income statement is charged with the fair value of
services received.
This policy has been applied to share warrants issued to Mizrahi
Tefahot Ltd as part of their loan agreement with the company's
subsidiary undertaking in Israel and to the company's nominated
advisers in relation to reduced fees for a two year period .Details
in relation to these agreements are given in notes to the financial
statements.
(i) Severance pay
Pursuant to Israel's severance pay law, employees of more than
one year are entitled to one month's salary for each year employed
or a portion thereof. The cost of providing severance pay is
determined using an independent actuary. Actuarial gains and losses
are recognised immediately in the income statement in the period in
which they occur.
The value of deposited funds is based on the cash surrender
value of the insurance policies. The deposited funds include
profits accumulated up to the balance sheet date. The deposited
funds may be withdrawn only upon fulfilment of the severance pay
obligation, pursuant to Israel's severance pay law or labour
agreements.
(j) Government grants
Government grants are recognised when there is reasonable
assurance that the grants will be received and the company will
comply with the attached conditions. Government investment grants
related to assets, such as property, plant and equipment, are
presented as a deduction from the carrying amount of the
assets.
Government grants received from the Office of the Chief
Scientist ("OCS") in Israel as support for a research and
development project which include an obligation to pay to the State
royalties that are conditional on future sales arising from the
project, are recognised upon receipt as a liability,pursuant to IAS
39 'Financial Instruments: Recognition and Measurement', if future
economic benefits are expected from the project that will result in
royalty-bearing sales. If no such economic benefits are expected,
the grants are recognised as a reduction of the related research
and development expenses. In that event, the royalty obligation is
treated as contingent liability in accordance with IAS 37.
At each reporting date, the company evaluates whether there is
reasonable assurance that the royalty liability, in whole or in
part, will or will not be settled based on the best estimate of
future sales. If the estimate of future sales indicates that there
is no such reasonable assurance, the appropriate liability
reflecting the anticipated royalty payments is recognised with a
corresponding charge to research and development expenditure.
Royalty payments are treated as a reduction of the
liability.
(k) Taxation
Income tax expense represents the sum of the current tax payable
and the deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the same
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The company's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit, and are accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
The carrying amount of deferred tax is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised. Deferred tax is charged or credited to income statement,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the company intends to settle
its current tax assets and liabilities on a net basis.
(l) Foreign currency
Transactions in foreign currency are recorded at the rate of
exchange prevailing at the date of the transaction. All differences
are taken to the income statement. Assets and liabilities
denominated in foreign currency are translated into sterling at the
rate of exchange prevailing at the balance sheet date.
On consolidation, income and expenditure of subsidiary
undertakings are translated into sterling at average rates of
exchange in the period. Assets and liabilities are translated into
sterling at the rate of exchange ruling at the balance sheet date.
Exchange differences arising from the use of average rates for
translating the results of foreign subsidiaries or from the
translation of net assets on the acquisition of foreign subsidiary
undertakings are taken to the group's translation reserves.
(m) Investments
Investments represent funds invested in insurance policies in
order to meet severance pay obligations pursuant to Israeli
severance pay law and staff contracts of employment relevant to the
company's principal subsidiary undertaking in Israel.
(n) Trade receivables
Trade receivables are recognised at fair value. A provision for
impairment of trade receivables is established where there is
objective evidence that the company or group will not be able to
collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or liquidation
and default or delinquency of payments are considered indicators
that the trade receivable is impaired. The amount of the provision
is the difference between the asset's carrying amount and the
present value of estimated future cash flows discounted at the
original rate of interest. The carrying amount of the asset is
reduced through the use of an allowance account and the amount of
the loss is recognised in the income statement within
administrative expenses. When a trade receivable is uncollectable
it is written off against the allowance account for trade
receivables.
(o) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
on call with banks. Bank overdrafts are shown as borrowings within
current liabilities.
(p) Provisions
A provision is recognised when the group has a legal or
constructive obligation as a result of a past event and it is
probable that an outflow of economic benefits will be required to
settle the obligation and the effect is material.
(q) Financial liabilities and equities
Financial liabilities and equities instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the group after deducting all of
its liabilities.
Ordinary shares are classified as equity. Incremental costs
directly attributable to new shares are shown in equity as a
deduction from the proceeds.
Share premium represents funds raised from shareholders in
excess of their nominal value net of issue costs.
Revenue reserves represent the cumulative net gains and losses
of the group along with increases in equity for services received
in equity settled share-based transactions.
Borrowings represent bank borrowings and are measured at
amortised cost.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
(r) Borrowing costs
Borrowing costs are expensed to the comprehensive income
statement in the period incurred.
(s) Managing capital
The group's objectives when managing capital are to safeguard
the group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. In order to maintain or adjust the capital
structure, the group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or
sell assets to reduce debt.
5 Basic and diluted loss per share
Basic earnings per share has been calculated on the group's
profit attributable to equity holders of the parent company of
GBP324,376 (2010: GBP357,245) and on the weighted average number of
shares in issue during the year, which was 235,880,000 (2010:
235,880,000).
Diluted earnings per share has been calculated on the group's
profit of GBP324,376 (2010: GBP357,245) which in addition to 235
million ordinary shares in issue, takes into account 15 million
warrants and 23 million options to subscribe for ordinary
shares.
6 Cash and cash equivalents
At
At 1 January 31 December
2011 Cash Flow 2011
GBP GBP GBP
Group
Cash and cash equivalents 357,319 186,365 543,684
Company
Cash and cash equivalents 15,452 161,334 176,786
============= ========== =============
Ends
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGZVVRDGZZM
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