RNS Number:3291Y
SPG Media Group Plc
14 June 2007
SPG MEDIA GROUP PLC
Financial highlights
Turnover #16.6 million (2006: # 18.2 million)
Operating profit (before exceptional items
and goodwill amortisation) #0.7 million (2006: #1.6 million)
Operating profit #0.3 million (2006: #1.5 million)
Cash generated by operations #1.0 million (2006: #2.2 million)
Cash in hand #3.0 million (2006: #2.3 million)
Stephen Davidson, Chairman
"In a difficult year we have produced results which show the underlying
performance of the Group to be sound. We need to make investments in our
products and people to ensure they have an opportunity to deliver growth. I
believe we now have a realistic plan to deliver that growth.
The Group finished the period with net funds of #3.0 million."
Keith Sadler, Chief Executive
"Our aim is to grow the Group from its current base by developing the current
portfolio of products, to increase the revenue from each product through
investment in content, people and ideas. The result of this investment will
drive response for our clients ensuring they achieve a return on their
investment with us."
Contact:
Keith Sadler SPG Media Group plc 020 7915 9600
Mike Coe Blue Oar Securities Plc 0117 933 0020
Chairman's Statement
Trading results
In a difficult year we have produced results which show the underlying
performance of the Group to be sound. The results for the year ended 31 March
2007 show turnover of #16.6 million (2006: #18.2 million) and an operating
profit, before exceptional items and amortisation, of #0.7 million (2006: #1.6
million). The profit before taxation was #0.3 million (2006: #1.3 million).
As I stated in my interim statement we were reliant on the fourth quarter of the
year to deliver significant operating and financial performance. Although the
fourth quarter was disappointing for revenues we delivered both operating
profits and cash flow.
Following a review, we made the decision to close our Indian office based in
Hyderabad. The Indian operation had produced poor quality data and failed
financially to justify continued support. We have entered into an agreement to
sell the shares in SPG Media India Pty Limited to Visage Media Pty Limited for
US$100,000. This included the seven websites we had transferred to India to sell
advertising. We retain a small successful sales team who sell our International
Outsourcing Forum.
Net Funds
The Group produced net cash flow from operating activities of #1.0 million
(2006: #2.2 million) and made capital expenditure of some #0.3 million (2006:
#0.3 million). The Group finished the period with net funds of #3.0 million
(2006: #2.3 million). This increase represents the earnings before interest,
tax, depreciation and amortisation and indicates healthy cash conversion.
Board
I am pleased to welcome Adrian Howe to the Board of Directors. Adrian has a
wealth of experience in operating with large and medium sized companies. With
his financial background Adrian will Chair the Audit Committee. I would like to
thank Christopher Haines for his tenure as Chair of the Audit Committee, which
he has conducted diligently and effectively. Christopher will remain on the
Audit Committee and continue to make a positive contribution to its operation.
Employees and customers
I would like to thank the staff and management of the Group for their hard work
and commitment throughout the year. Also my thanks to all our customers and
clients who have placed their marketing needs with us and supported us through
this year.
Outlook
We need to make investments in our products and people to ensure they have an
opportunity to deliver growth. I believe we now have a realistic plan to deliver
that growth.
Stephen Davidson
Chairman
14 June 2007
Business Review
Strategy
Our aim is to grow the Group from its current base by developing the current
portfolio of products, to increase the revenue from each product through
investment in content, people and ideas. The result of this investment will
drive response for our clients ensuring they achieve a return on their
investment with us.
SPG Media Group plc's activities are focussed in three areas, in print, online
and in person. We aim to offer measurable marketing/advertising solutions to our
customers through these three channels. Historically we have pushed products
into the market place and cut costs to achieve short term results. To achieve
long term growth for the business and increase shareholder value we need to make
investments that will lead to improvements in revenue and over time improvement
in the operating profit of the Group.
The key driver for the business is the demand for advertising and marketing
services from a broad spectrum of industries. We are investing in our products
to ensure we can provide services for our clients even in the cyclical nature of
marketing and advertising. We have increased the budget for content on our
websites, introduced e-newsletters and job boards are to be launched on our
websites from September. Editorial and design form an important part of our
magazines where we now invest in compelling content through the editorial team
writing and commissioning specific articles for the magazines. In our events
division we are introducing more opportunities for our clients to meet their
potential clients through the addition of exhibition stands, meeting chalets and
establishing networking areas.
Principal risks and uncertainties facing the Group would be a failure to respond
to the competitive landscape and establishing marketing and product initiatives
to ensure we remain competitive. Investing in our products in the future will be
imperative if we are to achieve and maintain a profitable Group. The Group is
reliant on its sales force and critical to its success is the recruitment and
retention of skilled sales personnel.
Key performance indicators
The Board use a wide range of financial indicators to assess performance with in
the Group. These key performance indicators are reviewed regularly by the Board
and senior management to ensure we comply with our aims.
Order intake year on year 2007: (11.1)% 2006: (6.4)%
Product order intake (in aggregate as above)
Sales revenue recognition (conversion of orders into 2007: 110% 2006:109%
revenue)
Orders per sales person (average number in year) 2007: #2,354 2006: #1,891
Cash conversion (operating profit to cash from 2007: 3.38 2006: 1.42
operations)
EBITDA 2007: #1.4 million 2006: #2.7 million
Group Results
Turnover for the Group fell from #18.2 million to #16.6 million. This was a
result of the continued decline in our print division which showed a decline in
revenues of #1.8 million. The majority of this decline, #1.2 million, occurred
in the first half of the year when restructuring had an impact on the
performance of this division. The rate of decline in revenue in the second half
has slowed and has shown signs of stability.
The gross profit margin has been maintained at 54% and produced a gross profit
of #9.0 million compared to #9.8 million for the previous year.
Distribution costs fell as a result of sourcing cheaper distribution channels
and publishing fewer titles.
We have identified certain costs as exceptional and disclosed these separately
on the face of the profit and loss account. They include the redundancy and
compensation for loss of office costs of #0.6 million (#0.3 million redundancy
and #0.3 million compensation for loss of office), the write down of our assets
in India and a tax liability in India totalling #182,000 and costs associated
with the potential offer for the company of #44,000. This charge was offset by a
release of #603,000 from the property provision as a result of the surrender of
the lease on Edgware Road and the letting of the vacant floor at Goodge Street.
The Administrative expenses have increased from #7.7 million to #7.9 million.
This increase is due to a stepped increase in the rent at North Wharf Road, the
Group's principal operating office and an increase in the bad debt provision.
The previous year benefited from a release from the bad debt provision.
Offsetting these increases was a release of #0.4 million (2006: #0.2 million) of
credit balances on the balance sheet. The Board regularly reviews and assess the
appropriateness of credit balances in the balance sheet which led to this
release.
The Group reported an operating profit before amortisation and exceptional items
of #0.7 million (2006: #1.6 million). Group operating profit after amortisation
and exceptional items is #0.3 million.
The net interest charge of #34,000 includes a charge of #114,000 (2006:
#168,000) for the discount applied on the property provision at the time the
initial provision was calculated. This is a non-cash item and increases the
property provision by this amount. This should reduce as the provision is
reduced over time. #82,000 (2006: #21,000) of interest was generated from the
Group's cash balances.
As a result of the reduced retained earnings the earnings per share fell to 0.30
pence from 1.59 pence in 2006.
The Group was a positive cash generator with #0.7 million added to the balance
at the previous year-end making a total of #3.0 million of cash balances held at
31 March 2007.
Internet
We operate web sites where we offer a listing service to clients with a 600 word
profile and five image package. These web sites are aimed at businesses who are
looking to search for the procurement of goods and services for their own
businesses. Following the sale of our Indian operation we now have 30 web sites
which cover a number of industries. The full list of our current websites are as
follows:
Aerospace-technology.com Medicaldevice-network.com
Airforce-technology.com Mobilecommunication-technology.com
Airport-technology.com Naval-technology.com
Army-technology.com Offshore-technology.com
The-Chiefexecutive.com Packaging-gateway.com
Chemicals-technology.com Pharmaceutical-technology.com
Designbuild-network.com Power-technology.com
Drugdevelopment-technology.com Railway-technology.com
The-Financedirector.com Roadtraffic-technology.com
Foodprocessing-technology.com Semiconductor-technology.com
Hospital Management.net Ship-technology.com
Hotel-technology.com Totaloutsourcinghub.com
Hydrocarbons-technology.com Water-technology.com
Industryappointments.com Worldcruise-network.com
Mining-technology.com Worldpharamceuticals.net
Revenues from our internet business increased by 6.8% from #6.1 million to #6.5
million in the year ended 31 March 2007.
During the last six months we have implemented a number of initiatives to
improve the content on our websites. This includes an increase in the editorial
personnel to write and commission articles and features for these websites. The
intention of this is to increase unique user sessions on our websites. This
investment will initially target our better performing websites. We have also
established electronic newsletters which are sent out to our internet client
base and carry paid for advertising. Our initial launch is on
Offshore-technology.com. These newsletters are to be produced monthly with our
plan to increase frequency. From September 2007 we will launch our interactive
job boards for our top twelve websites. This is, again, to increase unique user
sessions but also offer clients opportunities to integrate into the web site and
create community.
Events
Our "in person" side of the business comprises executive Forums and Conferences.
The Forums consist of supplier and buyer delegates attending meetings at which
suppliers have an opportunity to make presentations to potential clients. An
important element for the success of the Forum is the seminar and conference
programme for all delegates. Separate to this is our conference programme where
we produce and sell delegate places to attendees. For both of these areas we
also attempt to generate sponsorship revenue. What we believe differentiates us
is our exceptional execution of both our Forums and Conferences.
We ran 13 forums (2006: 13), 2 business breakfasts (2006: none) and 35
conferences (2006: 31) through the year. Our aim is to increase the size of our
Forums with more delegates by making improvements in the proposition by offering
further opportunities for suppliers to have exhibition stands and also the
introduction of networking areas. These will generate further sponsorship
revenue opportunities. Revenue generated from all the events held was #6.0
million (2006: #6.2 million). The primary cause for the fall in revenue was the
cancellation of the Digital Infrastructure Technology Forum which was being sold
out of our Indian office. However, due to poor sales this event had to be
cancelled. In addition we were unable to rebook the South African Event we ran
successfully on behalf of the South African Contact Centre Community.
As with the other areas of the business we have invested in more producers and
sales staff as well marketing personnel to improve the performance of this part
of the business.
Print
After a period of change we established the print division under a single head
of sales. We have also improved the quality of the magazines under the direction
of our Editor-in-Chief. Our aim is to have compelling content within the
magazines giving our advertisers and contributors a value added product. Our UK
publications during the year were as follows:
World Pharmaceutical Frontiers Future Airport
World Expro CEO
FDE Packaging and Converting Intelligence
Medical Devices Hotel Management International
Global Semiconductor CIMA
World Cruise Review Future Banking
The Wealth Collection Hospital Management International
Leaf Review Review of Modern Surgery
Review of Patient Care
The revenue from our print division declined from #5.9 million to #4.1 million;
#1.2 million of the decline was accounted for in the first half of the year and
#0.6 million in the second half. And of this second half decline some #0.3
million was due to the decision to cease publishing certain titles.
Half year on half year the rate of decline slowed dramatically and now we have a
platform from which we can improve. During the year we were awarded the contract
to publish a quarterly magazine for the Chartered Institute of Management
Accountants ("CIMA"). We believe this indicates our ability to produce and
publish quality magazines. The magazine is part of the continuing professional
development for certain members of the institute and therefore required reading
for those members. In addition we have been asked to produce, and procure
delegates for, four conferences on behalf of CIMA.
India
In the second half of the year a number of inconsistencies in the performance of
the Indian operation appeared. Revenue targets were not being met, bad debt
provisioning was increased and the quality of the data being produced in the
operation was consistently below standard. The Digital Infrastructure Technology
("DIT") forum had to be cancelled as no sales had been made on the event. This
was one of the first events run by the Group. In the wake of this outturn the
Board took the decision to sell the remaining part of the business to Visage
Media Pty Limited a subsidiary of iLabs Management LLC an Indian venture capital
fund. We have entered into an agreement with Visage Media Pty Limited to sell
the shares to them. We retain a small presence (four sales people and seven data
confirmation team) in India selling our International Outsourcing Forum.
Property
We have surrendered our lease at Edgware Road, London. This was the only
property not to be sublet. The annual outgoings for this property were #181,000.
The Group will make a saving of #74,000 for the remainder of the lease. We have
also let a floor at Goodge Street, London for the remainder of the lease, saving
the Group some #189,000 per annum. This lease runs until 2014. The settlement of
these property issues has allowed the Group to release #603,000 from the
property provision, which has been disclosed as an exceptional item.
Unaudited Consolidated profit and loss account
For the year ended 2007 2006
31 March
Before Exceptional Total Before Exceptional Total
exceptional items and exceptional items and
items and amortisation items and amortisation
amortisation amortisation
(Note 4) (Note 4)
Notes #'000 #'000 #'000 #'000 #'000 #'000
Group turnover including
share of joint venture
16,597 - 16,597 18,256 - 18,256
Less share of joint
venture turnover
- - - (65) - (65)
Group turnover 1 16,597 - 16,597 18,191 - 18,191
Cost of sales (7,567) - (7,567) (8,349) - (8,349)
Gross profit 9,030 - 9,030 9,842 - 9,842
Distribution costs (380) - (380) (450) - (450)
Administrative expenses (7,916) (444) (8,360) (7,752) (94) (7,846)
Administrative expenses 2 (7,916) - (7,916) (7,752) - (7,752)
Amortisation 2 - (241) (241) - (248) (248)
Exceptional items 3 - (203) (203) - 154 154
Total administrative
expenses
(7,916) (444) (8,360) (7,752) (94) (7,846)
Group operating profit 734 (444) 290 1,640 (94) 1,546
Share of joint venture
operating loss
- - - (44) - (44)
Loss on termination of 3
joint venture
- - - - (57) (57)
Profit on disposal of 3
business
- - - - 51 51
Net interest payable 5 (34) - (34) (152) - (152)
Profit on activities
before taxation
700 (444) 256 1,444 (100) 1,344
Tax on profit on ordinary
activities
6 (2) - (2) - - -
Profit on ordinary
activities after taxation
and retained profit for
the financial year
698 (444) 254 1,438 (100) 1,344
Basic profit per share 7 0.30p 1.59p
Diluted profit per share 7 0.30p 1.58p
* All of the above activities are continuing operations with the
exception of the joint venture
* There are no material differences between the profits on ordinary
activities before taxation and the retained profit as stated above and their
historical cost equivalents.
Unaudited Consolidated Balance Sheet
As at 31 March 2007
2007 2006
Notes #'000 #'000
Fixed assets
Intangible assets 8 3,918 4,159
Tangible assets 9 936 1,590
4,854 5,749
Current assets
Debtors 10 4,104 4,861
Cash at bank and in hand 3,039 2,329
7,143 7,190
Creditors - amounts falling due within one year
Trade and other creditors 12 (8,025) (8,072)
(8,025) (8,072)
Net current liabilities (882) (882)
Total assets less current liabilities 3,972 4,867
Creditors - amounts falling due after more than one year 13 - (39)
Provisions for liabilities and charges 14 (1,157) (2,280)
Net assets 2,815 2,548
Capital and reserves
Called up share capital 18 4,293 4,293
Share premium account 19 7,262 7,262
Capital redemption reserve 19 7,874 7,874
Other reserves 19 733 733
Profit and loss account 19 (17,347) (17,614)
Equity shareholders' funds 2,815 2,548
Unaudited Consolidated statement of total recognised gains and losses
For the year ended 31 March 2007
2007 2006
#'000 #'000
Profit for the financial year
- Group 254 1,388
- Joint venture - (44)
254 1,344
Exchange rate adjustment offset in reserves (retranslation of foreign
investments)
(4) 8
Total recognised gains for the year
- Group 250 1,396
- Joint venture - (44)
Total recognised gains for the year 250 1,352
Prior year adjustment - (4,385)
Total gain/loss recognised since last annual report 250 (3,033)
Unaudited Reconciliation of movements in shareholders' funds
For the year ended 31 March 2007
2007 2006
#'000 #'000
Profit/(loss) for the financial year 254 1,344
Share based payments charge 17 -
Other recognised gains and losses (4) 8
Net change in shareholders' funds 267 1,352
Shareholders' funds as at start of year 2,548 1,196
Shareholders' funds as at 31 March 2,815 2,548
Unaudited Consolidated cash flow statement
For the year ended 31 March 2007
2007 2006
Notes #'000 #'000
Net cash inflow from operating activities 22 981 2,199
Returns on investments and servicing of finance
Interest received and similar items 82 21
Interest element of finance lease payments (2) (5)
Taxation
Overseas corporation tax paid (2) -
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (341) (291)
Acquisitions and disposals
Net cash inflow from sale of trading assets 39 180
Net cash flow before financing 757 2,104
Financing
Capital element of finance lease payments (45) (8)
Increase in net cash in the period 712 2,096
Reconciliation of net cash flow to movement in net debt
Increase in cash in the period 712 2,096
Cash outflow from lease financing 45 8
Change in net debt resulting from cash flows 757 2,104
Movement in net funds for the period 757 2,104
Opening net funds 2,282 178
Closing net funds 23 3,039 2,282
1. Segmental analysis
The turnover and operating profit is derived from international business to
business communications and originates in the UK and India. Revenue generated
out of India was #0.7 million (2006: #0.9 million).
Geographical analysis of turnover:
2007 2006
#'000 #'000
UK 3,892 3,659
USA 3,208 3,640
Europe (other than UK) 7,774 9,272
Other 1,723 1,620
16,597 18,191
Business analysis:
2007 2007 2007 2006 2006 2006
#'000 #'000 #'000 #'000 #'000 #'000
Turnover Operating Net assets Turnover Operating Net assets
profit profit
Print 4,116 56 1,602 5,884 404 825
Internet 6,533 165 460 6,115 653 856
Events 5,948 69 736 6,192 489 867
16,597 290 2,798 18,191 1,546 2,548
The calculation of operating profit before tax has been undertaken by allocating
central costs to each division on the basis of contribution generated. Net
assets have been allocated to each business unit on a proportional basis using
turnover as the basis for the calculation. Barter revenue of #0.5 million (2006:
#nil) is contained in the above total revenue.
2. Operating profit
Operating profit is stated after charging/(crediting) the following amounts:
2007 2006
#'000 #'000
Staff costs (including directors)
Wages and salaries 7,867 8,924
Share based payments 17 -
Social security costs 988 951
Other pension costs 64 26
8,936 9,901
Depreciation, amortisation and impairment
Owned assets 848 908
Assets held under finance leases - 13
Amortisation of goodwill 100 107
Amortisation of web publishing rights 141 141
Auditors' remuneration
Fees payable to the company's auditor for the audit of the parent
company and consolidated accounts
58 55
Fees payable to the company's auditor and its associates for other
services:
The audit of the company's subsidiaries pursuant to legislation 5 5
Other services pursuant to legislation 12 -
Tax services 22 -
Operating lease rentals
Other (land and buildings) 1,492 1,174
Plant and machinery 74 112
Release of credit balances (428) (148)
The Board regularly reviews and assesses the appropriateness of credit balances
held on the balance sheet. In the year, this review resulted in the release of
#428,000 (2006: #148,000)
3. Exceptional items
The following have been identified as exceptional items and disclosed separately
on the face of the profit and loss account:
Exceptional items 2007 2006
#'000 #'000
Property provisions 603 523
Write-off of leasehold improvements associated with onerous - (369)
leases
Write down of Indian fixed assets (81) -
Tax exposure on India employees (101) -
Costs associated with potential offer (44) -
Redundancy costs and compensation for loss of office (580) -
(203) 154
Closure of joint venture - (57)
Profit on disposal of business - 51
Due to the surrender, letting and recalculation of the required property
provision an exceptional release of #603,000 has been made. The release mainly
comprises #187,000 for the surrender of Edgware Road. The fourth floor of Goodge
Street has been let for the remainder of the term at the current rent. Therefore
the remaining provision for this floor of #257,000 has been released.
As the Indian undertaking has been sold post year end we have reviewed the
carrying value of the Indian assets on the balance sheet and provided #81,000
against these assets. The assets relate to software licences. In addition a
provision of #101,000 has been made for personal tax liability of employees in
India. A claim is to be pursued against the individuals to reclaim this tax.
The costs for the potential offer for the Company relate to adviser fees and
legal costs.
Leasehold improvements were undertaken to improve the potential letting ability
of the non-operational properties and accordingly the ascertained costs have
therefore been written off.
In 2006 the Board decided to discontinue its joint venture with its partner and
closed this business down. A one-off charge has been made of outstanding loans
made to the joint venture company. #57,000 has been written off.
The profit on disposal of business relates to deferred consideration on disposal
of Debrett's in 2005 which has been adjusted to reflect the estimated amount
receivable, resulting in a #51,000 credit to the profit and loss account.
4. Number of employees
The average monthly number of persons, including executive directors, employed
by the Group during the year was as follows:
2006 2006
Number Number
Sales 147 162
Production, editorial and administrative 174 202
Total 321 364
5. Net interest payable
2007 2006
#'000 #'000
Interest payable
Interest on finance leases (2) (5)
Unwinding of discount on property provisions (114) (168)
(116) (173)
Interest receivable
Bank interest 82 21
Total (34) (152)
The unwinding of the discount on the property provisions calculates a nominal
interest charge on the property provision made. This is not a cash charge and
will fall as the provision is either released or utilised.
6. Tax charge
2007 2006
#'000 #'000
UK corporation tax at 30% (2005: 30%) - -
Foreign taxation (2) -
Deferred taxation (note 11) - -
(2) -
The current tax charge is reconciled to the standard corporation tax rate
applicable in the UK as follows:
2007 2006
#'000 #'000
Profit/(loss) on ordinary activities before tax 256 1,344
Corporation tax at 30% (2005: 30%) 77 403
Effects of:
Prior year adjustment for basis of work-in-progress - (1,329)
Expenses not deductible for tax purposes 14 57
Excess of capital allowances over depreciation of eligible 87 195
assets
Reduction in rate due to foreign reliefs - (35)
Utilisation of losses brought forward (331) -
Losses carried forward 46 694
General bad debt provision - (71)
Amortisation of goodwill 70 73
Associate losses not utilised 37 13
Foreign tax (2) -
(2) -
The 2007 budget, announced by the Chancellor of the Exchequer on 21 March 2007,
reduced the rate of UK corporation tax from 30% to 28% with effect from 1 April
2008. There is no impact on the 2007 Financial statements.
7. Earnings per share
The earnings per share of 0.30p (2006: 1.59p) and the diluted earnings per share
of 0.30p (2006: 1.58p) have been calculated on the attributable profit to
shareholders of #0.3 million (2006: #1.3million).
The weighted average number of shares in issue during the period (excluding
those held by the Group's Employee Benefit Trust) were:
2007 2006
Number Number
'000 '000
Total number of shares 85,857 85,857
Shares held in employee benefit trust (1,214) (1,214)
Basic number of shares 84,643 84,643
Dilutive effect of share options 74 376
Diluted number of shares 84,717 85,019
8. Intangible assets
Goodwill Website Total
publishing
rights and other
intangible fixed
assets
#'000 #'000 #'000
Group
Cost
At 1 April 2006 and 31 March 2007 2,306 10,539 12,845
Amortisation/permanent diminution
At 1 April 2006 (838) (7,848) (8,686)
Charge for the year (100) (141) (241)
At 31 March 2007 (938) (7,989) (8,927)
Net book value
At 31 March 2007 1,368 2,550 3,918
At 31 March 2006 1,468 2,691 4,159
Goodwill, being the excess of the consideration paid over the fair value
attributed to net assets acquired, relates to the acquisitions of Net Resources
International Limited and Vision in Business Limited.
The carrying value of the publishing rights relate to fair value of the websites
acquired with Net Resources International Limited.
9. Tangible fixed assets
Short-term Equipment, Total
leasehold vehicles
premises fixtures and
fittings
#'000 #'000 #'000
Group
Cost
At 1 April 2006 263 4,046 4,309
Additions - 341 341
Disposals - (134) (134)
Impairment of assets held in India - (81) (81)
Assets written off - (1,754) (1,835)
At 31 March 2007 263 2,418 2,681
Depreciation
At 1 April 2006 (76) (2,643) (2,719)
Charge for the year (38) (810) (848)
Depreciation written off - 68 68
Assets written off - 1,754 1,754
At 31 March 2007 (114) (1,631) (1,745)
Net book value
At 31 March 2007 149 787 936
At 31 March 2006 187 1,403 1,590
The net book value assets held under finance leases and hire purchase contracts
included in tangible fixed assets in the Group was #nil (2006: #60,000). The
depreciation charge on these assets in the year was #nil (2006: #13,000).
10. Debtors
Group
2007 2006
#'000 #'000
Trade debtors 3,494 4,179
Other debtors 66 234
Prepayments and accrued income 544 448
4,104 4,861
11. Deferred taxation
The Group has a unrecognised potential deferred tax asset at the year end
comprising:.
Group
Provided Unprovided
2007 2006 2007 2006
#'000 #'000 #'000 #'000
General bad debt provisions - - 51 76
Excess capital allowances over depreciation - - 211 110
Losses - - 1,940 2,157
Capital losses - - 4,573 4,583
- - 6,775 6,926
12. Creditors - amounts falling due within one year
Group
2007 2006
#'000 #'000
Net obligations under finance - 8
leases
Trade creditors 398 139
Other taxes and social security 527 268
costs
Other creditors 1,308 1,728
Accruals and deferred income 5,792 5,929
8,025 8,072
13. Creditors - amounts falling due after more than one year
Group
2007 2006
#'000 #'000
Net obligations under finance leases - 39
- 39
14. Provision for liabilities
#'000
Group
At 1 April 2006 2,280
Utilised in year (634)
Release in the year (603)
Unwinding of discount (see note 6) 114
At 31 March 2007 1,157
Provision has been made for the net present value of future residual leasehold
commitments. This provision has been calculated making assumptions on future
rental income, market rents, insurance and rates this has then been discounted
using a discount rate of 5.0% per annum. As these are estimates this provision
cannot be known with certainty. During the year we surrendered the lease for
Edgware Road which had been empty for a number of years this allowed us to
release the provision for this property of #206,000. This surrender will also
save the Group cash flow of approximately #100,000. The subletting of the vacant
floors at Goodge Street, London allowed a release of #397,000.
The provision will be utilised over the term of the relevant leases and falls
within the following periods:
#'000
Group
Less than one year 290
Between two and five years 750
More than five years 117
Total 1,157
15. Financial assets and liabilities
The Group does not have any material exposure to interest rate, liquidity or
currency risks. The Group has cash balances, committed overdraft facilities if
required and conducts the majority of its business in sterling. The Group does
not use any swap or hedge instruments. Cash deposits are held on term notice or
placed with the money market. Interest is earned by reference to inter-bank
rates.
During the year the company funded its subsidiary, SPG India Private Limited, on
an imprest basis on a monthly cycle. Since the disposal of SPG India Private
Limited no further funding is required. The remaining employees based in India
are paid directly from the UK.
The Group banking facility operates under a right of set-off agreement for each
balance and each currency.
Short-term debtors and creditors have been excluded from the following
disclosures.
The fair value of the financial assets is not materially different to the
carrying value.
Financial assets: floating rate
2007 2006
#'000 #'000
EUR 35 3
USD 52 (7)
Indian Rupees 11 92
Total 98 88
Interest on floating-rate bank deposits is based on the inter-bank rate and may
be fixed for up to one month. The balance held on deposit for one month at the
year end was #2.8 million (2006: #2.0 million).
16. Obligations under finance leases
Obligations under finance leases net of finance charges allocated to future
periods are as follows:
2007 2006
#'000 #'000
Less than one year - 8
Between two and five years - 39
Total - 47
17. Operating leases
Non-cancellable operating lease rentals are payable as follows:
2007 2006
#'000 #'000
Land and buildings
Less than one year 61 57
Between two and five years - 201
More than five years 1,221 1,181
Total 1,272 1,439
Other
Less than one year 40 56
Between two and five years 9 -
Total 49 56
18. Share capital
2007 2006 2007 2006
Number Number
'000 '000 #'000 #'000
Authorised
Ordinary shares of 5p each 223,754 223,754 11,188 11,188
Redeemable deferred shares of 1p each 535,621 535,621 5,356 5,356
At 31 March 16,544 16,544
Allotted and fully paid
Ordinary shares of 5p each 85,857 85,857 4,293 4,293
There are outstanding options over ordinary shares granted to executives and
employees as shown in the following table:
Number of options
Scheme Date of 1 April Granted Exercised/ 31 March Exercise Date from Expiry date
grant 2006 during the lapsed during 2007 price which
year the year exercisable
1996 07/07/1998 15,000 - - 15,000 15.00p 08/07/2001 06/07/2008
1996 06/07/1999 125,000 - - 125,000 33.00p 07/07/2002 05/07/2009
1996 15/12/1999 86,000 - (21,000) 65,000 76.50p 16/12/2002 14/12/2009
2000 10/03/2000 1,333,335 - - 1,333,335 116.50p 10/03/2000 09/03/2010
1996 07/07/2000 200,000 - (100,000) 100,000 132.50p 08/07/2003 06/07/2010
1996 24/11/2000 70,000 - - 70,000 135.00p 25/11/2003 23/11/2010
1996 20/12/2002 90,000 - (30,000) 60,000 11.25p 21/12/2005 19/12/2012
2003 09/12/2003 1,535,708 - (1,535,708) - 13.25p 10/12/2006 08/12/2013
2003 25/07/2004 150,000 - - 150,000 12.00p 26/07/2007 24/07/2014
2003 26/07/2004 244,292 - (144,292) 100,000 12.00p 27/07/2007 27/07/2014
2003 01/07/2005 1,075,000 - (575,000) 500,000 7.12p 02/07/2008 30/06/2015
2003 05/09/2005 2,500,000 - - 2,500,000 8.20p 06/09/2008 04/09/2015
2003 21/09/2005 50,000 - - 50,000 10.25p 22/09/2008 20/09/2015
2003 10/10/2005 250,000 - (250,000) - 9.42p 11/10/2008 09/10/2015
2003 10/02/2006 250,000 - (250,000) - 10.87p 11/02/2009 09/02/2016
2003 01/04/2006 - 50,000 - 50,000 11.00p 02/04/2009 31/03/2016
2003 06/03/2007 - 3,300,000 - 3,300,000 6.00p 07/03/2010 05/03/2017
7,974,335 3,350,000 (2,906,000) 8,418,335
The Group operates three share option schemes. Under the terms of the Sterling
Publishing Group 1996 Scheme ("1996"), options may only be exercised provided
the average annual growth in earnings per share over a three-year period exceeds
inflation by at least 2%.
The Sterling Publishing Group 2000 Scheme ("2000") was approved to grant options
by way of compensation for rights given up under the long term incentive plan.
The options were exercisable as to 40% immediately, 35% after one year (10 March
2001) and 25% after two years (10 March 2002). 50 of the share options are
subject to a requirement that average earnings per share over a three year
period exceed inflation by at least 2%. Provision also exists for option holders
to receive the cash equivalent of the excess of the market price of shares over
the option exercise price in the event of a general offer for the shares in the
Company. No further options may be granted under this scheme.
The third scheme is the Sterling Publishing Group 2003 Scheme ("2003") approved
by shareholders on 28 July 2003 and excludes the awards made under the 2000
scheme from the calculation of limits of share options to be awarded. Option
granted under the 2003 scheme are subject to the requirement that earnings per
share grow at an annual rate of the increase in the retail price index plus
either 5% (where the market value of the options granted is less than or equal
to 50% of the recipients salary) or 8% (where the market value of the options
granted is greater than 50% of the recipients salary).
Apart from the 2000 scheme, all employees including directors are eligible to
participate in the share option schemes. No awards have been made under the 1996
scheme since December 2005.
The fair value of options granted on 1 April 2006 and 6 March 2007 determined
using the Black-Scholes valuation model was 4.32 pence and 2.59 pence per option
respectively (2006: nil pence per option). The significant inputs into the model
were the share price at the date of grant, exercise prices of 11.00 pence and
6.00 pence, volatility 52.05% and 58.89% respectively (as measured on the
statistical analysis of weekly share prices over the previous three years from
the date of grant), expected option life of three years and an annual risk-free
interest rate of 4.5%.
19. Statement of movement on reserves
Share Capital Other Profit and
premium redemption reserves loss account
reserve
#'000 #'000 #'000 #'000
Group
At 31 March 2006 7,262 7,874 733 (17,614)
Retained profit for the year - - - 254
Share based payments - - - 17
Exchange rate differences - - - (4)
At 31 March 2007 7,262 7,874 733 (17,347)
At the 31 March 2007, the Group's EBT held 1,214,395 Ordinary Shares in the
Company. The historical cost of the Ordinary Shares is #1,755,000. Under UITF 38
this has been set off against the profit and loss account. In prior years this
was shown as a separate reserve.
20. Contingent liabilities
All the companies within the Group, with the exception of SPG Media Private
Limited, are subject to a right of set-off agreement with Lloyds TSB plc. As the
Group has no borrowings there is no contingent liability existing under any
banking arrangements at 31 March 2007 (2006: #nil).
21. Capital commitments
There were no capital commitments at 31 March 2007 (2006: #nil).
22. Reconciliation of operating loss to net cash inflow from operating
activities
2007 2006
#'000 #'000
Operating profit
- Group 290 1,546
Amortisation of goodwill 241 248
Depreciation of tangible fixed assets 848 921
Share based payment 17 -
Loss on disposal of tangible fixed assets 26 -
Write-off of tangible fixed assets 81 -
Write-off of leasehold improvements - 369
Decrease/(increase) in debtors 757 (511)
Write-off of joint venture investment - (47)
(Decrease)/increase in creditors (43) 908
Movement in provision for liabilities and (1,236) (1,235)
charges
Net cash inflow from operating activities 981 2,199
23. Analysis of net funds
1 April 2006 Cash flow 31 March 2007
#'000 #'000 #'000
Cash at bank and in hand 2,329 710 3,039
Finance leases (47) 47 -
Net funds 2,282 757 3,039
24. Post balance sheet event
On 14 May heads of agreement were signed with Visage Media Private Limited
whereby Visage would purchase the share capital and assets of SPG Media India
Private Limited. The consideration is $100,000 (United States dollars). As
result the carrying value of the assets held in the consolidated balance sheet
were reviewed for the year ended 31 March 2007 and an impairment provision of
#81,000 was made against these assets.
Preliminary results
These unaudited preliminary results do not constitute statutory accounts. The
preliminary results for the year ended 31 March 2006 are extracted from the
unaudited Group's accounts for the year. Those financial statements have not
yet been delivered to the Registrar of Companies, nor have the auditors yet
reported on them.
These preliminary results have been prepared on the basis of the accounting
policies set out in the Company's 2006 statutory accounts, apart from the change
of accounting policy relating to work-in-progress as explained in note 8.
Copies of the directors' report and the audited financial statements for the
year ended 31 March 2006 will be posted to shareholders on 13 June 2007 and may
be obtained from the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKNKNFBKDNAD
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