TIDMTWE
RNS Number : 4087J
Twenty PLC
30 June 2011
30 June 2011
TWENTY PLC
(AIM: TWE)
FINAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2010
The Board of Twenty Plc ('Twenty' or 'the Group'), an investment
vehicle focusing on the marketing services sector, announces its
final results for the year ended 31 December 2010.
The Annual Report is available for downloading from the
Company's website www.twentyplc.com.
Enquiries:
Twenty Plc Tel: 01908 329800
Ian Lancaster, Chief Executive
www.twentyplc.com
Daniel Stewart Tel: 020 7776 6550
Noelle Greenaway
Paul Shackleton
Chairman's Statement
The sale of the Group's largest subsidiary, DF Property
Portfolio Limited (formerly Dataforce Group Limited) in May 2010,
was the defining corporate event in 2010. The total consideration
was GBP7.69m of which GBP6.19m was received on completion. This
allowed all borrowings to be repaid and provided additional working
capital.
Since then the strategy has been to focus on the faster growing
Customer Intelligence, Data, Database Development and E-commerce
products, but the 2010 results are disappointing because progress
has been much slower than expected.
The Board does not recommend payment of a dividend.The Group is
soundly financed, but due to its small size, the Board is
evaluating a number of strategic options.
During the year there were two Board changes. Rob Unsworth
joined the Board in January 2010 as financial non-executive
director and Prof. Martin Clarke resigned from the Board in March
after five years of good service.
I would like to use the occasion of this annual report to pay
tribute to the hard work of the Twenty Plc staff. I would also like
to thank our shareholders for their tremendous support and patience
throughout this difficult period.
Mark Patron
Non-Executive Chairman
30 June 2011
Registered Office:
9-23 St Andrew Street
London EC4A 3AF
Principal Place of Business:
249 Midsummer Boulevard
Milton Keynes
MK9 1EA
Chief Executive's Report
Introduction
The Group was restructured during 2010 with a major disposal of
the largest component of the Dataforce business incorporating the
Contact Centre, Fulfilment and BPO Outsourcing, under the brand
Dataforce Interact, at a good price.
The Group disposed of DF Property Portfolio Limited (formerly
Dataforce Group Limited) in May 2010 for a total consideration of
GBP7.69m, of which GBP6.19m was received on completion, allowing
all bank and other indebtedness to be repaid in full and to provide
additional working capital.
The Group's remaining businesses are both much smaller than
Dataforce Interact. The data analytics and hosting business has
been re-branded TwentyCi, and the web business has been re-branded
TwentyWeb. The Moving Service Limited, a fledgling home mover data
business, was acquired in January 2010 and has been re-branded
TwentyData. Our product strategy has been to focus on the faster
growing Customer Intelligence, Data, Database Development and
E-commerce product segments.
The acquisition of the Moving Service business has also enabled
us to consolidate our relationship with one of our major clients,
The Royal Mail Group, where we have an exclusive relationship to
broker their unique data into the Utilities and Insurance segments.
The Moving Service business has been fully integrated with the
existing site in Milton Keynes, but the speed of sales growth of
the data has been slower than we had predicted.
Financial Performance
The results for the period include DF Property Portfolio Limited
and its subsidiary Dataforce Interact Limited for the period from 1
January 2010 to 18 May 2010, when the company was sold. In
addition, the results include The Moving Service Limited from 29
January 2010, the date of acquisition. Under the provisions of IFRS
5 the comparative results for the year ended 31 December 2009 have
been restated to reflect the continuing operations and discontinued
operations following the disposal of DF Property Portfolio Limited
in May 2010.
Corporate activity
The most significant event during the period under review was
the disposal of DF Property Portfolio Limited and its subsidiary
Dataforce Interact Limited. This business encompassed the call
centre, fulfilment and business process outsourcing operations,
based in Northampton. Following adjustments for working capital
movements, the net initial consideration received was GBP6.19m.
The sale allowed us to pay off bank debt and invoice financing
balances amounting to GBP2.4m, together with strengthening the
working capital position of the company. Deferred consideration on
the sale was originally agreed at GBP2.95m payable over the two
years following the completion. However, following the purchaser
issuing a warranty claim the board agreed to amend the deferred
consideration to GBP1.5m payable over the period to 31 December
2012. Following the amendment to the deferred consideration, the
profit on the sale was GBP0.73m.
On 29 January 2010, The Moving Service Limited was acquired for
a nominal consideration of GBP1 plus estimated deferred
consideration of GBP0.04m. Net assets acquired were GBP0.19m, of
which GBP0.16m was cash. In addition, the vendors invested GBP0.18m
in Twenty Plc at a price of 7.2p per share. During the period the
acquired business returned an operating loss after allocation of
corporate costs of GBP0.76m. The business has been significantly
restructured and integrated into the Milton Keynes site.
On 26 July 2010 475,000 ordinary 0.1p shares with a nominal
value of GBP475 were purchased from Andy Lee, a previous director,
for GBP15,922 and subsequently cancelled. The percentage of the
called up capital which these shares represent was 0.8%.
Trading performance
For the full year we report a loss of GBP6.34m. Following the
sale of DF Property Portfolio Limited, the loss on continuing
operations was GBP6.70m, compared to prior year loss of GBP1.72m.
Current year's results include the following:
-- The Directors review the carrying value of goodwill annually
and based on current year performance and future forecasts the
directors have taken the decision to impair the value of goodwill
in full. This has resulted in a charge to the Income Statement of
GBP4.85m.
-- The Directors have also reviewed the carrying value of fixed
assets that are obsolete as a result of the restructure of the
Group and have therefore written down the net book value on these
assets incurring a one off charge of GBP0.08m.
Before the inclusion of The Moving Service Limited, unallocated
corporate expenses and goodwill impairment charge, the Data
Services and E-Commerce business reflected a decline in EBIT during
the period of GBP0.17m, increasing the segment loss for the period
to GBP0.59m. Sales in the period saw a reduction of GBP1.0m
reflecting 28%, and largely as a result of lost clients due to the
economic downturn not being replaced. Although sales fell by
GBP1.0m, the cost base was rationalised in order to minimise any
significant increase in the loss.
The acquisition of The Moving Service Limited has allowed the
Group to extend its product offering into data sales relating to
home move trigger. By acquiring The Moving Service Limited we were
able to extend our relationship with Royal Mail by winning the
contract to resell Royal Mail's redirectional data to the utilities
sector. This contract has now been extended to include the
insurance sector. Despite dramatically restructuring the business
during the period, the revenues generated from the sale of data
have had a disappointing start and delivered well below the Board's
expectations. Loss per share was (11.12p) (2009: loss per share
(0.79p)). Adjusted EPS was a loss per share of (4.03p) (2009:
adjusted earnings per share of 0.10p).
The Group had net cash inflow of GBP0.27m (2009: GBP0.44m)
during the period.
Cash at the end of the period was GBP0.74m (2009: GBP0.47m).
At the balance sheet date, the Group had net current assets,
including cash, of GBP0.53m compared to net current liabilities
last year of GBP2.49m at 31 December 2009.
Current trading and outlook
Trading conditions remain very challenging in 2011 due to a
combination of the current economic climate and slower than
expected progress on the newly formed TwentyData business. The
rationalisation of the TwentyData business has seen sales decline
year on year as we have removed loss making activities. We have
continued to focus on cost control during recent months and have
reduced our cost base and expect to report an improved result in
our interims compared to 2010, albeit still a loss.
Ian Lancaster
Chief Executive
30 June 2011
Group Income Statement
For the year ended 31 December 2010
Restated
Year to Year to
31 December 31 December
2010 2009
GBP GBP
Continuing Operations
Revenue 3,158,246 3,624,588
Cost of sales (2,183,253) (1,980,314)
---------------------------------------------- ------------- -------------
Gross Profit 974,993 1,644,274
Administrative expenses (2,957,683) (3,170,153)
---------------------------------------------- ------------- -------------
Operating Loss pre-exceptional (1,982,690) (1,525,879)
Exceptional item - gain on acquisition
of The Moving Service Limited 152,633 -
Exceptional item - goodwill impairment (4,848,200) -
Operating Loss (6,678,257) (1,525,879)
Finance income 282 1
Finance costs (64,358) (202,977)
---------------------------------------------- ------------- -------------
Loss before Taxation (6,742,333) (1,728,855)
Taxation 38,893 12,562
---------------------------------------------- ------------- -------------
Loss for the year from continuing operations (6,703,440) (1,716,293)
---------------------------------------------- ------------- -------------
Discontinued Operations
Profit for the period from discontinued
operations 359,822 1,285,567
Loss for the period (6,343,618) (430,726)
---------------------------------------------- ------------- -------------
Attributable to:
Equity holders of the parent (6,343,618) (430,726)
---------------------------------------------- ------------- -------------
(6,343,618) (430,726)
---------------------------------------------- ------------- -------------
Earnings per share:
Basic and diluted earnings/(loss) per share
From continuing operations (11.75 p) (3.17 p)
From discontinued operations 0.63 p 2.38 p
---------------------------------------------- ------------- -------------
From total operations (11.12 p) (0.79)
p
---------------------------------------------- ------------- -------------
The comparative income statement has been restated to classify
operations discontinued during 2010 as required by IFRS 5.
The Group income statement for the year ended 31 December 2010
includes The Moving Service Limited for the 11 months from the date
of acquisition.
Group and Parent Company
Statements of Comprehensive Income
For the year ended 31 December 2010
Restated
Year to Year to
31 December 31 December
2010 2009
Group GBP GBP
Loss for the period from continuing operations (6,703,440) (1,716,293)
Profit from discontinued operations 359,822 1,285,567
Other comprehensive income - -
------------------------------------------------ ------------- -------------
Total comprehensive loss for the year (6,343,618) (430,726)
------------------------------------------------ ------------- -------------
Attributable to:
Equity holders of the parent (6,343,618) (430,726)
------------------------------------------------ ------------- -------------
(6,343,618) (430,726)
------------------------------------------------ ------------- -------------
Year to Year to
31 December 31 December
2010 2009
Company GBP GBP
(Loss)/profit for the year from continuing
operations (6,521,547) 2,204,836
Other comprehensive income - -
------------------------------------------------ ------------- -------------
Total comprehensive (loss)/profit for the
year (6,521,547) 2,204,836
------------------------------------------------ ------------- -------------
Attributable to:
Equity holders of the Company (6,521,547) 2,204,836
------------------------------------------------ ------------- -------------
(6,521,547) 2,204,836
------------------------------------------------ ------------- -------------
Group Statement of Financial Position
At 31 December 2010
Year to Year to
31 December 31 December
2010 2009
GBP GBP
Assets
Non-current assets
Property, plant and equipment 129,896 600,080
Goodwill - 10,730,273
Other debtors 685,714 -
Deferred tax - 129,017
---------------------------------- ------------- -------------
Total non-current assets 815,610 11,459,370
---------------------------------- ------------- -------------
Current assets
Trade and other receivables 1,598,009 1,892,936
Cash and cash equivalents 743,263 474,599
---------------------------------- ------------- -------------
Total current assets 2,341,272 2,367,535
---------------------------------- ------------- -------------
Total assets 3,156,882 13,826,905
---------------------------------- ------------- -------------
Equity and liabilities
Current liabilities
Trade and other payables 1,770,367 4,212,397
Obligations under finance leases 40,540 165,415
Current tax liabilities - 43,180
Borrowings - 433,332
---------------------------------- ------------- -------------
Total current liabilities 1,810,907 4,854,324
---------------------------------- ------------- -------------
Non-current liabilities
Borrowings - 1,213,407
Obligations under finance leases 20,299 240,622
---------------------------------- ------------- -------------
Total non-current liabilities 20,299 1,454,029
---------------------------------- ------------- -------------
Total liabilities 1,831,206 6,308,353
---------------------------------- ------------- -------------
Equity
Share capital 4,835,793 4,833,860
Share premium account 4,151,956 3,979,364
Capital redemption reserve 475 -
Share options reserve 70,753 79,089
Retained earnings (7,733,301) (1,373,761)
---------------------------------- ------------- -------------
Total equity 1,325,676 7,518,552
---------------------------------- ------------- -------------
Total equity & liabilities 3,156,882 13,826,905
---------------------------------- ------------- -------------
Approved and authorised for issue by the Board of Directors on
30 June 2011.
Ian Lancaster
Chief Executive
Company registration No. 5452424
Parent Company Statement of Financial Position
At 31 December 2010
Year to Year to
31 December 31 December
2010 2009
GBP GBP
Assets
Non-current assets
Investments - 22,048,602
Other debtors 685,714 -
Total non-current assets 685,714 22,048,602
Current assets
Trade and other receivables 993,501 17,111
Cash and cash equivalents 114,283 10,194
Total current assets 1,107,784 27,305
Total assets 1,793,498 22,075,907
Equity & liabilities
Current liabilities
Trade & other payables 188,838 12,453,703
Borrowings - 433,332
Total current liabilities 188,838 12,887,035
Non-current liabilities
Borrowings - 1,213,407
Total non-current liabilities - 1,213,407
Total liabilities 188,838 14,100,442
Equity
Share capital 4,835,793 4,833,860
Share premium account 4,151,956 3,979,364
Capital redemption reserve 475 -
Share options reserve 70,753 79,089
Retained earnings (7,454,317) (916,848)
Total equity 1,604,660 7,975,465
Total equity & liabilities 1,793,498 22,075,907
Approved and authorised for issue by the Board of Directorson 30
June 2011.
Ian Lancaster
Chief Executive
Company registration No. 5452424
Group & Parent Company Statements of Cash Flows
For the year ended 31 December 2010
Year to 31 December Year to 31 December
2010 2009
Group Company Group Company
GBP GBP GBP GBP
Cash flow from
operating activities
(Loss)/profit for the
period (6,343,618) (6,521,547) (430,726) 2,204,836
Adjustments for:
Finance income (282) - (1) -
Finance costs 64,358 211,719 202,977 106,494
Taxation 66,990 - 40,501 -
Depreciation of
property, plant and
equipment 236,673 - 624,753 -
Amortisation of
software development
costs - - 172,993 -
Impairment of goodwill 4,848,200 - - -
Impairment of
investments - 15,788,501 - -
Release of intercompany
loan balances - (9,053,813)
Share-based payment
(credit)/expense (8,336) (8,336) 10,458 10,458
Gain on acquisition of
subsidiary (152,633) - - -
Profit on disposal of
subsidiary (733,307) (741,891) - -
Dividend received - (472,364) - -
Loss/(gain) on disposal
of property, plant and
equipment 84,132 - (950) -
------------------------ ------------ ------------ ---------- ------------
4,405,795 5,723,816 1,050,731 116,952
------------------------ ------------ ------------ ---------- ------------
Operating cash flows
before movements in
working capital (1,937,823) (797,731) 620,005 2,321,788
------------------------ ------------ ------------ ---------- ------------
Decrease /(increase)
in receivables 142,262 (228,153) 1,414,949 43,475
Decrease in payables (1,976,510) (3,250,963) (654,441) (1,783,559)
------------------------ ------------ ------------ ---------- ------------
(1,834,248) (3,479,116) 760,508 (1,740,084)
------------------------ ------------ ------------ ---------- ------------
Cash (used)/generated
from operations (3,772,071) (4,276,847) 1,380,513 581,704
------------------------ ------------ ------------ ---------- ------------
Taxation paid (75,603) - (5,470)
------------------------ ------------ ------------ ---------- ------------
Net cash
(used)/generated from
operating activities (3,847,674) (4,276,847) 1,375,043 581,704
------------------------ ------------ ------------ ---------- ------------
Investing activities
Interest received 282 - 1 -
Proceeds on disposal
of property, plant and
equipment - - 950 -
Purchases of property,
plant and equipment (54,594) - (25,038) -
Receipts from disposal
of subsidiary
undertakings 6,180,836 6,180,836 - -
Costs associated with
disposal of subsidiary
undertakings (397,883) (397,883) - -
Investment in
subsidiary - (175,000) - -
Cash and cash
equivalents sold with
subsidiary (116,952) - - -
Acquisition of
subsidiary
undertakings (1) (1) - -
Cash and cash
equivalents acquired
with subsidiary 159,300 -
Net cash
generated/(used) in
investing activities 5,770,988 5,607,952 (24,087) -
------------------------ ------------ ------------ ---------- ------------
Financing activities
Interest paid (64,358) (211,719) (202,977) (106,494)
Dividend received - 472,364 - -
Repayments of
borrowings (1,646,739) (1,646,739) (467,892) (467,892)
Repayments of
obligations under
finance leases (102,631) - (244,215) -
Issue of new share
capital 175,000 175,000 - -
Buy back of shares (15,922) (15,922) - -
------------------------ ------------ ------------ ---------- ------------
Net cash used in
financing activities (1,654,650) (1,227,016) (915,084) (574,386)
------------------------ ------------ ------------ ---------- ------------
Net increase in cash
and cash equivalents 268,664 104,089 435,872 7,318
Cash and cash
equivalents at the
beginning of the year 474,599 10,194 38,727 2,876
------------------------ ------------ ------------ ---------- ------------
Cash and cash
equivalents at the end
of the year 743,263 114,283 474,599 10,194
------------------------ ------------ ------------ ---------- ------------
Group and Parent Company Statements of Changes in Equity
For the year ended 31 December 2010
Share Share Capital Retained
Share options premium redemption earnings
Group capital reserve account reserve (losses) Total
GBP GBP GBP GBP GBP GBP
At 1 January
2009 4,827,060 68,631 3,901,164 - (943,035) 7,853,820
Total
comprehensive
loss for the
year - - - - (430,726) (430,726)
Issue of new
share
capital 6,800 - 78,200 - - 85,000
Share options - 10,458 - - - 10,458
--------------- ---------- -------- ---------- ----------- ------------ ------------
At 31 December
2009 4,833,860 79,089 3,979,364 - (1,373,761) 7,518,552
Total
comprehensive
loss for the
year - - - - (6,343,618) (6,343,618)
Share buy back (475) - 475 (15,922) (15,922)
Issue of new
share
capital 2,408 - 172,592 - - 175,000
Share options - (8,336) - - - (8,336)
--------------- ---------- -------- ---------- ----------- ------------ ------------
At 31 December
2010 4,835,793 70,753 4,151,956 475 (7,733,301) 1,325,676
--------------- ---------- -------- ---------- ----------- ------------ ------------
Share Share Capital Retained
Share options premium redemption earnings
Company capital reserve account reserve (losses) Total
GBP GBP GBP GBP GBP GBP
At 1 January
2009 4,827,060 68,631 3,901,164 - (3,121,684) 5,675,171
Total
comprehensive
loss for the
year - - - - 2,204,836 2,204,836
Issue of new
share
capital 6,800 - 78,200 - - 85,000
Share options - 10,458 - - - 10,458
--------------- ---------- -------- ---------- ----------- ------------ ------------
At 31 December
2009 4,833,860 79,089 3,979,364 - (916,848) 7,975,465
Total
comprehensive
loss for the
year - - - - (6,521,547) (6,521,547)
Share buy back (475) - - 475 (15,922) (15,922)
Issue of new
share
capital 2,408 - 172,592 - - 175,000
Share options - (8,336) - - - (8,336)
--------------- ---------- -------- ---------- ----------- ------------ ------------
At 31 December
2010 4,835,793 70,753 4,151,956 475 (7,454,317) 1,604,660
--------------- ---------- -------- ---------- ----------- ------------ ------------
Twenty Plc is a public limited company incorporated and
domiciled in the UK and is listed on the Alternative Investment
Market (AIM). The addresses of its registered office and principal
place of business are disclosed in the introduction to the annual
report.
Accounting Policies The principal accounting
policies applied in the preparation of these
consolidated and company financial statements are
set out below. These policies have been applied
consistently to all the years presented unless
otherwise stated. a) Basis of preparation The
annual financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the European
Union, IFRIC interpretations and with those parts
of the Companies Act 2006 applicable to companies
reporting under IFRS. They have been prepared on
a consistent basis with the accounting policies
set out in this Annual Report and Accounts for
the year ended 31 December 2010. The preparation
of the financial statements requires management
to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the
year end and reported amounts of revenue and
expenses during the financial year. Actual
results could differ from the original estimates
and assumptions. New accounting standards being
applied starting on 1 January 2010 are as
follows: - IFRS 3 (2008) 'Business Combinations'
(Revised), IAS 27 (2008) 'Consolidated and
Separate Financial Statements' and IAS 28 (2008)
'Investments in Associates'. These standards,
effective for acquisitions taking place in
accounting periods beginning on or after 1 July
2009, have introduced a number of changes in the
accounting for business combinations when
acquiring a subsidiary or an associate. - IFRIC
9, 'Reassessment of embedded derivatives and IAS
39, Financial instruments: Recognition and
measurement', effective 1 July 2009. - IAS 1
(amendment), 'Presentation of financial
statements'. The amendment clarifies that the
potential settlement of a liability by the issue
of equity is not relevant to its classification
as current or non-current. - IAS 36 (amendment),
'Impairment of assets', effective 1 January 2010.
The amendment brings the standard in line with
IFRS 8 'Operating Segments'. - IFRS 5
(amendment), 'Non-current assets held for sale
and discontinued operations'. The amendment
clarifies disclosures to be made in respect of
disposal groups. The consolidated financial
information has been prepared under the
historical cost convention. Going Concern At the
balance sheet date the Group had net current
assets of GBP0.53m (2009: net current liabilities
GBP2.49m). On the completion of the sale of the
entire share capital of DF Property Portfolio
Limited and its wholly owned subsidiary Dataforce
Interact Limited on 18 May 2010 for an initial
consideration (after adjustments for net current
assets) of GBP6.31m the Group repaid all its
borrowings from the Bank of Scotland leaving the
Group in a significantly stronger financial
position. The continuing business of the Group
incurred a significant loss in the year to 31
December 2011, including an impairment charge of
GBP4.85m, and in response has undertaken a number
of cost cutting measures after the year end to
reduce further losses. On 23 June 2011, at a
meeting of the Board, the Directors reviewed and
approved the forecasted performance and cash
flows of the Group for the period to 31 December
2012. These incorporate the recent cost
reductions and the receipt of the remaining
deferred consideration of GBP1.5m over the period
to 31 December 2012, and on the basis of these
forecasts, the Directors consider that the Group
will be able to meet its obligations as they fall
due in the normal course of business. The
Directors consider the Group to be soundly
financed but, if necessary, further measures
would be taken to reduce costs further or enter
into financing arrangements as required. For
these reasons, the Directors consider it
appropriate to adopt the going concern basis in
preparing these Annual Accounts.
Critical accounting estimates and judgments The
preparation of financial information in
accordance with generally accepted accounting
practice, in the case of the Group being
International Financial Reporting Standards as
adopted by the European Union, requires the
directors to make estimates and judgments that
affect the reported amount of assets,
liabilities, income and expenditure and the
disclosures made in the financial statements.
Such estimates and judgments must be continually
evaluated based on historical experience and
other factors, including expectations of future
events. The significant judgments made by
management in applying the Group's accounting
policies as set out above, and the key sources of
estimation, were: Goodwill impairment The Group
tests goodwill annually for impairment, in
accordance with the accounting policies of the
Group. The value in use calculation requires the
Group to estimate the future cash flows expected
to arise from each cash generating unit and also
to estimate a suitable discount rate in order to
calculate the present values of the anticipated
future cash flows. Following the review of the
carrying value of goodwill in relation to
TwentyCi Limited, which acquired the trade and
assets of Twenty Web Limited, Emaginating Limited
and TwentyCi Central Services Limited in December
2010 as part of a group reorganisation, the Board
considered it necessary to impair the valuation
of goodwill fully in 2010. The key assumptions
for the value in use calculations are those
regarding the discount rates, growth rates and
expected changes to forecast profitability. These
assumptions have been revised in the year to take
account of the current economic environment.
Management estimates discount rates using pre-tax
rates that reflect the current market assessments
of the time value of money and the risks specific
to each cash generating unit. Future cash flows
are derived from the most recent financial
forecast for the next 18 months. Beyond that
period cash flows are extrapolated using a growth
rate of 2% over a period of 10 years. The rate
used to discount forecast future cash flows is
20% reflecting some uncertainty in the short term
economic environment.
Group segmental
analysis
The Directors consider that the Group's internal financial
reporting is organised along product and service lines and
therefore segmental information has been presented about business
segments. The segmental analysis of the Group's business was
derived from its principal activities as set out below. The
information below also comprises the disclosures required
by IFRS 8 in respect of products and services as the Directors
consider that the products and services sold by the disclosed
segments are essentially similar and therefore no additional
disclosure in respect of products and services is required.
No single customer represents more than 10% of the total Group
revenues.
Reportable
segments
The reportable segment results for the year ended 31
December 2010 are as follows :
Analytical
CRM &
Data Data Year ended
Services Sales E-Commerce 31.12.2010
GBP GBP GBP GBP
Revenue 2,048,857 572,691 536,698 3,158,246
Cost of sales (1,043,972) (758,265) (381,016) (2,183,253)
-------------------------- ------------ ---------- ----------- -------------- -----
Gross profit 1,004,885 (185,574) 155,682 974,993
Administrative expenses (1,252,841) (490,326) (122,367) (1,865,534)
-------------------------- ------------ ---------- ----------- -------------- -----
Segment result before
allocated corporate
expenses (247,956) (675,900) 33,315 (890,541)
Allocated corporate
expenses (301,451) (83,417) (78,174) (463,042)
-------------------------- ------------ ---------- ----------- -------------- -----
Segment result after
allocated corporate
expenses (549,407) (759,317) (44,859) (1,353,583)
Gain on acquisition of
The Moving Service Ltd 152,633
Impairment of goodwill (4,848,200)
Unallocated corporate
expenses (258,794)
Corporate expenses
previously allocated to
discontinued operations (370,313)
Operating loss (6,678,257)
Finance income 282
Finance costs (64,358)
-------------------------- ------------ ---------- ----------- -------------- -----
Loss before taxation (6,742,333)
Taxation 38,893
-------------------------- ------------ ---------- ----------- -------------- -----
Loss for the period (6,703,440)
-------------------------- ------------ ---------- ----------- -------------- -----
The reportable segment results for the year ended 31
December 2009 are as follows :
Analytical
CRM & Restated
Data Data Year ended
Services Sales E-Commerce 31.12.2009
GBP GBP GBP GBP
Revenue 2,937,036 - 687,552 3,624,588
Cost of sales (1,536,338) - (443,976) (1,980,314)
---------------------------- ------------ ------- ----------- ------------
Gross profit 1,400,698 - 243,576 1,644,274
Administrative expenses (1,239,331) - (303,739) (1,543,070)
Readers Digest bad
debt provision (163,693) - - (163,693)
Write off obsolete
assets (56,772) - - (56,772)
Impairment of capitalised
software - - (94,226) (94,226)
---------------------------- ------------ ------- ----------- ------------
Segment result before
allocated corporate
expenses (59,098) - (154,389) (213,487)
Allocated corporate
expenses (173,968) - (40,728) (214,696)
---------------------------- ------------ ------- ----------- ------------
Segment result after
allocated corporate
expenses (233,066) - (195,117) (428,183)
Unallocated corporate
expenses (567,353)
Corporate expenses
previously allocated to
discontinued operations (530,343)
---------------------------- ------------ ------- ----------- ------------
Operating loss (1,525,879)
Finance income 1
Finance costs (202,977)
---------------------------- ------------ ------- ----------- ------------
Loss before taxation (1,728,855)
Taxation 12,562
---------------------------- ------------ ------- ----------- ------------
Loss for the period (1,716,293)
---------------------------- ------------ ------- ----------- ------------
In accordance with IFRS 8, segmented information is presented
based on the way in which financial information is reported
internally to the chief operating decision maker. The Group
has determined its reportable segments in accordance with
IFRS 8.
Analytical CRM
Provision of marketing platform design, development and support
and customer data analytical services.
E-Commerce
Design, development and support of client's e-commerce platforms.
Data Sales
The collection and sale of data relating to home move services.
Administrative expenses are allocated to segments where they
are directly attributable. All revenue and profit has been
generated solely within the United Kingdom.
In August 2009 the Dataforce business was restructured and
costs not specifically attributable to Dataforce Interact
or TwentyCi have been included in TwentyCi Central Services.
These costs have been allocated to segments in proportion
to revenue.
The Group reports assets and liabilities internally on a statutory
entity basis and therefore has not reported on assets and
liabilities by segment.
Discontinued Operations
2010 2009
GBP GBP
Revenue 2,542,348 8,092,622
Cost of sales (1,270,501) (4,145,017)
----------------------------------------------- ------------ ------------
Gross Profit 1,271,847 3,947,605
----------------------------------------------- ------------ ------------
Administrative expenses (894,455) (2,608,975)
Administrative expenses associated with
disposal (644,994)
----------------------------------------------- ------------ ------------
(Loss)/profit before taxation (267,602) 1,338,630
----------------------------------------------- ------------ ------------
Taxation (105,883) (53,063)
(Loss)/profit for the period from discontinued
operations (373,485) 1,285,567
----------------------------------------------- ------------ ------------
Pretax gain recognised on the sale of
discontinued operations 733,307 -
Taxation - -
After tax gain recognised on the sale of
discontinued operations 733,307 -
Profit for the period from discontinued
operations 359,822 1,285,567
----------------------------------------------- ------------ ------------
Cashflows
Cash generated from operations 44,375
Administrative expenses associated with
disposal (644,994)
Taxation paid (95,326)
Net cash used in operating activities (695,945)
Net cash used in investing activities (10,031)
Net cash used in financing activities (43,252)
Net decrease in cash and cash equivalents (749,228)
------------
No cash flow statement can be prepared for the previous year
as the operations were combined before a corporate restructure
on 31 July 2009 and the cash flows arising before this date
cannot be separated for reporting purposes.
Earnings per share
The calculation of the basic and diluted
earnings per share attributable to the
ordinary equity holders of the company is
based on the following data:
Year to Year to
31.12.2010 31.12.2009
GBP GBP
Loss for the purposes of basic earnings
per share (6,343,618) (430,726)
----------------------------------------------- ------------ ------------
Goodwill impairment 4,848,200 -
Gain on acquisition of The Moving Service
Limited (152,633) -
Profit on sale of subsidiary (733,307)
Write off obsolete assets 84,132 160,190
Write off software development costs - 94,256
Bad debt provision - 163,693
Excess property costs - 67,869
(Loss)/earnings for the purposes of adjusted
basic earnings per share (2,297,226) 55,282
----------------------------------------------- ------------ ------------
Year to Year to
31.12.2010 31.12.2009
No. No.
Number of shares
Weighted average number of ordinary shares 57,067,504 54,213,614
Basic and diluted loss per Share (in pence) (11.12) (0.79)
Adjusted basic (loss)/earnings per share
(in pence) (4.03) 0.10
No potential ordinary shares were considered to be issuable
as the exercise price of share options and warrants was above
the average share price during the period.
Acquisition of Subsidiaries
The Moving Service Limited On 29 January 2010 the Group acquired
100% of the issued capital of The Moving Service Limited for a
consideration of GBP39,912, obtaining control of The Moving
Service Limited. GBP1 was paid in cash at the date of acquisition
and the remainder will be paid by the issue of new shares in the
company based on the achievement of revenue targets in the period
to 31 December 2015 as follows. The additional shares would only
be issued if The Moving Service achieves: -- a revenue of GBP2m
in a financial year, in which case a further 1% of equity is
earned by the Vendors, -- a revenue of GBP3m in a financial year,
in which case a further 2.5% of equity is earned by the Vendors,
-- a revenue of GBP4m in a financial year, in which case a
further 2.31% of equity is earned by the Vendors. The issue of
further shares in Twenty is capped at 5.81% of equity in Twenty
Plc within the period to December 2015. In the event that the
revenues of The Moving Service exceed GBP5m in a financial year
within the period to December 2015, Twenty may at its option: --
issue a further 1% of equity for each GBP1m of revenue in excess
of GBP5m at a subscription price of 7.2p per share. The revenue
target is incremental in that following the achievement of the
GBP5m revenue target in a financial year, further shares would
only be issued in relation to subsequent financial years if the
revenue exceeds GBP5m and the highest amount of revenue in the
prior financial years in the period from Completion to December
2015. The number of further shares in Twenty that can be issued
is capped at 10% of the issued share capital of Twenty Plc at the
time of issue and is subject to the revenues of The Moving
Service reaching GBP15m in a financial year within the period to
December 2015; or -- pay a cash sum to the Vendors of GBP150,000
for each GBP1m of revenues in excess of GBP5m. Again, the revenue
target is incremental in that following the achievement of the
GBP5m revenue target in a financial year, further cash would only
be payable in relation to subsequent financial years if the
revenue exceeds GBP5m and the highest amount of revenue in the
prior financial years in the period from Completion to December
2015. At the date of acquisition, the directors estimated that
the deferred consideration would be the issue of 2.14m ordinary
shares representing 3.5% of the ordinary shares in issue. This
deferred contingent consideration is valued at the share price on
the date of acquisition. The subsidiary acquires data relating to
home movers and sells to companies who wish to market to
customers relating to home move products and services. The
acquisition allowed the Group to extend its product offering as
well as extend its existing relationship with Royal Mail, where
subsequent to the acquisition; the Group won the contract to sell
Royal Mail's redirectional data to the utility and insurance
sectors.
Acquiree's
carrying
amount
before Fair value
combination adjustments Fair value
GBP GBP GBP
Net Assets acquired
Property, plant and equipment 39,958 - 39,958
Trade and other receivables 159,564 - 159,564
Trade and other payables (166,277) - (166,277)
Cash 159,300 - 159,300
--------------------------------- ------------ ------------ ------------
Net Assets 192,545 - 192,545
--------------------------------- ------------ ------------ ------------
The consideration for the acquisition and
the profit arising on the acquisition are
as follows :
Consideration 1
Deferred contingent
consideration 39,911
--------------------------------- ------------ ------------ ------------
39,912
Gain on acquisition 152,633
--------------------------------- ------------ ------------ ------------
No intangible assets were acquired with the company.
At the time of acquisition Twenty Plc invested a further GBP175,000
in equity in The Moving Service Limited to fund working capital.
The fair value of the financial assets acquired includes trade
receivables with a fair value of GBP77,757 and a gross contractual
value of GBP77,757. The best estimate at acquisition date
of the contractual cash flows not to be collected is GBPnil.
The remaining other receivables relate to prepayments and
deferred income with a fair value of GBP77,593 at the date
of acquisition.
Costs associated with the acquisition amounted to GBP20,000
and are included within administrative expenses in the income
statement.
Revenue in the period from acquisition to 31 December 2010
was GBP0.57m with an operating loss after allocation of corporate
expenses of GBP0.76m
If the acquisition had been completed on 1 January 2010, total
revenue from continuing operations would have been GBP3.21m
and the loss for the Group for the period (after tax) would
have been GBP6.46m.
Total Total
Goodwill 2010 2009
GBP GBP
Cost
At 1 January 11,553,604 11,553,604
Disposals (5,882,073) -
--------------------------------------------------- ------------ -----------
At 31 December 5,671,531 11,553,604
--------------------------------------------------- ------------ -----------
Impairment
At 1 January (823,331) (823,331)
Impairment loss recognised in the year (4,848,200) -
--------------------------------------------------- ------------ -----------
At 31 December (5,671,531) (823,331)
--------------------------------------------------- ------------ -----------
Net Book Value
--------------------------------------------------- ------------ -----------
At 31 December - 10,730,273
--------------------------------------------------- ------------ -----------
The disposal of goodwill relates to the sale of DF Property
Portfolio Limited on 18 May 2010.
The goodwill impairment charge for 2010 arose in respect
of TwentyCi Limited, which acquired the trade and assets
of Twenty Web Limited, Emaginating Limited and TwentyCi Central
Services Limited in December 2010 as part of a group reorganisation.
The directors test annually for impairment by calculating
the value in use of each cash generating unit using discounted
cash flow techniques and comparing this to the carrying amount
of goodwill. Due to the declining performance of TwentyCi
Limited the value in use calculation did not support the
carrying value of goodwill and the resulting impairment has
been charged to the income statement.
The key assumptions for the value in use calculations are
those regarding the discount rates, growth rates and expected
changes to forecast profitability. These assumptions have
been revised in the year to take account of the current economic
environment. Management estimates discount rates using pre-tax
rates that reflect the current market assessments of the
time value of money and the risks specific to each cash generating
unit.
Future cash flows are derived from the most recent financial
forecast for the next 18 months. Beyond that period cash
flows are extrapolated using a growth rate of 2% over a period
of 10 years. Growth rates were determined by taking a prudent
view on long term average growth rates in the economy.
The rate used to discount forecast future cash flows is 20%
reflecting some uncertainty in the short term economic environment
and was determined by reference to the estimated weighted
average cost of capital for the Group and rates applied by
comparable companies.
The directors consider that the fair value less the costs
to sell of the cash generating units is negligible based
on the current forecasts of expected liabilities and the
underlying financial position of the subsidiaries that make
up these units.
As a result of the analysis an impairment charge of GBP4.85m
has been made during the period.
Total Total
2010 2009
GBP GBP
Attributable by subsidiary as follows:
DF Property Portfolio Limited (formerly Dataforce
Group Limited) - 5,882,072
TwentyCi Limited (formerly Dataforce Online
Limited) - 3,673,927
TwentyCi Central Services Limited (formerly
Dataforce Central Services Limited) - 327,074
Emaginating Limited - 97,200
Twenty Web Limited (formerly Ominor Limited) - 750,000
--------------------------------------------------- ------------ -----------
- 10,730,273
--------------------------------------------------- ------------ -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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