Preliminary Results For The Year Ended 31 March 12

SNACKTIME PLC

("SnackTime," the "Company" or the "Group")

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2012

SnackTime plc, the third largest vending business in the UK, is pleased to announce its preliminary results for the year ended 31 March 2012.

Financial Highlights

·; Revenues increased by 28%

·; Loss before exceptional items, amortisation & share option charges and tax of £414,670 (2011 -Profit of £1,022,667)

·; Loss before taxation of £732,179 (2011 - Loss of £2,185,486)

·; Net assets of £18,516,108 (2011 - £18,535,756)

·; Operating cash inflow before exceptional items of £1,389,505 (2011 - Inflow of £2,359,397)

·; Operating cash inflow after exceptional items of £1,557,943 (2011 - Outflow of £431,174)

Jeremy Hamer, Chairman, commented:

"After a challenging year of re-organisation and integration, there are encouraging signs of progress being made across the Group. Despite the continuing severe economic conditions there are exciting opportunities for both growth and operating efficiencies to aim for. "

A copy of the Company's 2012 Report and Accounts will be posted to shareholders and will be made available on the Company's website: www.snacktime.com

For further information:

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2012

Chairman's Statement

During the year ended 31st March 2012 SnackTime completed the integration of the Vendia businesses against a backdrop of rising input prices and an economy where consumers faced high inflation and low or nil wage inflation. This is the first period reflecting a full year of income for the combined group, following the acquisition of the Vendia Group in September 2010. Turnover totalled £22,190,524 (2011: £17,329,745) and normalised profit, defined as profit before depreciation, exceptional items, amortisation & share option charges and interest, was £1,392,170, (2011: £2,359,397). Operating profit before exceptional items and head office costs was £1,016,663 (2011: £969,088) representing 4.6% of turnover (2011: 5.6%). Operating loss was £463,707 (2011: loss of £1,904,764) and the operating margin improved from (11.0%) to (2.1%) as the high acquisition and integration expenditure in 2011 has not recurred to the same level in 2012. Net debt stood at £2,718,130 in March 2012 (2011: £1,570,889). During the first six months significant cash outflows were incurred on restructuring and the balance of the purchase of Vendia; these items abated in the second half and net debt showed a slight decrease. The Company currently has headroom in excess of £1.5m in its banking facilities. The Directors are not recommending the payment of a dividend (2011: nil).

Operations

SnackTime now comprises two traditional vending operations, VMI based in Blackburn, with operational centres in Corby and Newport, and Simply Drinks in London; Snack in the Box, our franchise division, based in Wokingham; and Drinkmaster, a specialist supplier of 'in cup' solutions, based in Cornwall.

Trading conditions in the traditional vending market remain challenging and competitive, as discussed in the last annual report and accounts, and these factors resulted in lost sales during the period. The market combination of a cautious business spending climate, competition, suppliers seeking to pass on commodity price inflation, VAT changes and 'squeezed' consumer incomes combine to make any organic growth challenging in the short term. To counter these negative factors, we continue to review and improve operational efficiency across all areas of the business. All the senior management at VMI has changed during the year and we have also recently strengthened our sales force with the appointment of an experienced sales manager. A similar level of change is now being implemented at Simply Drinks in London, where sales have been under significant competitive pressure. Our aim remains to make this division the most efficient in its sector through increased use of technology in data collection, routing and controls.

Our franchise business, Snack in the Box, sold a record 18 new franchises during the year under review. This is an area where there is room for expansion and we have in place a programme aimed at delivering sustainable growth and enhancing our reputation as a reliable and supportive franchise operator.

Drinkmaster, our specialist 'in cup' drinks supplier based in Cornwall, continues to deliver an efficient and cost effective service to customers throughout the UK. The company is in the process of developing new solutions that will appeal to a broad customer base, some of which may be employed elsewhere within the Group.

These combined businesses provide a platform from which to service a range of businesses from high end offices through to small companies.

Directors and Staff

I was appointed as your executive Chairman on 30th May 2012 and on that date Blair Jenkins, the co-founder and CEO of the business, resigned to pursue other interests. I would like to thank Blair for his contribution in creating a group with a turnover in excess of £22m that is the third largest player in its sector in the UK.

Our staff has experienced the implementation of a huge change programme in the last financial year and I would like to thank all of them for their resolve. Change must continue if we are to become a profitable and competitive force in this industry and I look forward to working with management and employees throughout the Group to continue that transformation.

Strategy

Despite the recent performance disappointments it is not our intention to alter the overall strategic direction of the Company. The Board believes that the combination of managed vending operations for larger sites supported regionally, together with a franchise solution for smaller customer operations is a sound business model. The failure to deliver results to date has largely been down to ambitious sales targets not being met and to implementation issues and operational inefficiencies, which have resulted in both more time and cost than originally predicted. However progress towards this structure continues and the key drivers remain:-

·; A focus on cash generation

·; Increased control through the use of handheld data capture technology

·; The identification, appointment and motivation of ambitious franchisees

·; Tighter management of and optimal utilisation of the vending machine 'estate'

·; Rebuilding the market share lost since the acquisition of Vendia

Current Trading

The process of integrating the Group's recent acquisitions has proved more complex, costly and time consuming than previously anticipated. The intensity of competition and the state of the economy have both detracted from the benefits of the many synergies being achieved. This battle between operational improvement and market conditions will continue into 2013 and our forecasts have been adjusted to reflect these factors. Having said that, there are encouraging signs of the progress being achieved by the new management team at VMI in particular, whilst appetite for our Snack in the Box franchises remains strong. The restabilising of management numbers after the severe cuts of 2011 is resulting in improving service levels whilst the visibility being achieved through the introduction of handheld data collection technology across the operator network should soon provide the controls and management information the Company needs. Whilst cash generation remains a key focus, we do have in excess of £1.5 million of headroom within our bank facilities. The market for quality coffee and impulse snacking on a 24/7 basis will not go away and we remain optimistic that our strategy has the potential to deliver profitable growth in the medium term.

Jeremy Hamer

Chairman

RESULTS AND DIVIDENDS

The Group revenue for the year was £22,190,524. Normalised profit* was £1,392,170 (2011 -£2,359,397). The Group's operating loss was £463,707 (2011 - loss of £1,904,764). Losses after tax were £50,548 (2011 - £2,156,886) and the loss per share was 0.31p (2011 - loss per share of 15.90p).

The Directors do not recommend payment of a dividend in respect of the year ended 31 March 2012 (2011: nil).

*Normalised profit is defined as the statutory profit before interest, tax, amortisation, depreciation, exceptional items and share option charges.

GOING CONCERN

Accounting standards require the Directors to consider the appropriateness of the going concern basis when preparing the financial statements. The Directors confirm that they consider that the going concern basis remains appropriate based upon forecasts which have been reviewed by the Board. The Directors have taken notice of the Financial Reporting Council guidance 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2010' which requires the reasons for this decision to be explained. The Directors regard the going concern basis as remaining appropriate as the Group has adequate resources to continue in operational existence for the foreseeable future. There are considerable cash reserves along with adequate financing arrangements which can be utilised by the Group as required. Thus the Directors continue to adopt the going concern basis of accounting in preparing the annual financial statements. 

capital

The capital structure of the Group consists of debt, which includes the borrowings and convertible loan notes disclosed in Note 19, cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, warrant reserve, merger reserve, capital redemption reserve and retained earnings as disclosed in Note 23.

The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. 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.

RISKS AND UNCERTAINTIES

The operation of a public listed company involves a series of inherent risks and uncertainties across a range of strategic, commercial, operational and financial areas. The Board has outlined their perception of particular risks and uncertainties facing the Group below. These risks and uncertainties could cause the actual results to vary from those experienced previously or described in forward looking statements within the annual report:

·; Changing consumer trends

Since the acquisition of Vendia UK Limited the emphasis of SnackTime's sales has shifted towards hot drinks. This has reduced our exposure to the snack market which could be subject to future regulation relating to healthier eating. It is in the interests of the brands whose products we stock to develop either healthier snacks or to amend the recipe of its existing items to, for example, reduce fat and salt content as consumer tastes and trends change towards healthier products SnackTime's offering will evolve to meet that demand.

·; Litigation and dispute risk

From time to time, the Group may be involved in litigation. This litigation may include, but is not limited to, contractual claims, personal injury claims, employee claims and environmental claims. If a successful claim is pursued against the Group, the litigation may adversely impact the sales, profits or financial performance of the Group. Any claim, whether successful or not, may adversely impact on the Company's share price. There is a risk that should the Group seek redress against another party to its contracts by way of litigation or other dispute resolution processes, these processes may incur significant Group resources, the cost of pursuing such actions may be prohibitive and a successful result is not assured.

·; General economic conditions

Changes in the general economic climate in which the Group operates may adversely affect the financial performance of the Group. Factors which may contribute to that general economic climate include the level of direct and indirect competition against the Group, industrial disruption, the rate of growth of the Group's sectors, interest rates and the rate of inflation.

·; Covenants compliance

The Group's borrowing facilities include a requirement to comply with certain specified covenants in relation to the level of debt service cover, interest cover, capital expenditure and minimum tangible net worth. A breach of these covenants could result in a significant proportion of the Group's borrowings becoming repayable immediately.

The covenants are tested by the Group on a quarterly basis. The Group expects to comply with these covenant and manages compliance through regular monitoring of cash flows and forecasts. Sensitivity analysis using various scenarios are applied to forecasts to assess their impact on covenants.

·; Product price changes

The purchase price of products distributed by the Group can fluctuate from time to time, thereby potentially affecting the results of operations. Adverse economic conditions resulting and rising input prices may impacts the Group's revenue and, as a result, its profits.

The Group endeavours, whenever possible, to pass on price increase from its suppliers to its customers. The Group mitigates against the risk of holding overvalued inventory in a deflationary environment by managing stock levels efficiently and ensuring they are kept to a minimum.

·; Integration of acquisitions

A significant portion of the Group's historical growth has been achieved through acquisition. The process of integrating the Group's acquisitions could prove to be more complex, costly and time consuming.

The Group endeavours to maximise the performance of an acquisition through the recruitment and retention of high quality management combined with effective strategic planning, investment in resources and infrastructure.

The Group's exposure to interest rate risk, credit risk and liquidity risk are detailed in the Financial Instruments section of the Directors' report.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

year ended 31 March 2012

Consolidated STATEMENT OF Changes in equity

 year ended 31 March 2012

consolidated STATEMENT OF FINANCIAL POSITION

31 March 2012

CONSOLIDATED statement OF cash flowS

Year ended 31 March 2012

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 March 2012

1 presentation of financial statements

General information

SnackTime plc is a public limited company incorporated in England and Wales under the Companies Act (registered number 06135746). The Company is domiciled in the United Kingdom and its registered address is 2nd Floor, West Forest Gate, Wellington Road, Wokingham, Berkshire, RG40 2AQ. The Company's shares are traded on the AIM market of the London Stock Exchange.

Basis of preparation

The financial information set out in this release does not constitute the Company's full statutory accounts for the year ended 31 March 2012 for the purposes of section 435 of the Companies Act 2006, but it is derived from those accounts that have been audited. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered after the forthcoming AGM. The auditors have reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 in either 2011 or 2010.

While the financial information for the year ended 31 March 2012 is prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as endorsed by the European Union and implemented in the UK, this announcement does not itself contain sufficient information to comply with IFRSs. These financial statements have also been prepared in accordance with the accounting policies set out in the 2012 Annual Report and Financial Statements. The adoption of the interpretations, standards or amendment to standards were either not relevant for the Group or have not led to any significant impact on the Group's financial statements.

These consolidated financial statements have been prepared in accordance with the accounting policies set out in note 2 and under the historical cost convention, except where modified by the revaluation of certain financial instruments and commodities.

All companies in the Group use sterling as presentational and functional currency.

Accounting standards require the Directors to consider the appropriateness of the going concern basis when preparing the financial statements. The Directors confirm that they consider that the going concern basis remains appropriate. The Directors have taken notice of the Financial Reporting Council guidance 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2010' which requires the reasons for this decision to be explained. The Directors regard the going concern basis as remaining appropriate as the Group has adequate resources to continue in operational existence for the foreseeable future based upon the Group's forecasts. The Group has adequate financing arrangements which can be utilised by the Group as required. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Changes in accounting policies

The following new standards, amendments and interpretations are also effective for the first time in these financial statements but none have had a material effect on the group so have not been listed.

·; Deferred tax: Recovery of Underlying Assets (Amendments to IAS12)

There are certain new standards, amendments and interpretations of existing standards that have been published and are effective for the Company's accounting periods beginning on or after 1 April 2011 and which are applicable to the Company, but which have not been adopted early. These are:

·; IFRS 9 Financial Instruments - effective 01/01/2013

·; Presentation of Items of Other Comprehensive Income (Amendments to IAS1) - effective 01/07/2012

·; IFRS 10 Consolidated Financial Statements - effective 01/01/2013

·; IFRS 13 Fair Value Measurement - effective 01/01/2013

·; IAS 27 Separate Financial Statements - effective 01/01/2013

·; IAS 28 Investments in Associates and Joint Ventures - effective 01/01/2013

·; IFRS 11 Joint Arrangements - effective 01/01/2013

·; IFRS 12 Disclosure of Interests in Other Entities - effective 01/01/2013

·; IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities - effective 01/01/2013

·; Annual Improvements to IFRSs (2009 - 2011) - effective 01/01/2013

The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Company's loss for the year or equity. Application of these standards may result in some changes in presentation of information within the Company's financial statements.

Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The principal areas where judgement was exercised are as follows:

§ Acquisitions are accounted for in accordance with IFRS 3 'Business Combinations', the directors fair valued the assets and liabilities acquired. This requires the Directors to estimate the fair value of the acquired assets and liabilities at the date of acquisition, including intangible assets.

§ Property, plant and equipment includes the value of the vending machine estate. The Directors annually assess both the residual value of these assets and the expected useful life of such assets.

§ The Directors have estimated the useful economic lives of intangible assets in Note 14. The economic lives and the amortisation rates are reviewed annually by the directors.

§ The Group receives branding fees to contribute to the installation and refurbishment of vending machines. The Directors are required to assess the amounts receivable at each reporting date and whether all the conditions have been met to enable these to be recognised.

§ The sales from vending machines disclosed in Note 10 are recognised at the point of sale to the customer. At each year end, the Directors are required to make an estimate of sales where the vending machine has not been emptied or inspected at the year end date.

§ The convertible loan notes disclosed in Note 19 have been split between the debt and equity element in accordance with IAS 32. This requires calculating the present value of the debt element using an effective interest rate. 12% was assumed to be an effective interest rate that would be charged on a similar loan by a third party.

§ Share based payment and warrant valuations are based upon a Black-Scholes based model which requires various assumptions to be made as set out in Note 24.

§ The dilapidation provisions set out in Note 21 are calculated as a percentage of annual rents plus specific costs.

§ An impairment of goodwill has the potential to significantly impact upon the Group's statement of comprehensive income for the year. In order to determine whether impairments are required the Directors estimate the recoverable amount of the goodwill disclosed in Note 15. This calculation is based on the cash flow forecasts applicable to the Group of cash-generating units for the following financial year extrapolated over a eight year period assuming growth rates in the region of 2-3%. A terminal value has been included which extrapolates the growth of the year 8 cash flow at 2.3% in perpetuity. A discount factor, based upon the Group's weighted average cost of capital is applied to obtain a current value ('value in use'). The fair value less costs to sell of the cash generating unit is used if this results in an amount in excess of value in use.

Estimated future cash flows for impairment calculations are based on management's expectations of future volumes and margins based on plans and best estimates of the productivity of the income generating unit in their current condition. Future cash flows therefore exclude benefits from major expansion projects requiring future capital expenditure.

Future cash flows are discounted using a discount rate based on the Group's weighted average cost of capital. The weighted average cost of capital is impacted by estimates of interest rates, equity returns and market related risks. The Group's weighted average cost of capital is reviewed on an annual basis.

Further details are set out in Note 15.

2. significant ACCOUNTING POLICIES

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group's financial statements.

a) Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings. The merger method of accounting has been adopted as detailed in note 1, following a group reconstruction involving Snacktime Plc and Snacktime UK Limited. The acquisitions of Snack in a Box Limited and Vendia UK Limited were accounted for using acquisition accounting in accordance with IFRS 3 "Business Combinations (Revised)".

Intra-group revenues and profits are eliminated on consolidation and all revenue and profit figures relate to external transactions only.

b) Revenue recognition

Revenue is measured by reference to the fair value of consideration received or receivable by the group for goods and services supplied, excluding VAT and trade discounts. Revenue for goods sold from vending machines is recognised at the date of sale. Revenue in respect of installation and refurbishment of branded vending machines (branding fees) is recognised at the date of installation or refurbishment. Franchising fees are recognised when the franchisee starts trading. Managed estate sales are recognised in full once the customer has taken over operation of the machine.

c) Income tax

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year.  

Deferred tax is recognised on all temporary differences. This involves comparison of the carrying amount of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. 

Deferred tax liabilities are provided for in full. Deferred tax assets and liabilities are calculated without discounting, at tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (tax laws) that have been enacted or substantively enacted by the balance sheet date. All changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity. 

Tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. Deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the asset can be recognised and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

d) Cost of sales

Cost of sales represents amounts payable for supplies of products for resale.

e) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment provisions.

Depreciation is provided to write off the cost, less the estimated residual value of property, plant and equipment by equal instalments over their estimated useful economic lives as follows:

Leasehold improvements - over the term of the lease

Plant & machinery - 10 - 25% straight line basis

Fixtures, fittings & equipment - 25% straight line basis

Motor vehicles - 25% straight line basis

Material residual value estimates are updated as required, but at least annually, whether or not the asset is revalued.

Impairment reviews of property, plant and equipment are undertaken if there are indications that the carrying values may not be recoverable or that the recoverable amounts may be less than the asset's carrying value.

f) Intangible assets

In accordance with 'IFRS 3 Business Combinations(Revised)', an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date.

After initial recognition, intangible assets are carried at deemed cost less any accumulated amortisation and any accumulated impairment losses. Impairment reviews are conducted annually from the first anniversary following acquisition, where indicators of impairment arise.

Brands are amortised to the income statement over their estimated economic life on a reducing balance basis. The average useful economic life of brands has been estimated at 10-15 years. The customer relationships are amortised on a straight line basis over its 15 year useful economic life.

g) Goodwill

Goodwill is calculated as the difference between the fair value of the consideration exchanged and the net fair value of the identifiable assets and liabilities acquired and is capitalised. Goodwill is tested for impairment annually and whenever there is an indication of impairment. Goodwill is carried at cost less accumulated impairment losses.

When the acquired interest in the net fair value of the identifiable assets and liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.

Gains and losses on the disposal of a business combination include the carrying amount of goodwill relating to the entity sold.

h) Leases

Where a lease is entered into which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. The asset is recorded in the balance sheet as an item of property, plant and equipment and is depreciated over the shorter of its estimated useful life or the term of the lease.

Future instalments under such leases, net of finance charges, are included within payables. Rentals payable are apportioned between the finance element, which is charged to the income statement, and the capital element, which reduces the outstanding obligation for future instalments. Land and building elements of lease agreements are separately assessed in accordance with IAS 17.

All other leases are treated as operating leases and the rentals payable are charged on a straight line basis to the income statement over the lease term.

i) Inventories

Inventories are stated at the lower of purchase cost from third parties and net realisable value on a first in first out basis. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula.

j) Cash and cash equivalents

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

k) Share-based payments

The Group has applied the requirements of IFRS 2 'Share-based payment', as amended by IFRIC Interpretation 2 - IFRS 2 Group and Treasury share transactions.

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. Where services are from employees fair value is determined indirectly by reference to the fair value of the instrument granted. The fair value determined at the grant date of the equity settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. 

Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital.

Fair value is measured based upon a Black-Scholes pricing model.

l) Financial instruments

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the group becomes a party to the contractual provisions of the instrument. Financial liabilities are recorded initially at fair value, net of direct issue costs as an expense in the income statement with a corresponding credit to equity.

Financial liabilities are subsequently recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance costs in the income statement. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the income statement on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual terms of the instrument. 

All financial assets are classified as loans and receivables.

Bank borrowings

Bank loans and overdrafts are initially recorded at fair value net of transaction costs. Finance charges including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the income statement using the effective interest method and are added to the carrying value of the instrument to the extent that they are not settled in the period in which they arise.

Convertible Loan

Convertible loan notes, as disclosed in note 19, have been split between debt and equity elements in accordance with IAS 32.

Trade payables

Trade payables are not interest bearing and are stated at their fair value on initial recognition. They are then accounted for using the effective interest rate method.

m) Equity instruments

Equity instruments, which are detailed below, issued by the Group are recorded at the proceeds received, net of direct costs except for warrants, share options and convertible loans which are recorded at fair value at the time of issue.

Equity comprises the following:

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

·; "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

·; "Merger reserve" represents an amount arising on the consolidation which was accounted for in accordance with FRS 6.

·; "Capital redemption reserve" which arose on the redemption of shares.

·; "Retained earnings" represents retained profits.

·; "Share option reserve" relates to the company's share option scheme detailed in note 24.

·; "Equity element of compound financial instruments" represents the equity element of the convertible loan notes (note 19).

·; "Warrants reserve" represents the fair value at the time the warrants were issued.

n) Pensions

The Group contributes to personal pension plans of one of the directors as detailed in note 9 and defined contribution pension schemes for certain employees. The amount charged to the Income Statement in the year represents the amount payable in respect of that year.

o) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and Chief Financial Officer.

p) Exceptional Costs

It is the Group's policy to show items that it considers are of a significant nature separately on the face of the Consolidated Statement of Comprehensive Income in order to assist the reader to understand the accounts. The Group defines exceptional costs as items that are material in respect of their size and nature, for example, a major restructuring of the activities of the Group. Summary details of exceptional costs are shown in note 5.

q) Provisions

The Group recognises a provision where a legal or constructive obligation exists at the balance sheet date and a reliable estimate can be made of the likely outcome.

3. REVENUE

The Company operates wholly within the United Kingdom.

4. AUDITOR'S REMUNERATION

The analysis of auditor's remuneration is as follows:

5. PROFIT from operations

Exceptional costs/(income) comprise of:

Exceptional costs in 2012 and 2011 represent items arising primarily from the acquisition of Vendia UK Limited and its subsidiaries on 22 September 2010 and the essential restructuring of the group following the acquisition to streamline operations and align the acquired businesses. This represents a major change to the group structure with two of the newly acquired entities now heading up the Vending operations, being VMI in the North and Midlands and Simply Drinks in London and the South. Snack in the Box remains our national franchise operation and the newly acquired Drinkmaster producing and marketing 'in cup' solutions. Included in the item are professional and other fees relating to the acquisition which are expensed in line with IFRS 3, Business Combinations.

An exceptional interest charge arose in prior year on the convertible loan note which related to interest that should have been charged for the period to 31 March 2011.

6. FINANCE income

7. Finance CoSTS

8. dIRECTORS' REMUNERATION

The emoluments of the Directors for the year were as follows:

Key management personnel are considered to be only the Company's Directors.

Details of the EBT loans and payments to other related parties are disclosed in Note 27.

During the year ended 31 March 2012 pension contributions of £133,992 (2011 - £Nil) were paid in respect of the then highest paid director.

Directors' interests in share options

60,000 options were granted to Directors during the year to 31 March 2012. Options have been granted to Directors whose performance and potential contribution were judged to be important to the operations of the Group, as incentives to maximise their performance and contribution.

The mid-market price of the ordinary shares on 31 March 2012 was 50.0p and the range during the year was 42.0p to 109.5p.

During the current year retirement benefits were accruing to 1 Director (2011 - 1) in respect of money purchase pension schemes.

No Directors exercised any options during the year.

9. Staff numbers and costs

The average monthly number of people employed by the Group (including Executive Directors) during the year, analysed by category, were as follows:

10 segment information

The Group has three main reportable segments:

§ Specialist drinks - The manufacture and sale of single portion beverages called 'Drinkpacs' together with the sale of associated food and drink products.

§ Franchising - The marketing and franchising of operations in the provision of snack solutions.

§ Vending - Vending activities.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

Measurement of operating segment profit or loss, assets and liabilities

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

The Group evaluates performance on the basis of profit or loss from operations but excluding non-recurring profits/losses, such as goodwill impairment, and the effects of share-based payments.

Inter-segment sales are priced on the same basis as sales to external customers, with an appropriate discount being applied to encourage use of group resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the period.

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities. Loans and borrowings are allocated to the segments based on relevant factors (e.g. funding requirements). Details are provided in the reconciliation from segment assets and liabilities to the group position.

As at 31 March 2012 there were no non-current assets held outside of the United Kingdom (2011: £Nil).

11 Taxation

Factors affecting tax credit for the year:

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 26% (2011: 28%). The differences are explained below:

The 2010 Budget announced that the main rate of UK corporation tax was to be reduced from 28% to 24% between 2011 and 2014. Further reductions were announced in the 2011 and 2012 Budgets, so that the main rate of corporation tax was reduced to 26% from 1 April 2011, to 24% from 1 April 2012 and with more reductions planned to reduce the main rate to 22% by 1 April 2014.

The rate change from 26% to 24% had been substantively enacted by the balance sheet date, so deferred tax is provided for at a rate of 24%. 

The other proposed changes had not been substantively enacted by the balance sheet date and it is not yet possible to quantify the full effect of the announced further 2% rate reduction, although this will further reduce the company's future current tax charges and reduce the deferred tax assets accordingly. 

12 Loss per share

The calculation of basic loss per share is calculated on the basis of the result for the year after tax, divided by the weighted average number of shares in issue for the year ended 31 March 2012 of 16,349,014 (2011 - 13,625,087).

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potential dilutive ordinary shares (3,302,363 shares). Potential dilutive ordinary shares arise from share options and convertible loans. For these, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the exercise price attached to outstanding share options. Thus the dilutive weighted average number of shares considers the number of shares that would have been issued assuming the exercise of the share options. If these are proved to be anti-dilutive (increase the potential earnings per share) they are omitted from the calculation, as the group has made a loss in the current year the options, warrants and convertible loan notes are therefore anti-dilutive and diluted earnings per share are therefore not provided for the current year.

13 Property Plant and equipment

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:

14 INTANGIBLE ASSETS

Current estimates of useful economic lives of intangible assets are as follows:

Goodwill Indefinite

Customer relationships Amortised over 15 years

Snack In The Box brands Amortised over 15 years

Vendia brands Amortised over 10 years

15 Goodwill and impairment

Goodwill acquired in a business combination is allocated at acquisition to the cash generating units (CGUs) that are expected to benefit from that business combination as follows:

The group tests annually for impairment or more frequently if there are indications that goodwill may be impaired. The recoverable amounts of all the above CGUs have been determined from value in use calculations based on cash flow projections from formally approved budgets for 2012, which are then extrapolated over 8 years and a terminal value applied to the year 8 cashflow. The major assumptions are as follows:

Operating margins have been based on past experience and future expectations in the light of anticipated economic and market conditions. Discount rates are based on the Group, this is then adjusted to reflect management's assessment of specific risks related to the cash generating unit. Growth rates beyond the first eight years are based on economic data pertaining to the region concerned.

The recoverable amount for the CGU is set out below:

·; Specialist drinks exceeds its carrying amount by £247,000.

·; Vending exceeds its carrying amount by £812,000.

If any one of the following changes were made to the above key assumptions, the carrying amount and recoverable amount would be equal. The cashflows in 2011 were not sensitive to large variations in the terminal value percentage.