30th Jun 2005 06:00
30 June 2005 THEMUTUAL.NET PLC (the 'Company') PRELIMINARY RESULTSTheMutual.net announces Preliminary Results for the year ended 30 April 2005.Highlights:Percentage change shown versus the year ended 30 April 2004.- Revenue: ‚£3,079,000 (+ 40%)- Profit before tax: ‚£778,000 (+ 20%)- Cash at bank: ‚£1,555,000 (+ 69%)- Members: 1,270,000 (+ 54%)Mark Smith, CEO, said: "It has been another successful year for themutual.netwith increased revenue and profits. We set high standards in email marketingand rewarded shopping portals, and with internet advertising spend and usagecontinuing to grow rapidly we are well positioned for the year ahead."Contacts:themutual.net plc Tel: 020 7440 9310Mark Smith, Chief ExecutivePeter Coveney, Finance DirectorEditor's Notesthemutual.net plc, the AIM quoted on-line reward company hasdeveloped a website to act as a portal for its members to access around 500online shopping sites. themutual.net incentivises shoppers by rewarding themwith shares in the Company or with points which are redeemable for cash.themutual.net now has over 1.27 million registered members.CHAIRMAN'S STATEMENTYEAR ENDED 30 APRIL 2005I am pleased to announce the Company's results for the year ended30th April 2005 showing continued growth in revenue and profitability, withturnover increasing by 40%, EBITDA increasing by 35% and profit before taxincreasing by 20%. Cash at bank at ‚£1,555,000 increased by ‚£636,000 which,after spending ‚£189,000 on the buyback of our shares and ‚£121,000 on thepurchase of an investment reflects the strong cash generative qualities of thebusiness.This is the first year that we have had to provide for corporation taxresulting in a profit after tax of ‚£489,000. The following figures highlightthe growth in the business over the last three years.Profit and Loss Year ended Year ended Year endedAccount 30 April 05 30 April 04 30 April 03 ‚£'000 ‚£'000 ‚£'000Turnover 3,079 2,199 1,372Gross profit 2,733 2,011 1,305EBITDA profit 1,375 1,015 681Profit before tax 778 650 558 Balance Sheet 30 April 05 30 April 04 30 April 03 ‚£'000 ‚£'000 ‚£'000Cash at bank 1,555 919 720Net current assets 1,772 1,260 734Shareholders' funds 2,100 1,797 1,091The Company has passed a number of significant milestones this year,positioning ourselves for further expansion and development. Highlights forthe year include:- Launch of the new website with increased search facility from the MutualShop and a better user experience- The adoption of new, bespoke technology to handle increased demands for email marketing, putting us at the forefront of the field- Our membership base now stands at 1.27 million members, and we are delivering over 25 million emails to our members each month, resulting in over 1 million monthly visits to our advertisers and partners- Consolidation of the shares by 100:1, and the introduction of cash rewards to themutual.net membersIn the latter part of the year we moved once more to new premises, allowing usto accommodate an increased number of sales and technical personnel.Due to delays in launching the new website and email deliverysystems, which coincided with our move to new premises, profit growth wasconstrained this year against previously communicated expectations. However,we are pleased to note that recent evidence confirms our view that thesedevelopments will show benefits in this coming year, with the investment inthe new website showing strong return with usage and new member generation. Inaddition the successful acquisition of MyPoints Europe Limited (subsequentlyrenamed MutualPoints Limited) will be fully written off by September 2005,reducing our current level of expenses by ‚£20,000 per month.Online advertising spend continues to grow and has been reported asexceeding both cinema and radio spend by third party comments in 2004. Withthe continued exciting growth in the market place we are well positioned forthe coming year.Following strategies set out in our interim report to ensureincreased email deliverability and targeting data, we are currently focused onenhancing the member experience and usability of our website. Entry intoGermany and France is still at an exploratory stage, with our full focusremaining on optimising success in the UK.Shareholders might like to know that since the year end we havedisposed of approximately 50% of our investment in QXL Ricardo plc, realisingan exceptional profit of ‚£190,000. Our remaining investment stands in ourbalance sheet at ‚£62,000 and we plan to retain this holding pending furtherdevelopments.At our last AGM we received shareholder approval to buy back up to10% of our shares. As noted above we spent ‚£189,000 during the year buyingback 900,000 shares. We will be seeking shareholder approval to renew thisauthority at the next AGM as we believe this can be a satisfactory way ofrewarding our shareholders.Looking forward we are actively reviewing opportunities in a numberof potential areas for expansion and the possibility of consolidating throughacquisitions. We have a strengthened management team, a new service, improvedtechnology and balance sheet strength. With all these resources available tous we look forward with confidence to this coming year.We continue to be committed to developing themutual.net into amature market leader in the facilitation of email marketing and rewardedonline shopping, through our strategy for growth in members, revenue andprofitability.It only remains to thank our staff for their dedication andenthusiasm and our growing list of supportive shareholders, including thosewho have taken advantage of earning shares under our reward system.Warren TaylerChairmanGROUP PROFIT AND LOSS ACCOUNTYEAR ENDED 30 APRIL 2005 2005 2004 Note ‚£ ‚£GROUP TURNOVER 2 3,079,352 2,198,708Cost of sales 346,847 187,409 ---------- ----------GROSS PROFIT 2,732,505 2,011,299Administrative expenses 1,999,554 1,378,474 ---------- ----------OPERATING PROFIT 3 732,951 632,825Interest receivable 45,214 17,660 ---------- ---------- PROFIT ON ORDINARYACTIVITIES BEFORETAXATION 778,165 650,485Tax on profit on ordinary activities 6 288,780 - ---------- ----------RETAINED PROFITFOR THE FINANCIAL YEAR 7 489,385 650,485 ---------- ----------Earnings per ordinary share (pence) 8 1.21 1.66Diluted earnings per share (pence) 8 1.13 1.56 All of the activities of the group are classed as continuing. The group has no recognised gains or losses other than the results for the year as set out above. The company has taken advantage of section 230 of the Companies Act 1985 not to publish its own Profit and Loss Account.GROUP BALANCE SHEET30 APRIL 2005 2005 2004 Note ‚£ ‚£ ‚£ ‚£ FIXED ASSETSIntangibleassets 9 456,093 717,814Tangibleassets 10 68,001 77,835Investments 11 121,363 - 645,457 795,649CURRENT ASSETSDebtors 12 760,229 689,993Cash at bank 1,554,764 919,363 2,314,993 1,609,356CREDITORS:Amountsfallingdue withinone year 13 542,547 349,592NET CURRENTASSETS 1,772,446 1,259,764TOTAL ASSETS LESS CURRENT LIABILITIES 2,417,903 2,055,413PROVISIONS FOR LIABILITIES AND CHARGESOther provisions 14 318,000 257,946 2,099,903 1,797,467CAPITAL AND RESERVESCalled-up share capital 17 104,003 104,042Share premium account 2,330,501 2,330,501Other reserves 18 120,464 120,374Profit and loss account 18 (455,065) (757,450)SHAREHOLDERS'FUNDS(includingnon-equityinterests) 19 2,099,903 1,797,467These financial statements were approved by the directors on the 28 June 2005 and are signed on their behalf by:M D Smith P N CoveneyGROUP CASH FLOWYEAR ENDED 30 APRIL 2005 2005 2004 ‚£ ‚£ ‚£ ‚£ NET CASH INFLOW FROM OPERATINGACTIVITIES 1,267,475 701,584RETURNS ON INVESTMENTS ANDSERVICING OF FINANCEInterest received 45,214 17,660NET CASH INFLOW FROMRETURNS ON INVESTMENTSAND SERVICING OF FINANCE 45,214 17,660CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayments to acquireintangible fixed assets (334,721) (280,323)Payments to acquiretangible fixed assets (34,255) (82,308)Acquisitionof investments (121,363) -NET CASH OUTFLOW FORCAPITAL EXPENDITUREAND FINANCIAL INVESTMENT (490,339) (362,631)ACQUISITIONS AND DISPOSALSCash paid to acquiresubsidiaries - (212,500)NET CASH OUTFLOW FROMACQUISITIONS AND DISPOSALS - (212,500)CASH INFLOWBEFORE FINANCING 822,350 144,113FINANCINGIssue of equity share capital 52 226Share premium on issue of equityshare capital - 54,984Purchase of ownequity shares (91) -Premium onpurchase of ownequity shares (186,910) -NET CASH (OUTFLOW)/INFLOWFROM FINANCING (186,949) 55,210INCREASE IN CASH 635,401 199,323RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2005 2004 ‚£ ‚£Operating profit 732,951 632,825Amortisation 596,442 363,810Depreciation 44,089 18,456Increase in debtors (70,236) (446,286)Decrease increditors (95,825) (125,167)Increase inprovisions 60,054 257,946Net cash inflowfrom operatingactivities 1,267,475 701,584RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 ‚£ ‚£Increase in cash inthe period 635,401 199,323Movement in netfunds in the period 635,401 199,323Net funds at 1 May2004 919,363 720,040Net funds at 30April 2005 1,554,764 919,363ANALYSIS OF CHANGES IN NET FUNDS At 1 May Cash At 30 Apr 2004 flows 2005 ‚£ ‚£ ‚£Net cash:Cash in handand at bank 919,363 635,401 1,554,764Net funds 919,363 635,401 1,554,764NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 APRIL 20051. ACCOUNTING POLICIES Basis of accounting The financial statements have been prepared under the historicalcost convention, and in accordance with applicable accounting standards. Basis of consolidation The consolidated financial statements incorporate the results ofthe company and all of its subsidiary undertakings up to 30 April 2005. Unlessotherwise stated, the acquisition method of accounting has been adopted. Underthis method, the results of the subsidiary undertakings acquired in the yearare included in the consolidated profit and loss account from the date ofacquisition. The group financial statements consolidate the financialstatements of themutual.net plc and its subsidiary undertakings. As permittedby Section 230 of the Companies Act 1985, a separate profit and loss accountis not presented in respect of the Company. Turnover Turnover represents the value of services provided during the yearnet of value added tax. Amortisation Amortisation is calculated so as to write off the cost of anasset, less its estimated residual value, over the useful economic life ofthat asset as follows: Database - 2 to 4 years straight line Intangible fixed assets Intangible fixed assets represent various databases which are usedwithin the internet based marketing of the business. Depreciation Depreciation is calculated so as to write off the cost of anasset, less its estimated residual value, over the useful economic life ofthat asset as follows: Fixtures and fittings - 30 months straight line Operating lease agreements Rentals applicable to operating leases where substantially all ofthe benefits and risks of ownership remain with the lessor are charged againstprofits on a straight line basis over the period of the lease.2. TURNOVER The turnover and profit before tax are attributable to the oneprincipal activity of the group. An analysis of turnover is given below: 2005 2004 ‚£ ‚£United Kingdom 3,079,352 2,198,7083. OPERATING PROFIT Operating profit is stated after charging: 2005 2004 ‚£ ‚£Amortisation 596,442 363,810Depreciation of owned fixed assets 44,089 18,456 Auditors' remuneration- as auditors 5,000 4,775- as group auditors 15,350 14,860- for other services 8,350 6,500 Operating lease costs:Land and buildings 16,600 14,6504. PARTICULARS OF EMPLOYEES The average number of staff employed by the group during thefinancial year amounted to: 2005 2004 No NoNumber ofadministrativestaff 20 14 The aggregate payroll costs of the above were: 2005 2004 ‚£ ‚£Wages and salaries 862,174 600,474Social securitycosts 94,404 65,898 956,578 666,3725. DIRECTORS' EMOLUMENTS The directors' aggregate emoluments in respect of qualifyingservices were: 2005 2004 ‚£ ‚£Emolumentsreceivable 287,833 215,741 Emoluments of highest paid director: 2005 2004 ‚£ ‚£Total emoluments(excluding pensioncontributions) 100,000 85,000 Share options The directors during the period and their beneficial interest inoptions to purchase ordinary shares in the company which were granted andvested during the period, were as follows: Date of grant Number of Number of Exercise Expiry date options options price granted vested in period P Coveney 23 May 2000 250,000 - 0.01p 23 May 2010 5 April 2002 1,815,000 - 5.50p 5 April 2012 A Soobrattee 23 May 2000 100,000 - 0.01p 23 May 2010 31 October 100,000 - 21.25p 31 October 2000 2010 M Smith 6 April 2004 1,000,000 - 19.50p 6 April 2014 The above share options have been restated to reflect theconsolidation and redesignation of ordinary share capital as described at note17. A. Soobrattee resigned as a director 29 November 2004. Only vested options may be exercised at any time in whole or in part. No options were exercised during the period.6. TAXATION ON ORDINARY ACTIVITIES (a) Analysis of charge in the year 2005 2004 ‚£ ‚£ Current tax: UK Corporation tax based on the results for the year at 30% (2004 - 30%) 288,780 -Total current tax 288,780 - (b) Factors affecting current tax charge The tax assessed on the profit on ordinary activities for the yearis higher than the standard rate of corporation tax in the UK of 30% (2004 -30%). 2005 2004 ‚£ ‚£Profit on ordinaryactivities beforetaxation 778,165 650,485Profit/(loss) onordinary activitiesby rate of tax 233,450 195,145Expenses notdeductible for tax(primarilyintangibleamortisation) 77,454 45,436Capital allowancesin excess ofdepreciation 9,665 (14,259)Utilisation of taxlosses (16,075) (226,322)Marginal relief (15,714) -Total current tax(note 6(a)) 288,780 -7. PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY The profit dealt with in the accounts of the parent company was‚£335,672 (2004 - ‚£(841)).8. EARNINGS PER SHARE 2005 2004 pence penceEarnings per ordinary share 1.21 1.66Diluted earnings per share 1.13 1.56 The calculation of the profit per share is based on the profit forthe period of ‚£ 489,385 (2004 - ‚£650,485) and on the weighted average numberof shares in issue during the period of 40,507,379 (2004 - 39,109,723). The calculation of the diluted profit per share is based on thesame profit and weighted average shares of 43,466,545 (2004 - 41,705,557). Comparatives have been restated to reflect the consolidation andredesignation of issued ordinary share capital during the year as described atnote 17.9. INTANGIBLE FIXED ASSETS Group Database ‚£ COSTAt 1 May 2004 1,266,518Additions 334,721At 30 April 2005 1,601,239 AMORTISATIONAt 1 May 2004 548,704Charge for the year 596,442At 30 April 2005 1,145,146 NET BOOK VALUEAt 30 April 2005 456,093At 30 April 2004 717,81410. TANGIBLE FIXED ASSETSGroup Fixtures & Fittings ‚£ COSTAt 1 May 2004 205,579Additions 34,255At 30 April 2005 239,834 DEPRECIATIONAt 1 May 2004 127,744Charge for the year 44,089At 30 April 2005 171,833 NET BOOK VALUEAt 30 April 2005 68,001At 30 April 2004 77,83511. INVESTMENTSGroup Other investments ‚£ COSTAdditions 121,363At 30 April 2005 121,363 NET BOOK VALUEAt 30 April 2005 121,363 At the year end the other investment had a market value of‚£299,854.Subsidiary undertakings Proportion of voting rights and Country of shares incorporation Holding held Nature of business All held by the company:Hague Limited Ordinary Permission based England shares 100% e-mail marketingFreequotes.co.uk Ordinary Permission basedLimited England shares 100% e-mail marketingMutualpoints Ordinary Permission basedLimited England shares 100% e-mail marketing12. DEBTORS Group 2005 2004 ‚£ ‚£Trade debtors 592,168 546,871VAT recoverable - -Other debtors 1,219 -Prepayments andaccrued income 166,842 143,122 760,229 689,99313. CREDITORS: Amounts falling due within one year Group 2005 2004 ‚£ ‚£Trade creditors 115,069 184,029 Other creditors including taxation and social security:Corporation tax 288,780 -PAYE and socialsecurity 27,441 30,731VAT 56,828 47,984Accruals anddeferred income 54,429 86,848 542,547 349,59214. OTHER PROVISIONS Group 2005 2004 ‚£ ‚£Other provisions 318,000 257,946 The provision is in respect of the redemption value of rewardpoints accrued by members at the year end.15. COMMITMENTS UNDER OPERATING LEASES At 30 April 2005 the group had annual commitments undernon-cancellable operating leases as set out below.Group Land and buildings 2005 2004 ‚£ ‚£ Operating leases which expire:Within 2 to 5years 56,326 16,60016. RELATED PARTY TRANSACTIONS No transactions with related parties were undertaken such as arerequired to be disclosed under Financial Reporting Standard 8. There is no ultimate controlling party.17. SHARE CAPITALAuthorised sharecapital: 2005 2004 ‚£ ‚£10,000,000,000Ordinary sharesof 0.0001p each - 10,000100,000,000Ordinary sharesof 0.01p each 10,000 -100,000 deferredshares of ‚£1 each 100,000 100,000 110,000 110,000Allotted andcalled up sharecapital: 2005 2004 number ‚£ number ‚£ Ordinarysharesof0.0001peach - - 4,041,716,353 4,042Ordinarysharesof 0.01peach 40,033,192 4,003 - -Deferredsharesof ‚£1each 100,000 100,000 100,000 100,000 40,133,192 104,003 4,041,816,353 104,042 During the period 51,612,086 ordinary shares of 0.0001p wereissued at par. In September 2004 the company brought back 50,000,000 ordinaryshares of 0.0001p each. The aggregate amount paid by the company for theseshares was ‚£87,000. In October 2004 the entire authorised share capital of thecompany, being ‚£110,000 divided into 10,000,000,000 ordinary shares of 0.0001peach and 100,000 deferred shares of ‚£1, was consolidated and redesignated as‚£110,000 divided into 100,000,000 ordinary shares of 0.01p each and 100,000deferred shares of ‚£1 each. Following this consolidation, in March 2005 the company broughtback 400,000 ordinary shares of 0.01p each. The aggregate amount paid by thecompany for these shares was ‚£100,000. The above share buy-backs took place in order to rewardshareholders. The rights and restrictions attached to and imposed on thedeferred shares are as follows: a) The deferred shares shall not confer upon the holders thereofas a class, the right to receive any dividend, distribution or otherparticipation in the profits of the company. b) The deferred shares do not entitle the holders to receivenotice of or to attend and speak or vote at any general meeting of thecompany. c) On distribution of assets on liquidation or otherwise, thesurplus assets of the company remaining after payments of its liabilitiesshall be applied: i) first in repaying to holders of the deferred shares the nominal amounts and any premium paid up or credited as paid up on such shares; and ii) second, the balance of such assets shall belong to and be distributed amount the holders of the ordinary shares in proportion to the nominal amounts paid up in the ordinary shares held by them respectively. Other share options At 30 April 2005 the following share options to purchase ordinaryshares in the company were in issue:Date of grant Number of Number of Exercise price Expiry date options granted options vested in period 23 May 2000 398,333 - 0.01p 23 May 201031 October 2000 172,500 - 21.25p 31 October 20105 April 2002 1,815,000 - 5.50p 5 April 201216 May 2003 200,000 - 7.00p 16 May 20136 April 2004 1,040,000 - 19.50p 6 April 2014 The above share options have been restated to reflect theconsolidation and redesignation of ordinary share capital as described above. Only vested options may be exercised at any time in whole or inpart.18. RESERVESGroup Capital Merger Share premium redemption reserve on Profit and account reserve consolidation loss account ‚£ ‚£ ‚£ ‚£Balancebroughtforward 2,330,501 - 120,374 (757,450)Retainedprofitfor theyear - - - 489,385OthermovementsPurchaseof ownshares - 90 - (187,000)Balancecarriedforward 2,330,501 90 120,374 (455,065)19. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSEQUITY SHAREHOLDERS' FUNDS 2005 2004 ‚£ ‚£ ‚£ ‚£Profit forthe financial year 489,385 650,485New equity sharecapital subscribed 52 226Premium on new sharecapital subscribed - 54,984 52 55,210Purchase of own equityshares (91) -Premium on purchaseof own equity shares (186,910) - (187,001) -Net addition to shareholders'equity funds 302,436 705,695Opening shareholders'equity funds 1,697,467 991,772Closing shareholders'equity funds 1,999,903 1,697,467NON-EQUITY SHAREHOLDERS' FUNDSOpening and closingshareholders'non-equity funds 100,000 100,000TOTAL SHAREHOLDERS'FUNDS 2,099,903 1,797,467ENDthemutual.net PLCRelated Shares:
GlobalData