Final Results
24 June 2008
Totally plc
("Totally", the "Company" or the "Group")
Final results for the year ended 31 December 2007
Totally, the AIM quoted digital marketing and international publisher business
today announces its final results for the year ended 31 December 2007.
Chairman's Statement
Group Overview
The Group comprises a digital marketing agency, Totally Communications, which
derives its revenues from website design and development, IT consultancy and
online marketing and a publishing division with offices in the UK and the US
which are focused on delivering products and services for the world's Jewish
communities.
Financial Summary
During the period under review the Group's turnover for the year ended 31
December 2007 was £2.65 million (2006: £2.82 million). This reduction was in
part due to year on year average exchange rate differences. The average
exchange rate £/USD in 2007 was £2.00 (2006: £1.86).
Administrative expenses before non cash charges for group share options and
amortisation and depreciation were £2.18 million (2006:£2.16 million).
Group EBITDA for the period before head office costs was £0.49 million (2006: £
0.52 million) with an operating profit before head office charges of £0.22
million (2006: £0.43 million).
Publishing division EBITDA improved by 8 per cent. to £0.32 million (2006: £
0.30 million) and digital marketing division EBITDA was £0.16 million (2006: £
0.21 million).
Strategy
During 2007 Dan Assor, Chief Executive Officer, conducted a review of the
Group's operations which resulted in the introduction of a long term strategic
plan at the beginning of the current financial year designed to deliver
shareholder value and increase profitability through a combination of organic
growth and targeted acquisitions specifically within the digital marketing
sector.
Totally's digital marketing agency, Totally Communications, now generates
approximately 25 per cent. of the Group's revenue. A recent report conducted by
the Internet Advertising Bureau, in partnership with PricewaterhouseCooper
(Source: entitled "IAB/PwC Adspend Study H2 2007", dated March 2008) stated
that online advertising spend in the UK for 2007 surpassed £2.8 billion which
is equivalent to 38 per cent. year on year growth on a like for like basis. The
report also forecast that internet advertising revenues would grow to £4.5
billion and account for nearly 30 per cent. of all UK advertising by 2011, up
from 15 per cent. in 2007. The board is confident that the strategy of
providing a range of consultative and technical services to advertisers
represents a high growth opportunity for the Company as marketing budgets
continue to migrate to online channels.
Board, Staff & Clients
I would like to thank Totally's Board and staff for their hard work and efforts
over the past 12 months and also to thank Dan Assor for assuming the role of
Chief Executive Officer. In particular, I would like to thank the clients of
Totally for their loyalty and support.
Prospects
Trading since the beginning of the current financial year has remained stable
and as outlined above the Group is committed to growing the business
particularly within the digital marketing sector and is exploring organic and
acquisition opportunities. Furthermore, the Board believes that the Group is
now in a position to build from a stable platform to increase shareholder
value.
Dr. Michael Sinclair
Non Executive Chairman
24 June 2008
Totally Plc www.totallyplc.com T: 020 7692 6929
Daniel Assor
CEO
John East & Partners Limited T: 020 7628 2200
David Worlidge / Simon Clements
HB Corporate T: 020 7510 8654
Luke Cairns
Group Income Statement
for the year to 31 December 2007
Note Total Total
2007 2006
£000 £000
As restated
Revenue 2,644 2,823
Cost of Sales (488) (528)
Gross profit 2,156 2,295
Administrative expenses (2,200) (2,191)
Earnings before interest, tax, depreciation (44) 104
and amortisation
Depreciation (9) (19)
Amortisation (89) (78)
Impairment (176) -
Operating (loss)/profit (318) 7
Share of loss of joint venture accounted for (4) (18)
using the equity method
Finance costs (38) (50)
Loss before taxation (360) (61)
Income tax 4 17 17
Loss for the year attributable to Equity 8 (343) (44)
Shareholders
Loss per share - basic 7 0.3p 0.05p
Loss per share - diluted 7 0.3p 0.05p
Consolidated Statement of Changes in Equity
for the year ended 31 December 2007
Share Share Translation Profit Equity share-
Reserve
capital premium and loss holders'
account account funds
£000 £000 £000 £000 £000
At 1 January 2005 as 788 2,947 1 (3,311) 425
previously stated
At 1 January 2005 as 788 2,947 1 (3,311) 425
restated
Loss for the year - - - (372) (372)
Credit on issue of - - - 14 14
share options
Credit on issue of - - - 63 63
warrants
Currency translation - - 1 - 1
differences on
foreign currency net
investments
Share capital issued 110 159 - - 269
At 31 December 2005 898 3,106 2 (3,606) 400
Loss for the year - - - (44) (44)
Share capital issued 3 1 - - 4
Credit on issue of - - - 14 14
share options
Credit on issue of - - - 11 11
warrants
At 31 December 2006 901 3,107 2 (3,625) 385
Loss for the year - - - (343) (343)
Share capital issued 223 246 - - 469
Currency translation (1) (1)
differences on
foreign currency net
investments
Credit on issue of - - - 15 15
share options
Credit on issue of - - - 6 6
warrants
At 31 December 2007 1,124 3,353 1 (3,947) 531
Group balance sheet
at 31 December 2007
2007 2006 as restated
Note £000 £000 £000 £000
Non current assets
Goodwill and intangible fixed assets 5 1,014 1,241
Property, plant and equipment 27 21
1,041 1,235
Current assets
Inventories 2 8 5
Trade and other receivables 433 422
Cash and cash equivalents 94 32
535 459
Total assets 1,576 1,694
Current liabilities
Trade and other payables (475) (527)
Borrowings - financial liabilities (542) (755)
(1,017) (1,282)
Non current liabilities
Investment in joint venture (28) (27)
Total liabilities (1,045) (1,309)
Net assets 531 385
Shareholders' Equity
Called up share capital 8 1,124 901
Share premium account 8 3,353 3,107
Translation reserve 8 1 2
Retained earnings 8 (3,947) (3,625)
Equity shareholders funds 8 531 385
Group cash flow statement
for the year ended 31 December 2007
2007 2006
Note £000 £000
Cash flows from operating activities
Operating (loss)/profit (318) 7
Option charge 21 25
Share of joint venture loss (4) -
Amortisation and depreciation 5,6 274 97
Increase in inventories (3) (1)
Increase in trade and other receivables (11) (14)
Decrease in trade and other payables (52) (1)
Cash (utilised)/generated by operations (93) 113
R&D tax credit 4 24 21
Foreign tax on subsidiary profit 4 (7) (5)
Net cash (utilised)/generated by operating (76) 129
activities
Cash flows from investing activities
Purchase of non current asset 5,6 (80) (95)
Net cash utilised by investing activities (80) (95)
Cash outflow before financing (156) 34
Cash flows from financing activities
Interest paid (38) (50)
Issue of ordinary share capital 8 467 -
Receipt for exercise of share options 8 2 4
Net cash from financing activities 431 (46)
Net increase/(decrease) in cash and cash 275 (12)
equivalents
Cash and cash equivalents at beginning of (723) (711)
year
Cash and cash equivalents at 31 December (448) (723)
Notes to the financial statements
1. Publication of non statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The consolidated balance sheet as at 31 December 2007 and the consolidated
profit and loss account, consolidated cash flow statement and associated notes
for the year then ended have been extracted from the Group's financial
statements. Those financial statements have received an unqualified report from
the auditors but have not yet been delivered to the Registrar of Companies. The
2006 accounts have been delivered to the Registrar of Companies and the
auditors gave an unqualified report on them.
The auditors opinion on those financial statements was not qualified but
contained an emphasis of matter paragraph relating to the adequacy of the
future funding of the Company and Group.
2. Basis of preparation
These are the Group's and Company's first financial statements prepared under
IFRS and IFRS 1 "First Time Adoption of International Financial Reporting
Standards" has been applied. The last financial statements under UK Generally
Accepted Accounting Principles ("UK GAAP") were for the year ended 31 December
2006. The current year figures and comparatives have been restated to comply
with IFRS. The transition from UK GAAP to IFRS is explained in note 23 of the
report and accounts.
The accounting policies set out in note 4 of the report and accounts have been
applied consistently to all periods presented in these consolidated financial
statements and in preparing an opening balance sheet at 31 December 2005 for
the purposes of transition to IFRS.
The financial statements are prepared on a going concern basis which the
Directors believe to be appropriate for the following reasons. The Group
currently meets its day to day working capital requirements through two
overdraft facilities which are repayable on demand.
The Group has confirmed the availability of a facility of £550,000 with Bank
Hapoalim which was renewed on 25 June 2007 until 30 June 2008. As security for
the facility, the bank has obtained the unlimited Joint and Several Guarantees
of Dr. Michael J. Sinclair (non-executive Chairman), Mr Leo Noe and Grand Rabbi
Y.A. Korff of Boston (non-executive Director).
In addition, a working capital facility of £50,000 has been agreed with Natwest
which is secured on the Group's debtor book. This facility is due for renewal
on 30 September 2008.
The Directors have prepared projected cash flow information for the period
ending 12 months from the date of their approval of these financial statements.
On the basis of cash flow forecasts and discussions with the Group's bankers,
the Directors consider that the Group will be able to operate within the
facilities currently agreed.
Inherently, there can be no certainty in relation to these matters, but the
Directors believe that the going concern basis of preparation continues to be
appropriate.
3. Segmental analysis
Primary reporting format - business segments
The table below sets out information for the Group's business segments for the
years ended 31 December 2007 and 2006.
Segment revenue represents revenue from external customers arising from the
sale of goods and services.
The type of products sold by each segment is detailed in the Business Review.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Analysis by business segment 2007
Head UK US Total Commu-nications Total
Office Publishing Publishing
Publishing
£000 £000 £000 £000 £000 £000
Revenue - 1,165 808 1,973 671 2,644
EBITDA (535) 190 137 327 164 (44)
Depreciation - (5) (3) (8) (1) (9)
Amortisation (1) (87) - (87) (1) (89)
Impairment losses - (176) - (176) - (176)
Operating (loss)/ (536) (78) 134 56 162 (318)
profit
Finance costs (40) 1 1 2 - (38)
Share of Joint - - (4) (4) - (4)
Venture loss
(Loss)/Profit (576) (77) 131 54 162 (360)
before tax
Income tax - 24 (7) 17 - 17
(Loss)/Profit (576) (53) 124 71 162 (343)
after tax
Segment assets 49 243 1,072 1,315 184 1,548
Segment (572) (284) (98) (373) (63) (1,017)
liabilities
Other segment
information:
Capital
expenditure
Property, plant - 8 19 27 - 27
and equipment
Goodwill - - 941 941 - 941
Other intangible - 68 - 68 5 73
assets
Analysis by business segment 2006
Head UK US Total Commu-nications Total
Office Publishing Publishing
Publishing
£000 £000 £000 £000 £000 £000
Revenue - 1,259 903 2,162 661 2,823
EBITDA (412) 148 154 302 214 104
Depreciation (5) (11) - (11) (3) (19)
Amortisation (2) (76) - (76) - (78)
Impairment - - - - -
losses
Operating (loss) (419) 61 154 215 211 7
/profit
Finance costs (50) - - - (50)
Share of Joint - - (18) (18) - (18)
Venture loss
(Loss)/Profit (469) 61 136 197 211 (61)
before tax
Income tax - 21 (4) 17 - 17
(Loss)/Profit (469) 82 132 214 211 (44)
after tax
Segment assets 33 446 1,058 1,504 299 1,836
Segment (791) (441) (104) (545) (115) (1,451)
liabilities
Other segment
information:
Capital
expenditure
Property, plant - 7 13 20 1 21
and equipment
Goodwill - - 941 941 - 941
Other intangible 1 272 - 272 - 273
assets
Secondary reporting format - Geographical segments
Analysis by geographical segment
UK operations US operations Total
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
Revenue 1,836 1,920 808 903 2,644 2,823
Segment assets 504 804 1,044 1,032 1,548 1,836
Other segment
information:
Capital expenditure
Property, plant and 8 8 19 13 27 21
equipment
Goodwill - - 941 941 941 941
Other intangible 73 273 - - 73 273
assets
Segment revenue by geographical segment represents revenue from external
customers based upon the geographical location of the customer. The analyses of
segment assets and capital expenditure are based upon the location of the
assets.
4. Taxation
a) Taxation charge
2007 2006
£000 £000
Overseas income tax on subsidiary 7 4
undertakings
Research and development tax credit (24) (21)
Total current income tax credit charged in (17) (17)
the income statement
b) Taxation reconciliation
The current income tax credit for the period is explained below:
2007 2006
£000 £000
Loss before tax (360) (43)
Taxation at the standard UK income tax rate (108) (13)
of 30 per cent. (2006: 30 per cent.)
Research and Development tax credit (24) (21)
Deferred Tax movement not provided for 108 13
Foreign tax adjustment 7 4
Total income tax credit charged in the income (17) (17)
statement
c) Deferred tax
Tax losses of £3,776,000 (2006: £3,651,000) are available to relieve future
profits of the Group. A deferred tax asset has not been recognised in respect
of these losses on the grounds of uncertainty in respect of when and the rate
the losses will be recovered at.
5. Goodwill and intangible fixed assets
Software Goodwill Total
£000 £000 £000
Cost
At 1 January 2007 395 941 1,336
Additions 6 - 6
Additions - Internally generated 59 - 59
At 31 December 2007 460 941 1,401
Amortisation
At 1 January 2007 122 - 122
Amortisation during the year 89 - 89
Impairment loss 176 - 176
At 31 December 2007 387 - 387
Net carrying value
At 31 December 2007 73 941 1,014
At 31 December 2006 273 941 1,214
On 29 January 2004 the Group acquired 100 per cent. of the issued share capital
of The Jewish Advocate Publishing Corporation for a share consideration of £
929,000. The amount of goodwill arising as a result of the acquisition was £
941,000. This has been capitalised on the Group balance sheet and is not to be
amortised. As a result the Group performs an annual impairment review as
described in note 4 "Accounting policies - Impairment of assets".
The Directors believe that the purchased goodwill relating to the acquisition
of The Jewish Advocate Publishing Corporation largely relates to the brand name
of The Jewish Advocate newspaper, which they regard as a trophy asset likely to
retain it's value for a useful economic life greater than 20 years.
The goodwill above is allocated to the respective CGU within the US Publishing
sector. The value of the goodwill was tested for impairment during the current
financial year by means of comparing the recoverable amount of each CGU to the
carrying value of its goodwill.
In assessing value in use, the estimated future cash flows are calculated by
preparing cash flow forecasts derived from the most recent financial budget and
an assumed growth rate of 0 per cent., which does not exceed the long-term
average growth rate of the relevant markets. The terminal value of the cash
flow is then calculated by discounting using the Group's cost of capital (8 per
cent.). A period of 30 years has been used for assessing the value in use on
the basis that goodwill as mentioned above, is likely to retain it's value for
a useful economic life greater than 20 years. If the recoverable amount of an
asset is estimated to be less than its carrying amount, the carrying amount of
the asset is reduced to its recoverable amount. An impairment loss is
recognised as an expense.
It is the opinion of the Directors that at 31 December 2007 there was no
impairment of goodwill.
Following the Group's annual impairment review of intangible fixed assets, an
impairment charge of £176,000 (2006: £Nil) was made in the accounts due to a
fall in the value in use of some of the Totally Jewish websites. These websites
were phased out and the income generated has declined. The impairment loss has
been included in administrative expenses in the income statement. The
impairment loss relates to the UK publishing segment as disclosed in note 5.
6. Property, plant and equipment
Short Computer Fixtures Total
and
leasehold equipment fittings
property
£000 £000 £000 £000
Cost
At beginning of year 54 126 89 269
Additions - 1 14 15
At end of year 54 127 103 284
Depreciation
At beginning of year 54 120 74 248
Charge for year - 4 5 9
At end of year 54 124 79 257
Net book value
At 31 December 2007 - 3 24 27
At 31 December 2006 - 6 15 21
7. Loss per share
The calculation of the basic loss per share is based on the loss of £343,000
(2006: £44,000) and on 107,135,514 (2006: 90,042,249) ordinary shares being the
weighted average number of shares in issue during the period. The diluted loss
per share is the same as the basic loss per share, in accordance with IAS33
which prescribes that potential ordinary shares should only be used as dilutive
when, and only when, their conversion to ordinary shares would decrease net
profit or increase net loss per share from continuing operations.
8. Group changes in equity
Share Share Translation Profit Equity
Reserve share-
capital premium and loss
holders'
account account
funds
£000 £000 £000 £000 £000
At 1 January 2005 as 788 2,947 1 (3,311) 425
previously stated
At 1 January 2005 as 788 2,947 1 (3,311) 425
restated
Loss for the year - - - (372) (372)
Credit on issue of share - - - 14 14
options
Credit on issue of - - - 63 63
warrants
Currency translation - - 1 - 1
differences on foreign
currency net investments
Share capital issued 110 159 - - 269
At 31 December 2005 898 3,106 2 (3,606) 400
Loss for the year - - - (44) (44)
Share capital issued 3 1 - - 4
Credit on issue of share - - - 14 14
options
Credit on issue of - - - 11 11
warrants
At 31 December 2006 901 3,107 2 (3,625) 385
Loss for the year - - - (343) (343)
Share capital issued 223 246 - - 469
Currency translation - - (1) - (1)
differences on foreign
currency net investments
Credit on issue of share - - - 15 15
options
Credit on issue of - - - 6 6
warrants
At 31 December 2007 1,124 3,353 1 (3,947) 531
9. Dividends
The Directors are not proposing the payment of a dividend in respect of the
year ended 31 December 2007.
10. Copies of accounts will be sent to shareholders shortly and will also be
available at the Company's registered office, Unit 611, Highgate Studios, 53-79
Highgate Road, Kentish Town, London NW5 1TL and on the Company's website
www.totallyplc.com.
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