Final Results

RNS Number : 5347G

CentralNic Group PLC

08 May 2014

Press Release

8 May 2014

CentralNic Group plc

("CentralNic" or "the Company" or "the Group")

Final results

for the year ended 31 December 2013

CentralNic (AIM: CNIC), the owner and manager of an internet distribution platform which derives a revenue share from sales of internet domain names into markets across the world, today announces its audited results for the year ended 31 December 2013.

The Company expects to publish the Annual Report on 19 May 2014, and the Company's Annual General Meeting will be held on 11 June 2014.

Operational highlights

§ Successful listing on AIM on 2 September 2013, raising £5 million in cash for the Company (£4.2 million after costs)

§ Signed contracts to supply domain names to an additional 114 domain retailers from 32 countries, including leading Chinese registrars and the world's largest domain name retailer, GoDaddy, which collaborated with CentralNic on a significant promotion for the .LA domain in Los Angeles in July 2013

§ The CentralNic-distributed domain name .PW has been the world's most successful Top-Level Domain ("TLD") launch since .co was re-launched in 2011, attaining sales of 250,000 domains within the first six months of retail. CentralNic also launched domains ending .in.net, .mex.com and .Africa.com

§ 25 new generic Top-Level Domains ("gTLDs") have passed ICANN's initial evaluation and, being uncontested, will be exclusively powered by CentralNic when they launch from mid-2014. An additional 26 gTLD applications have passed initial evaluation and remain candidates for CentralNic to distribute

Financial highlights

	31 Dec 2013	31 Dec 2012
	£'000	£'000
Billings	3,891	3,380
Revenue	3,051	2,933
Gross profit	2,338	2,152
Adjusted EBITDA*	1,015	1,134
PBT	701	835
Net cashflow from operating activities	1,134	982

* - Earnings before interest, tax, depreciation, amortisation and non-cash charges; excludes share based payments expense of £66,447

§ Billings (including partner share) increased by 15% to £3.89 million (2012: £3.38 million)

§ Net revenue increased by 4% to £3.05 million (2012: £2.93 million), despite being in the pre-revenue phase for new Top-Level Domains. Domain net revenue grew by 7% to £2.65 million (2012 £2.48 million) with growth from .PW revenues, while revenues in other domains distributed by CentralNic were sustained

§ Gross profit margin increased to 76.6% (2012: 73.4%) reflecting the Company's ability to grow registry revenue with minimal incremental cost

§ Adjusted EBITDA of £1.02 million (2012 £1.13 million), reflecting a year-on-year increase offset by £0.20 million of investment in resourcing the registrar business, further developing the registry business and costs related to the new status as an AIM-listed business

§ Net cash-flow from operating activities increased to £1.13 million (2012 £0.98 million) reflecting timing of customer payments on account and an increased accrual for partner revenue share.

Post year end

§ Five new gTLDs entered launch phase in March and April 2014: .wiki; .xyz; .ink; .bar; .rest

§ Four additional gTLD distribution contracts won - .website, .press, .host and .space, plus the distribution contract for .co.com

§ Preferred supplier agreement signed with Domain Venture Partners (Fund II)

§ Fully owned retail subsidiary TLD Registrar Solutions ("TLD RS") launched with retail websites for .menu, .build, .luxury and .london

§ DomiNIC Domain Management software development progressing and marketing commenced

Commenting on the results, John Swingewood, Chairman of CentralNic, said:

"The Directors are extremely pleased with CentralNic's strategic progress in 2013. The Company is achieving sustained growth resulting from the continued demand for our domain names, establishing new retail channels and securing new inventory. The Board is particularly pleased that these results are yet to include revenues from sales of our pipeline of new Top-Level Domains or of our new retail websites, all of which are starting their launch activities in mid-2014.

"Our objectives when we listed on AIM last year were to accelerate our growth through securing new retail channels, including our own proprietary channels, and obtaining new inventory through commercial and government contracts, including making strategic investments in new TLD applicants. I am delighted that we made progress in each of those areas in 2013. The Board is excited by the considerable opportunities for CentralNic and is confident that the Company will achieve its commercial targets for 2014."

-Ends-

For further information, please contact:

CentralNic Group plc
Ben Crawford (CEO)	+44 (0) 203 388 0600

Zeus Capital
Ross Andrews / Nick Cowles ( Corporate Finance)	+44 (0) 161 831 1512
John Goold (Institutional Sales)	+44 (0) 207 533 7716

Abchurch Communications
Jamie Hooper / Julian Bosdet Jamie.hooper@abchurch-group.com	+44 (0) 20 7398 7719

About CentralNic Group plc

§ CentralNic (LSE: CNIC) is one of the world's leading providers of both registry and registrar services to the internet domain name industry, meaning that it is both a wholesaler and a retailer of the names used for website and email addresses. The business operates globally, with customers in over 75 countries. It is headquartered in London, and in September 2013 successfully completed its admission to the AIM market of the London Stock Exchange. At the time of listing, CentralNic's goals were to grow the volume of transactions over CentralNic's platform, giving companies and individuals all over the world the tools to have their own online presence.

§ CentralNic distributes domains on behalf of their clients - owners or rights-holders - on a revenue share basis. CentralNic-distributed domains use an annual registration fee model, paid in advance by the end users, providing an annuity revenue stream for both CentralNic and its clients.

§ CentralNic was selected as the Registry Service Provider and distributor for 60 applications for new generic Top-Level Domains (gTLDs) - a programme devised by the domain industry regulator ICANN to supplement the existing TLDs such as .com and .co.uk with new domain extensions. Out of the 60 applications, there are 25 new gTLDs that will make exclusive use of CentralNic's platform, these include: .wiki, .bar, .college, .press, .rest, .ink, .feedback, .contact and .xyz.

§ CentralNic will also distribute additional TLDs from a list of 26 applications that have passed initial evaluation and are currently in the process of contention resolution. These TLDs include .app, .art, .blog, .law, .llc, .mail, .news, and .school.

§ CentralNic's clients that are acquiring and funding these new TLDs include a number of successful entrepreneurs as well as Global 1000 companies such as Saudi Telecommunications, Qatar Telecom, Etisalat and Kuwait Finance House, and media and entertainment industry leaders The Guardian and William Morris Endeavor. CentralNic will receive service fees or shares in transactional revenues as fees for the distribution of domains using the new TLDs.

§ CentralNic's distribution network has approximately 1,500 registrars, including industry-leading domain retailers such as GoDaddy and Network Solutions. The network includes registrars in over 75 countries that retail domain names directly to the public and wholesale them through an additional network of over 100,000 resellers. End users register these domain names as an address for their websites and emails, as a defensive measure to protect their brands online, as a method of capturing internet traffic and achieving desired rankings on search engines, and as an investment.

§ CentralNic is itself the rights holder for 25 domain extensions, including .us.com, .eu.com, .uk.com, .ru.com and .cn.com. It therefore retains 100% of the wholesale revenues for domains using those domain extensions.

§ CentralNic is the owner of a portfolio of premium domain names including 17 two-letter .com domains including http://us.com and http://uk.com. Reports of sales of two-letter .com domains for US$4.6 million and US$3.7 million in 2013 and 2014 (respectively) serve as evidence of the continued high values the market places on these premium domains.

§ In addition to its growth as a global distributor of domain names, the Directors believe that there is potential for CentralNic to also become a significant retailer of domain names direct to end users. To this end, CentralNic has already obtained the necessary accreditations, built the technology, signed initial contracts and commenced trading as a domain name retailer.

All Group information and news can be found at http://www.centralnic.com

Chief Executive Officer's Report

CentralNic is a profitable, high-margin business with strong cash-flows, already set on a high growth strategy via a portfolio of new Top-Level Domains that I consider second to none.

Performance overview

CentralNic has made significant progress in 2013. The Company listed on the AIM market of the London Stock Exchange, guided its clients' applications for new Top-Level Domains through the evaluation and approvals process, and commenced an aggressive business development strategy aimed at securing recurring revenues for years to come. In addition, the Company achieved its financial performance targets.

Billings were £3.89 million, representing a 15% increase on 2012, and producing net revenues of £3.05 million, an increase of 4% over 2012. Net cash-flow from operating activities was £1.13 million, a 15% improvement over the previous year. This growth in revenues is the result of strong deferred revenues from prior periods, continued growth in annuity billings for existing inventory, the successful launch of new domain extensions and consulting revenues relating to new TLDs.

In September 2013, CentralNic successfully raised £5 million (£4.2 million after costs of placing) through its listing on AIM, and immediately commenced investing the funds raised in its future growth strategies, with £0.20 million of operating expenditure invested in the fourth quarter of 2013. Despite this additional spend and new expenses due to our AIM listing, the Group achieved an adjusted EBITDA of £1.02 million in 2013, representing a strong 33.3% margin on net revenues.

At the year end the Group had cash balances of £4.93 million (2012 £0.16 million).

New Top-Level Domains

The internet is going through what our industry regulator ICANN called "the biggest change since its inception," with the introduction of the new gTLD programme, allowing new entrants to join the ranks of .com, .org, .net, etc - and another 20 or so TLDs which have achieved sales of over 1 million domains.

CentralNic was selected as the exclusive registry provider for 60 gTLD applications, under revenue-share and fee-for-service contracts. At the close of 2013, industry regulator ICANN had completed the Initial Evaluations of these new TLD Applications:

§ 25 passed initial evaluation and are uncontested; they are therefore guaranteed to be powered by CentralNic when they launch

§ 26 applications passed initial evaluation, and are in contention resolution between CentralNic's clients and other applicants. We anticipate that CentralNic will obtain exclusive distribution rights to some of these TLDs.

CentralNic continues to support its clients in navigating the ICANN contracting and contention resolution processes, and assisting them in developing their launch marketing and operational strategies. TLD-related consulting fees that CentralNic received in 2013 will be supplanted with revenues from the sale of domains from the second half of 2014.

Business Development

CentralNic listed on the AIM market with four clearly stated objectives to accelerate our growth. During 2013 CentralNic made considerable progress in realising those objectives:

1. Increasing our global retail market coverage

CentralNic continued to expand its global retailer network in 2013 by signing contracts with 114 new registrars and resellers from 32 countries, including the world's largest domain name retailer, GoDaddy, which has 12 million customers and 57 million domains under management.

2. Engaging with developing markets

CentralNic has expanded its team, and we now have multilingual executives around the world focussed on developing markets. We have already made significant progress accessing what is now the world's largest market of internet users, China, by signing contracts with three leading Chinese registrars.

3. Adding new domains to our inventory

When CentralNic listed in September 2013, its expectations were to obtain distribution contracts for an additional five domain extensions over the ensuing two years. This objective was actually met by April 2014. CentralNic has already won the distribution contracts for .website, .press, .host, .space and .co.com.

4. Entering the retail marketplace ourselves

Extensive planning and development work on CentralNic's retail strategy was undertaken in 2013 and Q1 2014. By May 2014 TLD RS had launched "flagship store" retail websites for .menu, .build, .luxury and .london.

Domain Management Software Acquisition

In December 2013, CentralNic acquired DomiNIC, a domain portfolio management and sales software product, currently used by some of the largest corporations in the German-speaking markets. CentralNic is using this software to integrate its domain distribution platform with the in-house systems used by major corporations.

Outlook

At the end of 2013 the estimated number of people with access to the internet was growing rapidly towards three billion, with smart phone sales now surpassing one billion per year and initiatives like internet.org focused on getting the remaining five billion people online, using the resources of Facebook, Samsung, Nokia, and Ericsson, amongst others.

CentralNic intends to supply this growing demand with domain names and other tools to empower these new internet users to get their own websites. We are already active in 75 geographic markets, making us well-equipped to continue growing globally and supporting consumers and businesses in developing markets seeking to enjoy the benefits of internet adoption.

Taking into account the continuing investment in 2014 and the revenues from new TLD operations commencing in the second half, the Company is well positioned to meet market expectations for 2014.

Ben Crawford

Chief Executive Officer

7 May 2014

CENTRALNIC GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

			Proforma
		2013	2012
	Note	£'000	£'000


Revenue	2,3	3,051	2,933
Cost of sales		(713)	(781)


Gross profit		2,338	2,152
Administrative expenses		(1,578)	(1,317)
Share based payments expense		(66)	-

Operating Profit		694	835

Adjusted EBITDA*		1,015	1,134
Depreciation		(16)	(25)
Amortisation of intangible assets		(239)	(274)
Share based payments expense		(66)	-
Operating Profit		694	835

Finance income		7	-

Profit before taxation		701	835

Income tax expense	4	(171)	(242)


Profit after taxation attributable to equity shareholders		530	593

Other comprehensive income
Other comprehensive income		1	-


Total comprehensive income for the financial year attributable to equity shareholders		531	593



Earnings per share			Proforma
Basic, Pence	5	1.00	1.19
Diluted, Pence	5	0.91	1.19

All amounts relate to continuing activities.

*Earnings before interest, tax, depreciation and amortisation and non-cash charges.

CENTRALNIC GROUP PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		2013	Proforma2012
	Note	£'000	£'000

ASSETS

NON-CURRENT ASSETS
Property, plant and equipment		54	21
Intangible assets		1,941	1,959
Deferred receivables		694	977
Investments		2	2


		2,691	2,959
CURRENT ASSETS
Trade and other receivables		316	497
Cash and bank balances		4,932	160


		5,248	657


TOTAL ASSETS		7,939	3,616



EQUITY AND LIABILITIES

EQUITY
Share capital	6	59	50
Share premium		3,485	-
Share based payments reserve		742	-
Foreign exchange translation reserve		1	-
Retained Earnings		521	629



TOTAL EQUITY		4,808	679


NON-CURRENT LIABILITIES
Other payables		457	725
Deferred tax liabilities		62	107

		519	832
CURRENT LIABILITIES
Trade and other payables and accruals		2,427	1,964
Taxation payable		185	141


		2,612	2,105


TOTAL LIABILITIES		3,131	2,937


TOTAL EQUITY AND LIABILITIES		7,939	3,616

CENTRALNIC GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Share based payments reserve	Foreign exchange translation Reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Balance as at 31 December 2011	50	-	-	-	426	476

Profit after taxation and total comprehensive income for the year	-	-	-	-	593	593
Total comprehensive income for the year	-	-	-	-	593	593

Dividends	-	-	-	-	(390)	(390)


Balance as at 31 December 2012	50	-	-	-	629	679

Profit for the year	-	-	-	-	530	530
Other comprehensive income for the year - translation of foreign operation	-	-	-	1	-	1
Total comprehensive income for the year	-	-	-	1	530	531

Dividends	-	-	-	-	(638)	(638)

Issue of new shares	9	4,991	-	-	-	5,000
Share issue costs	-	(1,506)	-	-	-	(1,506)
Share based payments	-	-	742	-	-	742



Balance as at 31 December 2013	59	3,485	742	1	521	4,808

Share capital represents the nominal value of the company's cumulative issued share capital. Share premium represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of their nominal value less attributable share issue costs and other permitted reductions. Retained profits represent the cumulative value of the profits not distributed to shareholders, but retained to finance the future capital requirements of the CentralNic Group. Share based payments reserve represents the cumulative value of share based payments recognised through equity. Foreign currency translation reserve represents the cumulative exchange differences arising on group consolidation.

CENTRALNIC GROUP PLC

CONSOLIDATED STATEMENT OF CASHFLOWS

	2013	Proforma 2012
	£'000	£'000

Cash flow from operating activities

Profit before taxation	701	835

Adjustments for:

Depreciation of property, plant and equipment	16	25
Amortisation of intangible assets	239	274
Share based payments	66	-


Operating profit before working capital changes	1,022	1,134

Increase in trade and other receivables	(138)	(103)
Increase in trade and other payables and accruals	375	43


Cash flow from operations	1,259	1,074

Income tax paid	(125)	(92)


Net cash flow from operating activities	1,134	982

Cash flow used in investing activities
Purchase of property, plant and equipment	(50)	(20)
Purchase of intangible assets	(216)	(11)
Disposal of intangible assets	-	18
Loan repayments received from third parties	283	-
Purchase of investments	-	(2)


Net cash flow used in investing activities	17	(15)

Cash flow used in financing activities
Proceeds from issuance of ordinary shares	4,169	-
Repayments of borrowings	319	(218)
Dividends paid	(638)	(390)
Reduction in deferred consideration	(223)	(218)
Net cash flow generated from / (used in) financing activities	3,627	(826)


Net increase in cash and cash equivalents	4,778	141
Cash and cash equivalents at beginning of the year	160	19
Exchange losses on cash and cash equivalents	(6)	-

Cash and cash equivalents at end of the year	4,932	160

1. Basis of preparation

CentralNic Group plc ("the Company") was incorporated on 19 June 2013. The Company is the holding company of a group which is engaged in the provision of independent global domain registry services and related strategic consulting services.

The consolidated financial statements have been prepared using accounting policies which are consistent with those adopted in the Company's AIM admission document, as well as applying the following accounting policy in respect of the basis of consolidation.

On 9 August 2013 the Company acquired the entire share capital of CentralNic Limited. As a result of this transaction, the ultimate shareholders in CentralNic Limited received shares in the Company in direct proportion to their original shareholdings in CentralNic Limited.

Under IFRS 3 (revised) "Business Combinations", the acquisition of CentralNic Limited by the Company has been accounted for as a reverse acquisition and the consolidated IFRS financial statements of the Company are therefore a continuation of the financial statements of CentralNic Limited.

As a result, any financial statements after 9 August 2013 represent consolidated financial statements of the Group. Prior to this date, the historical financial statements represent the financial statements of the Company's subsidiary, CentralNic Limited, and CentralNic Limited's subsidiary undertakings. On this basis, the comparative information is pro-forma.

The financial statements are measured and presented in sterling (£), unless otherwise stated, which is the currency of the primary economic environment in which the entities operate. They have been prepared under the historical cost convention, except for financial instruments that have been measured at fair value through profit and loss.

The financial statements have been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2013, but is derived from those accounts. The statutory accounts will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified.

The directors do not recommended the payment of a final dividend.

The financial information set out in this announcement was approved and authorised for issue by the board of directors on 7 May 2014.

2. Segment analysis

CentralNic is an independent global domain name registry service provider. It provides registry services and strategic consultancy and is the owner and registrant for a portfolio of domain names, which it uses as Second Level Domain ("SLD") extensions for domains. Management reviews the activities of the CentralNic Group as one segment, that of domain registry services and related activities.

The CentralNic Group's revenue from external customers, its non-current and current assets (other than deferred tax assets) and its non-current and current liabilities are divided into the following geographical areas:

	2013
	Revenue	Non-current assets	Current assets	Non-current liabilities	Current liabilities
	£'000	£'000	£'000	£'000	£'000
United States	1,269	4	685	-	662
Europe	1,782	2,687	4,563	519	1,950
	3,051	2,691	5,248	519	2,612

	2012
	Revenue	Non-current assets	Current assets	Non-current liabilities	Current liabilities
	£'000	£'000	£'000	£'000	£'000
United States	899	6	183	-	289
Europe	2,034	2,953	474	832	1,816
	2,933	2,959	657	832	2,105

3. Revenue

	2013	2012
	£'000	£'000

Revenue from Domain Sales	2,653	2,479
Revenue from Consultancy	381	424
Other revenue	17	30


	3,051	2,933

The following table shows customers that represent 10% or more of total revenue:

	2013	2012
	£'000	£'000


Customer A	490	516
Customer B	487	345
Other customers	2,074	2,072


	3,051	2,933

4. Income tax expense

	2013	2012
	£'000	£'000

Current tax on profits for the year	137	180
Adjustments in respect of previous years	33	-
Current Income Tax	170	180

Deferred Income Tax	1	62

Income tax expense	171	242

A reconciliation of the current income tax expense applicable to the profit before taxation at the statutory tax rate to the current income tax expense at the effective tax rate of CentralNic is as follows:


	2013	2012
	£'000	£'000

Profit before taxation	701	835

Tax calculated at domestic tax rates applicable to profits in the respective countries	135	- 205

Tax effects of:
Expenses not deductible for tax purposes	1	20
Capital allowances in excess of depreciation	1	-
Adjustments in respect of previous years	33	-
Other adjustments	-	(45)

Current Income Tax	170	180

The Company provides for income taxes on the basis of its income for financial reporting purposes, adjusted for items that are not assessable or deductible for income tax purposes, in accordance with the regulations of domestic tax authorities.

The effective rate of tax for the year was 24.4%. In the UK, the applicable statutory tax rate for 2013 was 23% (2012: 24%). In the USA, federal taxes are due at 15% on the first US$50,000 of taxable income and 25% thereafter, under California tax legislation an additional 8.85% of state tax is due on taxable income.

5. Earnings per share

Earnings per share has been calculated by dividing the consolidated profit after taxation attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.

In calculating earnings per share prior to the group reconstruction on 9 August 2013 whereby the Company became the new parent company of the CentralNic Group it is of limited significance to calculate earnings per share based on the historical equity of the CentralNic Group.

Accordingly, a pro-forma earnings per share has been included based on the relevant number of shares in CentralNic Group plc following the reorganisation on 9 August 2013 but prior to the issue of shares by the Company to raise new funds and the actual shares in issue after that date. The calculation of earnings per share is based on the earnings and number of shares set out below.

Diluted earnings per share has been calculated on the same basis as above, except that the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares (arising from the Group's share option scheme and warrants) into ordinary shares has been added to the denominator. There are no changes to the profit (numerator) as a result of the dilutive calculation. The number of dilutive shares has increased due to the issue of new share options in the current year.

	2013	2012
	£'000	£'000
Profit after tax attributable to owners	530	593
Weighted average number of shares:
Basic	52,814,446	50,000,000
Effect of dilutive potential ordinary shares	5,328,727	-
Diluted	58,143,173	50,000,000
Earnings per share:
Basic	1.00 pence	1.19 pence
Diluted	0.91 pence	1.19 pence

6. Share capital of CentralNic Group Plc

The Company was incorporated on 19 June 2013 and on 9 August 2013 became the new parent company of the CentralNic Group following a re-organisation under which the Company acquired the entire share capital of CentralNic Limited. As a result of this transaction, the ultimate shareholders in CentralNic Limited received shares in the Company in direct proportion to their original shareholdings in CentralNic Limited.

The Company has no authorised share capital.

The Company's issued and fully paid share capital is as follows:

		Share Capital	Share Premium
	Number	£'000	£'000

On incorporation on 19 June 2013	1	-	-
Issued in connection with the acquisition of CentralNic Limited on 9 August 2013	49,999	50	-
Share split	49,950,000	-	-
Placing shares	9,090,909	9	3,485
At 31 December 2013	59,090,909	59	3,485

On incorporation on 19 June 2013 the Company had one issued share of £1.

On 9 August 2013 the Company issued 49,999 ordinary shares of £1 credited as fully paid in consideration for the acquisition of the entire issued share capital of CentralNic Limited.

On 9 August 2013 the Company sub-divided its 50,000 issued ordinary shares of £1 each into 50 million ordinary shares of 0.1 pence each.

On 9 September 2013 the Company issued 9,090,909 new ordinary shares of 0.1 pence each in a placing at 55 pence per share. A share premium was created on the issue of these shares totalling £4,990,909. Issue costs in relation to the listing were £830,390 and a share payment expense for warrants granted on listing of £675,409 has also been charged.

7. Share options and warrants

Share Options

The share option scheme, which was adopted by the Company during the year, was established to reward and incentivise the executive management team and staff for delivering share price growth.

The share option scheme is administered by the Remuneration Committee.

Following the acquisition of CentralNic Limited, 2,530,000 share options which were issued on 1 June 2013 were converted into share options in the Company on the 14 October 2013. On the 14 October 2013 the Company granted a further 1,026,000 share options to directors and employees with an exercise price of 57p each. The weighted fair value of the options granted was 19p per share.

A charge of £66,447 (2012: £nil) has been recognised in the statement of comprehensive income for the year relating to these options.

These fair values were calculated using the Black Scholes option pricing model. The inputs into the model were as follows:

	Share options granted 1 June 2013	Share options granted 14 October 2013
Options Granted	2,530,000	1,026,000
Stock price	10p	55p
Exercise price	10p	57p
Interest rate	5%	5%
Volatility	75%	75%
Time to maturity	10 years	10 years

The expected volatility was determined with reference to similar entities trading on AIM.

Details of the share options outstanding at the year end are as follows:

	Number 31 Dec 2013	WAEP* 31 Dec 2013	Number 31 Dec 2012	WAEP* 31 Dec 2012
Outstanding at 1 January	-	-	-	-
Granted during year	3,556,000	23p	-	-
Expired during year	-	-	-	-
Lapsed during year	-	-	-	-
Outstanding at 31 December	3,556,000	23p	-	-
Exercisable at 31 December	378,639	23p	-	-

* weighted average exercise price.

The weighted average remaining contractual life of the options outstanding at the statement of financial position date is 9.6 years.

Options are exercisable in accordance with the contracted vesting schedules. Options granted in June 2013 may be exercised in respect of 1/12 of the Option Shares on 1 September 2013 and a further 1/12 of the Option Shares following the expiry of each subsequent 3 month period. Options granted on the 14 October may be exercised 3 years after the date of grant.

Warrants

On 12 August 2013, the Company executed a warrant instrument to create and issue warrants to Zeus Capital to subscribe for an aggregate of 1,772,727 ordinary shares. The warrants will expire six years after admission and will be exercisable after the first anniversary of admission (2 September 2014) at the placing price of 55p. The ordinary shares to be allotted and issued on the exercise of any or all of the warrants will rank for all dividends and other distributions declared after the date of the allotment of such shares but not before such date and otherwise pari passu in all respects with the ordinary shares in issue on the date of such exercise allotment.

These fair values were calculated using the Black Scholes warrant pricing model. The inputs into the model were as follows: