INTERACTIVE PUBLISHING PLC
('IP', 'the Company' or 'the Group')
FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2009
Interactive Publishing plc announces its annual results for the 12 months ended 30 June 2009.
Highlights in the Period
- "Women's Fitness" magazine's status as the Number One performing title on the UK newsstand
during January to June 2009 (ABC Circulation)
- The acquisition of new title "Scarlet" magazine into the Group's portfolio
- Turnover increased from £5.79m to £6.4m over the preceding year (an increase of 10.92%)
Post balance sheet events
- Secured the publisher management contract for the Paul Raymond titles
- Acquired the entire issued share capital of Marine Media Limited
- Awarded an Enterprise Finance Guarantee Scheme Loan to fuel acquisitive growth and working
capital requirements
- Acquired the entire issued share capital of Scissorhands Media Limited, which includes "Hair
Now", the Number One best selling hair magazine in Europe
Chairman's Statement
I am pleased to be able to make this report to you as Chairman of the Company and of the Group.
The period under review has been one of the most challenging years on record for the publishing
industry and its related sectors and the Company has proven that, through its survival and growth
of some key titles, it has the foundations to survive and adapt to these adverse conditions.
During the year, the business operated within the global economic crisis which hit the heart of
the consumer publishing industry. This had the most immediate effect of a decline in advertising
revenues in the sector. As a result, publishers have had to rethink traditional advertising models
and seek creative alternatives to traditional page advertising.
Consequently there have been casualties in the magazine market, with well-established brands like
"Maxim" and "Arena" closing. As with any business during hard times IP has also had to make hard
decisions about its own portfolio and close titles that are no longer profitable. During 2009 we
made the decision to close "FLUSH" in its printed format to concentrate on www.flushonline.com
http://www.flushonline.com. In addition, we have suspended the publication of "FRESH" magazine.
Global magazine launches have remained at a minimum level throughout 2009 and this has led to less
licensing opportunities with our brands. However, since the end of the financial year the Group
has licensed "Women's Fitness Guides" in Germany and is now starting to see a revival of the
licensing market. Further licensing negotiations are ongoing but due to market uncertainty some
earlier negotiations are being put on hold, although the Board believes these can be revived at
any time.
As a result of these challenging conditions, during the year the directors undertook a complete
review of the business. To ensure the Company's ability to remain competitive and adapt readily to
the downturn in the publishing sector, steps were taken to streamline staffing levels, renegotiate
distribution contracts, and make further enhancements to arrangements for print and paper
supplies.
Despite the challenges described the Company proved its ability to acquire, incubate and grow
niche consumer magazine titles and expand their online capabilities. Highlights include "Women's
Fitness" magazine being the Number One performing title on the UK newsstand during January to June
2009 (as reported by the Audit Bureau of Circulation in August 2009) with year on year growth of
117%. In addition the editor for "Attitude" magazine Matthew Todd was short-listed for the
prestigious BSE Men's Lifestyle Editor of the Year award.
In the period under review, the Company acquired "Scarlet" - a niche women's magazine providing
informative features that talks to a female audience in a way that women talk to each other when
men are not around. This was a result of being able to capitalise on the consolidation
opportunities that have been presented by the downturn.
Financial Overview
Turnover, which comprises all of the external turnover in the Group, has increased from £5.79m to
£6.4m over the preceding year (an increase of 10.92%).
The gross profit reduced from £1.36m to £0.75m largely as a result of reductions in the level of
advertising revenues (a reduction of 44.77%).
This large reduction in gross profit resulted in a loss on operations of £0.43m which has been
increased to a loss on operations of £0.79m by £0.36m of impairment provisions against intangible
fixed assets.
Last year showed a profit on operations of £0.03m (as restated by the prior year adjustments).
The Group loss before tax and basic loss per share for the year in review amounted to £0.73m and
0.46p respectively. At 30 June 2009, shareholders' funds were £0.71m. The Directors do not
propose to declare a dividend.
Whilst the loss for the year is disappointing, the Board is confident that the recent
acquisitions, the new trading terms secured and the additional bank finance secured will enable
the Group to achieve a substantial trading profit in the current trading period.
Review of Activities
IP is a London-based magazine publishing company that acquired Trojan Publishing, a company formed
in June 2006 with the strategy of building a publishing group engaged in the production of both
magazine and digital content. IP now has a portfolio of 51 magazines, of which 1 is printed
monthly, 18 are printed every 24 weeks, 16 are printed bi-monthly and 16 have thirteen issues per
annum.
The major titles are "Women's Fitness", "What Diesel", "Scarlet" and "Attitude" (the UK's number
one gay lifestyle magazine).
The Group has applied economies of scale to its diverse portfolio and has streamlined its
activities to exploit the critical mass now being achieved. The directors' strategy is to focus
heavily on the consumer based brands whilst nurturing the adult portfolio to ensure that high
revenues and profitability complement and nuture the growth of the Group.
In addition to straightforward publication of printed titles, IP develops social networking
platforms for its key brands which involve fully interactive websites that enhance the magazine
users' experience of the brand while building the brand awareness. In creating this interactive
experience, a separation has been maintained between the user and the magazine. This enables a
title or brand to maintain traditional revenue streams while adding new revenue streams to flow
from the platform.
The Group's strategy remains for each magazine title in the IP portfolio to develop a niche and
sought after brand that will generate new revenue streams, thereby increasing the longevity of the
life of the title. As titles can be published over several decades, there is a real benefit to be
gained by creating on-target brands.
The key components in creating a brand are: the ability of the consumer to visualise the magazine
experience without being reliant on the editorial content; an understanding of the target
audience; and the ability to interact with that audience.
The directors intend to keep the development of new revenue streams under constant review to
ensure that the Company is not overly dependent upon one revenue source and the portfolio remains
complementary and varied. This is to ensure that the effects of a downturn in one revenue source
have less impact on the overall Company.
Key Performance Indicators
The principal performance indicator used to measure the progress of the Group's business
activities is the contribution generated by each magazine title or brand. This is assessed by
reference to direct costs associated with the production and maintenance of that title or brand.
The directors keep the performance of each title under constant review and take a commercial view,
based on research and their own industry experience, of the future contribution to the business
that, in their opinion, each title or brand is likely to make.
During the year these reviews resulted in the closure of "Flush" magazine, which lost
substantially all of its advertising revenues and the suspension of "Fresh" magazine, which
operated in a highly competitive sector of the magazine market and could not secure the level of
advertising necessary.
Principal risks and uncertainties
The principal risks and uncertainties experienced by the Group are as follows:
- The continued attraction, retention and motivation of qualified employees to provide a high
quality of content in the publication and to drive circulation, advertising and other
revenues;
- changing customer and market demands, and changes in the competitive environment
in which the business operates;
- the effect of current global economic conditions on the level of consumer spend, particularly
on advertising revenues; and
- the ability of senior management to continue to identify suitable targets for future
acquisitions and to develop complimentary revenue streams.
Post Balance Sheet Events
Since the year end Interactive Publishing has been able to take advantage of opportunities in the
sector caused by the downturn by making further acquisitions. This has given IP further market
gravitas to enable it to secure even better prices and terms throughout its business.
On 19 August 2009, Interactive Publishing acquired the entire issued share capital of Marine Media
Limited. This company publishes "Sailing Today" - a magazine committed to providing the most
authoritative, relevant and up to date information on all aspects of sailing. Packed with in depth
reports and independent analysis, Sailing Today's sharp focus is harnessed to an unpretentious,
entertaining and practical approach, enhanced by superb images and cutting-edge graphics; written
for cruising enthusiasts by cruising enthusiasts.
A further acquisition was made on On 12 November 2009, when IP acquired the entire issued share
capital of Scissorhands Media Limited. This company publishes magazines focused on providing
relevant and up to date information on all aspects of the hair and beauty industries, targeted
specifically to inform the consumer. The titles are published on six weekly and bi-monthly
frequencies. "Hair Now" is the number one best selling hair magazine in Europe.
On 24 August 2009, the Group's wholly owned subsidiary, Trojan Publishing Limited, entered into
agreement to manage the administration, production, printing, circulation and distribution of the
magazines published by Paul Raymond Publications Limited. This contract is for a minimum term of
12 months at a rate of £300,000 per annum. These services are being provided via the existing
management and facilities within the Group.
On 12 October 2009, IP was able to draw down the £200,000 Enterprise Finance Guarantee Scheme loan
which had been secured through the support of Barclays bank plc and has provided additional
funding for the Group's working capital needs. This loan is repayable at £4,000 per month.
I would like to take this opportunity to thank shareholders for their support and fellow directors
and staff for their invaluable commitment in building IP to where it is today.
Peter Jay
Chairman
CONSOLIDATED INCOME STATEMENT
For The Year Ended 30 June 2009
Year ended Year ended
30.06.09 30.06.08
Unaudited Restated
£ £
REVENUE 6,426,474 5,793,665
Cost of sales (5,673,907) (4,431,012)
------------ -----------
GROSS PROFIT 752,567 1,362,653
Administrative expenses (1,184,605) (1,277,479)
Impairment provisions (359,018) -
------------ -----------
(LOSS)/PROFIT FROM OPERATIONS (791,056) 85,174
Finance revenue 34 275
Finance costs (22,874) (28,530)
------------ -----------
(LOSS)/PROFIT BEFORE TAX (813,896) 56,919
Taxation 85,657 (21,457)
------------ -----------
(LOSS)/PROFIT FOR THE YEAR (728,239) 35,462
------------ -----------
------------ -----------
Basic (loss)/earnings per share (0.46)p 0.03p
Diluted (loss)/earnings per share (0.46)p (0.03)p
CONSOLIDATED BALANCE SHEET
As at 30 June 2009
30.06.09 30.06.08
Unaudited Restated
£ £
Non-current assets
Intangible assets 2,523,996 2,535,126
Property, plant and equipment 61,975 76,794
Deferred tax 186,200 100,543
----------- ------------
2,772,171 2,712,463
Current assets
Trade and other receivables 1,147,266 1,110,167
Cash and cash equivalents 1,852 3,426
----------- ------------
1,149,118 1,113,593
Current liabilities
Trade and other payables (2,899,307) (2,065,413)
Bank overdraft (198,201) (130,448)
Convertible loan notes (111,500) (161,500)
Commitments under finance leases and hire purchase obligations (1,502) -
----------- ------------
(3,210,510) (2,357,361)
----------- ------------
Net current liabilities (2,061,392) (1,243,768)
----------- ------------
Total assets less current liabilities 710,779 1,468,695
Non-current liabilities
Other payables - (99,175)
Commitments under finance leases and hire purchase obligations (861) -
----------- ------------
NET ASSETS 709,918 1,369,952
----------- ------------
Equity
Issued share capital 420,667 367,916
Share premium account 960,888 435,002
Shares to be issued reserve 267,500 777,500
Merger reserve 2,291,667 2,291,667
Reverse acquisition reverse (2,230,848) (2,230,848)
Retained losses (999,956) (271,717)
----------- ------------
SHAREHOLDERS' FUNDS 709,918 1,369,952
----------- ------------
----------- ------------
CONSOLIDATED CASH FLOW STATEMENT
For The Year Ended 30 June 2009
Year ended Year ended
30.06.09 30.06.008
Unaudited Restated
£ £
Cash flow from operating activities
(Loss)/profit before taxation (813,896) 56,919
Adjusted for:
Finance revenue (34) (275)
Finance costs 22,874 28,530
Depreciation 23,279 17,416
Impairment provisions 359,018 -
Increase in trade and other receivables (58,933) (593,062)
Increase in trade and other payables 560,593 21,437
------------ ------------
Net cash inflow/(outflow) from operating activities 92,901 (469,035)
Cash flows from investing activities
Purchase of intangible fixed assets (163,262) (358,323)
Purchase of financial assets (4,123) -
Purchase of property, plant & equipment (10,414) (34,426)
Finance revenue 34 275
Finance costs (1,313) (28,530)
------------ ------------
Net cash outflow from investing activities (179,078) (421,004)
------------ ------------
Cash flows from financing activities
Issue of shares 82,000 950,000
Expenses of share issues (13,363) (322,915)
Issue of convertible loan notes 62,500 155,000
Repayment of convertible loan notes (112,500) -
Capital element of finance lease payments (1,787) (4,547)
------------ ------------
Net cash from financing activities 16,850 777,538
------------ ------------
Net decrease in cash and cash equivalents (69,327) (112,501)
Cash and cash equivalents at 01.07.08 (127,022) (14,521)
------------ ------------
Cash and cash equivalents at 30.06.09 (196,349) (127,022)
------------ ------------
------------ ------------
Notes to the financial information
The basic loss per share is calculated by dividing the loss for the financial period attributable
to shareholders by the weighted average number of shares in issue. All outstanding warrants and
options were anti-dilutive in the year for the purposes of calculation of the diluted earnings per
share.
Year ended Year ended
30.06.09 30.06.08
The weighted average number of shares were: Number Number
Weighted average number of ordinary shares 157,800,457 105,896,347
Effect of outstanding warrants and options - 16,666,667
------------ ------------
Adjusted weighted average number of
ordinary shares 157,800,457 122,563,014
------------ ------------
Basic (loss)/earnings (0.46)p 0.03p
Diluted (loss)/earnings (0.46)p 0.03p
1. While the financial information included in this announcement has been computed in accordance
with International Financial Reporting Standards (IFRS), this announcement does not itself contain
sufficient information to comply with IFRS. The full financial statements of the company will be
prepared in accordance with IFRS, International Accounting Standards and their interpretations issued
or adopted by the International Accounting Standards Board as adopted for use in the European Union.
2. The information contained in this announcement has not been agreed with the Company's auditor,
nor extracted from audited information. This financial statement does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985 (the "Act").
3. It is likely that the text below will be included in the auditor's report in the Company's
Report and Accounts for the year ended 30 June 2009:
"Emphasis of matter - going concern
In giving our opinion on the financial statements, which is not qualified, we have considered the
adequacy of the disclosures in note 1(a) to the financial statements concerning the Group's
ability to continue as a going concern. The Group made a net loss of £369,221 before impairment
provisions during the year ended 30 June 2009, and at that date had net assets of £709,918.
However, the directors have prepared cash flow forecasts for the period ended 30 June 2011 which
indicate that, with new business and title acquisitions obtained post 30 June 2009 and as a result
of creditor support as detailed in note 1(a), the Group has sufficient resources to continue in
operational existence. These conditions indicate the existence of an uncertainty which may cast
doubt about the Group's ability to continue as a going concern. The financial statements do not
include the adjustments that would result if the Group was unable to continue as a going concern."
4. The Directors have not declared a dividend for the year.
5. This statement was approved by the Board of Directors on 30 November 2009. Copies of this
statement will be available free of charge from the Company's Registered Office at Ground Floor, 207
Old Street, London EC1V 9NR.
Going Concern
The Group made a net loss of £369,221 before impairment provisions of £359,018 during the year
ended 30 June 2009, and at that date had net current liabilities of £2,061,392. However, the
directors have prepared cash flow forecasts for the periods ended 30 June 2010 and 30 June 2011
which indicate that, with new business and title acquisitions secured post 30 June 2009 and as a
result of creditor support as detailed below, the Group has sufficient resources to continue in
operational existence. These conditions indicate the existence of an uncertainty which may cast
doubt about the Group's ability to continue as a going concern. The financial statements do not
include the adjustments that would result if the Group was unable to continue as a going concern.
At the year end the Group's net assets have reduced to £709,918 with a cash balance of £1,852.
Despite this, the Group has maintained good relations with its creditors who continue to support
the business. Since the period end, the Group has acquired two new subsidiaries which are
expected to be cash positive from acquisition and has also secured a significant contract to
provide magazine publishing services to a third party. These are expected to generate substantial
profits and cash generation to the Group over the next twelve months. In addition, a new bank
loan of £200,000 has been provided by Barclays Bank in October 2009, to replace the old overdraft
facility of £90,000 from the Group's previous bankers. The directors continue to minimise and
reduce expenses whilst ensuring that a professional service continues to be provided. Monthly
management accounts produced since the year end show that the group has been able to continue to
operate within its available funds.
The directors have prepared cash flow forecasts for the the period to 30 June 2011 which show that
the group is able to meet its liabilities as they fall due. This is dependent upon the Group
maintaining its good relations with its creditors. The major liabilities which need to be met are
the monthly salaries, print and paper costs and the scheduled repayments on the liabilities
incurred in respect of the acquisition of magazine titles.
The directors are confident that the results of the business since the year end provide a strong
indication that its forecasts will be achieved and on this basis consider that the group has
sufficient resources to continue in operational existence for the foreseeable future and that it
is appropriate to prepare these financial statements on a going concern basis.
Prior year adjustment
The directors have identified prior year adjustments amounting to £135,100 relating to over-
estimations of revenue of £193,000 and the effect of the resultant impact to the tax charge.
These were the result of the accounting practices and systems in place at the time and which have
since been revised during the period under review. Consequently, the directors are confident that
the provisions included in the financial statements for the current year are materially correct.
The prior year restatement has led to a restatement of the revenue, other debtors and relevant tax
amounts only.
The directors of Interactive Publishing Plc accept responsibility for this announcement.
- ends -
INTERACTIVE PUBLISHING PLC
Registered No. 06388765
CONTACT DETAILS:
Interactive Publishing plc
Peter Jay / Justin Sanders Tel: 020 7608 6300
SVS Securities Plc - PLUS Corporate Adviser
Peter Ward / Alexander Brearley Tel: 020 7638 5600
SVS Securities Plc - Broker
Ian Callaway / Alexander Mattey Tel: 020 7638 5600
Interactive Publishing Plc
Notes to editors:
Interactive Publishing plc floated on the PLUS market on 20 February 2008 for the purpose of
making investments in the publishing and marketing services sectors and with the objective of
producing long-term capital growth. Since its Introduction the directors of the Company have been
aggressively expanding the Company's portfolio through the acquisition of magazine titles
primarily in the consumer lifestyle sector.
Interactive Publishing Plc
Interactive Publishing Plc