- Part 2: For the preceding part double click ID:nRSA4561Qa
be measured reliably
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce
and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include
development engineer's salary and on-costs incurred on software development. The cost of internally generated software
developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired
software. However, until completion of the development project, the assets are subject to impairment testing only.
Amortisation commences upon completion of the asset, and is shown within administrative expenses in the statement of
comprehensive income. Amortisation is calculated to write down the cost less estimated residual value of all intangible
assets by equal annual instalments over their expected useful lives. The rates generally applicable are:
· Development costs 33%
Ancora Customer Relationships
Upon review of the Ancora Solutions' business the directors' opinion was that the Client Sales Relationships, once won,
were likely to remain for the long term due to:
a) Once the boxes were put into storage and not on view to the client, the services tended to roll along
b) A majority of the clients have long term storage requirements (legal and health records) which require documents to
be retained and then called out of storage as required
c) There are significant costs in moving the boxes to another storage unit. As such customers are more likely to start
using another supplier whilst maintaining the existing operation rather than completely transferring the business
At acquisition, the sales and on-going costs of the existing operation were forecast and were discounted back using the
Group's Weighted Average Cost of Capital. This gave a valuation of £280,000, which is amortised over 10 years on a
straight-line basis, being the estimated life of these assets. The amortisation charge is shown within administrative
expenses.
Ancora Solutions Brand Valuation
The relief from royalty valuation method assumes that if a business did not own the Ancora Solutions' brand it would have
to pay a royalty to the owners of the brand for its use. The value of the brand is the capitalised value of the royalties
that the owner is relieved from paying as a result of the ownership of the asset. The royalty attributed to the purchase
was valued using a similar basis to the Customer Relationships and applying a 0.25% royalty rate. At acquisition this gave
a valuation of £3,000, which is amortised over 10 years on a straight-line basis, being the estimated life of these assets.
The amortisation charge is shown within administrative expenses.
f) Land, building, plant and equipment
Land, buildings, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Leased plant
is included in plant and equipment only where it is held under a finance lease.
Disposal of assets
The gain or loss arising on disposal of an asset is determined as the difference between the disposal proceeds and the
carrying amount of the asset and is recognised in profit or loss.
Depreciation
Depreciation is calculated to write down the cost less estimated residual value of all plant and equipment assets by equal
annual instalments over their expected useful lives. The rates generally applicable are:
· Land not depreciated
· Buildings 2%
· Motor vehicles 33%
· Fixtures and fittings 20% to 50%
· Plant 20% to 50%
· Computer equipment 33%
Material residual value estimates are updated as required, but at least annually.
g) Impairment testing of goodwill, other intangible assets, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows ("cash-generating units"). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level.
Goodwill and intangible assets not yet available for use are tested for impairment at least annually. All other individual
assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less cost to sell, and
value in use based on an internal discounted cash flow evaluation. Any impairment loss is first applied to write down
goodwill to nil and then is charged pro rata to the other assets in the cash-generating unit. With the exception of
goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised no longer
exists.
h) Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears
substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at
the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum
lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a
finance leasing liability.
The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged
to profit or loss over the period of the lease.
All other leases are regarded as operating leases and the payments made under them are charged to profit or loss on a
straight-line basis over the lease term. Lease incentives are spread over the term of the lease.
i) Taxation
Current tax is the tax payable based on the profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally
provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred
tax is not provided on the initial recognition of goodwill, nor the initial recognition of an asset or liability, unless
the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available
to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences will be able to be offset against future taxable
income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted at the year end.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of
comprehensive income, except where they relate to items that are charged or credited to other comprehensive income or
directly to equity in which case the related tax charge is also charged or credited directly to other comprehensive income
or equity.
j) Dividends
Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the
dividends are approved in general meeting prior to the year end.
k) Financial assets and liabilities
The Group's financial assets comprise cash and trade and other receivables, which under IAS 39 are classed as "loans and
receivables". Financial assets are recognised on inception at fair value plus transaction costs. Loans and receivables are
non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and
receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less
provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in profit or
loss in the year.
Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all
amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as
the difference between the assets' carrying amount and the present value of estimated future cash flows.
The Group has a number of financial liabilities including trade and other payables and bank borrowings. These are classed
as "financial liabilities measured at amortised cost" in IAS 39. These financial liabilities are carried on inception at
fair value net of transaction costs, and are thereafter carried at amortised cost under the effective interest method.
l) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of
changes in value.
m) Equity
Equity comprises the following:
· "Share capital" represents the nominal value of equity shares
· "Share premium" represents the difference between the nominal and issued share price
· "Other reserves" represents the Merger Reserve resulting from the demerger from KDM International PLC in November 1999
and represents the difference between the value of the shares acquired (nominal value plus related share premium) and the
nominal value of shares issued
· "Profit and loss account" represents retained profits
n) Contribution to defined contribution pension schemes
The pension costs charged against profits represent the amount of the contributions payable to the schemes in respect of
the accounting period.
o) Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the year end.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different
from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise.
p) Share options
The directors do not consider that the amounts involved are material and, as the performance criteria are not expected to
be met, no charge has been recognised as explained in Note 20.
q) Capital management
The capital structure of the Group consists of debt, cash, loans and equity. The Group's objective when managing capital is
to maintain the cash position to protect the future on-going profitable growth which will reflect in shareholder value.
At 30 June 2014 the Group had a closing cash balance of £459,693 (2013: £559,574) and an outstanding mortgage of £1,160,455
(2013: outstanding loan of £29,167).
5. PROFIT BEFORE TAXATION
Profit on ordinary activities is stated after:
2014 2013
£ £
Auditors' remuneration
Fees payable to the Company'sauditors for the audit of the Company's annual accounts 9,000 8,500
Fees payable to the Group's auditors for other services
The audit of the company's subsidiaries pursuant to legislation 12,000 11,000
Taxation services 6,250 4,200
All other services 1,100 3,313
Depreciation and amortisation - charged in administrative expenses
Buildings 49,265 -
Intangible assets - amortisation 162,374 153,883
Intangible assets - impairment 322,974 -
Plant and equipment - owned 162,894 164,218
Plant and equipment - leased 61,903 47,999
Rents payable 75,483 187,695
Foreign exchange cost 22,403 5,212
(Loss)/profit on sale of fixed asset (1,625) 600
══════ ══════
Subsequent to the purchase of the freehold, the sub-tenant of the upper floor agreed to the early termination of its lease
in consideration of which it paid the Group the sum of £352,367.
6. FINANCE INCOME
2014£ 2013£
Bank interest receivable 3,439 3,105
══════ ══════
7. FINANCE EXPENDITURE
2014£ 2013£
Interest on bank borrowings 38,674 3,126
Finance charges in respect of finance leases 6,675 9,295
Other 3,372 3,372
────── ──────
48,721 15,793
══════ ══════
8. DIRECTORS AND EMPLOYEES
Staff costs of the Group, including the directors who are considered to be part of the key management personnel, during the
year were as follows:
2014£ 2013£
Wages and salaries 6,056,388 5,096,151
Social security costs 473,500 426,358
Other pension costs 85,278 78,390
─────── ───────
6,615,166 5,600,899
═══════ ═══════
2014Heads 2013Heads
Average number of employees during the year 302 248
══════ ══════
Remuneration in respect of directors was as follows:
2014£ 2013£
Emoluments 461,065 471,771
Pension contributions to money purchase pension schemes 35,871 38,210
─────── ───────
496,936 509,981
═══════ ═══════
During the year 3 (2013: 3) directors participated in money purchase pension schemes.
The amounts set out above include remuneration in respect of the highest paid director as follows:
2014 2013
£ £
Emoluments 162,979 169,449
Pension contributions to money purchase pension schemes 14,734 14,568
═══════ ═══════
A detailed breakdown of the Directors' Emoluments, in line with the AIM rules, appears in the
Directors' Report.
Key management compensation:
2014£ 2013£
Short term employee benefits 754,178 758,787
Post employment benefits 51,871 53,063
─────── ───────
806,049 811,850
═══════ ═══════
9. SEGMENTAL INFORMATION
IPPlus PLC operates three business sectors, Ansaback, CallScripter and Ancora. These divisions are the basis on which the
Group reports its segment information. IP3 Telecom and PCI-PAL are part of the Ansaback division. The results of these two
activities are not reported separately to management and are not treated as separate segments. The inter-segment sales are
insignificant. Segment results, assets and liabilities include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated assets comprise items such as cash and cash equivalents, taxation
and borrowings. All liabilities, other than the bank loan, are unallocated. Segment capital expenditure is the total cost
incurred during the year to acquire segment assets that are expected to be used for more than one period.
Ansaback CallScripter Ancora Unallocated Total
£ £ £ £ £
2014
Revenue 7,292,026 1,099,867 731,494 - 9,123,387
─────── ─────── ─────── ─────── ───────
Segment result* 1,030,197 (678,653) (93,779) - 257,765
─────── ─────── ─────── ───────
Finance income 3,439
Finance costs (48,721)
───────
Profit before tax 212,483
Taxation 4,701
───────
Profit for the year from continuing operations 217,184
═══════
Segment assets 3,280,204 411,242 257,938 833,798 4,783,182
Segment liabilities (1,160,455) - - (1,071,276) (2,231,731)
Other segment items:
Capital Expenditure
- Plant and Equipment 224,370 2,069 31,181 - 257,620
- Intangible Assets - 157,687 - - 157,687
Depreciation(note 13) 178,244 8,481 38,072 - 224,797
Amortisationof intangible assets(note 12) - 134,074 28,300 - 162,374
Impairmentof intangible assets(note 12) - 322,974 - - 322,974
Depreciation of Buildings (note 14) 49,265 - - - 49,265
* included within the segment result of Ansaback is the profit on lease surrender of £352,367 and of CallScripter is
the loss on impairment of Intangible Assets of £322,974.
Ansaback CallScripter Ancora Unallocated Total
£ £ £ £ £
2013
Revenue 5,759,218 1,490,042 826,898 - 8,076,158
─────── ─────── ─────── ─────── ───────
Segment result 458,456 (49,936) (49,976) - 358,544
─────── ─────── ─────── ───────
Finance income 3,105
Finance costs (15,793)
───────
Profit before tax 345,856
Taxation 127,000
───────
Profit for the year from continuing operations 472,856
═══════
Segment assets 1,428,658 632,309 437,969 1,060,348 3,559,284
Segment liabilities - - - (1,100,606) (1,100,606)
Other segment items:
Capital Expenditure
- Plant and Equipment 115,468 16,651 24,872 - 156,991
- Intangible Assets - 157,972 - - 157,972
Depreciation(note 13) 144,251 6,837 61,129 - 212,217
Amortisationof intangible assets(note 12) 2,505 123,078 28,300 - 153,883
Revenue can be split by location of customers as follows:
2014 2013
£ £
Ansaback
United Kingdom 7,251,254 5,733,104
United States 5,360 3,758
Ireland 5,476 8,336
Hong Kong 9,505 3,285
Luxembourg 9,880 -
Other countries 10,551 10,735
─────── ───────
7,292,026 5,759,218
─────── ───────
Ancora
United Kingdom 731,494 826,898
─────── ───────
731,494 826,898
─────── ───────
CallScripter
United Kingdom 480,270 621,490
United States 521,797 624,261
Ireland 12,557 29,356
Australia 50,817 59,239
Nigeria - 22,080
Luxembourg - 20,306
Belgium 16,857 10,610
Netherlands 3,416 6,427
Denmark 8,237 87,892
Cyprus 5,916 5,960
Other countries - 2,421
─────── ───────
1,099,867 1,490,042
─────── ───────
9,123,387 8,076,158
═══════ ═══════
One single external customer generates 41% (£3,023k) of the Ansaback division's revenues.
All non-current assets are located in the United Kingdom.
10. EARNINGS PER SHARE
The calculation of the earnings per share is based on the profit after taxation added to reserves divided by the weighted
average number of ordinary shares in issue during the relevant period. No diluted profit per share is shown because all
options are non-dilutive as the vesting conditions are not met at the year end. Details of potential share options are
disclosed in note 20.
12 monthsended30 June2014 12 months ended30 June2013
Profit after taxation added to reserves £217,184 £472,856
Weighted average number of ordinary sharesin issue during the period 31,579,732 31,714,825
Basic and diluted earnings per share 0.69p 1.49p
11. TAXATION
2014 2013
£ £
Analysis of charge in the year
Current tax:
In respect of the year:
UK Corporation tax based on the results for the year
at 22.5% (2013:23.75%) (222) -
Adjustments in respect of prior periods 32,923 22,590
─────── ───────
Total current tax credited 32,701 22,590
─────── ───────
Deferred tax:
Origination and reversal of temporary differences (28,000) 93,000
Movement on capitalised intangibles - 11,410
─────── ───────
Total deferred tax (charged)/credited (28,000) 104,410
─────── ───────
Credit 4,701 127,000
═══════ ═══════
═══════
Factors affecting current tax charge
The tax assessed on the profit on ordinary activities for the year was lower than the standard rate of corporation tax in
the UK of 22.5% (2013: 23.75%).
2014 2013
£ £
Profit on ordinary activities before tax 212,483
345,856
═══════ ═══════
Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK of 22.5% (2013: 23.75%) 47,809 82,141
Expenses not deductible for tax purposes 11,148
4,272
Depreciation (less than)/in excess of capital allowances
for the year
(6,155) 1,737
Utilisation of tax losses (98,600)
(90,432)
Other
46,304 2,282
Research and Development claim (33,207)
(22,590)
Movement on deferred tax timing differences 28,000
(93,000)
Liability on capitalised intangibles -
(11,410)
─────── ───────
Total tax credit for the year (4,701)
(127,000)
═══════ ═══════
During the year to 30 June 2014 the Group submitted a Research and Development claim to HMRC relating to the year ended 30
June 2013 of £33,207. This credit was recognised in the Income Statement and included in Debtors.
12. INTANGIBLE ASSETS
The Directors have not considered the carrying value of the Ancora division goodwill as it is not considered material.
In calculating the value in use of the capitalised internal salaries in the CallScripter division, management make
judgements and estimates of future cash flows. In the current year, due to these negative cash flow forecasts, the
directors have fully impaired the Intangible Assets in this division.
2014 Cost Goodwill£ Purchased intangibles £ Capitalised development costs £ Total £
Goodwill 32,500 - - 32,500
Ancora brand - 3,000 - 3,000
Ancora client relationships - 280,000 - 280,000
CallScripter internal salaries - - 926,024 926,024
──────── ──────── ──────── ───────
Cost at 1 July 2013 32,500 283,000 926,024 1,241,524
──────── ──────── ──────── ───────
Goodwill - - - -
Ancora brand - - - -
Ancora client relationships - - - -
CallScripter internal salaries - - 157,687 157,687
──────── ──────── ──────── ────────
Additions - - 157,687 157,687
──────── ──────── ──────── ────────
Goodwill - - - -
Ancora brand - - - -
Ancora client relationships - - - -
CallScripter internal salaries - - - -
──────── ──────── ──────── ───────
Disposals - - - -
──────── ──────── ──────── ───────
Goodwill 32,500 - - 32,500
Ancora brand - 3,000 - 3,000
Ancora client relationships - 280,000 - 280,000
CallScripter internal salaries - - 1,083,711 1,083,711
──────── ──────── ──────── ────────
Cost at 30 June 2014 32,500 283,000 1,083,711 1,399,211
──────── ──────── ──────── ────────
2014 Goodwill£ Purchased intangibles £ Capitalised development costs £ Total £
Amortisation and impairment(included within administrative expenses):
Goodwill - - - -
Ancora brand - 700 - 700
Ancora client relationships - 65,333 - 65,333
CallScripter internal salaries - - 626,663 626,663
──────── ──────── ──────── ───────
Amortisation at 1 July 2013 - 66,033 626,663 692,696
──────── ──────── ──────── ───────
Goodwill - - - -
Ancora brand - - - -
Ancora client relationships - 28,300 - 28,300
CallScripter internal salaries - amortisation - - 134,074 134,074
CallScripter internal salaries - impairment - - - -
──────── ──────── ──────── ───────
Charge for the year - 28,300 134,074 162,374
──────── ──────── ──────── ────────
Goodwill - - - -
Ancora brand - - - -
Ancora client relationships - - - -
CallScripter internal salaries - amortisation - - - -
CallScripter internal salaries - impairment - - 322,974 322,974
──────── ──────── ──────── ──────
Written out in the year - - 322,974 322,974
──────── ──────── ──────── ──────
Goodwill - - - -
Ancora brand - 700 - 700
Ancora client relationships - 93,633 - 93,633
CallScripter internal salaries - amortisation - - 760,737 760,737
CallScripter internal salaries - impairment - - 322,974 322,974
──────── ──────── ──────── ────────
Amortisation at 30 June 2014 - 94,333 1,083,711 1,178,044
──────── ──────── ──────── ────────
Net book amount Goodwill£ Purchased intangibles £ Capitalised development costs £ Total £
Goodwill 32,500 - - 32,500
Ancora brand - 2,300 - 2,300
Ancora client relationships - 186,367 - 186,367
CallScripter internal salaries - - - -
──────── ──────── ──────── ────────
Net book amount at 30 June 2014 32,500 188,667 - 221,167
════════ ════════ ═════════ ═══════
2013 Cost
Goodwill 32,500 - - 32,500
Customer contracts - 15,038 - 15,038
Ancora brand - 3,000 - 3,000
Ancora client relationships - 280,000 - 280,000
CallScripter internal salaries - - 768,053 768,053
──────── ──────── ──────── ───────
Cost at 1 July 2012 32,500 298,038 768,053 1,098,591
──────── ──────── ──────── ───────
Goodwill - - - -
Customer contracts - - - -
Ancora brand - - - -
Ancora client relationships - - - -
CallScripter internal salaries - - 157,972 157,972
──────── ──────── ──────── ────────
Additions - - 157,972 157,972
──────── ──────── ──────── ────────
Goodwill - - - -
Customer contracts - (15,038) - (15,038)
Ancora brand - - - -
Ancora client relationships - - - -
CallScripter internal salaries - - - -
──────── ──────── ──────── ───────
Disposals - (15,038) - (15,038)
──────── ──────── ──────── ───────
Goodwill 32,500 - - 32,500
Customer contracts - - - -
Ancora brand - 3,000 - 3,000
Ancora client relationships - 280,000 - 280,000
CallScripter internal salaries - - 926,025 926,025
──────── ──────── ──────── ───────
Cost at 30 June 2013 32,500 283,000 926,025 1,241,525
──────── ──────── ──────── ───────
2013 Goodwill£ Purchased intangibles £ Capitalised development costs £ Total £
Amortisation(included within administrative expenses):
Goodwill - - - -
Customer contracts - 12,533 - 12,533
Ancora brand - 400 - 400
Ancora client relationships - 37,333 - 37,333
CallScripter internal salaries - - 503,586 503,586
──────── ──────── ──────── ───────
Amortisation at 1 July 2012 - 50,266 503,586 553,852
──────── ──────── ──────── ───────
Goodwill - - - -
Customer contracts - 2,505 - 2,505
Ancora brand - 300 - 300
Ancora client relationships - 28,000 - 28,000
CallScripter internal salaries - - 123,078 123,078
──────── ──────── ──────── ────────
Charge for the year - 30,805 123,078 153,883
──────── ──────── ──────── ────────
Goodwill - - - -
Customer contracts - (15,038) - (15,038)
Ancora brand - - - -
Ancora client relationships - - - -
CallScripter internal salaries - - - -
──────── ──────── ──────── ──────
Written out in the year - (15,038) - (15,038)
──────── ──────── ──────── ──────
Goodwill - - - -
Customer contracts - - - -
Ancora brand - 700 - 700
Ancora client relationships - 65,333 - 65,333
CallScripter internal salaries - - 626,664 626,664
──────── ──────── ──────── ────────
Amortisation at 30 June 2013 - 66,033 626,664 692,697
──────── ──────── ──────── ────────
Net book amount
Goodwill 32,500 - - 32,500
Customer contracts - - - -
Ancora brand - 2,300 - 2,300
Ancora client relationships - 214,667 - 214,667
CallScripter internal salaries - - 299,361 299,361
──────── ──────── ──────── ────────
Net book amount at 30 June 2013 32,500 216,967 299,361 548,828
════════ ════════ ═════════ ═══════
13. PLANT AND EQUIPMENT
2014 Plant£ Motor Vehicles£ Fixtures and Fittings£ Computer Equipment £ Total £
Cost: - - -
At 1 July 2013 135,621 58,113 400,238 448,038 1,042,010
Additions 36,881 9,995 51,053 159,691 257,620
Disposals - (6,000) (4,073) (1,200) (11,273)
──────── ──────── ──────── ──────── ────────
At 30 June 2014 172,502 62,108 447,218 606,529 1,288,357
──────── ──────── ──────── ────────
- More to follow, for following part double click ID:nRSA4561Qc