REG - PCI-PAL PLC - Final Results <Origin Href="QuoteRef">PCIPP.L</Origin> - Part 1

PCI- PALAnnouncement

23/11/2016 07:05

RNS Number : 8564P
PCI-PAL PLC
23 November 2016
PCI-PAL PLC
("PCI-PAL" or the "Company")
(Formerly IPPlus PLC)
Final Results for 
12 months to 30 June 2016
"A transformational year and a considerable opportunity in secure payment solutions"
PCI-PAL (AIM: PCIP), the customer engagement specialist focussed on secure payment solutions, announces its Final Results for the 12 months ended 30 June 2016 reflecting a period largely accounted for by now discontinued operations following the sale of the call centre focussed operations, Ansaback and CallScripter post period-end.
Financial Highlights:
 Group turnover climbed 27% to 8,265,955 (2015: 6,486,941).
 Group returned to profitability, with profit before taxation on continuing activities of 21,163 (2015: loss of 258,244).
 Closing cash and cash equivalents balance of 895,422 (2015: 1,040,822).
Operational Highlights: 
 Major wins for PCI-PAL which included a major pan-European fitness chain, a market leader in the European gambling sector, a leading national online estate agency, a global retail fashion brand, and a regional public sector authority.
 PCI-PAL transaction volumes rose by 46% in the six months to June 2016.
 Ansaback increased overall sales by 36.3% on the previous year, while CallScripter had a difficult trading year resulting in a loss of 229,631.
Post year end transaction and re-organisation
Summary Highlights:
 Disposed of the Ansaback call centre and CallScripter businesses to an industry consolidator.
 3.35 million up front cash consideration paid on completion with the balance of 3.35 million received in the form of Loan Notes, to be redeemed over 42 months, post completion.
 Sale and leaseback of the Group's property generating further net cash to the Group of c. 0.8 million.
 4.8 million net cash position (including existing Group resources) at completion.
 Special interim dividend of 1 million, as announced on 7 November 2016, to be paid to shareholders on the register as at 18 November 2016. 
 Renamed the PLC to reflect the new focus of the business, as a specialist provider of secure payments solutions, including a cloud-based, PCI DSS(1) compliant suite. 
 Recent contract wins and growing transaction volumes across multiple verticals highlight the significant market opportunity in the market for secure payments solutions and data security.
(1) The Payment Card Industry Data Security Standard or PCI DSS has been developed globally by the major payment card schemes
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Commenting on the results and prospects, William Catchpole, CEO said:
"The recent disposal marks the beginning of our next phase of growth and this is a very exciting time for the business. The opportunities to grow our secure payments operations are without doubt considerable. We have an excellent team in place, cash resources to pursue our strategy and look forward to providing updates on our progress in due course."
Annual Report and Accounts - Copies of this announcement can be downloaded from the Company's website (www.ipplusplc.com). Copies of the Annual Report and Accounts (in addition to the notice of the Annual General Meeting) will be sent to shareholders by 24 November 2016 for approval at the Annual General Meeting to be held on 16 December 2016, and are also being made available today on the Company's website.
For further details, please contact:
PCI-PAL Plc
William Catchpole - Chief Executive Officer
Andy Francombe - Chief Financial Officer
Via Walbrook PR
N+1 Singer (Nomad & Broker)
Aubrey Powell / James White
+44 (0) 20 7496 3000
Walbrook PR
Tom Cooper / Paul Vann
+44 (0) 20 7933 8780
+44 (0) 797 122 1972
tom.cooper@walbrookpr.com
About PCI-PAL PLC:
PCI-PAL provides products and services that enable organisations to take customer payments securely, to store customer data safely, in particular payment card data, and to de-risk their business activities from the threat of data loss and cybercrime. 
PCI-PAL allows companies to achieve compliance with the Payment Card Industry Data Security Standard ("PCI DSS") without the need to invest in or maintain their own infrastructure. PCI DSS is a standard developed by the major payment card schemes globally, and is a requirement for all companies handling card payments from customers. PCI-PAL has an established history in contact centres, software and telephony, with its management team having previously grown businesses successfully in both the outsourcing and desktop software space. 
PCI-PAL's solutions include the 'PCI-PAL Agent Assist' tool and the 'PCI-PAL Automate' service, which are both secure payment solutions for contact centres to process customer credit card details securely and in adherence with PCI DSS. 'PCI-PAL Call Record' enables call recordings to be retrieved within one second of call completion, and call archiving and retrieval via secure web access.
In addition to contact centre payments and data security, PCI-PAL also provides additional cloud communications services including bespoke interactive voice response, multi-lingual automation, international numbering, media response tracking and associated cloud contact centre services.
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2016
I take pleasure in presenting my statement in respect of the year ended 30 June 2016 which includes a review of the considerable changes to the Group since the period end.
Operational Highlights
There is much to report since my previous statement to the market on 26th August 2016 in respect of last year. The Board is pleased to report that the Group ceased to be loss-making last year, and that, since the year-end, we have completed the disposal of the Ansaback call centre business and the CallScripter software business, so focusing all of our efforts on our rapidly developing PCI-PAL secure payment business; PCI being the recognised market acronym for Payment Card Industry.
Reflecting this change, we renamed the holding company PCI-PAL PLC on 3 October 2016.
Financial Summary 
In the year ended 30 June 2016 the Group generated a profit on continuing activities before tax of 21,163 (2015: loss of 258,244), on turnover up 27% at 8,265,955 (2015: 6,486,941). Cash and cash equivalents at 30 June were 895,422 (2015: 1,040,822).
The trends in the business over the period reflected the positive changes that were being made in the Group ahead of the decision to pursue our current strategy of focussing solely on the development of the PCI-PAL business.
Review of Operations
PCI-PAL had an excellent year, securing 32 new contracts across a range of market sectors including retail, services, leisure, public, and charity sector. Transaction volumes for the month of June 2016 were 84% higher compared to June 2015. The continued evolution of the PCI-PAL product suite to provide a wide range of payment security solutions for businesses has allowed us to broaden and extend the value proposition to both existing clients and new business prospects. We maintain a high retention of existing clients, retaining all payments clients for the period.
Significant client wins last year included a global leader in the logistics market, a major pan-European fitness chain, a market leader in the European gaming sector, and a global retail fashion brand. PCI-PAL typically benefits from a high proportion of contracted, recurring revenue. In the 2015/2016 financial year, the business demonstrated its ability to grow this revenue and it is the view of the Board that further investment would allow us to accelerate this growth.
Ansaback had a strong year delivering growth in revenue of 36.3% on the previous year, however much of this was generated from its new significant customer, which represented a major risk for a group of our size.
CallScripter, despite the best endeavours of management and its staff, struggled to secure sufficient new contracts and again generated losses.
Against this background the Group resolved to sell the Ansaback and CallScripter businesses to Direct Response Contact Centres Group Limited, as announced following the year-end on 12 September 2016.
Following this disposal, the Group will now focus all of its efforts and working capital on developing the exciting momentum PCI-PAL achieved last year.
Dividend
The proceeds from the sale will also allow us to return 1 million to shareholders by way of a special interim dividend. In light of the special interim dividend and the results for the year ended 30 June 2016, the Board is not proposing a final dividend in respect of the year to 30 June 2016.
People 
Again I would like to thank each of the Directors and employees for all their efforts during the past year. We said goodbye to Stuart Gordon, who stood down as Chief Financial Officer following the disposal, and his team; Christian Pawsey and his staff at Ansaback; and Kevin Ellis and his staff at CallScripter. We thank each of them for all their efforts on behalf of the Group and wish them every success in the future.
At the same time, we have welcomed to the Board James Barham, who has been responsible for PCI-PAL operations to date, as Commercial Director, and Andy Francombe as Chief Financial Officer, on a part-time basis.
Current trading and outlook 
I am pleased to report that PCI-PAL has continued to make strong progress since the year-end, securing 12 new contracts for the provision of secure payment services, with client highlights including a major utilities company and a global furniture retailer. In addition, we continue to grow our channel business with the agreement of two partner arrangements with global leaders in the business communications and IP Telephony space. Monthly transaction volumes have increased 22% over the four months since year end.
We have strengthened our operations team which is now more capable than ever to deliver projects successfully. Improved delivery is, in turn, expected to shorten the time period between contract signature and commencement of recurring and service usage revenues at service 'go live'.
Our focus on PCI-PAL reflects our ambitious expansion plans for this business. We are targeting substantial growth in both gross revenue and new customer wins, both this year and next, with the objective that PCI-PAL PLC will deliver an inaugural monthly profit in the next financial year. Although we intend to invest meaningful sums to grow this business, our plans are predicated on the Group's existing resources together with the proceeds of the redemption of the Loan Notes received from the recent disposal.
The Board is pleased with the progress to date and is confident that the Group's long term strategy is appropriate. We believe that PCI-PAL's positioning within the 'Fintech' (Financial Technology) space provides exciting growth prospects.
We look forward to reporting to shareholders on our progress in developing this business.
Chris Fielding 
Non-Executive Chairman
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Business Summary
Subsequent to the disposal of the Ansaback call centre business and CallScripter software division, PCI-PAL PLC now operates solely in the PCI and telephony space. The operating company is the fully-owned subsidiary, PCI-PAL (U.K.) Limited (formerly PCI-PAL Limited).
Ansaback Division
The Ansaback call centre is a 24 hours a day, 7 days a week bureau telephony service providing out of hours call handling, emergency cover, dedicated phone resources, non-geographic, low call and Freephone telephone facilities as well as disaster recovery lines and other telecommunication services. Ansaback increased overall sales by 36.3% on the previous year. Dedicated advisor services have shown the largest increase, with the bureau also showing an increase in sales revenue of 12.3% year-on-year and the smaller outbound department increasing by 74.4%.
The Ansaback division's results also incorporate the results of PCI-PAL (formerly IP3 Telecom), which was included within the division prior to the year end.
PCI-PAL
PCI-PAL provides products and services that enable organisations to securely take customer payments, safely store customer data, in particular credit card data, and to de-risk their business activities from the threat of data loss and cybercrime. PCI-PAL is a cloud based solution suite.
The focus in the year for the PCI-PAL and telephony division has been on expanding the PCI-PAL secure payments business. Our expertise in contact centre, and industry relevant telephony, security, and compliance requirements, mean we are well placed to continue to grow our share of an expanding and highly topical market.
PCI-PAL, including its telephony business, had a strong year expanding its client base extensively in the phone payment market, with extensive contract wins through the provision of its agent-assisted and automated payment products, while also seeing growth in supplementary data security and PCI related products and services. The client base continues to consist of blue chip, well-known European and, increasingly, global brands, representing organisations with a high risk of reputation loss in the event of data breach. Recurring revenues have grown 75% year on year, with an additional pipeline of contracted business yet to go live. We maintain a position as one of Europe's leading providers of contact centre payment security solutions; but with this comes increasing interest in our product set from outside of this local region, and this is something we expect to develop on in the coming financial year.
Cyber security and data protection remain high on boardroom agendas, and with the market fuelled by well publicised data breaches across multiple vertical industries, more and more companies are looking to find cost effective, outsourced technical solutions to protect customer data and de-risk their businesses from the threat of data loss. We anticipate this focus will continue for years to come, and we are well placed with a strong client reference base and product set with which to capitalise on the opportunity.
CallSripter Division
CallScripter is an enhanced customer interaction software suite specifically developed for contact centres, telesales and telemarketing operations. Clients gain major benefits by introducing CallScripter's dynamic scripting environment and advanced reporting software into their organisations. The software facilitates the rapid set-up, handling and reporting of sophisticated inbound calls, outbound calls and e-mail campaigns.
The division had a difficult trading year resulting in a loss of 229,631 from a turnover of 637,334. Two main factors contributed: First, being a shift in focus from traditional capex purchasing to cloud models by both a major partner and the market in general resulting in significantly less upfront fees from Outright Purchase sales. Second, being a number of external forces resulting in potential customers delaying, or cancelling entirely, their purchase decisions.
Risks
Principal business risks and uncertainties
The PCI-PAL business has a limited operating history and, as at the date of this document, the Company has no distinct financial statements and/or no meaningful historical financial data upon which prospective investors may base an evaluation of the Continuing Group. The Company is therefore subject to all of the risks and uncertainties associated with any new business enterprise including the risk that the Company will not achieve its investment objectives and that the value of an investment in the Company could decline and may result in the total loss of all capital invested.
There can be no assurances that the Group will successfully develop or that the resources it has will be suitable for its requirements. The Group may require the injection of further capital at a level which the Company or any third party may consider that it is unable to meet.
The principal risks facing the Group and its continuing operations relate broadly to data security, business continuity plans, its intellectual property, its technology, the market place and competitive environment, and dependence on key people.
Intellectual property rights ('IPR'): The Group is reliant on IPR surrounding its internally generated and licensed-in software. Whilst it relies upon IPR protections including patents, copyrights, trademarks and contractual provisions it may be possible for third parties to obtain and use the Group's intellectual property without its authorisation. Third parties may also challenge the validity and/or enforceability of the Group's IPR, although the Directors do not envisage this risk to be significant. In addition, the Directors are aware of the risk of losing key partners.
Data security and business continuity pose inherent risks for the Group. The Group invests in and keeps under review formal data security and business continuity policies which are independently audited.
Market place and competition: The sector in which the Group operates in and/or routes to market may undergo rapid and unexpected changes or not develop at a pace in line with the Directors' expectations. It is also possible that competitors will develop similar products; the Group's technology may become obsolete or less effective; or that consumers use alternative channels of communications, which may reduce demand for the Group's products and services. In addition, the Group's success depends upon its ability to develop new, and enhance existing products, on a timely and cost effective basis, that meet changing customer requirements and incorporate technological advancements. The Directors review the market movements, client requirements and competitive suppliers to ensure that the current portfolio is as required.
The Directors ensure that the team are properly directed, trained and motivated to address this issue.
Key personnel: The Group depends on the services of its small team of key technical, operations, sales and management personnel. The loss of the services of any one or more of these persons could have a material adverse effect on the Group's business. The Group maintains an active policy to identify, hire, train, motivate and retain highly skilled personnel in key functions.
Key performance indicators
The Company monitors a number of key performance indicators, using both financial and non-financial metrics, on a daily and monthly basis. The most important of these are as follows:
 Cash on a daily basis
 Sales and results against budget on a monthly basis
 Sales pipeline on a monthly basis
Employee Relations and Social Responsibilities
The Company continues to advocate a healthy staff policy via its participation in Investors in People together with pursuing a Health and Well-being policy for encouraging healthy practices. The Company continues to encourage car sharing, bus usage and the cycle to work initiative.
The Company employees support a designated charity each year and raised 3,205.
Summary and Outlook
The recent disposal marks the beginning of our next phase of growth and this is a very exciting time for the business. The opportunities to grow our secure payments operations are without doubt considerable. We have an excellent team in place and cash resources to pursue our strategy and look forward to providing updates on our progress in due course.
By Order of The Board
William A Catchpole
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Note
2016
2015
Revenue
8,265,955
6,486,941
Cost of sales
(6,382,528)
(4,955,327)
Gross profit
1,883,427
1,531,614
Administrative expenses
(1,832,745)
(1,751,157)
Operating profit/(loss)
50,682
(219,543)
Finance income
6
2,892
2,323
Finance expenditure
7
(32,411)
(41,024)
Profit/(loss) before taxation
5
21,163
(258,244)
Taxation
11
99,432
(279,778)
Profit/(loss) for year from continuing activities
120,595
(538,022)
Profit/(loss) for the period from discontinued activities
28
36,460
(53,856)
Profit/(loss) and total comprehensive income attributable to equity holders of the parent company
157,055
(591,878)
Basic and diluted earnings per share
10
 0.50p
 (1.88)p
The accompanying accounting policies and notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Note
2016
2015
ASSETS
Non-current assets
Land and buildings
14
1,600,600
1,653,304
Plant and equipment
13
251,852
224,333
Intangible assets
12
-
-
Deferred taxation
18
-
-
Non-current assets
1,852,452
1,877,637
Current assets
Trade and other receivables
15
1,483,382
1,199,628
Current tax assets
-
-
Cash and cash equivalents
895,422
1,040,822
Current assets
21
2,378,804
2,240,450
Total assets
4,231,256
4,118,087
LIABILITIES
Current liabilities
Trade and other payables
16
(1,000,074)
(1,042,266)
Current portion of long-term borrowings
16
(62,198)
(51,762)
Current liabilities
21
(1,062,272)
(1,094,028)
Non-current liabilities
Long term borrowings
17
(1,147,020)
(1,111,818)
Non-current liabilities
(1,147,020)
(1,111,818)
Total liabilities
(2,209,292)
(2,205,846)
Net assets
2,021,964
1,912,241
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Note
2016
2015
EQUITY
Equity attributable to equity holders of the parent
Share capital
20
317,212
317,212
Share premium
89,396
89,396
Other reserves
18,396
18,396
Profit and loss account
1,596,960
1,487,237
Total equity
2,021,964
1,912,241
The accompanying accounting policies and notes form an integral part of these financial statements.
The Board of Directors approved and authorised the issue of the financial statements on 22 November 2016.
W A Catchpole
Director
A K Francombe
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
2016
2015
Cash flows from operating activities
Profit/(loss) after taxation
157,055
(591,878)
Adjustments for:
Depreciation
206,580
209,722
Interest income
(2,892)
(2,323)
Interest expense 
28,771
35,974
Interest element of finance leases
3,640
4,490
Other interest
-
560
Income taxes
-
(222)
Deferred tax write off
-
280,000
Loss on sale of plant and equipment
210
-
Profit on sale of Ancora Solutions
-
(203,697)
Decrease/(increase) in trade and other receivables
(294,153)
611,157
Decrease in trade and other payables
(27,698)
26,235
Cash generated from continuing operations
71,513
370,018
Dividend paid
(47,332)
(47,332)
Income taxes received
99,432
33,214
Interest element of finance leases 
(3,640)
(4,490)
Interest paid
(28,771)
(35,974)
Net cash from continuing operating activities
91,202
315,436
Net cash used from discontinued operations
-
(115,906)
Net cash from operating activities
91,202
199,530
Cash flows from investing activities
Consideration for sale of Ancora division
-
500,000
Deferred consideration from sale of Commercial Finance Brokers (UK) Limited
-
13,000
Purchase of land, buildings, plant and equipment
(181,605)
(73,304)
Interest received
2,892
2,323
Net cash (used)/generated in investing activities in continuing activities
(178,713)
442,019
Net cash used in investing activities in discontinued activities
-
(2,000)
Net cash (used)/generated in investing activities
(178,713)
440,019
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
FOR THE YEAR ENDED 30 JUNE 2016
2016
2015
Cash flows from financing activities
Repayment of borrowings
(22,228)
(22,971)
Capital element of finance lease rentals
(35,661)
(35,449)
Net cash used in financing activities
(57,889)
(58,420)
Net (decrease)/increase in cash
(145,400)
581,129
Cash and cash equivalents at beginning of year
1,040,822
459,693
Net (decrease)/increase in cash
(145,400)
581,129
Cash and cash equivalents at end of year
895,422
1,040,822
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Share capital
Share
premium
Other reserves
Profit and loss account
Total
Equity
Balance at 1 July 2014
317,212
89,396
18,396
2,126,447
2,551,451
Dividend paid
-
-
-
(47,332)
(47,332)
Transactions with owners
-
-
-
(47,332)
(47,332)
Loss and total comprehensive loss for the year
-
-
-
(591,878)
(591,878)
Balance at 30 June 2015
317,212
89,396
18,396
1,487,237
1,912,241
Dividend paid
-
-
-
(47,332)
(47,332)
Transactions with owners
-
-
-
(47,332)
(47,332)
Profit and total comprehensive income for the year
-
-
-
157,055
157,055
Balance at 30 June 2016
317,212
89,396
18,396
1,596,960
2,021,964
The accompanying accounting policies and notes form an integral part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.  AUTHORISATION OF FINANCIAL STATEMENTS
The Group's consolidated financial statements (the "financial statements") of PCI-PAL PLC (the "Company") and its subsidiaries (together the "Group") for the year ended 30 June 2016 were authorised for issue by the Board of Directors on 22 November 2016 and the Chief Executive, William Catchpole, and the Chief Financial Officer, Andrew Francombe, signed the balance sheet.
2.  NATURE OF OPERATIONS AND GENERAL INFORMATION
PCI-PAL PLC is the Group's ultimate parent company. It is a public limited company incorporated and domiciled in the United Kingdom. PCI-PAL PLC's shares are quoted and publicly traded on the AIM division of the London Stock Exchange. The address of PCI-PAL PLC's registered office is also its principal place of business.
The Company operates principally as a holding company. The main subsidiaries are engaged in the provision of a 24 hours a day, 7 days a week out of hours and overflow telephony service, the development and sale of contact centre contact relationship management software and the provision of secure storage and destruction of documents.
3.  STATEMENT OF COMPLIANCE WITH IFRS
These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The principal accounting policies adopted by the Group are set out in note 4. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these financial statements.
Standards and interpretations in issue, not yet effective
New standards and interpretations currently in issue but not yet effective for accounting periods commencing on 1 July 2015 are:
- Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (effective 1 January 2016)
- Amendments to IAS 27: Equity Method in Separate Financial Statements (effective 1 January 2016)
- Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements (effective 1 January 2016)
- IFRS15 Revenue from Contracts with Customers (effective date 1 January 2018).
- IFRS16 Leases (not yet effective).
The directors anticipate that the adoption of these standards and interpretations in future periods will have no material effect on the financial statements of the Group.
4. PRINCIPAL ACCOUNTING POLICIES
a) Basis of preparation
The financial statements have been prepared on a going concern basis in accordance with the accounting policies set out below. These are based on the International Financial Reporting Standards ("IFRS") issued in accordance with the Companies Act 2006 applicable to those companies reporting under IFRS as adopted by the European Union ("EU").
a) Basis of preparation (continued)
The financial statements are presented in pounds sterling (), which is also the functional currency of the parent company, and under the historical cost convention. 
b) Basis of consolidation
The Group financial statements consolidate those of the Company and its subsidiary undertakings (see note 19) drawn up to 30 June 2016. A subsidiary is a company controlled directly by the Group and all of the subsidiaries are 100% owned by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
The Group has utilised the exemption (within IFRS 1) not to apply IFRS to pre-transition business combinations. The results of IPPlus (UK) Limited are consolidated using merger accounting principles. All other subsidiaries are accounted for using the acquisition method.
c) Revenue
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for services provided, excluding VAT and trade discounts. Revenue is recognised upon the performance of services or the transfer of risk to the customer.
Contact centre revenue is recognised based on billable minutes in the month, along with standing monthly charges and any specific supplementary service charges.
Software revenue is recognised at the point of sale for contracts sold in perpetuity, as it is at this point that the Group has performed all of its obligations. Revenue from annual software licences and maintenance contracts may be received in a single amount or in monthly instalments. Such turnover is recognised evenly over the period to which it relates, reflecting the performance of obligations over time.
Ancora revenue is recognised based on the services provided in the month, along with standing monthly charges and any specific supplementary service charges.
d) Intangible assets
Research and development
Expenditure on research (or the research phase of an internal project) is recognised as an expense in the period in which it is incurred.
Development costs incurred are capitalised when all of the following conditions are satisfied:
 completion of the intangible asset is technically feasible so that it will be available for use or sale
d) Intangible assets (continued)
 the Group intends to complete the intangible asset
 the Group is able to use or sell the intangible asset
 the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits
 there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
 the expenditure attributable to the intangible asset during the development can be measured reliably
The cost of an internally generated intangible asset comprises all directlyattributable 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%
e) 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 differencebetween 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.
f) 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.
g) 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.
h) Taxation
Current tax is the tax payable based on the profit for the year, accounted for at the rates enacted at 30 June 2016.
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, accounted for at the rates enacted at 30 June 2016, 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.
h) Taxation (continued)
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.
i)  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. Interim dividends are recognised when paid.
j)  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.
k) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments with maturities of three months or less from inception that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
l) 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
 "Treasury shares" represents ordinary shares owned by the company and the cost of treasury shares are deducted from the profit and loss account in reserves.
m)  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.
n) 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.
o) Significant judgements and estimates
The Group makes estimates concerning the future in assessing the carrying amounts of capitalised development costs. To substantiate the carrying amount the directors have applied the criteria of IAS 38 and considered the future economic benefit likely as a result of the investment. In the prior year Directors fully impaired the carrying value of the CallScripter intangible asset.
Careful judgement by the directors is applied when deciding whether the recognition requirements for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each balance sheet date. In addition, all internal activities related to the research and development of new software products are continuously monitored by the directors. No costs are considered to meet the criteria in the current year.
The calculation of the deferred tax asset involved the estimation of future taxable profits. In the year ended 30 June 2015, the Directors assessed the carrying value of the Deferred Tax asset and decided to write off the balance, as the utilisation of the assets was unlikely in the near future due to Research and Development tax credits. The directors have reached the same conclusion for this accounting period and so no asset has been recognised.
5.  PROFIT BEFORE TAXATION
Profit on ordinary activities is stated after:
2016
2015
Auditor's remuneration
Fees payable to the Company's
auditors for the audit of the Company's annual accounts
9,000
9,000
Fees payable to the Group's auditors for other services
The audit of the company's subsidiaries pursuant to legislation
13,600
13,500
Taxation services
25,950
5,000
All other services
-
1,680
Depreciation and amortisation - charged in administrative expenses
Buildings
52,704
49,743
Plant and equipment - owned
113,130
121,122
Plant and equipment - leased
40,747
38,856
Rents payable
38,590
216,775
Foreign exchange gain
11,784
829
Loss on sale of fixed asset
98
-
Amounts of research and development written off
138,164
136,128
6. FINANCE INCOME
2016
2015
Bank interest receivable
2,892
2,323
7. FINANCE EXPENDITURE
2016
2015
Interest on bank borrowings
28,771
35,974
Finance charges in respect of finance leases
3,640
4,490
Other
-
560
32,411
41,024
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:
2016
2015
Wages and salaries
5,460,139
4,694,213
Social security costs
412,603
361,326
Other pension costs
87,623
90,533
5,960,365
5,146,072
2016
Heads
2015
Heads
Average number of employees during the year
329
255
 Remuneration in respect of directors was as follows:
2016
2015
Emoluments
482,145
466,231
Pension contributions to money purchase pension schemes
29,255
35,871
511,400
502,102
During the year 3 (2015: 3) directors participated in money purchase pension schemes.
The amounts set out above include remuneration in respect of the highest paid director as follows:
2016
2015
Emoluments
179,486
162,442
Pension contributions to money purchase pension schemes
7,552
14,734
A detailed breakdown of the Directors' Emoluments, in line with the AIM rules, appears in the Directors' Report.
Key management compensation:
2016
2015
Short term employee benefits
650,593
721,095
Post employment benefits
36,380
52,996
686,973
806,049
9. SEGMENTAL INFORMATION
PCI-PAL PLC operates three business sectors, Ansaback, CallScripter and Ancora Solutions (the discontinued activity). 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
Central
Continuing Activities
Discontinued
Activities
Total
2016
Revenue
7,592,621
673,334
-
8,265,955
(311)
8,265,644
Segment result
1,006,743
(229,631)
(726,430)
50,682
36,460
87,142
Finance income
-
-
2,892
2,892
-
2,892
Finance costs
-
-
(32,411)
(32,411)
-
(32,411)
Profit/(loss) before tax
1,006,743
(229,631)
(755,949)
21,163
36,460
57,623
Segment assets
3,146,266
153,893
931,114
4,231,273
-
4,231,273
Segment liabilities
(1,115,256)
-
(1,094,036)
(2,209,292)
-
(2,209,292)
Other segment items:
Capital Expenditure
- Plant and Equipment
179,875
1,730
-
181,605
-
181,605
Depreciation
(note 13)
143,277
10,600
-
153,877
-
153,877
Depreciation of Buildings
(note 14)
52,704
-
-
52,704
-
52,704
9. SEGMENTAL INFORMATION (continued)
Ansaback
CallScripter
Central
Continuing Activities
Discontinued
Activities
Total
2015
Revenue
5,441,094
1,045,847
-
6,486,941
362,803
6,849,744
Segment result
424,508
(31,466)
(612,585)
(219,543)
(53,856)
(273,399)
Finance income
-
-
2,323
2,323
-
2,323
Finance costs
-
-
(41,024)
(41,024)
-
(41,024)
Profit/(loss) before tax
424,508
(31,466)
(651,286)
(258,244)
(53,856)
(312,100)
Segment assets
2,715,970
256,894
1,145,223
4,118,087
-
4,118,087
Segment liabilities
(1,189,246)
-
(1,016,600)
(2,205,846)
-
(2,205,846)
Other segment items:
Capital Expenditure
- Plant and Equipment
58,443
962
-
59,405
3,784
63,189
Depreciation
(note 13)
146,696
13,282
-
159,978
20,674
180,652
Amortisation
of intangible
assets (note 12)
-
-
-
-
14,150
14,150
Depreciation of Buildings
(note 14)
49,743
-
-
49,743
-
49,743
9. SEGMENTAL INFORMATION (continued)
Revenue can be split by location of customers as follows:
2016
2015
Continuing activities
Ansaback division
United Kingdom
7,466,994
5,396,625
Denmark
66,260
3,129
Australia
36,549
27,428
France
7,140
4,779
Greece
5,980
-
Ireland
4,877
3,129
United States
2,501
2,793
Netherlands
2,093
-
Other countries
227
3,211
7,592,621
5,441,094
CallScripter division
United Kingdom
300,200
404,313
United States
294,666
522,941
Australia
34,001
47,500
Ireland
20,607
6,109
Luxembourg
15,938
-
Greece
7,922
-
Netherlands
-
36,838
Belgium
-
12,136
Denmark
-
7,637
Cyprus
-
4,838
France
-
3,535
673,334
1,045,847
Continuing activities
8,265,955
6,486,941
Discontinued activities
Ancora Solutions division
United Kingdom
(311)
362,803
8,265,644
6,849,744
One single external customer generates 22% - 1,651,961 (2015: 14% - 772,622) 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 as adjusted for treasury shares. No diluted profit per share is shown because all options are non-dilutive as the vesting conditions were not met at the year ended 30 June 2015 and the options had expired by 30 June 2016. Details of potential share options are disclosed in note 20.
12 months
ended
30 June
2016
12 months
ended
30 June
2015
Profit/(loss) after taxation added to reserves
157,055
(591,878)
Weighted average number of ordinary shares
in issue during the period
31,553,949
31,553,949
Basic and diluted earnings per share
0.50p
(1.88)p
11.  TAXATION
2016
2015
Analysis of charge in the year
Current tax:
In respect of the year:
UK Corporation tax based on the results for the year
at 20% (2015: 20.75%)
-
222
Adjustments in respect of prior periods
99,432
-
Total current tax credited
99,432
222
Movement on recognition of tax losses
-
(280,000)
Total deferred tax charged
-
(280,000)
Credit/(charge)
99,432
(279,778)
11.  TAXATION (continued)
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 20% (2015: 20.75%).
2016
2015
Profit/(loss) on ordinary activities before tax
21,163
(258,244)
Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 20% (2015: 20.75%)
11,525
(64,762)
Expenses not deductible for tax purposes
3,090
3,462
Depreciation (less than)/in excess of capital allowances
for the year
28,538
23,177
Utilisation of tax losses
(50,341)
-
Unrelieved tax losses
-
33,547
Other
7,188
4,576
Research and Development claim
-
-
Movement on deferred tax timing differences
-
(280,000)
Prior year adjustment
99,432
222
Total tax credit/(charge) for the year
99,432
(279,778)
The company has unrecognised tax losses carried forward of 1.8 million (2015: 2.0 million).
During the year to 30 June 2016 the Group submitted a Research and Development claim to HMRC relating to the year ended 30 June 2015 and a payment was received of 99,432. This credit was recognised in the Income Statement.
12.  INTANGIBLE ASSETS
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 previous year, due to these negative cash flow forecasts, the directors fully impaired the Intangible Assets in this division.
2016
Cost
Goodwill
Purchased intangibles 
Capitalised development costs 
 Total
 
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
1,083,711
1,083,711
Cost at 1 July 2015
-
-
1,083,711
1,083,711
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
1,083,711
1,083,711
Cost at 30 June 2016
-
-
1,083,711
1,083,711
12.  INTANGIBLE ASSETS (continued)
2016
Goodwill
Purchased intangibles 
Capitalised development costs 
 Total
 
Amortisation and impairment
(included within administrative expenses):
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
1,083,711
1,083,711
 
Amortisation at 1 July 2015
-
-
1,083,711
1,083,711
 
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
1,083,711
1,083,711
Amortisation at 30 June 2016
-
-
1,083,711
1,083,711
Net book amount
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
-
-
Net book amount at 30 June 2016
-
-
-
-
12. INTANGIBLE ASSETS (continued)
2015
Goodwill
Purchased intangibles 
Capitalised development costs 
 Total
 
Cost
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 1 July 2014
32,500
283,000
1,083,711
1,399,211
Goodwill
(32,500)
-
(32,500)
Ancora brand
-
(3,000)
-
(3,000)
Ancora client relationships
-
(280,000)
-
(280,000)
CallScripter internal salaries
-
-
-
-
Disposals
(32,500)
(283,000)
-
(315,500)
Goodwill
-
-
-
 -
Ancora brand
-
-
-
 -
Ancora client relationships
-
-
-
 -
CallScripter internal salaries
-
-
1,083,711
1,083,711
Cost at 30 June 2015
-
-
1,083,711
1,083,711
12.  INTANGIBLE ASSETS (continued)
2015
Goodwill
Purchased intangibles 
Capitalised development costs 
 Total
 
Amortisation
(included within administrative expenses):
Goodwill
-
-
-
-
Ancora brand
-
700
-
700
Ancora client relationships
-
93,633
-
93,633
CallScripter internal salaries
-
-
1,083,711
1,083,711
 
Amortisation at 1 July 2014
-
94,333
1,083,711
1,178,044
 
Goodwill
-
-
-
-
Ancora brand
-
150
-
150
Ancora client relationships
-
14,000
-
14,000
CallScripter internal salaries
-
-
-
-
Charge for the year
-
14,150
-
14,150
Goodwill
-
-
-
-
Ancora brand
-
(850)
-
(850)
Ancora client relationships
-
(107,633)
-
(107,633)
CallScripter internal salaries
-
-
-
-
Written out in the year
-
(108,483)
-
(108,483)
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
1,083,711
1,083,711
Amortisation at 30 June 2015
-
-
1,083,711
1,083,711
Goodwill
-
-
-
-
Ancora brand
-
-
-
-
Ancora client relationships
-
-
-
-
CallScripter internal salaries
-
-
-
-
Net book amount at 30 June 2015
-
-
-
-
13.  PLANT AND EQUIPMENT
 
2016
Plant
Motor Vehicles
Fixtures and 
Fittings
Computer Equipment
Total
Cost:
At 1 July 2015
25,154
59,108
423,430
511,102
1,018,794
Additions
-
-
19,922
161,683
181,605
Disposals
-
-
(33,381)
(62,193)
(95,574)
At 30 June 2016
25,154
59,108
409,971
610,592
1,104,825
Depreciation (included within administrative expenses):
At 1 July 2015
10,204
47,028
369,802
367,427
794,461
Charge for the year
3,526
4,999
33,971
111,381
153,877
Disposals
-
-
(33,172)
(62,193)
(95,365)
At 30 June 2016
13,730
52,027
370,601
416,615
852,973
Net book amount
at 30 June 2016
11,424
7,081
39,370
193,977
251,852
2015
Plant
Motor Vehicles
Fixtures
and Fittings
Computer Equipment
Total
At 1 July 2014
172,502
62,108
447,218
606,529
1,288,357
Additions
3,784
-
2,846
56,559
63,189
Disposals
(151,132)
(3,000)
(26,634)
(151,986)
(332,752)
At 30 June 2015
25,154
59,108
423,430
511,102
1,018,794
Depreciation (included within administrative expenses):
At 1 July 2013
85,200
42,577
358,170
381,154
867,101
Charge for the year
18,698
7,451
37,640
116,863
180,652
Disposals
(93,694)
(3,000)
(26,008)
(130,590)
(253,292)
At 30 June 2015
10,204
47,028
369,802
367,427
794,461
Net book amount
at 30 June 2015
14,950
12,080
53,628
143,675
224,333
13.  PLANT AND EQUIPMENT (continued)
Included within the net book amount of 251,852 (2015: 224,333) is 97,929 (2015: 36,015) relating to assets held under finance leases. The depreciation charged to the financial statements in the year in respect of such assets amounted to 40,747 (2015: 42,863).
14. LAND AND BUILDINGS  
2016
Land
Buildings
 
 Total
 
Cost:
At 1 July 2015
428,347
1,250,520
1,678,867
Additions
-
-
-
Disposals
-
-
-
At 30 June 2016
428,347
1,250,520
1,678,867
Depreciation (Included within administrative expenses):
At 1 July 2015
-
25,563
25,563
Charge for the year
-
52,704
52,704
Disposals
-
-
-
At 30 June 2016
-
78,267
78,267
Net book amount
at 30 June 2016
428,347
1,172,253
1,600,600
2015
Land
Buildings
 Total
Cost:
At 1 July 2014
428,347
1,313,687
1,742,034
Additions
-
1,500
1,500
Disposals
-
(64,667)
(64,667)
At 30 June 2015
428,347
1,250,520
1,678,867
Depreciation (Included within administrative expenses):
At 1 July 2014
-
49,265
49,265
Charge for the year
-
49,743
49,743
Disposals
-
(73,445)
(73,445)
At 30 June 2015
-
25,563
25,563
Net book amount
at 30 June 2015
428,347
1,224,957
1,653,304
15.  TRADE AND OTHER RECEIVABLES
2016
2015
Trade receivables 
1,265,861
950,449
Other receivables
500
504
Prepayments and accrued income
217,021
248,675
Trade and other receivables
1,483,382
1,199,628
All amounts fall due within one year and therefore the fair value is considered to be approximately equal to the carrying value. All of the Group's trade and other receivables are denominated in pounds sterling. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group holds 12,934 (2015: 14,618) of deposits as security against certain accounts.
Trade receivables have been reviewed for indicators of impairment and a provision has been recorded as follows:
2016
2015
Opening provision
12,900
17,000
Charged/(released) to income
10,200
(4,100)
Closing provision at 30 June
23,100
12,900
All of the impaired trade receivables are past due at the reporting dates. In addition, some of the non-impaired trade receivables are past due at the reporting date:
2016
2015
0-30 days past due
32,599
16,312
30-60 days past due
2,292
22,700
Over 60 days past due
1,293
2,630
36,184
41,642
Amounts which are not impaired, whether past due or not, are considered to be recoverable at their carrying value. Factors taken into consideration are past experience of collecting debts from those customers, plus evidence of post year end collection.
16.  CURRENT LIABILITIES
2016
2015
Trade payables
289,284
276,415
Social security and other taxes
406,833
319,878
Other payables
303,957
445,973
Trade and other payables
1,000,074
1,042,266
Bank loans (note 17)
35,661
32,766
Amounts due under finance leases (note 17)
26,537
18,996
Current portion of long-term borrowings
62,198
51,762
1,062,272
1,094,028
Amounts due under finance leases are secured on the related assets.
17.  NON-CURRENT LIABILITES
  2016 2015
   
Bank loans  1,079,596 1,104,718
Amounts due under finance leases  67,424 7,100
   
Long term borrowings  1,147,020 1,111,818
 
Borrowings
Bank loans are repayable as follows:
2016
2015
Within one year
35,661
32,766
After one year and within two years
33,827
33,727
After two years and within five years
145,853
107,231
Over five years
899,916
963,760
1,115,257
1,137,484
17.  NON-CURRENT LIABILITES (continued)
Borrowings (continued)
On 15 January 2016 the Company obtained a loan of 1,145,529, secured over Melford Court, The Havens, Ransomes Europark, Ipswich IP3 9SJ repayable over 25 years with a 5 year fixed rate of 2.4% above the base rate from the NatWest Bank PLC.
Interest on the bank loan falls due as follows:
2016
2015
Within one year
32,328
32,633
After one year and within two years
31,573
31,672
After two years and within five years
115,744
88,967
Over five years
255,977
298,042
435,622
451,314
Amounts due under finance leases are secured on the related assets.
The minimum lease payments due under finance leases fall due as follows:
2016
2015
Within one year
28,863
20,200
After one year and within five years
70,733
7,244
99,596
27,444
The above table includes interest included within the amounts due under finance leases which falls due as follows:
2016
2015
Within one year
2,326
1,205
After one year and within five years
3,309
143
5,635
1,348
The lease agreements are for various fixed assets and include fixed lease payments with a purchase option at the end of the lease terms. The agreements are non-cancellable and do not contain any further restrictions.
18.  DEFERRED TAXATION
Deferred taxation is calculated at a rate of 20% (2015: 22.5%).
Tax
losses
Total
Opening balance at 1 July 2014
280,000
280,000
(Charged)/credited through the statement of comprehensive income in the year
(280,000)
(280,000)
At 30 June 2015
-
-
Charged through the statement of 
comprehensive income in the year
-
-
At 30 June 2016
-
-
2016
2015
Unprovided deferred tax assets
Accelerated capital allowances
36,000
(6,000)
Trading losses
283,500
398,000
319,500
392,000
In the previous year the deferred tax asset in respect of carried forward tax losses of 280,000 was written off on the basis that the directors believe that it is more than likely not to be realised against future taxable profits of the Group in the foreseeable future, since declared profits have become taxable losses due to Research and Development claims.
The unprovided deferred tax assets are calculated at a rate of 18% (2015: 20%).
19.  GROUP UNDERTAKINGS
At 30 June 2016, the Group included the following subsidiary undertakings, which are included in the consolidated accounts:
Name
Country of
Incorporation
Class of share
capital held
Proportion
held
Nature of
business
IPPlus (UK) Limited
England
Ordinary
100%
Out of hours and overflow telephony services and software company
CallScripter Limited
England
Ordinary
100%
Software reseller
Suffolk Disaster Recovery Limited(previously Ancora Solutions Limited)
England
Ordinary
100%
Dormant
Ansaback Limited
England
Ordinary
100%
Dormant
CallScripter (U.K.) Limited
England
Ordinary
100%
Dormant
EasyScripter Limited
England
Ordinary
100%
Dormant
Fault Solutions 365 Limited
England
Ordinary
100%
Dormant
IP3 Telecom Limited
England
Ordinary
100%
Dormant
PCI-PAL Limited
England
Ordinary
100%
Dormant
The Number Experts Limited
England
Ordinary
100%
Dormant
Vital Contact (UK) Limited
England
Ordinary
100%
Dormant
20.  SHARE CAPITAL
Group
2016
Number
2016
2015
Number
2015
Authorised:
Ordinary shares of 1p each
100,000,000
1,000,000
100,000,000
1,000,000
Allotted called up and fully paid:
Ordinary shares of 1p each
31,721,178
317,212
31,721,178
317,212
The Group owns 167,229 (2015: 167,229) shares and these are held as Treasury Shares.
During the year, the share price fluctuated between 16 pence and 12.5 pence and closed at 12.50 pence on 30 June 2016.
Contingent rights to the allotment of shares
No share options are currently exercisable.
Contingent rights to the allotment of shares (continued)
2016
Share
Options
2015
Share
Options
Amounts in issue at beginning of year
600,000
1,725,000
Granted in period
-
Expirations in period
(600,000)
(1,125,000)
Amounts in issue at year end
-
600,000
21.  FINANCIAL INSTRUMENTS
The Group uses various financial instruments including cash, trade receivables, trade payables, other payables, loans and leasing that arise directly from its operations. The main purpose of these financial instruments is to maintain adequate finance for the Group's operations. The existence of these financial instruments exposes the Group to a number of financial risks, which are described in detail below. The directors do not consider price risk to be a significant risk. The directors review and agree policies for managing each of these risks, as summarised below, and these remain unchanged from previous years.
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 2016 the Group had a closing cash balance of 895,422 (2015: 1,040,822) and an outstanding mortgage of 1,109,256 (2015: 1,137,484).
21.  FINANCIAL INSTRUMENTS (continued)
Financial risk management and objectives
The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The directors achieve this by regularly preparing and reviewing forecasts based on the trends shown in the monthly management accounts.
Interest rate risk
The total loan balance at 30 June 2016 is 1,109,256 (2015: 1,137,484). Interest is payable at 2.4% above the base rate (2015: at 2.4% above the base rate) (note 17).
The Group finances its operations through a mixture of cash and loans and has some risk to interest rate movements which are not deemed significant in the short term.
A 1% increase in interest the interest rate payable would have a negative impact the profit and loss account of 11,052. A 1% decrease in interest the interest rate payable would have a positive impact the profit and loss account of 11,052.
Credit risk
The Group's principal financial assets are cash and trade receivables, with the principal credit risk arising from trade receivables. In order to manage credit risks the Group conducts third party credit reviews on all new clients, takes deposits where this is deemed necessary and collects payment by direct debit on all new Ansaback and Ancora accounts, limiting the exposure to a build up of a large outstanding debt. The Group also conducts third party credit reviews on CallScripter accounts, which also have an agreed payment plan tailored to the risk of the individual client.
Liquidity risk
The Group aims to mitigate liquidity risk by closely monitoring cash generation and expenditure. Cash is monitored daily and forecasts are regularly prepared to ensure that the movements are in line with the directors' strategy.
Trade payables and loans fall due as follows:
Less than one year
One to two years
Two to five years
Over five years
Total
2016
Trade payables
289,284
-
-
-
289,284
Other payables
303,957
-
-
-
303,957
Lease capital and interest
28,863
28,863
41,870
-
99,596
Loans
67,989
65,400
261,597
1,155,893
1,550,879
At 30 June 2016
690,093
94,263
303,467
1,155,893
2,243,716
Less than one year
One to two years
Two to five years
Over five years
Total
2015
Trade payables
276,415
-
-
-
276,415
Other payables
445,973
-
-
-
445,973
Lease capital and interest
20,200
7,244
-
-
27,444
Loans
65,399
65,399
196,197
1,261,802
1,588,797
At 30 June 2015
807,987
72,643
196,197
1,261,802
2,338,629
Foreign currencies
During the year exchange gains of 11,784 (2015: charge of 829) have arisen and at the year-end 57,333 (2015: 1,679) was held in foreign currency bank accounts. It is the Group's policy to hold limited amounts in foreign currency in order to reduce exposure to currency risk. The Group does not sell or buy any currency forward or enter into any hedging contracts. A 10% decrease in the value of the foreign currency held would result in a negative impact to the profit and loss account of 5,734. A 10% increase in the value of the foreign currency held would result in a positive impact to the profit and loss account of 5,734.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction and monetary assets and liabilities in foreign currencies are translated at the rates ruling at the year end. At present foreign exchange is minimal and hedging and risk management is not deemed necessary.
Financial assets by category
Loans and
receivables
Non financial assets
Total
2016
Cash at bank
895,422
-
895,422
Trade receivables - current
1,265,861
-
1,265,861
Other receivables
500
-
500
Prepayments and accrued income
-
217,021
217,021
2,161,783
217,021
2,378,804
Loans and
receivables
Non financial assets
Total
2015
Cash at bank
1,040,822
-
1,040,822
Trade receivables - current
950,449
-
950,449
Other receivables
504
-
504
Prepayments and accrued income
-
248,675
248,675
1,991,775
248,675
2,240,450
21.  FINANCIAL INSTRUMENTS (continued)
The fair values of loans and receivables are considered to be approximately equal to the carrying values.
Financial liabilities by category
Financial
liabilities
measured at
Non
amortised
financial
cost
liabilities
Total
2016
Trade payables
289,284
-
289,284
Accruals
290,982
-
290,982
Other payables
12,975
-
12,975
VAT and tax payable
-
406,833
406,833
Loans
35,661
-
35,661
Leases 
-
26,537
26,537
628,902
433,370
1,062,272
Financial
liabilities
measured at
Non
amortised
financial
cost
liabilities
Total
2015
Trade payables
276,415
-
276,415
Accruals
434,839
-
434,839
Other payables
11,134
-
11,134
VAT and tax payable
-
319,878
319,878
Loans
32,766
-
32,766
Leases 
-
18,996
18,996
755,154
338,874
1,094,028
The fair values of financial liabilities are considered to be approximately equal to the carrying values.
22.  CAPITAL COMMITMENTS
 
The Group has no capital commitments at 30 June 2016 or 30 June 2015.
23.  CONTINGENT ASSETS
The Group has no contingent assets at 30 June 2016 or 30 June 2015.
24.  CONTINGENT LIABILITIES
The Group has no contingent liabilities at 30 June 2016 or 30 June 2015.
25.  OPERATING LEASE COMMITMENTS
2016
2015
Total future lease payments:
Less than one year
72,072
140,095
After one and within two years
42,432
59,383
After two and within five years
60,586
65,742
_________
__________
175,090
265,220
Operating lease commitments relate to the following buildings:
London expires May 2017
Martlesham (Anson Road) expires March 2019
Martlesham (Unit F) expires January 2021
Martlesham (Unit G) expires January 2021
26.  TRANSACTIONS WITH DIRECTORS
There were no transactions with directors in the year to June 2016 or June 2015 other than the dividends noted below.
27.  DIVIDENDS
The directors have proposed a dividend of nil pence per share (2015: 0.15 pence per share) post year end (subject to shareholder approval). As this was proposed post year end no liability has been recognised in the accounts. 
An interim dividend of 3.16 pence per share was declared on 04 November 2016 (2015: nil pence per share).
The following directors received dividend payments during the year to 30 June 2016 as follows:
Dividend
Paid
2016
Dividend Paid
2015
W A Catchpole
3,878
3,878
R S M Gordon
1,452
1,452
G Forsyth
1,487
1,487
28. DISPOSAL OF ANCORA SOLUTIONS DIVISION
On 31 December 2014 the Group disposed of the division to Restore PLC. Under the terms of the Disposal, Restore PLC purchased the entire fixed assets, payroll and existing contracts of Ancora in return for a cash consideration of 500,000.
Prior to the disposal, Ancora Solutions was reorganised and removals were ceased with a consequent reduction in staff, including the divisional Managing Director. This gave rise to a total reorganisation cost of 100,166 in the prior year.
Revenues and expenses, gains and losses relating to the discontinuance of this division have been eliminated from the loss from the Group's continuing operations and are shown as a single line item on the face of the Consolidated Statement of Comprehensive Income.
Operating losses until the date of disposal are summarised below:
2016
2015
Revenue
(311)
362,803
Cost of sales
36
(286,028)
Gross (loss)/profit
(275)
76,775
Administrative expenses
17,531
(113,162)
Trading profit/(loss)
17,256
(36,387)
Reorganisation costs
-
(100,166)
Provision for onerous leases
19,204
(121,000)
Operating loss
36,460
(257,553)
Profit on disposal
-
203,697
Loss for period from discontinued activities
36,460
(53,856)
The prior year provision for onerous leases relates to the estimated cost of warehouse leases that the Group would continue to bear once the archiving relocated to the Restore units.
As Restore occupied the premises for longer than anticipated, part of the provision for onerous leases was released in the year. Restore have now fully vacated all of the premises used by Ancora.
28. DISPOSAL OF ANCORA SOLUTIONS DIVISION (continued)
The calculation of the profit on disposal is shown below:
Goodwill and intangible assets
(207,017)
Plant and equipment
(79,296)
Net Assets disposed
(286,313)
Other Items:
Legal Fees
(8,300)
Other costs
(1,690)
Total net assets and provisions
(296,303)
Cash received
500,000
Profit on disposal
203,697
29. SUBSEQUENT EVENTS
On 30 September 2016 the group disposed of the investment in IPPlus (UK) Limited and CallScripter Limited to Direct Response Contact Centres Group Limited for 6,700,000. This generated a profit on disposal of 6,275,762, subject to agreement with the purchaser on final completion accounts.
COMPANY BALANCE SHEET
AS AT 30 JUNE 2016
Note
2016
2015
Fixed assets
Investments
5
201,609
201,609
201,609
201,609
Current assets
Debtors
6
605,037
709,334
Cash at bank and in hand
31,987
8,347
637,024
717,681
Creditors: amounts falling due within one
year
7
(58,887)
(22,162)
Net current assets
578,137
695,519
Total assets less current liabilities
779,746
897,128
Creditors: amounts falling due after more than one year
-
-
Net Assets
779,746
897,128
Capital and reserves
Called up share capital
8
317,212
317,212
Share premium account
89,396
89,396
Profit and loss account
373,138
490,520
Shareholders' Funds
779,746
897,128
The financial statements were approved by the directors and were authorised for issue on 22 November 2016.
W A Catchpole
Director
A K Francombe
Director
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Share capital
Share
premium
Profit and loss account
Total
Equity
Balance at 1 July 2014
317,212
89,396
531,787
938,395
Dividend paid
-
-
(47,332)
(47,332)
Transactions with owners
-
-
(47,332)
(47,332)
Profit and total recognised income and expense for the year
-
-
6,065
6,065
Balance at 30 June 2015
317,212
89,396
490,520
897,128
Dividend paid
-
-
(47,332)
(47,332)
Transactions with owners
-
-
(47,332)
(47,332)
Loss and total recognised income and expense for the year
-
-
(70,050)
(70,050)
Balance at 30 June 2016
317,212
89,396
373,138
779,746
The accompanying accounting policies and notes form an integral part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
2016
2015
Cash flows from operating activities
(Loss)/Profit after taxation
(70,050)
6,065 
Adjustments for:
Depreciation
-
25,923 
Interest income
(33,440)
(2,115)
Decrease/(increase) in trade and other receivables
104,297 
(409,474)
(Decrease)/Increase in trade and other payables
36,725 
(46,639)
Cash generated from and used in continuing operations
37,532 
(426,240)
Dividend paid
(47,332)
(47,332)
Net cash from operating activities
(9,800)
(473,572)
Cash flows from investing activities
Sale of land, buildings, plant and equipment
-
1,570,100 
Interest received
33,440 
2,115 
Net generated from investing activities 
33,440 
1,572,215 
Cash flows from financing activities
Repayment of borrowings
-
(1,128,671)
Net cash used in financing activities
- 
(1,128,671)
Net increase/(decrease) in cash
23,640 
(30,028)
Cash and cash equivalents at beginning of year
8,347
38,375
Net (decrease)/increase in cash
23,640
(30,028)
Cash and cash equivalents at end of year
31,987
8,347
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1. ACCOUNTING POLICIES
Basis of preparation
The financial statements of the Company have been prepared in accordance with applicable United Kingdom law and accounting standards (United Kingdom Generally Accepted Accounting Practice) including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland" ("FRS102") and the Companies Act 2006.
The directors have continued to adopt the going concern basis in preparing the financial statements.
Merger relief
The Company is entitled to merger relief offered by the Companies Act, and the shares issued when the subsidiary undertaking, IPPlus (UK) Limited, was acquired are shown at their nominal value.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more tax in the future, or a right to pay less tax in future, have occurred by the year end. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured on an undiscounted basis using rates of tax that have been enacted or substantively enacted by the year end.
Investments

Shares in subsidiary undertakings are included at original cost less any amounts written off for permanent diminution in value.
Land and buildings
Land and buildings are stated at cost, net of depreciation and any provision for impairment.
Related Party Transactions
The Company maintains Group intercompany balances with 100% owned subsidiaries, and therefore has taken advantage of Section 33 of FRS102 which states that transactions between a parent and its 100% owned subsidiaries do not need to be disclosed.
2. PROFIT FOR THE FINANCIAL YEAR
The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The loss for the Company for the year was 70,050 (2015: Profit 6,065).
3. PERSONNEL REMUNERATION
The Company has no employees, therefore personnel remuneration was nil (2015 nil). All employee costs are borne by the Company's wholly-owned subsidiaries. 
4. INTEREST INCOME
The Company received interest from bank deposits and balances with Group Companies of 33,440 (2015 2,115).
5. FIXED ASSETS
INVESTMENTS
Subsidiary
Total
undertakings
Cost at 1 July 2015
201,609
201,609
Additions
-
-
Cost at 30 June 2015
201,609
201,609
Disposals
-
-
Cost at 30 June 2016
201,609
201,609
6. CURRENT ASSETS
2016
2015
Other debtors
16,115
4,213
Amount owed by Group undertaking
583,752
700,441
Prepayments and accrued income
5,170
4,680
605,037
709,334
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2016
2015
Trade creditors
49,144
16,852
Accruals and deferred income
9,743
5,310
58,887
22,162
8. SHARE CAPITAL
2016
2016
2015
2015
Number
Number
Allotted called up and fully paid:
Ordinary shares of 1p each
31,721,178
317,212
31,721,178
317,212
9. DIVIDENDS
The directors have proposed no final dividend of in respect of the year ended 30 June 2016 (2015: 0.15 pence per share). 
A special interim dividend of 3.16 pence per share declared on 07 November 2016 (2015: nil pence per share), and is expected to be paid on 9 December 2016. As this was proposed post year end no liability has been recognised in the accounts.
The following directors received dividend payments as follows:
Dividend
2016
Dividend
2015
W A Catchpole
3,878
3,878
R S M Gordon
1,452
1,452
G Forsyth
1,487
1,487
10. FINANCIAL ASSETS AND LIABILITIES
2016
2015
Financial Assets Measured at amortised cost
599,867
704,654
Financial Liabilities Measured at amortised cost
49,144
16,852
11. FIRST TIME ADOPTION OF FRS102
The company transitioned to FRS 102 on 1July 2014 and these are the first financial statements that comply with FRS 102. The policies applied under the entity's previous accounting framework are not materially different to FRS 102 and have not impacted on equity or profit or loss.

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