Interactive Publishing Plc
LSE : INTP

November 30, 2009 08:46 ET

Final Results for the Year Ended 30 June 2009

                                                   
                                      INTERACTIVE PUBLISHING PLC
                                 ('IP', 'the Company' or 'the Group')

                             FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2009
    
    Interactive Publishing plc announces its annual results for the 12 months ended 30 June 2009.
    
    Highlights in the Period
    
    - "Women's Fitness" magazine's status as the Number One performing title on the UK newsstand
      during January to June 2009 (ABC Circulation)
    
    - The acquisition of new title "Scarlet" magazine into the Group's portfolio
    
    - Turnover increased from £5.79m to £6.4m over the preceding year (an increase of 10.92%)
    
    Post balance sheet events
    
    - Secured the publisher management contract for the Paul Raymond titles
    
    - Acquired the entire issued share capital of Marine Media Limited

    - Awarded an Enterprise Finance Guarantee Scheme Loan to fuel acquisitive growth and working
      capital requirements
        
    - Acquired the entire issued share capital of Scissorhands Media Limited, which includes "Hair
      Now", the Number One best selling hair magazine in Europe
    
    
    Chairman's Statement
    
    I am pleased to be able to make this report to you as Chairman of the Company and of the Group.
    
    The  period  under review has been one of the most challenging years on record for the  publishing
    industry and its related sectors and the Company has proven that, through its survival and  growth
    of some key titles, it has the foundations to survive and adapt to these adverse conditions.
    
    During  the year, the business operated within the global economic crisis which hit the  heart  of
    the  consumer publishing industry. This had the most immediate effect of a decline in  advertising
    revenues in the sector. As a result, publishers have had to rethink traditional advertising models
    and seek creative alternatives to traditional page advertising.
    
    Consequently there have been casualties in the magazine market, with well-established brands  like
    "Maxim"  and "Arena" closing. As with any business during hard times IP has also had to make  hard
    decisions about its own portfolio and close titles that are no longer profitable. During  2009  we
    made  the  decision  to close "FLUSH" in its printed format to concentrate on  www.flushonline.com
    http://www.flushonline.com. In addition, we have suspended the publication of "FRESH" magazine.
    
    Global magazine launches have remained at a minimum level throughout 2009 and this has led to less
    licensing  opportunities with our brands. However, since the end of the financial year  the  Group
    has  licensed  "Women's Fitness Guides" in Germany and is now starting to see  a  revival  of  the
    licensing  market. Further licensing negotiations are ongoing but due to market  uncertainty  some
    earlier  negotiations are being put on hold, although the Board believes these can be  revived  at
    any time.
    
    As  a  result of these challenging conditions, during the year the directors undertook a  complete
    review of the business. To ensure the Company's ability to remain competitive and adapt readily to
    the downturn in the publishing sector, steps were taken to streamline staffing levels, renegotiate
    distribution  contracts,  and  make  further enhancements to  arrangements  for  print  and  paper
    supplies.
    
    Despite  the  challenges described the Company proved its ability to acquire,  incubate  and  grow
    niche  consumer magazine titles and expand their online capabilities. Highlights include  "Women's
    Fitness" magazine being the Number One performing title on the UK newsstand during January to June
    2009  (as reported by the Audit Bureau of Circulation in August 2009) with year on year growth  of
    117%.  In  addition  the  editor for "Attitude" magazine Matthew Todd  was  short-listed  for  the
    prestigious BSE Men's Lifestyle Editor of the Year award.
    
    In  the  period under review, the Company acquired "Scarlet" - a niche women's magazine  providing
    informative features that talks to a female audience in a way that women talk to each  other  when
    men  are  not  around.  This  was  a  result of being able  to  capitalise  on  the  consolidation
    opportunities that have been presented by the downturn.
    
    Financial Overview
    
    Turnover, which comprises all of the external turnover in the Group, has increased from £5.79m  to
    £6.4m over the preceding year (an increase of 10.92%).
    
    The  gross profit reduced from £1.36m to £0.75m largely as a result of reductions in the level  of
    advertising revenues (a reduction of 44.77%).
    
    This  large  reduction in gross profit resulted in a loss on operations of £0.43m which  has  been
    increased  to a loss on operations of £0.79m by £0.36m of impairment provisions against intangible
    fixed assets.
    
    Last  year  showed  a profit on operations of £0.03m (as restated by the prior year  adjustments).
    The  Group loss before tax and basic loss per share for the year in review amounted to £0.73m  and
    0.46p  respectively.   At 30 June 2009, shareholders' funds were £0.71m.   The  Directors  do  not
    propose to declare a dividend.
    
    Whilst  the  loss  for  the  year  is  disappointing, the  Board  is  confident  that  the  recent
    acquisitions,  the new trading terms secured and the additional bank finance secured  will  enable
    the Group to achieve a substantial trading profit in the current trading period.
    
    Review of Activities
    
    IP is a London-based magazine publishing company that acquired Trojan Publishing, a company formed
    in  June  2006 with the strategy of building a publishing group engaged in the production of  both
    magazine  and  digital  content. IP now has a portfolio of 51 magazines, of  which  1  is  printed
    monthly, 18 are printed every 24 weeks, 16 are printed bi-monthly and 16 have thirteen issues  per
    annum.
    
    The  major titles are "Women's Fitness", "What Diesel", "Scarlet" and "Attitude" (the UK's  number
    one gay lifestyle magazine).
    
    The  Group  has  applied  economies  of scale to its diverse portfolio  and  has  streamlined  its
    activities to exploit the critical mass now being achieved.  The directors' strategy is  to  focus
    heavily  on  the  consumer based brands whilst nurturing the adult portfolio to ensure  that  high
    revenues and profitability complement and nuture the growth of the Group.
    
    In  addition  to  straightforward publication of printed titles,  IP  develops  social  networking
    platforms  for its key brands which involve fully interactive websites that enhance  the  magazine
    users'  experience of the brand while building the brand awareness.  In creating this  interactive
    experience,  a  separation has been maintained between the user and the magazine. This  enables  a
    title  or brand to maintain traditional revenue streams while adding new revenue streams  to  flow
    from the platform.
    
    The  Group's strategy remains for each magazine title in the IP portfolio to develop a  niche  and
    sought after brand that will generate new revenue streams, thereby increasing the longevity of the
    life of the title.  As titles can be published over several decades, there is a real benefit to be
    gained by creating on-target brands.
    
    The  key components in creating a brand are: the ability of the consumer to visualise the magazine
    experience  without  being  reliant  on the editorial content;  an  understanding  of  the  target
    audience; and the ability to interact with that audience.
    
    The  directors  intend  to keep the development of new revenue streams under  constant  review  to
    ensure  that the Company is not overly dependent upon one revenue source and the portfolio remains
    complementary  and varied. This is to ensure that the effects of a downturn in one revenue  source
    have less impact on the overall Company.
    
    Key Performance Indicators
    
    The  principal  performance  indicator  used to measure  the  progress  of  the  Group's  business
    activities  is  the contribution generated by each magazine title or brand.  This is  assessed  by
    reference to direct costs associated with the production and maintenance of that title or brand.
    
    The directors keep the performance of each title under constant review and take a commercial view,
    based  on  research and their own industry experience, of the future contribution to the  business
    that, in their opinion, each title or brand is likely to make.
    
    During  the  year  these  reviews  resulted  in  the  closure  of  "Flush"  magazine,  which  lost
    substantially  all  of  its  advertising revenues and the suspension of  "Fresh"  magazine,  which
    operated  in a highly competitive sector of the magazine market and could not secure the level  of
    advertising necessary.
    
    Principal risks and uncertainties
    
    The principal risks and uncertainties experienced by the Group are as follows:
    
    - The  continued attraction, retention and motivation of qualified employees to provide  a  high
      quality  of  content  in  the  publication and to drive  circulation,  advertising  and  other
      revenues;
    - changing  customer and market demands, and changes in the competitive         environment
      in which the business operates;
    - the  effect of current global economic conditions on the level of consumer spend, particularly
      on advertising revenues; and
    - the  ability  of  senior  management  to  continue to identify  suitable  targets  for  future
      acquisitions and to develop complimentary revenue streams.
    
    Post Balance Sheet Events
    
    Since the year end Interactive Publishing has been able to take advantage of opportunities in  the
    sector  caused  by the downturn by making further acquisitions. This has given IP  further  market
    gravitas to enable it to secure even better prices and terms throughout its business.
    
    On 19 August 2009, Interactive Publishing acquired the entire issued share capital of Marine Media
    Limited.  This  company  publishes "Sailing Today" - a magazine committed to  providing  the  most
    authoritative, relevant and up to date information on all aspects of sailing. Packed with in depth
    reports  and  independent analysis, Sailing Today's sharp focus is harnessed to an  unpretentious,
    entertaining and practical approach, enhanced by superb images and cutting-edge graphics;  written
    for cruising enthusiasts by cruising enthusiasts.
    
    A  further  acquisition was made on On 12 November 2009, when IP acquired the entire issued  share
    capital  of  Scissorhands  Media Limited. This company publishes magazines  focused  on  providing
    relevant  and  up  to date information on all aspects of the hair and beauty industries,  targeted
    specifically  to  inform  the  consumer. The titles are published on  six  weekly  and  bi-monthly
    frequencies. "Hair Now" is the number one best selling hair magazine in Europe.
    
    On  24  August 2009, the Group's wholly owned subsidiary, Trojan Publishing Limited, entered  into
    agreement to manage the administration, production, printing, circulation and distribution of  the
    magazines published by Paul Raymond Publications Limited. This contract is for a minimum  term  of
    12  months  at  a rate of £300,000 per annum. These services are being provided via  the  existing
    management and facilities within the Group.
    
    On 12 October 2009, IP was able to draw down the £200,000 Enterprise Finance Guarantee Scheme loan
    which  had  been  secured  through the support of Barclays bank plc and  has  provided  additional
    funding for the Group's working capital needs. This loan is repayable at £4,000 per month.
    
    I would like to take this opportunity to thank shareholders for their support and fellow directors
    and staff for their invaluable commitment in building IP to where it is today.
    
    Peter Jay
    Chairman
    

    CONSOLIDATED INCOME STATEMENT
    For The Year Ended 30 June 2009
         
                                                                                                 
                                                                         Year ended        Year ended
                                                                           30.06.09          30.06.08
                                                                          Unaudited          Restated
                                                                                  £                 £
                                                                                                 
     REVENUE                                                              6,426,474         5,793,665
                                                                                         
     Cost of sales                                                       (5,673,907)       (4,431,012)
                                                                        ------------       -----------
                                                                                        
     GROSS PROFIT                                                           752,567         1,362,653
                                                                                         
     Administrative expenses                                             (1,184,605)       (1,277,479)
     Impairment provisions                                                 (359,018)                -
                                                                        ------------       -----------
                                                                                         
     (LOSS)/PROFIT FROM OPERATIONS                                         (791,056)           85,174
                                                                                         
     Finance revenue                                                             34               275
     Finance costs                                                          (22,874)          (28,530)
                                                                        ------------       -----------
                                                                                         
     (LOSS)/PROFIT BEFORE TAX                                              (813,896)           56,919
                                                                                         
     Taxation                                                                85,657           (21,457)
                                                                        ------------       -----------
                                                                                         
     (LOSS)/PROFIT FOR THE YEAR                                            (728,239)           35,462
                                                                        ------------       -----------
                                                                        ------------       -----------
                                                                                         
     Basic (loss)/earnings per share                                        (0.46)p             0.03p
                                                                                         
     Diluted (loss)/earnings per share                                      (0.46)p           (0.03)p

    
    CONSOLIDATED BALANCE SHEET
    As at 30 June 2009

                                                                         30.06.09          30.06.08
                                                                        Unaudited          Restated
                                                                                £                 £
     Non-current assets                                                                  
     Intangible assets                                                  2,523,996         2,535,126
     Property, plant and equipment                                         61,975            76,794
     Deferred tax                                                         186,200           100,543
                                                                       -----------      ------------
                                                                        2,772,171         2,712,463
                                                                                         
     Current assets                                                                      
     Trade and other receivables                                        1,147,266         1,110,167
     Cash and cash equivalents                                              1,852             3,426
                                                                       -----------      ------------
                                                                        1,149,118         1,113,593
                                                                                         
     Current liabilities                                                                 
     Trade and other payables                                          (2,899,307)       (2,065,413)
     Bank overdraft                                                      (198,201)         (130,448)
     Convertible loan notes                                              (111,500)         (161,500)
     Commitments under finance leases and hire purchase obligations        (1,502)                -
                                                                       -----------      ------------
                                                                       (3,210,510)       (2,357,361)
                                                                       -----------      ------------
     Net current liabilities                                           (2,061,392)       (1,243,768)
                                                                       -----------      ------------
     Total assets less current liabilities                                710,779         1,468,695
                                                                                         
     Non-current liabilities                                                             
     Other payables                                                             -           (99,175)
     Commitments under finance leases and hire purchase obligations          (861)                -
                                                                       -----------      ------------
                                                                                         
     NET ASSETS                                                           709,918         1,369,952
                                                                       -----------      ------------
                                                                                         
     Equity                                                                              
     Issued share capital                                                 420,667           367,916
     Share premium account                                                960,888           435,002
     Shares to be issued reserve                                          267,500           777,500
     Merger reserve                                                     2,291,667         2,291,667
     Reverse acquisition reverse                                       (2,230,848)       (2,230,848)
     Retained losses                                                     (999,956)         (271,717)
                                                                       -----------      ------------
                                                                                         
     SHAREHOLDERS' FUNDS                                                  709,918         1,369,952
                                                                       -----------      ------------
                                                                       -----------      ------------
                                                                                         


    CONSOLIDATED CASH FLOW STATEMENT
    For The Year Ended 30 June 2009
                                                                                                 
                                                                        Year ended        Year ended
                                                                          30.06.09         30.06.008
                                                                         Unaudited          Restated
                                                                                 £                 £
     Cash flow from operating activities                                                 
     (Loss)/profit before taxation                                        (813,896)           56,919
                                                                                         
     Adjusted for:                                                                       
     Finance revenue                                                           (34)             (275)
     Finance costs                                                          22,874            28,530
     Depreciation                                                           23,279            17,416
     Impairment provisions                                                 359,018                 -
     Increase in trade and other receivables                               (58,933)         (593,062)
     Increase in trade and other payables                                  560,593            21,437
                                                                       ------------      ------------
     Net cash inflow/(outflow) from operating activities                    92,901          (469,035)
                                                                                         
     Cash flows from investing activities                                                
     Purchase of intangible fixed assets                                  (163,262)         (358,323)
     Purchase of financial assets                                           (4,123)                -
     Purchase of property, plant & equipment                               (10,414)          (34,426)
     Finance revenue                                                            34               275
     Finance costs                                                          (1,313)          (28,530)
                                                                       ------------      ------------
     Net cash outflow from investing activities                           (179,078)         (421,004)
                                                                       ------------      ------------
     Cash flows from financing activities                                                
     Issue of shares                                                        82,000           950,000
     Expenses of share issues                                              (13,363)         (322,915)
     Issue of convertible loan notes                                        62,500           155,000
     Repayment of convertible loan notes                                  (112,500)                -
     Capital element of finance lease payments                              (1,787)           (4,547)
                                                                       ------------      ------------
     Net cash from financing activities                                     16,850           777,538
                                                                       ------------      ------------
                                                                                         
     Net decrease in cash and cash equivalents                             (69,327)         (112,501)
                                                                                         
     Cash and cash equivalents at 01.07.08                                (127,022)          (14,521)
                                                                       ------------      ------------
                                                                                         
     Cash and cash equivalents at 30.06.09                                (196,349)         (127,022)
                                                                       ------------      ------------
                                                                       ------------      ------------

    
    Notes to the financial information

    The  basic loss per share is calculated by dividing the loss for the financial period attributable
    to  shareholders by the weighted average number of shares in issue.  All outstanding warrants  and
    options were anti-dilutive in the year for the purposes of calculation of the diluted earnings per
    share.
    
                                                                      Year ended             Year ended
                                                                        30.06.09               30.06.08
        The weighted average number of shares were:                       Number                 Number
                                                                                                         
        Weighted average number of ordinary shares                   157,800,457            105,896,347
        Effect of outstanding warrants and options                             -             16,666,667
                                                                    ------------           ------------
        Adjusted weighted average number of                                                            
        ordinary shares                                              157,800,457            122,563,014
                                                                    ------------           ------------
                                                                                     
        Basic (loss)/earnings                                            (0.46)p                  0.03p
                                                                                     
        Diluted (loss)/earnings                                          (0.46)p                  0.03p
    
    
    1. While the financial information included in this announcement has been computed in accordance
    with International Financial Reporting Standards (IFRS), this announcement does not itself contain
    sufficient information to comply with IFRS.  The full financial statements of the company will  be
    prepared in accordance with IFRS, International Accounting Standards and their interpretations issued
    or adopted by the International Accounting Standards Board as adopted for use in the European Union.
    
    2. The information contained in this announcement has not been agreed with the Company's auditor,
    nor  extracted  from audited information.  This financial statement does not constitute  statutory
    accounts within the meaning of Section 240 of the Companies Act 1985 (the "Act").

    3. It is likely that the text below will be included in the auditor's report in the Company's
    Report and Accounts for the year ended 30 June 2009:
    
    "Emphasis of matter - going concern
    In  giving our opinion on the financial statements, which is not qualified, we have considered the
    adequacy  of  the  disclosures  in note 1(a) to the financial statements  concerning  the  Group's
    ability  to  continue as a going concern.  The Group made a net loss of £369,221 before impairment
    provisions  during  the  year ended 30 June 2009, and at that date had  net  assets  of  £709,918.
    However,  the directors have prepared cash flow forecasts for the period ended 30 June 2011  which
    indicate that, with new business and title acquisitions obtained post 30 June 2009 and as a result
    of  creditor  support as detailed in note 1(a), the Group has sufficient resources to continue  in
    operational existence.  These conditions indicate the existence of an uncertainty which  may  cast
    doubt  about the Group's ability to continue as a going concern.  The financial statements do  not
    include the adjustments that would result if the Group was unable to continue as a going concern."
    
    4. The Directors have not declared a dividend for the year.
    
    5. This statement was approved by the Board of Directors on 30 November 2009.  Copies of this
    statement will be available free of charge from the Company's Registered Office at Ground Floor, 207
    Old Street, London EC1V 9NR.

    Going Concern
    
    The  Group  made a net loss of £369,221 before impairment provisions of £359,018 during  the  year
    ended  30  June  2009, and at that date had net current liabilities of £2,061,392.   However,  the
    directors  have prepared cash flow forecasts for the periods ended 30 June 2010 and 30  June  2011
    which indicate that, with new business and title acquisitions secured post 30 June 2009 and  as  a
    result  of  creditor support as detailed below, the Group has sufficient resources to continue  in
    operational existence.  These conditions indicate the existence of an uncertainty which  may  cast
    doubt  about the Group's ability to continue as a going concern.  The financial statements do  not
    include the adjustments that would result if the Group was unable to continue as a going concern.
    
    At  the  year end the Group's net assets have reduced to £709,918 with a cash balance  of  £1,852.
    Despite  this, the Group has maintained good relations with its creditors who continue to  support
    the  business.   Since  the  period end, the Group has acquired two  new  subsidiaries  which  are
    expected  to  be  cash  positive from acquisition and has also secured a significant  contract  to
    provide magazine publishing services to a third party.  These are expected to generate substantial
    profits  and cash generation to the Group over the next twelve months.  In addition,  a  new  bank
    loan  of £200,000 has been provided by Barclays Bank in October 2009, to replace the old overdraft
    facility  of  £90,000 from the Group's previous bankers. The directors continue  to  minimise  and
    reduce  expenses  whilst ensuring that a professional service continues to be  provided.   Monthly
    management  accounts produced since the year end show that the group has been able to continue  to
    operate within its available funds.
    
    The directors have prepared cash flow forecasts for the the period to 30 June 2011 which show that
    the  group  is  able to meet its liabilities as they fall due.  This is dependent upon  the  Group
    maintaining its good relations with its creditors.  The major liabilities which need to be met are
    the  monthly  salaries,  print  and paper costs and the scheduled repayments  on  the  liabilities
    incurred in respect of the acquisition of magazine titles.
    
    The  directors are confident that the results of the business since the year end provide a  strong
    indication  that  its forecasts will be achieved and on this basis consider  that  the  group  has
    sufficient resources to continue in operational existence for the foreseeable future and  that  it
    is appropriate to prepare these financial statements on a going concern basis.
    
    Prior year adjustment
    
    The  directors  have  identified prior year adjustments amounting to £135,100  relating  to  over-
    estimations  of  revenue of £193,000 and the effect of the resultant impact  to  the  tax  charge.
    These were the result of the accounting practices and systems in place at the time and which  have
    since been revised during the period under review.  Consequently, the directors are confident that
    the provisions included in the financial statements for the current year are materially correct.
    
    The prior year restatement has led to a restatement of the revenue, other debtors and relevant tax
    amounts only.


    The directors of Interactive Publishing Plc accept responsibility for this announcement.

                                               - ends -

    
    INTERACTIVE PUBLISHING PLC
    Registered No. 06388765
    
    
    CONTACT DETAILS:
    
    Interactive Publishing plc
    Peter Jay / Justin Sanders              Tel: 020 7608 6300
    
    SVS Securities Plc - PLUS Corporate Adviser
    Peter Ward / Alexander Brearley         Tel: 020 7638 5600
    
    SVS Securities Plc - Broker
    Ian Callaway / Alexander Mattey         Tel: 020 7638 5600
    
    Interactive Publishing Plc
    
    
    Notes to editors:
    
    Interactive  Publishing  plc floated on the PLUS market on 20 February 2008  for  the  purpose  of
    making  investments  in the publishing and marketing services sectors and with  the  objective  of
    producing long-term capital growth. Since its Introduction the directors of the Company have  been
    aggressively  expanding  the  Company's  portfolio through  the  acquisition  of  magazine  titles
    primarily in the consumer lifestyle sector.
    
    
    Interactive Publishing Plc
   

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