Critical Information Group plc Report and Financial ... · critical information group plc officers...

Company Registration No. 06908911

Report and Financial Statements

For the period from incorporation on

18 May 2009 to 30 June 2010

Critical Information Group plc

CRITICAL INFORMATION GROUP PLC

CONTENTS Page

REPORT AND FINANCIAL STATEMENTS 2010

Officers and professional advisers 1

Chairman's statement 2

Directors' report 4

Directors’ responsibilities statement 8

Independent auditors' report 9

Statement of comprehensive income 11

Statement of changes in equity 12

Statement of financial position 13

Statement of cash flows 14

Notes to the financial statements 15


OFFICERS AND PROFESSIONAL ADVISERS

1

REPORT AND FINANCIAL STATEMENTS 2010

DIRECTORS

David J Smith (executive director) (appointed 18 May 2009)

Anthony M Foye (executive director) (appointed 18 May 2009)

Peter L Bazalgette (non executive director) (appointed 9 June 2009)

Jonathan J G Conibear (non executive director) (appointed 9 June 2009)

COMPANY SECRETARY

Anthony M Foye (appointed 18 May 2009)

REGISTERED OFFICE

One Hanover Street

London

W1S 1YZ

AUDITORS

Deloitte LLP

Reading, United Kingdom

NOMINATED ADVISER

Singer Capital Markets Limited

One Hanover Street

London

W1S 1YZ


CHAIRMAN'S STATEMENT

2

Operating review for period from incorporation on 18 May 2009 to 30 June 2010.

CHAIRMAN’S STATEMENT

It continues to be an interesting period for Critical Information Group plc (“CIG” or “the Company”). The primary

focus has been to acquire a business or businesses of sufficient size to act as a platform from which to profitably

develop and integrate further acquisitions.

REVIEW OF OPERATIONS

CIG was established to acquire public or private business to business (B2B) media companies and businesses which

in our Board’s opinion have the potential for operational improvement and would benefit from consolidation. The

positive response to our flotation combined with the calibre of CIG’s financial backers has opened a number of

potential opportunities for the Company. As previously stated in our half year report we approached three businesses

and made conditional offers or non binding approaches on two of them. Since then we have made non-binding

indicative approaches to two further targets but were unable to take these further. CIG continues to be active and is

in early stage discussions regarding three additional businesses.

CIG offers a clear strategy and an experienced management team to implement this strategy. Our experience includes

restructuring target companies, buying and building businesses and delivering the benefits associated with integrating

assets into a larger entity. All targets are financially assessed using two cashflow based evaluation methods; NPV of

future cashflows and simple payback. Our first acquisitions will ideally offer good market positions, brand franchise

and a spread of operations to provide broad market access together with the necessary infrastructure to allow timely

integration of acquisitions and scale to support strong organic growth.

Although we have been very active over the period we have continued to maintain a strong focus on cost control.

This has kept our administrative expenses, before exceptional costs, to less than £100,000 in the period, the bulk of

which relate to professional and compliance costs. The executive directors will not draw a salary until completion of

our first acquisition, and they are not entitled to any benefits in kind. The approach to Centaur Media plc in 2009 is

shown separately, cost £119,500 and is disclosed in note 3. The direct costs on issues of shares were £155,200 and

were charged against the Share Premium Account.

As reported in the 31 December 2009 half yearly financial report whilst many companies are reporting that

conditions have stabilised in our target markets in recent months, they still face many of the same concerns we

identified at the time of our IPO last June; challenging market conditions, over leverage, lack of liquidity for smaller

listed companies, limited M&A activity and restricted access to debt finance. The biggest change that this

stabilisation has presented us has been potential targets factoring a return to growth into their price expectations for

their businesses. In many cases this forecast return to growth has not yet been demonstrated. We are still confident

that a number of opportunities remain and will continue to pursue them with the support of our shareholders. As

demonstrated by our actions during this period, we will not overpay for assets and we will invest only where we see

an opportunity for value creation for all of our shareholders.

THE FUTURE

At the time of our IPO we undertook to consult with shareholders and to seek their consent to continue with our

investment policy if we have not invested in a business or have not substantially implemented that investment policy

within 18 months of our IPO. As CIG has not, at the date of this report, implemented its stated investing policy we

will therefore commence this consultation process with our shareholders beginning next month with the objective of

tabling a suitable ordinary resolution at the Annual General Meeting to be convened on 18 November 2010.

As reported above, we continue to be active and are currently working on three projects, however as they are at an

early state there can be no certainty that these may lead to formal acceptable offers or indeed successful outcomes.

We continue to believe there are opportunities available to the Company with many B2B businesses still reporting an

uncertain economic outlook for 2010/11. We have ample cash to support our business activities,(with an net asset

balance of £2.6m at the end of June equivalent to 87.8p per share), a supportive investor base, potential access to

debt finance and a low underlying operational cost base.


CHAIRMAN'S STATEMENT

3

David J Smith, Chairman


DIRECTORS' REPORT

4

The directors of Critical Information Group plc present their report and the audited financial statements for the

period from incorporation on 18 May 2009 to 30 June 2010.

PRINCIPAL ACTIVITIES

The principal activity of the Company is to acquire media companies and businesses which in the opinion of the

directors, have the potential for operational improvement and would benefit from consolidation.

BUSINESS REVIEW

The Company raised £2,850,000 net of expenses (£3,005,000 before expenses) on its admission to AIM on 25 June

2009. During the period ended 30 June 2010 CIG made a loss for the financial period from May 2009 to June 2010

of £209,100 of which £119,500 related to advisory costs associated with the approach to Centaur Media plc.

Interest rates available for money on short term deposit remain at historic lows and the Company received £9,900 in

interest during the period.

Due to the incidence of losses, no tax is payable or accrued for the period.

At 30 June 2010, CIG had cash balances of £2,646,100 to support the business going forward and has outstanding

trade creditors and accruals of £23,300.

KEY PERFORMANCE INDICATORS

The company closely monitors its cash position and seeks to operate in the most cost effective manner. A number of

key business processes such as the operation of the company website, payroll and financial processing are carried out

in-house by the executive directors at little or no cost and other operational processes, such as front office functions,

are subcontracted to avoid the need to employ staff directly. Administration costs are therefore closely controlled

and the company seeks to keep these costs below a target of an average of approximately£10k per month.

The company seeks to maximise the interest it gets from its utilised cash deposits whilst ensuring any such deposits

are taken by low risk highly rated financial institutions and that sufficient cash is available for deployment in the

business. During 2010 the company transferred £2m from one such financial institution to another to take advantage

of higher deposit rates. The company seeks to achieve average interest rates of at least UK base rate.

RESULTS AND DIVIDEND

The company's loss for the financial period was £209,100 which will be transferred to reserves. The results for the

period are shown on page 11.

The company does not propose to pay a dividend at this stage of its development.


DIRECTORS' REPORT (CONTINUED)

5

PRINCIPAL RISKS AND UNCERTAINTIES

These financial statements are subject to a number of risks and uncertainties and actual results and events could be

materially different from those currently anticipated. Factors which may cause future outcomes to differ from those

foreseen include but are not limited to: general economic conditions, competition, legislative, fiscal and regulatory

developments.

The directors have identified the following material risks as affecting the company and its activities. Further risks

were identified on pages 17 to 25 in the admission document for Critical Information Group plc dated 25 June 2009.

Details of these risks and copies of this document are available on the company’s web site

www.criticalinformationgroup.co.uk. In summary:

1. There can be no assurance that the company will be successful in identifying or consummating an acquisition.

In the event that the company does not consummate an acquisition or other investment by 18 November 2010

it will convene a meeting of shareholders to consider whether to continue with its stated investment strategy.

A possible outcome of this resolution could be the start of a process to wind up the company and distribute

any residual cash to shareholders or a disposal of the company. If the company fails to complete an

acquisition an investor may therefore lose much or all of his or her investment.

2. The company will require additional financing to consummate an acquisition which it may or may not be able

to obtain on acceptable terms or at all.

3. The company envisages that its acquisitions will involve the issue of substantial amounts of further equity and

/ or the incurrence of indebtedness to acquire an acquisition target; these and other issues may dilute the

interests of its shareholders or present other risks.

4. Other entities with greater resources may seek to effect transactions in the media sector thereby making it

more difficult for the company to do so.

5. The company may run out of cash before consummating an acquisition, particularly if it spends significant

amounts pursuing acquisitions that do not complete.

CAPITAL STRUCTURE

Details of the authorised and issued share capital, together with details of the movements in the company's issued

share capital during the period are shown in note 10. The company has one class of ordinary shares which carries no

right to fixed income. Each share carries the right to one vote at general meetings of the company. The percentage

of the issued nominal value of the ordinary shares is 100% of the total issued nominal value of all share capital.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by

the general provisions of the Articles of Association and prevailing legislation. The directors are not aware of any

agreements between holders of the company's shares that may result in restrictions on the transfer of securities or on

voting rights.

No person has any special rights of control over the company's share capital and all issued shares are fully paid.

Under its Articles of Association, the company has authority to issue 5,000,000 ordinary shares.

DIRECTORS

The directors who served the company during the period and to the date of signing of these accounts is as shown on

page 1.



6

DIRECTORS’ INTEREST IN SHARES

The directors who held office at 30 June 2010 had the following interests in the ordinary shares of the company:

Name of Director Ordinary

shares of

£0.50 each

%

David Smith 350,000 12

Anthony Foye 1,000,000 33

Peter Bazalgette 100,000 3

Jonathan Conibear - -

DIRECTORS’ REMUNERATION

Name of director

Period from

incorporation 18

May 2009 to 30

June 2010

Salary or fees

£’000

Peter Bazalgette 10

Jonathan Conibear 10

SUBSTANTIAL SHAREHOLDERS

On 14th

September 2010, the company had been notified, in accordance with chapter 5 of the Disclosure and

Transparency Rules, of the following voting rights as a shareholder of the Company.

Name of Holder

% of voting

rights

and issued

share capital

Number

of ordinary

shares

Nature of

holding

Aegon Asset Management 5.3 160,000 Beneficial

Artemis Investment Management 5.3 160,000 Beneficial

Aviva Investors 5.3 160,000 Beneficial

Henderson Global Investors 5.3 160,000 Beneficial

Jupiter Asset Management 5.3 160,000 Beneficial

Legal & General Investment

Management 5.3 160,000 Beneficial

Threadneedle Asset Management 5.3 160,000 Beneficial

Old Mutual Investment Managers (UK) 4.5 136,000 Beneficial

Axa Framlington Investment Management 4.2 125,000 Beneficial

Singer Capital Markets Ltd (as principal) 3.6 108,000 Beneficial



7

GOING CONCERN

The directors have a reasonable expectation that the company has adequate resources to continue in operational

existence for the foreseeable future. Thus the directors continue to adopt the going concern basis in preparing these

financial statements. The company on its admission to AIM undertook to convene a meeting of shareholders if no

acquisition or investment had been made within 18 months of Admission. At this meeting should it be called, the

shareholders will be asked to consider whether or not to continue with the company’s stated investment policy. The

outcome of this meeting may result in a process to wind up the company and distribute any residual cash to

shareholders or the sale of the company as a going concern.

CORPORATE GOVENANCE

As an AIM-listed company, Critical Information Group plc is not required to follow the provisions of the Combined

Code, as set out in the Financial Services Authority’s Listing Rules. However, the Directors recognise the

importance and support the principles of good governance as contained within Section 1of the Combined Code (“the

Code”).

EVENTS AFTER THE REPORTING DATE

As mentioned in note 14 the directors have carried out a post balance sheet events review and can confirm no

significant post balance sheet events have occurred.

AUDITORS

Each of the persons who are a director at the date of approval of this annual report confirms that:

• so far as the director is aware, there is no relevant audit information of which the company's auditors are

unaware; and

• the director has taken all the steps that he ought to have taken as a director in order to make himself/herself

aware of any relevant audit information and to establish that the company's auditors are aware of that

information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act

2006. Deloitte LLP were appointed as auditors during the period.

By Order of the Board

David Smith

Director

24th September 2010


DIRECTORS' RESPONSIBILITIES STATEMENT

8

The directors are responsible for preparing the Annual Report and the financial statements in accordance with

applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the

directors are required to prepare the financial statements in accordance with International Financial Reporting

Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to

prepare the parent company financial statements under IFRSs as adopted by the EU. Under company law the

directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of

affairs of the company and of the profit or loss of the company for that period. In preparing these financial

statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable

and understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to

enable users to understand the impact of particular transactions, other events and conditions on the entity's

financial position and financial performance; and

• make an assessment of the company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and

enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible

for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included

on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of

financial statements may differ from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with International Financial Reporting Standards as adopted

by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the

company and the undertakings included in the consolidation taken as a whole; and

• the management report, which is incorporated into the directors' report, includes a fair review of the

development and performance of the business and the position of the company and the undertakings included

in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that

they face.

By order of the Board

Director Director

David Smith Anthony Foye

24th

September 2010 24th

September 2010

9

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CRITICAL INFORMATION

GROUP PLC

We have audited the financial statements of Critical Information Group plc for the period from incorporation on 18

May 2009 to 30 June 2010 which comprises the Statement of Comprehensive Income, Statement of Changes in

Equity, Statement of Financial Position, Statement of Cash Flows, and the related notes 1 to 14. The financial

reporting framework that has been applied in their preparation is applicable law and International Financial

Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those

matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s

members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation

of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit

the financial statements in accordance with applicable law and International Standards on Auditing (UK and

Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for

Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or

error. This includes an assessment of: whether the accounting policies are appropriate to the company’s

circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant

accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 30 June 2010 and of its loss for the

period from incorporation on 18 May 2009 to 30 June 2010;

• have been properly prepared in accordance with IFRSs as adopted by the European Union; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter – Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the

disclosure made in note 1 to the financial statements concerning the company’s ability to continue as a going

concern. The company on its admission to AIM undertook to convene a meeting of shareholders if no acquisition or

investment had been made within 18 months of Admission. At this meeting should it be called, the shareholders will

be asked to consider whether or not to continue with the company’s stated investment policy. The outcome of this

meeting may result in a process to wind up the company. As explained in note 1 to the financial statements, this

indicates the existence of an uncertainty which may cast significant doubt about the company’s ability to continue as

a going concern. The financial statements do not include any adjustment that would result if the company was unable

to continue as a going concern.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financial statements

are prepared is consistent with the financial statements.

10

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CRITICAL INFORMATION

GROUP PLC (CONTINUED)

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received

from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

John Clennett (Senior Statutory Auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditors

Reading, United Kingdom

24th

September 2010


STATEMENT OF COMPREHENSIVE INCOME

Period 18 May 2009 to 30 June 2010

11

Note Period

from 18

May 2009

to 30 June

2010

£000

Administrative expenses

Exceptional costs 3 119.5

Other administration expenses 99.5

OPERATING LOSS (219.0)

Finance income 4 9.9

LOSS ON ORDINARY ACTIVITIES

BEFORE TAXATION

2

(209.1)

Tax on loss on ordinary activities 6 -

TOTAL COMPREHENSIVE LOSS FOR

THE FINANCIAL PERIOD

12

(209.1)

EARNINGS PER SHARE

Basic loss per share 7 (7p)

All results derive from continuing operations.


STATEMENT OF CHANGES IN EQUITY


12

Share

Capital

£’000

Share

Premium

Account

£’000

Accumulat-

ed Deficit

£’000

Total

£’000

Balance at 18 May 2009 - - - -

Issues of shares 1,502.5 1,502.5 - 3,005.0

Loss for the period - - (209.1) (209.1)

Direct costs on issues of shares - (155.2) - (155.2)

Balance at 30 June 2010 1,502.5 1,347.3 (209.1) 2,640.7


STATEMENT OF FINANCIAL POSITION

30 June 2010

13

Note

30 June

2010

£’000

CURRENT ASSETS

Other receivables 8 17.9

Cash and cash equivalents 2,646.1

TOTAL ASSETS 2,664.0

CURRENT LIABILITIES

Trade creditors and accruals 9 (23.3)

NET CURRENT ASSETS AND NET ASSETS 2,640.7

EQUITY

Share capital 10,11 1,502.5

Share premium account 11 1,347.3

Accumulated deficit 11 (209.1)

Total equity 2,640.7

The financial statements of Critical Information Group plc (registration number 06908911) were approved and

authorised for issue by the Board of Directors on 24th

September 2010

David Smith

Director


STATEMENT OF CASH FLOWS


14

Period

from 18

May 2009

to 30 June

2010

£000

Operating activities

Loss before tax for the period (209.1)

Adjusting for:

Finance income (9.9)

Operating cash flows before movements in working capital (219.0)

Increase in receivables (17.9)

Increase in payables 23.3

Cash used by operations (213.6)

Interest received 9.9

Net cash used in operating activities (203.7)

Financing activities

Proceeds on issue of shares 3,005.0

Direct cost on issue of shares (155.2)

Net cash from financing activities 2,849.8

Net increase in cash and cash equivalents 2,646.1

Cash and cash equivalents comprise bank balances with an original maturity of three months or less. The carrying

amount of these assets is approximately equal to their fair value.


NOTES TO THE FINANCIAL STATEMENTS


15

1. ACCOUNTING POLICIES

General information

Critical information Group plc is a public limited company incorporated in the United Kingdom under the

Companies Act 2006. The address of the registered office is One Hanover Street, London, W1S 1YZ. The

nature of the company’s operations and its principal activities are the identification, acquisition and

integration of B2B media companies.

The company has its primary listing on the Alternative Investment Market (‘AIM’) of the London Stock

Exchange.

These financial statements are presented in pounds sterling because that is the currency of the primary

economic environment in which the company operates.

Adoption of new and revised standards

At the date of authorisation of these financial statements, the following Standards and Interpretations which

have not been applied in these financial statements were in issue but not yet effective:

Effective date

IFRS 2* Share Based Payment (amendments) 1 January 2010

IFRS 5 Non-current Assets held for Sale and Discontinued Operations (amendments) 1 July 2010

IFRS 7 Financial Instrument Disclosures (amendments)

IAS 1* Presentation of financial statements (amendments)

1 January 2011

1 January 2011

IAS 24 Related Parties Disclosures (revision) 1 January 2011

IAS 27 Consolidated and Separate Financial Statements (amendments)

IAS 34 Interim Financial Reporting (amendments)

1 July 2010

1 January 2011

IFRIC13 Customer Loyalty Programmes (amendments)

IFRIC14 Amendment – Prepayments of a minimum Funding Requirement

1 January 2011

1 January 2011

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

IFRS 9 Financial Instruments 1 January 2013

*endorsed by the EU

The directors do not expect that the adoption of these Standards and Interpretations in future periods will

have a material impact on the financial statements of the company except for treatment of acquisition of

subsidiaries and associates when IFRS 3 (revised 2008), IAS 27 (revised 2008) and IAS 28 (revised 2008)

comes into effect for business combinations for which the acquisition date is on or after the beginning of the

first annual period beginning on or after 1 July 2009.

Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards

(IFRSs). The financial statements have also been prepared in accordance with IFRSs adopted by the

European Union and therefore the financial statements comply with Article 4 of the EU IAS Regulation.

The financial statements have been prepared on the historical cost basis. Historical cost is generally based on

the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted

are set out below.


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)


16

1. ACCOUNTING POLICIES (CONTINUED)

Going concern

The directors have a reasonable expectation that the company has adequate resources to continue in

operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis

in preparing these financial statements. The company on its admission to AIM undertook to convene a

meeting of shareholders if no acquisition or investment had been made within 18 months of Admission. At

this meeting should it be called, the shareholders will be asked to consider whether or not to continue with the

company’s stated investment policy. The outcome of this meeting may result in a process to wind up the

company and distribute any residual cash to shareholders or the sale of the company as a going concern.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and are subject to an insignificant risk of changes in value.

Receivables

Other receivables that have fixed or determinable payments that are not quoted in an active market are

classified as ‘receivables’. Receivables are measured at amortised cost using the effective interest method,

less any impairment. Interest income is recognised by applying the effective interest rate, except for short-

term receivables when the recognition of interest would be immaterial.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the

substance of the contractual arrangement

Financial liabilities are initially measured at fair value, net of transaction costs. They are subsequently

measured at amortised cost using the effective interest method, with interest expense recognised on an

effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of

allocating interest expense over the relevant period. The effective interest rate is the rate that exactly

discounts estimated future cash payments through the expected life of the financial liability, or, where

appropriate, a shorter period, to the net carrying amount on initial recognition.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the company after

deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds

received, net of direct issue costs.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as

reported in the income statement because it excludes items of income or expense that are taxable or

deductible in other years and it further excludes items that are never taxable or deductible. The company’s

liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the

balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of

assets and liabilities in the financial statements and the corresponding tax bases used in the computation of

taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are

generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent

that it is probable that taxable profits will be available against which deductible temporary differences can be

utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial

recognition of goodwill or from the initial recognition (other than in a business combination) of other assets

and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.




17

1. ACCOUNTING POLICIES (CONTINUED)

Taxation (continued)

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries

and associates, and interests in joint ventures, except where the company is able to control the reversal of the

temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each period end and reduced to the extent that it is

no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be

recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled

or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to

items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax

assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority

and the company intends to settle its current tax assets and liabilities on a net basis.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting

estimates. It also requires management to exercise its judgement in the process of applying the company’s

accounting policies. The directors currently believe that at the period end there are no areas involving a

higher degree of judgement or complexity, or areas where assumptions and estimates are significant.

2. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION

Loss on ordinary activities before taxation is shown after charging:

Period

from 18

May 2009

30 June

2010

£’000

Auditors' remuneration 12.5

Staff costs (see note 5) 20.7

Fees payable to the company’s auditor in respect of the Admission to AIM were £20,000, and were charged

to Share Premium.

3. EXCEPTIONAL COSTS

Loss on ordinary activities before taxation is shown after charging:

Period

from 18

May 2009

30 June

2010

£’000

Professional fees and other costs 119.5

The above represents costs incurred in the approach to Centaur Media plc.




18

4. FINANCE INCOME

Period

from 18

May 2009

30 June

2010

£’000

Bank interest 9.9

5. INFORMATION REGARDING DIRECTORS AND EMPLOYEES

Period from

18 May 2009

30 June 2010

£’000

Staff costs during the period (including directors):

Wages and salaries including National Insurance Contributions 20.7

Directors’ emoluments 20.0

The payments above relate to non-executive directors as the executive directors currently are not entitled to

any remuneration.

Average monthly number of persons employed (including directors) 4

6. TAX CHARGE ON LOSS ON ORDINARY ACTIVITIES

a) Analysis for the tax for the period

Period

from 18

May 2009

30 June

2010

£’000

UK Corporation tax:

Current tax on loss for the period -

b) Factors affecting current period tax:

Period

from 18

May 2009

30 June

2010

£’000

Loss on activities before tax (209.1)

Loss on ordinary activities multiplied by standard rate of corporation tax in UK of

28% (58.5)

Tax losses carried forward – not recognised 58.5

Total current tax -

The unprovided deferred tax asset was £58,500. The deferred tax asset has not been recognised as the

directors consider that it is not probable that these losses will be utilised in the foreseeable future.




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7. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the following data:

Period

from 18

May 2009

30 June

2010

£’000

Earnings for the purpose of basic earnings per share being net loss attributable to

shareholders - based on the average number of shares in issue during the period

(209.1)

No.

Weighted average number of ordinary shares during the period for the purposes of

basic earnings per share 3,005

8. OTHER RECEIVABLES

30 June 2010

£’000

Other receivables 2.7

Prepayments 15.2

17.9

The directors consider that the carrying amount of other receivables is approximately equal to their fair value.

There are no past due or impaired receivable balances within the company.

9. TRADE CREDITORS AND ACCRUALS

30 June 2010

£’000

Trade creditors and accruals 23.3

Trade creditors and accruals principally comprise amounts outstanding for trade purchases, and ongoing

costs. The directors consider that the carrying amount of trade payables approximates to their fair value.

10. CALLED UP SHARE CAPITAL

Share capital as at 31 December 2009 amounted to £1,502,500. During the period, the company issued

3,005,000 shares of £0.50 each for £3,005,000.

30 June

2010

£’000

Authorised

5,000,000 ordinary shares of £0.50 each 2,500.0

Called up, allotted and fully paid

3,005,000 ordinary shares of £0.50 each 1,502.5

The company has one class of ordinary shares which carries no fixed income.




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11. SHARE PREMIUM

30 June

2010

£’000

Balance at 18 May 2009 -

Issues of shares 1,502.5

Direct costs on issues of shares (155.2)

Balance at 30 June 2010 1,347.3

12. ACCUMULATED DEFICIT

30 June

2010

£’000

Loss for the financial period (209.1)

13. FINANCIAL INSTRUMENTS

Capital risk management

The company manages its capital to ensure that it will be able to continue as going concern. The capital

structure of the company consists of cash and cash equivalents and equity attributable to shareholders,

comprising issued capital and share premium as disclosed in notes 10 to 11.

The board reviews and agrees policies on a regular basis for managing the risks associated with its assets and

its capital. It is, and has been throughout the period under review, the company’s policy that no trading in

financial instruments shall be undertaken and the company does not hold or issue derivative financial

instruments for speculative purposes.

The company is not subject to externally imposed capital requirements.

Credit risk

The company’s principal financial asset is its bank balance.

The company’s credit risk is primarily attributable to its bank balance. Cash is placed in interest bearing

accounts with institutions deemed to be of low credit risk.

14. EVENTS AFTER THE REPORTING DATE

There were no significant events since the balance sheet date.

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