Attached files
file | filename |
---|---|
10-K/A - FORM 10-K/A - Actua Corp | c01837e10vkza.htm |
EX-31.1 - EXHIBIT 31.1 - Actua Corp | c01837exv31w1.htm |
EX-32.1 - EXHIBIT 32.1 - Actua Corp | c01837exv32w1.htm |
EX-32.2 - EXHIBIT 32.2 - Actua Corp | c01837exv32w2.htm |
EX-23.4 - EXHIBIT 23.4 - Actua Corp | c01837exv23w4.htm |
EX-31.2 - EXHIBIT 31.2 - Actua Corp | c01837exv31w2.htm |
Exhibit 99.3
GoIndustry DoveBid plc
Comparative Consolidated Financial Statements and Independent Auditors Report
Year ended December 31, 2009 and 2008
Comparative Consolidated Financial Statements and Independent Auditors Report
Years ended December 31, 2008 and 2007
Independent auditors report to the members of GoIndustry-DoveBid plc
We have audited the group and parent company financial statements (the financial statements)
on pages 11 to 52. 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 and, as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the companys 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
companys 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 companys 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 more fully explained in the Directors Responsibilities Statement set out on page 9, 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 Boards (APBs) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APBs
website at www.frc.org.uk/apb/scope/UKNP.
Opinion on the financial statements
In our opinion
| the financial statements give a true and fair view of the state of the groups and the parents affairs as at 31 December 2009 and of the groups loss for the year then ended; | |
| the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; | |
| the parent financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the Companies Act 2006; and | |
| the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. |
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.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
| adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or | |
| the parent company financial statements are not in agreement with the accounting records and returns; 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. |
David Clark (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
2 Bloomsbury Street
London WC1B 3ST
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
2 Bloomsbury Street
London WC1B 3ST
14 May 2010
10
Consolidated statement of comprehensive income
For the year ended 31 December 2009
2009 | 2008 | |||||||||||||||||||||||||||||||||||
Before | Before | |||||||||||||||||||||||||||||||||||
except- | except- | |||||||||||||||||||||||||||||||||||
ional | Except- | ional | Except- | |||||||||||||||||||||||||||||||||
items and | ional | Other | items and | ional | Other | |||||||||||||||||||||||||||||||
other | items | charges | other | items | charges | |||||||||||||||||||||||||||||||
In thousands of pounds | Note | charges | (note 6) | (note 7) | Total | charges | (note 6) | (note 7) | Total | |||||||||||||||||||||||||||
Revenue |
5 | 41,990 | | | 41,990 | 36,898 | | | 36,898 | |||||||||||||||||||||||||||
Cost of sales |
(16,716 | ) | | | (16,716 | ) | (13,681 | ) | | | (13,681 | ) | ||||||||||||||||||||||||
Direct profit |
25,274 | | | 25,274 | 23,217 | | | 23,217 | ||||||||||||||||||||||||||||
Administrative expenses |
(25,857 | ) | (1,773 | ) | (1,036 | ) | (28,666 | ) | (27,200 | ) | (23,758 | ) | (788 | ) | (51,746 | ) | ||||||||||||||||||||
Operating loss |
8 | (583 | ) | (1,773 | ) | (1,036 | ) | (3,392 | ) | (3,983 | ) | (23,758 | ) | (788 | ) | (28,529 | ) | |||||||||||||||||||
Finance costs |
||||||||||||||||||||||||||||||||||||
Interest income |
11 | 141 | | | 141 | 369 | | | 369 | |||||||||||||||||||||||||||
Finance costs |
11 | (972 | ) | (414 | ) | | (1,386 | ) | (698 | ) | | | (698 | ) | ||||||||||||||||||||||
Share of loss of associate |
(28 | ) | | | (28 | ) | (27 | ) | | | (27 | ) | ||||||||||||||||||||||||
Loss before income tax |
(1,442 | ) | (2,187 | ) | (1,036 | ) | (4,665 | ) | (4,339 | ) | (23,758 | ) | (788 | ) | (28,885 | ) | ||||||||||||||||||||
Income tax expense |
12 | (170 | ) | | | (170 | ) | (73 | ) | | | (73 | ) | |||||||||||||||||||||||
Loss for the year from
continuing operations |
(1,612 | ) | (2,187 | ) | (1,036 | ) | (4,835 | ) | (4,412 | ) | (23,758 | ) | (788 | ) | (28,958 | ) | ||||||||||||||||||||
Loss for the year from
discontinued operations |
13 | | (1,303 | ) | ||||||||||||||||||||||||||||||||
Loss for the year |
(4,835 | ) | (30,261 | ) | ||||||||||||||||||||||||||||||||
Other comprehensive income |
||||||||||||||||||||||||||||||||||||
Exchange (losses) / gains on
translation of foreign subsidiaries |
(2,130 | ) | 8,043 | |||||||||||||||||||||||||||||||||
Actuarial (losses) / gains on
defined benefit pension scheme |
(2,150 | ) | 430 | |||||||||||||||||||||||||||||||||
Other comprehensive income
for the year |
(4,280 | ) | 8,473 | |||||||||||||||||||||||||||||||||
Total comprehensive income
for the year |
(9,115 | ) | (21,788 | ) | ||||||||||||||||||||||||||||||||
Loss attributable to: |
||||||||||||||||||||||||||||||||||||
Owners of the Parent |
(4,916 | ) | (30,323 | ) | ||||||||||||||||||||||||||||||||
Non-controlling interests |
81 | 62 | ||||||||||||||||||||||||||||||||||
(4,835 | ) | (30,261 | ) | |||||||||||||||||||||||||||||||||
Total comprehensive loss
attributable to: |
||||||||||||||||||||||||||||||||||||
Owners of the Parent |
(9,196 | ) | (21,850 | ) | ||||||||||||||||||||||||||||||||
Non-controlling interests |
81 | 62 | ||||||||||||||||||||||||||||||||||
(9,115 | ) | (21,788 | ) | |||||||||||||||||||||||||||||||||
Loss per share for loss from continuing operations attributable to owners of the parent during
the year (expressed in pence per share) |
||||||||||||||||||||||||||||||||||||
Basic |
14 | (0.8p | ) | (6.6p | ) | |||||||||||||||||||||||||||||||
Diluted |
14 | (0.8p | ) | (6.6p | ) | |||||||||||||||||||||||||||||||
Loss per share for loss attributable to owners of the parent during the year (expressed in pence per share) |
||||||||||||||||||||||||||||||||||||
Basic |
14 | (0.8p | ) | (6.9p | ) | |||||||||||||||||||||||||||||||
Diluted |
14 | (0.8p | ) | (6.9p | ) |
The tax effect on other comprehensive income is nil (2008: nil).
The notes on pages 15 to 43 are an integral part of these consolidated financial statements
11
Consolidated statement of financial position
As at 31 December 2009
In thousands of pounds | Note | 2009 | 2008 | |||||||||
Non-current assets |
||||||||||||
Property, plant and equipment |
15 | 1,026 | 1,429 | |||||||||
Intangible assets |
16 | 32,335 | 35,750 | |||||||||
Investment in associate |
17 | | 28 | |||||||||
33,361 | 37,207 | |||||||||||
Current assets |
||||||||||||
Inventories |
597 | 2,743 | ||||||||||
Trade and other receivables |
18 | 6,649 | 10,853 | |||||||||
Cash and cash equivalents |
19 | 20,751 | 18,037 | |||||||||
27,997 | 31,633 | |||||||||||
Total assets |
61,358 | 68,840 | ||||||||||
Current liabilities |
||||||||||||
Trade and other payables |
20 | 25,611 | 27,803 | |||||||||
Borrowings |
21 | 2,317 | 9,970 | |||||||||
27,928 | 37,773 | |||||||||||
Non-current liabilities |
||||||||||||
Trade and other payables |
20 | 358 | 1,094 | |||||||||
Borrowings |
21 | 2,048 | 546 | |||||||||
Retirement benefit obligations |
22 | 4,581 | 2,898 | |||||||||
6,987 | 4,538 | |||||||||||
Total liabilities |
34,915 | 42,311 | ||||||||||
Net assets |
26,443 | 26,529 | ||||||||||
Equity |
||||||||||||
Share capital |
23 | 9,745 | 23,583 | |||||||||
Share premium |
23 | 22,495 | 18,872 | |||||||||
Shares to be issued |
23 | 542 | 542 | |||||||||
Own shares held in trust |
24 | | (974 | ) | ||||||||
Capital redemption reserve |
27 | 18,908 | | |||||||||
Other reserves |
25 | 54,327 | 56,207 | |||||||||
Accumulated losses |
26 | (79,836 | ) | (71,882 | ) | |||||||
Capital and reserves attributable to owners of the parent |
26,181 | 26,348 | ||||||||||
Non-controlling interests |
262 | 181 | ||||||||||
Total equity |
26,443 | 26,529 | ||||||||||
The notes on pages 15 to 43 are an integral part of these consolidated financial statements
The financial statements were approved by the board of directors and authorised for issue on 14 May
2010. They were signed on its behalf by:
Jack Reinelt
|
David Horne | |
Chief Executive Officer
|
Chief Financial Officer |
12
Consolidated statement of changes in equity
For the year ended 31 December 2009
Attributable to owners of the parent | ||||||||||||||||||||||||||||||||||||||||||||||||
Own | ||||||||||||||||||||||||||||||||||||||||||||||||
Capital | shares | Share | Foreign | Accumu- | Non- | |||||||||||||||||||||||||||||||||||||||||||
Share | Share | redemption | Shares to | held in | Acquisition | options | currency | lated | controlling | TOTAL | ||||||||||||||||||||||||||||||||||||||
In thousands of pounds | capital | premium | reserve | be issued | trust | reserve | reserve | reserve | losses | TOTAL | interest | Equity | ||||||||||||||||||||||||||||||||||||
At 1 January 2008 |
13,250 | 9,578 | | | (1,042 | ) | 47,649 | 1,149 | (807 | ) | (41,989 | ) | 27,788 | 119 | 27,907 | |||||||||||||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the year |
| | | | | | | | (30,323 | ) | (30,323 | ) | 62 | (30,261 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive income: |
||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial gain on defined benefit
pension scheme |
| | | | | | | | 430 | 430 | | 430 | ||||||||||||||||||||||||||||||||||||
Currency translation differences |
| | | | | | | 8,043 | | 8,043 | | 8,043 | ||||||||||||||||||||||||||||||||||||
Total comprehensive income: |
| | | | | | | 8,043 | (29,893 | ) | (21,850 | ) | 62 | (21,788 | ) | |||||||||||||||||||||||||||||||||
Transactions with owners: |
||||||||||||||||||||||||||||||||||||||||||||||||
Issue of share capital to finance the
acquisition of DoveBid Inc. |
9,250 | 9,250 | | | | | | | | 18,500 | | 18,500 | ||||||||||||||||||||||||||||||||||||
Shares issued as consideration for the
acquisition of DoveBid Inc. |
1,083 | 1,083 | | 542 | | | | | | 2,708 | | 2,708 | ||||||||||||||||||||||||||||||||||||
Cost of share issue |
| (1,039 | ) | | | | | | | | (1,039 | ) | | (1,039 | ) | |||||||||||||||||||||||||||||||||
Share based payments |
| | | | | | 173 | | | 173 | | 173 | ||||||||||||||||||||||||||||||||||||
Transfer of shares |
| | | | 68 | | | | | 68 | | 68 | ||||||||||||||||||||||||||||||||||||
Total transactions with owners: |
10,333 | 9,294 | | 542 | 68 | | 173 | | | 20,410 | | 20,410 | ||||||||||||||||||||||||||||||||||||
At 1 January 2009 |
23,583 | 18,872 | | 542 | (974 | ) | 47,649 | 1,322 | 7,236 | (71,882 | ) | 26,348 | 181 | 26,529 | ||||||||||||||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the year |
| | | | | | | | (4,916 | ) | (4,916 | ) | 81 | (4,835 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive income: |
||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial
loss on defined benefit pension scheme |
| | | | | | | | (2,150 | ) | (2,150 | ) | | (2,150 | ) | |||||||||||||||||||||||||||||||||
Currency translation differences |
| | | | | | | (2,130 | ) | | (2,130 | ) | | (2,130 | ) | |||||||||||||||||||||||||||||||||
Total comprehensive income: |
| | | | | | | (2,130 | ) | (7,066 | ) | (9,196 | ) | 81 | (9,115 | ) | ||||||||||||||||||||||||||||||||
Transactions with owners: |
||||||||||||||||||||||||||||||||||||||||||||||||
Cancellation of shares |
(18,908 | ) | | 18,908 | | 888 | | | | (888 | ) | | | | ||||||||||||||||||||||||||||||||||
New shares issued |
2,657 | 2,126 | | | | | | | | 4,783 | | 4,783 | ||||||||||||||||||||||||||||||||||||
Conversion of loan notes |
2,413 | 1,923 | | | | | | | | 4,336 | | 4,336 | ||||||||||||||||||||||||||||||||||||
Cost of share issue |
| (426 | ) | | | | | | | | (426 | ) | | (426 | ) | |||||||||||||||||||||||||||||||||
Share based payments |
| | | | | | 250 | | | 250 | | 250 | ||||||||||||||||||||||||||||||||||||
Transfer of shares |
| | | | 86 | | | | | 86 | | 86 | ||||||||||||||||||||||||||||||||||||
Total transactions with owners: |
(13,838 | ) | 3,623 | 18,908 | | 974 | | 250 | | (888 | ) | 9,029 | | 9,029 | ||||||||||||||||||||||||||||||||||
At 31 December 2009 |
9,745 | 22,495 | 18,908 | 542 | | 47,649 | 1,572 | 5,106 | (79,836 | ) | 26,181 | 262 | 26,443 | |||||||||||||||||||||||||||||||||||
The notes on pages 15 to 43 are an integral part of these consolidated financial statements
13
Consolidated statement of cash flows
For the year ended 31 December 2009
In thousands of pounds | 2009 | 2008 | ||||||
Cash flows from operating activities |
||||||||
Loss before income tax |
(4,665 | ) | (28,885 | ) | ||||
Adjustments for: |
||||||||
Depreciation |
434 | 360 | ||||||
Amortisation |
935 | 672 | ||||||
Goodwill impairment charge |
| 19,378 | ||||||
Net interest expense |
1,245 | 329 | ||||||
Share based payments |
336 | 241 | ||||||
Net retirement benefit cost |
117 | 176 | ||||||
Share of loss of associate |
28 | 27 | ||||||
Changes in working capital: |
||||||||
Decrease / (increase) in inventories |
1,943 | (1,855 | ) | |||||
Decrease in accounts receivable |
3,719 | 1,785 | ||||||
(Decrease) / increase in accounts payable |
(2,563 | ) | 1,209 | |||||
Increase / (decrease) in retirement benefit obligations |
1,683 | (367 | ) | |||||
Operating cash flows before interest and taxes |
3,212 | (6,930 | ) | |||||
Interest paid |
(1,116 | ) | (698 | ) | ||||
Interest received |
141 | 369 | ||||||
Income and corporation taxes paid |
(156 | ) | (108 | ) | ||||
Net cash generated from / (used in) operating activities |
2,081 | (7,367 | ) | |||||
Cash flows from investing activities |
||||||||
Purchases of property, plant and equipment |
(94 | ) | (471 | ) | ||||
Disposals of property, plant and equipment |
91 | | ||||||
Purchases of intangible assets |
(394 | ) | (1,786 | ) | ||||
Loan granted to associate |
| (55 | ) | |||||
Disposal of subsidiary |
| (129 | ) | |||||
Acquisition of subsidiary net of cash acquired |
| (7,044 | ) | |||||
Net cash used in investing activities |
(397 | ) | (9,485 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds on issue of shares |
4,087 | 17,461 | ||||||
(Decrease) / increase in borrowings |
(1,815 | ) | 3,379 | |||||
Net cash generated from financing activities |
2,272 | 20,840 | ||||||
Net increase in cash and cash equivalents |
3,956 | 3,988 | ||||||
Cash and cash equivalents at beginning of year |
18,037 | 14,797 | ||||||
Effect of foreign exchange rate changes |
(1,242 | ) | (748 | ) | ||||
Cash and cash equivalents at end of year |
20,751 | 18,037 | ||||||
The notes on pages 15 to 43 are an integral part of these consolidated financial statements
14
Notes to the consolidated financial statements
For the year ended 31 December 2009
1. General information
GoIndustry-DoveBid plc (the company) and its subsidiaries (together the group) is a global
market leader in the service, management, and disposal of surplus industrial assets. The group has
offices in locations across Europe, North America, and Asia.
The company is a public limited company incorporated and domiciled in the United Kingdom. The
address of its registered office is 1-6 Lombard Street, London, EC3V 9JU.
The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all of the years
presented unless otherwise stated.
Basis of preparation
These consolidated financial statements include the accounts of GoIndustry-DoveBid plc and all of
its subsidiaries made up to 31 December each year.
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) adopted for use in the EU and IFRIC interpretations as at 31 December 2009
(adopted IFRS) and the Companies Act applicable to companies reporting under IFRS.
The financial statements are presented in Sterling, rounded to the nearest thousand, and have been
prepared on a historical cost basis.
The preparation of financial statements in accordance with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process
of applying the groups accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed in note 4.
(a) Standards, amendments and interpretations effective in 2009
| IAS 1 (revised), Presentation of financial statements. The revised standard has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised standard prohibits the presentation of items of income and expenses (that is non-owner changes in equity) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity. All non-owner changes in equity are required to be shown in a performance statement. | ||
Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The group has elected to present one statement: a statement of comprehensive income. | |||
| IFRS 8, Operating segments. The group has adopted IFRS 8 Operating segments during the period. The standard supersedes IAS 14, Segment reporting and is effective for the year ended 31 December 2009. IFRS 8 provides segmental information for the group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The group considers that the role of chief operating decision-maker is performed by the group board of directors. IAS 14 required segmental information to be reported for business segments and geographical segments based on assets and operations that provided products or services subject to different risks and returns. The adoption of IFRS 8 has not had any impact on the performance or position of the group or on the presentation of these financial statements as internal reporting is based upon geographical segments. | ||
| IFRS 2 Share-based payment amendments relating to group cash-settled share-based payment transactions | ||
| IFRS 3 Business combinations comprehensive revision on applying the acquisition method adopted early by the group | ||
| IFRS 9 Financial Instruments amendments relating to classification and measurement | ||
| IAS 1 Presentation of financial statements amendments resulting from April 2009 Annual Improvements to IFRSs adopted early by the group | ||
| IAS 7 Statement of Cash Flows amendments resulting from April 2009 Annual Improvements to IFRSs | ||
| IAS 17 Leases amendments resulting from April 2009 Annual Improvements to IFRSs | ||
| IAS 24 Related Party Disclosures revised definition of related parties | ||
| IAS 27 Consolidated and Separate Financial Statements consequential amendments arising from amendments to IFRS 3 early adopted by the group |
15
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
| IAS 36 Impairment of Assets amendments resulting from April 2009 Annual Improvements to IFRSs | ||
| IAS 38 Intangible Assets amendments resulting from April 2009 Annual Improvements to IFRSs | ||
| IFRIC 14 IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction (endorsed). |
(b) Standards, amendments and interpretations effective in 2009 but not relevant
The following standards, amendments and interpretations to published standards are mandatory for
accounting periods beginning on or after 1 January 2009 but are not relevant to the group:
| IFRS 1 First time adoption of IFRS amendments relating to oil and gas assets and determining whether an arrangement contains a lease; amendment in relation to the cost of an investment in a subsidiary, jointly controlled entity or associate | ||
| IFRS 5 Non-current Assets Held for Sale and Discontinued Operations amendment | ||
| IAS 28 Interests in Joint Ventures consequential amendments arising from amendments to IFRS 3 | ||
| IAS 32 Financial instruments: presentation amendments relating to classification of rights issues | ||
| IAS 39 Financial instruments: recognition and measurement amendments for eligible hedged items | ||
| IFRIC 2 Members shares in co-operative entities and similar instruments consequential amendments arising from amendments to IAS 32 | ||
| IFRIC 12 Service concession arrangements | ||
| IFRIC 13 Customer loyalty programs (endorsed) | ||
| IFRIC 16 Hedges of a net investment in a foreign operation | ||
| IFRIC 17 Distributions of non-cash assets to owners | ||
| IFRIC 18 Transfer of assets from Customers | ||
| IAS 28 (amendment), Investment in associates (and consequential amendments to IAS 32, Financial instruments: Recognition and measurement and IFRS 7, Financial instruments: Disclosures) | ||
| IAS 29 (amendment), Financial reporting in hyperinflationary economies | ||
| IAS 31 Investment in joint ventures consequential amendments arising from amendments to IFRS 3 | ||
| IAS 31 (amendment), Interests in joint ventures (and consequential amendments to IAS 32, Financial instruments: Recognition and measurement and IFRS 7, Financial instruments: Disclosures) | ||
| IAS 32 (amendment), Financial instruments: Presentation and IAS 1 (amendment) Presentation of financial statements Puttable financial instruments and obligations arising on liquidation | ||
| IAS 40 (amendment), Investment property (and consequent amendments to IAS 16, Property, plant and equipment) | ||
| IAS 41 (amendment), Agriculture. |
Going concern
The group had net current assets of £69 thousand at 31 December 2009 (2008: net current liabilities
of £6,140 thousand), gross cash of £20,751 thousand (2008: £18,037 thousand) and net cash after
deducting borrowings and amounts due to clients of £150 thousand (2008: net debt of £8,658
thousand). The directors have considered the implications for going concern as set out below.
The board remains satisfied with the groups funding and liquidity position, and in particular
notes the significant improvement from 2008. The main sources of debt funding are the bank
facilities with Barclays Bank plc in the United Kingdom, PNC Bank in the United States of America,
Hypo Vereins Bank in Germany and the convertible loan notes. The group also holds subordinated loan
notes that were acquired as part of the acquisition of DoveBid, Inc.
As indicated in note 21 to the financial statements, the group meets its day-to-day working capital
requirements from its cash and overdraft facilities. Subsequent to 31 December 2009, management has
renegotiated the PNC Bank facilities to reduce the principal deal facility from $5 million to $3.5
million, with a corresponding increase in the working capital facility from $2 million to $3.5
million; the $3 million term loan facility remains unchanged and had a balance of $2.65 million
outstanding at 31 December 2009. In addition to the PNC Bank facilities, the group has facilities
with Barclays Bank plc of £300 thousand and Hypo Vereins Bank of £300 thousand, both of which are
repayable on demand.
16
The board remains mindful regarding the uncertainties inherent in the current economic climate. The
groups forecasts and projections, taking account of reasonable changes in trading performance
given these uncertainties, show the group operating within its current facilities.
The board has reviewed the bank facilities and believes that they provide sufficient headroom going
forward. Forecasts reviewed by the board, including forecasts adjusted for worse economic
conditions together with appropriate cost containment measures already in place show continued
compliance with covenants on the PNC Bank facilities. All other debt funding is free of covenants.
Those forecasts show the group has sufficient working capital facilities.
On the basis of these forecasts, both base case and sensitised as described above, and given the
level and repayment profile of the facilities, the board has concluded that the going concern basis
of preparation continues to be appropriate.
Consolidation
Subsidiaries are all entities over which the group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which control is transferred to the
group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
group. The cost of an acquisition is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the groups share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of
the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies
are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
Investments in associates are all entities over which the group has significant influence but not
control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are included in the consolidated financial statements using the equity
method.
The groups share of its associates post-acquisition profits or losses is recognised in profit or
loss. The cumulative post-acquisition movements are adjusted against the carrying value of the
investment.
Segment reporting
The group presents segmental analysis by geography. All geographical segments are engaged in
providing products or services within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in other economic environments. The
corporate centre provides support services to the group as a whole covering IT, finance, legal and
campaign marketing. Assets and liabilities are allocated according to their physical location.
Information reported to the groups chief operating decision maker for the purposes of resource
allocation and assessment of segment performance is more specifically focussed on the geographical
region and not the type of service. The groups reportable segments under IFRS 8 are therefore as
follows: North America, Europe, Asia and Corporate. The accounting policies of the reportable
segments are the same as the groups accounting policies described in this note. Segment profit
represents the profit earned by each segment without allocation of central administration costs and
directors salaries. This is the measure reported to the chief operating decision maker for the
purposes of resource allocation and assessment of segment performance.
Foreign currency translation
(a) | Functional and presentation currency | |
Items included in the financial statements of each of the groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Sterling (£), which is the companys functional and presentation currency. | ||
(b) | Transactions and balances | |
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. |
17
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
(c) | Group companies | |
The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: |
i. | assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; | ||
ii. | income and expenses are translated at weighted average monthly exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and all resulting exchange differences are recognised in other comprehensive income. |
On consolidation, exchange differences arising from the translation of the net investment in
foreign operations, are recognised in other comprehensive income. When a foreign operation is
partially disposed of or sold, exchange differences that were recorded in other comprehensive
income are recognised in profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the groups activities. Revenue is shown net of value-added
tax, returns, rebates and discounts.
The primary business of the group is the provision of services associated with the valuation and
sale of used industrial equipment. In such circumstances group companies act as an agent on behalf
of their clients, and revenues represent commissions or fees charged to clients in connection with
the provision of these services. Group companies may also take a position as a principal whereby
they purchase and sell equipment on their own behalf. On these occasions revenues represent the
percentage ownership of the value of the equipment being sold with the cost of such equipment being
reported within inventory at the time of purchase and as cost of sales at the time of sale.
Revenue is recognised when it is probable that the economic benefits will flow to the group, when
the revenues and associated costs can be reliably measured and when the stage of completion of the
transaction at the balance sheet date can also be reliably measured. In addition in the case of
principal sales of equipment the group company must have transferred to the buyer the significant
risks and rewards of ownership of those goods, and must retain no significant managerial
involvement with, nor control over, those goods.
In the case of agency sales a buyer will usually be identified, the sale price agreed and the buyer
invoiced on behalf of the client before the group invoices the client. Accrued income receivable
represents an accrual for such work completed on behalf of clients but not yet invoiced to the
client. Accruals are estimated based on the expected proceeds from the sale of client owned
equipment, agreed commission rates and other contractual terms.
Employee benefits
(a) | Pension obligations | |
The group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. | ||
The defined benefit plan, the Henry Butcher Pension and Life Assurance Scheme, is operated by GoIndustry UK Limited. GoIndustry UK Limited is obliged to make sufficient contributions to an externally administered fund in order to satisfy future pension obligations. The Scheme was closed to new members with effect from 1 January 2002, and with effect from 31 December 2004 accrual of benefits in the Scheme ceased and active members contributed to a defined contribution scheme. The liability recognised in the balance sheet in respect of the defined benefit scheme is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. |
18
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. | ||
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. | ||
(b) | Share-based compensation | |
The group operates a number of equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. | ||
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. |
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to profit or loss on a straight-line basis over
the period of the lease.
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the companys subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation
and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and
associates, except where the timing of the reversal of the temporary difference is controlled by
the group and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the group 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.
Property, plant and equipment
All property, plant and equipment is stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss during the financial period in which they are incurred.
19
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
Depreciation is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Buildings |
10-25 years | |||
Vehicles |
4 years | |||
Furniture, fittings and equipment |
3 years |
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
An assets carrying amount is written down immediately to its recoverable amount if the assets
carrying amount is greater than its estimated recoverable amount.
Intangible assets
(a) | Goodwill | |
Goodwill represents the excess of the cost of an acquisition over the fair value of the groups share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. | ||
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The company allocates goodwill to each geographical business unit. | ||
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed 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 assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. | ||
(b) | Customer relationships | |
Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The customer relationships have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship, which is 5 years. | ||
(c) | Brands | |
Brands acquired in a business combination are recognised at fair value at the acquisition date. The brands have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the brands, which is 10 years. | ||
(d) | Other intangible assets | |
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 2 to 3 years. | ||
In line with IFRS, the group does not recognise internally generated intangible assets arising from expenditures such as research, branding or the creation of its customer and equipment databases. Expenditures associated with internal systems development and with internally generated goodwill are charged against profit in the period in which they are incurred. |
Inventories
Inventories comprise used industrial equipment purchased for resale and are stated at the
acquisition cost of the assets. In some cases dismantling, transportation, or warehousing costs may
be incurred, which are added to the inventory value. These costs are allocated between the group of
assets acquired on a weighted average of the deemed value of the assets. Where this allocated cost
is in excess of net realisable value the excess carrying amount is written off to profit or loss.
Borrowing costs are not included in the inventory valuation. Net realisable value is the estimated
selling price in the ordinary course of business, less applicable variable selling expenses.
Financial assets
The groups financial assets comprise trade and other receivables, cash and cash equivalents.
20
Trade and other receivables
Trade and other receivables comprise trade accounts receivable, accrued income receivable, auction
expenses receivable, prepayments and other receivables. Trade receivables are initially recognised
at fair value, and subsequently measured at amortised cost using the effective interest method less
impairment. A provision for impairment is established when there is objective evidence that the
group will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial
reorganisation, and default or delinquency in payments are considered indicators that the trade
receivable is impaired. The amount of the provision is the difference between the assets carrying
amount and the present value of estimated future cash flows. The carrying amount of the asset is
reduced through the use of an allowance account, and the amount of the loss is recognised in profit
or loss within administrative expense. When a trade receivable is uncollectible, it is written off
against the allowance account for trade receivables. Subsequent recoveries of amounts previously
written off are credited against administrative expense in profit or loss.
Accrued income receivable represents an accrual for work completed on behalf of clients but not yet
invoiced. Auction expenses represent costs incurred on behalf of and recoverable from clients but
not yet invoiced.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, monies held under
guarantee, and bank overdrafts.
Group companies routinely collect cash from auction sales, the proceeds of which are ultimately
payable to the client whose assets are being sold. Client money owing is reported within cash on
the consolidated balance sheet with a corresponding liability reported as amounts due to clients
within accounts payable. Client cash that is held together with the groups own cash is reported
within own cash on hand and at bank, but if for legal or other reasons it must be segregated from
company funds it is reported separately as client cash on escrow. Short-term deposits are liquid
investments that are convertible to known amounts of cash and which are subject to insignificant
risk of change in value. Monies held under guarantee is cash held in accounts to which the group
enjoys legal title, which are used to meet specific client liabilities.
Trade payables
Trade payables are initially recognised at fair value and subsequently measured at amortised cost,
using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in profit or loss over the period of the borrowings
using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to
defer settlement of the liability for at least 12 months after the balance sheet date.
Provisions
Provisions for potential future costs such as those arising from the defence of a legal claim are
recognised when the group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and
the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction from the proceeds.
Where any group company purchases the companys equity share capital (own shares held in trust),
the consideration paid, including any directly attributable incremental costs is deducted from
equity attributable to the companys equity holders until the shares are cancelled or reissued.
3. Financial risk management
The groups activities expose it to a variety of financial risks: market risk (including
foreign exchange risk and interest rate risk), credit risk and liquidity risk. Financial risk
management is coordinated at group level and seeks to minimise potential adverse effects on the
groups financial performance.
Market risk
(a) | Foreign exchange risk | |
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. In order to reduce the currency risk arising in respect of recognised foreign currency assets and net investments in foreign subsidiaries, the group uses direct borrowings in the same currency. The risk relating to future commercial transactions and recognised liabilities is mitigated through the maintenance of cash balances in the same currency. |
21
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
The effect of changing exchange rates is regularly monitored by the group and a sensitivity analysis has been prepared to show the impact of changes in foreign exchange between Sterling, the United States Dollar and the Euro. A decrease of twenty cents in the value of both the Dollar and the Euro would increase consolidated loss before tax by £12 thousand (2008: Decrease £393 thousand) and increase total equity by £5,000 thousand (2008: £5,618 thousand). An increase of five cents in the value of both the Dollar and the Euro would decrease consolidated loss before tax by £1 thousand (2008: Increase £522 thousand) and decrease total equity by £999 thousand (2008: £8,459 thousand). | ||
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the functional currency. | ||
The carrying values of the groups financial assets and liabilities are denominated in the following currencies: |
2009 | ||||||||||||||||
In thousands of pounds | USD | Euro | GBP | Total | ||||||||||||
Loans and receivables: |
||||||||||||||||
Trade receivables |
2,130 | 809 | 464 | 3,403 | ||||||||||||
Other receivables |
767 | 117 | 6 | 890 | ||||||||||||
Accrued income |
60 | 324 | 1,066 | 1,450 | ||||||||||||
Cash and cash equivalents |
14,268 | 2,727 | 3,756 | 20,751 | ||||||||||||
Amortised Costs: |
||||||||||||||||
Trade payables |
124 | (272 | ) | (3,341 | ) | (3,489 | ) | |||||||||
Amounts due to clients |
(12,635 | ) | (2,647 | ) | (954 | ) | (16,236 | ) | ||||||||
Accruals and other payables |
(1,550 | ) | (1,003 | ) | (787 | ) | (3,340 | ) | ||||||||
Borrowings |
(3,280 | ) | (500 | ) | (585 | ) | (4,365 | ) | ||||||||
(116 | ) | (445 | ) | (375 | ) | (936 | ) | |||||||||
2008 | ||||||||||||||||
In thousands of pounds | USD | Euro | GBP | Total | ||||||||||||
Trade receivables |
1,857 | 1,094 | 628 | 3,579 | ||||||||||||
Other receivables |
849 | 165 | 30 | 1,044 | ||||||||||||
Accrued income |
621 | 791 | 3,401 | 4,813 | ||||||||||||
Cash and cash equivalents |
13,036 | 1,217 | 3,784 | 18,037 | ||||||||||||
Amortised Costs: |
||||||||||||||||
Trade payables |
(1,501 | ) | (841 | ) | (2,365 | ) | (4,707 | ) | ||||||||
Amounts due to clients |
(9,695 | ) | (1,881 | ) | (4,603 | ) | (16,179 | ) | ||||||||
Accruals and other payables |
(3,176 | ) | (1,160 | ) | (1,042 | ) | (5,378 | ) | ||||||||
Borrowings |
(5,290 | ) | | (5,226 | ) | (10,516 | ) | |||||||||
(3,299 | ) | (615 | ) | (5,393 | ) | (9,307 | ) | |||||||||
During the 12 month period the Sterling / US Dollar exchange rate fluctuated between a maximum and minimum of 1.653 and 1.421 US $ to £1. | ||
During the 12 month period the Sterling / Euro exchange rate fluctuated between a maximum and minimum of 1.176 and 1.076 EUR to £1. | ||
(b) | Cash flow interest rate risk | |
Borrowings of the group comprise convertible loan notes issued by GoIndustry-DoveBid plc and bank loans held by GoIndustry USA Inc., GoIndustry UK Limited and GoIndustry AG. The group is exposed to cash flow interest rate risk only on its bank borrowings as the convertible loan notes attract interest at a fixed rate of 12%. Bank borrowings are used mainly for working capital to finance the purchase of assets for resale and therefore are generally held only for a short time period. | ||
Before the purchase of each group of assets a proposal is presented to an investment committee projecting the profitability of the investment after the cost of finance and therefore decisions can be taken based upon the prevailing interest rate at the time of investment. Due to the short time period for which these assets are held the actual finance cost is only likely to fluctuate marginally from the projection. There is also a term loan facility of £1,663 thousand (2008: nil) that is repayable over the period to 30 April 2012. | ||
A sensitivity analysis has been prepared to model the impact on profit before tax of a change in the effective interest rate for bank borrowings. A +/- variance of 100 basis points in the effective interest rate would have an impact of £77 thousand (2008: £77 thousand) on profit before tax. Further details on interest rate risk exposure are contained in note 21. |
22
Credit risk
Credit risk arises from the risk that a counterparty defaults on its liability in relation to
financial assets of the group that they are holding. The group is subject to credit risk on its
bank deposits and trade receivables. Bank deposits are held only by institutions rated as
investment grade by an independent rating agency; credit exposure is further reduced by limiting
the proportion of net deposits that can be held by a single institution. Further details regarding
the groups policy for the management of trade receivables is set out below.
The table below shows the major counterparties at the reporting date:
In thousands | 2009 | |||||||
Counterparty | Rating | Balance | ||||||
PNC Bank |
A | 8,289 | ||||||
Barclays Bank plc |
AA- | | ||||||
Hypo Vereins Bank |
AAA | 827 | ||||||
LCL |
AA- | 363 | ||||||
HSBC |
AA | 323 | ||||||
Deutsche Bank |
AAA | 246 | ||||||
Other |
| 10,703 | ||||||
20,751 | ||||||||
The fair values of trade and other receivables are not materially different from the carrying
values. The maximum exposure to credit risk at the reporting date is the carrying value of each
class of receivable mentioned in note 18, other than prepayments, and cash.
Trade receivables management
Exposure to credit risk on trade receivables from commission and principal sales is limited because
it is the groups policy not to allow the title to assets to be transferred until payment is
received.
Capital risk management
The group manages its capital to ensure that subsidiary operations are able to continue as going
concerns, the group and relevant subsidiaries remain in compliance with their banking covenants,
and the return to shareholders is maximised through an appropriate mix of debt and equity funding.
The groups capital structure comprises total equity and net debt.
Surplus cash is either reinvested in the business or used to repay debt. The level of debt is
monitored through the cash flow leverage ratio, which is net debt divided by EBITDA. Net debt is
calculated as amounts due to clients, borrowings and both convertible and subordinated loan notes
less cash and cash equivalents. EBITDA is earnings before interest, taxation, depreciation and
amortisation.
Liquidity risk
Liquidity risk is primarily managed through the maintenance of adequate liquid resources,
principally in the form of bank deposits. In addition to this, bank facilities to allow financing
of working capital are also available in some business units.
23
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
The table below sets out the liquidity profile of the groups financial assets and liabilities:
2009
Effective | Recognised | Contractual | Total | |||||||||||||||||||||||||
interest | asset / | interest | Contractual | 6 months | 6-12 | |||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | or less | months | 1-5 years | |||||||||||||||||||||
Loans and receivables: |
||||||||||||||||||||||||||||
Trade receivables |
| 3,403 | | 3,403 | 2,999 | 404 | | |||||||||||||||||||||
Other receivables |
| 890 | | 890 | 890 | | | |||||||||||||||||||||
Accrued income |
| 1,450 | | 1,450 | 1,450 | | | |||||||||||||||||||||
Cash and
cash equivalents |
2 | % | 20,751 | | 20,751 | 20,751 | | | ||||||||||||||||||||
Amortised Cost: |
||||||||||||||||||||||||||||
Trade payables |
| (3,489 | ) | | (3,489 | ) | (3,365 | ) | (124 | ) | | |||||||||||||||||
Amounts due to clients |
| (16,236 | ) | | (16,236 | ) | (16,236 | ) | | | ||||||||||||||||||
Accrued expenses |
| (3,340 | ) | | (3,340 | ) | (3,340 | ) | | | ||||||||||||||||||
Bank loans
and overdrafts |
4 | % | (3,371 | ) | | (3,371 | ) | (3,371 | ) | | | |||||||||||||||||
Subordinated loan notes |
9 | % | (494 | ) | | (494 | ) | (116 | ) | (116 | ) | (262 | ) | |||||||||||||||
Convertible loan notes |
12 | % | (500 | ) | | (500 | ) | | | (500 | ) | |||||||||||||||||
(936 | ) | | (936 | ) | (338 | ) | 164 | (762 | ) | |||||||||||||||||||
2008
Effective | Recognised | Contractual | Total | |||||||||||||||||||||||||
interest | asset / | interest | Contractual | 6 months | ||||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | orless | 6-12 months | 1-5 years | |||||||||||||||||||||
Loans and receivables: |
||||||||||||||||||||||||||||
Trade receivables |
| 3,579 | | 3,579 | 3,526 | 53 | | |||||||||||||||||||||
Other receivables |
| 1,044 | | 1,044 | 1,044 | | | |||||||||||||||||||||
Accrued income |
| 4,813 | | 4,813 | 4,813 | | | |||||||||||||||||||||
Cash and
cash equivalents |
2 | % | 18,037 | | 18,037 | 18,037 | | | ||||||||||||||||||||
Amortised Cost: |
||||||||||||||||||||||||||||
Trade payables |
| (4,707 | ) | | (4,707 | ) | (4,583 | ) | (124 | ) | | |||||||||||||||||
Amounts due to clients |
| (16,179 | ) | | (16,179 | ) | (16,179 | ) | | | ||||||||||||||||||
Accruals and
other payables |
| (5,378 | ) | | (5,378 | ) | (5,378 | ) | | | ||||||||||||||||||
Bank loans
and overdrafts |
4 | % | (6,722 | ) | | (6,722 | ) | (6,722 | ) | | | |||||||||||||||||
Subordinated loan notes |
9 | % | (804 | ) | (72 | ) | (876 | ) | (170 | ) | (170 | ) | (536 | ) | ||||||||||||||
Convertible loan notes |
8 | % | (2,990 | ) | (60 | ) | (3,050 | ) | (3,050 | ) | | | ||||||||||||||||
(9,307 | ) | (132 | ) | (9,439 | ) | (8,662 | ) | (241 | ) | (536 | ) | |||||||||||||||||
The group is not contractually bound to make interest payments on any financial instruments except
bank loans and overdrafts, convertible and subordinated loan notes.
4. Critical accounting estimates and judgements
The preparation of financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements
and of revenues and expenses during the year. Significant items subject to such estimates and
judgments include goodwill, the defined benefit pension obligation, the equity settled share-based
payment charge, and the direct profit margin for principal sales. Actual amounts recognised may
differ from those estimated. The estimates and assumptions which have a potentially material impact
on the carrying amount of assets and liabilities are discussed below:
(a) | Impairment of goodwill | |
The group is required to test, at least annually, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a suitable discount rate in order to calculate the present value of these cash flows. Actual outcomes could vary. See note 16 for further details. |
24
(b) | Post retirement benefits | |
The determination of the defined benefit pension obligation depends upon the selection of certain assumptions, which include the discount rate, inflation rate, mortality and expected return on scheme assets. Differences arising from actual experience or future changes in assumptions will be reflected in subsequent periods. See note 22 for further details. | ||
(c) | Equity settled share based payments | |
The group recognises a charge in profit or loss for the fair value of equity settled share based payments over the vesting period. Those instruments vesting in the period are principally options over ordinary shares and the fair value of these at the balance sheet date is estimated using the Black-Scholes model. This model is dependent upon several assumptions such as the risk free interest rate and the expected life of the options. Actual experience may differ from that estimated. Note 23 contains further details on these assumptions. | ||
(d) | Direct profit margin for principal sales | |
When the group acquires equipment for principal sales an estimate is made of the expected sales value for the whole project, and from this a projected margin is calculated. This projected margin is then used to estimate the actual margin to be recorded as individual items of equipment are sold. The actual margin achieved may vary from this initial estimate. Any incremental losses that are foreseeable at the year-end are provided for, non-foreseeable losses and any incremental profits are taken to the income statement in the period in which they occur. |
5. Segmental analysis
2009 | ||||||||||||||||||||
North | ||||||||||||||||||||
In thousands of pounds | Europe | America | Asia | Corporate | Consolidated | |||||||||||||||
Revenue |
15,165 | 22,016 | 4,809 | | 41,990 | |||||||||||||||
Segment result |
321 | 766 | 499 | (2,169 | ) | (583 | ) | |||||||||||||
Other charges |
| | | (1,036 | ) | (1,036 | ) | |||||||||||||
Exceptional items |
(620 | ) | 4 | (223 | ) | (934 | ) | (1,773 | ) | |||||||||||
Operating (loss) / profit |
(299 | ) | 770 | 276 | (4,139 | ) | (3,392 | ) | ||||||||||||
Finance (costs) / income net |
(57 | ) | (590 | ) | 18 | (202 | ) | (831 | ) | |||||||||||
Convertible loan note
restructuring interest |
| | | (414 | ) | (414 | ) | |||||||||||||
Share of loss of associate |
| (28 | ) | | | (28 | ) | |||||||||||||
(Loss) / profit before
income tax |
(356 | ) | 152 | 294 | (4,755 | ) | (4,665 | ) | ||||||||||||
Income tax expense |
(6 | ) | (45 | ) | (119 | ) | | (170 | ) | |||||||||||
(Loss) / profit for the year
from continuing operations |
(362 | ) | 107 | 175 | (4,755 | ) | (4,835 | ) | ||||||||||||
Depreciation and amortisation |
290 | 511 | 240 | 328 | 1,369 | |||||||||||||||
Impairment of goodwill |
| | | | | |||||||||||||||
Segment assets |
25,849 | 15,077 | 3,410 | 17,022 | 61,358 | |||||||||||||||
Segment liabilities |
8,367 | 7,991 | 2,403 | 16,154 | 34,915 | |||||||||||||||
25
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
2008 | ||||||||||||||||||||
North | ||||||||||||||||||||
In thousands of pounds | Europe | America | Asia | Corporate | Consolidated | |||||||||||||||
Revenue |
16,140 | 16,380 | 4,378 | | 36,898 | |||||||||||||||
Segment result |
(1,764 | ) | 241 | (94 | ) | (2,366 | ) | (3,983 | ) | |||||||||||
Other charges |
(314 | ) | (373 | ) | (101 | ) | | (788 | ) | |||||||||||
Exceptional items |
(6,877 | ) | (12,074 | ) | (4,153 | ) | (654 | ) | (23,758 | ) | ||||||||||
Operating loss |
(8,955 | ) | (12,206 | ) | (4,348 | ) | (3,020 | ) | (28,529 | ) | ||||||||||
Finance (costs) / income net |
(6 | ) | (209 | ) | 4 | (118 | ) | (329 | ) | |||||||||||
Share of loss of associate |
| (27 | ) | | | (27 | ) | |||||||||||||
Loss before income tax |
(8,961 | ) | (12,442 | ) | (4,344 | ) | (3,138 | ) | (28,885 | ) | ||||||||||
Income tax (expense) / credit |
(31 | ) | 17 | (59 | ) | | (73 | ) | ||||||||||||
Loss for the year |
(8,992 | ) | (12,425 | ) | (4,403 | ) | (3,138 | ) | (28,958 | ) | ||||||||||
Depreciation and amortisation |
328 | 367 | 169 | 168 | 1,032 | |||||||||||||||
Impairment of goodwill |
5,392 | 10,311 | 3,675 | | 19,378 | |||||||||||||||
Segment assets |
49,012 | 15,193 | 4,617 | 18 | 68,840 | |||||||||||||||
Segment liabilities |
16,442 | 19,281 | 5,379 | 1,209 | 42,311 | |||||||||||||||
Revenue from external customers:
In thousands of pounds | 2009 | 2008 | ||||||
Entitys country of domicile United Kingdom |
10,407 | 10,493 | ||||||
Foreign countries from which the Group derives revenue |
||||||||
USA |
22,016 | 16,380 | ||||||
Germany |
3,592 | 3,361 | ||||||
Other Europe |
1,166 | 2,134 | ||||||
Asia Pacific |
4,809 | 4,530 | ||||||
41,990 | 36,898 | |||||||
Revenues are allocated to countries from which the group derives revenue based on the location of
the customer.
Non-current assets :
In thousands of pounds | 2009 | 2008 | ||||||
Located in the entitys country of domicile United Kingdom |
15,362 | 22,160 | ||||||
Located in foreign countries in which the Group holds assets |
||||||||
USA |
6,327 | 2,706 | ||||||
Germany |
9,052 | 11,866 | ||||||
Other Europe |
1,727 | 274 | ||||||
Asia Pacific |
893 | 201 | ||||||
33,361 | 37,207 | |||||||
26
6.
Exceptional items
In thousands of pounds | 2009 | 2008 | ||||||
Reorganisation costs |
1,140 | 3,726 | ||||||
Costs associated to ZetaBid |
265 | | ||||||
Board change costs |
368 | | ||||||
Convertible loan note restructuring interest |
414 | | ||||||
Impairment of trade receivables |
| 354 | ||||||
Impairment of inventory |
| 822 | ||||||
Impairment of goodwill |
| 19,378 | ||||||
Gain on translation of foreign currency |
| (522 | ) | |||||
2,187 | 23,758 | |||||||
Reorganisation costs arise from the restructuring of global operations following the downturn in
global economic activity in the fourth quarter of 2008 and from the groups decision to exit from
the associate investment in ZetaBid.
The costs denoted as Board change costs include termination payments, recruitment fees and
associated legal fees arising from the change in Chief Executive Officer during the year.
7. Other charges
In thousands of pounds | 2009 | 2008 | ||||||
Equity settled share based payments |
336 | 241 | ||||||
Amortisation of customer relationships and brands (note 16) |
700 | 547 | ||||||
1,036 | 788 | |||||||
8. Operating loss
In thousands of pounds | 2009 | 2008 | ||||||
Operating loss is stated after charging / (crediting): |
||||||||
Direct profit categories: |
||||||||
Sale of goods |
(1,742 | ) | (1,646 | ) | ||||
Rendering of services |
(23,532 | ) | (21,571 | ) | ||||
Included in cost of sales: |
||||||||
Cost of inventories recognised as an expense |
4,138 | 5,662 | ||||||
Included in administrative expenses: |
||||||||
Employee benefit expenses |
19,914 | 20,718 | ||||||
Depreciation of property plant and equipment |
434 | 360 | ||||||
Amortisation of intangible assets |
935 | 672 | ||||||
Rentals under operating leases |
2,106 | 1,781 | ||||||
Impairment of goodwill |
| 19,378 | ||||||
Loss/(gain) on the translation of foreign currencies |
109 | (1,248 | ) |
Direct profit represents the gross profit on our jobs before administrative expenses. This is the
revenue target that is used for measuring the performance and growth in each of our business units.
Direct profit is used rather than gross revenue as reported on the Statement of comprehensive
income, because the latter can be skewed from one year to the next depending on the volume of
principal transactions undertaken.
27
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
In addition to the cost of inventories, cost of sales consisted primarily of disposal expenses and
third party commissions. The additional inventory provision for the year is £200 thousand (2008:
£205 thousand).
Auditors remuneration: | 2009 | 2008 | ||||||
Fees payable to the companys auditor for the audit of parent company
and consolidated financial statements |
65 | 75 | ||||||
Fees payable to the companys auditor and its associates for other services: |
||||||||
The audit of the companys subsidiaries pursuant to legislation |
167 | 137 | ||||||
Tax services |
68 | 128 | ||||||
Other services |
35 | 33 | ||||||
335 | 373 | |||||||
9. Employee benefit expenses
In thousands of pounds | 2009 | 2008 | ||||||
Wages and salaries |
17,554 | 18,295 | ||||||
Social security costs |
1,449 | 1,476 | ||||||
Pension costs defined benefit plan (note 22) |
273 | 338 | ||||||
Pension costs defined contribution plans |
302 | 368 | ||||||
Share options granted to directors and employees (note 23) |
336 | 241 | ||||||
19,914 | 20,718 | |||||||
The number of employees of the group, averaged on a monthly basis over the year is as follows:
2009 | 2008 | |||||||
Number | Number | |||||||
Sales |
92 | 115 | ||||||
Operations |
216 | 264 | ||||||
Central services |
19 | 25 | ||||||
327 | 404 | |||||||
Employee benefit expense is included within administrative expenses.
10. Directors Emoluments
In thousands of pounds | 2009 | 2008 | ||||||
Emoluments |
502 | 500 | ||||||
Termination Benefits |
173 | | ||||||
Employers national insurance contributions |
39 | 55 | ||||||
Share based payments (note 23) |
69 | 36 | ||||||
Pension contributions defined contribution |
28 | 33 | ||||||
811 | 624 | |||||||
The emoluments of the highest paid director were £262 thousand (2008: £257 thousand) and company
pension contributions of £6 thousand (2008: £25 thousand) were made to a money purchase scheme on
the directors behalf.
Two (2008: two) directors are accruing benefits under money purchase schemes.
No share options were exercised during the current year.
28
The total remuneration of the key management of GoIndustry DoveBid in the year was as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Short-term employee benefits |
1,813 | 1,588 | ||||||
Post-employment benefits |
173 | 79 | ||||||
Share based payments (note 23) |
151 | 99 | ||||||
2,137 | 1,766 | |||||||
Key management costs relate to the benefits earned by the Global Management Team and the
non-executive directors for their services rendered in managing the group globally.
11. Finance income and costs
In thousands of pounds | 2009 | 2008 | ||||||
Finance income: |
||||||||
Interest income on short-term bank deposits |
141 | 369 | ||||||
Finance costs: |
||||||||
Bank borrowings |
(358 | ) | (491 | ) | ||||
Convertible loan notes |
(614 | ) | (207 | ) | ||||
Convertible loan note restructuring interest (note 6) |
(414 | ) | | |||||
(1,245 | ) | (329 | ) | |||||
12. Income tax expense
In thousands of pounds | 2009 | 2008 | ||||||
Current tax: |
||||||||
Adjustments to prior year tax charges |
| 19 | ||||||
Overseas corporation tax on profits in the year |
170 | 54 | ||||||
170 | 73 | |||||||
In thousands of pounds | 2009 | 2008 | ||||||
Loss before income tax |
(4,665 | ) | (28,885 | ) | ||||
Tax at the UK corporation tax rate of 28% |
(1,306 | ) | (8,088 | ) | ||||
Effect of lower income tax rate of other countries |
(70 | ) | (70 | ) | ||||
Adjustment in respect of current income tax of previous years |
| 19 | ||||||
Deferred tax not recognised |
262 | (197 | ) | |||||
Tax losses not utilised |
1,111 | 2,659 | ||||||
Share based payments expense not deductible |
94 | 76 | ||||||
Expenditure not allowable for income tax purposes |
79 | 221 | ||||||
Goodwill amortisation and impairment |
| 5,453 | ||||||
170 | 73 | |||||||
Deferred tax assets arising from cumulative taxable losses of £34,705 thousand (2008: £37,292
thousand) and from other temporary differences of £308 thousand (2008: £886 thousand) have not been
recognised as it is not sufficiently foreseeable that they will be recoverable against future
taxable profits.
29
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
For the year ended 31 December 2009
13. Discontinued operations
On 26 June 2008 the group decided to dispose of GoIndustry Benelux NV, its subsidiary operation
in Belgium. The business was sold for consideration of 1.
Financial information relating to GoIndustry Benelux NV for the period is set out below. The
statement of comprehensive income and statement of cash flows distinguish discontinued operations
from continuing operations. The amounts recognised in the statement of comprehensive income are as
set out below:
In thousands of pounds | 2009 | 2008 | ||||||
Revenue |
| 229 | ||||||
Expenses |
| (335 | ) | |||||
Loss before income tax from discontinued operation |
| (106 | ) | |||||
Tax |
| | ||||||
Loss after income tax from discontinued operation |
| (106 | ) | |||||
Loss on disposal of discontinued operation |
| (1,197 | ) | |||||
Loss from discontinued operation |
| (1,303 | ) | |||||
14. Earnings per share
Loss per share from continuing operations:
Loss per share from continuing operations:
2009 | 2008 | |||||||
Loss from continuing operations attributable to owners of the parent
(thousands of pounds) |
(4,916 | ) | (29,020 | ) | ||||
Weighted average number of ordinary shares in issue (thousands) |
628,415 | 437,834 | ||||||
Basic / diluted loss per share (pence per share) |
(0.8p | ) | (6.6p | ) | ||||
Loss per share from continuing and discontinued operations:
2009 | 2008 | |||||||
Loss attributable to owners of the parent (thousands of pounds) |
(4,916 | ) | (30,323 | ) | ||||
Weighted average number of ordinary shares in issue (thousands) |
628,415 | 437,834 | ||||||
Basic / diluted loss per share (pence per share) |
(0.8p | ) | (6.9p | ) | ||||
Loss per share before exceptional items and other charges:
2009 | 2008 | |||||||
Loss for the year before exceptionals and other charges (thousands of pounds) |
(1,612 | ) | (4,412 | ) | ||||
Weighted average number of ordinary shares in issue (thousands) |
628,415 | 437,834 | ||||||
Adjusted basic/ diluted loss per share (pence per share) |
(0.3p | ) | (1.0p | ) | ||||
The calculation of the weighted average number of shares including shares to be issued has been
made after having deducted those shares held in trust for the company. As there is a loss for the
year, there are no dilutive ordinary shares.
Potentially dilutive shares include 178,571 thousand convertible loan notes and 55,167 thousand
share options.
30
15. Property, plant and equipment
Furniture, | ||||||||||||||||
Freehold | fittings and | |||||||||||||||
In thousands of pounds | Buildings | Vehicles | equipment | Total | ||||||||||||
Cost: |
||||||||||||||||
At 1 January 2008 |
815 | 432 | 1,873 | 3,120 | ||||||||||||
Exchange differences |
269 | 44 | 190 | 503 | ||||||||||||
Additions |
36 | 104 | 206 | 346 | ||||||||||||
Additions through acquisition |
52 | 15 | 242 | 309 | ||||||||||||
Disposals |
| (112 | ) | (44 | ) | (156 | ) | |||||||||
At 1 January 2009 |
1,172 | 483 | 2,467 | 4,122 | ||||||||||||
Exchange differences |
(77 | ) | (12 | ) | (276 | ) | (365 | ) | ||||||||
Additions |
| 59 | 35 | 94 | ||||||||||||
Disposals |
(23 | ) | (39 | ) | (208 | ) | (270 | ) | ||||||||
At 31 December 2009 |
1,072 | 491 | 2,018 | 3,581 | ||||||||||||
Accumulated depreciation: |
||||||||||||||||
At 1 January 2008 |
290 | 220 | 1,452 | 1,962 | ||||||||||||
Exchange differences |
93 | 99 | 239 | 431 | ||||||||||||
Charge for the year |
87 | 47 | 226 | 360 | ||||||||||||
Disposals |
| (27 | ) | (33 | ) | (60 | ) | |||||||||
At 1 January 2009 |
470 | 339 | 1,884 | 2,693 | ||||||||||||
Exchange differences |
(50 | ) | (5 | ) | (338 | ) | (393 | ) | ||||||||
Charge for the year |
83 | 40 | 311 | 434 | ||||||||||||
Disposals |
(13 | ) | (11 | ) | (155 | ) | (179 | ) | ||||||||
At 31 December 2009 |
490 | 363 | 1,702 | 2,555 | ||||||||||||
Net book value: |
||||||||||||||||
At 31 December 2009 |
582 | 128 | 316 | 1,026 | ||||||||||||
At 1 January 2009 |
702 | 144 | 583 | 1,429 | ||||||||||||
At 1 January 2008 |
525 | 212 | 421 | 1,158 | ||||||||||||
31
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
For the year ended 31 December 2009
16. Intangible assets
Software and | ||||||||||||||||||||
Customer | systems | |||||||||||||||||||
In thousands of pounds | Goodwill | relationships | Brands | development | Total | |||||||||||||||
Cost: |
||||||||||||||||||||
At 1 January 2008 |
24,900 | | | 2,158 | 27,058 | |||||||||||||||
Exchange differences |
8,508 | 877 | 283 | 554 | 10,222 | |||||||||||||||
Additions |
| | | 362 | 362 | |||||||||||||||
Additions through acquisition |
18,450 | 2,369 | 768 | | 21,587 | |||||||||||||||
Disposals |
(1,147 | ) | | | | (1,147 | ) | |||||||||||||
At 1 January 2009 |
50,711 | 3,246 | 1,051 | 3,074 | 58,082 | |||||||||||||||
Exchange differences |
(4,225 | ) | (295 | ) | (96 | ) | (393 | ) | (5,009 | ) | ||||||||||
Additions |
| | | 394 | 394 | |||||||||||||||
Disposals |
| | | (12 | ) | (12 | ) | |||||||||||||
At 31 December 2009 |
46,486 | 2,951 | 955 | 3,063 | 53,455 | |||||||||||||||
Accumulated amortisation: |
||||||||||||||||||||
At 1 January 2008 |
| | | 1,992 | 1,992 | |||||||||||||||
Exchange differences |
| | | 290 | 290 | |||||||||||||||
Charge for the year |
| 413 | 134 | 125 | 672 | |||||||||||||||
Impairment of goodwill |
19,378 | | | | 19,378 | |||||||||||||||
At 1 January 2009 |
19,378 | 413 | 134 | 2,407 | 22,332 | |||||||||||||||
Exchange differences |
(1,848 | ) | 67 | (57 | ) | (297 | ) | (2,135 | ) | |||||||||||
Charge for the year |
| 602 | 98 | 235 | 935 | |||||||||||||||
Disposals |
| | | (12 | ) | (12 | ) | |||||||||||||
At 31 December 2009 |
17,530 | 1,082 | 175 | 2,333 | 21,120 | |||||||||||||||
Net book value: |
||||||||||||||||||||
At 31 December 2009 |
28,956 | 1,869 | 780 | 730 | 32,335 | |||||||||||||||
At 1 January 2009 |
31,333 | 2,833 | 917 | 667 | 35,750 | |||||||||||||||
At 1 January 2008 |
24,900 | | | 166 | 25,066 | |||||||||||||||
Goodwill is allocated to the segments as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Europe |
8,390 | 8,717 | ||||||
North America |
15,109 | 16,673 | ||||||
Asia |
5,457 | 5,943 | ||||||
28,956 | 31,333 | |||||||
The group tests annually for impairment or more frequently if there are indications that
goodwill might be impaired. The recoverable amounts of the CGUs are determined from value in use
calculations. Value in use was determined by discounting future cash flows generated from the cash
generating units and was based on the following assumptions which the board believes to be highly
conservative:
| Cash flows for 2010 were forecast based on the budget for 2010; | |
| Cash flows for 2011-12 were using forecast direct profit growth rates at 7.5%, and expense growth rates of 3.75%. | |
| Cash flows beyond 2012 are extrapolated using a long-term growth rate of 2.25%; | |
| Central overheads are borne by the CGUs where deemed appropriate by management and allocated based on managements best estimates; | |
| Cash flows were discounted using a rate of 10%. |
32
The amortisation and impairment charge for the year is included within administrative expenses.
If the growth rates set out above were 1/3rd lower for 2011 and 2012, the Goodwill impairment would
be £4 million.
17. Investment in Associate
In thousands of pounds | 2009 | 2008 | ||||||
Investment in ZetaBid associate |
28 | 55 | ||||||
Share of loss for the year of associate |
(28 | ) | (27 | ) | ||||
| 28 | |||||||
The investment in associate represents the groups share of the cost of establishing ZetaBid
and the groups share of its losses during the year.
The groups share of the result of ZetaBid, which is unlisted, and its aggregated assets and
liabilities are as follows:
2009 | ||||||||||||||||||||||||
% | ||||||||||||||||||||||||
Country of | Profit/ | interest | ||||||||||||||||||||||
Name | incorporation | Assets | Liabilities | Revenue | (Loss) | held | ||||||||||||||||||
ZetaBid Holdings LLC |
USA | | | 150 | (28 | ) | 0 | % |
2008 | ||||||||||||||||||||||||
% | ||||||||||||||||||||||||
Country of | Profit/ | interest | ||||||||||||||||||||||
Name | incorporation | Assets | Liabilities | Revenue | (Loss) | held | ||||||||||||||||||
ZetaBid Holdings LLC |
USA | 28 | | 34 | (27 | ) | 25 | % |
On 31 December 2009 the group disposed of its interest in ZetaBid Holdings LLC.
18. Trade and other receivables
In thousands of pounds | 2009 | 2008 | ||||||
Trade receivables |
3,403 | 3,579 | ||||||
Prepayments and accrued income |
2,047 | 5,580 | ||||||
Other taxes |
309 | 650 | ||||||
Other receivables |
890 | 1,044 | ||||||
6,649 | 10,853 | |||||||
A provision has been made against all past due receivables that are considered impaired at the
balance sheet date as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Trade receivables |
3,564 | 4,256 | ||||||
Provision for doubtful debts |
(161 | ) | (677 | ) | ||||
3,403 | 3,579 | |||||||
33
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
For the year ended 31 December 2009
It is not practicable or meaningful to produce an analysis of past due trade receivables because
the group does not have standard credit terms on all its sales. In the majority of auction sales,
the groups receivables form part of the auction proceeds that are collected into the client
account and settled with the group at the same time as they are settled with the client, typically
within 4-6 weeks of the auction. However, in more complex cases the payment terms may be linked to
the dismantling and shipping of an asset from one location to another, such that a drawdown might
only be made when the assets have reached shipping point. An ageing analysis of trade receivables
is shown below:
In thousands of pounds | 2009 | 2008 | ||||||
Up to three months |
2,334 | 3,301 | ||||||
Three to six months |
665 | 225 | ||||||
Greater than six months |
404 | 53 | ||||||
3,403 | 3,579 | |||||||
The provision for doubtful debt movement for the year is as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Opening balance |
(677 | ) | (314 | ) | ||||
Increase in provision |
(97 | ) | (402 | ) | ||||
Utilised against bad debt written off |
613 | 39 | ||||||
(161 | ) | (677 | ) | |||||
19. Cash and cash equivalents
In thousands of pounds | 2009 | 2008 | ||||||
Own cash on hand and at bank |
2,672 | 3,411 | ||||||
Short-term bank deposits |
12,060 | 9,739 | ||||||
Monies held under guarantee |
6,019 | 4,887 | ||||||
20,751 | 18,037 | |||||||
20. Trade and other payables
In thousands of pounds | 2009 | 2008 | ||||||
Current |
||||||||
Trade payables |
3,489 | 4,707 | ||||||
Amounts due to clients |
16,236 | 16,179 | ||||||
Social security and other taxes |
2,546 | 1,539 | ||||||
Accrued expenses |
3,340 | 5,378 | ||||||
25,611 | 27,803 | |||||||
In thousands of pounds | 2009 | 2008 | ||||||
Non-current |
||||||||
Social security and other taxes |
156 | 704 | ||||||
Provisions |
202 | 390 | ||||||
358 | 1,094 | |||||||
34
21. Borrowings
In thousands of pounds | 2009 | 2008 | ||||||
Current |
||||||||
Bank loans and overdrafts |
2,084 | 6,722 | ||||||
Convertible loan notes |
| 2,990 | ||||||
Subordinated loan notes |
233 | 258 | ||||||
2,317 | 9,970 | |||||||
In thousands of pounds | 2009 | 2008 | ||||||
Non-current |
||||||||
Bank loans |
1,287 | | ||||||
Convertible loan notes |
500 | | ||||||
Subordinated loan notes |
261 | 546 | ||||||
2,048 | 546 | |||||||
The groups borrowings are split between fixed and floating rate as set out below:
In thousands of pounds | 2009 | 2008 | ||||||
Floating rate: |
||||||||
Expiring within one year |
2,084 | 6,722 | ||||||
Fixed rate: |
||||||||
Expiring within one year |
233 | 3,248 | ||||||
Expiring beyond one year |
2,048 | 546 | ||||||
4,365 | 10,516 | |||||||
The fair value of current and non-current borrowings equals their carrying amount, as the
impact of discounting is not significant.
The loans totalling £3,067 thousand are used to fund principal transactions and working capital and
are secured by charges over the assets of those companies and a parent company guarantee from
GoIndustry-DoveBid plc. Subsequent to year-end these facilities were re-negotiated and are in place
until 30 April 2011. There is also a term loan facility that matures on 30 April 2012. These loans
bear floating interest at a rate of 0.75% above US Prime Rate.
The loan held of £209 thousand is repayable on demand, bears interest at a floating rate of 2.5%
above UK Base Rates and is secured by a guarantee over the assets of that company.
The loan of £95 thousand is repayable on demand, bears interest at a floating rate of 9.25% and is
secured by a charge over the real estate assets of that company.
The convertible loan notes are held by GoIndustry-DoveBid plc, mature on 31 December 2011 and bear
interest at 12% per annum. The notes are convertible at any time into 1p Ordinary shares at a price
of 2.8p per share. The notes may be redeemed by the company at par at any time after 31 December
2010.
The subordinated loan notes are held by DoveBid, Inc. and do not bear interest. The loan notes are
unsecured, subordinated to other debt of the group and are repayable in 60 monthly instalments
ending 30 November 2011.
22. Retirement benefit obligations
The group contributes to a number of defined contribution pension plans for UK and overseas
employees. Costs relating to these arrangements are expensed in full to profit or loss as they
occur and are disclosed in note 9.
GoIndustry UK Limited also maintains a defined benefit scheme: the Henry Butcher Pension and Life
Assurance Scheme. This scheme is closed to new members and with effect from 31 December 2004,
active members ceased to accrue benefits on a defined benefit basis and salary linkage was broken
to their accrued rights. A new money purchase section was opened with effect from 1 January 2005 in
which existing defined benefit members and new entrants were invited to join.
The scheme is funded and GoIndustry UK Limited is currently making a gross annual contribution of
£595 thousand (2008: £588 thousand) to reduce the defined benefit liability and to fund certain
administrative expenses of the scheme.
35
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
For the year ended 31 December 2009
The company is currently re-negotiating the level of contributions with the trustees. Contributions
are expected to continue for the next ten years.
The valuations have been based upon the most recent full valuation performed on 15 January 2010 as
updated by the actuaries to reflect the projected scheme liabilities at 31 December 2009. Scheme
assets have been presented at their market value at 31 December 2009.
The defined benefit liability recognised at the end of the year and the statement of comprehensive
income charge for the year are as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Balance sheet obligations for: |
||||||||
Pension benefits |
4,581 | 2,898 | ||||||
Income statement charge for: |
||||||||
Pension benefits (note 9) |
273 | 338 | ||||||
In thousands of pounds | 2009 | 2008 | ||||||
Present value of funded obligations |
13,828 | 11,071 | ||||||
Fair value of plan assets |
(9,247 | ) | (8,173 | ) | ||||
Liability in the balance sheet |
4,581 | 2,898 | ||||||
The present value of scheme liabilities has changed over the year as analysed below:
In thousands of pounds | 2009 | 2008 | ||||||
Beginning of year |
11,071 | 12,696 | ||||||
Current service cost |
11 | 17 | ||||||
Interest cost |
696 | 730 | ||||||
Actuarial loss / (gain) on plan liabilities |
2,454 | (2,122 | ) | |||||
Benefits paid |
(404 | ) | (250 | ) | ||||
End of year |
13,828 | 11,071 | ||||||
Changes in the fair value of scheme assets are as set out below:
In thousands of pounds | 2009 | 2008 | ||||||
Fair value of scheme assets at start of year |
8,173 | 9,177 | ||||||
Expected return on scheme assets |
579 | 554 | ||||||
Employer contributions |
740 | 529 | ||||||
Benefits paid |
(404 | ) | (250 | ) | ||||
Scheme administration costs borne by the group |
(145 | ) | (145 | ) | ||||
Actuarial gain / (loss) on scheme assets |
304 | (1,692 | ) | |||||
Fair value of scheme assets at end of year |
9,247 | 8,173 | ||||||
The actual return on plan assets in the year was a gain of £883 thousand (2008: loss of £1,138
thousand).
The amounts recognised in the profit or loss are as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Current service cost |
11 | 17 | ||||||
Interest on obligation |
696 | 730 | ||||||
Expected return on scheme assets |
(579 | ) | (554 | ) | ||||
Scheme administration costs borne by the group |
145 | 145 | ||||||
Total, included in staff costs (note 9) |
273 | 338 | ||||||
36
The cumulative amount recognised in the statement of other comprehensive income and expense in
respect of actuarial losses is £402 thousand (2008: gain of £1,748 thousand).
The major categories of scheme assets and the proportion they represent of total scheme assets are
as set out below:
In thousands of pounds | 2009 | 2009 | 2008 | 2008 | ||||||||||||
Percentage | Percentage | |||||||||||||||
Equity instruments |
4,759 | 51 | % | 3,781 | 46 | % | ||||||||||
Debt instruments |
4,419 | 48 | % | 4,368 | 54 | % | ||||||||||
Other |
69 | 1 | % | 24 | 0 | % | ||||||||||
Pension assets |
9,247 | 100 | % | 8,173 | 100 | % | ||||||||||
The history of experience gains and losses has been as follows:
In thousands of pounds | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
At 31 December |
||||||||||||||||||||
Present value of defined benefit obligation |
13,828 | 11,071 | 12,696 | 12,147 | 13,098 | |||||||||||||||
Fair value of plan assets |
(9,247 | ) | (8,173 | ) | (9,200 | ) | (8,573 | ) | (7,774 | ) | ||||||||||
Deficit |
4,581 | 2,898 | 3,496 | 3,574 | 5,324 | |||||||||||||||
Experience adjustments on plan liabilities |
(2,454 | ) | 2,122 | (243 | ) | 1,412 | (1,086 | ) | ||||||||||||
Experience adjustments on plan assets |
304 | (1,692 | ) | 22 | 149 | 715 | ||||||||||||||
The principal assumptions used by the actuaries in the preparation of their valuation are set
out below. The assumptions used are selected from a range of possible outcomes and represent the
best estimate at the balance sheet date. Due to the inherent subjectivity of this process the
actual outcome may vary.
2009 | 2008 | |||||||
Percentage | Percentage | |||||||
Discount rate |
5.7 | % | 6.4 | % | ||||
Expected return on scheme assets |
6.5 | % | 7.0 | % | ||||
Rate of increase in salaries |
| | ||||||
Price inflation |
3.6 | % | 2.8 | % | ||||
Pension increases: |
||||||||
Pensions accrued before 6 April 1997 |
| | ||||||
Pensions accrued after 6 April 1997 |
3.6 | % | 2.8 | % |
The expected return on scheme assets has been determined based on the weighted average yield on
15 year AA rated corporate bonds and global equities.
The assumptions regarding future mortality experience are set out below:
The average life expectancy in years of a pensioner retiring at age 65, at the balance sheet date
is as follows:
2009 | 2008 | |||||||
Male |
88.0 | 87.9 | ||||||
Female |
90.6 | 90.5 |
The average life expectancy in years of a pensioner retiring at age 65, aged 45 years at the
balance sheet date is as follows:
2009 | 2008 | |||||||
Male |
91.0 | 90.8 | ||||||
Female |
93.6 | 93.4 |
37
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
For the year ended 31 December 2009
23. Share capital and premium
Number of shares in thousands | In thousands of pounds | |||||||||||||||||||||||
Redeemable | Ordinary | Deferred | Share | |||||||||||||||||||||
Ordinary 5p | deferred shares 4p | Ordinary 1p | share capital | share capital | premium | |||||||||||||||||||
01-Jan-08 Opening balance |
264,998 | | | 13,250 | | 9,578 | ||||||||||||||||||
25-Feb-08 Issue of share capital to finance
the acquisition of DoveBid Inc. |
185,000 | | | 9,250 | | 9,250 | ||||||||||||||||||
25-Feb-08 Proceeds from shares issued |
21,660 | | | 1,083 | | 1,083 | ||||||||||||||||||
25-Feb-08 Less: cost of share issue |
| | | | | (1,039 | ) | |||||||||||||||||
01-Jan-09 Opening balance |
471,658 | | | 23,583 | | 18,872 | ||||||||||||||||||
02-Jan-09 Sub-division of ordinary shares |
(471,658 | ) | 471,658 | 471,658 | (18,866 | ) | 18,866 | | ||||||||||||||||
25-Jun-09 Cancellation of own shares held |
| (4,239 | ) | (4,239 | ) | (42 | ) | (170 | ) | | ||||||||||||||
11-Sep-09 Proceeds from shares issued |
| | 265,723 | 2,657 | | 2,126 | ||||||||||||||||||
11-Sep-09 Conversion of loan notes |
| | 241,288 | 2,413 | | 1,923 | ||||||||||||||||||
11-Sep-09 Cancellation of redeemable
deferred shares held |
| (467,419 | ) | | | (18,696 | ) | | ||||||||||||||||
11-Sep-09 Less: cost of share issue |
| | | | | (426 | ) | |||||||||||||||||
31-Dec-09 Closing balance |
| | 974,430 | 9,745 | | 22,495 | ||||||||||||||||||
On 2 January, shareholders approved the sub-division of each issued 5p Ordinary share into one
new 1p Ordinary share and one effectively worthless 4p Redeemable Deferred share. The company had
the right at any time to redeem all of the Redeemable Deferred shares for an aggregate
consideration of £0.01, and these were redeemed and cancelled on 25 June and 11 September. The
Redeemable Deferred shares had no voting rights, no rights to dividends and negligible rights on a
return of capital. The Redeemable Deferred shares were not listed on any stock exchange and were
not capable of transfer. No share certificates were issued for any of the Redeemable Deferred
shares.
On 25 June, the company cancelled 4,239 thousand 1p Ordinary shares and 4,239 thousand 1p
Redeemable Deferred shares that it was holding.
On 11 September, in addition to cancelling the remaining Redeemable Deferred shares, the company
issued 250,723 thousand new 1p Ordinary shares for cash, 241,288 thousand new 1p Ordinary shares in
return for £4,500 thousand of 2011 convertible loan notes and 15,000 thousand new 1p Ordinary
shares in settlement of a restructuring fee payable to the converting note holders.
The authorised share capital is set out in the table below:
In thousands of pounds | 2009 | 2008 | ||||||
Authorised ordinary shares of 1p each 1,613,367 thousand |
16,134 | | ||||||
Authorised redeemable deferred shares of 4p each 471,658,157 thousand |
| | ||||||
Authorised ordinary shares of 5p each 700,000 thousand |
| 35,000 | ||||||
Equity ordinary shares to be issued of 1p each (2008: 5p each) 5,420 thousand |
542 | 542 | ||||||
38
Share based payments
All of the Share based payment arrangements entered into by the group are equity settled.
All of the Share based payment arrangements entered into by the group are equity settled.
The weighted average exercise price and number of warrants and share options is set out below:
Options | ||||||||
Weighted | ||||||||
average | ||||||||
exercise price | Number of | |||||||
Pence per | shares | |||||||
share | Thousands | |||||||
Outstanding at 1 January 2008 |
22p | 27,564 | ||||||
Granted |
9p | 7,300 | ||||||
Lapsed or forfeited |
22p | (2,781 | ) | |||||
Outstanding at 1 January 2009 |
19p | 32,083 | ||||||
Granted |
2p | 30,033 | ||||||
Lapsed or forfeited |
22p | (6,949 | ) | |||||
Outstanding at 31 December 2009 |
10p | 55,167 | ||||||
Exercisable at 31 December 2009 |
10p | 25,934 | ||||||
Exercisable at 31 December 2008 |
23p | 23,619 | ||||||
Options outstanding at 31 December 2009 and 31 December 2008 had weighted average remaining contractual lives as
follows:
At 31 December 2009: |
||||
Weighted average remaining contractual life |
10.9 | |||
At 31 December 2008: |
||||
Weighted average remaining contractual life |
6.5 | |||
39
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
Share options in issue at the year end are as follows:
Exercise price | Vesting | Shares in thousands | ||||||||||||||
Date of grant | in pence | condition | 2009 | 2008 | ||||||||||||
28-Sep-09 |
2.00 | 1 | 29,233 | | ||||||||||||
28-Sep-09 |
2.42 | 2 | 800 | | ||||||||||||
05-Dec-08 |
5.00 | 2 | 100 | 100 | ||||||||||||
27-Jun-08 |
10.00 | 2 | 975 | 2,200 | ||||||||||||
22-May-08 |
10.50 | 2 | 1,150 | 2,750 | ||||||||||||
30-Jan-08 |
11.75 | 2 | 500 | 600 | ||||||||||||
25-Jul-07 |
5.00 | 2 | 5,467 | 5,467 | ||||||||||||
25-Jul-07 |
18.00 | 2 | 1,000 | 1,000 | ||||||||||||
25-Jul-07 |
17.00 | 2 | 600 | 600 | ||||||||||||
19-Jul-07 |
18.75 | 2 | 1,035 | 1,675 | ||||||||||||
20-Nov-06 |
54.45 | | 16 | 31 | ||||||||||||
20-Nov-06 |
27.00 | | 16 | 31 | ||||||||||||
04-Mar-06 |
12.80 | | 3,044 | 3,176 | ||||||||||||
01-Apr-05 |
10.00 | | 3,000 | 3,000 | ||||||||||||
31-Dec-04 |
12.78 | | 1,322 | 2,485 | ||||||||||||
01-May-03 |
15.00 | | 639 | 639 | ||||||||||||
01-May-03 |
14.99 | | 107 | 109 | ||||||||||||
01-Jan-03 |
54.45 | | 145 | 145 | ||||||||||||
01-Jan-03 |
27.22 | | 145 | 145 | ||||||||||||
31-Oct-02 |
54.45 | | 554 | 917 | ||||||||||||
31-Oct-02 |
27.22 | | 546 | 1,026 | ||||||||||||
19-Oct-02 |
44.73 | | 659 | 938 | ||||||||||||
30-Aug-02 |
44.73 | | 2,984 | 2,984 | ||||||||||||
01-Mar-02 |
44.73 | | 159 | 159 | ||||||||||||
01-Oct-01 |
22.36 | | 365 | 976 | ||||||||||||
01-Oct-01 |
12.78 | | 289 | 289 | ||||||||||||
01-Sep-01 |
12.78 | | 27 | 27 | ||||||||||||
12-Dec-00 |
141.62 | | 128 | 142 | ||||||||||||
01-Sep-00 |
141.62 | | 39 | 39 | ||||||||||||
01-Aug-00 |
141.62 | | 14 | 260 | ||||||||||||
11-Jul-00 |
44.09 | | 7 | 71 | ||||||||||||
12-May-00 |
44.09 | | 33 | 33 | ||||||||||||
02-Mar-00 |
44.73 | 2 | 69 | 69 | ||||||||||||
55,167 | 32,083 | |||||||||||||||
Vesting Conditions:
Condition 1: The options are exercisable from the third to the tenth anniversary from the date of
grant, subject to acceleration or termination in certain circumstances. Exercise of the options is
subject to a performance condition such that the market value of the companys ordinary shares on,
after or within 6 months prior to the date the relevant option first becomes exercisable must be
equal to or greater than 130% of the market value of the companys ordinary shares on the relevant
date of grant.
Condition 2: The options are exercisable from the third to the tenth anniversary from the date of
grant, subject to acceleration or termination in certain circumstances. Exercise of the options is
subject to earnings per share exceeding by 2% the RPI growth over any period of three consecutive
financial years commencing no earlier than the financial year in which the relevant option is
granted.
Other than as indicated, no further vesting or performance conditions apply.
40
As permitted by IFRS2 Share based payments no charge has been taken to the income statement for
options vesting prior to 7 November 2002.
The fair value of services received in return for share options granted are measured by the fair
value of those instruments. For grants in the current and prior years the pricing models used and
inputs into those models were as follows:
2009 | 2008 | |||||||
Valuation method |
Black-Scholes | Black-Scholes | ||||||
Share price at the date of grant |
2p 10p | 3p 10p | ||||||
Expected volatility |
58.3% 38.5 | % | 58.3% 38.5 | % | ||||
Expected option life at grant date (years) |
3 | 3 | ||||||
Risk-free interest rate |
1.02% 4.46 | % | 1.02% 4.46 | % | ||||
Weighted average fair value per option at the grant date |
5p | 5p |
The calculation of expected volatility is performed taking into account historical movements in the
market value of 1p ordinary shares in GoIndustry-DoveBid plc.
24. Own shares held in trust
In thousands of pounds | ||||
At 1 January 2008 |
(1,042 | ) | ||
Transfer of shares |
68 | |||
At 1 January 2009 |
(974 | ) | ||
Cancellation of own Shares held |
888 | |||
Transfer of shares |
86 | |||
At 31 December 2009 |
| |||
Zero (2008: 6,493 thousand) 1p ordinary shares of GoIndustry-DoveBid plc are held in trust.
25. Other reserves
Foreign | Share | |||||||||||||||
Acquisition | currency | options | ||||||||||||||
In thousands of pounds | reserve | reserve | reserve | Total | ||||||||||||
At 1 January 2008 |
47,649 | (807 | ) | 1,149 | 47,991 | |||||||||||
Currency translation differences |
| 8,043 | | 8,043 | ||||||||||||
Share based payments |
| | 173 | 173 | ||||||||||||
At 1 January 2009 |
47,649 | 7,236 | 1,322 | 56,207 | ||||||||||||
Currency translation differences |
| (2,130 | ) | | (2,130 | |||||||||||
Share based payments |
| | 250 | 250 | ||||||||||||
At 31 December 2009 |
47,649 | 5,106 | 1,572 | 54,327 | ||||||||||||
41
Notes to the consolidated financial statements continued
For the year ended 31 December 2009
26. Accumulated Losses
In thousands of pounds | ||||
At 1 January 2008 |
(41,989 | ) | ||
Actuarial gain on defined benefit pension scheme |
430 | |||
Loss for the year |
(30,323 | ) | ||
At 31 December 2008 |
(71,882 | ) | ||
Actuarial loss on defined benefit pension scheme |
(2,150 | ) | ||
Loss for the year |
(4,916 | ) | ||
Cancellation of shares |
(888 | ) | ||
At 31 December 2009 |
(79,836 | ) | ||
27. Capital redemption reserves
In thousands of pounds | ||||
At 1 January 2008 and 2009 |
| |||
Cancellation of own shares held |
18,908 | |||
At 31 December 2009 |
18,908 | |||
28. Operating lease arrangements
Land and | ||||||||||||||||
In thousands of pounds | buildings | Vehicles | Other | Total | ||||||||||||
Amounts falling due: |
||||||||||||||||
Within one year |
946 | 118 | 25 | 1,089 | ||||||||||||
More than one but less than five years |
1,338 | 203 | 10 | 1,551 | ||||||||||||
More than five years |
55 | | | 55 | ||||||||||||
As at 31 December 2009 |
2,339 | 321 | 35 | 2,695 | ||||||||||||
Land and | ||||||||||||||||
In thousands of pounds | buildings | Vehicles | Other | Total | ||||||||||||
Amounts falling due: |
||||||||||||||||
Within one year |
383 | 117 | 203 | 703 | ||||||||||||
More than one but less than five years |
1,713 | 435 | 271 | 2,419 | ||||||||||||
More than five years |
1,618 | | 364 | 1,982 | ||||||||||||
As at 31 December 2008 |
3,714 | 552 | 838 | 5,104 | ||||||||||||
Operating lease rentals represent rentals payable by the group for certain of its office
properties, motor vehicles and office equipment.
29. Contingent liability
Several group companies are parties to a lawsuit from a former employee in respect of alleged
breaches of his contract of employment, which has been brought in the Australian courts. The total
claim is for A$1,366 thousand (£766 thousand), including a claim for alleged damages in the amount
of A$1,174 thousand (£658 thousand). The groups view is that this claim is without merit and will
be strongly contested.
30. Event after the balance sheet date
Part of the consideration for the acquisition of DoveBid, Inc. in 2008 was to be satisfied by
the issue of up to 5,420,000 shares on the second anniversary of completion. On 25 February 2010,
the company issued 5,420,000 1p Ordinary shares to the vendors of DoveBid, Inc. in full
satisfaction of this obligation.
42
31. Significant investments
The table below sets out the significant members of the GoIndustry DoveBid group. DoveBid,
Inc., GoIndustry AG and GoIndustry Nordic AB are direct subsidiaries of GoIndustry-DoveBid plc
while the remaining companies are direct or indirect subsidiaries of GoIndustry AG or DoveBid, Inc.
All of the companies listed below are included in the consolidated accounts.
Country of | Ownership/ | |||||||
Company name | incorporation | Voting Control | Principal activity | |||||
1 AssetTRADE.com, Inc. |
USA | 100% | Holding company | |||||
2 DoveBid (S) Pte. Ltd. |
SINGAPORE | 100% | Asset sales and services | |||||
3 DoveBid Trading France Sarl |
FRANCE | 100% | Asset sales and services | |||||
4 DoveBid UK Limited |
UK | 100% | Asset sales and services | |||||
5 DoveBid Valuation Consultants, Inc |
USA | 100% | Asset sales and services | |||||
6 DoveBid, Inc. |
USA | 100% | Asset sales and services | |||||
7 GoIndustry (Austria) GmbH |
AUSTRIA | 100% | Asset sales and services | |||||
8 GoIndustry (Canada) Limited |
CANADA | 100% | Asset sales and services | |||||
9 GoIndustry (UK) Limited |
UK | 100% | Asset sales and services | |||||
10 GoIndustry AG |
GERMANY | 100% | Asset sales and services | |||||
11 GoIndustry Deutschland GmbH |
GERMANY | 100% | Asset sales and services | |||||
12 GoIndustry Operations Limited |
UK | 100% | Asset sales and services | |||||
13 GoIndustry Operations, Inc. |
USA | 100% | Holding company | |||||
14 GoIndustry Quippo Valuers & Auctioneers Pvt. Ltd. |
INDIA | 50% | Asset sales and services | |||||
15 GoIndustry Trading Limited |
UK | 100% | Asset sales and services | |||||
16 GoIndustry USA, Inc. |
USA | 100% | Asset sales and services | |||||
17 GoIndustry-DoveBid (Asia) Limited |
HONG KONG | 100% | Asset sales and services | |||||
18 GoIndustry-DoveBid (Australia) Pty. Ltd. |
AUSTRALIA | 100% | Asset sales and services | |||||
19 GoIndustry-DoveBid (Hong Kong) Limited |
HONG KONG | 100% | Asset sales and services | |||||
20 GoIndustry-DoveBid (Malaysia) Sdn. Bhd. |
MALAYSIA | 70% | Asset sales and services | |||||
21 GoIndustry-DoveBid (Shanghai) Co. Limited |
CHINA | 100% | Asset sales and services | |||||
22 GoIndustry-Dovebid (Taiwan) Ltd |
TAIWAN | 100% | Asset sales and services | |||||
23 GoIndustry-DoveBid (Thailand) Limited |
THAILAND | 100% | Asset sales and services | |||||
24 GoIndustry DoveBid Japan K.K. |
JAPAN | 100% | Asset sales and services | |||||
25 GoIndustry-DoveBid Korea Co. Ltd. |
KOREA | 100% | Asset sales and services | |||||
26 GoIndustry-DoveBid Mexico SA de CV |
MEXICO | 100% | Asset sales and services | |||||
27 GoIndustry-DoveBid Philippines, Inc. |
PHILIPPINES | 100% | Asset sales and services | |||||
28 GoIndustry-DoveBid Valuation (Thailand) Limited |
THAILAND | 100% | Asset sales and services |
43
Company statement of financial position
As at 31 December 2009
In thousands of pounds | Note | 2009 | 2008 | |||||||||
Non-current assets |
||||||||||||
Intangible assets |
3 | | 5 | |||||||||
Investments in subsidiaries |
4 | 22,873 | 31,651 | |||||||||
Investment in associate |
5 | | 68 | |||||||||
Loans to subsidiary undertakings |
8,975 | 15,986 | ||||||||||
31,848 | 47,710 | |||||||||||
Current assets |
||||||||||||
Trade and other receivables |
6 | 81 | 30 | |||||||||
Cash and cash equivalents |
7 | 3,073 | 4,353 | |||||||||
3,154 | 4,383 | |||||||||||
Total assets |
35,002 | 52,093 | ||||||||||
Current liabilities |
||||||||||||
Trade and other payables |
8 | 814 | 552 | |||||||||
Borrowings |
9 | | 4,970 | |||||||||
814 | 5,522 | |||||||||||
Non-current liabilities |
||||||||||||
Borrowings |
9 | 500 | | |||||||||
500 | | |||||||||||
Total liabilities |
1,314 | 5,522 | ||||||||||
Net assets |
33,688 | 46,571 | ||||||||||
Capital and reserves attributable to equity holders of the
company |
||||||||||||
Called-up equity share capital |
10 | 9,745 | 23,583 | |||||||||
Share premium |
10 | 22,495 | 18,872 | |||||||||
Shares to be issued |
10 | 542 | 542 | |||||||||
Own shares held in trust |
11 | | (974 | ) | ||||||||
Capital redemption reserve |
12 | 18,908 | | |||||||||
Other reserves |
13 | 20,196 | 19,946 | |||||||||
Accumulated losses |
14 | (38,198 | ) | (15,398 | ) | |||||||
Total equity |
33,688 | 46,571 | ||||||||||
The notes on pages 47 to 52 are an integral part of these company financial statements.
The financial statements were approved by the board of directors and authorised for issue on 14 May
2010. They were signed on its behalf by:
Jack Reinelt Chief Executive Officer |
David Horne Chief Financial Officer |
44
Company statement of changes in equity
Capital | Own | |||||||||||||||||||||||||||||||||||
redem- | Shares | shares | Acquis- | Share | Accum- | |||||||||||||||||||||||||||||||
Share | Share | ption | to be | held in | ition | options | ulated | |||||||||||||||||||||||||||||
In thousands of pounds | capital | premium | reserve | issued | trust | reserve | reserve | losses | TOTAL | |||||||||||||||||||||||||||
At 1 January 2008 |
13,250 | 9,578 | | | (1,042 | ) | 18,624 | 944 | (1,138 | ) | 40,216 | |||||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||||||
Loss for the year |
| | | | | | | (14,260 | ) | (14,260 | ) | |||||||||||||||||||||||||
Transactions with owners: |
||||||||||||||||||||||||||||||||||||
Issue of share capital to finance the acquisition
of DoveBid, Inc. |
9,250 | 9,250 | | | | | | | 18,500 | |||||||||||||||||||||||||||
Shares issued as consideration for the
acquisition of DoveBid, Inc. |
1,083 | 1,083 | | 542 | | | | | 2,708 | |||||||||||||||||||||||||||
Less: cost of share issue |
| (1,039 | ) | | | | | | | (1,039 | ) | |||||||||||||||||||||||||
Share based payments |
| | | | | | 378 | | 378 | |||||||||||||||||||||||||||
Transfer of shares |
| | | | 68 | | | | 68 | |||||||||||||||||||||||||||
Total transaction with owners: |
10,333 | 9,294 | | 542 | 68 | | 378 | | 20,615 | |||||||||||||||||||||||||||
At 1 January 2009 |
23,583 | 18,872 | | 542 | (974 | ) | 18,624 | 1,322 | (15,398 | ) | 46,571 | |||||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||||||
Loss for the year |
| | | | | | | (21,912 | ) | (21,912 | ) | |||||||||||||||||||||||||
Transactions with owners: |
||||||||||||||||||||||||||||||||||||
Cancellation of shares |
(18,908 | ) | | 18,908 | | 888 | | | (888 | ) | | |||||||||||||||||||||||||
New shares issued |
2,657 | 2,126 | | | | | | | 4,783 | |||||||||||||||||||||||||||
Conversion of loan notes |
2,413 | 1,923 | | | | | | | 4,336 | |||||||||||||||||||||||||||
Less: cost of share issue |
| (426 | ) | | | | | | | (426 | ) | |||||||||||||||||||||||||
Share based payments |
| | | | | | 250 | | 250 | |||||||||||||||||||||||||||
Transfer of shares |
| | | | 86 | | | | 86 | |||||||||||||||||||||||||||
Total transaction with owners: |
(13,838 | ) | 3,623 | 18,908 | | 974 | | 250 | (888 | ) | 9,029 | |||||||||||||||||||||||||
At 31 December 2009 |
9,745 | 22,495 | 18,908 | 542 | | 18,624 | 1,572 | (38,198 | ) | 33,688 | ||||||||||||||||||||||||||
The notes on pages 47 to 52 are an integral part of these company financial statements
45
Company statement of cash flows
For the year ended 31 December 2009
In thousands of pounds | 2009 | 2008 | ||||||
Cash flows from operating activities |
||||||||
Loss before income tax |
(21,912 | ) | (14,260 | ) | ||||
Adjustments for: |
||||||||
Share based payments |
130 | 125 | ||||||
Net interest expense / (income) |
713 | (323 | ) | |||||
Amortisation |
5 | 3 | ||||||
Impairment of investments |
11,564 | 14,912 | ||||||
Changes in working capital: |
||||||||
Decrease / (Increase) in trade and other receivables |
4,448 | (7,587 | ) | |||||
(Decrease) / Increase in amounts due from trade payables |
262 | 64 | ||||||
Operating cash flows before interest and taxes |
(4,790 | ) | (7,066 | ) | ||||
Interest paid |
(757 | ) | (267 | ) | ||||
Interest received |
314 | 590 | ||||||
Net cash used in operating activities |
(5,233 | ) | (6,743 | ) | ||||
Cash flows from investing activities |
||||||||
Investment in subsidiary undertakings |
| (12,803 | ) | |||||
Investment in associate |
| (68 | ) | |||||
Net cash used in investing activities |
| (12,871 | ) | |||||
Cash flows from financing activities |
||||||||
Proceeds on issue of shares |
4,087 | 17,461 | ||||||
(Decrease) / Increase in bank loans, loan notes and overdrafts |
(134 | ) | 1,980 | |||||
Net cash from financing activities |
3,953 | 19,441 | ||||||
Net decrease in cash and cash equivalents |
(1,280 | ) | (173 | ) | ||||
Cash and cash equivalents at beginning of year |
4,353 | 4,526 | ||||||
Cash and cash equivalents at end of year |
3,073 | 4,353 | ||||||
The notes on pages 47 to 52 are an integral part of these company financial statements
46
Notes to the company financial statements
For the year ended 31 December 2009
1. Summary of significant accounting policies
Basis of preparation
The company has elected to prepare its financial statements in accordance with International
Financial Reporting Standards (IFRS) adopted for use in the EU as at 31 December 2009 (adopted
IFRS). The financial statements are presented under the historical cost convention.
The accounting policies applied by the GoIndustry DoveBid group are described in detail in note 2
to the consolidated accounts. The other important company accounting policies are summarised below.
Loss for the year
The company has taken advantage of section 408 of the Companies Act 2006 and consequently has not
presented a statement of comprehensive income for the company alone. The company made a loss of
£21,912 thousand in the year (2008: £14,260 thousand loss). There was no other recognised income or
expense in the year (2008: nil).
Investments
Investments in subsidiaries are recorded at cost less any provision for impairment losses.
Investments in associates are all entities over which the group has significant influence but not
control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are included in the company financial statements at cost.
2. Financial risk management
The companys activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. Financial risk management is
coordinated at group level and seeks to minimise potential adverse effects on the groups financial
performance.
Market risk
(a) Foreign exchange risk
The companys exposure to foreign exchange risk is limited as it does not engage in trading
activity. The company does enter into transactions with overseas group undertakings, but these are
denominated predominantly in sterling. Where balances with group undertakings denominated in
foreign currency do exist these are long-standing and therefore changes in foreign exchange rates
do not have any impact on cash flows.
(b) Interest rate risk
The convertible loan notes are at a fixed interest rate of 12% and therefore the company is not
subject to cash flow interest rate risk.
Credit risk
Credit risk arises from the risk that a counterparty defaults on its liability in relation to
financial assets of the company that they are holding. The company is subject to credit risk on its
bank deposits. Bank deposits are held only by institutions rated as investment grade by an
independent rating agency; credit exposure is further reduced by limiting the proportion of net
deposits that can be held by a single institution.
Liquidity risk
Liquidity risk is primarily managed through the maintenance of adequate liquid resources,
principally in the form of bank deposits.
47
Notes to the company financial statements continued
For the year ended 31 December 2009
The table below sets out the maturity profile of the companys financial assets and liabilities:
2009 | ||||||||||||||||||||||||||||
Recog- | Contra- | Total | ||||||||||||||||||||||||||
Effective | nised | ctual | Contra- | |||||||||||||||||||||||||
interest | asset / | interest | ctual | 6 months | 6-12 | 1-5 | ||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | or less | months | years | |||||||||||||||||||||
Loans to subsidiary
undertakings |
| 8,975 | | 8,975 | | | 8,975 | |||||||||||||||||||||
Bank deposits |
2 | % | 3,073 | | 3,073 | 3,073 | | | ||||||||||||||||||||
Amortised cost: |
||||||||||||||||||||||||||||
Trade payables |
| (118 | ) | | (118 | ) | (118 | ) | | | ||||||||||||||||||
Amounts
payable to subsidiary undertakings |
| (285 | ) | (285 | ) | (285 | ) | | | |||||||||||||||||||
Accrued expenses |
| (371 | ) | | (371 | ) | (371 | ) | | | ||||||||||||||||||
Convertible loan notes |
12 | % | (500 | ) | (500 | ) | | | (500 | ) | ||||||||||||||||||
10,774 | | 10,774 | 2,299 | | 8,475 | |||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Effective | Recognised | Contractual | Total | |||||||||||||||||||||||||
interest | asset / | interest | Contractual | 6 months | 6-12 | |||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | or less | months | 1-5 years | |||||||||||||||||||||
Loans to subsidiary
undertakings |
| 15,986 | | 15,986 | | | 15,986 | |||||||||||||||||||||
Bank deposits |
6 | % | 4,353 | | 4,353 | 3,662 | | 691 | ||||||||||||||||||||
Amortised cost: |
||||||||||||||||||||||||||||
Trade payables |
| (100 | ) | | (100 | ) | (100 | ) | | | ||||||||||||||||||
Amounts payable to
subsidiary undertakings |
| (220 | ) | | (220 | ) | (220 | ) | | | ||||||||||||||||||
Accrued expenses |
| (207 | ) | | (207 | ) | (207 | ) | | | ||||||||||||||||||
Borrowings |
4 | % | (1,980 | ) | | (1,980 | ) | (1,980 | ) | | | |||||||||||||||||
Convertible loan notes |
8 | % | (2,990 | ) | (60 | ) | (3,050 | ) | (3,050 | ) | | | ||||||||||||||||
14,842 | (60 | ) | 14,782 | (1,895 | ) | | 16,677 | |||||||||||||||||||||
48
3. Intangible Assets
Software and | ||||
systems | ||||
In thousands of pounds | development | |||
Cost: |
||||
At 1 January 2008 |
10 | |||
Additions |
| |||
At 1 January 2009 |
10 | |||
Additions |
| |||
At 31 December 2009 |
10 | |||
Accumulated depreciation: |
||||
At 1 January 2008 |
2 | |||
Charge for the year |
3 | |||
At 1 January 2009 |
5 | |||
Charge for the year |
5 | |||
At 31 December 2009 |
10 | |||
Net book value: |
||||
At 31 December 2009 |
| |||
At 1 January 2009 |
5 | |||
At 1 January 2008 |
8 | |||
4. Investment in subsidiaries
In thousands of pounds | ||||
At 1 January 2008 |
30,731 | |||
Acquisition of DoveBid, Inc. |
15,511 | |||
Impairment of investments |
(14,912 | ) | ||
Capital contribution to subsidiary undertaking |
321 | |||
At 1 January 2009 |
31,651 | |||
Impairment of investments |
(11,496 | ) | ||
Capital contribution to subsidiary undertaking |
206 | |||
Additional investment in subsidiary |
2,512 | |||
At 31 December 2009 |
22,873 | |||
An impairment review was performed on the company investments resulting in a charge of £11,496
thousand. Full details of the assumptions underlying the impairment calculations are set out in
note 16 to the consolidated accounts.
Further details of the investments held by the company are contained in note 31 to the consolidated
accounts.
5. Investment in associate
In thousands of pounds | 2009 | 2008 | ||||||
Investment in ZetaBid associate |
| 68 |
49
Notes to the company financial statements continued
For the year ended 31 December 2009
6. Trade and other receivables
In thousands of pounds | 2009 | 2008 | ||||||
Current |
||||||||
Taxes Receivable |
68 | | ||||||
Prepayments |
13 | 30 | ||||||
81 | 30 | |||||||
7. Cash and cash equivalents
In thousands of pounds | 2009 | 2008 | ||||||
Own cash on hand and at bank |
100 | | ||||||
Short-term bank deposits |
2,973 | 4,353 | ||||||
3,073 | 4,353 | |||||||
8. Trade and other payables
In thousands of pounds | 2009 | 2008 | ||||||
Trade payables |
118 | 100 | ||||||
Amounts payable to subsidiary undertakings |
285 | 220 | ||||||
Social security and other taxes |
40 | 25 | ||||||
Accrued expenses |
371 | 207 | ||||||
814 | 552 | |||||||
9. Borrowings
In thousands of pounds | 2009 | 2008 | ||||||
Current |
||||||||
Bank loans and overdrafts |
| 1,980 | ||||||
Convertible loan notes |
| 2,990 | ||||||
| 4,970 | |||||||
In thousands of pounds | 2009 | 2008 | ||||||
Non-current |
||||||||
Convertible loan notes |
500 | |
The convertible loan notes are denominated in sterling, mature on 31 December 2011 and bear
interest at 12% per annum, payable quarterly in arrears. The notes are convertible at any time into
1p Ordinary shares at a price of 2.8p per share.
50
10. Share capital and premium
Number of shares in thousands | In thousands of pounds | |||||||||||||||||||||||||||
Redeemable | ||||||||||||||||||||||||||||
deferred | Ordinary | Deferred | Share | |||||||||||||||||||||||||
Ordinary 5p | shares | Ordinary 1p | Share Capital | Share Capital | premium | |||||||||||||||||||||||
01-Jan-08 Opening balance |
264,998 | | | 13,250 | | 9,578 | ||||||||||||||||||||||
25-Feb-08 Issue of share capital to finance the acquisition
of DoveBid, Inc. |
185,000 | | | 9,250 | | 9,250 | ||||||||||||||||||||||
25-Feb-08 Proceeds from shares issued |
21,660 | | | 1,083 | | 1,083 | ||||||||||||||||||||||
25-Feb-08 Less: cost of share issue |
| | | | | (1,039 | ) | |||||||||||||||||||||
01-Jan-09 Opening balance |
471,658 | | | 23,583 | | 18,872 | ||||||||||||||||||||||
02-Jan-09 Sub-division of ordinary shares |
(471,658 | ) | 471,658 | 471,658 | (18,866 | ) | 18,866 | | ||||||||||||||||||||
25-Jun-09 Cancellation of own shares held |
| (4,239 | ) | (4,239 | ) | (42 | ) | (170 | ) | | ||||||||||||||||||
11-Sep-09 Proceeds from shares issued |
| | 265,723 | 2,657 | | 2,126 | ||||||||||||||||||||||
11-Sep-09 Conversion of loan notes |
| | 241,288 | 2,413 | | 1,923 | ||||||||||||||||||||||
11-Sep-09 Cancellation of redeemable deferred
shares held |
| (467,419 | ) | | | (18,696 | ) | | ||||||||||||||||||||
11-Sep-09 Less: cost of share issue |
| | | | | (426 | ) | |||||||||||||||||||||
31-Dec-09 Closing balance |
| | 974,430 | 9,745 | | 22,495 | ||||||||||||||||||||||
The authorised share capital is set out in the table below:
In thousands of pounds | 2009 | 2008 | ||||||
Authorised ordinary shares of 1p each 1,613,367 thousand |
16,134 | | ||||||
Authorised redeemable deferred shares of 4p each 471,658,157 |
| | ||||||
Authorised ordinary shares of 5p each 700,000 thousand |
| 35,000 | ||||||
Equity ordinary shares to be issued of 1p each (2008: 5p each) 5,420 thousand |
542 | 542 | ||||||
On 2 January, shareholders approved the sub-division of each issued 5p Ordinary share into one new
1p Ordinary share and one effectively worthless 4p Redeemable Deferred share. The company had the
right at any time to redeem all of the Redeemable Deferred shares for an aggregate consideration of
£0.01, and these were redeemed and cancelled on 25 June and 11 September. The Redeemable Deferred
shares had no voting rights, no rights to dividends and negligible rights on a return of capital.
The Redeemable Deferred shares were not listed on any stock exchange and were not capable of
transfer. No share certificates were issued for any of the Redeemable Deferred shares.
On 25 June, the company cancelled 4,239 thousand 1p Ordinary shares and 4,239 thousand 1p
Redeemable Deferred shares that it was holding.
On 11 September, in addition to cancelling the remaining Redeemable Deferred shares, the company
issued 250,723 thousand new 1p Ordinary shares for cash, 241,288 thousand 1p Ordinary shares in
return for £4,500 thousand of 2011 convertible loan notes and 15,000 thousand new 1p Ordinary
shares in settlement of a restructuring fee payable to the converting note holders.
11. Own shares held in trust
In thousands of pounds | ||||
At 1 January 2008 |
(1,042 | ) | ||
Transfer of shares |
68 | |||
At 1 January 2009 |
(974 | ) | ||
Cancellation of own Shares held |
888 | |||
Transfer of shares |
86 | |||
At 31 December 2009 |
| |||
Zero (2008: 6,943 thousand) 1p ordinary shares of GoIndustry-DoveBid plc are held in trust.
51
Notes to the company financial statements continued
For the year ended 31 December 2009
12. Capital redemption reserves
In thousands of pounds | ||||
At 1 January 2008 and 2009 |
| |||
Cancellation of own shares held |
18,908 | |||
At 31 December 2009 |
18,908 | |||
13. Other reserves
Share | ||||||||||||
Acquisition | options | |||||||||||
In thousands of pounds | reserve | reserve | Total | |||||||||
At 1 January 2008 |
18,624 | 944 | 19,568 | |||||||||
Share based payments |
| 57 | 57 | |||||||||
Capital contribution to subsidiary undertaking |
| 321 | 321 | |||||||||
At 31 December 2008 |
18,624 | 1,322 | 19,946 | |||||||||
Share based payments |
| 44 | 44 | |||||||||
Capital contribution to subsidiary undertaking |
| 206 | 206 | |||||||||
At 31 December 2009 |
18,624 | 1,572 | 20,196 | |||||||||
The acquisition reserve arose on the reverse acquisition of GoIndustry AG by GoIndustry-DoveBid
plc.
14. Accumulated losses
In thousands of pounds | ||||
At 1 January 2008 |
(1,138 | ) | ||
Loss for the year |
(14,260 | ) | ||
At 1 January 2009 |
(15,398 | ) | ||
Loss for the year |
(21,912 | ) | ||
Cancellation of shares |
(888 | ) | ||
At 31 December 2009 |
(38,198 | ) | ||
15. Related party transactions
During the year the company has entered into transactions with subsidiary companies of the
GoIndustry DoveBid group of £2,038 thousand (2008: £958 thousand) comprising of interest,
management fees and loans. Balances with these companies at 31 December 2009 and 2008 are detailed
in note 8 and the statement of financial position.
The total remuneration of the key management of GoIndustry-DoveBid plc (the company) in the year
was as follows:
In thousands of pounds | 2009 | 2008 | ||||||
Short-term employee benefits |
410 | 1,588 | ||||||
Post-employment benefits |
173 | 79 | ||||||
Share based payments |
44 | 99 | ||||||
627 | 1,766 | |||||||
52
Independent auditors report
We have audited the group and parent company financial statements on pages 13 to 53.
This report is made solely to the companys members, as a body, in accordance with section 235 of
the Companies Act 1985. Our audit work has been undertaken so that we might state to the companys
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 companys members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors responsibilities for preparing the Annual Report and the financial statements in
accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union (EU) are set out in the Statement of Directors Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and
regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and
whether the financial statements have been properly prepared in accordance with the Companies Act
1985. We also report to you whether in our opinion the information given in the Directors Report
is consistent with the financial statements. The information given in the Directors Report
includes that specific information presented in the Chairmans Statement that is cross referenced
from the business review section of the Directors Report.
In addition we report to you, if in our opinion, the company has not kept proper accounting
records, if we have not received all the information and explanations we require for our audit, or
if information specified by law regarding directors remuneration and other transactions is not
disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with
the audited financial statements. The other information comprises only the Directors Report and
the Chairmans Statement. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate to the groups and
companys circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the financial statements are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Opinion
In our opinion:
| the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the groups affairs as at 31 December 2008 and of its loss for the year then ended; | ||
| the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent companys affairs as at 31 December 2008; | ||
| the financial statements have been properly prepared in accordance with the Companies Act 1985; and | ||
| the information given in the Directors Report is consistent with the financial statements. |
/s/ BAKER TILLY UK AUDIT LLP
Registered Auditor
Registered Auditor
Chartered Accountants
2 Bloomsbury Street
London WC1B 3ST
2 Bloomsbury Street
London WC1B 3ST
25 June 2009
12 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
Consolidated income statement
For the year ended 31 December 2008
2008 | 2007 | |||||||||||||||||||||||||||||||||||
Before | Before | |||||||||||||||||||||||||||||||||||
except- | except- | |||||||||||||||||||||||||||||||||||
ional | ional | |||||||||||||||||||||||||||||||||||
items | Except- | items | Except- | |||||||||||||||||||||||||||||||||
and | ional | Other | and | ional | Other | |||||||||||||||||||||||||||||||
other | items | charges | other | items | charges | |||||||||||||||||||||||||||||||
In thousands of pounds | Note | charges | (note 6) | (note 7) | Total | charges | (note 6) | (note 7) | Total | |||||||||||||||||||||||||||
Revenue |
5 | 36,898 | | | 36,898 | 29,105 | | | 29,105 | |||||||||||||||||||||||||||
Cost of sales |
(13,681 | ) | | | (13,681 | ) | (11,333 | ) | | | (11,333 | ) | ||||||||||||||||||||||||
Direct profit |
23,217 | | | 23,217 | 17,772 | | | 17,772 | ||||||||||||||||||||||||||||
Administrative expenses |
(27,200 | ) | (23,758 | ) | (788 | ) | (51,746 | ) | (16,749 | ) | (369 | ) | (866 | ) | (17,984 | ) | ||||||||||||||||||||
Operating (loss)/profit |
8 | (3,983 | ) | (23,758 | ) | (788 | ) | (28,529 | ) | 1,023 | (369 | ) | (866 | ) | (212 | ) | ||||||||||||||||||||
Finance costs |
||||||||||||||||||||||||||||||||||||
Interest income |
11 | 369 | | | 369 | 405 | | | 405 | |||||||||||||||||||||||||||
Finance costs |
11 | (698 | ) | | | (698 | ) | (776 | ) | | | (776 | ) | |||||||||||||||||||||||
Share of loss of associate |
18 | (27 | ) | | | (27 | ) | | | | | |||||||||||||||||||||||||
(Loss)/profit before
income tax |
(4,339 | ) | (23,758 | ) | (788 | ) | (28,885 | ) | 652 | (369 | ) | (866 | ) | (583 | ) | |||||||||||||||||||||
Income tax expense |
12 | (73 | ) | | | (73 | ) | (233 | ) | | | (233 | ) | |||||||||||||||||||||||
(Loss)/profit for the year
from continuing operations |
(4,412 | ) | (23,758 | ) | (788 | ) | (28,958 | ) | 419 | (369 | ) | (866 | ) | (816 | ) | |||||||||||||||||||||
Loss for the year from
discontinued operations |
13 | (1,303 | ) | | ||||||||||||||||||||||||||||||||
Loss for the year |
(30,261 | ) | (816 | ) | ||||||||||||||||||||||||||||||||
Attributable to: |
||||||||||||||||||||||||||||||||||||
Equity holders of the company |
(30,323 | ) | (795 | ) | ||||||||||||||||||||||||||||||||
Minority interests |
62 | (21 | ) | |||||||||||||||||||||||||||||||||
(30,261 | ) | (816 | ) | |||||||||||||||||||||||||||||||||
Loss per share for loss from continuing operations attributable to equity holders of the company during
the year (expressed in pence per share) |
||||||||||||||||||||||||||||||||||||
Basic |
14 | (6.6p | ) | (0.3p | ) | |||||||||||||||||||||||||||||||
Diluted |
14 | (6.6p | ) | (0.3p | ) | |||||||||||||||||||||||||||||||
Loss per share for loss attributable to equity holders of the company during the year (expressed in pence per share) | ||||||||||||||||||||||||||||||||||||
Basic |
14 | (6.9p | ) | (0.3p | ) | |||||||||||||||||||||||||||||||
Diluted |
14 | (6.9p | ) | (0.3p | ) |
The notes on pages 17 to 45 are an integral part of these consolidated financial statements.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 13 |
Consolidated statement of recognised income and expense
For the year ended 31 December 2008
In thousands of pounds | Note | 2008 | 2007 | |||||||||
(restated) | ||||||||||||
Exchange gains/(losses) on translation of foreign subsidiaries |
26 | 8,043 | (67 | ) | ||||||||
Actuarial gains/(losses) on defined benefit pension scheme |
23 | 430 | (226 | ) | ||||||||
Net income/(expense) recognised directly in equity |
8,473 | (293 | ) | |||||||||
Loss for the year |
(30,261 | ) | (816 | ) | ||||||||
Total recognised income and expense for the year |
(21,788 | ) | (1,109 | ) | ||||||||
Attributable to: |
||||||||||||
Equity holders of the company |
(21,850 | ) | (1,088 | ) | ||||||||
Minority interest |
62 | (21 | ) | |||||||||
(21,788 | ) | (1,109 | ) | |||||||||
The notes on pages 17 to 45 are an integral part of these consolidated financial statements.
14 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
Consolidated balance sheet
As at 31 December 2008
In thousands of pounds | Note | 2008 | 2007 | |||||||||
(restated) | ||||||||||||
Non-current assets |
||||||||||||
Property, plant and equipment |
16 | 1,429 | 1,158 | |||||||||
Intangible assets |
17 | 35,750 | 25,066 | |||||||||
Investment in associate |
18 | 28 | | |||||||||
37,207 | 26,224 | |||||||||||
Current assets |
||||||||||||
Inventories |
2,743 | 888 | ||||||||||
Trade and other receivables |
19 | 10,853 | 10,002 | |||||||||
Cash and cash equivalents |
20 | 18,037 | 14,797 | |||||||||
31,633 | 25,687 | |||||||||||
Total assets |
68,840 | 51,911 | ||||||||||
Current liabilities |
||||||||||||
Trade and other payables |
21 | 27,803 | 14,438 | |||||||||
Borrowings |
22 | 6,722 | 3,092 | |||||||||
Convertible loan notes |
22 | 2,990 | | |||||||||
Subordinated loan notes |
22 | 258 | | |||||||||
37,773 | 17,530 | |||||||||||
Non-current liabilities |
||||||||||||
Trade and other payables |
21 | 1,094 | | |||||||||
Convertible loan notes |
22 | | 2,990 | |||||||||
Subordinated loan notes |
22 | 546 | | |||||||||
Retirement benefit obligations |
23 | 2,898 | 3,519 | |||||||||
4,538 | 6,509 | |||||||||||
Total liabilities |
42,311 | 24,039 | ||||||||||
Net assets |
26,529 | 27,872 | ||||||||||
Equity |
||||||||||||
Ordinary shares |
24 | 23,583 | 13,250 | |||||||||
Share premium |
24 | 18,872 | 9,578 | |||||||||
Shares to be issued |
24 | 542 | | |||||||||
Own shares held |
25 | (974 | ) | (1,042 | ) | |||||||
Other reserves |
26 | 56,207 | 47,991 | |||||||||
Accumulated losses |
27 | (71,882 | ) | (41,989 | ) | |||||||
Capital and reserves attributable to equity holders of the company |
26,348 | 27,788 | ||||||||||
Minority interests |
181 | 84 | ||||||||||
Total equity |
26,529 | 27,872 | ||||||||||
The notes on pages 17 to 45 are an integral part of these consolidated financial statements.
The financial statements were approved by the board of directors and authorised for issue on 25
June 2009. They were signed on its behalf by:
Neville Davis
|
David Horne | |
Non-executive Chairman
|
Chief Financial Officer |
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 15 |
Consolidated cash flow statement
For the year ended 31 December 2008
In thousands of pounds | 2008 | 2007 | ||||||
(restated) | ||||||||
Cash flows from operating activities |
||||||||
Loss before tax |
(28,885 | ) | (583 | ) | ||||
Adjustments for: |
||||||||
Depreciation |
360 | 240 | ||||||
Amortisation |
672 | 25 | ||||||
Goodwill impairment charge |
19,378 | | ||||||
Net interest expense |
329 | 371 | ||||||
Share based payments |
241 | 866 | ||||||
Net retirement benefit cost |
176 | 126 | ||||||
Share of loss of associate |
27 | | ||||||
Changes in working capital: |
||||||||
(Increase)/decrease in inventories |
(1,855 | ) | 195 | |||||
Decrease/(increase) in accounts receivable |
1,785 | (773 | ) | |||||
Increase in accounts payable |
1,209 | 563 | ||||||
Decrease in provisions |
(367 | ) | (548 | ) | ||||
Operating cash flows before interest and taxes |
(6,930 | ) | 482 | |||||
Interest paid |
(698 | ) | (776 | ) | ||||
Income and corporation taxes paid |
(108 | ) | (170 | ) | ||||
Interest received |
369 | 405 | ||||||
Net cash used in operating activities |
(7,367 | ) | (59 | ) | ||||
Cash flows from investing activities |
||||||||
Purchases of property, plant and equipment |
(471 | ) | (432 | ) | ||||
Purchases of intangible assets |
(1,786 | ) | (153 | ) | ||||
Loan granted to associate |
(55 | ) | | |||||
Disposal of subsidiary |
(129 | ) | | |||||
Acquisition of subsidiary net of cash acquired (note 15) |
(7,044 | ) | | |||||
Net cash used in investing activities |
(9,485 | ) | (585 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds on issue of shares |
17,461 | 6,577 | ||||||
Increase/(decrease) in bank loans and overdrafts |
3,379 | (846 | ) | |||||
Repayment of mortgage |
| (63 | ) | |||||
Subsidiary company dividend paid to minority shareholder |
| (71 | ) | |||||
Net cash from financing activities |
20,840 | 5,597 | ||||||
Net increase in cash and cash equivalents |
3,988 | 4,953 | ||||||
Cash and cash equivalents at beginning of year |
14,797 | 9,911 | ||||||
Effect of foreign exchange rate changes |
(748 | ) | (67 | ) | ||||
Cash and cash equivalents at end of year |
18,037 | 14,797 | ||||||
The notes on pages 17 to 45 are an integral part of these consolidated financial statements.
16 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
Notes to the consolidated financial statements
For the year ended 31 December 2008
1. General information
GoIndustry-DoveBid plc (formerly GoIndustry plc) (the company) and its subsidiaries (together
the group) is a global market leader in the service, management, and disposal of surplus
industrial assets. The group has offices in locations across Europe, North America, and Asia.
The company is a public limited company incorporated and domiciled in the United Kingdom. The
address of its registered office is 1-6 Lombard Street, London, EC3V 9JU.
The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all of the years presented unless otherwise
stated.
Basis of preparation
These consolidated financial statements include the accounts of GoIndustry-DoveBid plc and all of
its subsidiaries made up to 31 December each year.
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) adopted for use in the EU and IFRIC interpretations as at 31 December 2008
(adopted IFRS) and the Companies Act 1985 applicable to companies reporting under IFRS.
The financial statements are presented in Sterling, rounded to the nearest thousand, and have been
prepared on a historical cost basis.
The comparative financial information has been restated such that all client cash held is now
reported within the consolidated balance sheet with a corresponding liability shown as amounts due
to clients. In the financial statements for the year ended 31 December 2007 those client cash
balances for which the group did not enjoy the economic benefits of holding the cash were excluded
from the consolidated balance sheet. As a result, the balances reported for cash and amounts due to
clients as at 31 December 2007 have increased by £4,848 thousand.
The preparation of financial statements in accordance with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying the groups
accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements are disclosed in
note 4.
(a) | Standards, amendments and interpretations effective in 2008 |
| IFRIC 11, IFRS 2 Group and treasury share transactions. This interpretation provides further clarification on the treatment of certain share based payment transactions. It identifies whether a transaction is equity or cash settled where the shares involved are transferred by a third party as well as giving guidance on the treatment in the accounts of a subsidiary where its parent directly makes share based payments to the employees of the subsidiary. |
| IFRIC 14, IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction. This interpretation provides guidance on assessing the limit in IAS 19 on the amount of surplus that can be recognised as an asset. As the group has a pension liability, the adoption of this standard does not have any impact on the consolidated financial statements. |
(b) | Standards, amendments and interpretations effective in 2008 but not relevant |
The following standards, amendments and interpretations to published standards are mandatory for
accounting periods beginning on or after 1 January 2008 but are not relevant to the group:
| IFRIC 12, Service concession arrangements. |
(c) | Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group |
The following standards, amendments and interpretations to
existing standards have been published and are mandatory for the groups accounting periods
beginning on or after 1 January 2009 or later periods, but the group has not early adopted them:
| IAS 1 (revised), Presentation of financial statements (effective from 1 January 2009 and endorsed by the EU in December 2008). The revised standard requires non-owner changes in equity to be presented separately from owner changes in equity, with all non-owner changes in equity to be shown in a performance statement. |
| IAS 1 (amendment), Presentation of financial statements (effective from 1 January 2009, subject to endorsement by the EU). The amendment clarifies the disclosure of held-for-trading assets and liabilities between current and non-current assets and liabilities. |
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 17 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
| IAS 19 (amendment), Employee benefits (effective from 1 January 2009, subject to endorsement by the EU). The amendment makes a number of changes to accounting for defined benefit pension schemes. | ||
| IAS 23 (amendment), Borrowing costs (effective from 1 January 2009, subject to endorsement by the EU). The amendment to the standard requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a significant period of time to get ready for use or sale) as part of the cost of the asset. The option of immediately expensing those borrowing costs will be removed. | ||
| IAS 36 (amendment), Impairment of assets (effective from 1 January 2009, subject to endorsement by the EU). The amendment clarifies the disclosure requirements for impairment tests. | ||
| IAS 38 (amendment), Intangible assets (effective from 1 January 2009, subject to endorsement by the EU). The amendment clarifies the treatment of prepayments for intangible assets and deletes the wording that states that there is rarely, if ever support for use of a method that results in a lower rate of amortisation than the straight-line method. | ||
| IAS 39 (amendment), Financial instruments: Recognition and measurement (effective from 1 January 2009, subject to endorsement by the EU). The amendment makes a number of changes to accounting for financial instruments. | ||
| IFRS 2 (amendment), Share-based payment (effective from 1 January 2009 and endorsed by the EU in December 2008). This amendment clarifies the accounting treatment of vesting conditions and cancellations. | ||
| IFRS 3 (amendment), Business combinations (effective from 1 July 2009, subject to endorsement by the EU), and consequential amendments to IAS 27, Consolidated and separate financial statements, IAS 28, Investments in associates, and IAS 31 Interests in Joint Ventures. The amendment to IFRS 3 revises the application of the acquisition method of accounting for business combinations and should be applied prospectively from 1 January 2010. | ||
| IFRS 5 (amendment), Non-current assets held-for-sale and discontinued operations (and consequential amendments to IFRS 1 First-time adoption) (effective from 1 July 2009, subject to endorsement by the EU). This amendment clarifies that all of a subsidiarys assets and liabilities are classified as held-for-sale if a partial disposal sale plan results in loss of control. | ||
| IFRS 8, Operating segments (effective from 1 January 2009 and endorsed by the EU in December 2007). IFRS 8 replaces IAS 14, Segment reporting and requires the group to take a management approach, under which segment information is presented on the same basis as that used for internal reporting purposes. |
(d) | Interpretations to existing standards that are not yet effective and not relevant to the group: |
The following interpretations to existing standards have been published and are mandatory for the
groups accounting periods beginning on or after 1 January 2009 or later but are not relevant to
the group:
| IFRS 1, (amendment), First time adoption of IFRS and IAS 27, Consolidated and separate financial statements. | ||
| IAS 16 (amendment), Property, plant and equipment (and consequential amendment to IAS 7, Statement of cash flows). | ||
| IAS 20 (amendment), Accounting for government grants and disclosure of government assistance. | ||
| IAS 27 (amendment) and IAS 27 (revised), Consolidated and separate financial statements. | ||
| IAS 28 (amendment), Investment in associates (and consequential amendments to IAS 32, Financial instruments: Recognition and measurement and IFRS 7, Financial instruments: Disclosures). | ||
| IAS 29 (amendment), Financial reporting in hyperinflationary economies. | ||
| IAS 31 (amendment), Interests in joint ventures (and consequential amendments to IAS 32, Financial instruments: Recognition and measurement and IFRS 7, Financial instruments: Disclosures). | ||
| IAS 32 (amendment), Financial instruments: Presentation and IAS 1 (amendment) Presentation of financial statements Puttable financial instruments and obligations arising on liquidation. | ||
| IAS 40 (amendment), Investment property (and consequent amendments to IAS 16, Property, plant and equipment). | ||
| IAS 41 (amendment), Agriculture. | ||
| IFRIC 13, Customer loyalty programmes. | ||
| IFRIC 15, Agreements for construction of real estates. |
18 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
| IFRIC 16, Hedges of a net investment in a foreign operation. |
| IFRIC 17, Transfers of non-cash assets from owners. |
| IFRIC 18, Transfers of assets from customers. |
Going concern
The group had net current liabilities as at 31 December 2008 of £6,140 thousand. The directors have
considered the implications for going concern below.
The board remains satisfied with the groups funding and liquidity position. The main sources of
debt funding are the bank facilities from Barclays Bank plc in the United Kingdom and PNC Bank in
the United States of America, and the convertible loan notes. The group also holds subordinated
loan notes that were acquired as part of the acquisition of DoveBid, Inc.
As highlighted in note 22 to the financial statements, the group meets its day to day
working capital requirements from its cash and overdraft facilities.
Subsequent to 31 December 2008, management has renegotiated each of the main sources of debt
funding, as follows:
| The Barclays Bank plc facility has been reduced from £2 million to £1 million and will be repaid before the end of 2009. | ||
| The PNC Bank facilities have been reorganised into a new $2 million working capital facility; the existing working capital facility of $3 million has been converted to a term loan with a five year amortisation with an initial period of 3 years; and the principal deal facility has been reduced from $7 million to $5 million. | ||
| The £3 million convertible loan notes maturing in May 2009 have been redeemed, and £5 million of new convertible loan notes have been issued. |
The board remains mindful regarding the uncertainties inherent in the current economic climate. The
groups forecasts and projections, taking account of reasonable changes in trading performance
given these uncertainties, show the group operating within its current facilities.
The board has reviewed the new arrangements in light of the current trading expectations and
believes that they provide sufficient headroom going forward. Forecasts reviewed by the board,
including forecasts adjusted for worse economic conditions together with appropriate cost reduction
measures already in place show continued compliance with covenants, and sufficient available
working capital facilities.
On the basis of these forecasts, both base case and sensitised as described above, and given the
level of available facilities, the board has concluded that the going concern basis of preparation
continues to be appropriate.
Consolidation
Subsidiaries are all entities over which the group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which control is transferred to the
group. They are de-consolidated from the date that control ceases.
The purchase method of
accounting is used to account for the acquisition of subsidiaries by the group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
fair value of the groups share of the identifiable net assets acquired is recorded as goodwill. If
the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies
are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
Investments in associates are all entities over which the group has significant influence but not
control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are included in the consolidated financial statements using the equity
method.
The groups share of its associates post-acquisition profits or losses is recognised in the
income statement. The cumulative post-acquisition movements are adjusted against the carrying value
of the investment.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 19 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services
that are subject to risks and returns that are different from those of other business segments. The
group presents segmental analysis by
geography and class of business. The primary segmentation is geographical. Each geographical
segment is engaged in providing products or services within a particular economic environment that
are subject to risks and returns that are different from those of segments operating in other
economic environments. Assets and liabilities are allocated according to their physical location. A
business segment is a component of the group that is engaged in providing related products and
services and is subject to risks and returns that are different from those of other business
segments.
Foreign currency translation
(a) | Functional and presentation currency |
Items included in the financial statements of each of the groups entities are measured using the
currency of the primary economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in Sterling (£), which is the
companys functional and presentation currency.
(b) | Transactions and balances |
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
(c) | Group companies |
The results and financial position of all the group entities (none of which has the currency of a
hyper-inflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
(i) | assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; | ||
(ii) | income and expenses for each income statement are translated at weighted average monthly exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and all resulting exchange differences are recognised as a separate component of equity. |
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations, and of borrowings are taken to
shareholders equity. When a foreign operation is partially disposed of or sold, exchange
differences that were recorded in equity are recognised in the income statement as part of the gain
or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity
are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the groups activities. Revenue is shown net of value-added
tax, returns, rebates and discounts.
The primary business of the Group is the provision of services
associated with the valuation and sale of used industrial equipment. In such circumstances group
companies act as an agent on behalf of their clients, and revenues represent commissions or fees
charged to clients in connection with the provision of these services. Group companies may also
take a position as a principal whereby they purchase and sell equipment on their own behalf. On
these occasions revenues represent the percentage ownership of the value of the equipment being
sold with the cost of such equipment being reported within inventory at the time of purchase and as
cost of sales at the time of sale.
Revenue is recognised when it is probable that the economic benefits will flow to the Group, when
the revenues and associated costs can be reliably measured and when the stage of completion of the
transaction at the balance sheet date can also be reliably measured. In addition in the case of
principal sales of equipment the group company must have transferred to the buyer the significant
risks and rewards of ownership of those goods, and must retain no significant managerial
involvement with, nor control over, those goods.
In the case of agency sales a buyer will usually be identified, the sale price agreed and the buyer
invoiced on behalf of the client before the Group invoices the client. Accrued income receivable
represents an accrual for such work completed on behalf of clients but not yet invoiced to the
client. Accruals are estimated based on the expected proceeds from the sale of client owned
equipment, agreed commission rates and other contractual terms.
20 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
Employee benefits
(a) | Pension obligations |
The group has both defined benefit and defined contribution plans. A defined contribution plan
is a pension plan under which the group pays fixed contributions into a separate entity. The group
has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all
employees the benefits relating to employee service in the current and prior periods. A defined
benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit
plans define an amount of pension benefit that an employee will receive on retirement, usually dependent
on one or more factors such as age, years of service and compensation.
The defined benefit plan, the Henry Butcher Pension and Life Assurance Scheme, is operated by
GoIndustry UK Limited. GoIndustry UK Limited is obliged to make sufficient contributions to an
externally administered fund in order to satisfy future pension obligations. The Scheme was closed
to new members with effect from 1 January 2002, and with effect from 31 December 2004 accrual of
benefits in the Scheme ceased and active members contributed to a defined contribution scheme. The
liability recognised in the balance sheet in respect of the defined benefit scheme is the present
value of the defined benefit obligation at the balance sheet date less the fair value of plan
assets, together with adjustments for unrecognised past-service costs. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated
future cash outflows using interest rates of high-quality corporate bonds that are denominated in
the currency in which the benefits will be paid, and that have terms to maturity approximating to
the terms of the related pension liability.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to equity in the statement
of recognised income and expense (SoRIE) in the period in which they arise.
For defined contribution plans, the group pays contributions to publicly or privately
administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has
no further payment obligations once the contributions have been paid. The contributions are
recognised as employee benefit expense when they are due. Prepaid contributions are recognised as
an asset to the extent that a cash refund or a reduction in the future payments is available.
(b) | Share-based compensation |
The group operates a number of equity-settled, share-based compensation plans. The fair value
of the employee services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting period is determined by reference to the
fair value of the options granted, excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest. At each balance sheet date, the
entity revises its estimates of the number of options that are expected to vest. It recognises the
impact of the revision to original estimates, if any, in the income statement, with a corresponding
adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share
capital (nominal value) and share premium when the options are exercised.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the income statement on a straight-line basis
over the period of the lease.
Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the companys subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation
and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
Deferred income
tax is provided on temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference is controlled by the group and
it is probable that the temporary difference will not reverse in the foreseeable future.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 21 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the group 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.
Property, plant and equipment
All property, plant and equipment is stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement during the financial period in which they are
incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings |
Period of lease | |||
Vehicles |
4 years | |||
Furniture, fittings and equipment |
3 years |
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.
An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.
Intangible assets
(a) | Goodwill |
Goodwill represents the excess of the cost of an acquisition over the fair value of the
groups share of the net identifiable assets of the acquired subsidiary at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Impairment losses on
goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the goodwill arose. The company
allocates goodwill to each geographical business unit.
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed 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 assets carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an assets fair value less costs to sell and value in use.
(b) | Customer relationships |
Customer relationships acquired in a business combination are recognised at
fair value at the acquisition date. The customer relationships have a finite useful life and are
carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line
method over the expected life of the customer relationship, which is 5 years.
(c) | Brands |
Brands acquired in a business combination are recognised at fair value at the acquisition
date. The brands have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method over the expected life of the brands,
which is 10 years.
(d) | Other intangible assets |
Acquired computer software licences are capitalised on the basis of the costs incurred to
acquire and bring to use the specific software. These costs are amortised over their estimated
useful lives (two to three years).
In line with IFRS, the Group does not recognise internally generated intangible assets arising
from expenditures such as research, branding or the creation of its customer and equipment
databases. Expenditures associated with internal systems development and with internally generated
goodwill are charged against profit in the period in which they are incurred.
Inventories
Inventories comprise used industrial equipment purchased for resale and are stated at the
acquisition cost of the assets. In some cases dismantling, transportation, or warehousing costs may
be incurred, which are added to the inventory value. These costs are allocated between the group of
assets acquired on a weighted average of the deemed value of the assets. Where this allocated cost
is in excess of net realisable value the excess carrying amount is written-off to the
income statement. Borrowing costs are not included in the inventory valuation. Net realisable value
is the estimated selling price in the ordinary course of business, less applicable variable selling
expenses.
22 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
Financial assets
The groups financial assets comprise trade and other receivables, cash and cash equivalents.
Trade and other receivables
Trade and other receivables comprise trade accounts receivable, accrued income receivable, auction
expenses receivable, prepayments and other receivables. Trade receivables are recognised at fair
value. A provision for impairment is established when there is objective evidence that the group
will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy
or financial reorganisation, and default or delinquency in payments are considered indicators that
the trade receivable is impaired. The amount of the provision is the difference between the assets
carrying amount and the present value of estimated future cash flows. The carrying amount of the
asset is reduced through the use of an allowance account, and the amount of the loss is recognised
in the income statement within administrative expense. When a trade receivable is uncollectible, it
is written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited against administrative expense in the income
statement.
Accrued income receivable represents an accrual for work completed on behalf of clients
but not yet invoiced. Auction expenses represent costs incurred on behalf of and recoverable from
clients but not yet invoiced.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, monies held under
guarantee, and bank overdrafts.
Group companies routinely collect cash from auction sales, the
proceeds of which are ultimately payable to the client whose assets are being sold. Client money
owing is reported within cash on the consolidated balance sheet with a corresponding liability
reported as amounts due to clients within accounts payable. Client cash that is held together with
the Group companys own cash is reported within own cash on hand and at bank, but if for legal or
other reasons it must be segregated from company funds it is reported separately as client cash on
escrow. Short-term deposits are liquid investments that are convertible to known amounts of cash
and which are subject to insignificant risk of change in value.
Monies held under guarantee is cash held in an account to which the Group enjoys legal title, but
there are restrictions over access.
Trade payables
Trade payables are recognised at amortised cost.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to
defer settlement of the liability for at least 12 months after the balance sheet date.
Provisions
Provisions for potential future costs such as those arising from the defence of a legal claim are
recognised when the group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and
the amount has been reliably estimated.
Provisions are measured at the present value of the
expenditures expected to be required to settle the obligation using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the obligation.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction from the proceeds.
Where any group company purchases the companys equity share
capital (own shares held in trust), the consideration paid, including any directly attributable
incremental costs is deducted from equity attributable to the companys equity holders until the
shares are cancelled or reissued.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 23 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
3. Financial risk management
The groups activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. Financial risk management is
coordinated at group level and seeks to minimise potential adverse effects on the groups
financial performance.
Market risk
(a) | Foreign exchange risk |
The group operates internationally and is exposed to foreign exchange risk arising from
various currency exposures. Foreign exchange risk arises from future commercial transactions,
recognised assets and liabilities and net investments in foreign operations. In order to reduce the
currency risk arising in respect of recognised foreign currency assets and net investments in
foreign subsidiaries, the group uses direct borrowings in the same currency. The risk relating to
future commercial transactions and recognised liabilities is mitigated through the maintenance of
cash balances in the same currency.
The effect of changing exchange rates is regularly monitored by the group and a sensitivity
analysis has been prepared to show the impact of changes in foreign exchange between Sterling, the
United States Dollar and the Euro. A decrease of twenty cents in the value of both the Dollar and
the Euro would reduce consolidated loss before tax by £393 thousand (2007: Decrease £184 thousand)
and reduce total equity by £5,618 thousand (2007: £6,692 thousand). An increase of five cents in
the value of both the Dollar and the Euro would increase consolidated loss before tax by £522
thousand (2007: Increase £192 thousand) and increase total equity by £8,459 thousand (2007: £6,700
thousand).
(b) | Cash flow and interest rate risk |
Borrowings of the group comprise convertible loan notes issued by GoIndustry-DoveBid plc and bank
loans held by GoIndustry USA Inc., GoIndustry UK Limited and GoIndustry-DoveBid plc. The group is
exposed to interest rate risk only on its bank borrowings as the convertible loan notes attract
interest at a fixed rate of 8%. Bank borrowings are used mainly to finance the purchase of assets for resale and therefore are
generally held only for a short time period. Before the purchase of each group of assets a proposal
is presented to an investment committee projecting the profitability of the investment after the
cost of finance and therefore decisions can be taken based upon the prevailing interest rate at the
time of investment. Due to the short time period for which these assets are held the actual finance
cost is only likely to fluctuate marginally from the projection. The fair value of financial
instruments is equal to their carrying value and therefore the group is not exposed to any fair
value risk.
A sensitivity analysis has been prepared to model the impact on profit before tax of a change in
the effective interest rate for bank borrowings. A +/- variance of 100 basis points in the
effective interest rate would have an impact of £77 thousand (2007: £32 thousand) on profit
before tax. Further details on interest rate risk exposure are contained in note 22.
Credit risk
Credit risk arises from the risk that a counterparty defaults on its liability in relation to
financial assets of the group that they are holding. The group is subject to credit risk on its
bank deposits and trade receivables. Bank deposits are held only by institutions rated as
investment grade by an independent rating agency; credit exposure is further reduced by limiting
the proportion of net deposits that can be held by a single institution. Further details regarding
the groups policy for the management of trade receivables is set out below.
Trade receivables management
Exposure to credit risk on trade receivables from commission and principal sales is limited because
it is the groups policy not to allow the title to assets to be transferred until payment is
received.
Capital risk management
The group manages its capital to ensure that subsidiary operations are able to continue as going
concerns, the group and relevant subsidiaries remain in compliance with their banking covenants,
and the return to shareholders is maximised through an appropriate mix of debt and equity funding.
The groups capital structure is comprised of cash and cash equivalents, short- and long-term
borrowings as disclosed in note 22, and the equity attributable to equity holders of the parent
company as disclosed in note 24.
Surplus cash is either reinvested in the business or used to repay
debt. The level of debt is monitored through the cash flow leverage ratio, which is net debt divided
by EBITDA. Net debt is calculated as cash and cash equivalents less amounts due to clients, borrowings and both convertible and subordinated loan
notes. EBITDA is earnings before interest, taxation, depreciation and amortisation.
Liquidity risk
Liquidity risk is primarily managed through the maintenance of adequate liquid resources,
principally in the form of bank deposits. In addition to this, bank facilities to allow financing
of working capital are also available in some business units.
24 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
The table below sets out the liquidity profile of the groups financial assets and liabilities:
2008 | ||||||||||||||||||||||||||||
Effective | Recognised | Contractual | Total | |||||||||||||||||||||||||
interest | asset/ | interest | Contractual | 6 months | 6-12 | 1-5 | ||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | or less | months | years | |||||||||||||||||||||
Loans and receivables: |
||||||||||||||||||||||||||||
Trade receivables |
| 3,579 | | 3,579 | 3,579 | | | |||||||||||||||||||||
Other receivables |
| 1,694 | | 1,694 | 1,694 | | | |||||||||||||||||||||
Accrued income |
| 4,812 | | 4,812 | 4,812 | | | |||||||||||||||||||||
Bank deposits |
2 | % | 18,037 | | 18,037 | 18,037 | | | ||||||||||||||||||||
Trade payables |
| (4,707 | ) | | (4,707 | ) | (4,583 | ) | (124 | ) | | |||||||||||||||||
Amounts due to clients |
| (16,179 | ) | | (16,179 | ) | (16,179 | ) | | | ||||||||||||||||||
Accrued expenses |
| (5,378 | ) | | (5,378 | ) | (5,378 | ) | | | ||||||||||||||||||
Bank loans and overdrafts |
4 | % | (6,722 | ) | | (6,722 | ) | (6,722 | ) | | | |||||||||||||||||
Subordinated loan notes |
9 | % | (804 | ) | (72 | ) | (876 | ) | (170 | ) | (170 | ) | (536 | ) | ||||||||||||||
Convertible loan notes |
8 | % | (2,990 | ) | (60 | ) | (3,050 | ) | (3,050 | ) | | | ||||||||||||||||
(8,658 | ) | (132 | ) | (8,790 | ) | (7,960 | ) | (294 | ) | (536 | ) | |||||||||||||||||
2007 | ||||||||||||||||||||||||||||
Recognised | Total | |||||||||||||||||||||||||||
Effective | asset/ | Contractual | Contractual | 6 months | ||||||||||||||||||||||||
interest | (liability) | interest | cash flow | or less | 6-12 | 1-5 | ||||||||||||||||||||||
In thousands of pounds | rate | (restated) | payable | (restated) | (restated) | months | years | |||||||||||||||||||||
Loans and receivables: |
||||||||||||||||||||||||||||
Trade receivables |
| 5,221 | | 5,221 | 5,221 | | | |||||||||||||||||||||
Other receivables |
| 1,819 | | 1,819 | 1,819 | | | |||||||||||||||||||||
Accrued income |
| 2,385 | | 2,385 | 2,385 | | | |||||||||||||||||||||
Bank deposits |
5 | % | 14,797 | | 14,797 | 14,797 | | | ||||||||||||||||||||
Trade payables |
| (2,476 | ) | | (2,476 | ) | (2,476 | ) | | | ||||||||||||||||||
Accrued expenses |
| (3,049 | ) | | (3,049 | ) | (3,049 | ) | | | ||||||||||||||||||
Amounts due to clients |
| (7,819 | ) | | (7,819 | ) | (7,819 | ) | | | ||||||||||||||||||
Bank loans and overdrafts |
8 | % | (3,067 | ) | | (3,067 | ) | (3,067 | ) | | | |||||||||||||||||
Mortgage secured over property |
8 | % | (25 | ) | (3 | ) | (28 | ) | (28 | ) | | | ||||||||||||||||
Convertible loan notes |
8 | % | (2,990 | ) | (319 | ) | (3,309 | ) | (120 | ) | (120 | ) | (3,069 | ) | ||||||||||||||
4,796 | (322 | ) | 4,474 | 7,663 | (120 | ) | (3,069 | ) | ||||||||||||||||||||
The group is not contractually bound to make interest payments on any financial instruments except
for the convertible and subordinated loan notes.
4. Critical accounting estimates and judgments
The preparation of financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and
of revenues and expenses during the year. Significant items subject to such estimates and judgments
include goodwill, the defined benefit pension obligation, the equity settled share-based payment
charge, and the direct profit margin for principal sales. Actual amounts recognised may differ from
those estimated. The estimates and assumptions which have a potentially material impact on the
carrying amount of assets and liabilities are discussed below:
(a) | Impairment of goodwill |
The Group
is required to test, at least annually, whether goodwill has suffered any impairment. The
recoverable amount is determined based on value in use calculations. The use of this method
requires the estimation of future cash flows and the choice of a suitable discount rate in order to
calculate the present value of these cash flows.
Actual outcomes could vary. See note 17 for further details.
(b) | Post retirement benefits |
The determination of the defined benefit pension obligation depends upon the selection of
certain assumptions, which include the discount rate, inflation rate, mortality and expected return
on scheme assets. Differences arising from actual experience or future changes in assumptions will be reflected in subsequent periods.
See note 23 for further details.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 25 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
(c) | Equity settled share based payments |
The group recognises a charge in the income statement for the fair value of equity settled
share based payments over the vesting period. Those instruments vesting in the period are
principally options over ordinary shares and the fair value of these at the balance sheet date is
estimated using the Black-Scholes model. This model is dependent upon several assumptions such as
the risk free interest rate and the expected life of the options. Actual experience may differ from
that estimated. Note 24 contains further details on these assumptions.
(d) | Direct profit margin for principal sales |
When the Group acquires equipment for principal sales an estimate is made of the expected
sales value for the whole project, and from this a projected margin is calculated. This projected
margin is then used to estimate the actual margin to be recorded as individual items of equipment
are sold. The actual margin achieved may vary from this initial estimate. Any incremental losses
that are foreseeable at the year-end are provided for, non-foreseeable losses and any incremental
profits are taken to the income statement in the period in which they occur.
5. Segmental analysis geographical origin
For management purposes the group was organised in 2008 into three geographical divisions; Europe,
North America, and Asia. These divisions are the basis upon which the group reports its primary
segment information.
2008 | ||||||||||||||||||||
North | ||||||||||||||||||||
In thousands of pounds | Europe | America | Asia | Unallocated | Consolidated | |||||||||||||||
Revenue |
16,140 | 16,380 | 4,378 | | 36,898 | |||||||||||||||
Segment result |
(2,706 | ) | (879 | ) | (398 | ) | | (3,983 | ) | |||||||||||
Other charges |
(314 | ) | (373 | ) | (101 | ) | | (788 | ) | |||||||||||
Exceptional items |
(4,817 | ) | (16,389 | ) | (3,074 | ) | 522 | (23,758 | ) | |||||||||||
Operating loss |
(7,837 | ) | (17,641 | ) | (3,573 | ) | 522 | (28,529 | ) | |||||||||||
Finance costs net |
43 | (152 | ) | 20 | (240 | ) | (329 | ) | ||||||||||||
Share of loss of associate |
| (27 | ) | | | (27 | ) | |||||||||||||
Loss before income tax |
(7,794 | ) | (17,820 | ) | (3,553 | ) | 282 | (28,885 | ) | |||||||||||
Income tax expense |
(73 | ) | ||||||||||||||||||
Loss for the year
from continuing operations |
(28,958 | ) | ||||||||||||||||||
Depreciation and amortisation |
(395 | ) | (447 | ) | (190 | ) | | (1,032 | ) | |||||||||||
Segment assets |
49,024 | 15,196 | 4,620 | | 68,840 | |||||||||||||||
Segment liabilities |
15,730 | 18,445 | 5,146 | | 39,321 | |||||||||||||||
Unallocated liabilities: |
||||||||||||||||||||
Convertible loan notes |
| | | 2,990 | 2,990 | |||||||||||||||
Total liabilities |
15,730 | 18,445 | 5,146 | 2,990 | 42,311 | |||||||||||||||
Capital expenditure: |
||||||||||||||||||||
Property, plant and equipment |
144 | 102 | 100 | | 346 | |||||||||||||||
Intangible assets |
147 | 169 | 46 | | 362 | |||||||||||||||
26 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
2007 | ||||||||||||||||||||
North | ||||||||||||||||||||
In thousands of pounds | Europe | America | Asia | Unallocated | Consolidated | |||||||||||||||
Revenue |
19,778 | 5,423 | 3,904 | | 29,105 | |||||||||||||||
Segment result |
272 | 18 | 733 | | 1,023 | |||||||||||||||
Other charges |
| | | (866 | ) | (866 | ) | |||||||||||||
Exceptional items |
| | | (369 | ) | (369 | ) | |||||||||||||
Operating profit / (loss) |
272 | 18 | 733 | (1,235 | ) | (212 | ) | |||||||||||||
Finance costs net |
4 | (134 | ) | (1 | ) | (240 | ) | (371 | ) | |||||||||||
Profit / (loss) before income tax |
276 | (116 | ) | 732 | (1,475 | ) | (583 | ) | ||||||||||||
Income tax expense |
(233 | ) | ||||||||||||||||||
Loss for the year |
(816 | ) | ||||||||||||||||||
Depreciation and amortisation |
(188 | ) | (24 | ) | (53 | ) | | (265 | ) | |||||||||||
Segment assets (restated) |
42,700 | 6,866 | 2,345 | | 51,911 | |||||||||||||||
Segment liabilities (restated) |
13,408 | 6,996 | 645 | | 21,049 | |||||||||||||||
Unallocated liabilities: |
||||||||||||||||||||
Convertible loan notes |
| | | 2,990 | 2,990 | |||||||||||||||
Total liabilities |
13,408 | 6,996 | 645 | 2,990 | 24,039 | |||||||||||||||
Capital expenditure: |
||||||||||||||||||||
Property, plant and equipment |
272 | 58 | 102 | | 432 | |||||||||||||||
Intangible assets |
124 | 20 | 9 | | 153 | |||||||||||||||
The loss for the year of £1,303 thousand (2007: Nil) from discontinued operations is attributable
to the Europe segment.
Segmental analysis class of business
Divisional management information is also analysed by class of business, which represents the
nature of the relationship between the group and its client. Commission revenue is derived from
those sales where ownership of the asset remains with the client and the group receives its revenue
as a percentage commission or buyers premium based upon the hammer price. Principal revenue
relates to sales where the group owns the assets sold or guarantees a minimum sale price.
Professional services are valuations and other asset management activities where the group
typically charges an appropriate fee for its services. Class of business is the basis for the
presentation of the secondary segmental analysis.
2008 | ||||||||||||||||
Professional | ||||||||||||||||
In thousands of pounds | Commission | Principal | services | Total | ||||||||||||
Revenue |
22,836 | 8,047 | 6,015 | 36,898 | ||||||||||||
Segment assets |
47,681 | 6,567 | 14,592 | 68,840 | ||||||||||||
Capital expenditure: |
||||||||||||||||
Property, plant and equipment |
240 | 33 | 73 | 346 | ||||||||||||
Intangible assets |
252 | 34 | 76 | 362 | ||||||||||||
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 27 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
2007 | ||||||||||||||||
Professional | ||||||||||||||||
In thousands of pounds | Commission | Principal | services | Total | ||||||||||||
Revenue |
15,126 | 10,341 | 3,638 | 29,105 | ||||||||||||
Segment assets (restated) |
34,283 | 9,567 | 8,061 | 51,911 | ||||||||||||
Capital expenditure: |
||||||||||||||||
Property, plant and equipment |
270 | 88 | 74 | 432 | ||||||||||||
Intangible assets |
96 | 31 | 26 | 153 | ||||||||||||
6. Exceptional items
In thousands of pounds | 2008 | 2007 | ||||||
Reorganisation costs |
3,726 | 369 | ||||||
Impairment of trade receivables |
354 | | ||||||
Impairment of inventory |
822 | | ||||||
Impairment of goodwill |
19,378 | | ||||||
Gain on translation of foreign currency |
(522 | ) | | |||||
23,758 | 369 | |||||||
Reorganisation costs arise from the restructuring of global operations following the acquisition of
DoveBid, Inc. and its subsidiaries. The impairment of trade receivables and inventory is due to a
reduction in the market value of assets following the downturn in global economic activity in the
fourth quarter of 2008.
The basis for the impairment of goodwill is detailed in note 17.
The gain on the translation of foreign currency relates to the appreciation in the value of the
United States Dollar against the Pound Sterling over the period between the initial acquisition of
DoveBid, Inc. and the subsequent adjustment of the consideration amount.
7. Other charges
In thousands of pounds | 2008 | 2007 | ||||||
Equity settled share based payments (note 24) |
241 | 866 | ||||||
Amortisation of customer relationships and brand acquired (note 17) |
547 | | ||||||
788 | 866 | |||||||
8. Operating (loss) / profit
In thousands of pounds | 2008 | 2007 | ||||||
Operating (loss) / profit is stated after charging / (crediting): |
||||||||
Cost of inventories recognised as an expense (included in cost of sales) |
5,662 | 6,429 | ||||||
Depreciation of property plant and equipment |
360 | 240 | ||||||
Amortisation of intangible assets |
672 | 25 | ||||||
Rentals under operating leases |
1,781 | 1,239 | ||||||
Gain on the translation of foreign currencies |
(1,248 | ) | (210 | ) | ||||
Auditor remuneration: |
||||||||
Fees payable to the companys auditor for the audit of parent company
and consolidated financial statements |
75 | 64 | ||||||
Fees payable to the companys auditor and its associates for other services: |
||||||||
The audit of the companys subsidiaries pursuant to legislation |
137 | 105 | ||||||
Tax services |
128 | 61 | ||||||
Other services |
33 | 12 | ||||||
373 | 242 | |||||||
28 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
9. Employee benefit expense
In thousands of pounds | 2008 | 2007 | ||||||
Wages and salaries |
18,295 | 10,979 | ||||||
Social security costs |
1,476 | 1,226 | ||||||
Pension costs defined benefit plan (note 23) |
338 | 172 | ||||||
Pension costs defined contribution plans |
368 | 447 | ||||||
Share options granted to directors and employees (note 24) |
241 | 866 | ||||||
20,718 | 13,690 | |||||||
The number of employees of the group, averaged on a monthly basis over the year is as follows:
2008 | 2007 | |||||||
Number | Number | |||||||
Sales |
115 | 82 | ||||||
Operations |
264 | 176 | ||||||
Central services |
25 | 20 | ||||||
404 | 278 | |||||||
Employee benefit expense is included within administrative expenses.
10. Directors emoluments
The total remuneration of the directors of GoIndustry-DoveBid plc in the year was as follows:
In thousands of pounds | 2008 | 2007 | ||||||
Emoluments |
500 | 513 | ||||||
Employers national insurance contributions |
55 | 56 | ||||||
Share based payments (note 24) |
36 | 768 | ||||||
Pension contributions defined contribution |
33 | 33 | ||||||
624 | 1,370 | |||||||
The emoluments of the highest paid director were £257 thousand (2007: £321 thousand) and company
pension contributions of £25 thousand (2007: £25 thousand) were made to a money purchase scheme on
the directors behalf.
Two (2007: two) directors are accruing benefits under money purchase schemes.
The total remuneration of the key management of GoIndustry-DoveBid plc in the year was as follows:
In thousands of pounds | 2008 | 2007 | ||||||
Short-term employee benefits |
1,588 | 1,009 | ||||||
Post-employment benefits |
79 | 78 | ||||||
Share based payments (note 24) |
99 | 790 | ||||||
1,766 | 1,877 | |||||||
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 29 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
11. Finance income and costs
In thousands of pounds | 2008 | 2007 | ||||||
Finance income: |
||||||||
Interest income on short-term bank deposits |
369 | 405 | ||||||
Finance costs: |
||||||||
Bank borrowings |
(491 | ) | (569 | ) | ||||
Convertible loan notes |
(207 | ) | (207 | ) | ||||
(329 | ) | (371 | ) | |||||
12. Income tax expense
In thousands of pounds | 2008 | 2007 | ||||||
Current tax: |
||||||||
Adjustments to prior year tax charges |
19 | (2 | ) | |||||
Overseas corporation tax on profits in the year |
54 | 235 | ||||||
73 | 233 | |||||||
In thousands of pounds | 2008 | 2007 | ||||||
Loss before income tax |
(28,885 | ) | (583 | ) | ||||
Tax at the UK corporation tax rate of 28% (2007: 30%) |
(8,088 | ) | (175 | ) | ||||
Effect of lower income tax rate of other countries |
(70 | ) | (10 | ) | ||||
Adjustment in respect of current income tax of previous years |
19 | (2 | ) | |||||
Deferred tax not recognised |
(197 | ) | 51 | |||||
Tax losses not utilised |
2,659 | 84 | ||||||
Share based payments expense not deductible |
76 | 166 | ||||||
Expenditure not allowable for income tax purposes |
221 | 119 | ||||||
Goodwill amortisation and impairment |
5,453 | | ||||||
73 | 233 | |||||||
Deferred tax assets arising from cumulative taxable losses of £37,292 thousand (2007: £23,516
thousand) and from other temporary differences of £886 thousand (2007: £1,387 thousand) have not
been recognised as it is not sufficiently foreseeable that they will be recoverable against future
taxable profits.
30 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
13. Discontinued operation
On 26 June 2008 the group decided to dispose of GoIndustry Benelux NV, its subsidiary operation in
Belgium. The business was sold for consideration of 1.
Financial information relating to GoIndustry Benelux NV for the period is set out below. The income
statement and cash flow statement distinguish discontinued operations from continuing operations.
The amounts recognised in the income statement are as set out below:
In thousands of pounds | 2008 | 2007 | ||||||
Revenue |
229 | 409 | ||||||
Expenses |
(335 | ) | (354 | ) | ||||
(Loss) / profit before income tax from discontinued operation |
(106 | ) | 55 | |||||
Tax |
| (55 | ) | |||||
Loss after income tax from discontinued operation |
(106 | ) | | |||||
Loss on disposal of discontinued operation |
(1,197 | ) | | |||||
Loss from discontinued operation |
(1,303 | ) | | |||||
The cash-flows associated with the discontinued operation are not disclosed separately as they are
immaterial.
14. Earnings per share
The calculation of the weighted average number of shares including shares to be issued has been
made having deducted those shares held in trust for the company. Loss per share has been calculated
on a loss of £29,020 thousand (2007: £795 thousand) and as a result there are no dilutive ordinary
shares.
Loss per share from continuing operations:
2008 | 2007 | |||||||
Loss from continuing operations attributable to
equity holders of the company (thousands of pounds) |
(29,020 | ) | (795 | ) | ||||
Weighted average number of ordinary shares in issue (thousands) |
437,834 | 237,994 | ||||||
Basic loss per share (pence per share) |
(6.6p | ) | (0.3p | ) | ||||
Loss per share from continuing and discontinued operations:
2008 | 2007 | |||||||
Loss attributable to equity holders of the company (thousands of pounds) |
(30,323 | ) | (795 | ) | ||||
Weighted average number of ordinary shares in issue (thousands) |
437,834 | 237,994 | ||||||
Basic loss per share (pence per share) |
(6.9p | ) | (0.3p | ) | ||||
Loss per share before exceptional items and other charges:
2008 | 2007 | |||||||
(Loss) / profit after tax before exceptionals and other charges (thousands of pounds) |
(4,412 | ) | 419 | |||||
Weighted average number of ordinary shares in issue (thousands) |
437,834 | 237,994 | ||||||
Adjusted basic (loss) / profit per share (pence per share) |
(1.0p | ) | 0.2p | |||||
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 31 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
15. Acquisition
On 25 February 2008 the company completed its acquisition of 100% of the share capital of DoveBid,
Inc., the groups largest global competitor. The acquisition was funded through a combination of
cash and equity, and details of the goodwill arising are set out in the table below:
In thousands of pounds | ||||
Cash paid |
11,655 | |||
Immediate share consideration (21,660,000 5p ordinary shares) |
2,166 | |||
Deferred share consideration (5,420,000 5p ordinary shares) |
542 | |||
Direct costs relating to the acquisition |
1,148 | |||
Total purchase consideration |
15,511 | |||
Fair value of net liabilities acquired (see below) |
(2,939 | ) | ||
Goodwill |
18,450 | |||
The fair value of the share consideration was determined by the market value on the date of
acquisition.
The goodwill is attributable to the significant cost savings and synergies to the enlarged group
created by the acquisition and integration of DoveBid, Inc. into the group.
The carrying amount and
fair value of the assets and liabilities arising from the acquisition are as follows:
Acquirees | ||||||||
In thousands of pounds | carrying amount | Fair value | ||||||
Cash and cash equivalents |
5,759 | 5,759 | ||||||
Property, plant and equipment |
309 | 309 | ||||||
Brand |
| 768 | ||||||
Customer relationships |
| 2,369 | ||||||
Trade and other receivables |
2,724 | 2,724 | ||||||
Trade and other payables |
(12,515 | ) | (13,814 | ) | ||||
Subordinated loan notes |
(1,054 | ) | (1,054 | ) | ||||
Net identifiable liabilities acquired |
(4,777 | ) | (2,939 | ) | ||||
Outflow of cash to acquire business, net of cash acquired: |
||||||||
Cash consideration |
11,655 | |||||||
Direct costs relating to acquisition |
1,148 | |||||||
Cash and cash equivalents in subsidiary acquired |
(5,759 | ) | ||||||
7,044 | ||||||||
Fair value adjustments have been made to trade and other payables to record liabilities not
recognised in the acquisition balance sheet.
Under IFRS 3, Business combinations, the group is required to disclose the profit or loss of
DoveBid, Inc. included in the consolidated results since the acquisition date, unless disclosure
would be impracticable. The boards strategic plan was always to integrate the operations of
DoveBid, Inc. with those of GoIndustry in order to achieve operational efficiencies. As a result of this integration the required disclosure is impracticable. If the acquisition had
occurred on 1 January 2008, consolidated revenue for 2008 would have been £39.9 million, but it is
impracticable to disclose the consolidated profit or loss.
32 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
16. Property, plant and equipment
Furniture, | ||||||||||||||||
fittings and | ||||||||||||||||
In thousands of pounds | Buildings | Vehicles | equipment | Total | ||||||||||||
Cost: |
||||||||||||||||
At 1 January 2007 |
701 | 355 | 1,595 | 2,651 | ||||||||||||
Exchange differences |
60 | 18 | 37 | 115 | ||||||||||||
Additions |
54 | 114 | 264 | 432 | ||||||||||||
Disposals |
| (55 | ) | (23 | ) | (78 | ) | |||||||||
At 1 January 2008 |
815 | 432 | 1,873 | 3,120 | ||||||||||||
Exchange differences |
269 | 44 | 190 | 503 | ||||||||||||
Additions |
36 | 104 | 206 | 346 | ||||||||||||
Additions through acquisition (note 15) |
52 | 15 | 242 | 309 | ||||||||||||
Disposals |
| (112 | ) | (44 | ) | (156 | ) | |||||||||
At 31 December 2008 |
1,172 | 483 | 2,467 | 4,122 | ||||||||||||
Accumulated depreciation: |
||||||||||||||||
At 1 January 2007: |
238 | 194 | 1,290 | 1,722 | ||||||||||||
Exchange differences |
19 | 9 | 31 | 59 | ||||||||||||
Charge for the year |
33 | 53 | 154 | 240 | ||||||||||||
Disposals |
| (36 | ) | (23 | ) | (59 | ) | |||||||||
At 1 January 2008 |
290 | 220 | 1,452 | 1,962 | ||||||||||||
Exchange differences |
93 | 99 | 239 | 431 | ||||||||||||
Charge for the year |
87 | 47 | 226 | 360 | ||||||||||||
Disposals |
| (27 | ) | (33 | ) | (60 | ) | |||||||||
At 31 December 2008 |
470 | 339 | 1,884 | 2,693 | ||||||||||||
Net book value: |
||||||||||||||||
At 31 December 2008 |
702 | 144 | 583 | 1,429 | ||||||||||||
At 1 January 2008 |
525 | 212 | 421 | 1,158 | ||||||||||||
At 1 January 2007 |
463 | 161 | 305 | 929 | ||||||||||||
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 33 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
17. Intangible assets
Acquired | ||||||||||||||||||||
customer | Acquired | Software | ||||||||||||||||||
relationships | brands | and systems | ||||||||||||||||||
In thousands of pounds | Goodwill | (note 15) | (note 15) | development | Total | |||||||||||||||
Cost: |
||||||||||||||||||||
At 1 January 2007 |
24,900 | | | 1,989 | 26,889 | |||||||||||||||
Exchange differences |
| | | 16 | 16 | |||||||||||||||
Additions |
| | | 153 | 153 | |||||||||||||||
At 1 January 2008 |
24,900 | | | 2,158 | 27,058 | |||||||||||||||
Exchange differences |
8,508 | 877 | 283 | 554 | 10,222 | |||||||||||||||
Additions |
| | | 362 | 362 | |||||||||||||||
Additions through acquisition (note 15) |
18,450 | 2,369 | 768 | | 21,587 | |||||||||||||||
Disposals |
(1,147 | ) | | | | (1,147 | ) | |||||||||||||
At 31 December 2008 |
50,711 | 3,246 | 1,051 | 3,074 | 58,082 | |||||||||||||||
Accumulated amortisation: |
||||||||||||||||||||
At 1 January 2007: |
| | | 1,954 | 1,954 | |||||||||||||||
Charge for the year |
| | | 25 | 25 | |||||||||||||||
Exchange differences |
| | | 13 | 13 | |||||||||||||||
At 1 January 2008 |
| | | 1,992 | 1,992 | |||||||||||||||
Exchange differences |
| | | 290 | 290 | |||||||||||||||
Charge for the year |
| 413 | 134 | 125 | 672 | |||||||||||||||
Impairment of goodwill |
19,378 | | | | 19,378 | |||||||||||||||
At 31 December 2008 |
19,378 | 413 | 134 | 2,407 | 22,332 | |||||||||||||||
Net book value: |
||||||||||||||||||||
At 31 December 2008 |
31,333 | 2,833 | 917 | 667 | 35,750 | |||||||||||||||
At 1 January 2008 |
24,900 | | | 166 | 25,066 | |||||||||||||||
At 1 January 2007 |
24,900 | | | 35 | 24,935 | |||||||||||||||
Acquired intangible assets are being amortised over a period of one to ten years.
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating
units (CGUs) that are expected to benefit from that business combination. Following the acquisition
of DoveBid, Inc. and its integration into the group, both the goodwill acquired during the year and
the previous balance of goodwill arising from the reverse acquisition of GoIndustry AG by
GoIndustry-DoveBid plc in 2006 and the acquisitions by GoIndustry AG of its subsidiaries in 2000-01
were reallocated to the CGUs as follows:
In thousands of pounds | 2008 | 2007 | ||||||
Europe |
8,717 | 9,833 | ||||||
North America |
16,673 | 8,488 | ||||||
Asia |
5,943 | 6,579 | ||||||
31,333 | 24,900 | |||||||
34 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
The group tests annually for impairment or more frequently if there are indications that goodwill
might be impaired. The recoverable amounts of the CGUs are determined from value in use
calculations. Value in use was determined by discounting future cash flows generated from the cash
generating units and was based on the following assumptions:
| Cash flows for 2009 were projected based on the budget for 2009; |
| Cash flows for 2010-11 were extrapolated using conservative revenue growth rates at 5% in 2010 and 7.5% in 2011, and expense growth rates of 3.4% in 2010 and 4.3% in 2011, based on managements view on likely trading and growth; |
| Cash flows beyond 2011 are extrapolated using a long-term growth rate of 2.25%; |
| Central overheads are borne by the CGUs where deemed appropriate by management and allocated based on managements best estimates; |
| Cash flows were discounted using the groups weighted average cost of capital of 10% |
The amortisation and impairment charge for the year is included within administrative expenses.
18. Investment in associate
In thousands of pounds | 2008 | 2007 | ||||||
Investment in ZetaBid associate |
55 | | ||||||
Share of loss for the year of associate |
(27 | ) | | |||||
28 | | |||||||
The investment in associate represents the groups share of the cost of establishing ZetaBid and
the groups share of its losses during the year.
19. Trade and other receivables
In thousands of pounds | 2008 | 2007 | ||||||
Trade receivables after provison for doubtful debts |
3,579 | 5,221 | ||||||
Prepayments and accrued income |
5,580 | 2,962 | ||||||
Other receivables |
1,694 | 1,819 | ||||||
10,853 | 10,002 | |||||||
A provision has been made against all past due receivables that are considered impaired at the
balance sheet date as follows:
In thousands of pounds | 2008 | 2007 | ||||||
Trade receivables |
4,256 | 5,535 | ||||||
Provision for doubtful debts |
(677 | ) | (314 | ) | ||||
3,579 | 5,221 | |||||||
In the year, £363 thousand (2007: £29 thousand utilised) has been provided against doubtful debts.
The fair values of trade and other receivables are not materially different from the carrying
values. The maximum exposure to credit risk at the reporting date is the carrying value of each
class of receivable mentioned above.
The aging of trade receivables at the balance sheet date is as
follows:
In thousands of pounds | 2008 | 2007 | ||||||
Up to three months |
3,301 | 4,699 | ||||||
Three to six months |
225 | 418 | ||||||
Greater than six months |
53 | 104 | ||||||
3,579 | 5,221 | |||||||
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 35 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
The carrying value of the groups trade and other receivables is denominated in the following
currencies:
In thousands of pounds | 2008 | 2007 | ||||||
Pounds sterling |
628 | 1,829 | ||||||
Euros |
1,094 | 1,746 | ||||||
United States dollar |
1,857 | 1,646 | ||||||
3,579 | 5,221 | |||||||
20. Cash and cash equivalents
In thousands of pounds | 2008 | 2007 | ||||||
(restated) | ||||||||
Own cash on hand and at bank |
3,411 | 3,850 | ||||||
Short-term bank deposits |
9,739 | 2,457 | ||||||
Monies held under guarantee |
4,887 | 8,490 | ||||||
18,037 | 14,797 | |||||||
21. Trade and other payables
In thousands of pounds | 2008 | 2007 | ||||||
(restated) | ||||||||
Current |
||||||||
Trade payables |
4,707 | 2,476 | ||||||
Amounts due to clients |
16,179 | 7,819 | ||||||
Social security and other taxes |
1,539 | 1,094 | ||||||
Accrued expenses |
5,378 | 3,049 | ||||||
27,803 | 14,438 | |||||||
In thousands of pounds | 2008 | 2007 | ||||||
Non-current |
||||||||
Social security and other taxes |
704 | | ||||||
Provisions |
390 | | ||||||
1,094 | | |||||||
36 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
22. Borrowings
In thousands of pounds | 2008 | 2007 | ||||||
Current |
||||||||
Bank loans and overdrafts |
6,722 | 3,067 | ||||||
Mortgage secured over property |
| 25 | ||||||
Convertible loan notes |
2,990 | | ||||||
Subordinated loan notes |
258 | | ||||||
9,970 | 3,092 | |||||||
Noncurrent |
||||||||
Convertible loan notes |
| 2,990 | ||||||
Subordinated loan notes |
546 | | ||||||
546 | 2,990 | |||||||
The groups borrowings are split between fixed and floating rate as set out below:
In thousands of pounds | 2008 | 2007 | ||||||
Floating rate: |
||||||||
Expiring within one year |
6,722 | 3,092 | ||||||
Fixed rate: |
||||||||
Expiring within one year |
3,248 | | ||||||
Expiring beyond one year |
546 | 2,990 | ||||||
10,516 | 6,082 | |||||||
The currency profile of the groups borrowings is analysed below:
In thousands of pounds | 2008 | 2007 | ||||||
Pounds sterling |
5,226 | 3,290 | ||||||
Euros |
| 25 | ||||||
United States dollar |
5,290 | 2,767 | ||||||
10,516 | 6,082 | |||||||
The fair value of current and non-current borrowings equals their carrying amount, as the impact of
discounting is not significant. The fair values are based on cash flows discounted using a rate
based on the borrowing rate of 8% (2007: 8%).
Bank loans and overdrafts at 31 December 2008 were held by GoIndustry USA Inc. (£4,442 thousand;
2007: £2,767 thousand), GoIndustry UK Limited (£300 thousand; 2007: £300 thousand), and
GoIndustry-DoveBid plc (£1,980 thousand; 2007: nil). These loans are used to fund principal
transactions and working capital. The GoIndustry USA Inc. loan is secured by a charge over the
assets of that company and a parent company guarantee from GoIndustry-DoveBid plc for up to £2,073
thousand (2007: £1,500 thousand). It bears floating interest at 0.75% above US Prime Rate.
GoIndustry UK Limited and GoIndustry-DoveBid plc facilities bear floating interest at 2.5% above
Base Rate and are secured by a guarantee over the assets of those companies.
The convertible loan notes mature on 9 May 2009 and bear interest at 8% per annum, payable
quarterly in arrears. The notes are convertible at any time into 5p Ordinary shares at a price of
21p per share. The notes may be redeemed by the company at face value from 5 May 2008. As disclosed
in note 30, subsequent to the balance sheet date the convertible loan notes were redeemed and
replaced with £5,000 thousand of new 2011 convertible loan notes.
The subordinated loan notes are held by DoveBid, Inc. and do not bear interest. The loan notes are
unsecured, subordinated to other debt of the group and are repayable in 60 monthly instalments
commencing December 2006.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 37 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
23. Retirement benefit obligations
The group contributes to a number of defined contribution
pension plans for UK and overseas
employees. Costs relating to these arrangements are expensed in full to the profit and loss account
as they occur and are disclosed in note 9.
GoIndustry UK Limited also maintains a defined benefit scheme: the Henry
Butcher Pension and Life Assurance Scheme. This scheme is closed to new members and with effect from 31 December 2004, active members ceased
to accrue benefits on a defined benefit basis and salary linkage was broken to their accrued
rights. A new money purchase section was opened with effect from 1 January 2005 in which existing
defined benefit members and new entrants were invited to join.
The scheme is funded and GoIndustry UK Limited is
currently making a gross annual contribution of £588 thousand (2007: £453 thousand) to reduce the
defined benefit liability and to fund certain administrative expenses of the scheme. The company is currently re-negotiating the level of contributions with the trustees. Contributions
are expected to continue for the next ten years.
The valuations have been based upon the most recent full valuation performed on 26 January 2008 as
updated by the actuaries to reflect the projected scheme liabilities at 31 December 2008. Scheme
assets have been presented at their market value at 31 December 2008.
The defined benefit liability recognised at the end of the year and the income statement charge
for the year are as follows:
In thousands of pounds | 2008 | 2007 | ||||||
Balance sheet obligations for: |
||||||||
Pension benefits |
2,898 | 3,519 | ||||||
Income statement charge for: |
||||||||
Pension benefits (note 9) |
338 | 172 | ||||||
The defined benefit liability is analysed below:
In thousands of pounds | 2008 | 2007 | ||||||
Present value of funded obligations |
11,071 | 12,696 | ||||||
Fair value of plan assets |
(8,173 | ) | (9,177 | ) | ||||
Liability in the balance sheet |
2,898 | 3,519 | ||||||
The present value of scheme liabilities has changed over the year as analysed below:
In thousands of pounds | 2008 | 2007 | ||||||
Beginning of year |
12,696 | 12,147 | ||||||
Current service cost |
17 | 46 | ||||||
Interest cost |
730 | 634 | ||||||
Actuarial (gain) / loss on plan liabilities |
(2,122 | ) | 251 | |||||
Benefits paid |
(250 | ) | (382 | ) | ||||
End of year |
11,071 | 12,696 | ||||||
38 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
Changes in the fair value of scheme assets are as set out below:
In thousands of pounds | 2008 | 2007 | ||||||
Fair value of scheme assets at start of year |
9,177 | 8,573 | ||||||
Expected return on scheme assets |
554 | 508 | ||||||
Employer contributions |
529 | 453 | ||||||
Benefits paid |
(250 | ) | (382 | ) | ||||
Scheme administration costs borne by the group |
(145 | ) | | |||||
Actuarial (loss) / gain on scheme assets |
(1,692 | ) | 25 | |||||
Fair value of scheme assets at end of year |
8,173 | 9,177 | ||||||
The actual return on plan assets in the year was a loss of £1,138 thousand (2007: gain of £533
thousand).
The amounts recognised in the income statement are as follows:
In thousands of pounds | 2008 | 2007 | ||||||
Current service cost |
17 | 46 | ||||||
Interest on obligation |
730 | 634 | ||||||
Expected return on scheme assets |
(554 | ) | (508 | ) | ||||
Scheme administration costs borne by the group |
145 | | ||||||
Total, included in staff costs (note 9) |
338 | 172 | ||||||
The cumulative amount recognised in the statement of recognised income and expense in respect of
actuarial gains is £1,749 thousand (2007 £1,319 thousand).
The major categories of scheme assets and the proportion they represent of total scheme assets are
as set out below:
In thousands of pounds | 2008 | 2008 | 2007 | 2007 | ||||||||||||
Percentage | Percentage | |||||||||||||||
Equity instruments |
3,781 | 46 | % | 5,221 | 57 | % | ||||||||||
Debt instruments |
4,368 | 54 | % | 3,806 | 41 | % | ||||||||||
Other |
24 | 0 | % | 150 | 2 | % | ||||||||||
Pension benefits |
8,173 | 100 | % | 9,177 | 100 | % | ||||||||||
The history of experience gains and losses has been as follows:
In thousands of pounds | 2008 | 2007 | 2006 | 2005 | ||||||||||||
At 31 December |
||||||||||||||||
Present value of defined benefit obligation |
11,071 | 12,696 | 12,147 | 13,098 | ||||||||||||
Fair value of plan assets |
8,173 | 9,177 | 8,573 | 7,756 | ||||||||||||
Deficit |
2,898 | 3,519 | 3,574 | 5,342 | ||||||||||||
Experience adjustments on plan liabilities |
2,122 | (251 | ) | 1,412 | (1,129 | ) | ||||||||||
Experience adjustments on plan assets |
(1,668 | ) | 25 | 151 | 715 | |||||||||||
The principal assumptions used by the actuaries in the preparation of their valuation are set out
below. The assumptions used are selected from a range of possible outcomes and represent the best
estimate at the balance sheet date. Due to the inherent subjectivity of this process the actual
outcome may vary.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 39 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
2008 | 2007 | |||||||
Percentage | Percentage | |||||||
Discount rate |
6.4 | % | 5.8 | % | ||||
Expected return on scheme assets |
7.0 | % | 6.0 | % | ||||
Rate of increase in salaries |
| | ||||||
Price inflation |
2.8 | % | 3.3 | % | ||||
Pension increases: |
||||||||
Pensions accrued before 6 April 1997 |
| | ||||||
Pensions accrued after 6 April 1997 |
2.8 | % | 3.3 | % |
The expected return on scheme assets has been determined based on the weighted average yield on 15
year AA rated corporate bonds and global equities.
The assumptions regarding future mortality experience are set out below:
The average life expectancy in years of a pensioner retiring at age 65, on the balance sheet date
is as follows:
2008 | 2007 | |||||||
Male |
87.9 | 87.7 | ||||||
Female |
90.5 | 90.4 |
The average life expectancy in years of a pensioner retiring at age 65, aged 45 years on the
balance sheet date is as follows:
2008 | 2007 | |||||||
Male |
90.8 | 90.8 | ||||||
Female |
93.4 | 93.4 |
24. Share capital and premium
The movement in issued share capital is set out below:
Number | ||||||||||||
of shares | Ordinary | Share | ||||||||||
In thousands of pounds | Thousands | shares | premium | |||||||||
At 1 January 2007 |
199,133 | 9,957 | 4,962 | |||||||||
Placing of 5p ordinary shares |
||||||||||||
Proceeds from shares issued |
40,000 | 2,000 | 4,800 | |||||||||
Less: cost of placing |
(239 | ) | ||||||||||
Issue of 5p Ordinary shares to satisfy
deferred consideration payable |
25,760 | 1,288 | 44 | |||||||||
Share options exercised |
105 | 5 | 11 | |||||||||
At 1 January 2008 |
264,998 | 13,250 | 9,578 | |||||||||
Issue of share capital to finance the acquisition of DoveBid Inc. |
||||||||||||
Proceeds from shares issued |
185,000 | 9,250 | 9,250 | |||||||||
Less: cost of share issue |
(1,039 | ) | ||||||||||
Shares issued as consideration for the acquisition of DoveBid, Inc. |
21,660 | 1,083 | 1,083 | |||||||||
At 31 December 2008 |
471,658 | 23,583 | 18,872 | |||||||||
40 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
As disclosed in note 30, subsequent to the balance sheet date the company sub-divided its issued
share capital into one new 1p ordinary share and one effectively worthless 4p redeemable deferred
share.
The authorised share capital is set out in the table below.
In thousands of pounds | 2008 | 2007 | ||||||
Authorised ordinary shares of 5p each 700,000 thousand (2007: 330,000 thousand) |
35,000 | 16,500 | ||||||
Deferred share consideration for the acquisition of DoveBid, Inc. is as set out below: |
||||||||
Equity ordinary shares to be issued of 5p each 5,420 thousand note 15 (2007: Nil) |
542 | |
Share based payments
All of the Share based payment arrangements entered into by the group are equity settled.
The weighted average exercise price and number of warrants and share options is set out
below:
Weighted | Warrants | Weighted | Options | |||||||||||||
average | Number of | average | Number of | |||||||||||||
exercise price | shares | exercise price | shares | |||||||||||||
Pence per share | Thousands | Pence per share | Thousands | |||||||||||||
Outstanding at 1 January 2007 |
18p | 4,674 | 31p | 12,454 | ||||||||||||
Granted |
| | 11p | 15,215 | ||||||||||||
Exercised |
| | 15p | (105 | ) | |||||||||||
Lapsed or forfeited |
18p | (4,674 | ) | | | |||||||||||
Outstanding at 1 January 2008 |
| | 22p | 27,564 | ||||||||||||
Granted |
| | 9p | 7,300 | ||||||||||||
Exercised |
| | | | ||||||||||||
Lapsed or forfeited |
| | 22p | (1,670 | ) | |||||||||||
Outstanding at 31 December 2008 |
| | 19p | 33,194 | ||||||||||||
Exercisable at 31 December 2008 |
| | 23p | 23,619 | ||||||||||||
Exercisable at 31 December 2007 |
| | 23p | 24,060 | ||||||||||||
Options outstanding at 31 December 2008 and 31 December 2007 had weighted average remaining
contractual lives as follows:
At 31 December 2008: |
||||
Weighted average remaining contractual life |
6.5 | |||
At 31 December 2007: |
||||
Weighted average remaining contractual life |
6.5 |
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 41 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
Share options in issue at the year end are as follows:
Contractual | Shares | |||||||||||||
Exercise price | Vesting | life | 2008 | 2007 | ||||||||||
Date of grant | Pence | conditions | Years | Thousands | Thousands | |||||||||
05 December 2008 |
5p | 3 yrs of service | 10 | 100 | | |||||||||
13 October 2008 |
6.1p | 3 yrs of service | 10 | 2,000 | | |||||||||
27 June 2008 |
10p | 3 yrs of service | 10 | 2,050 | | |||||||||
22 May 2008 |
10.5p | 3 yrs of service | 10 | 2,650 | | |||||||||
30 January 2008 |
11.8p | 3 yrs of service | 10 | 500 | | |||||||||
19 July 2007 |
5p | | 10 yrs following end of service | 4,476 | 4,476 | |||||||||
19 July 2007 |
5p | | 180 days following end of service | 1,000 | 1,000 | |||||||||
19 July 2007 |
17p | | 10 | 600 | 600 | |||||||||
19 July 2007 |
18p | 3 yrs of service | 10 | 1,000 | 1,000 | |||||||||
19 July 2007 |
18.8p | 3 yrs of service | 10 | 1,275 | 1,675 | |||||||||
04 March 2006 |
12.8p | | 2 yrs following end of service | 132 | 124 | |||||||||
04 March 2006 |
12.8p | | 10 | 3,045 | 3,037 | |||||||||
01 April 2005 |
10p | | 7 | 3,000 | 3,000 | |||||||||
31 December 2004 |
12.8p | | 10 | 2,936 | 2,485 | |||||||||
03 October 2003 |
22.1p | | 5 | | 120 | |||||||||
03 October 2003 |
54.6p | | 10 | | 142 | |||||||||
01 May 2003 |
15p | | 8 | 110 | 110 | |||||||||
31 October 2002 |
27.2p | | 10 | 936 | 1,126 | |||||||||
31 October 2002 |
54.4p | | 10 | 1,602 | 1,767 | |||||||||
19 October 2002 |
44.7p | | 10 | 4,021 | 4,080 | |||||||||
31 December 2001 |
15p | | 9 | 634 | 634 | |||||||||
01 October 2001 |
12.8p | | 10 | | 289 | |||||||||
01 October 2001 |
22.4p | | 10 | 695 | 1,076 | |||||||||
01 September 2001 |
12.8p | | 10 | | 27 | |||||||||
01 September 2001 |
35.4p | | 10 | | 161 | |||||||||
01 February 2001 |
141.6p | | 10 | 260 | 304 | |||||||||
09 October 2000 |
12.8p | | 10 | | 159 | |||||||||
11 July 2000 |
44.1p | | 10 | 172 | 172 | |||||||||
33,194 | 27,564 | |||||||||||||
As permitted by IFRS2 Share based payments no charge has been taken to the income statement for
options vesting prior to 7 November 2002.
42 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
The fair value of services received in return for share options granted are measured by the fair
value of those instruments. For grants in the current and prior years the pricing models used and
inputs into those models were as follows:
2008 | 2007 | ||||
Valuation method | Black-Scholes | Black-Scholes | |||
Share price at the date of grant |
3p 10p | 18p | |||
Expected volatility |
58.3% 38.5% | 38.5% | |||
Expected option life at grant date (years) |
3 | 3 | |||
Risk-free interest rate |
1.02% 4.46% | 5.8% | |||
Weighted average fair value per option at the grant date |
5p | 11p |
The calculation of expected volatility is performed taking into account historical movements in the
market value of 5p ordinary shares in GoIndustry-DoveBid plc.
25. Own shares held in trust
In thousands of pounds | ||||
At 1 January 2007 |
(1,045 | ) | ||
Issue of 5p ordinary shares to satisfy future share based payment obligation |
(66 | ) | ||
Equity settled share based payments |
69 | |||
At 1 January 2008 |
(1,042 | ) | ||
Equity settled share based payments |
68 | |||
At 31 December 2008 |
(974 | ) | ||
6,493 thousand (2007: 6,949 thousand) 5p ordinary shares of GoIndustry plc are held in trust.
26. Other reserves
Foreign | ||||||||||||||||
Acquisition | currency | Share options | ||||||||||||||
In thousands of pounds | reserve | reserve | reserve | Total | ||||||||||||
At 1 January 2007 |
47,649 | (740 | ) | 352 | 47,261 | |||||||||||
Currency translation differences |
| (67 | ) | | (67 | ) | ||||||||||
Share based payments |
| | 797 | 797 | ||||||||||||
At 1 January 2008 |
47,649 | (807 | ) | 1,149 | 47,991 | |||||||||||
Currency translation differences |
| 8,043 | | 8,043 | ||||||||||||
Share based payments |
| | 173 | 173 | ||||||||||||
At 31 December 2008 |
47,649 | 7,236 | 1,322 | 56,207 | ||||||||||||
The acquisition reserve arose on the reverse acquisition of GoIndustry AG by GoIndustry-DoveBid
plc.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 43 |
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
27. Accumulated losses
In thousands of pounds | ||||
At 1 January 2007 |
(40,968 | ) | ||
Actuarial loss on defined benefit pension scheme |
(226 | ) | ||
Loss for the year |
(795 | ) | ||
At 31 December 2007 |
(41,989 | ) | ||
Actuarial gain on defined benefit pension scheme |
430 | |||
Loss for the year |
(30,323 | ) | ||
At 31 December 2008 |
(71,882 | ) | ||
28. Operating lease arrangements
The minimum lease payments under non-cancellable operating lease rentals are in aggregate as
follows:
Land and | ||||||||||||||||
In thousands of pounds | buildings | Vehicles | Other | Total | ||||||||||||
Amounts falling due: |
||||||||||||||||
Within one year |
383 | 117 | 203 | 703 | ||||||||||||
More than one but less than five years |
1,713 | 435 | 271 | 2,419 | ||||||||||||
More than five years |
1,618 | | 364 | 1,982 | ||||||||||||
As at 31 December 2008 |
3,714 | 552 | 838 | 5,104 | ||||||||||||
Land and | ||||||||||||||||
In thousands of pounds | buildings | Vehicles | Other | Total | ||||||||||||
Amounts falling due: |
||||||||||||||||
Within one year |
342 | 33 | 14 | 389 | ||||||||||||
More than one but less than five years |
430 | 162 | | 592 | ||||||||||||
More than five years |
304 | | | 304 | ||||||||||||
As at 31 December 2007 |
1,076 | 195 | 14 | 1,285 | ||||||||||||
Operating lease rentals represent rentals payable by the group for certain of its
office properties, motor vehicles and office equipment.
44 GoIndustry-DoveBid plc annual report and accounts 2008 | www.go-dove.com |
29. Significant investments
The table below sets out the significant members of the GoIndustry-DoveBid group. DoveBid, Inc.,
GoIndustry AG and
GoIndustry Nordic AB are direct subsidiaries of GoIndustry-DoveBid plc while the remaining
companies are direct or indirect subsidiaries of GoIndustry AG or DoveBid, Inc. All of the
companies listed below are included in the consolidated accounts.
Country of | Proportion of | Proportion of | ||||||||||
Company name | incorporation | ownership | voting control | Principal activity | ||||||||
AssetTRADE.com, Inc. |
USA | 100 | % | 100 | % | Holding company | ||||||
GoIndustry Operations, Inc. |
USA | 100 | % | 100 | % | Holding company | ||||||
GoIndustry AG |
Germany | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry Operations Limited |
UK | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid (Thailand) Limited |
Thailand | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid (Asia) Limited |
Hong Kong | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid (Hong Kong) Limited |
Hong Kong | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid (Malaysia) Sdn. Bhd. |
Malaysia | 70 | % | 70 | % | Asset sales and services | ||||||
GoIndustry-DoveBid Philippines, Inc. |
Philippines | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry Quippo Valuers &
Auctioneers Pvt. Ltd. |
India | 50 | % | 50 | % | Asset sales and services | ||||||
GoIndustry-DoveBid Korea Co. Ltd. |
South Korea | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid (Australia) Pty. Ltd. |
Australia | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry NV |
Belgium | 100 | % | 100 | % | Holding company | ||||||
GoIndustry (Austria) GmbH |
Austria | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry Deutschland GmbH |
Germany | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry USA, Inc. |
USA | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry (Canada) Limited |
Canada | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry (UK) Limited |
UK | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry Trading Limited |
UK | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-Dovebid (Nordic) Ab |
Sweden | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Trading France Sarl |
France | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Germany GmbH |
Germany | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Netherlands BV |
Netherlands | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Ireland Limited |
Ireland | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid UK Limited |
UK | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid, Inc. |
USA | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Valuation Consultants, Inc. |
USA | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid (S) Pte. Ltd. |
Singapore | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid (Shangahi) Co. Ltd. |
China | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid Japan KK |
Japan | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Asia Pacific Sdn. Bhd. |
Malaysia | 100 | % | 100 | % | Asset sales and services | ||||||
GoIndustry-DoveBid Valuation
(Thailand) Ltd. |
Thailand | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Hong Kong Ltd. |
Hong Kong | 100 | % | 100 | % | Asset sales and services | ||||||
DoveBid Australasia Pty. Ltd. |
Australia | 100 | % | 100 | % | Asset sales and services |
30. Events after the balance sheet date
On 2 January 2009, the shareholders approved a capital reorganisation whereby each existing 5p
ordinary share was sub-divided into one new ordinary share of 1p and one effectively worthless
redeemable deferred share of 4p. Each unissued share of 5p was sub-divided into 5 new ordinary
shares of 1p. The new ordinary shares retain all the rights attached to the existing ordinary
shares in respect of dividends and votes and will rank ahead of the redeemable deferred shares on a
winding up, such that the redeemable deferred shares will only rank for repayment of their nominal
value once all sums due on the ordinary shares have been paid and £1 million (plus the amount paid
up thereon) has been paid in respect of each ordinary share.
During January 2009, the company issued new 2011 convertible loan notes with a principal amount of
£5,000 thousand, generating £4,805 thousand of net proceeds and redeemed the 2009 convertible loan
notes of £2,990 thousand. The 2011 convertible loan notes bear interest at 12% per annum and are
repayable on 31 December 2011. The company may redeem the 2011 convertible loan notes at par at any
time after 31 December 2010 or prior to that date subject to certain premium payments being made.
The 2011 convertible loan notes may be converted into 1p ordinary shares of the company at any time
at a conversion price of 3.62p per share.
www.go-dove.com | GoIndustry-DoveBid plc annual report and accounts 2008 45 |
Company balance sheet
As at 31 December 2008
In thousands of pounds | Note | 2008 | 2007 | |||||||||
(restated) | ||||||||||||
Non-current assets |
||||||||||||
Intangible assets |
3 | 5 | 8 | |||||||||
Investments in subsidiaries |
4 | 31,651 | 30,731 | |||||||||
Investment in associate |
5 | 68 | | |||||||||
Trade and other receivables |
6 | 15,986 | 8,363 | |||||||||
47,710 | 39,102 | |||||||||||
Current assets |
||||||||||||
Trade and other receivables |
6 | 30 | 66 | |||||||||
Cash and cash equivalents |
7 | 4,353 | 4,526 | |||||||||
4,383 | 4,592 | |||||||||||
Total assets |
52,093 | 43,694 | ||||||||||
Current liabilities |
||||||||||||
Trade and other payables |
8 | 552 | 488 | |||||||||
Borrowings |
9 | 1,980 | | |||||||||
Convertible loan notes |
9 | 2,990 | | |||||||||
5,522 | 488 | |||||||||||
Non-current liabilities |
||||||||||||
Convertible loan notes |
9 | | 2,990 | |||||||||
| 2,990 | |||||||||||
Total liabilities |
5,522 | 3,478 | ||||||||||
Net assets |
46,571 | 40,216 | ||||||||||
Capital and reserves attributable to equity holders of the company |
||||||||||||
Called-up equity share capital |
10 | 23,583 | 13,250 | |||||||||
Share premium |
10 | 18,872 | 9,578 | |||||||||
Shares to be issued |
10 | 542 | | |||||||||
Own shares held in trust |
11 | (974 | ) | (1,042 | ) | |||||||
Other reserves |
12 | 19,946 | 19,568 | |||||||||
Accumulated losses |
13 | (15,398 | ) | (1,138 | ) | |||||||
Total equity |
46,571 | 40,216 | ||||||||||
The notes on pages 48 to 53 are an integral part of these company financial statements.
The financial statements were approved by the board of directors and authorised for issue on 25
June 2009. They were signed on its behalf by:
Neville Davis | David Horne | |
Non-executive Chairman
|
Chief Financial Officer |
46 GoIndustry-DoveBid plc annual report and account 2008 | www.go-dove.com |
Company cash flow statement
For the year ended 31 December 2008
In thousands of pounds | 2008 | 2007 | ||||||
Cash flows from operating activities |
||||||||
Loss before income tax |
(14,260 | ) | (633 | ) | ||||
Adjustments for: |
||||||||
Share based payments |
125 | 784 | ||||||
Net interest expense |
(323 | ) | 3 | |||||
Amortisation |
3 | | ||||||
Impairment of investments |
14,912 | | ||||||
Changes in working capital: |
||||||||
(Increase) in trade and other receivables |
(7,587 | ) | (3,465 | ) | ||||
Increase in trade and other payables |
64 | 505 | ||||||
Operating cash flows before interest and taxes |
(7,066 | ) | (2,806 | ) | ||||
Interest paid |
(267 | ) | (261 | ) | ||||
Interest received |
590 | 258 | ||||||
Net cash used in operating activities |
(6,743 | ) | (2,809 | ) | ||||
Cash flows from investing activities |
||||||||
Investment in subsidiary undertakings |
(12,803 | ) | (612 | ) | ||||
Investment in associate |
(68 | ) | | |||||
Purchases of intangible assets |
| (8 | ) | |||||
Net cash used in investing activities |
(12,871 | ) | (620 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds on issue of shares |
17,461 | 6,577 | ||||||
Increase in bank loans and overdrafts |
1,980 | | ||||||
Net cash from financing activities |
19,441 | 6,577 | ||||||
Net (decrease)/increase in cash and cash equivalents |
(173 | ) | 3,148 | |||||
Cash and cash equivalents at beginning of year |
4,526 | 1,378 | ||||||
Cash and cash equivalents at end of year |
4,353 | 4,526 | ||||||
The notes on pages 48 to 53 are an integral part of these company financial statements.
www.go-dove.com | GoIndustry-DoveBid plc annual report and account 2008 47 |
Notes to the company financial statements
For the year ended 31 December 2008
1. Summary of significant accounting policies
Basis of preparation
The company only financial statements contain the accounts of GoIndustry-DoveBid plc (formerly
GoIndustry plc).
The company has elected to prepare its financial statements in accordance with
International Financial Reporting Standards (IFRS) adopted for use in the EU as at 31 December
2008 (adopted IFRS). The financial statements are presented under the historical cost
convention.
The comparative financial information for the year ended 31 December 2007 was restated to reflect
the long-term nature of intercompany balances receivable and to recognise own shares held in trust.
The accounting policies applied by the GoIndustry-DoveBid group are described in detail in note 2
to the consolidated accounts. The more important company accounting policies are summarised below.
Loss for the year
The company has taken advantage of section 230 of the Companies Act 1985 and consequently has not
presented a profit and loss account for the company alone. The company made a loss of £14,260
thousand in the year (2007: £633 thousand loss). There was no other recognised income or expense
in the year (2007: nil).
Intangible assets
Computer software and systems development
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful lives
(two to three years).
Investments
Investments in subsidiaries are recorded at cost less any provision for impairment losses.
Investments in associates are all entities over which the group has significant influence but not
control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are included in the company financial statements at cost.
Trade payables
Trade payables are recognised at fair value.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction from the proceeds.
Where any group company purchases the companys equity share
capital (treasury shares), the consideration paid, including any directly attributable incremental
costs is deducted from equity attributable to the companys equity holders until the shares are
cancelled or reissued.
2. Financial risk management
The companys activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. Financial risk management is
coordinated at group level and seeks to minimise potential adverse effects on the groups
financial performance.
Market risk
(a) | Foreign exchange risk | |
The companys exposure to foreign exchange risk is limited as it does not engage in trading activity. The company does enter into transactions with overseas group undertakings, but these are denominated predominantly in sterling. Where balances with group undertakings denominated in foreign currency do exist these are long-standing and therefore changes in foreign exchange rates do not have any impact on cash-flows. | ||
(b) | Interest rate risk | |
The borrowings of the company carry interest at Base Rate plus 2.5%. The convertible loan notes are at a fixed interest rate of 8% and therefore the company is not subject to interest rate risk on these. |
48 GoIndustry-DoveBid plc annual report and account 2008 | www.go-dove.com |
Credit risk
Credit risk arises from the risk that a counterparty defaults on its liability in relation to
financial assets of the company that they are holding. The company is subject to credit risk on its
bank deposits. Bank deposits are held only by institutions rated as investment grade by an
independent rating agency; credit exposure is further reduced by limiting the proportion of net
deposits that can be held by a single institution.
Liquidity risk
Liquidity risk is primarily managed through the maintenance of adequate liquid resources,
principally in the form of bank deposits.
The table below sets out the maturity profile of the companys financial assets and liabilities:
2008 | ||||||||||||||||||||||||||||
Effective | Recognised | Contractual | Total | |||||||||||||||||||||||||
interest | asset/ | interest | Contractual | 6 months | 6-12 | 1-5 | ||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | or less | months | years | |||||||||||||||||||||
Amounts due from subsidiary undertakings |
| 15,986 | | 15,986 | 15,986 | | | |||||||||||||||||||||
Bank deposits |
6 | % | 4,353 | | 4,353 | 3,662 | | 691 | ||||||||||||||||||||
Trade payables |
| (100 | ) | | (100 | ) | (100 | ) | | | ||||||||||||||||||
Amounts payable to subsidiary undertakings |
| (220 | ) | | (220 | ) | (220 | ) | | | ||||||||||||||||||
Accrued expenses |
| (207 | ) | | (207 | ) | (207 | ) | | | ||||||||||||||||||
Borrowings |
4 | % | (1,980 | ) | | (1,980 | ) | (1,980 | ) | | | |||||||||||||||||
Convertible loan notes |
8 | % | (2,990 | ) | (60 | ) | (3,050 | ) | (3,050 | ) | | | ||||||||||||||||
14,842 | (60 | ) | 14,782 | 14,091 | | 691 |
2007 | ||||||||||||||||||||||||||||
Effective | Recognised | Contractual | Total | |||||||||||||||||||||||||
interest | asset/ | interest | Contractual | 6 months | 6-12 | 1-5 | ||||||||||||||||||||||
In thousands of pounds | rate | (liability) | payable | cash flow | or less | months | years | |||||||||||||||||||||
Amounts due from subsidiary undertakings |
| 8,363 | | 8,363 | 8,363 | | | |||||||||||||||||||||
Bank deposits |
5 | % | 4,526 | | 4,526 | 4,022 | | 504 | ||||||||||||||||||||
Trade payables |
| (9 | ) | | (9 | ) | (9 | ) | | | ||||||||||||||||||
Amounts payable to subsidiary undertakings |
| (258 | ) | | (258 | ) | (258 | ) | | | ||||||||||||||||||
Accrued expenses |
| (203 | ) | | (203 | ) | (203 | ) | | | ||||||||||||||||||
Convertible loan notes |
8 | % | (2,990 | ) | (319 | ) | (3,309 | ) | (120 | ) | (120 | ) | (3,069 | ) | ||||||||||||||
9,429 | (319 | ) | 9,110 | 11,795 | (120 | ) | (2,565 | ) |
www.go-dove.com | GoIndustry-DoveBid plc annual report and account 2008 49 |
Notes to the company financial statements continued
For the year ended 31 December 2008
3. Intangible assets
Software and | ||||
systems | ||||
In thousands of pounds | development | |||
Cost: |
||||
At 1 January 2007 |
| |||
Additions |
10 | |||
At 1 January 2008 |
10 | |||
Additions |
| |||
At 31 December 2008 |
10 | |||
Accumulated depreciation: |
||||
At 1 January 2007 |
| |||
Charge for the year |
2 | |||
At 1 January 2008 |
2 | |||
Charge for the year |
3 | |||
At 31 December 2008 |
5 | |||
Net book value: |
||||
At 31 December 2008 |
5 | |||
At 1 January 2008 |
8 | |||
At 1 January 2007 |
| |||
4. Investments in subsidiaries
In thousands of pounds | ||||
At 1 January 2007 |
27,835 | |||
Capital contribution to subsidiary company |
612 | |||
Capitalisation of loan to subsidiary company |
2,284 | |||
At 1 January 2008 |
30,731 | |||
Acquisition of DoveBid, Inc. |
15,511 | |||
Impairment of investments |
(14,912 | ) | ||
Capital contribution to subsidiary undertaking |
321 | |||
At 31 December 2008 |
31,651 | |||
Further details of the investments held by the company are contained in note 29 to the consolidated
accounts.
5. Investment in associate
In thousands of pounds | 2008 | 2007 | ||||||
Investment in ZetaBid associate |
68 | |
50 GoIndustry-DoveBid plc annual report and account 2008 | www.go-dove.com |
6. Trade and other receivables
Non-current | ||||||||
In thousands of pounds | 2008 | 2007 | ||||||
(restated) | ||||||||
Amounts due from subsidiary undertakings |
15,986 | 8,363 |
Current | ||||||||
In thousands of pounds | 2008 | 2007 | ||||||
Prepayments |
30 | 66 |
Amounts due from subsidiary undertakings are denominated in pounds sterling and are aged greater
than three months.
7. Cash and cash equivalents
In thousands of pounds | 2008 | 2007 | ||||||
Own cash on hand and at bank |
| 2,263 | ||||||
Short-term bank deposits |
4,353 | 2,263 | ||||||
4,353 | 4,526 | |||||||
8. Trade and other payables
In thousands of pounds | 2008 | 2007 | ||||||
Trade payables |
100 | 9 | ||||||
Amounts payable to subsidiary undertakings |
220 | 258 | ||||||
Social security and other taxes |
25 | 18 | ||||||
Accrued expenses |
207 | 203 | ||||||
552 | 488 | |||||||
9. Borrowings
In thousands of pounds | 2008 | 2007 | ||||||
Current |
||||||||
Bank loans and overdrafts |
1,980 | | ||||||
Convertible loan notes |
2,990 | | ||||||
4,970 | | |||||||
Non-current |
||||||||
Convertible loan notes |
| 2,990 | ||||||
The bank loans and overdrafts are denominated in sterling, bear floating interest at 2.5% above
Base Rate and are secured by a guarantee over the assets of the company.
The convertible loan notes are denominated in sterling, mature on 9 May 2009 and bear interest at
8% per annum, payable quarterly in arrears. The notes are convertible at any time into 5p Ordinary
shares at a price of 21p per share.
As disclosed in note 30 of the consolidated financial statements, subsequent to the balance sheet
date the convertible loan notes were redeemed and replaced with £5,000 thousand of new 2011 convertible loan
notes.
Certain bank loans and overdrafts of GoIndustry USA Inc. are secured by a guarantee provided by the
company as detailed in note 22 to the consolidated financial statements.
www.go-dove.com | GoIndustry-DoveBid plc annual report and account 2008 51 |
Notes to the company financial statements continued
For the year ended 31 December 2008
10. Share capital and premium
The movement in issued share capital is set out below:
Number of | ||||||||||||
shares | Ordinary | Share | ||||||||||
In thousands of pounds | Thousands | shares | premium | |||||||||
At 1 January 2007 |
199,133 | 9,957 | 4,962 | |||||||||
Placing of 5p ordinary shares |
||||||||||||
Proceeds from shares issued |
40,000 | 2,000 | 4,800 | |||||||||
Less: cost of placing |
(239 | ) | ||||||||||
Issue of 5p Ordinary shares to satisfy deferred consideration payable |
25,760 | 1,288 | 44 | |||||||||
Share options exercised |
105 | 5 | 11 | |||||||||
At 1 January 2008 |
264,998 | 13,250 | 9,578 | |||||||||
Issue of share capital to finance the acquisition of DoveBid Inc. |
||||||||||||
Proceeds from shares issued |
185,000 | 9,250 | 9,250 | |||||||||
Less: cost of share issue |
(1,039 | ) | ||||||||||
Shares issued as consideration for the acquisition of DoveBid, Inc. |
21,660 | 1,083 | 1,083 | |||||||||
At 31 December 2008 |
471,658 | 23,583 | 18,872 | |||||||||
The authorised share capital is set out in the table below.
In thousands of pounds | 2008 | 2007 | ||||||
Authorised ordinary shares of 5p each 700,000 thousand (2007: 330,000 thousand) |
35,000 | 16,500 | ||||||
Deferred share consideration for the acquisition of DoveBid, Inc. is as set out below: |
||||||||
Equity ordinary shares to be issued of 5p each 5,420 thousand (2007: Nil) |
542 | | ||||||
As disclosed in note 15 to the consolidated financial statements, subsequent to the balance sheet
date the company sub-divided its issued share capital into one new 1p ordinary share and one
effectively worthless 4p redeemable deferred share.
Details of share based payments are contained in note 24 to the consolidated financial statements.
11. Own shares held in trust
In thousands of pounds | ||||
At 1 January 2007 (restated) |
(1,045 | ) | ||
Issue of 5p ordinary shares to satisfy future share based payment obligation |
(66 | ) | ||
Equity settled share based payments |
69 | |||
At 1 January 2008 |
(1,042 | ) | ||
Equity settled share based payments |
68 | |||
At 31 December 2008 |
(974 | ) | ||
6,493 thousand (2007: 6,949 thousand) 5p ordinary shares of GoIndustry plc are held in trust.
52 GoIndustry-DoveBid plc annual report and account 2008 | www.go-dove.com |
12. Other reserves
Acquisition | Share options | |||||||||||
In thousands of pounds | reserve | reserve | Total | |||||||||
At 1 January 2007 (restated) |
18,624 | 160 | 18,784 | |||||||||
Share based payments |
| 784 | 784 | |||||||||
At 31 December 2007 |
18,624 | 944 | 19,568 | |||||||||
Share based payments |
| 57 | 57 | |||||||||
Capital contribution to subsidiary undertaking |
| 321 | 321 | |||||||||
At 31 December 2008 |
18,624 | 1,322 | 19,946 | |||||||||
13. Accumulated losses
In thousands of pounds | ||||
At 1 January 2007 |
(505 | ) | ||
Loss for the year |
(633 | ) | ||
At 1 January 2008 |
(1,138 | ) | ||
Loss for the year |
(14,260 | ) | ||
At 31 December 2008 |
(15,398 | ) | ||
14. Related party transactions
During the year the company has entered into transactions with subsidiary companies of the
GoIndustry-DoveBid group of £7,660 thousand (2006: £805 thousand). Balances with these companies at
31 December 2008 and 2007 are detailed in notes 6 and 8.
Transactions with key management are detailed in note 10 to the consolidated accounts.
15. Events after the balance sheet date
On 2 January 2009, the shareholders approved a capital reorganisation whereby each existing 5p
ordinary share was sub-divided into one new ordinary share of 1p and one effectively worthless
redeemable deferred share of 4p. Each unissued share of 5p was sub-divided into 5 new ordinary
shares of 1p. The new ordinary shares retain all the rights attached to the existing ordinary
shares in respect of dividends and votes and will rank ahead of the redeemable deferred shares on a
winding up, such that the redeemable deferred shares will only rank for repayment of their nominal
value once all sums due on the ordinary shares have been paid and £1 million (plus the amount paid
up thereon) has been paid in respect of each ordinary share.
During January 2009, the company issued new 2011 convertible loan notes with a principal amount of
£5,000 thousand, generating £4,805 thousand of net proceeds and redeemed the 2009 convertible loan
notes of £2,990 thousand. The 2011 convertible loan notes bear interest at 12% per annum and are
repayable on 31 December 2011. The company may redeem the 2011 convertible loan notes at par at any
time after 31 December 2010 or prior to that date subject to certain premium payments being made.
The 2011 convertible loan notes may be converted into 1p ordinary shares of the company at any time
at a conversion price of 3.62p per share.
www.go-dove.com | GoIndustry-DoveBid plc annual report and account 2008 53 |