themutual.net PLC
30 June 2003
THEMUTUAL.NET PLC
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2003
Chairman's Report
Results for the year ended 30 April 2003
I joined the Board on 26 September 2002 and was appointed Chairman with effect
from 1 December 2002. I am pleased to say that Vince Smith remains on the Board.
I am delighted to announce your Company's first full year of profitable trading.
This is a great achievement as very few pure internet companies born in the
'dotcom' period have made the transition to profitability.
The Group has maintained the growth in revenue and profitability reported at the
time of the interim results to 31 October 2002. The financial highlights are set
out below and demonstrate how far the company has progressed in the last few
years.
Profit and loss account Year ended Year ended Year ended
30/4/03 30/4/02 30/4/01
£ £ £
Turnover 1,372,000 821,000 476,000
Gross profit 1,305,000 716,000 476,000
Net profit/(loss) 558,000 (28,000) (1,221,000)
Balance Sheet 30/4/03 30/4/02 30/4/01
£ £ £
Cash at bank 720,000 199,000 299,000
Net current assets 734,000 303,000 333,000
Shareholders' funds 1,091,000 534,000 562,000
Revenues, profitability, net current assets, cash at bank and shareholders'
funds are all showing excellent growth and provide a strong base to continue the
development of the company and to take advantage of opportunities that may
arise.
What is particularly appealing but not evident from the figures is the
improvement in quality of the revenue from the first half to the second half
year. During the second half a much higher proportion of the revenue was derived
from repeat business.
The Chairman's report has previously highlighted a number of factors giving the
Board confidence on the prospects for the company. I update these below:
• It was recently reported that online advertising reached a record high in
2002. The total spend figure also revealed that the online market share
increased to 1.4% of total media spend - up from 1.2% in 2001. In Q4 of 2002
online market share reached 1.7%. These figures are rising against a
downward trend in the majority of other media channels. It was also reported
that the industry is on target to take a larger share of the overall
marketing budgets as marketers' attitudes to the medium are beginning to
change, it is also very much the traditional brands who are fuelling the
growth in online advertising spend.
• Email marketing is firmly established as part of the marketing mix,
allowing advertisers to contact individuals with a personalised message
targeted on their demographic profile and interests at a significant cost
advantage to direct mail. themutual.net holds, and continues to collect,
significant profile data and this is being utilised to better target
campaigns resulting in increased response rates leading to higher revenues,
and lower unsubscribe rates.
• Strong growth in our membership base with 433,000 subscribers at the year
end. (2002 - 214,000). We are continuing with our primary member acquisition
model of targeting key words through Search Engine advertising and have
recently outsourced this function to an Indian company who have demonstrated
a high level of expertise in this field, increasing the overall number of
clicks while reducing the overall cost per acquisition.
• Use of technology and the Internet, continues to allow us to enjoy
substantial member and revenue growth without a corresponding increase in
staff numbers or costs.
• Our low cost base continues to give us a significant competitive
advantage.
• We have decided to delay our ambitions to replicate themutual.net model
overseas as we feel that the UK market still has significant opportunities
and will produce better returns at this time.
• Trading for the start of the current year is in line with our forecasts.
At our AGM you will be asked to vote on a proposal to allow your Company to buy
back up to 10% of its shares as and when the Board deem it in the best interests
of members. I would ask you to support this proposed resolution.
I would like to thank all the staff for their continuing dedication and hard
work during the period, all of who have contributed to our success.
This remains a very exciting time for your company; we are generating profits
and cash and are confident for the future. We are committed to developing
themutual.net into a mature leader in email marketing, through our strategy for
growth in members, revenue and profitability.
Warren Tayler
Chairman
Group Profit and Loss Account
Year ended 30 April 2003
2003 2002
£ £
GROUP TURNOVER 1,372,641 821,291
Cost of sales 67,508 104,857
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GROSS PROFIT 1,305,133 716,434
Administrative expenses 757,782 749,718
---------- ----------
OPERATING PROFIT/(LOSS) 547,351 (33,284)
Interest receivable 11,306 7,116
Interest payable (707) (2,071)
----------- ---------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 557,950 (28,239)
Tax on profit/(loss) on ordinary activities - -
---------- ----------
RETAINED PROFIT/(LOSS) FOR THE FINANCIAL YEAR 557,950 (28,239)
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Earnings per share (pence) 0.015075 (0.00076)
======= ======
Diluted earnings per share (pence) 0.014160 (0.00076)
===== ======
Group Balance Sheet
30 April 2003
2003 2002
£ £ £ £
FIXED ASSETS
Intangible assets 343,895 205,035
Tangible assets 13,983 26,125
-------- ----------
357,878 231,160
CURRENT ASSETS
Debtors 243,707 357,356
Cash at bank 720,040 199,107
----------- ----------
963,747 556,463
CREDITORS: Amounts falling due within one 229,853 253,934
year
------------ -----------
NET CURRENT ASSETS 733,894 302,529
---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,091,772 533,689
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CAPITAL AND RESERVES
Called-up share capital 103,816 103,683
Share premium account 2,275,517 2,275,517
Other reserves 120,374 120,374
Profit and loss account (1,407,935) (1,965,885)
--------------- --------------
SHAREHOLDERS' FUNDS (including non-equity 1,091,772 533,689
interests)
======== =======
Group Cash Flow
Year ended 30 April 2003
2003 2002
£ £ £ £
NET CASH INFLOW/(OUTFLOW) FROM OPERATING 777,283 (2,604)
ACTIVITIES
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 11,306 7,116
Interest paid - (31)
Interest element of finance leases (707) (2,040)
---------- ----------
NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND 10,599 5,045
SERVICING OF FINANCE
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire intangible fixed assets (249,923) (84,825)
Payments to acquire tangible fixed assets (9,991) (9,396)
------------- ----------------
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND (259,914) (94,221)
FINANCIAL INVESTMENT
------------ --------------
CASH INFLOW/(OUTFLOW) BEFORE FINANCING 527,968 (91,780)
FINANCING
Issue of equity share capital 133 -
Capital element of finance leases (7,168) (8,460)
---------- -----------
NET CASH OUTFLOW FROM FINANCING (7,035) (8,460)
---------- ----------
INCREASE/(DECREASE) IN CASH 520,933 (100,240)
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RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH
INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
2003 2002
£ £
Operating profit/(loss) 547,351 (33,284)
Amortisation 111,063 53,618
Depreciation 22,133 41,580
Loss on disposal of fixed assets - 3,116
Decrease/(increase) in debtors 113,649 (100,108)
(Decrease)/increase in creditors (16,913) 32,474
---------- -----------
Net cash inflow/(outflow) from operating activities 777,283 (2,604)
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RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2003 2002
£ £ £ £
Increase/(decrease) in cash in the period 520,933 (100,240)
Cash outflow in respect of finance leases 7,168 8,460
Cash used to decrease liquid resources - (280,000)
------- ----------
528,101 (371,780)
----------- -----------
Change in net funds 528,101 (371,780)
Net funds at 1 May 2002 191,939 283,719
--------- ------------
Net funds at 30 April 2003 720,040 191,939
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ANALYSIS OF CHANGES IN NET FUNDS
At 1 May 2002 Cash flows At 30 April 2003
£ £ £
Net cash:
Cash in hand and at bank 199,107 520,933 720,040
----------- ------------- -----------
Debt:
Finance lease agreements (7,168) 7,168 -
--------- ----------- ------------
Net funds 191,939 528,101 720,040
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The company news service from the London Stock Exchange
