Company Registration No. 03663783 (England and Wales) GETMAPPING PLC ANNUAL REPORT AND FINANCIAL STATEMENTS
COMPANY INFORMATION Directors D E Horner (Managing) M D Tocher (Operations) M J Murphy (International Operations) J L A Cary (Non-executive) Secretary M D Tocher Company number 03663783 Registered office Auditors Virginia Villas High Street Hartley Wintney Hampshire RG27 8NW Moore Stephens (Guildford) LLP Priory House Pilgrims Court Sydenham Road Guildford Surrey GU1 3RX
CONTENTS Page Managing Director s statement 1 Group Strategic report 2 Group Directors' report 3-4 Independent auditors report 5-6 Consolidated income statement 7 Consolidated statement of comprehensive income 8 Group statement of financial position 9 Company statement of financial position 10 Group statement of changes in equity 11 Company statement of changes in equity 12 Consolidated statement of cash flows 13 Notes to the financial statements 14-35
MANAGING DIRECTOR S STATEMENT 2016 saw a 7% growth in Group turnover, despite a 12% drop in revenues from African operations. The slow down in Africa was primarily due to the cessation of all project work in Angola (due to the low oil price) and a moratorium on project work from Eskom in South Africa. The issues we encountered embedding our new production system in 2015 have been overcome during 2016, and this allowed us to have a stronger second half of the year and to return to profitability for 2016 as a whole. Year-end cash fell 25%, primarily due to investment in a second survey aircraft for Africa and a third camera system for the Group. These were purchased with cash as financing options in South Africa are currently expensive. However, these are long term investments which will drive stronger profitability for 2017 and beyond. Financial Results The financial highlights (with variances compared with 2015) were: Turnover up 7% to 6.42 million (2015-6,01million); Turnover in Africa down 12% to 1,38 million (2015-1,66 million) Gross profit up 6% to 3.62 million (2015-3.40million); Profit for the year 0.01 million (2015 - Loss 0.38 million); Year-end cash down 25% to 0.47 million (2015-0.62 million). Re-Structuring As set out in our letter to shareholders in November 2016, we have restructured the business and separated our Solutions Division into a new joint venture company GeoXphere headed up by our former Chairman (Tristram Cary) and our former Solutions Manager (Chris Mewse). GeoXphere's vision is to provide revolutionary mediumformat survey hardware and cloud-based mapping software to partners, allowing them to improve the efficiency of data capture and availability of geospatial data for bespoke project work. The new venture, in partnership with leading US medium format camera manufacturers WaldoAir, is expected to exploit a clear gap in the market between the traditional Getmapping large area survey work and the small project work of UAVs and drones. John Leighfield retired as a non-executive Director in January 2017, and the Finance Director, Paul Taylor-Toms, also left the business in February. We have appointed an interim FD and we are in the process of recruiting a permanent Finance Director and a new Chairman, and expect to have both in place over the summer. Outlook Our order book for Europe and Africa for 2017 is strong and our production system is now fully operational. In addition, we continue to develop a new range of survey services in Europe and Africa and grow our geographical reach in Southern Africa to mitigate the risks to our traditional core UK photography work. We expect this strategy to deliver both continued revenue growth and stronger profitability for the Group going forward. Despite the slowdown in 2016, we expect Africa to return to growth in 2017 as the oil and commodity prices have recovered somewhat in the last six months and Eskom is expected to restart survey work shortly. However, our strategy for the region ensures we also mitigate these risks by operating over a larger geographic area. David Horner Managing Director 2 June 2017-1 -
GROUP STRATEGIC REPORT The directors present the strategic report and financial statements for the year ended 31 December 2016. Fair review of the business Overall the Group s turnover increased 7% in 2016 from the previous year and has returned to profitability. The Group continues to manage its underlying costs whilst maintaining operational efficiency and it is noted that a significant cost continues to be the depreciation charge approximating to one third of total overhead costs in both 2016 and 2015. The Group continues to benefit from the ability to offset brought forward losses for tax purposes resulting in no reduction in the reported profit as a consequence of taxation. At the end of 2016 net assets are 2.96 million compared to 3.07 million at the end of 2015. The directors continue to focus on revenue growth, controlling costs and balance sheet management to ensure the financial base of the group remains strong for shareholders. The long term aim of the group is to continue to grow revenues and profits through retaining and increasing the efficiency of its existing operations, developing new lines of business and by expanding internationally. The main challenges are most evident in the domestic UK market with the anticipated changes in the competitive environment. The board recognise that in order to grow, the Group needs to be able to compete in terms of markets, products and services and this will require ongoing investment in the infrastructure to facilitate long term growth and financial sustainability. Risks and uncertainties In addition to the operating risks identified in the Managing Director s Statement, the board are active in managing the financial risks consequent on the business activities. The principal financial risks are those of credit risk, foreign currency risk and interest rate risk. The group uses financial instruments as appropriate to facilitate the group s ordinary trade activities, namely cash, trade payables and receivables. The group does not use financial derivatives in its management of these risks. Details of the use of financial instruments by the group are set out in the notes to the financial statements. Going concern The directors have a reasonable expectation that the company has adequate resources to continue operations for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Further details are given in the notes to the financial statements. On behalf of the board on 2 June 2017... D Horner Director - 2 -
GROUP DIRECTORS' REPORT The directors present their report together with the audited financial statements for the year ended 31 December 2016. Principal activities, trading review and future developments The principal activity of the group is the production and sale of aerial photography and related data. The directors' report should be read in conjunction with the Managing Director s Statement and the Strategic Review, which together, summarise the group's operations during the year, the key performance indicators, the principal risks to the business, and future plans.. Capitalisation policy Development costs relating to flying, photography, geo-correction, processing and delivery systems are capitalised as tangible fixed assets. All other development costs have been written off to the income statement. Employee Involvement The directors are well aware of the importance of good employee relations and the contribution the staff make to the group. The policy is to attract and retain good quality staff so that the group remains at the forefront of technical development in the acquisition of photographic data and its delivery on line. Members of staff are kept aware of the Board s plans and are encouraged to put forward ideas for improving the business. Directors The directors who held office during the year and up to the date of signature of the financial statements were as follows: Ordinary shares of 0.3p each T C L Cary (Resigned 2 December 2016) 4,080,533 4,080,533 D E Horner 1,800,000 1,800,000 M D Tocher 1,800,000 1,800,000 M J Murphy 1,625,000 1,625,000 J L A Cary 309,955 309,955 J P Leighfield (Resigned 27 January 2017) - - P D Taylor-Toms (Resigned 28 February 2017) 2,778 2,778 Share Options at 31 December Directors Scheme Exercise Period Exercise Price (p) J P Leighfield Approved - 50,000 10/02/09 09/02/16 6.50 D E Horner Approved - 500,000 12/02/11 11/02/16 10.00 D E Horner Approved 200,000 200,000 21/01/15 20/01/25 6.00 M D Tocher Approved 200,000 200,000 21/01/15 20/01/25 6.00 M J Murphy Approved 200,000 200,000 21/01/15 20/01/25 6.00 P D Taylor-Toms Approved 75,000 75,000 31/03/11 30/03/21 3.00 P D Taylor-Toms Approved 200,000 200,000 21/01/15 20/01/25 6.00 Results The results for the year are set out on page 7. No ordinary dividends were paid. The directors do not recommend payment of a final dividend. - 3 -
GROUP DIRECTORS' REPORT Share premium account Further to the authority granted by the shareholders at the 2016 Annual General Meeting, the Company applied for and duly received in December 2016 the approval of the High Court to the cancellation of the amount standing on the profit and loss account against the share premium account of the Company. This is reflected in the accompanying financial statements. Statement of Directors Responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group s and the parent company s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company s website. Auditors The auditors, Moore Stephens (Guildford) LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006. Statement of disclosure to auditors So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company s auditors are unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company s auditors are aware of that information. By order of the board... M D Tocher Secretary 2 June 2017-4 -
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF GETMAPPING PLC We have audited the financial statements of Getmapping plc for the year ended 31 December 2016 set out on pages 7 to 35. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102. This report is made solely to the company s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2016 and of its group s profit for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Managing Director s Statement, Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements. - 5 -
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF GETMAPPING PLC 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. Christopher Goodwin (Senior Statutory Auditor) for and on behalf of Moore Stephens (Guildford) LLP 5 June 2017 Chartered Accountants Statutory Auditor Priory House Pilgrims Court Sydenham Road Guildford Surrey GU1 3RX - 6 -
CONSOLIDATED INCOME STATEMENT Notes 000 000 Revenue Continuing operations 3 6,423 6,012 Cost of sales (2,804) (2,608) Gross profit 3,619 3,404 Administrative expenses (3,584) (3,747) Operating profit/(loss) 5 Continuing operations 35 (343) Income from interests in joint ventures 8 7 Interest receivable 4 4 Finance costs 9 (33) (47) Profit/(Loss) before taxation 14 (379) Taxation 10 - (1) Profit/(Loss) for the financial year 14 (380) Profit/(loss) in the financial year attributable to Non-controlling interests (14) - Owners of Parent Company 28 (380) 14 (380) Earnings per share - basic 11 0.08p (1.09)p Earnings per share - diluted 11 0.08p (1.02)p The consolidated income statement has been prepared on the basis that all operations are continuing operations. The notes on pages 14 to 35 form part of these consolidated financial statements. - 7 -
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 000 000 Profit/(loss) for the year 14 (380) Other comprehensive expenditure Currency translation differences arising on consolidation of overseas entities (132) - Other comprehensive expenditure for the year (132) - Total comprehensive expenditure for the year (118) (380) Total comprehensive expenditure for the year attributable to: Non-controlling interests (14) - Owners of Parent Company (112) (380) (118) (380) Note of historical cost profit and loss 000 000 Reported profit/(loss) on ordinary activities before taxation 14 (380) Historical cost profit/(loss) before taxation and historical cost profit/(loss) retained 14 (380) The notes on pages 14 to 35 form part of these consolidated financial statements. - 8 -
GROUP STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 Notes '000 '000 '000 '000 Fixed assets Intangibles 14 1,762 1,859 Property, plant and equipment 12 1,214 1,372 Investments 15 61 1 3,037 3,232 Current assets Inventories 18 166 142 Trade and other receivables 19 824 688 Cash at bank and in hand 467 619 1,457 1,449 Current liabilities 20 (1,400) (1,350) Net current assets 57 99 Total assets less current liabilities 3,094 3,331 Non-current liabilities 21 (139) (258) Net assets 2,955 3,073 Equity Called up share capital 25 104 104 Share premium 26-12,595 Consolidated reserves 26 3,005 (9,626) Equity attributable to members of the parent 3,109 3,073 Non-controlling interests 26 (154) - Total Equity 2,955 3,073 The financial statements were approved by the board of directors and authorised for issue on 2 June 2017 and are signed on its behalf by:... D E Horner Managing Director The notes on pages 14 to 35 form part of these consolidated financial statements. - 9 -
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 Notes 000 000 000 000 Fixed assets Intangibles 14 1,669 1,755 Property, plant and equipment 13 1,185 1,232 Investments 15 177 117 3,031 3,104 Current assets Inventories 18 166 142 Trade and other receivables 19 1,021 831 Cash at bank and in hand 454 610 1,641 1,583 Current liabilities 20 (1,290) (1,276) Net current assets 351 307 Total assets less current liabilities 3,382 3,411 Non-current liabilities 21 (105) (199) Net assets 3,277 3,212 Equity Called up share capital 25 104 104 Share premium 26-12,595 Retained earnings 26 3,173 (9,487) Total equity 3,277 3,212 The financial statements were approved by the board of directors and authorised for issue on 2 June 2017 and are signed on its behalf by:... D E Horner Managing Director Company Registration No. 03663783 The notes on pages 14 to 35 form part of these consolidated financial statements. - 10 -
GROUP STATEMENT OF CHANGES IN EQUITY Called up Share Consolidated Total share capital premium reserves 000 000 000 000 Balance at 1 January 2015 104 12,595 (9,246) 3,453 Year ended 31 December 2015: Loss for the year - - (380) (380) Total comprehensive expenditure for the year - - (380) (380) Balance at 31 December 2015 104 12,595 (9,626) 3,073 Year ended 31 December 2016: Profit for the year - - 14 14 Currency translation differences arising on consolidation of overseas entities - - (132) (132) Transfers between reserves - (12,595) 12,595 - Transfer to non-controlling interests - - 154 154 Balance at 31 December 2016 104-3,005 3,109 The notes on pages 14 to 35 form part of these consolidated financial statements. - 11 -
COMPANY STATEMENT OF CHANGES IN EQUITY Called up Share Retained Total share capital premium earnings 000 000 000 000 Balance at 1 January 2015 104 12,595 (9,213) 3,486 Year ended 31 December 2015: Loss for the year - - (274) (274) Total comprehensive expenditure for the year - - (274) (274) Balance at 31 December 2015 104 12,595 (9,487) 3,212 Year ended 31 December 2016: Profit for the year - - 65 65 Transfers between reserves - (12,595) 12,595 - Balance at 31 December 2016 104-3,173 3,277 The notes on pages 14 to 35 form part of these consolidated financial statements. - 12 -
CONSOLIDATED STATEMENT OF CASH FLOWS Notes 000 000 000 000 Cash flows from operating activities Cash generated from operations 29 1,004 690 Finance lease interest paid 9 (33) (47) Net cash inflow from operating activities 971 643 Income received from joint ventures 8 7 Investing activities Purchase of intangible assets 14 (403) - Purchase of property, plant and equipment 13 (523) (799) Investment in joint ventures (60) - Interest received 4 4 Net cash used in investing activities (982) (795) Financing activities Capital element of finance leases repaid (149) (237) Loan repayments - (63) Net cash used in financing activities (149) (300) Net decrease in cash and cash equivalents (152) (445) Cash and cash equivalents at beginning of year 619 1,064 Cash and cash equivalents at end of year 467 619 The notes on pages 14 to 35 form part of these consolidated financial statements. - 13 -
NOTES TO THE FINANCIAL STATEMENTS 1 Accounting policies Company information Getmapping plc ( the Company ) is a public limited company domiciled and incorporated in England and Wales. The registered office is Virginia Villas, High Street, Hartley Wintney, Hampshire, RG27 8NW. 1.1 Accounting convention These financial statements have been prepared in accordance with FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the requirements of the Companies Act 2006. The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest 1,000. The financial statements have been prepared on the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below. 1.2 Going concern The directors have reviewed the forecasts and future revenue streams and considered the management of associated costs for the foreseeable future. In undertaking this review, specific regard has been given to factors affecting income and expenditure in the light of the current economic climate. The group s revenue streams are dependent upon continued access to data owned by third parties and the ability to increase the geographical coverage of the mapping data. The directors have also recognised the costs associated with the commitment to invest in the data asset and have considered the risks associated therewith. Detailed forecasts have been prepared including an assessment of the funding required to meet the forecasts. Having completed their review, the directors continue to adopt the going concern basis in preparing the consolidated financial statements. These consolidated financial statements do not reflect any adjustments to the figures which would be necessary if the forecast performance is not achieved. 1.3 Revenue Revenue represents sales to outside customers at invoiced amounts less value added tax. Revenue is recognised as the group earns the right to consideration, which is generally on delivery. Where contracts are entered into for the provision by other data owners of aerial photography over a period, income is recognised as the group earns its entitlement to commission. 1.4 Property, plant and equipment Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases: Plant, machinery and equipment Fixtures and fittings 3-7 years on a straight line basis 3 years on a straight line basis The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement, subject to an appropriate adjustment for revalued amounts. - 14 -
1 Accounting policies (Continued) 1.5 Intangible fixed assets goodwill Goodwill represents the excess of the fair value of the consideration given over the fair value of the net assets acquired for a business combination. The group assesses the useful economic life of goodwill arising on consolidation of group entities and amortises amounts relating to each transaction over periods where the benefits are expected to be realised. The maximum useful economic life is ten years. 1.6 Intangible fixed assets amortisation policy Costs relating to flying, photography, geo-correction, processing and delivery systems are capitalised as intangible fixed assets. Website development costs have been capitalised as intangible fixed assets where they relate to an enduring asset, and are expected to generate future revenues in excess of costs of developing the website. Website planning and maintenance costs are charged to the profit and loss account when they are incurred. Intangible fixed assets are amortised at rates calculated to write off the cost of the assets over their estimated useful economic lives, as below. Impairment of intangible assets is reviewed where circumstances indicate that the carrying value of an asset may not be fully recoverable. Aerial photography / digital imaging Website 10 years on a straight line or 25% reducing balance 10 years on straight line basis 1.7 Non current investments Investments in subsidiaries are carried at cost and adjusted where there is a perceived permanent diminution in value. An entity is treated as a joint venture where the group holds a long term interest and shares control under a contractual agreement. The company s joint venture vehicles are limited liability partnerships (LLP). The group is entitled to share in the profits from the LLP. The investment in each LLP is adjusted where the group s share of the net assets is reported below cost. A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. 1.8 Impairment of non-current assets At each reporting end date, the group reviews the carrying amounts of its fixed assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. - 15 -
1 Accounting policies (Continued) 1.8 Impairment of non-current assets (continued) Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried in at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 1.9 Inventories Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials, direct labour costs and those overheads that have been incurred in the processing of data ready for sale. At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price is recognised as an impairment loss in the income statement. Reversals of impairment losses are also recognised in the income statement. 1.10 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities. 1.11 Financial instruments The group has elected to apply the provisions of Section 11 Basic Financial Instruments and Section 12 Other Financial Instruments Issues of FRS 102 to all of its financial instruments. Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Basic financial assets Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Other financial assets Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in the income statement, except that investments in equity instruments that are not publically traded and whose fair values cannot be measured reliably are measured at cost less impairment. - 16 -
1 Accounting policies (Continued) Impairment of financial assets Financial assets, other than those held at fair value are assessed for indicators of impairment at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairment loss is recognised in the income statement. Derecognition of financial assets Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. Classification of financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Basic financial liabilities Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. Derecognition of financial liabilities Financial liabilities are derecognised when, and only when, the obligation specified in the contract is discharged, cancelled, or expires. 1.12 Equity instruments Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group. 1.13 Taxation The tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date. - 17 -
1 Accounting policies (Continued) Deferred tax Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority. 1.14 Employee benefits The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets. The cost of any unused holiday entitlement is recognised in the period in which the employee s services are received. Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits. 1.15 Retirement benefits The group operates a defined contribution pension scheme available to all staff legally entitled to be in the scheme. Contributions payable in the year to the defined contribution pension scheme are charged to operating profit in the group's income statement. 1.16 Leases Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. Where the group enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated in accordance with the above depreciation policy. Future instalments under such leases, net of finance charges, are included with creditors. Rentals payable are apportioned between the finance element, which is charged to the profit and loss account to produce a constant rate of charge on the balance of capital repayments outstanding, and the capital element which reduces the outstanding obligation for future instalments. 1.17 Share based payments When share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. - 18 -
1 Accounting policies (Continued) 1.18 Foreign exchange Foreign currency transactions are translated at the rate ruling when they occurred. Monetary assets and liabilities denominated in foreign currencies are translated at the year end rates, the exchange differences arising being taken to the profit and loss account. This includes the translation of amounts reported by group entities where originally denominated in foreign currencies, subject to application of the specific accounting provisions. 2 Judgements and key sources of estimation uncertainty In the application of the group s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. Data asset valuation The value of the data asset is assessed annually for impairment. Historic trends in the revenue generated by the data assets is considered in assessing the carrying value of the data asset and the amortisation thereof. 3 Revenue All the turnover, profit and net assets are derived from aerial photography and digital imaging sales to external parties. Turnover identified as South Africa originates from the group s activities in that continent. No analysis of profit or net assets by origin is provided on the basis that this information is not considered to be significant. Revenue analysed by geographical market 000 000 UK 4,690 4,316 South Africa 1,333 1,578 Rest of World 400 118 6,423 6,012 4 Holding company results As permitted by s408 Companies Act 2006, the Company has not presented its own income statement and related notes. The Company s profit for the year was 65,000 (2015 - Loss 274,000). - 19 -
5 Operating (loss)/profit Operating profit/ (loss) for the year is stated after charging/(crediting): 000 000 Depreciation of owned property, plant and equipment 490 345 Depreciation of assets held under finance leases 191 222 Depreciation of intangible assets 500 536 Operating lease charges 115 121 (Profit)/loss on foreign exchange (62) 41 6 Auditors' remuneration Fees payable to the company's auditors and its associates: 000 000 For audit services Audit of the company's financial statements 24 23 For other services All other non-audit services 5 5 7 Employees The average monthly number of persons (including executive directors) employed by the group during the year was: Number Number Technical 5 6 Sales and administration 19 22 South Africa production 54 55 78 83 Employees aggregate remuneration comprised: 000 000 Wages and salaries 1,646 1,842 Social security costs 94 103 Pension costs 103 130 1,843 2,075-20 -
8 Directors' remuneration 000 000 Remuneration for qualifying services 285 292 Group pension contributions to defined contribution schemes 44 71 329 363 The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2015-5). Included within fees is 2,500 (2015-2,500) paid to third parties to make available the services of directors. Details of directors' share options are set out on page 3. During the year none of the directors exercised share options. Remuneration disclosed above includes the following amounts paid to the respective highest paid director in that year: Remuneration for qualifying services 67 66 Group pension contributions to defined contribution schemes 16 16 9 Finance costs 000 000 Interest on financial liabilities measured at amortised cost: Interest on finance leases and hire purchase contracts 33 47-21 -
10 Taxation The tax charge for the year is made up as follows: 000 000 Charge on the profit/(loss) for the year - - Under-provision for the previous year - 1-1 The factors affecting the tax charge for the year are explained below: 000 000 Profit/(loss) before taxation 14 (380) Expected tax charge based on a corporation tax rate of 20% (2015-20%) 3 (76) Tax effect of net expenses that are not deductible for taxation purposes 26 27 Tax effect of (utilisation)/increase of tax losses (54) 30 Depreciation in excess of/(less than) capital allowances 25 20 Tax expense for the year - 1 Deferred tax The group has tax losses of approximately 7.3m (2015-7.4m) available for offset against future taxable profits. As the recoverability of the amount in the foreseeable future is uncertain, the potential deferred tax asset has not been recognised. 11 Earnings per share The basic earnings per share has been calculated using the consolidated profit for the period divided by the weighted average number of shares in issue during the year, before taking account of shares under option, of 34,641,945 (2015-34,641,945). The diluted earnings per share has been calculated using the weighted average number of shares in issue during the year, after taking account of shares under option. The weighted average was 36,394,404 (2015-37,165,781), based upon shares in issue of 34,641,945 (2015-34,641,945) plus shares under option of 1,752,459 (2015-2,523,836). - 22 -
12 Property, plant and equipment Group Plant, Fixtures and Total Machinery Fittings and equipment 000 000 000 Cost or valuation At 1 January 2016 3,277 38 3,315 Additions 523-523 Disposals - - - At 31 December 2016 3,800 38 3,838 Depreciation and impairment At 1 January 2016 1,910 33 1,943 Depreciation charged in the 679 2 681 year Eliminated in respect of disposals - - - At 31 December 2016 2,589 35 2,624 Carrying amount At 31 December 2016 1,211 3 1,214 At 31 December 2015 1,367 5 1,372 The net book value of, and depreciation charge for the year, on tangible fixed assets held under finance leases was as follows. Net book Value 000 000 Plant, Machinery & Equipment 501 614 Depreciation 000 000 Plant, Machinery & Equipment 191 222-23 -
13 Property, plant and equipment Company Cost or valuation Plant, Fixtures and Total Machinery Fittings and equipment 000 000 000 At 1 January 2016 3,038 38 3,076 Additions 523-523 Disposals - - - At 31 December 2016 3,561 38 3,659 Depreciation and impairment At 1 January 2016 1,811 33 1,844 Depreciation charged in the year 568 2 570 Eliminated in respect of disposals - - - At 31 December 2016 2,379 35 2,414 Carrying amount At 31 December 2016 1,182 3 1,185 At 31 December 2015 1,227 5 1,232-24 -
14 Intangible fixed assets Group Cost or valuation Aerial Photography / digital imaging Website Domesday Book processing costs Goodwill Total 000 000 000 000 000 At 1 January 2016 11,388 587 454 124 12,553 Additions 403 - - - 403 At 31 December 2016 11,791 587 454 124 12,956 Amortisation and impairment At 1 January 2016 9,633 587 454 20 10,694 Amortisation charged in the year 488 - - 12 500 At 31 December 2016 10,121 587 454 32 11,194 Carrying amount At 31 December 2016 1,670 - - 92 1,762 At 31 December 2015 1,755 - - 104 1,859 Company Cost or valuation Aerial Photography / digital imaging Website Domesday Book processing costs Total 000 000 000 000 At 1 January 2016 11,388 587 454 12,429 Additions 403 - - 403 At 31 December 2016 11,791 587 454 12,832 Amortisation and impairment At 1 January 2016 9,633 587 454 10,674 Amortisation charged in the year 489 - - 489 At 31 December 2016 10,122 587 454 11,163 Carrying amount At 31 December 2016 1,669 - - 1,669 At 31 December 2015 1,755 - - 1,755-25 -
15 Fixed asset investments Company Group Company Group Investments Loans 2016 2015 000 000 000 000 000 000 Cost At 1 January 2016 517 84 601 485 601 485 Additions 60-60 60 - - Transfers - - - - - - At 31 December 2016 577 84 661 545 601 485 Provisions At 1 January 2016 400 84 484 484 484 484 Provisions - - - - - - At 31 December 2016 400 84 484 484 484 484 Net Book Value 177-177 61 117 1 Group Company Notes 000 000 000 000 Investments in subsidiaries and associated entities 28 61 1 177 117 16 Movements in non-current investments During September 2016, the company gained an initial 47 per cent interest in GeoXphere LLP, requiring an initial capital contribution of 60,000. The licenses of certain products have also been made available to the joint venture. - 26 -
17 Financial instruments Financial instruments are used that are necessary to facilitate the group s ordinary trade activities, namely cash, trade payables and receivables; the resultant risks are credit risk, foreign currency risk and interest rate risk. The group does not use financial derivatives in its management of these risks. Group Company '000 '000 '000 '000 Carrying amount of financial assets Debt instruments measured at amortised cost 955 940 968 993 Equity instruments measured at cost less impairment 61 1 177 117 1,016 941 1,145 1,110 Carrying amount of financial liabilities Measured at amortised cost 836 923 723 810 Credit risk The group s policy in respect of credit risk is to require appropriate credit checks on potential customers before sales are made. At the balance sheet date the group had the following trade receivables: Group Company 000 000 000 000 Carrying amount of financial assets Trade receivables 488 321 581 383 Foreign currencies There are a small number of routine trading contracts with customers and suppliers in US dollars, South African rand and euros. Payments and receipts are made through bank accounts denominated in the currency of the contract: therefore balances held in any foreign currency are to facilitate day to day transactions. The group mitigates exposure to movements in exchange rates by transferring funds into the sterling accounts on a timely basis. - 27 -
17 Financial instruments (Continued) Financial assets With a functional currency of sterling, there are the following currency net assets: Group Company 000 000 000 000 Currency: US dollars: Trade receivables - - - - Cash and cash equivalents 1-1 - 1-1 - Currency: Euros: Group Company 000 000 000 000 Trade receivables - 7-7 Cash and cash equivalents 24 1 24 1 24 8 24 8 Group Company 000 000 000 000 Currency: South African rand: Trade receivables 212 174 304 236 Cash and cash equivalents 144 43 131 33 356 217 435 269 Interest rates Cash balances are held in short-term deposit accounts, repayable on demand: these attract interest rates which fluctuate in relation to movements in bank base rate. This maintains liquidity and does not commit the group to long-term deposits at fixed rates of interest. Financial Assets: Cash and cash equivalents Group Company 000 000 000 000 Sterling 298 575 299 576 US Dollars 1 - - - Euros 24 1 24 1 South African rand 144 43 131 33 467 619 454 610-28 -
17 Financial instruments (Continued) Financial liabilities With a functional currency of sterling, there are the following currency net liabilities: Group Company 000 000 000 000 Carrying amount of financial liabilities Currency: South African rand: Trade Payables 218 119 185 111 Currency: US Dollars: Trade Payables 1 24 1 24 Currency: Euros: Trade Payables 143-143 - 362 143 329 135 18 Inventories Group Company 000 000 000 000 Finished goods and goods for resale 166 142 166 142 19 Trade and other receivables Group Company Amounts falling due within one year: 000 000 000 000 Trade receivables 488 321 581 383 Other receivables 17 46 121 128 Prepayments and accrued income 319 321 319 320 824 688 1,021 831-29 -
20 Current liabilities Group Company 000 000 000 000 Trade payables 450 395 417 387 Obligations under finance lease contracts 207 237 195 224 Other taxation and social security 156 126 144 125 Borrowings 33 33 - - Other payables 7 22 6 22 Accruals and deferred income 547 537 528 518 1,400 1,350 1,290 1,276 The obligations under finance lease contracts are secured on the assets which they finance. All amounts fall due for payment within 5 years. 21 Non current liabilities Group Company 000 000 000 000 Obligations under finance lease contracts 105 209 105 199 Borrowings 34 49 - - 139 258 105 199 The obligations under finance lease contracts are secured on the assets which they finance. All amounts fall due for payment within 5 years Borrowings for the group totalling 67,000 (2015: 82,000) represents a loan made to a group company which is secured through a cross-company guarantee. The loan is subject to interest at a rate of 1.5% below the prime rate of Nedbank Limited subject to a maximum rate of 10%. 22 Maturity of debt Group Company 000 000 000 000 Due within one year, or on demand 274 270 195 224 274 270 195 224 Due in more than one year, but not more than two years Due in more than two years, but not more than five years 68 205 68 162 37 53 37 37 105 258 105 199-30 -