Stockcube Plc
Preliminary results for the year to 31 December, 2002
2002 2001
�000 �000
Turnover 2,045 2,135
(Loss)/ Profit before tax & exceptional item (218) 91
(Loss) /Profit before tax after exceptional item (2,013) 91
(Loss) /Profit after tax (2,015) 30
(Loss) /Earnings per share (2.10)p 0.03p
Turnover down by 4.2%.
Loss of �218,000 before tax and exceptional items after charging website
development expenditure of �125,000 and goodwill amortisation of �26,000.
Exceptional write-off - �1,795,000 of purchased goodwill and other intangible assets
Robust client retention by all elements of business
Chartcraft breaks into profit in last quarter of year
Successful acquisition and integration of Sapphyr Technology into Ecube
Strong balance sheet with available cash of �3.8m after purchase of Sapphyr
Julian Burney, Chief Executive Officer, said:
"This has been the toughest year in the financial markets since we established Stockcube Research over 12 years ago
with the second half being particularly trying. We are, therefore, tremendously re-assured by the maintenance of
turnover near last year's record for the group and by the level of retention of our client base in both our
consultancies for the institutional market and our published wider market services. Our dedication to Chartcraft over
the last two years has at last borne fruit as the business has now broken into profit following a number of cost saving
measures and completion of our move onto on-line distribution.
As anticipated we incurred additional costs on the acquisition of Sapphyr's business but we are pleased to report that
our greatly enhanced technology expertise, concentrated in Ecube Limited, has already won its first contracts to build
and sell third party web facilities.
"Stockcube remains in very good health and well-positioned to fulfill and benefit from investors' increasing need for
clear, independent investment research and advice in what may turn out to be an extended period of flat or drifting
markets"
For further information:
Stockcube Julian Burney 020-7352-4001
Numis Simon Law 020-7776-1500
STOCKCUBE PLC - REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 2002
CHAIRMAN'S STATEMENT
Introduction
Stockcube plc continued to establish itself amongst the largest dedicated technical investment research companies in
the world during the most difficult year for financial services for a decade.
Against a background of declining investor confidence and market sentiment we, along with many other businesses,
reassessed the carrying value of our purchased goodwill and other intangibles. We concluded that the capacity of these
assets to generate a return to support their carrying value was so uncertain that the most prudent course for us was to
write them down by an exceptional charge of �1,795,000 and thereby give absolute clarity to our balance sheet moving
forward.
Financial review
Turnover for the year ended 31 December 2002 was �2,045,000, a slight decrease on last year's record of �2,135,000. We
accept the loss now of �218,000 before tax and exceptional items (2002: profit of �91,000) as the price of continuing
our investment in the quality and future reach of our services and product offerings. Exceptional write offs for the
year amounted to �1,795,000. Post-tax losses were �2,015,000 (2001: profit of �30,000) making a loss of 2.10p per 1p
ordinary share compared to a profit of 0.03p per share in 2001.
Our balance sheet remains strong with available cash reserves of �3,768,000 at the year-end (2001: �4,120,000).
Operations
The market and sector analysis consultancy, which we provide to over 100 institutional investor clients through
www.efmtech.com, continues to be the mainstay of our business. Income has held up remarkably well, down just 2% on 2001
which was a record year, in the face of extremely difficult conditions experienced by the big investment houses and
brokers.
Without doubt, recent criticisms about lack of integrity in certain in-house analysis functions and general concerns
about the potential for conflict of interest have given us a considerable boost. Independence of thought and opinion
are among our greatest assets, as is the quality and timeliness of our analysis.
We have now started our first venture with a major investment bank to run our analysis with their internal fundamental
research as a tool for benchmarking that research and providing more precision to market timing.
Our analysts continue to appear regularly on Bloomberg TV and CNBC's PowerLunch, Squawkbox and European Market Wrap
helping viewers to understand markets and publicising the Stockcube service and brand.
We report continuing progress by Chartcraft Inc which broke into profit on an on-going basis for the first time in the
last quarter of the year. We have made careful cost savings and have now simplified our production into four main
services: Chartcraft on-line for stocks, charts and related data, US Market Timing Service for market and sector
timing, C2F2 for commodities and currencies - all under the Investors Intelligence brand accessible through
www.chartcraft.com - and hardcopy chart books.
Chartcraft has been proposed as one of three recommended providers of independent research and analysis by A G Edwards
& Sons Inc, one of the USA's leading stockbrokers for private and business clients. We have re-engineered the
Chartcraft web platform and introduced greatly improved services at the end of March. We are now able to use our
proprietary software, developed by the former Sapphyr team, to extend Chartcraft's stock, sector and market timing
methodologies to European and global stocks.
During the year we entered joint venture arrangements with IG Index for the provision of a mini-website, hosting
commodities and financial instrument analysis from C2F2, and with Cantor Fitzgerald and Man Financial for the provision
of daily CFDs (contracts for differences) and pairs trading.
Fullermoney, our monthly global strategy newsletter, continues to thrive in hard copy as well as by electronic format
at www.fullermoney.com. David Fuller's daily website and audio presentation have been very well received and have
rapidly built up an enthusiatic audience from around the globe. Our bi-annual Chart Seminars in London were well
attended.
Staff
I should like to thank our staff for their dedication during the year and I am pleased to welcome the technology and
marketing expertise brought by the Sapphyr Technology team who have added considerable skills to our business.
Capital reconstruction
We are asking shareholders to approve a reduction of capital to eliminate the negative impact of the goodwill write off
on the company. This will be achieved by a reduction of part of the share premium account. As you will see from the
Notice of Extraordinary General Meeting in the circular dispatched with this document, we intend to seek your approval
for a reduction of �340,050 in the Company's share premium account to assist the directors in declaring dividends when
appropriate. At the same time we intend to approve similar arrangements for Stockcube Research in the sum of �290,646.
Outlook
We have made a very encouraging start to 2003 and the group is trading profitably. We have been publishing some
excellent market calls and generating very profitable trading ideas for our institutional consultancy clients,
supporting further our confidence in our methodologies and our analytical skills.
We are confident that the quality and independence of our work is increasingly valued by institutional investors and
our wider market audience, particularly in times when markets are perhaps driven more by changes in sentiment and
confidence rather than underlying economic realities.
Edward Forbes,
Chairman,
London
7th[DEL:[:DEL] April, 2003
Consolidated Profit and Loss Account
for the year ended 31 December 2002
2002 2001
�000 �000
Turnover 2,045 2,135
Administrative expenses
Ongoing (excluding impairment and website (2,293) (2,072)
development costs
Website development costs (125) (190)
Impairment (1,795)
-------- -------
Administrative expenses (4,213) (2,262)
-------- -------
Group operating loss (2,168) (127)
Interest receivable and similar income 155 218
------- -------
(Loss)/profit on ordinary activities before (2,013) 91
taxation
Tax on (loss)/profit on ordinary activities (2) (61)
------- -------
(Loss)/profit retained for the financial year (2,015) 30
-------- --------
(Loss) / earnings per share (2.10)p 0.03p
(Diluted loss) / earnings per share (2.10)p 0.03p
There were no recognised gains or losses other than the (loss)/profit for the year.
Consolidated Balance Sheet
31 December 2002
2002 2001
�000 �000
Fixed assets - 1,368
Intangible assets 346 363
Tangible assets - 235
Investments ----------- -----------
346 1,966
----------- -----------
Current assets
Debtors 394 468
Cash at bank and in hand 3,768 4,120
----------- -----------
4,162 4,588
Creditors: amounts falling due within one year (567) (598)
----------- -----------
Net current assets 3,595 3,990
----------- -----------
Total assets less current liabilities 3,941 5,956
----------- -----------
Capital and reserves
Called up share capital 961 961
Share premium account 4,114 4,114
Merger reserve 568 568
Profit and loss account (1,702) 313
----------- -----------
Equity shareholders' funds 3,941 5,956
----------- -----------
Group Statement of cash flows
for the year ended 31 December 2002
2002 2001
�000 �000
Net cash outflow from operating activities (205) (72)
----------- -----------
Returns of investments and servicing of finance
Interest received 155 185
----------- ----------
Taxation (59) (8)
----------- -----------
Capital expenditure
Payments to acquire intangible fixed assets - (70)
Payments to acquire tangible fixed assets (25) (22)
----------- -----------
(25) (92)
----------- -----------
Acquisitions and disposals
Payments to acquire investments (218) (150)
----------- -----------
Net cash outflow before financing (352) (137)
----------- -----------
Management of liquid resources
Decrease/(increase) in short-term deposits 320 (80)
----------- -----------
(Decrease) in cash (32) (217)
----------- -----------
Reconciliation of net cash flow to movement in net
funds
2002 2001
�000 �000
(Decrease) in cash (32) (217)
(Decrease)/increase in short-term deposits (320) 80
----------- ----------
Movement in net funds (352) (137)
Net funds at 1 January 4,120 4,257
----------- -----------
Net funds at 31 December 3,768 4,120
----------- -----------
Notes to Accounts
1.Nature of financial information
These accounts do not constitute accounts under section 240 of the Companies Act 1985. The results for the year ended
31 December 2001 are extracts from the Group accounts which have been delivered to the Registrar of Companies. They
carry an unqualified auditor's report and did not contain a statement under Section 237 (2) or (3) of the Company's Act
1985. The statutory accounts for the year ended 31 December 2002 will be finalised on the basis of the financial
information in this preliminary announcement and will be filed with the Registrar of Companies after the Annual General
Meeting.
2.Basis of preparation
The accounts are prepared under the historical cost convention and in accordance with applicable accounting standards.
The accounting policies set out in the group accounts for the year ended 31
December 2002 have been applied for the purposes of this statement.
3.Basis of consolidation
The group accounts consolidate the accounts of Stockcube PLC and all of its subsidiary undertakings for the year to 31
December 2002. No profit and loss account is presented for Stockcube PLC as permitted by Section 230 of the Companies
Act 1985.
4.Web-site Development Expenditure
Web-site development expenditure is written off as incurred. During the year the company incurred �125,108 (2001:
�190,144) in respect of database and website development expenditure which was written off directly to the profit and
loss account.
5.Exceptional Items
The carrying values of purchased goodwill and other intangibles have been reassessed in accordance with FRS 11,
Impairment of Fixed Assets and goodwill. Accordingly, �1,795,000 has been written off and is included as an exceptional
item within operating profit.
6.Earnings per share
The calculation of basic earnings per ordinary share is based on earnings as follows:
2002 2001
000 000
(Loss)/Profit for the year �(2,015) �30
Weighted average number of ordinary shares 96,106 90,106
outstanding
(Loss)/Profit per ordinary share (pence):
Basic and diluted (2.10)p 0.03p
The diluted earnings per share is based on 108,706,750 (2001: 107,801,500) ordinary shares which takes into account
theoretical ordinary shares that would have been issued based on average market value if all outstanding options were
exercised.
Reports and Accounts
Copies of the Company's Annual Report and Accounts will be sent to shareholders in due course. .
Independent's Auditors' report
to the members of Stockcube plc
We have audited the group's financial statements for the year ended 31 December 2002 which comprise the Group Profit
and Loss Account, Group Balance Sheet, Balance Sheet, Group Statement of Cash Flows and the related notes 1 to 20.
These financial statements have been prepared on the basis of the accounting policies set out therein.
This report is made solely to the group's 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 group's members those matters we are required to state
to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the Statement of Directors' Responsibilities the company's directors are responsible for the
preparation of the financial statements in accordance with applicable United Kingdom law and accounting standards.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements
and United Kingdom Auditing Standards.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared
in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not
consistent with the financial statements, if 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 transactions with the company is not disclosed.
We read the Directors' Report and consider the implications for our report if we become aware of any apparent
misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards 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 company's
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 financial statements give a true and fair view of the state of affairs of the company and the group
as at 31 December 2002 and of the loss of the group for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
Ernst & Young LLP
Registered Auditor
London
7th April 2003