2013 accounts and notice of AGM

richard@imutual
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2013 accounts and notice of AGM

Post by richard@imutual » Mon Nov 11, 2013 12:17 pm

Notice is hereby given that the Annual General Meeting of imutual PLC will be held on 2nd December 2013 8pm at 247.tv, The Firs, Barston Lane, Barston, Solihull, West Midlands, B92 0JP

The business to be conducted at the meeting will be to review the audited accounts for the year to 30 June 2013 and to vote on resolutions, including the re-election of directors

As per last year, the AGM will be broadcast as a live webcast, and you are encouraged to submit your vote using this proxy form rather than attend in person (to keep our costs down!). You are welcome to participate in the webcast and ask any questions live to the Chairman i.e. me :) Although of course you can ask questions at any time during the year using our forum ;)

General guidance with regard to our AGMs can be found here

Below is my "Review of business" which is also included in the accounts:
REVIEW OF BUSINESS

The year under review was the company's third year of operation. We made continuous improvements to our cashback service, with a dual aim of generating the maximum amount of cashback for members whilst also establishing a reputation as the most reliable and trustworthy cashback website. To date, imutual can boast the following achievements:

- We have extended our range of cashback merchants to over 3,000.
- We launched our "mutual dividend" initiative, beating the rates offered by our largest two competitors on over 80% of our merchants.
- We have tracked and awarded cashback to imutual members over two million times.
- We launched a new site design to make imutual more attractive to prospective members and easier to navigate for existing members.

Performance of the business

During the year, our revenues more than doubled from £118,296 to £260,881. This represents a small fraction of the potential revenues the company can achieve in the long term, but at this early stage for imutual we are pleased to see such a significant increase in turnover. It should be noted that this figure included a significant contribution from a small number of deals which we do not expect to see repeated in the following year. That said, the underlying performance of the business is clearly showing an improving trend. We also achieved our first annual profit, a significant milestone in the company's development. Again, it may be difficult to repeat this achievement in the following year, due to limited profit margins and the need to invest in the website's development. Unlike other companies, imutual does not seek to maximise its profits; its primary goal is to deliver the best possible savings for its customers whilst managing its costs prudently and increasing the value of the company.

Our administrative expenses for the year were £65,339. By way of comparison, the equivalent figures for the two largest UK cashback websites are £5.3m (year to July 2012) and £3.6m (year to Jan 2013). We attracted a further 5,077 members to the website during the year. imutual's approach to recruitment has been to rely on word-of-mouth recommendation rather than spend members' funds on advertising. We are continuing to see an increase in favourable commentary of imutual on third party websites and, together with planned improvements to the website and other initiatives such as tell-a-friend incentives, we hope to recruit significantly more members in the year ahead.

Financial position

We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, gross margin and return on capital employed.

The company reported a profit after tax of £1,883. Share capital in issue at the year end was £12,527 and closing reserves were -£16,350. The amount of cash at bank has increased from £7,899 to £32,074. The directors have demonstrated their commitment to the business by giving a written undertaking to provide ongoing financial support for the company.
If you have any questions on the accounts, no need to wait until the AGM - ask away! :thumbup:

By way of comparison, below is a comparison of our financial performance over the past few years with the largest two cashback companies.
cashback_company_accounts.gif
cashback_company_accounts.gif (27.18 KiB) Viewed 5896 times
- For simplicity, "Cashback paid" is assumed to be "Cost of sales" as reported in the accounts, although in reality Cost of Sales could include other items such as refer-a-friend fees.
- "Revenue kept" is the difference between revenue earned by the company and "Cost of sales"
- "Overheads" are the costs of running the company which are not classed as direct "Cost of sales", including administration expenses and exceptional items. It excludes any dividends paid to shareholders

There are only 3 lines for imutual as we only have 3 full years of operation, but the points I hope imutual members will take from this comparison are:

- There are significant revenues being generated in the industry that imutual operates in, demonstrating the huge potential for our company
- Whilst accepting that the top 2 sites do many things we don't, such as mobile phone apps and high street cashback, we're proud that we have kept our overheads so low while providing a broadly-equivalent online cashback service.
- The importance of having a member-owned business model to provide an alternative to commercial sites with outside shareholders. The top 2 describe themselves as "100% cashback sites" (and for years quidco called itself a "co-operative"), and yet over this period there's a difference of nearly £30m between income earned and what's been paid out to members. :shock: We think our member shareholder model is a good way of making us accountable to you, so that you can ensure that your cashback site is being operated 100% in your interests

I hope this is of interest

expressman33
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Re: 2013 accounts and notice of AGM

Post by expressman33 » Mon Nov 11, 2013 12:55 pm

How much of the 75% increase in overheads was due to the Advertising expenditure ?
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Re: 2013 accounts and notice of AGM

Post by richard@imutual » Mon Nov 11, 2013 1:19 pm

Good question. We barely spent anything on advertising. The only item we classed as advertising was the AGM webcast (a few hundred pounds)

Overheads increased by about £28000, of which £15000 was Directors salaries. In the first 3 years, the pre-tax salary of each of the 2 directors has been £0, £7500 and £15535 respectively. Given that we work fulltime on imutual and have pretty much no other source of income, together with financing the initial start up of the company, that's been pretty 'tight' :( Obviously at some point we need to justify further increases based on company performance and comparison with competitors, but I trust members accept that we're some way away from that point! :eek:

The next most significant cost increase was website development, which went up by about £9000. In part due to implementing the new design but also in previous year's we'd really operated on a shoestring (getting "free" work etc) and it's inevitable that this would have to increase.

Given our current size, I think it's more justified to look at absolute costs rather than the % increase.

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Re: 2013 accounts and notice of AGM

Post by Squire » Mon Nov 11, 2013 1:54 pm

Yes, no problems from me about the figures.

I appreciate all the work you and your fellow director are doing in order to run imutual so well and work on expanding it, it must be tiring at times.

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Re: 2013 accounts and notice of AGM

Post by kevinchess1 » Mon Nov 11, 2013 2:05 pm

Q+tcb employ a lot more staff than us
Are there any plans to employ more staff in the next year?
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Re: 2013 accounts and notice of AGM

Post by richard@imutual » Mon Nov 11, 2013 2:14 pm

We may or may not add an extra staff member between now and next June - depends on available funds. We'll certainly spend a bit more than last year on web development (we use a freelancer at present). But I can't ever envisage needing 50+ staff :eek:

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Re: 2013 accounts and notice of AGM

Post by maximusbeer » Mon Nov 11, 2013 4:52 pm

Nice clear and concise figures, running a tight ship will clearly benefit us all!

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Re: 2013 accounts and notice of AGM

Post by roger » Mon Nov 11, 2013 5:00 pm

I don't see anything obviously controversial in the accounts or the resolutions to be put to the AGM. I'm not myself convinced that the comparisons with Quidco and TCB are particularly meaningful (and, while I'm not a lawyer, I think we need to be careful what we say about being better than the opposition) as the latter are more mature companies. If and when iMutual reaches comparable size, it too will have to make strategic decisions as to what proportion of its earnings goes in the form of improved cashback and what proportion goes to shareholders and, frankly, if 100% were to be allocated to improved cashback then there would be a lot of disgruntled shareholders (by which I don't mean just Richard but also the rest of us!) as the shares would - in the absence of any dividend - be of relatively little value. But that's for another day sometime in the future.

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Re: 2013 accounts and notice of AGM

Post by William Joseph1 » Mon Nov 11, 2013 5:24 pm

roger wrote: If and when iMutual reaches comparable size, it too will have to make strategic decisions as to what proportion of its earnings goes in the form of improved cashback and what proportion goes to shareholders and, frankly, if 100% were to be allocated to improved cashback then there would be a lot of disgruntled shareholders (by which I don't mean just Richard but also the rest of us!) as the shares would - in the absence of any dividend - be of relatively little value. But that's for another day sometime in the future.
But surely cashback goes to shareholders when they purchase stuff via the site so its a win win situation. The shares will only be worth anything in my opinion if someone wants to buy the site in the future.
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Re: 2013 accounts and notice of AGM

Post by Stiofan » Mon Nov 11, 2013 5:28 pm

Squire wrote:I appreciate all the work you and your fellow director are doing in order to run imutual so well and work on expanding it
I second that, it's not an easy job running something like this with so much to keep an eye on.

Is there anything that we, as shareholders/members, can do to help lighten the load?

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