Correction: Final Results
The following replaces the "Final Results" announcement made today at 14.42
under Number PRNUK-2804. The final paragraph of the Chairman's Statement in the
earlier version should be disregarded. All other details remain the same.
For immediate release 28 April 2006
ADESTE INVESTMENTS PLC (the "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 OCTOBER 2005
CHAIRMAN'S STATEMENT
INTRODUCTION
The Company presents its results for the year ended 31 October 2005.
RESULTS AND DIVIDEND
Turnover for the year ended 31 October 2005 decreased to £101,550 (2004: £
567,455), giving a pre-tax loss of £7,971,423 (2004: £5,217,389) after
exceptional operating expenses which include provision against loan, interest
and fees of £7,901,368 (2004: £5,068,950). The board cannot recommend the
payment of a dividend to shareholders.
BUSINESS ACTIVITY
The Company's shares were suspended from trading on AIM on 8 March 2005 at the
Company's request following the appointment of administrative receivers to
Chesterton International Limited and thus the outstanding borrowings amounting
to approximately £7.2 million could no longer be repaid and which were
guaranteed by the company. National Westminster Bank subsequently demanded
payment under a guarantee given by the company for £1.6 million on the 14th
March 2005 and issued Statutory Demand on 17th March 2005. As the Company was
unable to meet this claim by the Bank, on 30 March 2005, after being made aware
of the financial position of the company, the secured creditor of the company,
Kaloshar Limited, appointed Antony Batty of Antony Batty & Co as administrator
to the company.
National Westminster Bank cancelled their demand against the company on the
likelihood of receiving a substantial payment on the sale of Chesterton assets
which could lead to them being repaid in due course by Chesterton International
Limited and Chesterton Limited.
The Directors over a number of months, worked toward a set of solutions for
which shareholder approval was given at a creditors meeting of the 6th
September 2005 and the Court were notified that the Company was no longer in
Administration.
At the Company's Extraordinary General meeting on the 7th October 2005 the
Company changed its name from Resurge Plc to Adeste Investments PLC and also
restructured its Share Capital as detailed in note 13 to the accounts.
CONTINUING OPERATIONS
The company continues to generate income through its current operations and
will be seeking further transactions to produce income and expand the business.
Adeste Investments PLC
PROFIT AND LOSS ACCOUNT
for the year ended 31 October 2005
Notes 2005 2004
£ £
TURNOVER 1 101,550 567,455
Direct costs (139,586) (37,874)
Other operating expenses - exceptional 2 (7,901,368) (5,068,950)
- other (29,163) (571,805)
OPERATING LOSS (7,968,567) (5,111,174)
Loss on disposal of fixed asset - (104,085)
investments
Interest receivable 1,973 8,309
Amounts written off fixed asset - (9,000)
investments
Interest payable 3 (4,829) (1,439)
LOSS ON ORDINARY ACTIVITIES BEFORE 4 (7,971,423) (5,217,389)
TAXATION
Taxation 6 - 164,464
LOSS ON ORDINARY ACTIVITIES AFTER 14 (7,971,423) (5,052,925)
TAXATION
LOSS PER SHARE 7
Basic (11.07p) (7.02p)
Diluted (11.07p) (7.02p)
The operating loss for the year arises from the company's continuing
operations.
No separate Statement of Total Recognised Gains and Loss has been prepared as
all such gains and losses have been dealt with in the profit and loss account.
Adeste Investments PLC
BALANCE SHEET
31 October 2005
Notes 2005 2004
£ £
FIXED ASSETS
Investments 8 33,789 33,790
CURRENT ASSETS
Debtors 9 209,578 22,171
Loans: due within one year 10 58,998 765,741
Cash at bank and in hand 36,439 33,689
305,015 821,601
CREDITORS: Amounts falling due within one 11 (805,951) (605,665)
year
NET CURRENT (LIABILITIES)/ASSETS (500,936) 215,936
TOTAL ASSETS LEE CURRENT LIABILITIES (467,147) 249,726
CREDITORS: Amounts falling due after more 12 (7,254,550) -
than one year
NET CURRENT (LIABILITIES)/ASSETS (7,721,697) 249,726
CAPITAL AND RESERVES
Called up share capital 13 1,440,519 1,440,519
Share premium account 2,890,013 2,890,013
Profit and loss account 14 (12,052,229) (4,080,806)
SHAREHOLDERS' FUNDS (including non-equity 15 (7,721,697) 249,726
interests)
Adeste Investments PLC
CASH FLOW STATEMENT
for the year ended 31 October 2005
Notes 2005 2004
£ £
Cash outflow from operating activities 16a (109,223) (1,085,209)
Returns on investments and servicing 16b 1,973 6,870
of finance
Taxation - (49,385)
Capital expenditure and financial 16b - 1,279,636
investment
Equity dividends paid - (79,229)
CASH (OUTFLOW)/INFLOW BEFORE FINANCING (107,250) 72,683
Financing 16b 110,000 -
INCREASE IN CASH IN THE YEAR 2,750 72,683
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (debt)/FUNDS
2005 2004
£ £
Increase in cash in the year 2,750 72,683
Cash inflow from change in debt (110,000) -
CHANGE IN NET DEBT RESULTING FROM CASH (107,250) 72,683
FLOWS
Accrued loan interest and debt from 16c (7,204,829) -
subsidiary
MOVEMENT IN NET (DEBT)/FUNDS IN THE (7,312,079) 72,683
YEAR
NET FUNDS/(DEBT) AT 1 NOVEMBER 2004 33,689 (38,994)
NET (DEBT)/FUNDS AT 31 OCTOBER 2005 16c (7,278,390) 33,689
Adeste Investments PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 October 2005
1 TURNOVER
The company's turnover is derived from its principal activity in the United
Kingdom and was split as follows:
2005 2004
£ £
Fixed returns on loan investments 44,108 433,955
Management fees 904 73,500
Other income 56,538 60,000
_________ _________
101,550 567,455
_________ _________
2 OTHER OPERATING EXPENSES - EXCEPTIONAL 2005 2004
£ £
Provision against loan to subsidiary 7,166,665 3,923,691
Provision against other loans 188,109 1,011,528
Legal fees 546,594 133,731
_________ _________
7,901,368 5,068,950
_________ _________
The exceptional legal fees arose in connection with an action brought against
the group as explained in note 18a.
3 INTEREST PAYABLE 2005 2004
£ £
On bank overdraft - 1,168
Other interest 4,829 271
_________ _________
4,829 1,439
_________ _________
4 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 2005 2004
£ £
Loss on ordinary activities before taxation is
stated after charging:
Auditors' remuneration for audit services 15,000 17,500
_________ _________
Amounts payable to Baker Tilly in respect of non-audit services were £
15,125 (2004: £33,723). This comprises taxation compliance and advisory
services of £15,125 (2004: £31,773) and other services of £Nil (2004: £
1,950).
5 EMPLOYEES 2005 2004
No. No.
The average monthly number of persons
(including Directors) employed by the
company during the year was:
Office and management 3 2
________ _______
2005 2004
£ £
Staff costs for above persons:
Wages and salaries - 27,083
Social security costs - 2,434
- 29,517
________ ________
2005 2004
£ £
DIRECTORS' REMUNERATION
Emoluments (including fees) - 41,833
6 TAXATION 2005 2004
£ £
Current tax: - (190,853)
UK corporation tax on loss for the period
Total current tax - (190,853)
Deferred tax: - 26,389
Origination and reversal of timing
differences
Tax on loss on ordinary activities - (164,464)
Factors affecting tax charge for the year 2005 2004
£ £
Loss on ordinary activities before tax (7,971,423) (5,217,389)
Loss on ordinary activities at the standard(2,391,427) (1,565,217)
rate of 30% (2004: 30%)
Expenses not deductible for tax purposes 80,476 111,837
Tax on realised revaluation profits - 85,420
Provision against subsidiary loan 2,150,000 1,177,107
Unutilised tax losses 160,951 -
Current tax recoverable for the year - (190,853)
Factors that may affect future tax charges:
As a result of being in administration from March to October 2005, the company
is currently in arrears in respect of resolving enquiries from HM Revenue and
Customs into prior year corporation tax returns and the submission of the 2004
tax return. The directors do not believe that a material tax liability will
arise in respect of these matters and are unable to quantify any potential
liability that could arise or the quantum of tax losses available to carry
forward to future accounting periods.
7 LOSS PER ORDINARY SHARE
The calculation of loss per share is based upon the loss after taxation of £
7,971,423 (2004: £5,052,925) and on 72,025,963 (2004: 72,025,963) being the
weighted average number of ordinary shares in issue during the year.
8 FIXED ASSET Shares in Unlisted shares Total
INVESTMENTS subsidiary
undertaking £ £
£
Valuation:
1 November 2004 1 33,789 33,790
Disposals (1) - (1)
31 October 2005 - 33,789 33,789
On an historical cost basis, the fixed asset investments would have been
included at £33,789 (2004: £33,790).
The company holds more than 20% of the ordinary share capital of the following
undertakings:
Proportion Nature of business
directly held
Skillglass Limited (in 100% Finance to Phoenix
administration) Acquisitions Limited
UV Modular Limited 22.01% Manufacturer of specialist
vehicles
Phoenix Acquisitions 24.75% Acquisition Vehicle for
Limited (in Chesterton International
administration) Limited
On 30 March 2005 Skillglass Limited and then on 5 April 2005 Phoenix
Acquisitions Limited were both placed into administration. Phoenix Acquisitions
Limited holds 86.9% of the ordinary share capital of Chesterton International
Limited, who went into administration on 7 March 2005.
In the opinion of the directors, the appointment of an administrator to
Skillglass Limited resulted in Adeste Investments PLC losing control of its
subsidiary and hence it has been treated as a disposal on that date.
The most recent financial statements for UV Modular Limited disclose a loss
after taxation for the year ended 3 July 2005 of £184,000 and aggregate capital
and reserves at that date of £364,000.
9 DEBTORS
2005 2004
£ £
Due within one year:
Trade debtors - 20,023
Other debtors 201,657 -
Prepayments and 7,921 2,148
accrued income
209,578 22,171
10 LOANS
2005 2004
£ £
Repayable within one 58,998 765,741
year
11 CREDITORS: Amounts falling due within one
year
2005 2004
£ £
Loan 60,279 -
Trade creditors 166,527 160,233
Other creditors - 1
Accruals and deferred 579,145 445,431
income
805,951 605,665
The loan is repayable on demand and accrues interest at 5% per annum.
12 CREDITORS: Amounts falling due after more than
one year
2005 2004
£ £
Convertible loan notes 7,254,550 -
On 7 October 2005, the company issued £7,250,000 of loan notes at par to settle
existing debts. These loan notes are convertible at 0.1p for each ordinary
share in the company at the loan note holders option. £1,300,000 of these loan
notes bear interest at 5% per annum and the remaining loan notes of £5,900,000
are non-interest bearing.
£800,000 of the 5% Loan notes are payable on 7 October 2007 and the remaining
interest bearing and all the non-interest hearing loan notes are repayable on 7
October 2012. Interest accruing on the loan notes is added to the debt which is
payable as follows:
2005 2004
£ £
Repayable in one to 802,837 -
two years
Repayable in two to 6,451,712 -
five years
7,254,549 -
£6,702,568 of these loan notes are secured by a charge on the company's assets
and the remainder are unsecured.
13 SHARE CAPITAL
2005 2004
£ £
Authorised:
18,631,506,703 (2004: 500,000,000) ordinary 18,631,507 10,000,000
shares of 0.1p each (2004: 2p)
72,025,963 deferred shares of 1.9p each 1,368,493 -
20,000,000 10,000,000
Allotted, issued and fully paid:
72,025,963 (2004: 72,025,963) ordinary shares 72,026 1,440,519
of 0.1p each (2004: 2p) - equity
72,025,963 deferred shares of 1.9p each - 1,368,493 -
non-equity
1,440,519 1,440,519
On 7 October 2005, each of the issued ordinary shares of 72,025,963 of 2p each
were subdivided into one ordinary share of 0.1p and one deferred share of 1.9p
credited as fully paid up. Each of the 427,974,037 un-issued ordinary shares of
2p each in the company were subdivided into 20 ordinary shares on 0.1p each.
On the same day, the company increased its authorised share capital to £
20,000,000 by the creation of 10,000,000,000 ordinary shares of 0.1p each.
The deferred shares have no rights to dividends or voting rights and are only
entitled to a return of capital on winding up once each ordinary share holder
has received the sum of £100,000 for each ordinary share held.
As disclosed in note 20, on 7 October 2005 the company issued a total of
7,250,000 £1 convertible loan notes at par. Each loan note can be converted
into 1,000 0.1p ordinary shares. £800,000 of the loan notes are convertible at
any time until 7 October 2007 and the remainder are convertible at any time
until 7 October 2012.
14 PROFIT AND LOSS ACCOUNT
2005 2004
£ £
1 November (4,080,806) 687,385
2004
Transfer - 284,734
from
revaluation
reserve
Loss for (7,971,423) (5,052,925)
the year
31 October (12,052,229) (4,080,806)
2005
15 RECONCILIATION OF MOVEMENT IN 2005 2004
SHAREHOLDERS' FUNDS
£ £
Loss for the financial year (7,971,423) (5,052,925)
Opening shareholders' funds 249,726 5,302,651
Closing shareholders' funds (7,721,697) 249,726
Shareholders' funds includes non-equity interests of £nil (2004: £Nil) due to
the commercial effect of the rights of the deferred shares, as disclosed in
note 14.
16 CASH FLOWS 2005 2004
£ £
a Reconciliation of operating loss to net
cash flow from operating activities
Operating loss (7,968,567) (5,111,174)
Non-cash change to long-term debt 7,200,000 -
(Increase)/decrease in debtors (187,407) 212,969
Decrease in loans 706,743 4,169,595
Increase/(decrease) in creditors 140,008 (356,599)
Net cash outflow from operating (109,223) (1,085,209)
activities
2005 2004
£ £
b Analysis of cash flows for headings netted in
the cash flow
Returns on investments and servicing of
finance
Interest received 1,973 8,309
Interest paid - (1,439)
Net cash inflow from returns on investments 1,973 6,870
and servicing of finance
Capital expenditure and financial investment
Purchase of equity shares - (190,994)
Sale of equity shares - 1,470,630
Net cash inflow from capital expenditure and - 1,279,636
financial investment
Financing
Increase in loans 110,000 -
Net cash inflow from financing 110,000 -
16 CASH FLOWS
(continued)
c Analysis of net At Cash flow Other non-cash At
funds/(debt) changes
1 November £ 31 October
£
2004 2005
£ £
Cash at bank and 33,689 2,750 - 36,439
in hand
Loan due within - (60,000) (279) (60,279)
one year
Loans due after - (50,000) (7,204,550) (7,254,550)
one year
33,689 (107,250) (7,204,829) (7,278,390)
Other non-cash changes comprise accrued loan interest of £129,853 and a debt
arising from a guarantee issued to the company's subsidiary, Skillglass Limited
(see note 19), of £7,074,976.
17 FINANCIAL INSTRUMENTS
The company's financial instruments comprise cash, loans receivable and
payable, equity shares, and various items such as trade creditors that arise
directly from its operations. Trade creditors and other short-term items
arising directly from operations, have been excluded from the following
disclosures.
Credit risk
The company supports the recovery of businesses in financial difficulties. The
nature of the company's trade means that there is a potential credit risk if
the business does not recover. The risk is minimised by securing all debts and
the risk is monitored on a daily basis by the Directors of the company.
Interest rate risk
The interest rate profile of the company's cash at bank and loans receivable at
31 October 2005 was:
2005 2004
£ £
Fixed rate financial assets 58,998 765,741
Floating rate financial assets 36,439 33,689
95,437 799,430
The weighted average interest rate and period of the fixed rate financial
assets at 31 October 2005 was 10% p.a. (2004: 10% p.a.) and repayable on demand
(2004: on demand) respectively.
The company's financial liabilities at 31 October 2005 are all at fixed rates,
with £60,279 repayable within one year (2004: £Nil) and £7,254,550 repayable
after more than one year (2004: £Nil). Further details on these financial
liabilities are disclosed in notes 11 and 12.
Market price risk
During the year, the company has not traded in financial instruments.
Fair value of financial instruments
There is no material difference between the fair value and book value of the
company's cash at bank and loans receivable and payable. The company's unlisted
equity shares are incorporated into the accounts in accordance with the
company's accounting policies. It is not practical to estimate the fair value
of these financial instruments with sufficient reliability as the shares are
unlisted and the nature of the company's trade means there is a potential
credit risk if the businesses do not recover.
18 CONTINGENT LIABILITIES
a During the year ended 31 October 2004, an action was brought by Mr
Jafari-Fini ("MJF") against Skillglass Limited and Phoenix Acquisitions
Limited for a personal claim and a derivative action relating to the
funding of Phoenix Acquisitions Limited. There have been two full Court
hearings on the derivative action in both the High Court and the Court of
Appeal both of which the company won with substantial cost orders against
MJF. Subsequently, MJF petitioned the House of Lords who have refused
consent for an appeal.
The MJF personal action against Skillglass Limited and Adeste Investments PLC
who were added as an additional defendant came on for trial on preliminary
issues and lasted from 12 to 21 December 2005 judgement was given on 20 January
2006. The court dismissed all of MJF's claims and ordered MJF to pay interim
costs to Skillglass Limited of £400,000. Adeste Investments PLC has also
obtained judgement against MJF for a sum in excess of £1,000,000 for the non
payment of some of his shares in Phoenix Acquisitions Limited. Payment of these
costs and judgement has been stayed pending MJF's application to the Court of
Appeal for permission to appeal, permission to appeal having been refused by
the High Court. MJF has filed his application for permission to appeal The
application is expected to be determined at the end of May or the beginning of
June 2006.
Adeste Investments PLC will consider what further action to take against MJF
after his application to the Court of Appeal has been heard.
The directors are of the opinion that the case against the group is without
merit.
No contingent asset has been recognised in the accounts in respect of the award
on the judgement due to the uncertainty as to the timing of receipt. The
directors have been unable to quantify the potential liability that would arise
against the company if MJF's claim was successful as Skillglass Limited and
Phoenix Acquisitions Limited are both in administration and the Board consider
that there is no claim against Adeste in any circumstances.
b On 23 December 2003, the company received a fee of £60,000 for guaranteeing
the obligations of MJS Lens (Automation) Limited under the lease of
premises. The company received a counter indemnity from Sauflon
Pharmaceuticals Limited in the event that any claim was made under the
lease guarantee.
The directors believe that it is remote that there will be any liability for
the company under this guarantee but are unable to qualify the potential
liability if one did arise.
19 RELATED PARTY TRANSACTIONS
Included in creditors as at 31 October 2005 are amounts owed to Kaloshar
Limited of £6,702,568. In view of the size of this debt, the directors believe
that transactions with Kaloshar Limited and its related parties should be
disclosed as related party transactions. Kaloshar Limited is controlled by The
Rowland Purpose Trust 2001. These transactions are explained below.
a During the year, the company was charged £12,600 (2004: £36,000) for
professional services supplied by Rowland Capital (CI) Limited. There was
no outstanding balance as at 31 October 2005 (2004: £Nil).
Rowland Capital (CI) Limited is controlled by the trustee of The Rowland
Purpose Trust 2001.
b On 7 October 2005, the company issued convertible loans of £7,200,000 at
par to replace the loan facility with Kaloshar Limited. This is explained
in note 20(c) below. This loan facility was provided by Kaloshar Limited to
Skillglass Limited and was guaranteed by Adeste Investments PLC. On the
appointment of an administrator to Skillglass Limited, this guarantee
crystallised as an actual liability in the company. Interest accruing from
30 March 2005 was recognised in the company's profit and loss account.
During the year, the company was charged interest totalling £125,024 in
connection with this facility.
19 RELATED PARTY TRANSACTIONS (continued)
c On 7 October 2005, the company issued convertible loan notes at par
totalling £7,200,000 to replace the existing loan due to Kaloshar Limited.
These loan notes are convertible at 0.1p per share at the option of the
note holder and are redeemable as follows.
i. £750,000 - redemption date 7 October 2007 and bear interest at 5% per
annum;
ii. £500,000 - redemption date 7 October 2012 and bear interest at 5% per
annum; and
iii. £5,950,000 - redemption date 7 October 2012 and non-interest bearing.
The 5% convertible loan note for £500,000 was assigned to Mr Leo Knifton
and Mr Jonathan Rowland, who are both directors of Adeste Investments PLC
on 7 October 2005.
Also on 7 October 2005, the company issued 5% convertible loan notes at par
to replace cash advances made by Caldicot Management Limited (£30,000), Mr
Leo Knifton (£10,000) and Mr Jonathan Rowland (£10,000). Caldicot
Management Limited is a trustee of The Rowland Purpose Trust 2001.
During the period, interest accrued on these loan notes of £2,568 to
Kaloshar Limited, £911 to Mr Leo Knifton, £910 to Mr Jonathan Rowland and £
160 to Caldicot Management Limited.
Consequently, at 31 October 2005 the company owed Kaloshar Limited £
6,702,568 (2004: £Nil), Mr Leo Knifton £260,911 (2004: £Nil), Mr Jonathan
Rowland £260,910 (2004: £Nil) and Caldicot Management Limited £30,160
(2004: £Nil).
d On the 28 September 2005, the company received a £60,000 loan from
Lawgra (365) Limited under a loan facility of £300,000. This facility
has been extended to £750,000 since the year end to enable the company
to meet its liabilities as they fall due.
The loan facility is repayable on demand and interest accrues on the
outstanding balance at 5% per annum. During the year, the accrued interest
on the loan was £279.
Lawgra (365) Limited is controlled by the trustee of The Rowland Purpose
Trust 2001 and Graham Robeson is a Director of Lawgra (365) Limited.
e During the period from 1 November 2004 until 30 March 2005, Skillglass
Limited was a wholly owned subsidiary of the company. During this
period, the company advanced monies of £91,658 to Skillglass Limited.
On 30 March 2005, Skillglass Limited was put into administration and is
therefore no longer a related party.
Note to the announcement:
The report and accounts have been posted to shareholders and are available,
free of charge, for a period of one month from 43 North Audley Street,
London W1K 6WH.
Adeste Investments PLC
COMPANY BALANCE SHEET
31 October 2005
END
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