Final Results
Peerless Technology Group PLC
23 May 2003
PEERLESS TECHNOLOGY GROUP PLC
Financial Statements
FOR THE YEAR ENDED
31 DECEMBER 2002
1 JANUARY 2002 31 DECEMBER 2001 Company no 04241478
Company registration number: 04241478
Registered office: Nidderdale House
Otley Road
Beckwith Knowle
Harrogate
HG3 1SA
Directors: A Ahmed
J M Fenn
R M James
S C A Harris
Nominated Adviser and Broker: Numis Securities Limited
Cheapside House
138 Cheapside
London
EC2V 6LH
Secretary: R M James
Bankers: Coutts & Co
440 Strand
London
WC2R 0QS
Solicitors: Norton Rose
Kempson House
Camomile Street
London
EC3A 7AN
Auditors: Grant Thornton
Registered Auditors
Chartered Accountants
Grant Thornton House
Melton Street
Euston Square
London
NW1 2EP
INDEX PAGE
Chairman's statement 1
Report of the directors 2 - 5
Report of the independent auditors 6 - 7
Principal accounting policies 8
Profit and loss account 9
Balance sheet 10
Cash flow statement 11
Notes to the financial statements 12 - 15
CHAIRMAN'S STATEMENT
I am pleased to report Peerless Technology's first full year as a quoted
company, following its admission to AIM on 20 November 2001. For the year ended
31 December 2002, the company had a loss before tax of £70,474 (from 26 June
2001 to 31 December 2002 loss £36,944) and had cash reserves of £2,246,537
(2001: £2,386,990).
Peerless was established to create a leading group in the media and technology
sectors through acquisition and organic growth. In the 18 months since the
company's listing, the Board have closely considered a number of potential
investment opportunities within these sectors. Negotiations with a number of
parties have been held, but the Board has not yet identified a suitable business
that meets the company's investment criteria.
As stated in, and required by, the prospectus issued at the time of listing, the
Board have issued a circular dated 23 May 2003 together with a notice of
extraordinary general meeting to consider the direction and future strategy of
the company. Included within these proposals is a recommendation from the Board
for a widening of the scope of Peerless's strategy to permit acquisitions and
investments in sectors other than the media and technology sectors. The circular
and notice set out proposals and resolutions, respectively, to be proposed at
the extraordinary general meeting which has been convened to follow Peerless's
annual general meeting to be held on 20 June 2003.
The Board will continue to be patient in its pursuit of suitable targets and are
confident that the difficult market conditions that still prevail will present
investment opportunities for the company.
Ajaz Ahmed
Chairman
23 May 2003
REPORT OF THE DIRECTORS
The directors present their report together with the audited financial
statements for the year ended 31 December 2002.
Principal activity
The principal activity of the company is that of an investment vehicle.
Business review and future developments
A review of the year and summary of the future developments are included in the
Chairman's Statement.
Dividends
The directors cannot recommend the payment of a dividend for the accounting
year.
Impact of the Euro
In the opinion of the directors, the introduction of the single currency for
Europe will have no significant impact on the company's trading operations and
results.
Charitable and political contributions
There were no charitable or political contributions made by this company during
the year.
Creditors payment policy
The company's current policy concerning the payment of its trade creditors is
to:
(a) Settle the terms of payment with suppliers when agreeing the
terms of such a transaction.
(b) Ensure that the suppliers are made aware of the terms of
payment by inclusion of the relevant terms in contracts; and
(c) Pay in accordance with its contractual and other legal
obligations.
The payment policy applies to all payments to creditors for all supplies of
goods and services without exception.
The company's average creditor payment period for the year ended
31 December 2002 was 53 days (2001: 28 days) days based on the ratio of average
trade creditors throughout the year to the amounts invoiced during the year by
trade creditors.
Directors
The directors during the year under review are listed below together with their
interests in the company's ordinary shares:
Ordinary shares of 1p each Ordinary shares of 1p each
31 December 1 January
2002 % holding 2002 % holding
A Ahmed 312,500 2.1 312,500 2.1
J M Fenn 936,000 6.3 750,000 5.0
R M James 811,000 5.4 625,000 4.2
S C A Harris 312,500 2.1 312,500 2.1
There have been no other changes in the directors' interests subsequent to the
year end.
Share options
At 1 January 2002 Granted At 31 Exercise
during the December price
year 2002
J M Fenn 62,500 - 62,500 20 pence
R M James 62,500 - 62,500 20 pence
The share options may be exercised in whole or in part at any time during the
period between such date which is determined to fall three months after the
completion of the first substantial acquisition, being the acquisition of the
issued share capital conferring the majority voting interest or majority
entitlement to profits of another company or another company's business, in
either case being an acquisition whose value is greater than 100 per cent of the
market capitalisation of the company on the business day immediately prior to
the completion of such acquisition by the company and the tenth anniversary of
their date of grant.
The share options will also lapse on the expiry of the period of 12 months
following the death of a holder or the expiry of the period of six months of his
ceasing to be a director. Rights of exercise will also arise on a change in
control of the company.
No further options have been granted to directors since the year end.
Substantial shareholdings
Other than the directors holdings listed above, the company has been notified of
the following shareholdings amounting to 3 per cent or more of the issued share
capital of the company as at 6 May 2003;
Shareholder Number of % holding
shares
Clydesdale Bank Custodian Nominees Limited 1,125,000 7.5
Peter Wilkinson 1,000,000 6.7
Redmayne (Nominees) Limited 759,000 5.1
Rodger Sargent 750,000 5.0
Vidacos Nominees Limited 650,000 4.3
HSBC Global Custody Nominee (UK) Limited 650,000 4.3
Cheapside Nominees Limited 550,000 3.7
HSBC Global Custody Nominee (UK) Limited 500,000 3.3
Nortrust Nominees Limited 500,000 3.3
N.Y. Nominees Limited 490,000 3.3
Nominated Adviser and Broker
Numis Securities Limited are the company's nominated adviser and broker. The
shares of the company are traded on the Alternative Investment Market.
Directors' responsibilities for the financial statements
United Kingdom company law requires the directors to prepare financial
statements for each financial year which give a true and fair view of the state
of affairs of the company and of the profit or loss of the company for that
period. In preparing those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently
- make judgements and estimates that are reasonable and prudent
- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records, for
safeguarding the assets of the company and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Auditors
Grant Thornton offer themselves for reappointment as auditors in accordance with
section 385 of the Companies Act 1985.
ON BEHALF OF THE BOARD
J M Fenn
Director
23 May 2003
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
PEERLESS TECHNOLOGY GROUP PLC
We have audited the financial statements of Peerless Technology Group plc for
the year ended 31 December 2002 which comprise the principal accounting
policies, the profit and loss account, the balance sheet, the cash flow
statement and notes 1 to 15. These financial statements have been prepared under
the accounting policies set out therein.
This report is made solely to the company'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 company'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 the directors and auditors
The directors' responsibilities for preparing the directors' report and the
financial statements in accordance with United Kingdom law and accounting
standards are set out in the statement of directors' responsibilities.
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 other information contained in the annual report, and consider whether
it is consistent with the audited financial statements. This other information
comprises only the Chairman's statement and the Report of the Directors. We
consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of 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.
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
PEERLESS TECHNOLOGY GROUP PLC (CONTINUED)
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 December 2002 and of its loss for the year
then ended and have been properly prepared in accordance with the Companies Act
1985.
GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
LONDON
23 MAY 2003
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost convention
and in accordance with applicable United Kingdom accounting standards.
The principal accounting policies of the company have been reviewed in
accordance with Financial Reporting Standard 18 'Accounting Policies'. These
accounting policies have remained unchanged from the prior period and are set
out below.
FINANCIAL INSTRUMENTS
Financial assets are recognised in the balance sheet at the lower of cost and
net realisable value. Provision is made for diminution in value where
appropriate.
DEFERRED TAXATION
Deferred tax is recognised on all timing differences where the transactions or
events that give the company an obligation to pay more tax in the future, or a
right to pay less tax in the future, have occurred by the balance sheet date.
Deferred tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is measured using rates of tax that have been
enacted or substantively enacted by the balance sheet date.
PROFIT AND LOSS ACCOUNT
Year
ended 31 26 June 2001 to 31
December December
Note 2002 2001
£ £
Turnover - -
Administrative expenses (150,734) (43,906)
Operating loss (150,734) (43,906)
Interest receivable and similar 80,260 6,962
income
Loss on ordinary activities before 1 (70,474) (36,944)
taxation
Taxation 2 - -
Loss retained and transferred from 8 (70,474) (36,944)
reserves
Loss per share
- basic 4 (0.47)p (1.01)p
All transactions arose from continuing operations.
There were no recognised gains or losses other than the loss for the financial
year.
BALANCE SHEET
Note 2002 2001
£ £
Current assets
Debtors 5 13,791 31,573
Cash at bank and in hand 2,246,537 2,386,990
2,260,328 2,418,563
Creditors: amounts falling due within one 6 (24,379) (112,140)
year
Total assets less current liabilities 2,235,949 2,306,423
Capital and reserves
Called up share capital 7 149,625 149,625
Share premium account 8 2,193,742 2,193,742
Profit and loss account 8 (107,418) (36,944)
Equity shareholders' funds 9 2,235,949 2,306,423
The financial statements were approved by the Board of Directors on 23 May 2003
J M Fenn - Director
CASH FLOW STATEMENT
Year ended 26 June 2001 to
31 December 31 December
Note 2002 2001
£ £
Net cash outflow from operating 10 (238,495) -
activities
Returns on investments and servicing
of finance
Interest received 73,042 389
Management of liquid resources
Cash withdrawn from/(deposited in) 140,000 (2,381,500)
money market account
Financing
Issue of ordinary share capital 25,000 2,417,500
Expenses paid in connection with - (30,899)
share issues
Net cash inflow from financing 25,000 2,386,601
(Decrease)/increase in cash 11,12 (453) 5,490
NOTES TO THE FINANCIAL STATEMENTS
1 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
The operating loss on ordinary activities before taxation is stated after:
Year 26 June 2001 to 31 December
ended 31 December
2002 2001
£
Auditors' remuneration:
Audit services 10,000 10,000
During the year fees of £nil (2001: £10,000) paid to the company's auditors in
respect of non-audit services were written off to the share premium account.
2 TAX ON LOSS ON ORDINARY ACTIVITIES
The tax charge is based on the loss for the year and represents:
2002 2001
£ £
Corporation tax at 30% (2001: 30%) - -
- -
2002 2001
£ £
Loss on ordinary activities before tax (70,474) (36,944)
Loss on ordinary activities multiplied by standard rate of (21,142) (11,083)
corporation tax in the United Kingdom of 30% (2001: 30%)
Effect of:
Increase of trading losses 21,142 11,083
Current tax charge for the year - -
Unrelieved tax losses of approximately £107,000 remain available to offset
against future income.
A deferred tax asset of £32,225 arising from losses in the company has not been
recognised (2001: £11,083). These losses may be offset against future income.
Although the directors expect sufficient profits to arise, they believe at this
stage that it is prudent not to recognise the deferred tax asset within the
financial statements.
3 DIRECTORS AND EMPLOYEES
Staff costs, including directors, during the period were as follows:
Year 26 June 2001 to 31 December
ended 31 December
2002 2001
£ £
Wages and salaries 60,000 8,000
Social security costs 7,000 2,000
67,000 10,000
There were no employees of the company during the period except for the
executive directors.
Remuneration in respect of directors was as follows:
Year 26 June 2001
ended 31 December to 31 December
2002 2001
£ £
Emoluments 60,000 8,000
4 LOSS PER SHARE
The calculation of loss per share is based on the loss for the financial year
divided by the weighted average number of ordinary shares in issue during the
period as follows:
2002 2001
Weighted Weighted
average Loss per average Loss per
number share number share
Loss of shares amount Loss of shares amount
£ pence £ pence
Basic loss per
share
Loss (70,474) 14,962,500 (0.47) (36,944) 3,655,690 (1.01)
attributable
to ordinary
shareholders
Loss per share amount for 2001 : (1.01)
Share options outstanding at the year end were anti-dilutive.
5 DEBTORS
2002 2001
£ £
Unpaid share capital - 25,000
Accrued interest 13,791 6,573
13,791 31,573
6 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2002 2001
£ £
Trade creditors 270 43,906
Other taxation and social security 2,500 2,000
Accruals 11,750 36,780
Other creditors 9,859 29,454
24,379 112,140
7 SHARE CAPITAL
2002 2001
£ £
Authorised
50,000,000 ordinary shares of £0.01 each 500,000 500,000
Allotted, called up and fully paid
14,962,500 ordinary shares (2001: 14,337,500) ordinary 149,625 143,375
shares of £0.01 each
Allotted, called up but not paid
625,000 ordinary shares of £0.01 each - 6,250
149,625 149,625
Share options
There are no outstanding share options at 31 December 2002 except for those
granted to directors as disclosed in the Report of Directors on page 3.
8 SHARE PREMIUM ACCOUNT AND RESERVES
Share premium Profit
account and
loss account
£ £
At 1 January 2002 2,193,742 (36,944)
Loss for the financial year - (70,474)
At 31 December 2002 2,193,742 (107,418)
9 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2002 2001
£ £
Loss for the financial year (70,474) (36,944)
Issue of shares - 2,343,367
Shareholders' funds at 1 January 2002 2,306,423 -
Shareholders' funds at 31 December 2002 2,235,949 2,306,423
10 NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2002 2001
£ £
Operating loss (150,734) (43,906)
(Decrease)/increase in creditors (87,761) 43,906
Net cash outflow from operating activities (238,495) -
11 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2002 2001
£ £
(Decrease)/increase in cash in the period (453) 5,490
Cash (inflow)/outflow from (decrease)/increase in (140,000) 2,381,500
liquid resources
Movement in net funds in the period (140,453) 2,386,990
Net funds at 1 January 2002 2,386,990 -
Net funds at 31 December 2002 2,246,537 2,386,990
12 ANALYSIS OF CHANGES IN NET FUNDS
At 1 At 31
January December
2002 Cash flow 2002
£ £ £
Cash at bank 5,490 (453) 5,037
Cash in money market account 2,381,500 (140,000) 2,241,500
2,386,990 (140,453) 2,246,537
13 CAPITAL COMMITMENTS
The company had no capital commitments at 31 December 2002 or 31 December 2001.
14 CONTINGENT ASSETS/LIABILITIES
There were no contingent liabilities at 31 December 2002 or 31 December 2001.
15 FINANCIAL INSTRUMENTS
The company uses financial instruments, other than derivatives, comprising cash
and various items such as trade debtors and trade creditors that arise directly
from its operations. As part of its cash management policy, the company makes
use of money market accounts.
The directors do not believe that there were any risks arising from financial
instruments at the year end and will produce policies in respect of them as and
when risks arise.
There is no material difference between the book value and fair value of the
company's financial investments.
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