Final Results

Jarvis Securities plc 20 March 2006 Jarvis Securities plc ('Jarvis' or 'the Company') PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 HIGHLIGHTS â€¢Funds under administration up 52% compared to 31 December 2004 â€¢Client numbers up 12.5% compared to 31 December 2004 â€¢Turnover up 3.5% to Â£2.6 million (2004: Â£2.56 million) â€¢Operating profit down 13.8% to Â£0.59 million (2004: Â£0.68 million) â€¢Net assets unchanged at Â£1.367 million (2004: Â£1.372 million) â€¢Record trading start to 2006 with highest number of trades ever completed in January, highest commission income ever earned in February and record number of trades completed in one day in March 2006. CHAIRMAN'S STATEMENT There is no doubt that 2005 has been a demanding year for the group. The financial results are not a fair reflection of the level of effort and progress made by the Company. We have indeed advanced in the last year and I am confident that this progress will be represented through improved financial performance in 2006. We are sensitive to market activity levels and consequently recorded a quiet second quarter in 2005. We were also involved with investigating a significant acquisition opportunity during the first quarter of 2005. Although we are anxious to find firms suitable for consolidation, by nature we are a conservatively run company. A number of potential issues were uncovered during the due diligence process, which persuaded us that the potential target was not suitable for consolidation into the group. The aborted acquisition resulted in exceptional costs although the Directors of the Company believe that it is preferable to incur these costs through necessary due diligence than to make an inappropriate purchase. Falling interest rates have adversely materially affected our financial performance as well. Despite these factors, the operating subsidiary, Jarvis Investment Management plc again improved its operating profit by 2.6% compared to the same period in 2005. This was counteracted by higher group costs recorded in Jarvis Securities, which prevented this upturn flowing into the consolidated results. We have incurred costs in developing and improving the system and legal framework for our outsourced services but have not seen the full benefit of these new contracts flowing through to the financial results. The majority of our Model B contracts will be running for their first full year in 2006 without the inevitable front-loaded costs to our operation. Our offices have also been extended to provide approximately one third more space, giving us plenty of room to expand without having the disruption and expense of moving premises. Jarvis is a business that prides itself on efficiency and quality of service. We have been striving very hard to differentiate ourselves from other volume execution-only brokers through our personal approach. With almost 35,000 clients, maintaining this differentiation in quality can be difficult. I am pleased, however, to say that we have achieved this and have been recognised accordingly. In October 2005, Jarvis Investment Management plc won the Investor's Chronicle Award for Best Self-Select ISA Provider 2005 from a public vote. This is a truly exciting result considering the size and market presence of our major competitors. There is no doubt that the group will face further challenges during 2006 although there are more opportunities available to the group than for some time. Levels of dealing volumes and new accounts opened are sharply higher so far this year for our existing products. A number of institutions looking to outsource financial administration processes have approached us and we have been vigorously promoting co-branded offerings to other organisations with an enthusiastic early reception. Jarvis Investment Management plc plans to launch a new web-based dealing service at a very competitive commission that the Company expects to garner a significant amount of interest. In addition, early stage talks with several potential targets or partners have either begun or recommenced recently and we believe that there are a number of opportunities to combine businesses in our sector to cut costs and improve profits and service. I shall, of course, report any developments of this nature in more detail in due course. I appreciate that our first year on AIM has not shown the growth in our share price that the directors were hoping to achieve for our existing shareholders. We have purchased a number of shares in the market when the price has fallen to levels that your Board believed undervalued the business and its current prospects. The best route to increasing shareholder value in my opinion is to maintain our distinctive quality while improving profits. This will be entirely the focus of the Board in 2006 and the early indications for an improved performance are promising. Andrew J. Grant Chairman GROUP PROFIT AND LOSS ACCOUNT For the year ended 31 December 2005 2005 2004 -------- --------- Â£ Â£ TURNOVER 2,651,665 2,562,793 Administrative expenses 2,009,206 1,742,074 Exceptional administrative 50,222 133,536 expenses -------- --------- 2,059,428 1,875,610 OPERATING PROFIT 592,237 687,183 Tax on profit on ordinary 281,678 148,201 activities -------- --------- PROFIT FOR THE FINANCIAL YEAR 310,559 538,982 Dividends 287,114 401,200 -------- --------- RETAINED PROFIT 23,445 137,782 Retained profit brought forward 457,815 320,033 -------- --------- RETAINED PROFIT CARRIED FORWARD 481,260 457,815 ======== ========= EARNINGS PER SHARE Basic earnings per share 2.70p 5.36p Diluted earnings per share 2.56p 5.35p GROUP BALANCE SHEET As at 31 December 2005 31/12/2005 31/12/2004 -------------- --------------- Â£ Â£ Â£ Â£ FIXED ASSETS Intangible 364,695 385,330 assets Tangible 176,597 126,873 assets -------- -------- 541,292 512,203 CURRENT ASSETS Investments 33,177 36,349 Debtors 3,693,549 3,440,023 Cash at bank 5,130,205 4,889,805 and in hand -------- -------- 8,856,931 8,366,177 CREDITORS: Amounts 8,031,163 7,505,700 falling due -------- -------- within one year NET CURRENT 825,768 860,477 ASSETS -------- -------- NET ASSETS 1,367,060 1,372,680 ======== ======== CAPITAL AND RESERVES Called up 114,845 114,845 share capital Share premium 789,834 800,020 account Profit and 481,260 457,815 loss account -------- -------- 1,385,939 1,372,680 Own shares (18,879) - held for -------- -------- cancellation SHAREHOLDERS' 1,367,060 1,372,680 FUNDS ======== ======== COMPANY BALANCE SHEET As at 31 December 2005 31/12/2005 31/12/2004 -------------- -------------- Â£ Â£ Â£ Â£ FIXED ASSETS Intangible assets 364,695 385,330 Tangible assets 176,597 126,873 Investments 100,300 100,300 -------- -------- 641,592 612,503 CURRENT ASSETS Debtors 287,956 87,261 Cash at bank and in hand 4,080 614,686 -------- -------- 292,036 701,947 CREDITORS: Amounts falling due within one year 63,069 483,958 -------- -------- NET CURRENT ASSETS 228,967 217,989 -------- -------- NET ASSETS 870,559 830,492 ======== ======== CAPITAL AND RESERVES Called up share capital 114,845 114,845 Share premium account 779,934 790,120 Profit and loss account (5,341) (74,473) -------- -------- 889,438 830,492 Own shares held for cancellation (18,879) - -------- -------- SHAREHOLDERS' FUNDS 870,559 830,492 ======== ======== GROUP CASH FLOW STATEMENT For the year ended 31 December 2005 31/12/2005 31/12/2004 --------- --------- Â£ Â£ Reconciliation of operating profit to net cash inflow from operating activities Operating profit 592,237 687,183 Depreciation 77,822 59,015 Amortisation 20,635 18,750 Loss on disposal of fixed 13,501 - assets (Increase) in debtors (319,021) (253,720) (Decrease)/increase in (282,020) 481,452 creditors --------- --------- Net cash inflow from 103,154 992,680 operating activities ========= ========= CASH FLOW STATEMENT Cash flow from operating 103,154 992,680 activities Taxation (245,412) (159,682) Capital expenditure and (137,874) (112,814) financial investment Equity dividends paid (287,114) (401,200) --------- --------- (567,246) 318,984 Financing (29,065) 804,665 --------- --------- (Decrease)/Increase in cash (596,311) 1,123,649 ========= ========= Reconciliation of net cash flow to movement in net funds 2005 2004 -------------- -------------- Â£ Â£ Â£ Â£ (Decrease)/Increase in cash (596,311) 1,123,649 in the year -------- -------- Movement in net funds in (596,311) 1,123,649 the year Net funds at 1 January 2005 1,231,041 107,392 -------- -------- Net funds at 31 December 2005 634,730 1,231,041 ======== ======== NOTES FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 31 December 2005 1. ACCOUNTING POLICIES The financial statements have been prepared in accordance with applicable accounting standards. The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. (a) Accounting convention The financial statements have been prepared under the historical cost convention. (b) Revenue Revenue represents net sales of services, commissions and interest excluding value added tax. Income is recognised as it is accrued for fees and interest and on receipt for commissions. (c) Basis of consolidation The group financial statements consolidate the financial statements of Jarvis Securities plc, Jarvis Investment Management plc, Sharegain Limited, JIM Nominees Limited, Galleon Nominees Limited and Dudley Road Nominees Limited made up to 31 December 2005. Intra-group sales and profits are eliminated on consolidation and all sales and profit figures relate to external transactions only. No profit and loss account is presented for Jarvis Securities plc as provided by S230(3) of the Companies Act 1985. (d) Tangible fixed assets Depreciation is provided on cost in equal annual instalments over the lives of the assets at the following rates: Website - 33% on cost Leasehold improvements - 33% on cost Motor vehicles - 15% on cost Office equipment - 20% on cost Software developments - 33% on cost (e) Intangible fixed assets Goodwill represents the excess of the fair value of the consideration given over the aggregate fair values of the separable net assets. Goodwill is amortised over 20 years on a straight-line basis, subject to annual impairment reviews as required. Other intangible assets are capitalised at their market value on acquisition and are amortised on the same basis. (f) Deferred taxation Provision is made in full for all taxation deferred in respect of timing differences that have originated but not reversed by the balance sheet date, except for gains on disposal of fixed assets which will be rolled over into replacement assets. No provision is made for taxation on permanent differences. Deferred tax assets are recognised to the extent that it is more likely than not that they will be recovered. (g) Segmental reporting There are no significant segments for reporting purposes as required by Statement of Standard Accounting Practice 25. (h) Pensions The group operates a defined contribution pension scheme. Contributions payable for the year are charged to the profit and loss account. (i) Stockbroking balances The gross assets and liabilities of the group relating to stockbroking transactions on behalf of clients are included in debtors, creditors and cash at bank. (j) Operating leases and finance leases Costs in respect of operating leases are charged on a straight line basis over the lease term in arriving at the operating profit. Where the company has entered into finance leases, the obligations to the lessor are shown as part of borrowings and the rights in the corresponding assets are treated in the same way as owned fixed assets. Leases are regarded as finance leases where their terms transfer to the lessee substantially all the benefits and burdens of ownership other than right to legal title. (k) Investments Fixed asset investments are stated at cost and current asset investments are stated at current market valuations. (l) Cashflow statement Cash movements relating to stockbroking balances derived from client trading are excluded from the cashflow statement on the basis that these amounts do not form part of the cashflow position of the group. 2. GROUP INCOME The income of the group during the year was made in the United Kingdom and the income of the group for the year derives from the same class of business as noted in the Directors' Report. 2005 2004 -------- -------- Â£ Â£ Interest received 1,280,405 1,165,331 Other turnover 1,371,260 1,397,462 -------- -------- 2,651,665 2,562,793 ======== ======== 3. OPERATING PROFIT 2005 2004 --------- -------- Operating profit is stated after charging: Â£ Â£ Directors' emoluments 241,079 198,905 Depreciation - owned assets 77,820 59,014 Amortisation 20,635 18,750 Operating lease rentals - hire of machinery 786 2,342 Operating lease rentals - land and buildings 19,750 19,750 Auditor's remuneration - audit - parent company 27,000 5,000 Auditor's remuneration - other services - parent compay 28,250 53,347 Auditor's remuneration - other services - 2,200 3,688 subsidiaries Loss on disposal of fixed assets 13,501 - Interest payable and similar charges 213,343 302,652 ========= ======== Directors' emoluments ========= ======== Fees 231,115 190,841 Pension contributions 9,964 8,064 ========= ======== Details of the highest paid director are as follows: Aggregate emoluments 116,248 104,000 Company contributions to personal pension scheme 9,964 8,064 --------- -------- 126,212 112,064 Other services performed by the auditors relates to work performed on tax, VAT and advice on reconstruction of the group. Exceptional administrative costs of an aborted acquisition include Â£23,000 paid to the auditors for due diligence work on the target. The audit costs of the subsidiaries were met by Jarvis Securities plc. Benefits are accruing for one director (2004 one director) under a money purchase pension scheme. Staff Costs The average number of persons employed by the group, including directors, during the year was as follows: Number Number Management and administration 23 22 ======== ======== The aggregate payroll costs of these persons were as Â£ Â£ follows: Wages and salaries 626,883 524,047 Pension contributions 9,964 8,064 Social security 66,094 62,311 -------- -------- 702,941 594,422 ======== ======== 4. EXCEPTIONAL ITEMS Exceptional items derive from the costs relating to the following events: During the current year a potential acquisition was aborted following due diligence. During the previous year the group was restructured and Jarvis Securities plc was formed as a new holding company for the group. 5. INTEREST PAYABLE AND SIMILAR CHARGES 2005 2004 -------- -------- Â£ Â£ Bank loans and overdrafts 8,288 5,320 Interest paid to clients 205,055 297,332 -------- -------- 213,343 302,652 ======== ======== 6. TAX ON PROFIT ON ORDINARY ACTIVITIES 2005 2004 -------- -------- Â£ Â£ Based on the adjusted results for the year: UK corporation tax 201,440 239,750 Adjustments in respect of prior years 523 (80,421) Payment for prior years' group relief 79,715 - -------- -------- Total current tax 281,678 159,329 Deferred tax: Origination and reversal of timing differences - (11,128) -------- -------- Tax on profit on ordinary activities 281,678 148,201 ======== ======== The tax assessed for the year is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below: Profit on ordinary activities before tax 861,989 787,206 ======== ======== Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2004 - 30%) 258,597 236,162 Effects of: Marginal relief - - Group relief claimed without payment (57,758) (4,667) Income not taxable - (28,375) Expenses not deductible for tax purposes 601 2,656 Ineligible depreciation - 1,048 Capital allowances less than depreciation - - Depreciation in excess of capital allowances - 32,926 Adjustments to tax charge in respect of previous years 523 (80,068) Payment for prior years' group relief 79,715 - -------- -------- Current tax charge for the year 281,678 159,682 ======== ======== Movement in provision: Provision at start of year - Deferred tax charged in the P&L account for the - year -------- Provision at end of year - ======== Provision for deferred tax: Accelerated capital allowances - ======== 7. DIVIDENDS 2005 2004 -------- -------- Â£ Â£ Interim dividends paid on Ordinary 1p shares 287,114 401,200 ======== ======== 8a. INTANGIBLE FIXED ASSETS - GROUP Goodwill Brands, Other & Total -------- Databases -------- -------- Â£ Â£ Â£ Cost: At 1 January 2005 387,699 25,000 412,699 -------- -------- -------- At 31 December 2005 387,699 25,000 412,699 ======== ======== ======== Amortisation: At 1 January 2005 25,442 1,927 27,369 Charge for the year 19,385 1,250 20,635 -------- -------- -------- At 31 December 2005 44,827 3,177 48,004 ======== ======== ======== Net Book Value: At 31 December 2005 342,872 21,823 364,695 ======== ======== ======== At 31 December 2004 362,257 23,073 385,330 ======== ======== ======== 8b. INTANGIBLE FIXED ASSETS - COMPANY Goodwill Brands, Other Total & Databases Â£ Â£ Â£ Cost: At 1 January 2005 387,699 25,000 412,699 -------- ------- -------- At 31 December 2005 387,699 25,000 412,699 ======== ======= ======== Amortisation: At 1 January 2005 25,442 1,927 27,369 Charge for the year 19,385 1,250 20,635 At 31 December 2005 -------- ------- -------- 44,827 3,177 48,004 Net Book Value: ======== ======= ======== At 31 December 2005 342,872 21,823 364,695 ======== ======= ======== At 31 December 2004 362,257 23,073 385,330 ======== ======= ======== Intangible assets arose on the acquisition of the trade of CFA Securities Limited during 2003. The trade, databases, trademarks, brands and the nominee company of CFA Securities Limited were purchased for a consideration of Â£225,000. Legal, data conversion and other costs of Â£187,699 were capitalised in addition to the initial consideration during the previous year. 9a. TANGIBLE FIXED ASSETS - GROUP -------- ------ -------- ------ ------- ------- Software Website Leasehold Motor Office Total Development Improvements Vehicle Equipment -------- ------ -------- ------ ------- ------- Â£ Â£ Â£ Â£ Â£ Â£ Cost: At 1 January 78,836 38,905 22,421 - 128,855 269,017 2005 Additions 11,391 5,485 5,877 98,555 61,737 183,045 Disposals - - - (60,000) - (60,000) -------- ------ -------- ------ ------- ------- At 31 90,227 44,390 28,298 38,555 190,592 392,062 December 2005 ======== ====== ======== ====== ======= ======= Depreciation: At 1 January 17,743 31,729 13,258 - 79,414 142,144 2005 Charge for 28,608 6,818 7,636 6,422 28,337 77,821 the year On Disposal - - - (4,500) - (4,500) -------- ------ -------- ------ ------- ------- At 31 46,351 38,547 20,894 1,922 107,751 215,465 December 2005 ======== ====== ======== ====== ======= ======= Net Book Value: At 31 43,876 5,843 7,404 36,633 82,841 176,597 December 2005 ======== ====== ======== ====== ======= ======= At 31 61,093 7,176 9,163 - 49,441 126,873 December 2004 ======== ====== ======== ====== ======= ======= 9b. TANGIBLE FIXED ASSETS - COMPANY -------- ------ -------- ------ ------- ------- Software Website Leasehold Motor Office Total Development Improvements Vehicles Equipment -------- ------ -------- ------ ------- ------- Â£ Â£ Â£ Â£ Â£ Â£ Cost: At 1 January 78,836 38,905 22,421 - 128,855 269,017 2005 Additions 11,391 5,485 5,877 98,555 61,737 183,045 Disposals - - - (60,000) - (60,000) -------- ------ -------- ------ ------- ------- At 31 90,227 44,390 28,298 38,555 190,592 392,062 December 2005 ======== ====== ======== ====== ======= ======= Depreciation: At 1 January 17,743 31,729 13,258 - 79,414 142,144 2005 Charge for 28,608 6,818 7,636 6,422 28,337 77,821 the year On Disposal - - - (4500) - (4,500) -------- ------ -------- ------ ------- ------- At 31 46,351 38,547 20,894 1,922 107,751 215,465 December 2005 ======== ====== ======== ====== ======= ======= Net Book Value: At 31 43,876 5,843 7,404 36,633 82,841 176,597 December 2005 ======== ====== ======== ====== ======= ======= At 31 61,093 7,176 9,163 - 49,441 126,873 December 2004 ======== ====== ======== ====== ======= ======= 10. FIXED ASSET INVESTMENTS Group Company 2005 2004 2005 2004 -------- -------- -------- -------- Unlisted Investments Â£ Â£ Â£ Â£ Cost: At 1 January 2005 - - 100,300 - Additions - - - 100,300 Disposals - - - - -------- -------- -------- -------- As at 31 December 2005 - - 100,300 100,300 -------- -------- -------- -------- Listed Investments Valuation: At 1 January 2005 - - - - Additions - - - - Disposals - - - - -------- -------- -------- -------- As at 31 December - - - - 2005 -------- -------- -------- -------- Total - - - - ======== ======== ======== ======== Unlisted investments are interests held in the following companies registered in the United Kingdom. Shareholding Holding Business -------------- --------- ---------- Jarvis Investment Management plc 100% 10,030,000 1p Ordinary shares Financial Administration On 19 July 2004 a group reorganisation was completed, whereby Jarvis Securities plc acquired 100% of Jarvis Investment Management plc in a share for share exchange. 11. CURRENT ASSET INVESTMENTS Group Company 2005 2004 2005 2004 -------- -------- -------- -------- Listed Investments Valuation: At 1 January 2005 36,349 46,482 - - Additions - - - - Disposals (3,172) (10,133) - - -------- -------- -------- -------- As at 31 December 2005 33,177 36,349 - - -------- -------- -------- -------- Listed investments are stated at their market value at 31 December 2005. 12. DEBTORS Group Company Amounts falling due within one year: 2005 2004 2005 2004 -------- -------- -------- -------- Â£ Â£ Â£ Â£ Trade debtors 2,904,391 2,885,312 3,525 - Amounts owed by group undertakings 149,479 5,000 149,479 5,000 Other debtors 126,698 124,481 126,698 73,676 Prepayments and accrued income 512,981 425,230 8,254 8,585 -------- -------- -------- -------- 3,693,549 3,440,023 287,956 87,261 Trade debtors include Â£2,878,896 (2004 Â£2,882,658) in respect of delivery versus payment transactions for the settlement of client bargains. Other debtors include amounts due from directors of Â£4,875.94 from Andrew Grant and Â£4,930.95 from Mathew Edmett. These loans were advanced pursuant to formal loan agreements to allow the directors to purchase shares in the company. 13. CASH AT BANK & IN HAND Group Company 2005 2004 2005 2004 -------- -------- -------- -------- Â£ Â£ Â£ Â£ Balance at bank and in hand 5,130,205 4,889,805 4,080 614,686 ======== ======== ======== ======== Cash at bank includes Â£4,495,475 (2004 Â£3,658,764) received in the course of settlement of bargains. This amount is held by the company in trust on behalf of clients and is only available to complete the settlement of outstanding bargains. 14. CREDITORS: Group Company Amounts falling due within one year: 2005 2004 2005 2004 -------- -------- -------- -------- Â£ Â£ Â£ Â£ Trade creditors 7,545,754 6,884,729 26,218 262,785 Amounts owed to group companies - - 2,991 - Corporation tax 201,440 159,682 - - Other taxes and Social Security 33,756 41,728 - - Other creditors and provisions 76,254 245,131 18,860 216,173 Accruals 173,959 174,430 15,000 5,000 -------- -------- -------- -------- 8,031,163 7,505,700 63,069 483,958 ======== ======== ======== ======== Trade creditors include Â£7,374,372 (2004 Â£6,541,422) in respect of delivery versus payment transactions for the settlement of client bargains. 15. DEFERRED TAX - GROUP 2005 2004 -------- -------- Â£ Â£ At 1 January 2005 - 11,128 Charge for the year - (11,128) -------- -------- As at 31 December 2005 - - ======== ======== The deferred tax is made up as follows: Origination and reversal of timing differences - - ======== ======== 16. CALLED UP SHARE CAPITAL 2005 2004 -------- -------- Â£ Â£ Authorised: 16,000,000 Ordinary shares of 1p each 160,000 160,000 -------- -------- 160,000 160,000 ======== ======== Allotted, issued and fully paid: 11,484,545 Ordinary shares of 1p each 114,845 114,845 -------- -------- 114,845 114,845 ======== ======== Details of options issued to directors and employees are disclosed in the Directors' Report. 17a. RESERVES AND RECONCILIATION OF SHAREHOLDERS' FUNDS - GROUP ------- ------- -------- ------- Share Share Own Shares Profit Total Capital Premium Held For & Loss Shareholders' Cancellation Account Funds ------- ------- -------- ------- --------- Â£ Â£ Â£ Â£ Â£ At 1 January 100,300 9,900 - 320,033 430,233 2004 Retained profit for - - - 137,782 137,782 the financial year Shares issued 114,845 1,185,454 - - 1,300,299 Expenses of - (395,334) - - (395,334) issue Share for share exchange on acquisition (100,300) - - - (100,300) ------- ------- -------- ------- --------- At 31 December 114,845 800,020 457,815 1,372,680 2004 Retained profit for - - - 23,445 23,445 the financial year Additional expenses of - (10,186) - - (10,186) share issue Purchase of shares for - - (18,879) - (18,879) cancellation ------- ------- -------- ------- --------- At 31 December 114,845 789,834 (18,879) 481,260 1,367,060 2005 ======= ======= ======== ======= ========= 17b. RESERVES AND RECONCILIATION OF SHAREHOLDERS' FUNDS - COMPANY ------- ------- ------- -------- Share Share Own Shares Profit Total Capital Premium Held For & Loss Shareholders' Cancellation Account Funds ------- ------- -------- ------- --------- Â£ Â£ Â£ Â£ Â£ Shares issued 114,845 1,185,454 - - 1,300,299 Expenses of issue - (395,334) - - (395,334) Retained profit for - - - (74,473) (74,473) the financial ------- ------- -------- ------- --------- year At 31 December 114,845 790,120 - (74,473) 830,492 2004 Retained profit for - - - 69,132 69,132 the financial year Additional expenses of - (10,186) - - (10,186) share issue Purchase of shares for - - (18,879) - (18,879) cancellation ------- ------- -------- ------- --------- At 31 December 114,845 779,934 (18,879) (5,341) 870,559 2005 ======= ======= ======== ======= ========= 18. IMMEDIATE AND ULTIMATE PARENT UNDERTAKINGS The company's immediate and ultimate parent undertaking is Sion Holdings Limited, a company registered in England and Wales. 19. RELATED PARTY TRANSACTIONS At the year end Sion Holdings Limited had an outstanding balance due to Jarvis Securities plc of Â£149,479 (2004 Â£5,000). During the year the company made a management charge of Â£10,000 to Sion Holdings Ltd for office and administrative services. 20. EARNINGS PER SHARE The weighted average number of shares in issue during the year for the Earnings per Share calculations are as follows: Date Event No. of shares Days 2005 2004 ------ ---------------- -------- ------ --------- --------- 01/01/ Opening balance 10,030,000 358 - 9,810,765 04 2005 23/12/ Issue of share 11,484,545 8 - 251,028 04 capital 01/01/ Opening balance 11,484,545 365 11,484,545 - 05 2005 --------- --------- 11,484,545 10,061,793 The Diluted Earnings per Share calculation is as follows: Date Event No. of shares Days 2005 2004 --------- 01/01/ Opening balance 2004 10,030,000 358 - 9,810,765 04 11/02/ Issue of share capital 12,134,545 8 - 265,236 04 and options 01/01/ Opening balance 2005 12,134,545 365 12,134,545 - 05 --------- --------- 12,134,545 10,076,001 Earnings per share before exceptional expenses 3.14p 6.68p 21. NOTES TO THE CASH FLOW STATEMENT NOTE A - GROSS CASH FLOWS 2005 2004 --------- --------- Â£ Â£ Capital expenditure and financial investment Payments to acquire tangible fixed assets (183,045) (50,257) Payments to acquire intangible fixed assets - (94,440) Receipts from disposal of fixed assets 41,999 21,750 Receipts from disposal of current asset investments 3,172 10,133 Receipts from disposal of - listed investments --------- --------- (137,874) (112,814) ========= ========= Financing Issue of ordinary share capital - 1,199,999 Expenses paid on issue of shares (10,186) (395,334) Repurchase of own shares (18,879) - --------- --------- (29,065) 804,665 ========= ========= NOTE B - ANALYSIS OF NET FUNDS At 1.1.05 Cash Flow Other Non At 31.12.05 Cash Changes --------- --------- --------- --------- Â£ Â£ Â£ Â£ Cash in hand, 4,889,805 240,400 - 5,130,205 at bank Less DVP (3,658,764) (836,711) - (4,495,475) cash --------- --------- --------- --------- NET FUNDS 1,231,041 (596,311) - 634,730 ========= ========= ========= ========= 22. OPERATING LEASE COMMITMENTS At 31 December 2005 the company was committed to making the following payments during the next year in respect of operating leases which expire: Land and Buildings --------- Â£ After more than five years: 26,500 ========= This information is provided by RNS The company news service from the London Stock Exchange

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