Final Results

Interregnum PLC 23 September 2004 Thursday 23rd September 2004 Interregnum plc Financial results for the 12 months ended 30 June 2004 Financial highlights * Turnover increased 83% to Â£3.77m (2003: Â£2.06m) * Losses after tax and minority interests reduced by 53% to Â£0.42m (2003: Â£0.91m) * Total recognised gains of Â£0.03m (2003: loss Â£0.55m) * Value of portfolio up 64% to Â£4.62m (2003: Â£2.89m) * Net cash position up 123% at 30 June to Â£2.86m (2003: Â£1.29m) * Loss per share 0.56p (2003: 1.39p) Corporate highlights * Increased firepower with successful placement of ordinary shares and convertible loan stock raising Â£2.7 million * Investment focus shifted from minority venture capital stakes to principal equity positions * Acquisition of Cellular Design Services in February and add-on acquisition of Applied Intelligent Buildings * Melvyn Morris and John Forrest appointed as Non-Executive Directors; Advisory Board strengthened with appointments of John Scarisbrick and Steve Lewis * Fee-earning advisory capabilities increased by appointment of four Managing Directors with immediate effect * Significant portfolio company developments; Metapraxis signed licensing agreement with PriceWaterhouseCoopers in the USA and UK and CDS signed wireless systems agreement with BAA for an initial five year term Commenting on the results, Ken Olisa, Chairman of Interregnum, said: 'As a technology merchant bank, we intend to become the first European port of call for entrepreneurs and investors seeking to transform technology into wealth and the difficult conditions of the last few years have seen the demise of nearly all of our competitors. Now, as the market improves, our principal assets - creative and experienced people, a powerful network of contacts, and capital - are much in demand.' - Ends - For further information: Interregnum 020 7494 3080 Ken Olisa, Chairman & CEO Martin Cooper, Finance Director Merlin 020 7653 6620 Vanessa Maydon Mob. 07802 961902 Rebecca Penney Mob. 07795 108178 Attached: Chairman's Statement Directors' Report Consolidated Profit & Loss Account Consolidated Balance Sheet Company Balance Sheet Consolidated Statement of Cash flows Notes to the Financial Statements CHAIRMAN'S STATEMENT Q: The technology market is showing some signs of recovery - how has Interregnum fared over the last year? A: The last year saw us achieve significant improvements across the range of key indicators: * Revenues up 83%: Our revenues grew to Â£ 3.77m (2003: Â£2.06m) * Portfolio value up 64%: The value of the portfolio grew to Â£4.62m (2003: Â£2.89m) * Losses halved: Our bottom line losses after tax and minority interests were reduced to Â£0.42m over the previous year (2003: Â£0.91m) * Total recognised gains and losses return to profitability: The losses of the previous year were turned into a small profit of Â£0.03m (2003: loss Â£0.55m) * Cash balances up 123%: The cash balance on June 30th was Â£2.86m (2003: Â£1.29m) Q: Before digging more deeply into the detail, what is your overall feeling about the business? A: We have turned an important corner. From my perspective, 2002 was the worst year I can recall in 30 years of business - a year in which the only news was bad as the world came to terms with the aftermath of September 11th and the bursting of the dot.com bubble. 2003 was very much a period of consolidation, both in the tech sector, and at Interregnum as we worked to recraft the company in response to the changing market realities. That refocusing - as a technology merchant bank - was a natural extension of our 10+ years' history and one which has enabled us to take advantage of the opportunities which emerge from the current information technology and communications market. Q: So you see the market improving for technology companies? A: Yes, there is some definite evidence that the long freeze which has characterised the IT and communications sector has begun to thaw. Both of the key sector indices - NASDAQ and Techmark have improved steadily, if not spectacularly, over the last twelve months and initial public offerings (IPOs) have become less rare. This year's listing of Wolfson Microelectronics on London's main exchange was the first sign and the much heralded flotation of Google on NASDAQ was the largest proof that technology investing is no longer a pariah subject. Q: What is driving this improvement? A: I see several factors at play. Firstly, the public markets are recovering, albeit cautiously, from the over-correction that occurred after the bursting of the dot.com bubble. Secondly, that recovery is underpinned by revenue growth reported by the major players as technology spending increases after two bumpy years. That growth is being driven partly by a natural catch-up process following the drought of the preceding years and partly by new projects such as the Â£5bn additional funding going into NHS IT in the UK and the investment in Homeland security in the USA. And thirdly, US companies are on the acquisition hunt, which is always good news for valuations, as shown by Veritas's recent purchase of UK company Key Vault Systems (KVS) at a price equivalent to 10 times KVS's revenues. Q: Back to your results - can you dig below the surface a little and explain them in more detail? A: Back in the dark days of 2002 and 2003 we established four key operating priorities to ensure that we survived and prospered in those unstable times. The four were - increasing revenues, building portfolio value, reducing overheads and increasing investment firepower. Although we have had to modify their details in the light of circumstances, we have been able to make significant progress against each. Let's look at the P&L first. Revenues have grown significantly as a result of our ownership of two subsidiaries - Cellular Design Services (CDS) and Yospace. During the last year we shifted our investment focus from taking minority venture capital stakes in companies to taking controlling positions instead. The first acquisition under this approach was that of CDS which was completed in February 2004. CDS has a turnover of around Â£4.5m and as it is wholly owned by Interregnum, we consolidate its results from the date of acquisition which accounts for around Â£1.9m of our total revenues. Separately, because we own more than 50% of Yospace their results are incorporated into the total too - a further Â£1.2m of revenue which, along with Â£625,000 of Interregnum advisory fees, produce the healthy 83% increase. This revenue, combined with a continued focus on cost control helped to reduce the year on year loss as described above. Q: And what has been happening to the portfolio? A: The last year has seen a steady growth in the value of our portfolio and in the potential value of some of our major holdings as well as producing over Â£1.0m in cash realisations. Including the acquisition of CDS we invested Â£1.72m in the portfolio and realised Â£1.1m of cash from it. Also, as the underlying performance of portfolio holdings improved we were able to either release provisions or increase their value recorded on our balance sheet. We released net provisions of Â£249,000 and revalued three holdings up by Â£452,000; these, together with net investments, increased our book value by 64% to Â£4.6m. Those rather arcane accounting measures disguise a far more interesting story, the highlights of which are: * CDS (www.cdseurope.com): Obviously the biggest action of the year was the acquisition of CDS as part of our strategy to take advantage of the emerging Age of Ubiquity. CDS is a provider of wireless infrastructure services and software - an area which we predict will be one of the early winners in the next generation of computing. CDS is trading profitably, is set to grow its revenues this year and is valued on our balance sheet at cost Â£1,558,000. * Yospace (www.yospace.com): As a developer of application software for mobile phone operators, Yospace, too is positioned to take advantage of the growth in ubiquitous computing. Both of its product lines have chalked up significant UK and international sales with household names in the mobile phone sector. This success has seen Yospace move into profit. We currently own approximately 54% of Yospace and it is valued on our balance sheet at Â£635,000. * Metapraxis (www.metapraxis.com): The introduction of the Sarbanes Oxley Act in the USA has placed enormous pressures on the management of public companies. In June, Metapraxis announced that it had licensed its Empower.NET software to PriceWaterhouseCoopers in the USA and UK to support PwC's introduction of its new Performance Risk Management ('PRM') advisory service for CEOs, CFOs and non-executive directors. Although terms of the licence have not been made public, we expect it to have a positive impact on Metapraxis' revenues, both directly and indirectly. We currently own 15% of Metapraxis and it is valued on our balance sheet at Â£525,000. * Respond (www.respond-uk.co.uk): The market for customer relationship management is very active at present and Respond supplies software to a very important niche within that market - complaints and feedback management. Respond's annualised revenues are approximately Â£3.3m and they are cash generative. We own 25.9% and it is valued on our books at Â£1.2m. Q: Can you translate 'total recognised gains and losses for the year' into English? A: I'll certainly try, because as a measure, it provides the best way for shareholders to understand Interregnum's true value. Just as for every other business, the correct way to value Interregnum is by measuring how much cash we generate for our shareholders. This is relatively easy if an entity's activities are either investment or trading. However, Interregnum is a hybrid with part of our work focused on generating profits from operations and the other on building and realising incremental value from investments in our portfolio. Over the long run, we will make the bulk of our money by turning shrewd, tightly managed investments, into significant capital gains. But it is a long run - experience from the venture capital sector teaches us that technology investment assets are generally held for between five and ten years before being turned into cash. In the meantime, while we nurture those investments, we earn revenues from the operating businesses that we own and from our advisory fees which are consolidated into a conventional P&L statement. Estimating our potential to generate cash needs a measure which combines the results of our two activities - investment and advisory - and shows the ultimate yield from both our P&L and our balance sheet. Total recognised gains and losses is that measure. Let me explain how we calculate it. Every six months we revalue our portfolio according to the guidelines set out by the British Venture Capital Association (BVCA), taking into account all of the events, both positive and negative, that have affected each investment. Things taken into consideration include: new investments, cash balances, revenue generation and overall operating profitability. If that revaluation produces a negative result (i.e. we think that the value of the holding has fallen) we make a provision against it and that amount reduces our profits in the P&L account. If, on the other hand, we believe that the value of an asset has risen, we record a valuation increase. If that increase is greater than any provision already taken for that particular company we record what is known as an unrealised surplus. Total recognised gains and losses is the net of all of those factors, namely the sum of our bottom line after tax profit, plus any unrealised surpluses. Given that net profits and increased portfolio value, produced within any given period, should eventually turn into cash it provides a very good indication of how well we are performing as a technology merchant bank. Q: Could you explain what you mean by a 'technology merchant bank'? A: We see two distinct opportunities to create wealth from technology over the upcoming months and years - consolidation of businesses from the older eras and the emergence of the next generation of products and services in what we call the Age of Ubiquitous Computing. Accessing those opportunities requires a range of capabilities which include: specialised technology market knowledge, and experience to spot the winning concepts and teams; operational experience to add value to those management teams; investment firepower to be able to take principal positions; and corporate finance skills combined with an extensive contact network to be able to effect complex transactions and exits. We group these activities under three headings - creative people, powerful network of contacts, and capital - the three defining characteristics of a merchant bank and apply them to opportunities with the sole purpose of generating wealth. Q: Is the improved attitude to technology likely to be a permanent phenomenon, or is it merely a fad? A: After the last few years, it would be a brave man who tried to predict the future with any confidence! However, there are some critical signs that provide hope that the current conditions are more normal than exceptional. As I have said above, we see two quite separate drivers of investment opportunity for the next few years. On one hand, companies which have enjoyed success in bygone eras - those centred on the mainframe, the minicomputer and the PC - will continue to consolidate. This trend received a welcome boost when the US courts recently rejected the Department of Justice's attempt to block Oracle's takeover of People Soft - effectively a green light for the larger players to swallow up the smaller fry. On the other hand, the next big generation- what we call the Age of Ubiquitous computing - is just beginning to establish itself. Fuelled by the power of the internet and wireless technologies an entire new computing platform is emerging - a time when almost everything man-made will be a computer. This new era promises to be bigger than any of its predecessors and will facilitate wealth creation in at least four key areas: infrastructure; security; supply chain; and news and entertainment. Q: What bearing does that improving mood have on Interregnum's activities? A: It provides a very welcome boost to our strategy. As a technology merchant bank, we intend to become the first European port of call for entrepreneurs and investors seeking to transform technology into wealth and the difficult conditions of the last few years have seen the demise of nearly all of our competitors. Now, as the market improves, our principal assets - creative and experienced people, a powerful network of contacts, and capital - are much in demand. Added to this, our own investments are enjoying easier trading conditions which of course flows through to an improvement in their values. All of which bodes well for the future. Q: But you have written elsewhere that the wealth created in the previous ages of computing has predominantly accumulated in the USA - is there any reason to believe that UK or European companies have a chance to succeed in the next one? A: It is true that US-registered companies have dominated each of the mainframe, mini-computer and PC ages. And they have done this despite the practical equivalence of US and EU market sizes and populations. History does not have to repeat itself, however. In the Age of Ubiquitous Computing it is the wireless network, the devices that connect to it and the applications that run on it that will determine where the money is made. These are areas in which Europe currently leads the USA. There are more than twice as many mobile phones in use in Europe than exist in the USA and we lead in non-voice applications with SMS (texting) and MMS (multi-media messaging) deploying faster here than in the States. This means that from the perspective of achieving returns, investors in the UK enjoy two different opportunities. The less risky one is to invest in the inevitable consolidation which will occur amongst the established companies. The riskier path is to invest in the next generation of companies which are seeking to catch the wireless wave. These include developers of devices, antennae, network infrastructure equipment, applications and services designed to profit from a future in which everything is connected. Q: You are sounding pretty upbeat again - what are your projections for the year ahead? A: The last year has seen us make considerable progress against our operational priorities, leaving us well positioned to take advantage of the improving market conditions. Let me answer that question in the context of the three elements of a merchant bank - creative people, a powerful network of contacts, and capital. Starting with creative people we have raised the number, level and qualifications of our professional staff. At Board level we were delighted to welcome Mel Morris and, more recently, John Forrest CBE as Directors. Mel was the founder of uDate.com a business which he launched in 1998 and sold for $150m in 2003. John, who has chaired our International Advisory Board since its inception, is a world renowned expert in wireless technologies, he was the founding CEO of NTL and, most recently, served on the Board of Europe's largest venture capitalist - 3i. To take advantage of the more vibrant market, we have recently recruited four new Managing Directors and three Associate Directors, significantly increasing our ability to identify opportunities and exploit them. To be able to call on the counsel of an experienced and well-connected network of contacts is a vital ingredient of a merchant bank and during the year we further strengthened our Advisory Board with the appointment of John Scarisbrick, former President of TI Europe and Non-Executive Director of ARM Holdings plc and Cambridge Silicon Radio plc, and Steve Lewis, formerly Microsoft's General Manager of Market Development and now Co-Founder and Managing Partner of L&H Partners LLC. John and Steve add their extensive knowledge of the semiconductor and software sectors to an already impressive group. Finally we underpinned our expansion plans by increasing our capital firepower during the year with the successful placement of ordinary shares and convertible loan stock raising Â£2.7m. Thanks to the sheer determination of our clients, portfolio company leaders and staff we have learned the many lessons of the last three difficult years and find ourselves well-positioned to take advantage of an increasingly optimistic market. And we do so at a time when most of our competitors have either exited our market or gone out of business. I am confident that the improvement in our performance will continue in lock step with the increased market activity levels and that Interregnum is well positioned for growth in the current financial year. Ken Olisa Chairman & CEO CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 30 JUNE 2004 2004 2003 Notes Â£ Â£ Turnover ----- ---- ---- Continuing operations Ongoing 1,796,656 2,064,606 Acquisitions 1,976,814 - --------- --------- Group turnover 2 3,773,470 2,064,606 Cost of sales - acquisitions (746,035) - ---------- --------- Gross profit 3,027,435 2,064,606 Administrative expenses - ongoing (3,568,711) (3,297,913) Administrative expenses - acquisitions (1,106,988) - ----------- ----------- Administrative expenses - total (4,675,699) (3,297,913) Other operating income - ongoing 108,313 79,230 ----------- ----------- Operating (loss)/profit Continuing operations Ongoing (1,663,742) (1,154,077) Acquisitions 123,791 - Group operating loss 3 (1,539,951) (1,154,077) Profit on sale of investments 6 574,663 251,352 Release of prior year provision on investments 344,880 - Amounts written off investments (95,261) (162,583) Net interest receivable 7 62,536 105,402 ---------- ---------- Loss on ordinary activities before taxation (653,133) (959,906) Taxation 8 102,336 - ---------- ---------- Loss on ordinary activities after taxation (550,797) (959,906) Minority interest - equity 21 126,978 51,063 ---------- ---------- Loss retained for the financial year 20 (423,819) (908,843) Loss per share - basic and diluted 10 (0.56p) (1.39p) NOTE OF HISTORICAL COST PROFITS AND LOSSES FOR THE YEAR ENDED 30 JUNE 2004 2004 2003 Â£ Â£ Loss on ordinary activities before taxation (653,133) (959,906) Realisation of revaluation gains from previous years 551,755 53,006 Write-down of previous revaluation that would not have been taken to the profit and loss account on a historical cost basis - 34,546 --------- --------- Historical cost loss on ordinary activities before taxation (101,378) (872,354) --------- --------- Historical cost profit/(loss) for year retained after taxation and minority interest 127,936 (821,291) --------- --------- CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 30 JUNE 2004 2004 2003 Â£ Â£ Loss for the financial year attributable to members of the parent company (423,819) (908,843) Unrealised surplus on revaluation of fixed asset investments 451,933 354,559 --------- --------- Total recognised gains/(losses) relating to the year 28,114 (554,284) --------- --------- CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2004 2004 2003 ---- ---- Notes Â£ Â£ Â£ Â£ FIXED ASSETS Intangible assets 11 1,651,234 541,021 Tangible assets 12 386,062 243,347 Investments 13 2,280,843 2,103,417 --------- --------- 4,318,139 2,887,785 CURRENT ASSETS Debtors 14 2,143,567 985,251 Cash at bank and in hand 2,859,146 1,293,780 --------- --------- 5,002,713 2,279,031 CREDITORS Amounts falling due within one year 15 (1,915,638) (770,878) ----------- --------- NET CURRENT ASSETS 3,087,075 1,508,153 --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 7,405,214 4,395,938 CREDITORS Amounts falling due after more than one year (including convertible debt) 16 (1,280,833) (116,240) ----------- ---------- NET ASSETS 6,124,381 4,279,698 =========== ========== CAPITAL AND RESERVES Called up share capital 19 4,621,263 3,271,655 Share premium account 20 19,430,496 18,876,852 Revaluation reserve 20 400,634 546,518 Merger reserve 20 (2,406,655) (2,406,655) Profit and loss account 20 (15,751,816) (15,925,814) ------------ ------------ EQUITY SHAREHOLDERS' FUNDS 20 6,293,922 4,362,556 MINORITY INTERESTS (EQUITY) 21 (169,541) (82,858) ------------ ------------ TOTAL FUNDS EMPLOYED 6,124,381 4,279,698 ============ ============ COMPANY BALANCE SHEET AS AT 30 JUNE 2004 2004 2003 ---- ---- Notes Â£ Â£ Â£ Â£ FIXED ASSETS Tangible assets 12 175,236 231,688 Investments 13 4,624,417 2,888,899 --------- --------- 4,799,653 3,120,587 CURRENT ASSETS Debtors 14 1,070,336 829,819 Cash at bank and in hand 2,593,012 1,099,467 --------- --------- 3,663,348 1,929,286 CREDITORS Amounts falling due within one year 15 (796,563) (632,722) --------- --------- NET CURRENT ASSETS 2,866,785 1,296,564 ---------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 7,666,438 4,417,151 CREDITORS Amounts falling due after more than one year (including convertible debt) 16 (1,200,000) - ----------- --------- NET ASSETS 6,466,438 4,417,151 =========== ========= CAPITAL AND RESERVES Called up share capital 19 4,621,263 3,271,655 Share premium account 20 19,430,496 18,876,852 Revaluation reserve 20 400,634 500,456 Profit and loss account 20 (17,985,955) (18,231,812) ------------ ------------ EQUITY SHAREHOLDERS' FUNDS 6,466,438 4,417,151 ============ ============ CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004 2004 2003 Notes Â£ Â£ Net cash flow from operating activities 22(a) (1,492,524) (905,993) Returns on investments and servicing of finance 22(b) 102,855 51,625 Taxation 24,089 - Capital expenditure and financial investment 22(b) 890,028 965,597 Acquisition 22(b) (685,312) (696,334) --------- --------- Cash outflow before financing (1,160,864) (585,105) Financing 22(b) 2,726,230 124,740 ----------- --------- Increase/decrease in cash 1,565,366 (460,365) =========== ========= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2004 2003 Notes Â£ Â£ Increase/(decrease) in cash in the year 1,565,366 (460,365) (Increase) in debt and lease financing (1,371,121) (116,288) Loans and finance leases acquired with subsidiary (18,918) - Loan stock issued on acquisition of subsidiary (400,000) - ----------- --------- Movement in net funds (224,673) (576,603) Net funds at 1 July 2003 1,177,540 1,754,143 ----------- ---------- Net funds at 30 June 2004 22(c) 952,867 1,177,540 =========== ========== NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2004 1 ACCOUNTING POLICIES ---------------------- (a) Basis of accounting The financial statements are prepared under the historical cost convention modified by the revaluation of fixed asset investments and in accordance with applicable accounting standards. (b) Basis of consolidation The consolidated financial statements incorporate those of Interregnum Plc and all of its subsidiary undertakings for the year. Subsidiaries acquired during the year are consolidated using the acquisition method. Their results are consolidated from the date that control passes. The difference between the acquisition cost of the shares in the subsidiary and the fair value of the separable net assets acquired is carried as goodwill. In accordance with the exemption allowed by section 230 of the Companies Act 1985, the company profit and loss account is not presented. (c) Goodwill Positive goodwill arising on acquisitions is capitalised, classified as an asset on the balance sheet, and amortised on a straight line basis over its useful economic life up to a presumed maximum of 20 years. Goodwill arising on the acquisitions of Yospace Technologies Limited and Cellular Design Services Limited is written off over 10 years. It is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. (d) Intangible assets Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangible assets created within the business are not capitalised. Intangible assets are amortised on a straight line basis over their estimated useful lives up to a maximum of 10 years. The carrying value of intangible assets is reviewed for impairment at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. A discount factor of 30% has been applied to the cash flows in measuring the value in use of the intangible fixed assets of Yospace. (e) Depreciation Tangible fixed assets are stated at net book value. Depreciation is provided on all tangible fixed assets at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows: Improvements to short leasehold land and buildings - 15% per annum straight line Fixtures and fittings - 15%-33% per annum straight line Plant and equipment - 33% per annum straight line Motor vehicles - 25-33% per annum straight line The carrying values of tangible fixed assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. (f) Fixed asset investments Fixed asset investments, comprising equity shares, share options and loans are stated at cost or valuation and in accordance with the 'Guidelines for the valuation and disclosure of venture capital portfolios' published by the British Venture Capital Association effective August 2003 on the following basis: â€¢ Early stage investments: these are investments in immature companies including seed, start-up and early stage investments. Such investments are valued at cost less any provision considered necessary, until no longer viewed as early stage or unless a significant transaction involving an independent third party at arm's length values the investment at a materially different value. â€¢ Development stage investments: such investments are in mature companies having a maintainable trend of sustainable profits and from which an exit, by way of flotation or trade sale, can be reasonably foreseen. An investment of this stage is periodically revalued by reference to open market value. Valuation will usually be by one of four methods as indicated: i) At cost for at least one period unless such a basis is unsustainable; i) On a third party basis based on the price at which a subsequent issue of capital is made involving a significant investment by a new investor; ii) On an earnings basis, but not until at least a period since the investment was made, by applying a discounted price/earnings ratio to profit after taxation, either before or after interest; or iii) On a net asset basis, again applying a discount to reflect the illiquidity of the investment. â€¢ Quoted investments: such investments are valued using the quoted mid market price, discounted if the shares are subject to any particular restrictions or are significant in relation to the issued share capital of a small quoted company. â€¢ Share options are subject to vesting and other conditions set out in the options agreements. The valuation is based on the intrinsic value of all share options that have vested. This is the difference between the market value of shares at the balance sheet date and the exercise price. A review of permanent diminution in value is undertaken by reference to funding, investment or offers in progress after the balance sheet date. No adjustment is made for any uplift in value after the balance sheet date. Investments in subsidiaries are held at cost less provision for impairment. (g) Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account. (h) Leasing and hire purchase agreements Assets held under finance leases and hire purchase contracts, which are those where substantially all the risks and rewards of ownership of the asset have passed to the Group, are capitalised in the balance sheet and are depreciated over their useful lives. The interest element of the rental obligations is charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding. Rentals payable and receivable under operating leases are charged or credited to the profit and loss account on a straight line basis over the lease term. (i) Deferred taxation Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more tax, with the following exceptions: â€¢ Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, or gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold. â€¢ Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. (j) Pensions The company contributes 3% of employees' gross salary into personal pension funds of their choice. The costs of providing pension contributions for employees are charged to the profit and loss account. (k) Turnover Turnover from advisory business represents the amount derived from the provision of completed work to clients during the year. Contingency fees (including investment fees) are recognised on completion of the contingent event. Software licence fees are recognised on delivery of the software licence. For bespoke projects income is recognised on acceptance of the software installation by the client. Software support income is recognised evenly over the period of the support agreement. Mobile and wireless consultancy is recognised on customer acceptance of the completed report. (l) Research and development Research and development expenditure is charged to the profit and loss account as incurred. 2 TURNOVER AND SEGMENTAL ANALYSIS --------------------------------- Turnover and loss by origin were sourced from the UK. The Group operates in three classes of business. The Investment and advisory business and the software development support and marketing business represent the ongoing activities in the profit and loss account. The mobile and wireless consultancy activity represents the acquired business as disclosed in the profit and loss account. Interregnum Plc provides both intellectual and financial capital to technology companies through offerings in research, market assessment, valuation, commercial due diligence, acquisition, venture capital, corporate venturing and recovery. Yospace Technologies Limited develops, markets and supports software for the mobile telecommunications industry at the leading edge of wireless development. Cellular Design Services Limited supplies consultancy services to the mobile and wireless telecommunications sector. Sales were made in the following geographical markets: 2004 2003 Â£ Â£ UK 3,289,356 1,032,285 Other European countries 439,922 323,436 USA and Canada 27,824 696,869 Other 16,368 12,016 --------- --------- 3,773,470 2,064,606 ========= ========= Profit/(loss) on ordinary activities before taxation Turnover and minority interest Net assets -------- --------------------- ---------- 2004 2003 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Â£ Â£ Continuing operations Investment and advisory 624,948 1,262,837 (355,494) (841,977) 6,040,514 4,418,304 Less: inter segmental sales (65,100) (15,450) - - - - Software development, support and marketing 1,236,808 817,219 (369,578) (117,929) (370,257) (138,606) --------- --------- --------- --------- ---------- ---------- 1,796,656 2,064,606 (725,072) (959,906) 5,670,257 4,279,698 Acquisitions Mobile and wireless consultancy 1,976,814 - 71,939 - 454,124 - --------- --------- --------- --------- ---------- ---------- 3,773,470 2,064,606 (653,133) (959,906) 6,124,381 4,279,698 3 OPERATING LOSS ------------------ 2004 2003 Â£ Â£ This is stated after charging/(crediting): Auditors' remuneration - audit - parent 23,000 34,000 - subsidiaries 14,500 - - non-audit 9,250 18,000 Depreciation of owned tangible fixed assets 171,596 123,445 Depreciation of tangible fixed assets held under finance leases and hire purchase contracts 4,064 - Depreciation of intangible assets 52,984 35,323 Amortisation of goodwill 58,599 6,200 Operating lease rentals - land and buildings 305,564 221,599 Operating lease rentals - plant and machinery 56,652 - Operating lease rentals - other 33,637 - Research and development 376,701 - Exchange loss 6,535 1,555 Operating lease rental income (108,313) (79,230) Charges for non audit services provided by the auditors in the year ended 30 June 2004 relate to the provision of tax compliance work. The directors consider the auditors were best placed to provide these services. The Audit Committee reviews the nature and extent of non audit services to ensure that independence is maintained. 4 DIRECTORS' EMOLUMENTS ----------------------- 2004 2003 Â£ Â£ Emoluments 509,761 471,002 Pension contributions 13,365 11,115 ------- ------- 523,126 482,117 ======= ======= Highest paid director: Emoluments 112,070 136,802 Pension contributions 3,240 3,240 ------- ------- 115,310 140,042 ======== ======= During the year 6 (2003: 5) directors accrued benefit under money purchase pension schemes. 5 STAFF COSTS -------------- 2004 2003 Â£ Â£ Wages and salaries 2,401,494 1,611,803 Social security costs 263,935 163,469 Other pension costs 46,495 26,368 --------- --------- 2,711,924 1,801,640 ========= ========= The average monthly number of employees (including directors) during the year was as follows: 2004 2003 No. No. Office and management 58 31 6 PROFIT ON SALE OF INVESTMENTS -------------------------------- 2004 2003 Â£ Â£ Realisation of investments 574,663 251,352 7 NET INTEREST RECEIVABLE -------------------------- 2004 2003 Â£ Â£ Interest receivable 206,244 117,790 Interest payable on - bank loans (9,942) - - other loans (44,194) (12,388) - finance charges payable under hire purchase contracts (447) - Loan finance costs (89,125) - -------- -------- 62,536 105,402 ======== ======== 8 TAXATION ----------- 2004 2003 Â£ Â£ (a) Analysis in year: Current tax: Based on the loss for the year: Corporation tax (68,561) - Overprovided in prior year (33,006) - -------- ---- Total current tax (note 8(b)) (101,567) - Deferred tax: Origination and reversal of timing differences (769) - --------- ---- Tax credit on loss on ordinary activities (102,336) - ========= ==== (b) Factors affecting tax charge for the year: The tax for the year differs from the standard rate of corporation tax in the UK (30%). The differences are explained below. 2004 2003 Â£ Â£ Loss on ordinary activities before tax (653,133) (959,906) Loss on ordinary activities multiplied by the tax rate above (195,940) (287,972) Effect of: Expenses not deductible for tax purposes 47,779 12,286 Depreciation in the year in excess of capital allowances 41,459 36,082 Investments written down - not tax deductible 25,203 139,450 Research and development tax relief (51,361) - Losses foregone on surrender for tax relief 55,769 - Difference in tax and accounting profit on disposal 165,523 - Unrelieved tax losses 221,174 100,154 Capital losses utilised (337,926) - Losses utilised (36,425) - Marginal small companies rate relief (3,816) - Adjustment in respect of previous period (33,006) - --------- -------- Current tax for the year (note 8(a)) (101,567) - ========= ======== (c) Deferred tax: Deferred taxation recognised and the amounts not recognised are as follows: Recognised Not recognised 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Group ----- Accelerated/(decelerated) capital allowances (52,157) - (35,493) (8,474) Tax losses carried forward - - (24,105,281) (23,997,419) -------- --- ------------ ------------ Undiscounted deferred tax asset (52,157) - (24,140,774) (24,005,893) ======== === ============ ============ Company ------- Accelerated/(decelerated) capital allowances - - (35,311) (8,474) Tax losses carried forward - - (24,063,565) (23,962,016) -------- --- ------------ ------------ Undiscounted deferred tax asset - - (24,098,876) (23,970,490) ======== === ============ ============ The group has tax losses of approximately Â£10,895,000 (2003: Â£10,161,000) available for off set against future taxable trading profits and capital losses of approximately Â£69,453,000 (2003: Â£70,580,000) available to carry forward and off set against future chargeable gains. Deferred tax assets of Â£24.1m (2003: Â£24.1m) have not been recognised in respect of these losses since the benefit of the unrecognised losses will only accrue when taxable profits are realised on the sale of the company's investments and gains are realised on future disposals. 9 LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY ----------------------------------------------------- The loss dealt with in the financial statements of the parent company is Â£305,898 (2003: Â£848,036). 10 LOSS PER SHARE ------------------ The calculation of basic earnings per share is calculated on a group loss of Â£423,819 (2003: Â£908,843) and on a weighted average of 75,461,656 (2003: 65,433,107) shares in issue during the year. Due to the loss in the year there is no further dilution of the earnings per share on a fully diluted basis. 11 INTANGIBLE FIXED ASSETS --------------------------- Group Intellectual property Goodwill Total Â£ Â£ Â£ Cost At 1 July 2003 529,839 52,705 582,544 Fair value adjustment to goodwill - 40,295 40,295 Additions - 1,181,501 1,181,501 ------- --------- --------- At 30 June 2004 529,839 1,274,501 1,804,340 ======= ========= ========= Depreciation At 1 July 2003 35,323 6,200 41,523 Charged in the year 52,984 58,599 111,583 ------- ------ ------- At 30 June 2004 88,307 64,799 153,106 ======= ====== ======= Net book value At 30 June 2004 441,532 1,209,702 1,651,234 ======= ========= ========= At 30 June 2003 494,516 46,505 541,021 ======= ====== ======= The fair value of the goodwill of Yospace has been adjusted in the first full year following acquisition as the full costs of the acquisition have now been finalised. 12 TANGIBLE FIXED ASSETS ------------------------- Group ----- Improvements Fixtures, to short fittings and leasehold land computer Plant and Motor and buildings equipment machinery vehicles Total Â£ Â£ Â£ Â£ Â£ Cost At 1 July 2003 116,566 542,445 - - 659,011 Acquired with subsidiary - 19,034 142,183 84,638 245,855 Additions 1,738 49,795 16,932 7,925 76,390 Disposals - - (15,066) - (15,066) ------- ------- -------- ------ -------- At 30 June 2004 118,304 611,274 144,049 92,563 966,190 ======= ======= ======== ====== ======== Depreciation At 1 July 2003 47,494 368,170 - - 415,664 Charged in the year 19,096 81,351 52,536 22,677 175,660 Released on disposal - - (11,196) - (11,196) ------ ------- -------- ------ -------- At 30 June 2004 66,590 449,521 41,340 22,677 580,128 ====== ======= ======== Net book value At 30 June 2004 51,714 161,753 102,709 69,886 386,062 ====== ======= ======== ====== ======= At 30 June 2003 69,072 174,275 - - 243,347 ====== ======= ======== ====== ======= The net book value of fixed assets includes Â£12,192 (2003: Â£nil) in respect of assets held under hire purchase agreements. The amount of depreciation in respect of such assets amounted to Â£4,064 (2003: Â£nil) for the year. Company ------- Improvements Fixtures, to short fittings and leasehold land computer and buildings equipment Total Â£ Â£ Â£ Cost At 1 July 2003 88,495 311,506 400,001 Additions 1,738 31,768 33,506 ------ ------- ------- At 30 June 2004 90,233 343,274 433,507 ====== ======= ======= Depreciation At 1 July 2003 19,423 148,890 168,313 Charged in the year 19,096 70,862 89,958 ------ ------- ------- At 30 June 2004 38,519 219,752 258,271 ====== ======= ======= Net book value At 30 June 2004 51,714 123,522 175,236 ====== ======= ======= At 30 June 2003 69,072 162,616 231,688 ====== ======= ======= 13 INVESTMENTS --------------- Group ----- Subsidiary Unlisted Listed undertakings investments investments Loans Total Â£ Â£ Â£ Â£ Â£ Cost or valuation At 1 July 2003 132,371 1,482,410 553,527 2,480,764 4,649,072 Additions - 115,803 - 44,197 160,000 Disposals - - (551,755) - (551,755) Revaluations - 367,500 84,433 - 451,933 Eliminated on liquidation (132,371) (109,170) - - (241,541) --------- --------- ------- -------- --------- At 30 June 2004 - 1,856,543 86,205 2,524,961 4,467,709 --------- ---------- ------- --------- ---------- Amounts provided At 1 July 2003 - 1,109,601 - 1,436,054 2,545,655 Released during the year - (11,250) - (333,630) (344,880) Provided during the year - 95,261 - - 95,261 Eliminated on liquidation - (109,170) - - (109,170) -------- --------- ------- ---------- --------- At 30 June 2004 - 1,084,442 - 1,102,424 2,186,866 -------- ---------- ------- ---------- ---------- Net book value At 30 June 2004 - 772,101 86,205 1,422,537 2,280,843 ======== ========== ====== ========= ========== At 1 July 2003 132,371 372,809 553,527 1,044,710 2,103,417 ======== ========== ======= ========= ========== Previous impairment losses in respect of investments have been reversed during the year due to the improved performance of the companies concerned. On an historical cost basis, these fixed asset investments would have been included as follows: 2004 2003 Â£ Â£ Unlisted investments 3,890,118 3,979,781 Listed investments - market value 1,772 553,527 Estimated taxation on potential capital gain if sold at valuation - - The estimated taxation on the potential capital gain if sold at valuation is Â£nil since there are sufficient capital losses available to offset any potential gains. Company ------- Subsidiary Unlisted Listed undertakings investments investments Loans Total Â£ Â£ Â£ Â£ Â£ Cost or valuation At 1 July 2003 280,610 1,551,293 553,527 3,104,146 5,489,576 Reclassifications 12,879 (12,879) - - - Revaluations - 367,500 84,433 - 451,933 Additions 1,558,092 115,803 - 44,197 1,718,092 Disposals - - (551,755) - (551,755) Eliminated on liquidation (132,371) (117,292) - - (249,663) --------- --------- --------- ------ --------- At 30 June 2004 1,719,210 1,904,425 86,205 3,148,343 6,858,183 ---------- ---------- --------- --------- ---------- Amounts provided At 1 July 2003 - 1,164,623 - 1,436,054 2,600,677 Released during the year (11,250) - (333,630) (344,880) Provided during the year - 95,261 - - 95,261 Eliminated on liquidation - (117,292) - - (117,292) -------- --------- -------- ---------- --------- At 30 June 2004 - 1,131,342 - 1,102,424 2,233,766 -------- ---------- -------- ---------- ---------- Net book value At 30 June 2004 1,719,210 773,083 86,205 2,045,919 4,624,417 ========= ======= ====== ========= ========= At 30 June 2003 280,610 386,670 553,527 1,668,092 2,888,899 ======= ======= ======= ========= ========= Previous impairment losses in respect of investments have been reversed during the year due to the improved performances of the companies concerned. On an historical cost basis, these fixed asset investments would have been included as follows: 2004 2003 Â£ Â£ Unlisted investments 6,282,353 5,489,576 Listed investments 1,772 553,527 Estimated taxation on potential capital gain if sold at valuation - - The estimated taxation on a potential capital gains if sold at valuation is Â£nil since there are sufficient capital losses available to set off any potential gains. Subsidiary undertakings Class Proportion Nature of Name of subsidiary of holding held directly of business ------------------ ---------- ------------- ----------- Interregnum Investment Partners Limited Ordinary 100% Fund Manager Interregnum Advisory Partners Limited Ordinary 100% Advisory services Yospace Technologies Limited* Ordinary 54% Provision of wireless software Cellular Design Services Limited Ordinary 100% Software solutions * On a fully diluted basis Interregnum Plc owns 47% of Yospace Technologies Limited. Analysis of the acquisition of Cellular Design Services Limited On 2 February 2004 Interregnum plc acquired 100% of Cellular Design Services Limited for a consideration including costs of Â£1,558,092 satisfied by the issue of 5,142,857 ordinary shares of 5p at 8.75p each, Â£400,000 of 6% unsecured loan notes at par and cash of Â£650,000. The assets acquired have been included in the Group's balance sheet at their fair value as at the date of acquisition. Analysis of the acquisition of Cellular Design Services Limited: Group Net assets at date of acquisition of 2 February 2004 Fair value Book value Adjustments to group Â£ Â£ Â£ Tangible Fixed assets 253,879 (8,024) (a) 245,855 Debtors 663,276 (3,485) (a) 659,791 Cash at bank and in hand 22,780 - 22,780 Creditors: amounts falling due within one year (548,449) - (548,449) Creditors: amounts falling due after one year (13,077) 9,691 (a) (3,386) --------- ------- --------- Net assets 378,409 (1,818) 376,591 ========= ======= ========= Goodwill arising on acquisition 1,181,501 --------- 1,558,092 Discharged by: ========= New share issue 450,000 Loan notes 400,000 Cash 650,000 Legal costs of acquisition 58,092 --------- 1,558,092 ========= (a) Adjustments to align accounting policies. Cellular Design Services Limited contributed Â£120,632 to the Group's net operating cash flows and paid Â£2,111 of interest in addition to the payment of cash and costs of Â£708,092 shown in the Group's cashflow statement as part of the purchase of Cellular Design Services Limited as shown above. The summarised profit and loss account for Cellular Design Services Limited for the period from 1 July 2003 to 2 February 2004 is as follows: Â£ Turnover 2,586,546 Operating profit 44,402 Profit before tax 22,115 In the 12 months to 30 June 2003 the loss after taxation was Â£272,451. 14 DEBTORS ------------ Group Company 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Due within one year Trade debtors 1,072,995 400,877 203,229 201,555 Amounts due from Group undertakings - - 9,203 640 Other debtors 714,740 387,465 703,816 442,242 Prepayments and accrued income 303,675 96,909 154,088 85,382 --------- ------- ------- ------- 2,091,410 885,251 1,070,336 729,819 Due in more than one year Other debtors - 100,000 - 100,000 Deferred tax asset 52,157 - - - --------- ------- --------- ------- 2,143,567 985,251 1,070,336 829,819 ========= ======= ========= ======= 15 CREDITORS ------------- Group Company 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Amounts falling due within one year Short term loans 614,383 - 400,000 - Obligations under finance leases and hire purchase contracts 11,063 - - - Trade creditors 522,311 231,807 236,715 219,441 Amounts due to group undertakings - 132,371 - 132,371 Corporation tax 12,063 - - - Other taxes and social security costs 261,331 60,883 31,047 28,888 Other creditors 146,185 116,527 - 22,732 Accruals and deferred income 348,302 229,290 128,801 229,290 --------- ------- ------- ------- 1,915,638 770,878 796,563 632,722 ========= ======= ======= ======= 16 CREDITORS -------------- Group Company 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Amounts falling due after more than one year Loans (note 17) 1,280,833 116,240 1,200,000 - 17 LOANS --------- Group Company 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Amounts falling due: In one year or less or on demand 614,383 - 400,000 - In more than one year but not more than two years 1,210,000 116,240 1,200,000 - In more than two years but not more than five years 30,000 - - - In more than five years 40,833 - - - --------- ------- --------- ---- 1,895,216 116,240 1,600,000 - Less: Included in creditors: amounts falling due within one year (614,383) - - - ---------- ------- --------- ---- 1,280,833 116,240 1,600,000 - ========== ======= ========= ==== Included within short term loans is an amount of Â£204,383 relating to loan notes in Yospace Technologies Limited secured over the assets of Yospace Technologies Limited. The loan attracts interest at the higher rate of 8% per annum or LIBOR plus 5% per annum and is repayable on 22 October 2004 with a repayment premium equal to 100% of the nominal value of the loan notes issued. Obligations under finance leases and hire purchase contracts are secured on the related assets. Included within loans is Â£10,000 falling due within one year and Â£80,833 falling due after one year which is repayable in equal monthly instalments of Â£833.33 over nine years. Interest is charged at 3.5% above the Barclays Bank plc base rate. During the year Interregnum plc issued Â£1,600,000 of debentures, Â£1,200,000 of which relates to floating rate Unsecured Convertible Loan Notes issued at par, and Â£400,000 relates to 6% unsecured loan notes issued at par. The Convertible Stock carries interest at the rate of 2 per cent above Barclays Bank plc's base rate from time to time. It can be redeemed by the Company at any time within two years of its issue and is required to be redeemed at par together with outstanding interest by the Company on its maturity date being the second anniversary of the date of its issue of 8 March 2004. On redemption, the Company is required to issue warrants ('Warrants') over ordinary shares in respect of each Â£1 of Convertible Stock redeemed. The Warrants are exercisable within 3 years from their issue at 15 pence per ordinary share. The Convertible Stock can be converted by the holder at any time prior to the maturity date (unless previously redeemed by the Company) at a rate of 6.6667 new ordinary shares for each Â£1 of Convertible Stock. In the event that the Company has not redeemed all of the unconverted Convertible Stock by or on the maturity date the holder of the Convertible Stock will have the right to convert all of the outstanding Convertible Stock at a rate of 20 ordinary shares for each Â£1 of Convertible Stock outstanding. 18 FINANCIAL INSTRUMENTS ------------------------- (a) Policies and risks The Group's financial instruments comprise term loans, warrants and equity investments held within the portfolio, cash and liquid resources and various items such as trade debtors and trade creditors that arise directly from its operations. The main reason for holding the warrants and equity investments is to achieve capital growth in their value and subsequently dispose of them realising a profit. The main risk arising from the Group's financial instruments is market price risk. The Group has investments denominated in foreign currencies; it is therefore subject to an element of foreign exchange risk. The Group does not undertake any foreign exchange hedging activities. The Group has debt with fixed and floating interest rates repayable as set out in note 17. The group does not hedge against interest rate risk. The disclosures below exclude short-term debtors and creditors. (b) Currency profile 2004 2003 Â£ Â£ Net monetary assets sterling 2,701,177 1,218,067 Net monetary assets US dollars 113,716 75,713 Net monetary assets Euro 44,253 - --------- --------- 2,859,146 1,293,780 ========= ========= (c) Maturity profile of the Group's financial liabilities Other than the loans referred to in note 17 all of the Group's other financial liabilities as at 30 June 2004 and 30 June 2003 mature within one year. (d) Interest rate profile The interest rate profile on financial assets is: 2004 Floating Fixed Interest free Total Â£ Â£ Â£ Â£ Sterling 2,751,177 1,177,400 725,243 4,653,820 US dollar 441,916 - - 441,916 Euro 44,253 - - 44,253 --------- --------- ------- --------- 3,237,346 1,177,400 725,243 5,139,989 ========= ========= ======= ========= 2003 Floating Fixed Interest free Total Â£ Â£ Â£ Â£ Sterling 1,318,067 1,045,946 508,072 2,872,085 US dollar 75,713 - 551,755 627,468 --------- --------- ------- --------- 1,393,780 1,045,946 1,059,827 3,499,553 ========= ========= ========= ========= The interest on fixed rate financial assets is 8% which is fixed until maturity averaging 4 years. Floating rate financial assets comprise cash deposits on money market at various short-term maturity rates which on average have an interest rate of 41/4 % The financial assets on which no interest is earned are the Group's fixed asset equity investments which have no maturity date. The interest rate profile on financial liabilities is: 2004 Floating Fixed Total Â£ Â£ Â£ Sterling 1,495,216 411,063 1,906,279 2003 Floating Fixed Total Â£ Â£ Â£ Sterling 116,240 - 116,240 (e) Fair values of financial assets and liabilities Book value 2004 2003 Â£ Â£ Cash and deposits 2,859,146 1,293,780 Debtors due after one year 52,157 100,000 Fixed asset investments - loans 1,422,537 1,044,710 Fixed asset investments - listed equity 86,205 553,527 Fixed asset investments - unlisted equity 772,101 372,809 Long term borrowings (1,280,833) (116,240) The directors believe that the book values for the financial assets and liabilities above are not materially different from their fair values. Fixed asset investment loans and unlisted equities have been written down to the directors' assessment of their recoverable amounts, which the directors believe is close to their fair values. Fixed asset investments in listed equities are valued in the books at mid market value at 30 June 2004 which the directors believe is approximately fair value. (f) Undrawn committed facilities The Group had undrawn committed borrowing facilities at 30 June 2004 of Â£316,627 (2003: Â£100,000). 19 SHARE CAPITAL ----------------- Authorised 2004 2003 Â£ Â£ Ordinary shares of Â£0.05 each 8,250,000 5,000,000 Allotted, called up and fully paid 2004 2004 No. Â£ At 1 July 2003 65,433,107 3,271,655 Issued during the year 26,992,147 1,349,608 ---------- --------- At 30 June 2004 92,425,254 4,621,263 ========== ========= On 2 February 2004 5,142,857 ordinary shares with an aggregate nominal value of Â£257,143 were issued at 8.75p each as part of the consideration for the acquisition of the issued share capital of Cellular Design Services Limited. On 18 March 2004 21,849,290 ordinary shares with an aggregate nominal value of Â£1,092,465 were issued at 7p each as part of a placing. Share options During the year the company granted options to subscribe for ordinary shares of Â£0.05 each as follows: Number of Option price ordinary shares per share No. Â£ Date granted 7 July 2003 5,000,000 Â£0.0538 24 July 2003 4,500,000 Â£0.0538 27 April 2004 250,000 Â£0.05 ------- 9,750,000 ========= Vesting of these options is as follows: Number of ordinary shares No. Vesting period Vest equally over three years 5,250,000 Vest equally over five years 4,500,000 --------- 9,750,000 ========= Subject to the vesting conditions, the options can be exercised at any date up to the tenth anniversary of the date of the grant. During the year to 30 June 2004 504,000 options lapsed. The following options, granted in previous years, were unexercised at 30 June 2004. Period in which options No of shares Exercise price can be exercised ------------ -------------- ---------------- 2,915,548 5.00p 13 March 2000 to 13 March 2010 2,000,000 5.00p 1 January 2003 to 31 December 2012 4,765,200 5.00p 9 April 2003 to 8 April 2013 1,500,000 5.00p 30 June 2004 to 31 December 2012 36,667 5.00p 8 April 2004 to 8 April 2013 36,667 5.00p 8 April 2004 to 8 April 2013 36,666 5.00p 8 April 2006 to 8 April 2013 1,353,083 5.00P 1 July 2003 to 8 April 2013 1,353,083 5.00p 1 July 2004 to 8 April 2013 1,353,083 5.00p 1 July 2005 to 8 April 2013 1,353,083 5.00p 1 July 2006 to 8 April 2013 1,353,083 5.00p 1 July 2007 to 8 April 2013 299,628 5.38p 24 July 2004 to 24 July 2013 299,628 5.38p 24 July 2005 to 24 July 2013 299,628 5.38p 24 July 2006 to 24 July 2013 299,628 5.38p 24 July 2007 to 24 July 2013 299,628 5.38p 24 July 2008 to 24 July 2013 3,001,859 5.38p * 250,000 5.00p 1 July 2004 to 27 April 2014 5,000,000 5.38p 7 July 2004 to 7 July 2013 4,360,000 Â£1.12 13 March 2000 to 13 March 2010 *These share options vest upon the holder's satisfactory contribution to the results of the Interregnum Advisory business and vest in five equal instalments from that date. The latest exercise date is 24 July 2013. 20 RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENTS ON RESERVES ------------------------------------------------------------------- Group ----- Total Share share- Share premium Revaluation Merger Profit and holders capital account reserve reserve loss account funds Â£ Â£ Â£ Â£ Â£ Â£ At 30 June 2003 3,271,655 18,876,852 546,518 (2,406,655) (15,925,814) 4,362,556 Gains realised in the year - - (551,755) - 551,755 - Revaluation upwards - - 451,933 - - 451,933 Loss for the year - - - - (423,819) (423,819) New share issue 1,349,608 629,843 - - - 1,979,451 Share issue costs - (76,199) - - - (76,199) Reserves transfer - - (46,062) - 46,062 - --------- ------- -------- --------- ------ ------- At 30 June 2004 4,621,263 19,430,496 400,634 (2,406,655) (15,751,816) 6,293,922 ========= ========== ======= ========= ========== ========= Following a review of reserves an adjustment has been made between the revaluation reserve and the profit and loss account reserve to reflect the realisation of revaluation gains on assets disposed of in previous years. Company ------- Total Share share- Share premium Revaluation Profit and holders capital account reserve loss account funds Â£ Â£ Â£ Â£ Â£ At 30 June 2003 3,271,655 18,876,852 500,456 (18,231,812) 4,417,151 Gains realised in the year - - (551,755) 551,755 - Revaluation upwards - - 451,933 - 451,933 Loss for the year - - - (305,898) (305,898) New Share issue 1,349,608 629,843 - - 1,979,451 Share issue costs - (76,199) - - (76,199) --------- -------- ------- -------- -------- At 30 June 2004 4,621,263 19,430,496 400,634 (17,985,955) 6,466,438 ========= =========== ======= ============ ========== 21 MINORITY INTERESTS (EQUITY) ------------------------------ 2004 Â£ At 1 July 2003 82,858 Loss for the year attributable to minority interests 126,978 Fair value adjustment to goodwill (note 11) (40,295) -------- At 30 June 2004 169,541 ======== 22 NOTES TO THE STATEMENT OF CASH FLOWS ---------------------------------------- (a) Reconciliation of operating loss to net cash outflow from operating activities 2004 2003 Â£ Â£ Operating loss (1,539,951) (1,154,077) Depreciation 175,660 123,445 Amortisation of intangible fixed assets 111,583 41,523 Movement in debtors (315,595) (16,672) Movement in creditors 71,909 99,788 Loss on sale of tangible fixed assets 3,870 - --------- ------ Net cash outflow from operating activities (1,492,524) (905,993) ========= ======= (b) Analysis of cash flows for headings netted in the cash flow statement 2004 2003 Â£ Â£ Returns on investments and servicing of finance Interest received 113,624 64,013 Interest paid (10,322) (12,388) Interest element of finance lease rental payments (447) - --- --- Net cash inflow from returns on investments and servicing of finance 102,855 51,625 ======= ====== Capital expenditure and financial investment Payments to acquire tangible fixed assets (76,390) (37,926) Payments to acquire fixed asset investments (160,000) (165,948) Increase in loan to current asset investments - (50,000) Receipts from sale of fixed assets investments 1,126,418 702,559 Receipts from sale of current asset investment - 516,912 --------- ------- Net cash inflow from capital expenditure and financial investment 890,028 965,597 ========= ======= Acquisition Purchase of subsidiary (708,092) (696,334) Net cash acquired with subsidiary 22,780 - ------ ------- Net cash outflow from acquisitions (685,312) (696,334) ======= ======= Financing Issue of ordinary share capital 1,453,252 - Capital element of finance lease rental payments (7,855) - Issue of ordinary share capital in subsidiary - 8,500 Increase in long term borrowings 80,833 116,240 Increases in loan stock borrowings 1,200,000 - --------- ------- Net cash inflow from financing 2,726,230 124,740 ========= ======= (c) Analysis of changes in net funds At Other non- At 1 July cash 30 June 2003 Cash flow Acquisitions movements 2004 Â£ Â£ Â£ Â£ Â£ Cash 1,293,780 1,565,366 - 2,859,146 Short term loans - - (400,000) (214,383) (614,383) Finance lease obligations - 7,855 (18,918) - (11,063) Long term loans - (80,833) - - (80,833) Loan stock (116,240) (1,200,000) - 116,240 (1,200,000) ------- --------- ------ ------- --------- 1,177,540 292,388 (418,918) (98,143) 952,867 ========= ========= ======= ====== ========= The other non-cash movements relate to the reclassification of loans from long term to short term and the allocation of interest. 23 OTHER FINANCIAL COMMITMENTS ------------------------------- At 30 June 2004 the Group had annual commitments under non-cancellable operating leases as set out below: Land and buildings Other 2004 2003 2004 2003 Â£ Â£ Â£ Â£ Operating leases which expire: Within one year 24,131 - 25,388 - Within two to five years 103,250 - - - After five years 225,500 222,500 - - ------- ------- ------ --- 352,881 222,500 25,388 - ======= ======= ====== === 24 ULTIMATE CONTROLLING PARTY AND RELATED PARTY TRANSACTIONS ------------------------------------------------------------- In the opinion of the directors there is no ultimate controlling party. During the year Interregnum plc supplied consultancy services of Â£15,100 to Yospace Technologies Limited, a subsidiary in which the Group owns 54% of the ordinary share capital. In addition Interregnum plc holds Â£524,542 (2003: Â£524,542) series A loan notes and Â£101,080 (2003: Â£101,080) series B loan notes in Yospace Technologies Limited. During the year Interregnum plc accrued interest receivable on this balance of Â£70,406. At the year end Yospace Technologies Limited owed Interregnum plc Â£104,277. No disclosure has been made within these financial statements for any transaction with any other subsidiary undertakings in accordance with the exemptions allowed by Financial Reporting Standard No. 8. During the year Venture Marketing Limited, a company controlled by Graham Ransom, a non executive director, paid Interregnum plc Â£17,733 in respect of services supplied. At the year end, Venture Marketing Limited owed Interregnum plc Â£3,173 in respect of these services. Included within trade creditors at the year end are the following amounts due to non-executive directors' companies, in respect of remuneration for the following directors included within directors' emoluments in note 4. R Fifield Â£2,143 G Shingles Â£2,053 G Ransom Â£2,117 This information is provided by RNS The company news service from the London Stock Exchange D FR PUUUUBUPCPGP

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Parkmead Group (The) (PMG)

Wednesday, 15th May 2024

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Oil services company Hunting sees share price jump on news of significant contract win from Kuwait, Keller advances as pre-AGM trading statement upgrades profit forecast and Experian full year performance lands at top of expectations.

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