Final Results
Room Service Group PLC
22 September 2003
To be embargoed
Not to be released until 7.00am on 22nd September, 2003
Room Service Group PLC
('Room Service' or 'the Company')
Preliminary results for the year ended 31 December 2002
Chairman's Statement
I am pleased to present my report on the Group's activities and financial
results for the year ended 31 December 2002.
Trading
The year ended 31 December 2002 proved to be very difficult for the Company.
The Company's food delivery subsidiary Room Service (UK) Limited, having made a
loss of £430,000 during the year, was put into members' voluntary liquidation in
January 2003.
The results of Room Service (UK) Limited have not been included in these
consolidated financial statements, on the basis that to do so would be
inconsistent with the requirement to give a true and fair view.
The consolidated profit and loss account shows that the Group incurred an
operating loss for the year of £1.091 million (2001: loss £3.574 million) from
turnover of £0.017 million (2001: £0.991 million).
The loss on ordinary activities before taxation was £2.837 million (2001: loss
£5.504 million).
As a result of the liquidation the preparation and audit of the Company's
financial statements for the year ended 31 December 2002 was delayed resulting
in a temporary suspension of the Company's shares pending publication of the
Company's Report and Financial Statements.
The auditors have drawn attention to the 'going concern' status of the Group
because there are at present no trading businesses while there remain a number
of creditors outstanding. On 3 April 2002, Hanover Capital Group plc ('Hanover
') announced that it was to acquire the outstanding debt of £216,000 from the
creditors of Room Service Group plc.
In the event, Hanover only succeeded in acquiring debt of £119,760 from the
creditors of the Group, leaving £96,740 outstanding. The directors have been
notified that Chiddingfold Investments Limited ('Chiddingfold') has acquired the
Hanover debt and has accordingly become a creditor of the Group.
Your directors have agreed that Chiddingfold will enter into arrangements to
make a loan of £100,000 to the Company, convertible, subject to shareholder
consent, into ordinary shares at 1p per share after the capital reorganisation
referred to below, to enable it to discharge its remaining creditors.
During the course of the year, the company incurred a liability to Coran
Investments Limited ('Coran') for the provision of services. The company has
agreed to discharge this liability by transferring its remaining investments to
Coran. On realisation, Coran shall be entitled to retain the first £50,000 of
sale proceeds with any surplus over £50,000 being shared equally between Coran
and the Company.
Included in the notice of meeting accompanying the financial statements are
details of a capital reorganisation, designed as a first step towards placing
the company in a position to seek an acquisition, which would be a reverse
takeover, intended to restore some value to shareholders.
Board Changes
Alexander Duma resigned as Chairman on 23 January 2003 and I took over as
Chairman on that date. Nicolas Greenstone and Raymond Harris are proposed to be
appointed to the board at the forthcoming Annual General Meeting.
Prospects
Following the liquidation of Room Service (UK) Limited, the Company has no
trading operations but still holds a small number of investments. The directors
are actively seeking to realise the Company's investments in order to satisfy
amounts due to creditors. They are also actively seeking suitable acquisitions
or investment opportunities, which are likely to be classified as a reverse
takeover under the AIM Rules and require shareholder approval.
Gerald Gold
Chairman
19th September, 2003
Consolidated profit and loss account
for the year ended 31 December 2002
Year ended Year ended
31 December 31 December
2002 2001
£'000 £'000
Turnover 17 991
Cost of sales - (380)
Gross profit 17 611
Administrative expenses
- amortisation of goodwill - (618)
- other (1,108) (3,567)
Operating loss (1,091) (3,574)
Profit on discontinuation of operations - 684
Interest receivable and similar charges 2 90
Amounts written off investments (1,748) (2,704)
Loss on ordinary activities before taxation (2,837) (5,504)
Taxation - -
Loss on ordinary activities after taxation (2,837) (5,504)
Minority interest (22) 25
Loss for the year (2,859) (5,479)
Loss per share (2.33p) (13.87p)
Fully diluted loss per ordinary share (2.33p) (13.77p)
Consolidated balance sheet
as at 31 December 2002
31 December 31 December
2002 2001
£'000 £'000
Tangible fixed assets
Investments - 75
Improvements to property, plant and equipment - 7
- 82
Current assets
Investments 133 425
Debtors 68 376
Cash at bank and in hand 1 728
202 1,529
Creditors: amounts falling due within one year (343) (409)
Net current (liabilities)/assets (141) 1,120
Total assets less current liabilities (141) 1,202
Provisions for liabilities and charges - (200)
Net assets (141) 1,002
Capital and reserves
Called up Share Capital 5,004 4,180
Share Premium 10,241 9,371
Profit and loss account (15,386) (12,527)
Equity shareholders funds (141) 1,024
Minority Interest - (22)
Total capital and reserves (141) 1,002
Consolidated cash flow statement
for the year ended 31 December 2002
Year ended Year ended
31 December 2002 31 December 2001
Notes £'000 £'000 £'000 £'000
Cash outflow from operating (723) (2,673)
activities
(i)
Returns on investments and
servicing of finance
Interest received 2 90
Capital expenditure
Purchase of tangible fixed assets (27) (36)
Sale of tangible fixed assets - 18
(27) (18)
Acquisitions
Acquisition of fixed asset investment (207) (649)
Loans and advances to fixed asset investments - (98)
Loans and advances to associates - (509)
Acquistions of subsidiaries - (18)
(207) (1,274)
Disposals
Cash balances of discontinued activities - (77)
Sale of business - 684
- 607
Financing
Issue of equity shares 265 -
Share issue costs (37) -
228 -
Decrease in cash in the period (ii) (727) (3,268)
Notes to the consolidated cash flow statement
for the year ended 31 December 2002.
(i) Reconciliation of operating loss to net cash outflow from operating activities
31 December 31 December
2002 2001
£'000 £'000
Operating loss (1,091) (3,574)
Depreciation 34 263
Amortisation - 618
Loss on discontinued business - 87
Decrease in current asset investments 292 -
Decrease in debtors 308 177
Decrease in creditors (66) (429)
(Decrease)/increase in provisions (200) 185
Net cash outflow from operating activities (723) (2,673)
(ii) Reconciliation of net cash flow to movement in net debt
31 December 31 December
2002 2001
£'000 £'000
Net (debt)/cash brought forward 728 3,996
Movement in funds (727) (3,268)
Net (debt)/cash carried forward 1 728
(iii) Summary of the effects of the acquisition of Room Service (UK) Limited
Net assets acquired £'000
Tangible fixed assets 249
Stocks 24
Debtors 166
Bank loans and overdraft (117)
Other creditors (1,204)
Provisions (11)
(893)
Goodwill 2,642
1,749
Consideration
Shares allotted 1,466
Acquisition expenses 207
Cost of existing investment
transferred from fixed assets 75
1,748
Notes to the preliminary results
For the year ended 31 December 2002
1. Basis of preparation
The financial information in this announcement does not constitute statutory
financial statements as defined in Section 240 of the Companies Act 1985. The
information relating to the year ended 31 December 2001 is an extract from the
statutory accounts for that year, which have been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified and did not
contain any statement under section 237(2) or (3) of the Companies Act 1985.
The auditors have indicated that, in their report on the accounts for the year
ended 31 December 2002 they will note that in forming their opinion they have
considered the adequacy of disclosures made in respect of the preparation of the
accounts on the going concern basis, the validity of which depends on additional
funding being available with which the company can settle expenses as they fall
due. In addition, consideration has been given to the disclosures made relating
to the non-inclusion of Room Service (UK) Limited in the consolidated financial
statements (see Note 2, below). Whilst the auditors have indicated that
attention will be drawn to these matters, their report is not qualified in these
respects.
2. Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and all its subsidiary undertakings (with the exception of Room Service
(UK) Limited) and have been prepared using both merger and acquisition
accounting principles. The Company acquired the entire issued share capital of
Room Service (UK) Limited on 7 January 2002. On 23 January 2003, Room Service
(UK) Limited was placed in members voluntary liquidation. The profit and loss
account, cash flows and balance sheet of Room Service (UK) Limited have not been
included in the consolidated financial statements for the year ended 31 December
2002 on the basis that to do so would be inconsistent with the requirement to
show a true and fair view.
3. Earnings per share
The basic earnings per share is calculated on the weighted average number of
shares in issue during the year of 122,870,118 (2001: 395,029,879). The fully
diluted earnings per share takes account of outstanding options which results in
a weighted average number of shares in issue during the year of 122,870,118
(2001: 397,807,679).
4. Dividends
The Directors are not proposing the payment of a dividend in respect of the year
ended 31st December 2002.
5. Copies of the Company's Report and Accounts will be sent to shareholders
shortly and will be available at the registered office of the Company, 159 Brent
Street, Hendon, London NW4 4DH.
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