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Woodburne Square AG (STGR)

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Thursday 30 June, 2011

Woodburne Square AG

Final Results

RNS Number : 4868J
Woodburne Square AG PLC
30 June 2011
 



`

30 June 2011

 

 

Woodburne Square Ag plc

 

("Woodburne Square" or the "Company")

 

Final Results for the year ended 31 December 2010

 

 

The Board of Woodburne Square, the silver and precious metals focused investment company, is delighted to announce its final results for the year ended 31 December 2010.

 

Financial and Operational Highlights

·    Net assets increased by 1.4million to £1.458 million (compared to £95,000 in 2009);

 

·    Profit increased to  £1.272 million (compared to a loss of £823,000 in 2009);

 

·    Earnings per share of 2.5 pence (compared to a loss of 1.6 pence in 2009)

 

·    Cash and cash equivalents increased by 323% to  £1.576 million (compared to a £488,000 in 2009)

 

·    Successfully shifted the strategic direction of the business to focus on investment opportunities in the precious metals securities market with a particular focus on silver.

 

Post-period Updates

·    Raised £605,000, before expenses, on 28 February 2011. This funding will be used  to make further investments in high quality silver companies listed on the TSX and ASX;

 

·    Fully diluted NAV increased by 34% from 2.52p on 7 January 2011, to 3.37p on 7 April 2011, within three months of the implementation of the new strategy;

 

·    Next NAV update to be announced to the market on 7 July 2011.

 

Martin Kiersnowski, Chairman of Woodburne Square, commented:

"2010 saw a transformation of the Company, including directorate changes and a business strategy overhaul reflected in the name change to Woodburne Square AG Plc.  Changing the strategic focus of the Company to seek value in precious metals securities markets, paying particularly attention to silver, has been a key driver during the period. The restructuring of the Group's activities has been vindicated with the positive financial highlights reported above.

"Whilst there will continue to be high level of volatility in commodity stock valuation, the Board remains positive about the outlook for silver in terms of price, silver equities and our portfolio in particular. Operational gearing means that shares in the high quality silver plays in which we have invested should prosper, and we therefore view the short and medium term outlook with extreme confidence."

Forward looking information

This financial report contains certain forward looking statements with respect to the financial condition, results, operations and business of the Group. These statements and forecasts involve risk and uncertainty because they relate to events that depend on circumstances in the future. There are a number of factors that could cause actual results or developments to differ from those expressed or implied by these forward looking statements.

 

For further information please contact

 

Woodburne Square Ag plc

Martin Kiersnowski, Chairman

Tel: 0207 562 3350

 

Tom Winnifrith, Chief Investment Officer
Tel: 01624 676848

 

Libertas Capital Corporate Finance Limited

Sandy Jamieson

Tel: 0207 569 9650

 

Rivington Street Corporate Finance

Dru Edmonstone

Tel: 020 7562 3350

 

Bishopsgate Communications

Laura Stevens/Giang Nguyen

Tel: 0207 562 3350

 



Chairman's Statement

Introduction

I would like to introduce myself as your new Chairman and am pleased to announce the results for Woodburne Square AG plc ("The Company" or "Woodburne Square"), covering the 12 month period ended 31 December 2010. This report  will discuss the Company's strategic change in direction to focus on investment opportunities in the precious metals securities market, particularly focused on silver, and will provide post period updates to give an indication of expectations for 2011.

Overview

On 9 November 2010, I was appointed Chairman of the Board following Jonathan Lander's resignation. Subsequently, upon shareholder approval, the investment focus of the Company was changed with a mandate to invest in precious metal securities, namely silver, in companies quoted on stock exchanges in the UK, Canada and Australia. Additionally, the Company disposed of the majority of its non-core operations during the period.

This strategic change in business direction followed the SF t1ps Smaller Companies funds - Growth and Gold - acquiring a 21% shareholding in the Company on 5 November 2010.

The Company's French subsidiaries, Directinet SA and Netcollections SAS were sold in January 2010 to Bisnode AB.  Following these disposals, the Company settled a lease obligation in respect of its London offices and repaid bank debt. A final consideration of €460,097 was agreed with Bisnode in July 2010 in accordance with calculations set out in the Sale and Purchase Agreement.

Additionally, ongoing costs associated with the running of the Company were significantly reduced with full time staff being replaced by non-executive directors and part-time advisors in France.

During the year, the principal activity of the Company was dealing with post-completion issues in relation to the sale of Directinet and Netcollections and building a new investment strategy designed to increase shareholder value.

 

Investing Policy

Going forward, our investment strategies will focus on:

·    Investing in companies involved in the exploration, development and production of precious metals, with a focus on silver;

 

·    A diversified spread of investments made into a number of different companies;

 

·    Target companies that are predominately quoted on stock exchanges, however, if we see value in unquoted companies, we will review and potentially invest;

 

·    Passive investments, with no monies being allocated to managed funds or active managed investment vehicles;

     

·    A minimum level of cash being held by the Company in the UK at all times, to cover day to day running costs.

 

 

Additionally:

 

·    Mr. Tom Winnifrith, manager of the SF t1ps Smaller Companies Gold Fund, has been appointed as the Company's Chief Investment Officer pursuant to the Investment Adviser's Agreement which has been entered into with t1ps Investment Management (IoM) Limited.

 

·    The Company will not take on any debt to finance the investments;

 

·    The Board, may from time to time, decide to hold assets of the Company, via the French Branch, if the Board considers that this may assist the Branch to utilise any tax losses it may benefit from;

 

 

Current Activities and Outlook

Upon shareholders' approval at the General Meeting held on 7 January 2011, the Company has embarked on a new investment strategy with the aim of obtaining significant investment returns arising from the increasing adoption of precious metals as a store of value by international investors.

As UK exposure to the exciting Silver market is limited, Woodburne Square's investment strategy is focused on high quality silver companies listed on the TSX and ASX, together with some special situations in gold. Silver's outperformance of Gold over the past year has been heavily covered, but operational gearing means that the high quality silver mining equities that the Company holds should result in a continuation of outperformance.

The new direction has been accompanied by a change of name, effective from 7 February 2011, from Directex Realisations plc to Woodburne Square AG plc.

The Company continues to manage its remaining French interests via its wholly owned subsidiary Direct Excellence Limited and is working to secure any possible repayment of historical tax losses in France. The branch holds a 12.2% interest stake in the ordinary share capital of Web-Clubs Limited.

On 28 February 2011, following increasing demand from institutional investors, Woodburne Square raised £605,000, before expenses.  Under the guidance of new Chief Investment Officer, Mr Tom Winnifrith, the new funds have been used to make further investments in high quality silver companies listed on the TSX and ASX.

On 8 April 2011, Woodburne Square announced that within only three months of implementing the new strategy its fully diluted NAV increased from 2.52p on 07 January 2011, to 3.37p on 7 April 2011, an increase of 34%.

The Company will next provide shareholders with a NAV update on 7 July 2011.

 

The Board remains positive about the outlook for silver in terms of price, silver equities and our portfolio in particular. Operational gearing means that shares in the high quality silver plays in which we have invested should prosper, and we therefore view the short and medium term outlook with extreme confidence.

 

Martin Kiersnowski

Chairman

30 June 2011

 

Consolidated income statement

For the year to 31 December 2010

 

Notes

 

2010

£'000

2009

£'000

Continuing operations

 

 

 

 

 

 

 

 

 

Revenue

5

 

-

-

 

 

 

 

 

Cost of sales

 

 

-

-

 

 

 

 

 

Gross profit

 

 

-

-

 

 

 

 

 

Administrative expenses

 

 

(338)

(1,337)

 

 

 

 

 

Operating loss

 

 

(338)

(1,337)

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

 

 

- Interest on bank overdraft and loans

 

 

(6)

(234)

- Foreign exchange gain on loan payable

 

 

-

308

 

 

 

 

 

Loss before tax

 

 

(344)

(1,263)

 

 

 

 

 

Tax

9

 

-

-

 

 

 

 

 

Loss for the year from continuing operations

6

 

(344)

(1,263)

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

Profit for the year from discontinued operations

20

 

1,616

440

 

 

 

 

 

Profit / (loss) for the period

 

 

1,272

(823)

 

 

 

 

 

Profit / (loss) attributable to equity holders of the parent

 

 

1,272

(823)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings /(loss) per share

11

 

 

 

 

 

 

 

 

From continuing operations

 

 

 

 

 

 

 

 

 

Basic (pence)

 

 

(0.7)

(2.5)

 

 

 

 

 

Diluted (pence)

 

 

(0.7)

(2.5)

 

 

 

 

 

From continuing and discontinued operations

 

 

 

 

 

 

 

 

 

Basic (pence)

 

 

2.5

(1.6)

 

 

 

 

 

Diluted (pence)

 

 

2.5

(1.6)

 

 

 

 

 

 


Consolidated statement of comprehensive income

For the year to 31 December 2010

 

2010

£'000

2009

£'000

 

 

 

 

Profit /(loss) for the year

 

1,272

(823)

 

 

 

 

Exchange differences on translation of foreign operations

 

91

(1,729)

 

 

 

 

Other comprehensive income / (loss) for the period

 

91

(1,729)

 

 

 

 

Total comprehensive income for the year attributable to equity holders of the parent

 

1,363

(2,552)

 

 

 

 

 

 


Consolidated statement of financial position

At 31 December 2010

Notes

2010

£'000

2009

£'000

 

 

 

 

Current assets

 

 

 

Trade and other receivables

13

24

84

Cash and cash equivalents

13

1,576

488

Assets held for sale

20

-

11,019

 

 

 

 

Total current assets and Total assets

 

1,600

11,591

 

 

 

 

Total assets

 

1,600

11,591

 

 

 

 

Current liabilities

 

 

 

Bank loans and overdrafts

14

-

(3,509)

Trade and other payables

15

(142)

(1,114)

Provisions

16

-

(965)

Liabilities directly associated with assets classified as held for sale

20

-

(5,908)

 

 

 

 

Total liabilities

 

(142)

(11,496)

 

 

 

 

Net current assets

 

1,458

95

 

 

 

 

Equity

 

 

 

Share capital

19

202

202

Share premium

 

26,680

26,680

Other reserve

 

2,372

2,372

Retained earnings

 

(27,796)

(29,159)

 

 

 

 

Total equity

 

1,458

95

 

 

 

 

 

 

 

 

 

 

 


Consolidated statement of changes in equity

At 31 December 2010

Share capital

£'000

Share premium

£'000

Other reserve

£'000

Retained

earnings

£'000

Total

£'000

Changes in equity

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

-

-

-

(823)

(823)

Other comprehensive loss for the period

-

-

-

(1,729)

(1,729)

 

 

 

 

 

 

Total comprehensive income for the year

-

-

-

(2,552)

(2,552)

Balance at 1 January 2009

202

26,680

2,372

(26,607)

2,647

 

 

`

 

 

 

Balance at 31 December 2009

202

26,680

2,372

(29,159)

95

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

1,272

1,272

Other comprehensive income for the period

-

-

-

91

91

 

 

 

 

 

 

Total comprehensive income for the year

-

-

-

1,363

1,363

Balance at 1 January 2010

202

26,680

2,372

(29,159)

95

 

 

 

 

 

 

Balance at 31 December 2010

202

26,680

2,372

(27,796)

1,458

 

 

 

 

 

 

 

The Company acquired the entire issued share capital of Direct Excellence Limited (previously known as Interactive Prospect Targeting Limited) pursuant to a share for share exchange on 1 December 2004.  The Other reserve reflects the difference between the nominal value of the shares issued to acquire Direct Excellence Limited and the cumulative value of the Company's share capital and share premium at the date of acquisition.

 

 

 


Consolidated statement of cash flows

For the year to 31 December 2010

 

 

 

2010

2009

 

Notes

 

£'000

£'000

Profit/(loss) for the year

 

 

 

 

 

From continuing operations

 

 

(344)

(1,263)

From discontinued Operations

 

 

1,616

440

Adjusted for:

 

 

 

 

Finance expense

 

 

6

234

Gain arising on disposal of discontinued operations

 

 

(1,616)

(273)

Income tax expense

 

 

-

323

Depreciation and amortisation

 

 

-

530

Foreign exchange revaluation gain

 

 

-

(308)

Decrease in provisions

 

 

(965)

(807)

Decrease in trade and other receivables

 

 

60

5,912

Decrease in trade and other payables

 

 

(972)

(5,706)

 

 

 

 

 

Cash used in operations

 

 

(2,215)

(918)

 

 

 

 

 

Taxation received

 

 

-

535

Interest paid

 

 

(6)

(477)

 

 

 

 

 

Net cash used in operating activities

 

 

(2,221)

(860)

 

 

 

 

 

Investing activities

 

 

 

 

Disposal of subsidiary

20

 

6,780

2,079

 

 

 

 

 

Net cash generated from investing activities

 

 

6,780

2,079

 

 

 

 

 

Financing activities

 

 

 

 

Repayment of borrowings

 

 

(3,509)

(2,901)

 

 

 

 

 

Net cash used in financing activities

 

 

(3,509)

(2,901)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

1,050

(1,682)

 

 

 



Cash and cash equivalents at beginning of year

 

 

488

3,704

 

 

 



Effect of foreign exchange rate changes

 

 

38

(535)

 

 

 



Cash balance held within assets held for sale

 

 

-

(999)

 

 

 

 

 

Cash and cash equivalents at end of year

 

 

1,576

488

 

 

 

 

 

 

 


Notes to the consolidated financial statements

For the year to 31 December 2010

 

1.         General information

Woodburne Square AG plc (the "Company") is a company incorporated in the United Kingdom under the Companies Act 2006. The principal activity of the Group was the provision of permission-based online direct marketing services and management services.  As reported in the Chairman's statement, the Group disposed of some of its trading operations during the year, with the remainder disposed of subsequent to the year end. The group is now trading as an investment company with a mandate to invest in low risk securities.

 The financial information for the year ended 31 December 2010 or 2009 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2009 have been delivered to the Registrar of Companies and the 2010 accounts will be delivered to Registrar of Companies following the Company's Annual General Meeting. The auditors reported on those accounts, their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2.         Adoption of new and revised Standards

In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.

Standards affecting the financial statements

IFRS 3(2008) Business Combinations;

IAS 27(2008) Consolidated and Separate Financial Statements;

IAS 28(2008) Investments in Associates

These standards have introduced a number of changes in the accounting for business combinations when acquiring a subsidiary or an associate. IFRS 3(2008) has also introduced additional disclosure requirements for acquisitions. See note 3 for more details.

The following amendments were made as part of Improvements to IFRSs (2009).

Amendment to IFRS 2 Share-based Payment

IFRS 2 has been amended, following the issue of IFRS 3(2008), to confirm that the contribution of a business on the formation of a joint venture and common control transactions are not within the scope of IFRS 2.

Amendment to IAS 17 Leases

IAS 17 has been amended such that it may be possible to classify a lease of land as a finance lease if it meets the criteria for that classification under IAS 17.

The amendment has been applied retrospectively in accordance with the relevant transitions.

Amendment to IAS 39 Financial Instruments: Recognition and Measurement

IAS 39 has been amended to state that options contracts between an acquirer and a selling shareholder to buy or sell an acquiree that will result in a business combination at a future acquisition date are not excluded from the scope of the standard.

Standards not affecting the reported results nor the financial position.

The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements.

 


Notes to the company financial statements

At 31 December 2010

 

2.         Adoption of new and revised Standards (continued)

IFRIC 17 Distributions of
Non-cash Assets to Owners

The Interpretation provides guidance on when an entity should recognise a non-cash dividend payable, how to measure the dividend payable and how to account for any difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable when the payable is settled.

IFRS 2 (amended) Group Cash-settled Share-based Payment Transactions

The amendment clarifies the accounting for share-based payment transactions between group entities.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

IFRS 9                                                    Financial Instruments

IAS 24 (amended)                                            Related Party Disclosures

IAS 32 (amended)                                            Classification of Rights Issues

IFRIC 19                                                             Extinguishing Financial Liabilities with Equity Instruments

IFRIC 14 (amended)                                         Prepayments of a Minimum Funding Requirement

Other improvements to IFRSs (May 2010)

The adoption of IFRS 9 which the Group plans to adopt for the year beginning on 1 January 2013 will impact both the measurement and disclosures of Financial Instruments.

The directors do not expect that the adoption of the other standards listed above will have a material impact on the financial statements of the Group in future periods.

3.         Accounting policies

The principal accounting policies adopted are set out below.

Basis of accounting

The financial statements have been prepared in on the historic cost basis and in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation.

Going concern

The financial statements have been prepared on a going concern basis.  At 31 December 2010, the Group had cash of £1,576,000, no borrowings and net assets of £1,458,000.

The French subsidiaries, Directinet SA and Netcollections SAS were sold in January 2010.  Following the disposal, the Group settled a lease obligation in respect of its London offices and repaid bank debt. The principal assets following the Directinet and Netcollections disposals were an unquoted investment in Webclubs Limited, and cash.

The Company has embarked on a new investment strategy focused on high quality silver companies listed on the TSX and ASX, together with some special situations in gold.  Since year end, the Group has invested the majority of its previous cash holdings in accordance with this strategy.  The Directors consider these investments to be highly liquid.Having assessed the ongoing level of expenditure and taking account of reasonably possible changes in trading performance, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future.

The Company has embarked on a new investment strategy focused on high quality silver companies listed on the TSX and ASX, together with some special situations in gold.  Since year end, the Group has invested the majority of its previous cash holdings in accordance with this strategy.  The Directors consider these investments to be highly liquid.

3.         Accounting policies (continued)

Basis of preparation

The consolidated financial statements incorporate the financial statements of the Group and entities controlled by the Company (its subsidiaries).  Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.  All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method.  The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquirer, plus any costs directly attributable to the business combination.  The acquirer's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.  If, after reassessment, the Group's interest in the net fair value of the acquirer's identifiable assets, liabilities and contingent liabilities exceed the cost of the business combination, the excess is recognised immediately in profit or loss.

Goodwill

Goodwill arising on business combinations represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.  Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.  Goodwill, which is recognised as an asset, is reviewed for impairment at least annually.  Any impairment is recognised immediately in the income statement and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units that is expected to benefit from the synergies of the combination.  Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.  If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.  An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.



 

3.         Accounting policies (continued)

Acquisition related intangible assets and other intangible assets

Acquisition related intangible assets, which comprise of existing unfulfilled orders at acquisition date, non-contractual customer relationships and trade names, relate to identifiable assets that meet the conditions for recognition under IFRS 3 at the acquisition date.

Other intangible assets, which comprise licences, computer software and data acquisition costs, are stated at cost, net of amortisation and any recognised impairment loss. Computer software is amortised over two years. Data acquisition costs comprise the external purchase costs of data used by customers for marketing purposes and are amortised over three years.

Property, plant and equipment

Property, plant and equipment are stated at cost, net of depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets less residual value, over their estimated useful lives, using the straight-line method, on the following basis:

Computer equipment

33% on cost

Plant and equipment

20% on cost

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease.

Internally-generated intangible assets

Expenditure on research activities is recognised as an expense in the period in which it is incurred. 

An internally-generated intangible asset arising from the Group's website developments is recognised only if all of the following conditions are met:

·           an asset is created that can be identified (such as software and new processes);

·           it is probable that the asset created will generate future economic benefits; and

·           the development costs of the asset can be measured reliably.

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives.  Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. 

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.   All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease.  The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.  Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.  Finance charges are charged directly against income. 

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.



 

3.         Accounting policies (continued)

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

Sales of goods are recognised when goods are delivered and title has passed. Revenue is recognised when the significant risks and rewards associated with ownership of the goods have been transferred. Sales of services are recognised with reference to the stage of completion. 

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency).  For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.  At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.  Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.  Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period.  Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity.  For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date.  Income and expense items are translated at the average exchange rates for the period.  Exchange differences arising are classified as equity and transferred to the Group's translation reserve.  Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Operating profit

Operating profit is stated before investment income and finance costs. 

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year.  Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.



 

3.         Accounting policies (continued)

Taxation (continued)

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.  Deferred tax is charged or credited in the income statement, except when it related to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and where they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.  If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.  Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.  An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount and the impairment loss is recognised as an expense immediately.

When an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years.  A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.



 

3.         Accounting policies (continued)

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Investments

Investments, other than investments in subsidiaries, joint ventures and associates are financial asset investments and are initially recorded at fair value.  Investments other than those classified as held to maturity or loans and receivables are classified as either at fair value through profit or loss (which includes investments held for trading) or available for sale investments.  Both sub-categories are measured at each reporting date at fair value.  Where investments are held for trading purposes, unrealised gains and losses for the period are included in the income statement within other gains and losses.  For available for sale investments, unrealised gains and losses are recognised in equity until the investment is disposed or impaired, at which time the cumulative gain or loss previously recognised in equity is included in the income statement.   

Trade receivables

Trade receivables do not carry any interest and are measured at their nominal value as reduced by any appropriate allowances for irrecoverable amounts.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Bank borrowings

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.  Finance charges are accounted for on an accruals basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade payables

Trade payables are not interest bearing and are stated at their nominal value.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group will be required to settle that obligation.  Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material.



3.         Accounting policies (continued)

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based payments.  In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005. 

The Group operates a number of equity-settled share-based payment schemes under which share options are issued to certain employees.  Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant.  The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of the Black Scholes model.  The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Assets held for sale

Assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

4.         Revenue

An analysis of the Group's revenue is as follows:

Year ended 31 December 2010

 

Continuing operations

 

Total

Discontinued operations

 

2010

£'000

2010

£'000

2010

£'000

Revenue from the supply of online direct marketing products and services

-

-

-

Investment revenue

-

-

-

 

 

 

 

Total

-

-

-

 

 

 

 

Year ended 31 December 2009

 

Continuing operations

 

Total

Discontinued operations

 

2009

£'000

2009

£'000

2009

£'000

Revenue from the supply of online direct marketing products and services

-

-

14,997

Investment revenue

-

-

-

 

 

 

 

Total

-

-

14,997

 

 

 

 

 

5.         Segmental information

Business segments

Segmental information is presented in respect of the Group's primary business segments.

Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.  Continuing operations comprise mainly head office expenses.

Segmental capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill and those arising on business combinations.

The Group currently has no trading segments and its activities are investment management and management services.

Results - year ended 31 December 2010

 

Continuing

operations

£'000

Discontinued operations (Note 11)

 £'000

 

 

 

Revenue

-

-


 

 

Operating (loss)/profit from operations

(338)

-


 

 

Finance costs

(6)

-

Gain on disposal

-

1,616


 

 

(Loss)/profit for the year before taxation

(344)

1,616


 

 

Taxation

-

-


 

 

(Loss)/profit for the year

(344)

1,616


 

 

Results - year ended 31 December 2009

 

Continuing

operations

£'000

Discontinued operations (Note 11)

 £'000

 

 

 

Revenue

-

14,997


 

 

Operating (loss)/profit from operations

(1,337)

490


 

 

Gain on disposal

-

273

Finance income, net

74

-


 

 

(Loss)/profit for the year before taxation

(1,263)

763


 

 

Taxation

-

(323)


 

 

(Loss)/profit for the year

(1,263)

440


 

 

 

6.         Loss for the year

Loss for the year has been arrived at after charging/(crediting):

Year ended 31 December 2010

Continuing operations

Discontinued operations

Total

 

2010

£'000

2010

£'000

2010

£'000

 

 

 

 

Staff costs (see note 8)

264

-

264

 

 

 

 

 

Year ended 31 December 2009

Continuing operations

Discontinued operations

Total

 

2009

£'000

2009

£'000

2009

£'000

 

 

 

 

Foreign exchange gain

(308)

-

(308)

 

 

 

 

Amortisation of intangible assets (note 15)

-

530

530

Staff costs (see note 8)

532

5,274

5,806

 

 

 

 

7.         Auditor's remuneration

The analysis of auditor's remuneration is as follows:

 

2010

£'000

2009

£'000

Fees payable to the Company's auditor for the audit of the Company's annual accounts

25

30

 

 

 

Fees payable to the Company's auditor and their associates for the audit of the Company's subsidiaries pursuant to legislation

-

5

 

 

 

Total audit fees

25

35

 

 

 

Fees payable to the Company's auditor and their associates for other services to the Group:

 

 

- Tax services

13

33

 

 

 

 

38

68

 

 

 

 



 

8.         Staff costs

The average monthly number of employees (including executive directors) for the continuing operations was:

 

2010

No.

2009

No.

 

 

 

Administration

3

6

 

 

 

 

2010

£'000

2009

£'000

 

 

 

Wages and salaries (including Directors' emoluments)

230

446

Social security costs

34

86

 

 

 

 

264

532

 

 

 

Directors' emoluments were as follows:

 

 2010

£'000

2009

£'000

 

 

 

Nicholas Ward

115

190

David Cicurel

9

30

Barton L. Faber

-

25

Stephane Zittoun

-

13

Martin Kiersnowski

19

104

Jonathan Lander

23

-

Nick Lander

23

-

Nicholas Hall

1

-

Russell Davill

1

-

 

 

 

 

191

362

 

 

 

Nicholas Ward resigned on 1 March 2010. An agreement was entered into with Nicholas Ward in April 2009, under which he was potentially entitled to certain payments if the French subsidiaries (being Directinet SA, NP6 SAS and Netcollections SAS) were all disposed of during his tenure as a director.  Following the completion of these transactions in January 2010, a payment of £100,000 was made and is included in the directors' emoluments above.

In addition, Nicholas Ward claims that the disposals triggered an obligation to pay him an amount equal to 5% of any Relevant Value defined as being any and all dividends or other capital or revenue distributions and payments for any rights, proceeds of sale or other consideration or whatsoever nature received at any time or times by shareholders in relation to the Company.  The payment would be in the same form (whether shares, cash or other) as is received by the shareholders. However, if any consideration received is not in cash or traded securities, a portion will be paid in cash in order to allow payment of the personal tax liability arising on the payment. The current directors are seeking legal advice as to the extent (if any) of his entitlement.

As the above potential right to future cash flows is linked to the value of future dividends, the economic interest is consistent with the holding of shares.  For accounting purposes, this arrangement would therefore fall to be accounted for as an equity settled share based payment under IFRS 2 - "Share based payments".  This requires a charge to be recognised over the vesting period (between grant date to the completion of the disposals of the French subsidiaries) equal to the fair value of the award at grant.  The amount is not subsequently revalued.  There is significant uncertainty over the value of the arrangement, such that no charge has been recognised, but the Directors are satisfied that the accounting fair value of the award at grant was not material.

9.         Taxation

There is no tax charge/credit in 2009 or 2010.

The UK corporation tax rate applicable for 2010 is 28% (2009: 28%). 

Reconciliation of tax charge:

 

2010

2010

2009

2009

£'000

%

£'000

%





Loss on ordinary activities before tax

(344)

 

(1,263)

 

 

 

 

 

 

Tax at the UK corporation tax rate of 28% (2009: 28%)

96

28%

354

28%

 

 

 

 

 

Effects of:

 

 

 

 

Tax effect of expenses that are not deductible in determining taxable profit

(48)

(14%)

(280)

(22%)

Creation of losses

(48)

(14%)

(74)

(6%)

 

 

 

 

 

Tax charge for period

-

 

-

 

 

 

 

 

 

 

 

10.       Discontinued operations

Discontinued operations relate to the activities of Netcollections and Directinet (and in 2009 also NP6, which was sold in April 2009).  Netcollections and Directinet were sold in January 2010 for an initial consideration of €7,350,000, which was subject to a net assets adjustment.  Following some negotiation with the buyer in relation to the treatment of certain items included in the buyer's proposed net assets determination, the final consideration has been agreed as €7,560,000, all of which has now been received. Discontinued operations are more fully disclosed in note 20.  The effect of discontinued operations on segment results is disclosed in note 5.

11.       Earnings/(loss) per share

 

2010

2009

 

Profit/
(loss)

Number
of shares

Pence
per share

Profit/
(loss)

Number
of shares

Pence
per share

 

£'000

'000

 

£'000

'000

 

 

 

 

 

 

 

 

Basic and diluted earnings/(loss) per share

1,272

50,518

2.5

(823)

50,518

(1.6)

  from continuing operations

(344)

50,518

(0.7)

(1,263)

50,518

(2.5)

  from discontinued operations

1,616

50,518

3.2

440

50,518

0.9

             The outstanding share options described in note 21 are out of the money such that diluted and basic earnings per share are the same.



 

12.       Subsidiaries

All principal subsidiaries of the Group are consolidated into the financial statements.  At 31 December 2010 the subsidiaries were as follows

Subsidiary undertakings

Country of registration

Principal activity

Holding

%

 

 

 

 

 

Direct Excellence Limited

UK

Intermediate holding company

Ordinary shares

100%

Netcollections Limited*

UK

Dormant

Ordinary shares

100%

Direct Dormant No. 4 Limited

UK

Dormant

Ordinary shares

100%

*Held through subsidiary undertaking.

13.       Other financial assets

Trade and other receivables

 

 

 

2010

£'000

2009

£'000

 

 

 

 

Prepayments and accrued income

 

10

20

VAT recoverable

 

14

64

 

 

 

 

 

 

24

84

 

 

 

 

Investments

The Group holds a 12.2% interest in the ordinary share capital of Web-Clubs Ltd, an online marketing business.  The Directors consider that the fair value cannot be reliably measured such that the investment is held at its original cost of £nil (2009: £nil).

Movement in the provision for doubtful debts

 

 

2010

£'000

2009

£'000

 

 

 

 

Balance at the beginning of the year

 

-

456

Impairment losses reversed

 

-

(456)

 

 

 

 

Balance at the end of the year

 

-

-

 

 

 

 

Cash and cash equivalents

 

 

2010

£'000

2009

£'000

 

 

 

 

Cash and cash equivalents

 

1,576

488

 

 

 

 

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The Directors consider that the carrying amount of these assets approximates their fair value.

 

14.       Borrowings

 

 

2010

£'000

2009

£'000

Secured borrowing at amortised cost

 

 

 

Bank loans due for settlement within 12 months

 

-

3,509

 

 

 

 

In January 2010, the remaining loan balance was fully repaid from the proceeds of sale of Directinet and Netcollections.

15.       Trade and other payables

 

 

2010

£'000

2009

£'000

 

 

 

 

Current

 

 

 

Trade payables

 

52

573

Accruals and deferred income

 

90

541

 

 

 

 

 

 

142

1,114

 

 

 

 

The Directors consider the carrying amount of trade payables approximates to their fair value.

16.       Provisions

Restructuring Provision

 

 

£'000

 

 

 

 

As at 1 January 2010

 

 

965

Utilisation of provision in the year

 

 

(965)

 

 

 

 

At 31 December 2010

 

 

-

 

 

 

 

On 11 December 2009 the Company agreed terms with the landlord of the Group's head offices at Vincent Square under which the Group has acquired an option to assign the Vincent Square leases to the landlord's ultimate parent company shortly after the completion of the proposed sale of Directinet and Netcollections, thereby extinguishing all the Group's obligations under those leases. The net cost of these assignments was approximately £965,000 which was satisfied out of the sale proceeds of Directinet and Netcollections in January 2010. 

17.       Financial instruments

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, (previously  includes the borrowings) cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings, all as disclosed in the statement of financial position.

Gearing ratio

The company has no external debt therefore no ratio is relevant.



 

18.       Financial instruments (continued)

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

Financial risk management objectives

The Group monitors risks include market risk, credit risk and liquidity risk.

Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The Group has historically entered into net investment hedges to manage its exposure to foreign currency risk arising on translation of the Group's borrowings.  The Group's requirement for this has diminished following the reduction in activities undertaken in foreign currency and the repayment of its borrowings.

Foreign currency risk management

The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise.

The Group's approach to managing this exposure is to fund investments in Euro-denominated operations with debt that is denominated in the same currency as the operations.  Refer to note 19 for further information on the bank loan.

Foreign currency sensitivity analysis

The Group is mainly exposed to the currency of France (Euro currency).

At 31 December 2010 the net assets of the Group were £1,458,000 (2009: £95,000) of which £68,000 were denominated in Euros (2009: £5,111,000).

The effect of a 5% increase in the value of the Euro compared to Sterling would increase the net assets of the Group as at 31 December 2010 by £3,400 (2009: £255,000). The effect of a 5% decrease in the value of the Euro compared to Sterling would decrease the net assets of the Group as at 31 December 2010 by £3,400 (2009: £255,000).

Interest rate risk management

The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments during the year.

 

 

Increase/(decrease) in
profit before tax

 

Group
2010

£'000

Group
2009

£'000

 

 

 

Increase interest rate by 1%

16

52

Decrease interest rate by 1%

(16)

(52)

 

 

 

There would have been no effect on amounts recognised directly in equity.

18.       Financial instruments (continued)

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group.

The Group's maximum exposure to credit risk is £1,600,000 (2009: £572,000) comprising trade receivables, other receivables and cash. The Group has no principal credit risk as trade receivables are nil (2009: £nil, principal risk being trade receivables).

Potential customers are evaluated for creditworthiness and where necessary collateral is secured. There is no particular industry concentration of credit risk within the customer base as no one customer accounts for more than 3% of gross receivables.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which monitors the Group's short, medium and long-term funding and liquidity management requirements on an appropriate basis. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities. In January 2010, the group sold its remaining trading segment and repaid in full all loans and settled its lease obligations. Minimal liquidity risk remains in the group.

18.       Deferred tax

At the balance sheet date, the Group had estimated unused tax losses of £2,171,000 (2009: £2,000,000) available for offset against future profits.  No deferred tax asset has been recognised in respect of these losses (2009: £nil) due to the unpredictability of future profit streams.

At 31 December 2010, the aggregate amount of temporary differences associated with undistributed earnings of the Group for which deferred tax liabilities have not been recognised was £nil (2009: £nil).

19.       Called up share capital

 

 

2010
£'000

2009
£'000

Authorised

 

 

 

60 million ordinary shares of 0.4p each

 

240

240

 

 

 

 

Called up, allotted and fully paid

 

 

 

50.5 million (2009: 50.5 million) ordinary shares of 0.4p each

 

202

202

 

 

 

 

 

The former Chairman, Nicholas Ward claims an obligation to pay him an amount equal to 5% of any Relevant Value defined as being any and all dividends or other capital or revenue distributions and payments for any rights, proceeds of sale or other consideration or whatsoever nature received at any time or times by shareholders in relation to the Company.  The payment will be in the same form (whether shares, cash or other) as is received by the shareholders. However, if any consideration received is not in cash or traded securities, a portion will be paid in cash in order to allow payment of the personal tax liability arising on the payment.



 

20.       Disposal of subsidiaries

On the 6 January 2010, the Group disposed of its interest in Directinet and its subsidiary Netcollections.

 

At disposal date

£'000

 


Goodwill

4,450

Other intangible assets

1,167

Trade and other receivables

4,198

Property, plant and equipment

205

Cash and cash equivalents

999

Trade and other payables

(5,050)

Tax liabilities 

(858)

 

 

Net assets disposed of

5,111

Other costs of disposal

53

Gain on disposal

1,616

 

 

Total consideration

6,780

 

 

Satisfied by:

 

Cash

6,780


 

Net cash inflows arising from on disposal

 

Cash consideration

6,780

Cash disposed

(999)


 


5,781


 

 

Subsidiary sold

Effective date

Net profit

on disposal

£'000

 

 

 

Directinet including its subsidiary Netcollections

6 January 2010

1,616

 

 

 



21.       Share-based payments

Equity-settled share option schemes

The Group has granted options to certain directors and employees. Options are exercisable at a price equal to the average quoted market price of the Company's shares on the date of grant. The vesting period is generally 3 years. If the options remain unexercised after a period of 10 years from the date of grant the options expire. Options are forfeited if the employee leaves the Group before the options vest.

Details of the options and warrants outstanding during the year are as follows:

 

2010

2009

 

Number of options

Weighted average exercise price

Number of options

Weighted average exercise price

 

'000s

£

'000s

£

 

 

 

 

 

Outstanding at the beginning of the year

258

1.55

2,265

0.87

Forfeited during the year

(158)

1.91

(2,007)

1.27

 

 

 

 

 

Outstanding at the end of the year

100

0.93

258

1.55

 

 

 

 

 

 

 

 

 

 

Exercisable at the end of the year

-

 

-

 

 

 

 

 

 

 

 

 

 

 

Warrants issued during the year

-

 

-

 

 

 

 

 

 

The options outstanding at 31 December 2010 had a weighted average exercise price of £0.93 and a weighted average remaining contractual life of 5.6 years.

In the year ended 31 December 2008 warrants were issued on 24 October 2008.  The aggregate of the estimated fair values of the warrants granted on that date was £180,000.  On the 24 October 2010 in accordance with the deed of termination the warrants were cancelled for cash consideration of £24,000.

As a consequence of the businesses and companies disposal in 2010, 158,000 options have expired in the year ended 31 December 2010.

22.       Events after the balance sheet date

On 28 February 2011, the Company raised £365,000 via the issue of 6,952,831 shares of 0.4p in the Company at 5.25p a share and an additional £240,000 via the issuance of new convertible loan notes. The loan notes do not carry a coupon, are redeemable in December 2012 and are convertible at any time, at the discretion of the note holder, into ordinary shares at 5.25p per share.  The new funds will be used to make further investments in high quality silver companies listed on the TSX and ASX, together with some special situations in gold.

23.       Related party transactions

Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in these financial statements.

The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 8.


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