Final Results

22 September 2010 Eurovestech plc ("Eurovestech" or the "Company") Final results for the year ended 30 June 2010 Eurovestech, the pan-European development capital fund, is pleased to announce its final results for the year ended 30 June 2010. HIGHLIGHTS * Sale of KSS Retail for £11 million net; * £7.1 million realised on part-sale of holding in ToLuna; * £10 million returned to shareholders; and * Record sales and profits at ToLuna. Richard Bernstein, Chief Executive of Eurovestech, commented: "It is ten years since Eurovestech listed. Including this year's £10 million return of capital, the share price has effectively trebled over that period. The year saw the sale of KSS Retail for £11 million net, £10 million more than the £1 million purchase price for both KSS Retail and KSS Fuels in 2003. Today, Eurovestech is issuing 400,000 shares to charity taking the total gifted since flotation through the 10 million share barrier, worth £1.5 million to good causes. The Company intends to build on its performance to date to continue to deliver exceptional returns to shareholders." FURTHER ENQUIRIES Eurovestech plc Richard Bernstein Tel: 020 7491 0770 Chief Executive www.eurovestech.com Merchant Securities Limited David Worlidge/Simon Clements Tel: 020 7628 2200 CHAIRMAN'S STATEMENT In a year in which we celebrated our tenth anniversary, I am pleased to report further, significant achievements for Eurovestech and its portfolio. I am especially pleased to report on the delivery of our first cash return to shareholders. Economic and market conditions affecting Eurovestech's portfolio of companies did improve during the year. Buoyant conditions are not with us yet. Concerns persist about the indebtedness of banks and, increasingly, of sovereign governments. However, the extreme volatility seen in 2008-9 appears, for the short term at least, to have been replaced with a more steady, underlying, demand. Our response has been to do what we always do; to work to ensure that we, and our portfolio companies, are prepared for any challenge - for the ups and the downs. It is gratifying to be able to report that our portfolio companies, and the portfolio in its entirety, have made solid and tangible progress during the past year. We sold KSS Retail Ltd in December 2009 at an excellent price, realising £11 million net for Eurovestech. You may recall that we originally acquired the operations of both KSS Retail and what is now KSS Fuels in 2003 for a total consideration of £1 million, and we still have KSS Fuels in the portfolio, which in the year to June 2010 made operating profits of £1.0 million. We also realised £7.1 million cash from the sale of part of our holding in ToLuna in July 2009, in conjunction with ToLuna's acquisition of Greenfield Online ISS. Following these sales, we announced our intention to return a proportion of the Company's cash reserves to shareholders. Detailed proposals to return approximately £10 million were approved by shareholders in March 2010 and a return of £7.6 million (2.18p per share) in cash was completed in early April 2010. In addition, we returned £2.4 million through a buyback of 17.5 million shares. This return of £10 million marked our tenth anniversary. Eurovestech reported profits after tax of £40.4 million for the year, compared to a profit after tax of £6.2 million in the 15 months to 30 June 2009 - the large increase in profits is a consequence of two successful disposals in the period and of changes in the way our investment in ToLuna is required to be valued under accounting rules (see note 5). Diluted earnings per share were 11.74 pence, compared to 1.78 pence in the prior period. One of our key measures of shareholder value is the balance sheet of the Eurovestech holding company, which includes our listed investment in ToLuna, at market value. The Company balance sheet (see note 8) shows shareholders' funds of £61.1 million. This compares to £68.6 million at 31 December 2009 and £72.9 million at 30 June 2009 - a fall mainly due to the return of £10 million to shareholders. Net assets at 30 June 2010 were 18.5 pence per share, following the cash return of 2.18p, or 20.7p adjusted for the cash return. This compares to 20p per share at 31 December 2009 and to 21.2 pence per share at 30 June 2009. Please let me take you through the portfolio and shed more light on these positive results. PORTFOLIO REVIEW TOLUNA plc ("ToLuna") ToLuna continued to deliver excellent growth - in all its regions and in all its lines of business. This was helped by the successful acquisition and integration of Greenfield Online ISS. Greenfield is a group focusing on sales of its technology - both unique and clearly differentiated from those of its competitors. It continues to expand its technology further, with specific offerings at both ends of the spectrum of customer size. Its offer to blue-chip customers is now in use by some of the world's best known businesses. The ToLuna Quick Surveys (TQS) service, effectively a new breed of do-it-yourself survey, brings significant advantages to smaller businesses, in both speed and cost. ToLuna achieved rapid growth both in 2009 and in the first half of 2010. In March 2010, it reported a 128 per cent rise in 2009 revenues, to £49.5 million, with underlying pretax profits of £7.6 million. This was well ahead of market expectations. Cash flow from operations more than doubled to £12.2 million - an impressive achievement in a challenging global economic environment. Last week, ToLuna reported further impressive growth in the six months to 30 June 2010. Revenues rose 164 per cent to £36.2 million and underlying operating profits more than trebled to £6.2 million. The interim dividend was also doubled. ToLuna believes it now has critical mass in North America and Europe and a significant platform for growth in the Asia-Pacific region. Eurovestech owns 29.6% of ToLuna's issued share capital. KSS LIMITED ("KSS FUELS") KSS Fuels is making very good progress. Revenues in the year ended June 2010 were £6.6 million. Unaudited operating profits were £1 million. This compares with revenues of £5.1 million and an operating loss of £190,000 for the year ended June 2009. A substantial order from The Pantry Inc., one of the largest independently operated convenience store chains in the USA, was secured during the first six months of the year. Since then, KSS Fuels has secured a number of additional contracts, including expansion into Australasia and Brazil. In June 2010 Preem, the largest oil company in Sweden, selected KSS Fuels products at almost 700 retail locations and Topaz, Ireland's largest fuels and convenience retailer, selected KSS Fuels for more than 300 sites. These new orders, which have been added to orders from existing customers and to software deals and consultancy services across the USA, Europe, Latin America and Australasia, constitute an extremely robust pipeline of future business. The directors of KSS Fuels have forecast further increases in revenue and operating profits for the year ending June 2011. KSS Fuels is wholly owned by Eurovestech. MAGENTA During the year, Eurovestech invested a further £0.5 million in Magenta, which raised our holding to 49.6 per cent. We are excited by the potential of Maxifier, Magenta's online marketing optimisation brand, which is being demerged and will operate under its own chief executive. Maxifier has won several important, new, multi-year contracts from leading media groups, including Guardian News & Media in the UK and a leading Spanish publisher. In June 2010, Maxifier and 24/7 Real Media, Inc. won the Ad Technology award at the Digital Publishing Awards of the Association of Online Publishers. A striking aspect of Maxifier's appeal is that it has attracted these leading media group customers before it commenced any marketing - testimony to its capability of delivering significant gains on behalf of these customers. The Maxifier business is being demerged from Magenta's core transport scheduling business in order to optimise its development and to allow it to achieve its full potential. Maxifier serves a very different market. The focus that can come from a demerger and establishment as an independent entity is expected to accelerate the development of its product offering and enable Maxifier to expand more rapidly. It is expected that the demerger will be completed shortly. The proposed demerger follows the very successful demerger strategy we pursued with KSS. Additional focus ought to help Magenta's logistics business as well. It has been awarded a significant contract by Lewis Day, the transport group. However, the pace of its development of recurring revenues has been at a slower rate than had been anticipated and is disappointing. To reflect this, we have reduced the carrying value of our Magenta investment by £1 million to £2.8 million. LOGNET LogNet -- our portfolio company in the electronic billing space - is developing its business successfully. Sales revenue more than trebled in 2009. Consequently, it reached profitability during this year, as expected. It made further profits in the six months to June 2010 and expects further profit growth in the current six month period. Recent contracts with some of its leading customers are of a twofold nature: they include the sale of a licence, which produces immediate revenue for LogNet, and a fee on a per-subscriber basis, paid on deployment of the e-billing service. This is expected to produce a major boost to revenues overall. LogNet has also expanded into utility and municipality billing, which are potentially important new markets for its services. It has won a significant contract from the Post Office in Portugal and is at an advanced stage of bidding for a utility contract in Eastern Europe. Following additional investment of £0.3 million during the year, Eurovestech's holding in LogNet has increased to 26.5 per cent. AUDIONAMIX This has been a good year for Audionamix (previously MIST Technologies). It has unique and patent protected technology, which can effect both sound separation and sound removal, allowing the introduction of new sounds and transforming old recordings, giving them modern, state of the art, surround sound quality. In November 2009, its high definition audio treatment technology combined Dame Vera Lynn's original recording of "We'll Meet Again" with the current Fron Male Voice Choir. This classic wartime song was remastered, became a high definition, modern sound and went to Number One in the Christmas record sale lists. After this, Audionamix helped to restore Alfred Hitchcock's Psycho for Universal Studios Home Entertainment, transforming the original mono soundtrack into 5.1 surround sound. The restored version's soundtrack was acclaimed following its premiere at the Classics section of the 2010 Cannes Film Festival. More recently, Audionamix worked with celebrated composer Hans Zimmer on Inception, the science fiction thriller starring Leonardo DiCaprio. Audionamix's sound removal capabilities were put to good use during the World Cup in June 2010, as viewers complained of the constant, buzzing sound of the `vuvuzela', the South African trumpet. Audionamix used its technology to isolate and remove the sound from live broadcasts and sold this solution to Canal+, the French TV channel, for its World Cup coverage. Audionamix now has a strong pipeline of sound separation business and believes the recent take-up by leading film, music and TV studios confirms the potential of its technology. Following a financing round in April 2010, in which Eurovestech invested £0.5 million, our holding in Audionamix has increased to 46.3 per cent. ARKeX In July 2009, ARKeX won a contract for the first marine oil and gas survey off the western coast of Greenland, regarded as a highly prospective area for oil and gas discoveries. In February 2010, ARKeX completed a BlueQube marine survey on behalf of CGG Veritas in offshore Gabon. Furthermore, in June 2010, ARKeX launched G-Qube, an airborne service designed to fill the gap between conventional airborne surveys and BlueQube, its high resolution survey technology for oil, gas and mineral exploration. More recently ARKeX has won other contracts from the oil exploration industry, including airborne surveys for Forent Energy Ltd in Nova Scotia, Tower Resources plc in north-west Uganda and Ophir in Madagascar. In August 2010, it also began a BlueQube marine survey for a consortium led by Svenska Petroleum Exploration in offshore Guinea Bissau. Eurovestech owns 2.5 per cent of ARKeX. RETURN OF CASH TO SHAREHOLDERS In January 2010, following the sale of KSS Retail and a detailed assessment of the appropriate cash requirements for current and future investment, we announced our intention to return a proportion of the Company's cash reserves. In February, we announced proposals to return approximately £10 million to shareholders. In March, the proposals were approved by shareholders at a general meeting. The return of £7.6 million cash, amounting to 2.18p per share, was completed by early April. The share buyback programme commenced immediately. By our year end, a total of 17.5 million shares had been purchased at an average price of 13.8p per share, amounting to a total share buyback of £ 2.4 million. CHARITIES From the beginning of its life as a quoted company, Eurovestech set out a commitment to support charities proactively by issuing and gifting them shares. Since 2000, it has created and gifted 9.6 million shares to 88 charitable organisations. Including the cash return to shareholders in March 2010, the charities have received shares and cash currently valued at £1.4 million. The company is today issuing a further 400,000 new ordinary shares to charity taking the total since listing to 10 million shares. 200,000 new ordinary shares are today being issued to the Evening Standard Dispossessed Fund, 100,000 new ordinary shares are being issued to Imperial College Healthcare and 100,000 new ordinary shares are being issued to Yorkshire Cancer Research. Application has been made for these shares to be admitted to AIM and it is expected that dealings will commence on 30 September 2010. Richard Bernstein, Chief Executive of the Company, has paid the £4,000 nominal value of the shares to facilitate their issue. The achievements of Eurovestech and Richard Bernstein were recognised on 30 June 2010: Richard was chosen as Business Charity Champion at Third Sector's first Business Charity Awards. He also received the award for Outstanding Individual. A list of the charities which have been gifted shares in Eurovestech is set out on our website www.eurovestech.com. We hope our efforts will encourage other listed companies to support charities in this way. PROSPECTS At Eurovestech, we maintain a simple focus: the achievement of the promise of our portfolio, in whatever conditions we must confront. We remain fully and firmly focused on the delivery of the portfolio's full potential and full value. We came through our most dire economic period by husbanding our resources and by encouraging our portfolio operations to tread carefully. Emerging from this period, propelled by their respective proprietary technologies, these companies have made impressive strategic and operating gains. This allowed us to return £ 10 million to shareholders, yet retain a strong balance sheet, with net cash. Moreover, our portfolio companies have entered the current trading period in good shape. The outlook for the major economies in which our companies operate has improved. Uncertainty about the strength and durability of the recovery remains. Nevertheless, we maintain a clear and simple strategy and retain the confidence that it will continue to deliver exceptional returns for our shareholders. Richard Grogan Chairman 22 September 2010 CONSOLIDATED INCOME STATEMENT Year 15 month ended period to 30 June 30 June 2010 2009 (restated) Continuing operations Note £000 £000 Revenue 3 6,806 7,466 Investment income 330 35 Net gains on financial assets at fair value 26 2,458 Operating expenses (10,710) (9,663) Operating (loss)/profit 3 (3,548) 296 Finance income 40 82 Finance costs (156) (38) (Loss)/profit before tax 3 (3,664) 340 Income tax (charge)/credit (101) 96 (Loss)/profit for the year from continuing 3 (3,765) 436 operations Discontinued operations Profit for the year from discontinued operations 5 44,194 5,753 Profit for the year 40,429 6,189 Attributable to: Equity holders of the company 40,429 4,112 Non-controlling interest - 2,077 40,429 6,189 Earnings per share Basic earnings per share (pence): - from continuing operations (1.10) 0.13 - from discontinued operations 12.93 1.67 4 11.83 1.80 Diluted earnings per share (pence): - from continuing operations (1.09) 0.13 - from discontinued operations 12.83 1.65 4 11.74 1.78 Prior period figures have been restated to reflect reclassification of KSS Retail Limited as a discontinued operation. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year 15 month ended period to 30 June 30 June 2010 2009 £000 £000 Profit for the year 40,429 6,189 Foreign exchange movements 143 (277) Total income and expense recognised in the year 40,572 5,912 Attributable to: Equity holders of the company 40,572 3,821 Non-controlling interest - 2,091 40,572 5,912 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 June 30 June 2010 2009 Note £000 £000 Assets Non-current assets Property, plant and equipment 93 240 Goodwill - - Other intangible assets 24 54 Financial assets at fair value through profit or loss 6 47,813 9,913 Deferred tax asset 1,288 1,372 49,218 11,579 Current assets Trade and other receivables 2,264 3,921 Financial assets at fair value through profit or loss 5,810 1,200 Cash and cash equivalents 2 4,313 4,299 Held-for-sale assets - 22,992 12,387 32,412 Liabilities Current liabilities Trade and other payables 6,120 4,087 Income tax liabilities 65 - Borrowings 17 17 Held-for-sale liabilities - 8,018 6,202 12,122 Net current assets 6,185 20,290 Non-current liabilities Borrowings 17 30 Deferred tax liability - - Provisions 3,889 3,375 3,906 3,405 Net assets 51,497 28,464 Equity Capital and reserves attributable to the equity holders of the Company Issued capital 7 3,304 3,443 Share premium - 18,771 Other reserves 4,313 34 Retained earnings 43,880 (1,184) 51,497 21,064 Non-controlling interest - 7,400 Total equity 51,497 28,464 CONSOLIDATED STATEMENT OF CASH FLOWS Year 15 month ended period to 30 June 30 June 2010 2009 Note £000 £000 Cash flows from operating activities Profit for the year before taxation 40,530 7,474 Adjustments for: Net finance cost 116 (46) Depreciation of property, plant and equipment 125 1,005 Amortisation of intangible assets 29 2,979 Gains on financial assets (31,519) (2,598) Impairment of financial assets 1,000 140 Profit on disposal of non-current assets (13,405) - Movement on provision 514 1,430 Investment income (330) (35) Share based payments 145 585 Increase in trade and other receivables (791) (2,405) Increase/(decrease) in trade and other 3,104 (1,296) payables Net cash (used in)/generated by operations (482) 7,233 Finance costs (156) (195) Income tax received/(paid) 146 (581) Net cash (used in)/generated by operating (492) 6,457 activities Cash flows from investing activities Finance income 40 157 Purchase of subsidiary undertakings (net of - (5,097) cash acquired) Disposal of subsidiary undertakings 16,779 - Purchase of property, plant and equipment (56) (1,066) Purchase of intangible assets (25) (4,082) Dividends received 330 475 Disposal of financial assets 19,556 52,619 Purchase of financial assets (27,271) (50,685) Net cash generated by/(used in) investing 9,353 (7,679) activities Cash flows from financing activities Finance lease capital repayments (13) (36) Dividends paid to minority interest - (432) B share dividend paid (3,343) - Redemption of C shares (4,257) - Purchase of own shares (2,423) - Proceeds from issue of equity shares 76 7 Net cash used in financing activities (9,960) (461) Net decrease in cash and cash equivalents (1,099) (1,683) Exchange movements 49 186 Cash and cash equivalents at the start of the 5,363 6,860 year Cash and cash equivalents at the end of the 4,313 5,363 year CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Foreign Share Share Other exchange Retained Minority Total capital premium reserve reserve earnings interest equity £000 £000 £000 £000 £000 £000 £000 At 1 April 2008 3,436 18,680 116 175 (5,296) 5,309 22,420 Charity shares 7 91 - - - - 98 Share based payment - - 34 - - - 34 charge Transactions with 7 91 34 - - - 132 owners Profit for the - - - - 4,112 2,077 6,189 period Foreign exchange - - - (291) - 14 (277) movements Total comprehensive - - - (291) 4,112 2,091 5,912 income At 30 June 2009 3,443 18,771 150 (116) (1,184) 7,400 28,464 Charitable donation 7 102 - - - - 109 of shares Exercise of share 27 42 - - - - 69 options Purchase of own (175) - 175 - (2,423) - (2,423) shares Issue of B shares 2 - - - - - 2 Issue of C shares 4,257 (4,257) - - - - - Redemption of C (4,257) - 4,257 - (4,257) - (4,257) shares Share premium - (14,658) - - 14,658 - - cancellation B Share dividend - - - - (3,343) - (3,343) Share based payment - - 36 - - - 36 charge Transactions with (139) (18,771) 4,468 - 4,635 - (9,807) owners Profit for the year - - - - 40,429 - 40,429 Foreign exchange - - - 143 - - 143 movements Disposal of - - - (332) - (7,400) (7,732) subsidiaries Total comprehensive - - - (189) 40,429 (7,400) 32,840 income At 30 June 2010 3,304 - 4,618 (305) 43,880 - 51,497 Other reserves include the capital redemption reserve of £4,432,000 created following the Return of Cash scheme. NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2010 1. BASIS OF PREPARATION The financial information set out above does not constitute the Company's statutory accounts for the period ended 30 June 2009 and the year ended 30 June 2010, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified and did not contain statements under the Companies Act 1985, sections 237(2) or (3) nor under the Companies Act 2006, sections 498(2) or (3). The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial instruments and share based payments. The Group has also elected to designate all associate sized investments as at fair value through profit or loss, thereby adopting the exemption in IAS 28 `Investments in associates' for venture capital organisations. 2. CASH AND CASH EQUIVALENTS 30 June 30 June 2010 2009 £000 £000 Cash at bank and in hand 4,313 4,299 Cash and cash equivalents 4,313 4,299 Net cash and cash equivalents from held-for- sale disposal - 1,064 group Cash and cash equivalents per cashflow 4,313 5,363 3. SEGMENTAL ANALYSIS The chief operating decision-maker has been identified as the Board of Directors. The Board of Directors reviews the Group's internal reporting in order to make strategic decisions. The Board considers the business from both an operational and geographic perspective. The segment results for the year ended 30 June 2010 are as follows: Venture Software capital development Total £000 £000 £000 Revenue 208 6,598 6,806 Investment income 330 - 330 Net gains on financial assets at fair value 26 - 26 Other operating expenses (5,077) (5,633) (10,710) Operating loss (4,513) 965 (3,548) Net finance cost (116) Loss before tax (3,664) Income tax charge (101) Loss for the year (3,765) The segment results for 15 month period ended 30 June 2009 are as follows: Venture Software Total capital development (restated) £000 £000 £000 Total segment revenue 145 7,617 7,762 Inter segment revenue (86) (210) (296) Revenue 59 7,407 7,466 Investment income 35 - 35 Net losses on financial assets at fair value 2,458 - 2,458 Other operating expenses (3,170) (6,493) (9,663) Operating loss (618) 914 296 Net finance costs 44 Profit before tax 340 Income tax 96 Profit for the period 436 Unallocated assets and liabilities comprise certain deferred taxation assets. The segment assets and liabilities at 30 June 2010 are as follows: Venture Software Unallocated capital development Items Total £000 £000 £000 £000 Assets 55,532 4,785 1,288 61,605 Liabilities (7,854) (2,254) - (10,108) Net assets 47,678 2,531 1,288 51,497 Capital expenditure 14 40 - 54 Depreciation and amortisation 3 84 - 87 Impairment of financial assets 1,000 - - 1,000 The segment assets and liabilities at 30 June 2009 are as follows: Venture Software Unallocated capital development items Total £000 £000 £000 £000 Assets 12,467 7,160 1,372 20,999 Liabilities (4,017) (3,492) - (7,509) 8,450 3,668 1,372 13,490 Held-for-sale disposal group (note 14,974 5) Net assets 28,464 Capital expenditure 2 211 - 213 Depreciation and amortisation 6 254 - 260 Impairment of financial assets 460 - - 460 The parent company is domiciled in the UK. The Group's main business segments are based in the following locations: * Venture capital - UK * Software development - UK, Europe and North America The geographical segments are based on an analysis of revenue by the location of the Group's customers as follows: Revenue Year 15 month ended period to 30 June 30 June 2010 2009 (restated) £000 £000 UK 514 845 Rest of Europe 2,622 2,390 North America 3,670 4,231 6,806 7,466 One customer, based in North America, contributed 15% of the Group's revenue; no other customer contributed greater than 10% of the Group's revenues. 4. EARNINGS PER SHARE Year 15 month ended period to 30 June 30 June 2010 2009 (restated) £000 £000 Profit for the year attributable to continuing (3,765) 436 operations Profit for the year attributable to discontinued 44,194 5,753 operations Profit for the year attributable to equity 40,429 6,189 shareholders Basic earnings per share (pence) from continuing operations (1.10) 0.13 from discontinued operations 12.93 1.67 11.83 1.80 Diluted earnings per share (pence) from continuing operations (1.09) 0.13 from discontinued operations 12.83 1.65 11.74 1.78 Shares Shares Issued ordinary shares at start of the year 344,322,801 343,622,801 Net movement in Ordinary shares during the year (Note (14,072,801) 700,000 7) Issued ordinary shares at end of the year 330,250,000 344,322,801 Weighted average number of shares in issue for the 341,668,818 343,825,912 year Dilutive effect of options 2,792,407 3,864,801 Weighted average shares for diluted earnings per 344,461,225 347,690,713 share 5. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (a) Analysis of the result of discontinued operations: Year 15 month ended period to 30 June 30 June 2010 2009 £000 £000 ToLuna's profit - 4,214 Profit on partial disposal of ToLuna: 4,312 - Reinstatement of ToLuna at investment fair 30,493 - value Profit on disposal of KSS Retail 9,093 - KSS Retail's profit 296 1,539 44,194 5,753 Partial disposal of ToLuna and reinstatement at fair value ToLuna Plc ("ToLuna"), a Eurovestech investment, announced the conditional acquisition of Greenfield Online, which completed on 15 July 2009. The acquisition was financed through an equity placing of £28 million to which the Company did not contribute. In conjunction with the above transaction, the Company agreed to sell 3,552,383 ToLuna shares at 210p per share, equivalent to the placing price, which realised £7.1 million after disposal costs. As a result of this share sale and ToLuna's share placing, the Company's shareholding in ToLuna reduced from 50.6 per cent to 29.9 per cent and ToLuna is now recorded as an investment in the Group accounts. The operations of ToLuna were therefore disclosed as discontinued operations and the assets and liabilities of ToLuna were presented as held-for-sale in the 15 month period to 30 June 2009. No results have been presented for ToLuna in the current year as they are immaterial to the Group's result. A profit on partial disposal of £4.3m has been recorded in discontinued operations to reflect the £7.1 million net proceeds less the Group's share of net assets disposed of £2.8 million. Additionally, as a consequence of reinstating ToLuna as a non-current investment in the Group Balance Sheet, a profit of £30.5 million was recorded as the difference between the Group's share of net assets remaining (£4.5 million) and the market value of the investment at the disposal date (£35.0 million). No tax is payable on the partial disposal and the reinstatement. Disposal of KSS Retail On 31 December 2009, KSS Retail was sold to dunnhumby Limited, a subsidiary of Tesco plc, for a cash consideration of £12.9 million. After taking account of share option entitlements, Eurovestech received £11.0 million of this consideration. A profit on disposal of £9.1 million, after disposal of net assets of £1.9 million, has been recorded in discontinued operations. No tax is payable on this disposal. KSS Retail's results have been disclosed within discontinued operations. The prior period results for the Group have also been restated to reflect the reclassification of KSS Retail's results into discontinued operations. The post-tax results of both ToLuna and KSS Retail have been analysed below: 15 month Year ended period to 30 June 30 June 2010 2009 (restated) £000 £000 Revenue 2,803 39,037 Expenses (2,507) (31,903) Profit before tax for discontinued operations 296 7,134 Income tax expense - (1,381) Profit for the year for discontinued operations 296 5,753 (b) The assets of the disposal group classified as held-for-sale are analysed as follows: 30 June 30 June 2010 2009 £000 £000 Property, plant and equipment - 744 Goodwill - 5,382 Other intangible assets - 6,244 Trade and other receivables - 7,811 Cash and cash equivalents - 2,811 - 22,992 The liabilities of the disposal group classified as held-for-sale are analysed as follows: 30 June 30 June 2010 2009 £000 £000 Trade and other payables - 4,751 Income tax liabilities - 284 Bank overdraft - 1,747 Borrowings - 301 Deferred tax liabilities - 935 - 8,018 (c) Cumulative income or expense recognised directly in equity relating to disposal group classified as held-for-sale 30 June 30 June 2010 2009 £000 £000 Exchange translation differences - 28 (d) Cash flows of the disposal group The cash flows of the disposal group classified as held-for-sale are analysed as follows: 30 June 30 June 2010 2009 £000 £000 Operating cash flows - 7,417 Investing cash flows - (10,240) Financing cash flows - 78 - (2,745) 6. NON-CURRENT INVESTMENTS Financial assets at fair value through profit and loss % interest in ordinary shares at Country of Subsidiary companies consolidated incorporation 30 June Principal activity in these accounts 2010 Knowledge Support Systems Limited UK 100.0 Price optimisation software Knowledge Support Systems Inc. US 100.0 Price optimisation software Non-current Equity investments £000 At 1 April 2008 6,991 Additions 470 Net gain on investments at fair value 2,622 Impairment of investments (140) Disposals (30) At 1 July 2009 9,913 Additions 36,593 Net gain on investments at fair value 2,338 Impairment of investments (1,000) Disposals (31) At 30 June 2010 47,813 Fair value At 30 June 2010 47,813 At 30 June 2009 9,913 % interest in ordinary Fair value at Country of shares at 30 June 2010 Portfolio company name incorporation 30 June £000 2010 ToLuna plc UK 29.6 37,344 Magenta Corporation Limited UK 49.6 2,868 Audionamix SA France 46.3 4,213 LogNet Information Systems Ltd UK 26.5 2,313 ARKeX Limited UK 2.5 1,075 Group investments carrying value 47,813 The additions derive from recognition of Toluna plc as an investment and additional investment in all other investments. The impairment relates to Magenta Corporation following lower than anticipated revenue growth. 7. SHARE CAPITAL AND RETURN OF CASH Shares £000 Authorised share capital Ordinary shares of £0.01 each At 1 July 2009 and 30 June 2010 570,000,000 5,700 B Shares of £0.00001 each 383,722,801 4 C shares of £0.0218 each 383,722,801 8,365 Issued, called up and fully paid Ordinary shares of £0.01 each At 1 July 2009 344,322,801 3,443 Issue of charity shares 700,000 7 Exercise of share options 2,750,000 27 Purchase of own shares (17,522,801) (175) At 30 June 2010 330,250,000 3,302 Issue of B Shares 152,518,623 2 Issue of C shares 195,254,178 4,257 Redemption of C shares (195,254,178) (4,257) At 30 June 2010 482,768,623 3,304 Shares donated to charity are subscribed for in cash to the extent of the nominal value and the difference between the nominal and market values at the time of the donation is charged to the income statement and forms an addition to share premium. A summary of the changes in the issued share capital of the Company during the year is as follows: (i) On 29 September 2009, the Company issued 200,000 new Ordinary Shares of 1p each at par, divided equally between two charitable organisations. (ii) On 23 March 2010, the Company issued 500,000 new Ordinary Shares of 1p each at par, divided between five charitable organisations. 2,750,000 new Ordinary shares of 1p each at par were also issued following the exercise of share options by two of the Company's Directors. (iii) On 30 March 2010, the authorised share capital of the Company was increased by 382,722,801 B shares and by 382,722,801 C shares as part of the Company's Return of Cash scheme. (iv) On 30 March 2010, following receipt of elections from shareholders through the Return of Cash scheme, 152,518,623 B shares of £0.00001 each and 195,254,178 C shares of £0.0218 each were issued to existing shareholders. The C shares were issued out of existing share premium. The B shares are deferred shares with no voting rights and are non-transferable, and were entitled to receive a special dividend. The C shares are redeemable shares with no voting rights. (v) On 31 March 2010 the share premium account was cancelled following Court approval. (vi) On 31 March 2010, a dividend of 2.18p per share was paid on the B shares and all the C shares were redeemed. (vii) Between 23 March 2010 and 30 June 2010 the Company acquired 17,522,801 ordinary shares for cancellation for an aggregate consideration of £2.4 million, as part of the shareholder approved Return of Cash scheme. Shares were purchased at prices ranging between 13.00p and 14.39p per share. 8. COMPANY BALANCE SHEET At At 30 June 30 June 2010 2009 Note £000 £000 Fixed assets Tangible assets 13 2 Investments 9 57,313 71,842 57,326 71,844 Current assets Debtors 170 1,681 Investments 5,810 1,200 Cash at bank and in hand 1,726 1,196 7,706 4,077 Creditors: amounts falling due within one year (3,965) (2,983) Net current assets 3,741 1,094 Net assets 61,067 72,938 Capital and reserves Called up share capital 3,304 3,443 Share premium account - 18,771 Other reserves 4,532 100 Profit and loss account 52,231 50,624 Shareholders' funds 61,067 72,938 9. COMPANY FIXED ASSET INVESTMENTS £000 Valuation At 1 April 2008 53,533 Additions 3,600 Net gains on revaluation at fair value through profit and loss 14,879 Impairment (140) Disposals (30) At 30 June 2009 71,842 Additions 1,586 Net gains on revaluation at fair value through profit and loss 2,338 Impairment (1,000) Disposals (17,453) At 30 June 2010 57,313 The additions derive from investment in Audionamix, Lognet, Magenta Corporation and ARKeX. Revaluation gains arise from ToLuna plc. Impairment relates to Magenta Corporation following lower than anticipated revenue growth. Disposals relate to KSS Retail and the partial disposal of Toluna plc. Included within fixed asset investments are the following companies: % interest in Value at ordinary shares 30 June Country of at 30 June 2010 Portfolio company name incorporation 2010 £000 Principal subsidiary Knowledge Support Systems Limited UK 100 9,500 Other investments ToLuna plc* UK 29.6 37,344 Magenta Corporation Limited UK 49.6 2,868 Audionamix SA France 46.3 4,213 LogNet Information Systems plc UK 26.5 2,313 ARKeX Limited UK 2.5 1,075 Investments carrying value 57,313 *AIM quoted investment 10. COPIES OF THE REPORT & ACCOUNTS Copies of the Report and Accounts will be posted to shareholders and will be available from the Company's registered office 29 Curzon Street, London W1J 7TL, and on the Company's website www.eurovestech.co.uk.

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