Final Results

Buckland Group PLC 29 June 2007 BUCKLAND GROUP PLC Report and financial statements for the year ended 31 December 2006 Chairman's statement for the year ended 31 December 2006 I present the financial results for the Buckland Group plc for the year ended 31 December 2006. At the half year we reported a loss of Â£148,397. The second half shows a loss of Â£147,494, but reflects an improvement in trading performance as this includes a charge of Â£146,221 for exceptional items. The full year therefore shows a Group loss of Â£295,891 (2005: loss of Â£2,029,416). Sales at Â£2,752,230 (2005: Â£3,443,290) are down mainly due to discontinued operations. The loss per share improved to 0.036p compared with a loss of 0.51p in 2005. No dividend is proposed. At the end of 2006 the majority of the Board became dissatisfied with the unsatisfactory performance and direction of the Group and decided to reassess the management of the Group and its future strategy. The result was a change in the composition of the Board during the first half of 2007 and the implementation of a new strategy. The new strategic plan required the Group to raise further funds and to improve the balance sheet by converting debt and loan notes to equity. The fund raising of Â£900,000 (as detailed in the circular to shareholders on 6 June 2007) will allow the Group to plan production more effectively and build sufficient stocks to fill the supply chain. This will allow order shipment to the customer by sea container, which will reduce airfreight significantly, saving in the region of Â£130,000 per year based on current levels of production. The concentration in Thailand of all production and administrative functions, in the first half of 2007, and the closure of all UK based operations, except for a European sales presence and a minimal head office function, has further reduced costs and improved efficiency. It is anticipated that as a result of the changes there will be further improvement in the Group's performance in the six months to June 30 2007. The new funding will also enable an increase in sales activity with a focus on moving into new markets where we can leverage the benefits of an economic labour force and our expertise in the manufacture of small components. The prospects for the group are now very positive. Philip E Palmer Chairman June 2007 Consolidated profit and loss account for the year ended 31 December 2006 Note Continuing Discontinued Year ended Year ended operations operations 31 December 31 December 2006 2005 Â£ Â£ Turnover 2 2,752,230 - 2,752,230 3,443,290 Cost of (2,047,723) (322) (2,048,045) (2,954,418) sales -------- ---------- --------- ---------- Gross profit/(loss) 704,507 (322) 704,185 488,872 Administrative expenses (1,170,428) (13,968) (1,184,396) (1,607,272) Exceptional items 6 162,467 61,418 223,885 (1,004,465) Other operating Income - - - 63,838 -------- ---------- --------- ---------- Operating (loss)/profit on ordinary activities before interest 7 (303,454) 47,128 (256,326) (2,059,027) -------- ---------- Profit on disposal of fixed assets - 100,660 Interest receivable 8 33 218 Interest payable and similar charges 9 (39,598) (71,267) --------- ---------- Loss on ordinary activities before and after taxation transferred to reserves 12,24 (295,891) (2,029,416) ========= ========== (Loss)/Profit per ordinary share: Basic and diluted 11 (0.04 p) 0.00 p (0.04p) (0.51p) ========== ========== ========= ========== The accompanying notes form an integral part of these financial statements. Consolidated statement of total recognised gains and losses and consolidated reconciliation of movements in shareholders' funds for the year ended 31 December 2006 Year ended Year ended 31 December 31 December 2006 2005 Â£ Â£ Consolidated statement of total recognised gains and losses Loss for the year (295,891) (2,029,416) Exchange translation loss on foreign currency net investments in subsidiary undertakings (35,701) 24,366 --------- ---------- Total recognised loss for the year (331,592) (2,005,050) ========= ========== Consolidated reconciliation of movements in shareholders' funds Total recognised loss (331,592) (2,005,050) New ordinary share capital subscribed for and allotted in the period, including share premium (net of expenses) 50,000 1,414,497 --------- ---------- Net reduction in equity shareholders' funds (281,592) (590,553) Opening equity shareholders' funds (540,751) 49,802 --------- ---------- Closing equity shareholders' (deficit)/funds (822,343) (540,751) ========= ========== The accompanying notes form an integral part of these financial statements. Consolidated balance sheet at 31 December 2006 Note At At 31 December 2006 31 December 2005 Â£ Â£ Â£ Â£ Fixed assets Intangible assets 13 - 243,387 Tangible assets 14 116,405 256,791 -------- -------- 116,405 500,178 Current assets Stocks 16 259,571 425,052 Debtors 17 534,490 937,668 Cash at bank and 26b 7,245 29,717 in hand -------- -------- 801,306 1,392,437 Creditors: amounts falling due 18 (1,624,054) (2,324,585) within one year -------- -------- Net current (822,748) (932,148) liabilities -------- -------- Total assets less current (706,343) (431,970) liabilities Creditors: amounts falling due after more than 19 (116,000) (9,371) one year Provision for liabilities 20 - (99,410) and charges -------- -------- Net liabilities (822,343) (540,751) ======== ======== Capital and reserves Called up share 23 3,533,397 3,526,492 capital Share premium 24 1,084,627 1,041,532 account Profit and loss 24 (5,440,367) (5,108,775) account -------- -------- Shareholders' (822,343) (540,751) deficit ======== ======== The accompanying notes form an integral part of these financial statements. Company balance sheet at 31 December 2006 Note At At 31 December 2006 31 December 2005 Â£ Â£ Â£ Â£ Fixed assets Investments 15 162 162 Current assets Debtors 17 126,842 877,996 Cash at bank and in - 4,882 hand -------- -------- 126,842 882,878 Creditors: amounts falling due 18 (644,626) (577,038) within one year -------- -------- Net current (liabilities)/ (517,784) 305,840 assets -------- -------- Total assets less current (517,622) 306,002 liabilities Creditors: amounts falling due after more than one 19 (116,000) - year -------- -------- Net assets/ (633,622) 306,002 (liabilities) ======== ======== Capital and reserves Called up share 23 3,533,397 3,526,492 capital Share premium 24 1,084,627 1,041,532 account Profit and loss 24 (5,251,646) (4,262,022) account -------- -------- Shareholders' (deficit)/funds (633,622) 306,002 ======== ======== Consolidated cash flow statement for the year ended 31 December 2006 Note Year ended Year ended 31 31 December December 2005 2006 Â£ Â£ Net cash outflow from operating activities (seebelow) (702,293) (657,039) Returns on investments and servicing of finance 26a (39,565) (71,049) Taxation - - Capital expenditure 26a (14,509) 54,689 Acquisitions 26a - (1,254,243) --------- --------- Cash outflow before management of liquid resources and financing (756,367) (1,927,642) Financing 26a 659,217 1,874,218 --------- --------- Decrease in cash (97,150) (53,424) ========= ========= Reconciliation of net cash flow to movement in 26b net debt Decrease in cash in the period (97,150) (53,424) Cash inflow from increase in debt (609,217) (459,721) Non cash movements 656,559 (30,000) --------- --------- Change in net debt resulting from cash flows (49,808) (543,145) Exchange movement - 1,719 --------- --------- Movement in net debt in the period (49,808) (541,426) Opening net debt (830,528) (289,102) --------- --------- Closing net debt (880,336) (830,528) ========= ========= Reconciliation of operating loss to net cash inflow/(outflow) from operating activities Operating loss (256,326) (2,059,027) Depreciation 95,658 176,532 Amortisation of goodwill 35,749 171,450 Impairment of goodwill 207,639 1,004,465 (Utilisation)/ Movement on provision for restructuring costs (99,410) 99,410 Closure of subsidiaries (431,524) - Loss on sale of fixed assets 9,721 - Decrease in stocks 122,374 317,464 Increase in debtors (318,041) (606,425) Increase/(decr ease) in creditors (31,275) 228,590 Other non cash operating adjustment (36,858) 10,502 --------- --------- Net cash outflow from operating activities (702,293) (657,039) ========= ========= The accompanying notes form an integral part of these financial statements. Notes forming part of the financial statements for the year ended 31 December 2006 1 Accounting policies The financial statements have been prepared under the historical cost convention and are in accordance with applicable United Kingdom accounting standards. The principal accounting policies of the Group are set out below. In accordance with Financial Reporting Standard ('FRS') 18 'Accounting policies' the Group has reviewed its accounting policies and estimation techniques and consider that these policies are the most appropriate. Turnover Turnover represents supplies of components used in consumer electronics products and gas ignition systems to third parties, excluding Value Added Tax or local sales tax where appropriate. Turnover is recognised upon delivery and its treatment is in line with FRS 5. Basis of consolidation The group has used the acquisition method of accounting to consolidate the results of subsidiary undertakings. The results of subsidiary undertakings are included in the group results from the date of acquisition. The consolidated financial statements incorporate the financial statements of Buckland Group plc and all of its subsidiary undertakings made up to 31 December 2006. Subsidiaries are consolidated until they cease to be under the control of the Group. Goodwill Goodwill arising on an acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair value of the assets and liabilities acquired. It is amortised through the profit and loss account over the directors' estimate of its useful economic life from the date of acquisition. Any permanent diminutions in value are written off. Valuation of investments Investments held as fixed assets are stated at cost less any amounts written off in respect of permanent diminution in value. Depreciation Depreciation is provided to write off the cost less estimated residual value, on a straight line basis, of all fixed assets evenly over their expected useful economic lives. Asset lives are as follows: Leasehold improvements - 5 years Fixtures and fittings and equipment - between 3 and 10 years Plant, Machinery and Motor vehicles - between 3 and 5 years Financial Instruments The group does not use derivative financial instruments. Financial assets are recognised in the balance sheet at the lower of cost and net realisable value. Income and expenditure arising on financial instruments is recognised on the accruals basis, and credited or charged to the profit and loss account in the financial period to which it relates. Foreign currency Foreign currency transactions of individual companies are translated at the rates ruling when they occurred. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet dates. Any differences are taken to the profit and loss account. The profit and loss accounts of foreign subsidiary undertakings are translated into sterling at the average rate of exchange for the period. Assets and liabilities of foreign subsidiary undertakings are translated into sterling at the rates of exchange ruling at the balance sheet date. Differences on exchange arising from the translation of the opening net investment in subsidiaries are taken directly to reserves. All other exchange differences are dealt with through the profit and loss account. 1 Accounting policies (continued) Product research and development Product research and development costs are charged to profit and loss account in the period in which the expenditure is incurred. Stocks Stocks are valued at the lower of cost and net realisable value. Cost is calculated as follows: Raw materials - purchase cost on a first in, first out basis. Work in progress and finished - cost of raw materials and labour together goods with attributable overheads Net realisable value is based on estimated selling price less additional costs to completion and disposal. Deferred taxation Deferred tax has been provided in accordance with FRS 19. Deferred tax is recognised on all timing differences where the transactions or events that give the group an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantially enacted by the balance sheet date. Leased assets Assets acquired under hire purchase contracts and finance leases are capitalised in the balance sheet. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to the profit and loss account. Lease payments are analysed between capital and interest components. The interest element of the payment is charged to the profit and loss account over the period of the lease and is calculated so that it represents a constant proportion of the balances of capital repayments outstanding. The capital element reduces the amounts payable to the lessor. Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the lease period. Retirement benefits The company operates a defined contributions pension scheme. The pension costs charged against operating profits are the contributions payable to a foreign scheme in respect of the accounting period. Invoice Discounting The Group discounts a proportion of its trade debts. The accounting policy is to include trade debt within trade debtors due within one year and record cash advances within creditors due within one year. Discounting fees and interest are charged to the profit and loss account when incurred. Bad debts are borne by the Group and are charged to the profit and loss account when incurred. 2 Turnover, profit, net assets and other operating income Turnover is related to the manufacture of components used in gas cooking and gas heating appliances. An analysis by geographical market follows: Year ended 31 December Year ended 31 December 2006 2005 Turnover by origin Â£ Â£ Europe 906,894 1,984,775 Asia 1,845,336 1,458,515 --------- --------- 2,752,230 3,443,290 ========= ========= Year ended Year ended 31 December 31 December 2006 2005 Turnover by destination Â£ Â£ Europe 1,844,947 2,776,658 Rest of the World 907,283 666,632 --------- --------- 2,752,230 3,443,290 ========= ========= Loss before tax and net assets relating to each major geographical market are not disclosed as, in the opinion of the directors, their disclosure would be seriously prejudicial to the interests of the group. An analysis by segment follows: Year ended 31 Year ended December 31 December 2006 2005 Turnover Â£ Â£ Electronic Components - 337,607 Gas Ignition Equipment 2,752,230 3,105,683 --------- --------- 2,752,230 3,443,290 ========= ========= Year ended 31 Year ended December 31 December 2006 2005 Operating loss on ordinary activities before Â£ Â£ interest Electronic Components - (540,762) Gas Ignition Equipment (256,326) (1,518,265) --------- --------- (256,326) (2,059,027) ========= ========= Year ended 31 December Year ended 31 December 2006 2005 Net liabilities Â£ Â£ Electronic Components - (72,888) Gas Ignition Equipment (822,343) (467,863) --------- --------- (822,343) (540,751) ========= ========= 3 Corresponding figures for discontinued operations Comparative figures for the 2005 performance of the activities discontinued in 2005 and 2006 are set out below: Year ended 31 December 2005 Continuing Discontinued in 2005 Total Â£ Â£ Â£ Turnover 3,105,683 337,607 3,443,290 Cost of sales (2,285,742) (668,676) (2,954,418) --------- ---------- --------- Gross profit 819,941 (331,069) 488,872 Administrative expenses (1,441,567) (1,170,170) (2,611,737) Other operating income 16,225 47,613 63,838 --------- ---------- --------- Operating loss on ordinary activities before interest (605,401) (1,453,626) (2,059,027) ========= ========== ========= 4 Employees Group Company Year ended Year ended Year ended Year ended 31 31 December 31 31 December 2005 December December 2006 2006 2005 Staff costs excluding Â£ Â£ Â£ Â£ directors consist of: Wages and salaries 550,807 1,179,937 - - Pension costs 3,114 4,364 - - Social security costs 20,735 60,568 - - --------- --------- --------- --------- 574,656 1,244,869 - - ========= ========= ========= ========= The average monthly number of employees of the group, excluding directors, during the year was as follows: Group Company Number Number Number Number 2006 2005 2006 2005 Manufacturing 154 245 - - Sales 2 4 - - Administration 6 9 - 3 Research and development 3 5 - - --------- ---------- --------- --------- 165 263 - 3 ========= ========== ========= ========= 5 Directors' emoluments Year ended Year ended 31 December 31 December 2006 2005 Â£ Â£ Fees 136,000 119,286 ========= ========= Directors fees include payments to third parties amounting to Â£76,218 No director receives contributions to a pension scheme. 6 Exceptional items Year ended Year ended 31 December 31 December 2006 2005 Â£ Â£ Impairment of goodwill (207,639) (1,004,465) Gain on cessation of subsidiaries. 431,524 - --------- --------- 223,885 (1,004,465) ========= ========= In view of the substantial reorganisation during 2006 and subsequent to the year end, the Directors feel it is appropriate to impair all the goodwill. The gain on cessation of subsidiaries is in connection with the liquidation of DK Gas Components Ltd and the decision to dissolve the non trading subsidiaries Holdsafe Limited and Ravago Plastics Limited. 7 Operating loss Year ended Year ended 31 31 December December 2006 2005 This has been arrived at after charging / Â£ Â£ (crediting) : Depreciation - own assets 86,848 103,440 - leased assets 8,810 11,261 Impairment provision against tangible fixed assets - 61,832 Amortisation of goodwill 35,749 171,450 Loss on disposal of tangible assets 9,721 - Exceptional items (223,885) 1,004,465 Reorganisation costs - 99,410 Operating lease rentals - other 83,950 86,205 Auditors' remuneration - audit services 25,000 38,750 - non-audit services: 5,000 6,000 taxation - audit of subsidiaries 2,143 4,356 Research and development expenditure 8,427 20,233 Net profit on foreign exchange (5,309) (72,079) ========= ========= Reorganisation costs During 2006 the Group relocated all of its UK manufacturing operations to Thailand. The reorganisation costs of Â£99,410 comprised redundancy costs and the costs of transferring plant and equipment and was provided for in 2005. 8 Interest receivable Year ended Year ended 31 December 31 December 2006 2005 Â£ Â£ Interest on bank balances 33 218 ========= ========= 9 Interest payable and similar charges Year ended Year ended 31 December 31 December 2006 2005 Â£ Â£ Interest on bank loans and overdrafts 33,040 37,334 Finance charges payable under finance leases and hire purchase contracts 3,481 4,009 Other loans 3,077 29,924 --------- --------- 39,598 71,267 ========= ========= 10 Taxation Year ended Year ended 31 December 31 December 2006 2005 Â£ Â£ Current tax: UK corporation tax on loss for the period - - Foreign corporation tax on profits for the - - year --------- --------- - - ========= ========= The tax assessed for the period is higher than the standard rate of corporation tax in the UK (30%). The differences are explained below: Loss on ordinary activities before tax (295,891) (2,029,416) ========= ========= Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (88,767) (608,825) Effects of: Expenses not deductible for tax purposes 75,000 21,818 Non taxable income (129,457) (3,399) Utilisation of tax losses - (9,599) Current year tax losses 143,224 600,005 --------- --------- Current tax charge for the period - - ========= ========= Current tax losses relate to Â£103,037 of UK losses and Â£40,187 of losses in Thailand. 11 Loss per share The calculation of basic and diluted loss per share is based on the loss for the year attributable to ordinary shareholders of Â£295,891 (2005: loss Â£2,029,416) and the weighted average number of shares in issue during the year of 809,862,908 (2005: 393,618,826). The loss relating to continuing activities is Â£303,454 (2005: Â£1,488,654) and the profit relating to discontinued activities is Â£47,128 (2005: loss Â£40,762). Note 23 shows that share options exist at 20% of issued share capital. These share options have an anti- dilutive effect on the earnings per share since the exercise prices are in excess of the market price. 12 Loss for the financial period The parent company has taken advantage of section 230 of the Companies Act 1985 and has not included its own profit and loss account in these financial statements. The parent company's loss after tax for the year was Â£989,624 (2005 loss Â£1,149,341). 13 Intangible assets Goodwill on: Group Acquisition Acquisition Acquisition of Total Purchased Goodwill of business of of Holdsafe Euro Asia Kigass Limited Connectors Co. Limited Â£ Â£ Â£ Â£ Cost At 1 January 2006 1,100,989 357,491 97,472 1,555,952 Addition in the - - - - Year ---------- --------- ---------------- --------- At 31 December 2006 1,100,989 357,491 97,472 1,555,952 ---------- --------- ---------------- --------- Amortisation At 1 January 2006 1,100,989 114,104 97,472 1,312,565 Provision for the period - 35,749 - 35,749 Impairment charge - 207,638 - 207,638 ---------- --------- ---------------- --------- At 31 December 2006 1,100,989 357,491 97,472 1,555,952 ---------- --------- ---------------- --------- Net book value At 31 December - - - - 2006 ========== ========= ================ ========= At 31 December 2005 - 243,387 - 243,387 ========== ========= ================ ========= The Directors have reviewed the Group's amortisation policy on intangible assets and in light of the significant reorganisation embarked on over the last few years and since the year-end, have decided to impair the full value of the goodwill acquired 14 Tangible assets Group Leasehold Plant, and Total improvement equipment Â£ Â£ Â£ Cost At 1 January 2006 88,107 1,041,886 1,129,993 Additions during the year - 30,139 30,139 Disposals - (266,814) (266,814) Exchange differences 615 4,814 5,429 --------- -------- --------- At 31 December 2006 88,722 810,025 898,747 --------- -------- --------- Depreciation At 1 January 2006 85,304 787,898 873,202 Provided for in the year 1,288 94,370 95,658 Disposals - (190,789) (190,789) Impairment provision - - - Exchange differences 470 3,801 4,271 --------- -------- --------- At 31 December 2006 87,062 695,280 782,342 --------- -------- --------- Net book value At 31 December 2006 1,660 114,745 116,405 ========= ======== ========= At 1 January 2006 2,803 253,988 256,791 ========= ======== ========= The net book value of tangible fixed assets included within plant, machinery and motor vehicles, includes an amount of Â£2,555 (2005: Â£38,624) in respect of assets held under finance leases and hire purchase contracts. Depreciation charged in the year on assets held under finance lease was Â£8,810 (2005: Â£11,261). 15 Fixed asset investments Subsidiary undertakings Company Â£ Cost At 1 January 2006 1,022,896 Additions - --------- At 31 December 2006 1,022,896 --------- Provisions at 1 January 2006 1,022,734 Provided during the year - --------- Provisions at 31 December 2006 1,022,734 --------- Net book value at 31 December 2006 162 ========= Net book value at 31 December 2005 162 ========= 15 Fixed asset investments (continued) As at 31 December 2006 the Group held 100% of the share capital of the following companies. Subsidiary Country of Nature of business Date of undertaking incorporation acquisition/ set up Euro Asia Connectors Thailand Non-trading 6 March 1998 Co Ltd * Euro Asia Connectors Hong Kong Trading 19 March 1999 Co (Hong Kong) Ltd Euro Asia Strip Thailand Non-trading 24 April 2000 Tinning Ltd * Ravago Plastics Ltd United Application to strike 5 June 2002 Kingdom off 3 April 2007 Holdsafe Ltd * United Dissolved 23 January 22 October Kingdom 2007 2002 Derlite Co. Limited Thailand Manufacturing 21 February (Thailand) * 2003 Buckland Group (Hong Hong Kong Trading 29 October Kong) Ltd 2003 DK Gas Components Ltd United In liquidation 14 18 February * Kingdom July 2006 2005 Derlite Ltd * United Trading June 2006 Kingdom All companies within the Group have co-terminous year ends. * indicates an investment held through an intermediate holding company. 16 Stocks Group 31 December 2006 31 December 2005 Â£ Â£ Raw materials 66,616 301,996 Work in progress 31,150 17,896 Finished goods 161,805 105,160 --------- --------- 259,571 425,052 ========= ========= There is no material difference between the replacement cost of stocks and the amounts stated above. 17 Debtors: amounts falling due within one year Group Company 31 December 31 December 31 December 31 December 2006 2005 2006 2005 Â£ Â£ Â£ Â£ Trade debtors 501,501 797,756 - 13,128 Amounts owed by group undertakings - - 125,757 858,529 Other debtors 29,648 114,978 - 1,594 Prepayments and accrued income 3,341 24,934 1,085 4,745 -------- -------- -------- -------- 534,490 937,668 126,842 877,996 ======== ======== ======== ======== At 31 December 2006 Â£537,981 (2005: Â£728,121 ) of the trade debtors have been factored. 18 Creditors: amounts falling due within one year Group Company 31 December 31 December 31 December 31 December 2006 2005 2006 2005 Â£ Â£ Â£ Â£ Bank loans and other borrowings 392,429 552,587 - - Bank overdrafts 29,351 44,778 23,997 - Other loans 345,892 231,105 210,348 231,105 Trade creditors 611,620 978,504 200,492 252,810 Amounts owed to group undertakings - - 133,652 7,447 Corporation tax - - - - Obligations under finance leases and hire purchase contracts 3,909 22,402 - - Other taxation and social security 75,135 273,381 5,314 6,715 Accruals 165,718 221,828 70,823 78,961 -------- -------- -------- -------- 1,624,054 2,324,585 644,626 577,038 ======== ======== ======== ======== Amounts due under finance leases and hire purchase contracts are secured on the assets to which they relate. The bank loans and other borrowings relate to the factored trade debtors. 19 Creditors: amounts falling due after more than one year Group Company 31 December 31 December 31 December 31 December 2006 2005 2006 2005 Â£ Â£ Â£ Â£ Obligations under finance leases and hire purchase contracts - 9,371 - - Corporate loan notes 116,000 - 116,000 - -------- -------- -------- -------- 116,000 9,371 116,000 - ======== ======== ======== ======== Amounts due under finance leases and hire purchase contracts are secured on the assets to which they relate. On the 25 August 2006 the company resolved to create Â£125,000 of 12% 2008 loan notes. At 31 December 2006 Â£116,000 had been issued in exchange for debt or cash. 20 Provision for liabilities and charges Â£ Provisions at 1 January 2006 99,410 Reorganisation costs provision utilised during the year (99,410) --------- Provisions at 31 December 2006 - ========= The Group completed the relocation all of its UK manufacturing operations to Thailand in the first half of 2006. The reorganisation costs of Â£99,410 related to redundancy payments and the cost of transferring plant and equipment. 21 Financial Instruments The company's treasury policy is to avoid transactions of a speculative nature. The main risks arising from the group's financial instruments are interest rate risk and foreign currency risk. The directors review and agree policies for managing each of these risks and they are summarised below. Short term debtors and creditors Short term debtors and creditors have been excluded from all the following disclosures, other than the currency risk disclosures. Interest rate risk The group finances its operations through bank borrowings. The group exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities. It is the Group's policy that approximately one third of its borrowings should be at a fixed rate and at the year end 30% per cent of the borrowings were on such terms. Loans Loans amounting to Â£210,348 (2005: Â£231,105) are unsecured, repayable on demand, due to a shareholder, Groupe Industriel, and include interest at 10% per annum. Of the amount due Â£147,174 (2005: Â£141,623) is related to capital and Â£63,174 (2005: Â£89,482) to interest. Loans amounting to Â£115,544 (2005: Â£35,000), secured by a debenture over the assets of Buckland Group (Hong Kong) Ltd, repayable on demand and are subject to interest at 10% per annum. Of the amount due Â£105,140 (2005: Â£35,000) is related to capital and Â£10,405 (2005: Â£nil) to interest. A loan of Â£20,000 (2005: Â£20,000) is due to Mr Leon Sharples. The loan is interest free, unsecured and repayable on demand. Bank loans Other borrowings amounting to Â£392,429 (2005: Â£552,588 ) relate to invoice finance facilities. The borrowings bear interest of 2.50% over base rate (2005: 2.75% per annum). Bank overdrafts Other overdrafts amounting to Â£29,351 (2005: Â£44,778 ) are secured by a fixed and floating charge over the Company's assets and personal guarantees from Mr Palmer and Mr Sharples. The overdraft bears interest of 4% over base rate. Liquidity risk The group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably manage the liquidity through the use of overdraft. It is the Group's policy to factor its trade debtors wherever practicable. 21 Financial Instruments (continued) Maturity of financial liabilities The group financial liabilities analysis at 31 December 2006 was as follows: Group 2006 2005 Â£ Â£ Borrowings are repayable as follows: Within one year Bank loans and overdrafts 421,780 597,365 Other loans 345,892 231,105 Finance leases 3,909 22,404 Between two and five years Loan notes 116,000 - Finance leases - 9,371 After five years Finance leases - - ---------- ---------- 887,581 860,245 ========== ========== Borrowing facilities At 31 December 2006 the Group had un-drawn committed borrowing facilities Â£nil (2005: Â£nil ). Currency risk The Group does not hedge its exposure of foreign investments held in foreign currencies. The Group considers that the prevailing financial conditions in Thailand preclude the need to hedge against the Baht. The Group is exposed to translation and transaction foreign exchange risk. In relation to translation risk the proportion of assets held in the foreign currency is matched to an appropriate level of borrowings in the same currency. The Group has overseas subsidiaries operating in Thailand and Hong Kong whose revenues and expenses are denominated in local currencies and sterling. The directors protect the Group's sterling balance sheet from movements in the US dollar/local currency exchange rates, by financing its net investments in its subsidiaries, with the exception of Thailand, by means of local currency borrowings. The majority of the Group's sales are to the United Kingdom, USA/Mexico and Asia . These sales are invoiced primarily in GB Â£, US dollars and Euros. The table below shows, in sterling, the extent to which group companies have monetary assets and liabilities in currencies other than their local currency. Foreign exchange differences on re-translation of these assets are taken to the profit and loss account of the Group companies and the group. Functional currency of Net foreign currency monetary assets/ operation (liabilities) Euro GBP US dollars At 31 December 2006 GBP (210,348) - (56,615) -------- -------- -------- (210,348) - (56,615) ======== ======== ======== At 31 December 2005 Euro 135 3,334 GBP (251,661) - (191,592) -------- -------- -------- (251,661) 135 (188,258) ======== ======== ======== Credit risk The Group is mainly exposed to credit risk from credit sales. It is group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings, taking into account local business practices are then factored into any decisions. The Group does not enter into any derivatives to manage credit risk. Fair values The fair value of short term deposits, long term borrowings, loans, overdraft and other financial assets approximates to the carrying amount because of the short maturity of these instruments. 22 Deferred tax Group Company Unprovided deferred 31 31 31 31 tax December December December December 2006 2005 2006 2005 Â£ Â£ Â£ Â£ Accelerated capital allowances (598) (598) (598) (598) Losses (1,642,743) (1,499,519) (1,162,210) (1,059,173) -------- -------- -------- -------- Unrecognised deferred tax asset (1,643,341) (1,500,117) (1,162,808) (1,059,771) ======== ======== ======== ======== No provision for the deferred tax asset has been made in the group or company due to the uncertainty of the group or company being able to generate sufficient future taxable profits from which the future reversal of the timing differences can be deducted. 23 Called up share capital 2006 2006 2005 2005 Number Â£ Number Â£ Authorised New Ordinary shares 0.01p each 30,165,809,008 3,016,581 30,165,809,008 3,016,581 ---------- -------- ---------- -------- Deferred shares 9.5p each 15,409,000 1,463,855 15,409,000 1,463,855 New Deferred shares of 0.49p each 404,779,408 1,983,419 404,779,408 1,983,419 ---------- -------- ---------- -------- 30,585,997,416 6,463,855 30,585,997,416 6,463,855 ========== ======== ========== ======== Allotted, called up and fully paid New Ordinary shares of 0.01p each 861,226,247 86,123 792,178,629 79,218 ---------- -------- ---------- -------- Deferred shares 9.5p each 15,409,000 1,463,855 15,409,000 1,463,855 New Deferred shares of 0.49p each 404,779,408 1,983,419 404,779,408 1,983,419 ---------- -------- ---------- -------- 1,281,414,655 3,533,397 1,212,367,037 3,526,492 ========== ======== ========== ======== The deferred shares, which are not listed, have no voting rights, no rights to dividends and are not entitled to any payment on winding up. On 21st July 2006 the Company issued 35,714,285 new ordinary shares of 0.01p each at a premium of 0.06p per shares. On 13th December 2006 there was an issue of 33,333,333 new ordinary shares of 0.01p each at a premium 0.065p each. At the same time it was announced that a further 73,333,333 ordinary shares were to be issued but these were not issued until after the year end. Options The company has entered into the following option arrangements under which the holders are entitled to subscribe for a percentage of the company's ordinary share capital from time to time. Holder Options outstanding Percentage at 31 December 2005 and 31 December 2006 Wharton Holdings 2,075,405 at 15p 13.38 Corporation 501,750 at 10p 20,633,700 at 0.75p 44,488,500 at 0.50p 64,792,520 at 0.10p Consortia Trustees Limited 1,026,845 at 15p 6.62 248,250 at 10p 10,208,902 at 0.75p 22,011,500 at 0.50p 32,057,285 at 0.10p The options held by Wharton Holdings Corporation are held on behalf of discretionary trusts, the beneficiaries of which include the families of Mr Rogers and Mr Sharples. Those held by Consortia Trustees Limited are held on behalf of a discretionary trust, beneficiaries of which include the family of Mr Palmer. 23 Called up share capital (continued) The following is a summary of the principal terms of the options. (a) The price at which the option holders are entitled to subscribe for ordinary shares is 15p in respect of the rights which accrued to the option holders on 19 September 1997 and on 6 March 1998. The exercise price in respect of rights which accrued to option holders in December 1999 is 10p per share and in respect of rights which accrued on 6 March and 17 April 2003 is 0.75p per share. For rights which accrued on 30 October 2003 and on 18 February 2005 the option price is 0.50p per share and for rights accruing on 15 December 2005 is 0.1p per share. (b) In respect of any ordinary shares for which the holder is entitled to subscribe as a result of a rights issue, placing, open offer or similar the exercise price shall be the price at which such ordinary shares are issued. (c) In respect of any ordinary shares for which the holder is entitled to subscribe as a result of any capitalisation of reserves or profits, or a capital reduction or otherwise or on the making of an exempt distribution by virtue of Chapter II Part VI of the Income and Corporation Taxes Act 1998, the exercise price may be varied. (d) In respect of any ordinary shares for which the option holder is entitled to subscribe as a result of the exercise by any other person, firm or corporation of any rights granted to subscribe for ordinary shares (whether by way of option, warrant or otherwise), the exercise price per ordinary share shall be equal to the average market price of the ordinary shares on each of the five business days preceding the date of the exercise of the said rights, as derived from the Stock Exchange Daily Official List. (e) The options may be exercised in whole or in part on any one or more occasions at any time between 1 October 1998 and 30 September 2009. (f) The ordinary shares allotted to the option holder shall rank pari passu in all respects with the ordinary shares of the company then in issue and shall carry the right to receive all dividends and other distributions declared, made or paid by the company in respect of the ordinary shares on and after the date of the exercise of any of the options. 24 Reserves Group Share Profit premium account and loss account Â£ Â£ At 1 January 2006 1,041,532 (5,108,775) Loss for the year (295,891) Premium on issue of new ordinary share capital net of expenses 43,095 Exchange differences (35,701) --------- --------- At 31 December 2006 1,084,627 (5,440,367) ========= ========= Company At 1 January 2006 1,041,532 (4,262,022) Loss for the year (989,624) Premium on issue of new ordinary share capital net of expenses 43,095 --------- --------- At 31 December 2006 1,084,627 (5,251,646) ========= ========= 25 Commitments under operating leases As at 31 December 2006, the group had annual commitments under non-cancellable operating leases as set out below. Group Company 31 December 31 December 31 December 31 December 2006 2005 2006 2005 Operating leases Â£ Â£ Â£ Â£ which expire: Within one year - 25,938 - - In two to five years 41,142 41,142 - - --------- --------- --------- --------- 41,142 67,080 - - ========= ========= ========= ========= 26 Notes to the cash flow statement (a) Gross cash flows 31 December 31 December 2006 2005 Â£ Â£ Returns on investments and servicing of finance Interest received 33 218 Interest paid (39,598) (71,267) --------- --------- (39,565) (71,049) ========= ========= Acquistions Cash consideration - 1,166,000 Acquisition expenses - 88,243 --------- --------- - 1,254,243 ========= ========= Capital expenditure Payments to acquire tangible fixed assets (30,139) (130,945) Receipts from sale of tangible fixed assets 15,630 185,634 --------- --------- (14,509) 54,689 ========= ========= Financing New ordinary share capital net of expenses 50,000 1,414,497 Issue of loan notes 116,000 - Increase in bank loans and other borrowings 499,833 483,942 Repayment of finance leases (6,616) (24,221) --------- --------- 659,217 1,874,218 ========= ========= (b) Analysis of At Cash Exchange Non cash At changes in net debt movement movements 1 Flow 31 January December 2006 2006 Â£ Â£ Â£ Â£ Â£ Cash in hand and at bank 29,717 6,376 - (28,848) 7,245 Bank overdrafts (44,778) (103,526) - 118,953 (29,351) --------- --------- --------- --------- -------- (15,061) (97,150) - 90,105 (22,106) Bank loans and Other borrowings (783,692) (615,833) - 545,204 (854,321) Finance leases (31,775) 6,616 - 21,250 (3,909) --------- --------- --------- --------- -------- Net (debt) (830,528) (706,367) - 656,559 (880,336) ========= ========= ========= ========= ======== The non cash movements relate to subsidiary bank and loan balances falling outside of the control of the group due to the liquidation or dissolution of the subsidiary. 27 Post balance sheet events The reorganisation of the group has continued after the end of the year with the transfer of the activities of Derlite Ltd in the United Kingdom to Derlite Co Ltd in Thailand. This company ceased to trade on 30 April 2007 and will be dissolved once all liabilities have been met. The dormant subsidiary, Holdsafe Limited, was dissolved on the 23 January 2007 and the Directors are allowing Ravago Plastics Limited to be struck off the register in July 2007. On the 6 June 2007 the Directors announced their plans to restructure the share capital by the consolidation of every 100 0.01p ordinary share into one new ordinary share of 1p. The Directors also announced their proposal to place 12,857,142 new ordinary shares to raise Â£900,000 to replay high cost borrowings and finance extra working capital to remove the need for expensive worldwide air-freight costs. At the same time the Directors have negotiated a debt for equity swap amounting to about Â£510,000. This has been accepted with the convertible corporate loan note holders and providers of outstanding loan capital. On the 6 June 2007 the group agreed to acquire all the share capital of Gas Ignition Limited, a company incorporated by Mr Palmer and Mr Sharples to supply gas boiler and industrial ignitors. The business was valued at Â£150,000 and Mr Palmer and Mr Sharples have accepted the issue of 2,142,857 new shares in Buckland plc as consideration. Changes to the board of Directors were effected on the 6 June 2007 with the resignation of Mr Rogers. There will be a termination payment of Â£60,000 in respect of his notice period. 28 Related party transactions During the year, Gas Ignition Limited, a company owned by Mr Palmer and Mr Sharples, bought gas igniters from Derlite Limited totalling Â£22,043 (2005 Â£nil). Derlite Limited also provided sales and administration services for a sum of Â£12,059 (2005 Â£nil). At the end of the year Gas Ignition owed Derlite Limited Â£17,913 (2005 Â£nil). Mr Palmer and Mr Sharples have provided personal guarantees in respect of the overdraft facility of Buckland plc in the sum of Â£20,000. A loan from Mr Sharples was outstanding at the year-end of Â£20,000 (2005: Â£20,000). 29 Pension During the year one of the subsidiaries, DK Gas Limited, operated a defined contribution scheme in which that assets of the scheme where held separately to the assets of the Group. During the year contributions were made totalling Â£3,114 (2005 Â£4,364) of which total contributions outstanding at the year-end were Â£nil (2005 Â£4,277). On the 14 July 2006 DK Gas Limited was placed into Creditors Voluntary Liquidation and the pension scheme proceeded to be wound up. Copies of the report and accounts have been sent to shareholders today and are available free of charge from: Seymour Pierce Limited 20 Old Bailey London EC4M 7EN This information is provided by RNS The company news service from the London Stock Exchange

Companies

Active Energy Group (AEG)

Tuesday, 3rd December 2024

COMPANIES COVERED:

MARS SSPG OTB

A positive start for a number of reporting stocks on Tuesday with double digit gains for SSP Group and On The Beach, whilst investors in pub operator Marston’s also found cause for cheer after market outperformance.

Full Archive

UK 100

Latest directors dealings

1 hour ago Molten Ventures
1 hour ago Touchstone Exploration Inc NPV (DI)
1 hour ago Team Internet Group plc
1 hour ago Ondo Insurtech
1 hour ago Wilmington

All directors dealings today