Final Results

RNS Number : 6666L

Glen Group PLC

15 January 2009

 



Embargoed until 0700                           

15 January 2009

Glen Group plc

 ('Glen' or the 'Company')

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2008

Glen Group plc, (AIM: GLN) the AIM listed provider of integrated telecommunications solutions to the SME market, today announces its preliminary results for the year ended 30 September 2008.

Highlights

• Successful sale, as at 31 December 2007, of the Eclectic and inGroup businesses for a net cash consideration of £2.72m.

• Acquisition on 27 June 2008 of Colloquium Limited, one of Scotland's first ISPs, for an all cash consideration of £100,000 excluding deal costs.

• Elimination of all group debt, amounting to over £800,000.

• Cash resources of over £0.5m available at the year end.

• Turnover of £1.5m, up 47% compared to last year.

• Gross margin percentage at 35.8% compared to 23.3% last year.

• Administrative expenses reduced.

• Operating loss of £1.07m represents a reduction of 58.5% over last year.

• Overall loss for the year nearly halved from £3.0m in 2007 to £1.63m.

• Strengthened sales team.

• Board successfully restructured.

• New Nominated Adviser and Broker appointed.

• Proposed name change to Pinnacle Telecom Group PLC

Graham J Duncan, Non-Executive Chairman commented:

'The Board recognises that the first priority for the year ending 30 September 2009 is organic growth and tight cash management. We believe that the new financial year will, in many respects, be a critically important year for us.'

For further information please contact:

Glen Group plc

Graham J Duncan, Non-Executive Chairman                 0131 202 0102

Alan J Bonner, Chief Executive                                    0845 119 2100

Zeus Capital Limited

Ross Andrews

Bobby Fletcher                                                           0161 831 1512

Pelham PR

Alex Walters                                                              0203 170 7435

CHAIRMAN'S STATEMENT

Despite the sharp economic downturn, we have continued to make progress, with the results compared to last year showing a 47% lift in turnover to £1.5m and our bottom line losses dramatically reduced by nearly 50%. We are also fortunate to be holding cash, which amounted to over £0.5m at the year end, having repaid all our borrowings, of over £800,000, from the proceeds of the sale of the businesses of Eclectic Group Limited and I G Software Limited. The timing of this sale could not have been better, given the precipitous downturn in the financial services sector which was the most important focus of the businesses sold.

Telecommunications spend, both fixed and mobile, remains a significant cost to many businesses. Although we have not seen a slowdown in activity at this time, we cannot be certain that we will avoid deterioration through 2009 as the economy continues to weaken. In this climate, we believe that businesses may be more willing to change their telecommunications provider on the basis of price alone, although services and solutions which can make their businesses more efficient remain important factors when considering a change. It is our view that, in a downturn, telecommunication services aimed at businesses do not suffer as rapidly as a consumer focused business and we intend to further promote our value for money solutions through our expanding sales channels.

We continue to expand the mix of services and on 27 June we were pleased to be able to acquire Colloquium Limited ('Colloquium'), at a realistic all cash price of £100,000, before acquisition costs. Colloquium is one of Scotland's oldest internet service providers, which we have fully integrated into the existing business. We now believe that we have an all-round service capability in the ICT space and remain focused on providing telecommunications based solutions to the SME market.

Major changes were made during the year to our Board structure. Eric M Hagman, our first Chairman (Non-Executive), stepped down from the Board at the end of May and Peter J Ford, who co-founded the group, did not put himself up for re-election at the AGM on 9 May 2008, resigning from the Board at that time. Effective 1 June 2008, I moved up into the role of Non-Executive Chairman and handed over the day to day running of the business to Alan J Bonner, the MD of our operating subsidiary Pinnacle Telecom, who took on the role of group CEO. We had welcomed David Hewitt to the Board in late February 2008, but on 1 August he stepped down in favour of John C Anderson, a well known Scottish based business figure, following our renewed focus on the telecommunications market. Also with effect from 1 June, Alan J Bonner, five significant shareholders and I entered into a memorandum of understanding for the purposes of promoting the development of the Company and its business. 

Following the Board changes, we have completely restructured our sales operations and are actively currently building a dealer channel as an additional route to market, as well as continuing with other direct channels, based on an active sales force. We have materially strengthened our middle management team and our marketing efforts have been sharpened.

In order to recognise that our telecom operations now dominate the group business, we are proposing at the AGM to change the name of the company to Pinnacle Telecom Group PLC.

On 23 December 2008, we announced the appointment of Zeus Capital Limited as our new Nominated Adviser and Broker and we look forward to working with them in the future.

Small AIM listed businesses are out of fashion and may not return to popularity for some time, perhaps several years. The ongoing costs of the listing remain overwhelming compared to the size of our operating units and we must 'grow into' these costs and beyond in order to pull the group into profit. We do have an extremely experienced team, but organic growth takes time. Through the efforts of the management team, we have identified a number of possible acquisition targets, but there needs to be more realism from private owners on the valuation of their businesses. Any non equity financing would need to be externally sourced by the Company. 

The Board recognises that the first priority for the year ending 30 September 2009 is organic growth and tight cash management. We believe that the new financial year will, in many respects, be a critically important year for us.

Graham J Duncan MA CA

CHAIRMAN

15 January 2009  

BUSINESS REVIEW

Introduction

The economic background deteriorated sharply during the second half of the year, and it continues to weaken. Given this dynamic, we are pleased to have lifted our turnover, improved our gross profit, kept our administrative expenses to a modest level and reduced our overall losses. Going forward, we cannot be certain that we have escaped the effects of the worst decline in confidence in living memory, but at this time we do not sense a fall off in turnover. We are, however, keeping a watchful eye on the situation.

Given the fact that the group is running at a loss, we are putting much of our energy into growing the business organically and, in particular, focussing on increasing our gross profit in absolute terms. The Board believe that the greatest risk to the business is being unable to achieve the levels of gross profit that we need in the time scale which we have planned, without access to further capital. Given the state of the financial markets, we are running the business on the premise that we will not be able to access any additional funds within the 2009 financial year, nor complete any acquisitions which require cash.

Our cash resources are finite. Although we have no debt, and had cash in excess of £0.5m at the year end, losses will continue to erode our cash resources until our gross profit exceeds our cost base. 

Much of our income is recurring particularly our telecom services revenues which now make up the majority of our revenue base. Our sales channels have been expanded both during the year and since the year end, and we now have a range of channels to market, including direct sales using a sales team, call centre sales activity and, more recently, the introduction of a dealer and reseller network. Since the acquisition of Colloquium, an ISP, in late June 2008, we have been able to sell a wider, more rounded, range of solutions to the business market and we continue to package and deliver services which are good value for money. In this climate, we believe that we may see more businesses change providers on the basis of price alone.

As indicated in the Chairman's Statement, we believe that 2009 will be a pivotal year.

Review 

      1)   Turnover

Turnover from the continuing operations, which constitutes our reported turnover, rose a healthy 47% over the year from £1,014,870 to £1,495,267. Turnover from the discontinued operations sold on 31 December 2007, was £1,686,652 for the three month period to the date of sale. Discontinued operations are shown as a single line item in the consolidated income statement and are more fully explained in the notes to the consolidated financial statements.

      2)   Gross Profit

The overall gross profit from continuing operations for the full year was £535,966, representing a gross profit to sales percentage of 35.8%. This compares favourably to a gross profit percentage of 23.3% for last year.

The gross profit that can be obtained from our service portfolio varies significantly depending on the sales channel, with top-end margins of 60% available on certain services sold directly to customers by a sales team. By contrast, margins as low as 5% apply for an indirect sale where we only provide wholesale pricing of services to our dealer client who retains the prime customer relationship. Much of this latter activity was embryonic at the year end, but is expected to increase in the 2009 year.

      3)   Operating Loss

In the full year we have incurred an operating loss of £1,068,394 (2007: £2,573,328). In 2007, we decided to expense all our goodwill, and the only intangible asset in our balance sheet represents the written down value of customer bases, a billing system and maintenance contracts acquired. We have expensed £170,244 of our intangibles in the year (2007: £65,741). Last year also saw significant write downs to goodwill and reorganisation costs expensed, which are not repeated this year. Before these adjustments, our operating loss amounted to £898,150 which compares favourably to an equivalent loss of £1,208,061 last year.

As well as the need to expand our gross profit, we also work to keep our administrative costs to modest levels given our continuing need to invest in good people, particularly in sales. During the year we incurred administrative expenses of £1,434,116 (2007: £1,445,020), with the costs of the parent company making up approximately 40% of these costs.

      4)   Discontinued Operations

The sale of the business and assets, including people, of Eclectic Group Limited ('Eclectic') and I G Software Limited was concluded on 31 December 2007. The shares in these companies were retained by the group, and we were left to ingather all receivables and pay all balance sheet liabilities as they fell due, together with all bank borrowings. The transaction included a mechanism to apportion certain costs between the buyer and the seller, and included a bonus payment to a director and key managers of Eclectic who transferred to the buyer.

The 'headline' price was £3.0m, and the net proceeds of sale were approximately £1.5m after payment of the above named costs, the bonus and the outstanding bank debt. In broad terms, we have been able to match sums received for outstanding receivables with amounts paid for outstanding payables.

Including provisions made in 2007 and the trading results of these companies in the current financial year to the date of sale, we have recorded losses from this sale of £987,889 over the two years to 30 September 2008, with £566,108 of that loss taken in the current year. Given the circumstances and timing of this sale, we are satisfied with the outcome.

    5)    Balance Sheet

At 30 September 2008, the group had net assets of £1,155,947. Included in this figure are intangible assets, making up the written down value of customer bases, a billing system and maintenance contracts acquired, of £717,568. We are writing down the value of the customer bases and billing system over five years, and the maintenance contracts over 10 years from the relevant acquisition date.

We also had £879,237 of currents assets (with £545,521 being cash) and £574,870 of current liabilities at 30 September 2008.

The cash balances remain a key performance indicator of the Board.

Risks

The key business risks are as undernoted. This list is not exhaustive, and should not be taken as being the only risks attached to the business going forward.

• Working capital

The group's cash resources are finite and there is no banking facility in place. The directors recognise that the group must achieve monthly profitability for the business to cover its cost base and remain within its finance resources. The Board seeks to mitigate this risk by carefully managing the cash resources of the group.

• People

            As in many businesses, the ability to hire and retain good people is fundamental to the success of the 
            business. Given the current economic climate, such individuals may be less willing to move to a small 
            business than might otherwise be the case in times of prosperity. This includes quality sales personnel. 
            The Board uses its contacts and significant experience in the recruitment and selection of employees.
 

• Bad debts

           The customer base is mainly made up of SME customers, who are one of the groups likely to feel the 
           effects of a downturn. Although we have not yet experienced any material lift in bad debt, that does not 
           mean to say that there will not be an increase in 2009. A majority of customers are signed on direct debit 
           which allows us very quickly to know when a customer defaults, and so take appropriate action.

• Competition

We pride ourselves in being competitive coupled with having the ability to deliver a solutions based result that enhances the customer's business. The deteriorating climate might cause buying decisions to move more in the direction of a price based sale compared to value based sale. As a relatively small business, the group may not be able to compete on price alone. However, our size is also a strength, as we are able to react very quickly to changing market conditions.

Of course all businesses carry technology risks, the risks of business interruption, the ability to get credit from suppliers on suitable terms and so on. The above is not an exhaustive list, and it should not be taken as such, but it does cover certain key areas which the Board is focusing on at this time.

Financing

The group relies on credit from suppliers on reasonable commercial terms. The main creditors tend to be significant companies, such as BT. The group does not, at this time, rely on the banking market and is therefore somewhat shielded from the difficulties associated with overdraft and other loan facilities.

From time to time, the group has taken out leasing for plant and vehicles and will continue to do so when required. The group owns no property.

The group's main credit exposure lies with sums due from customers. Where at all possible, the main telecom operating company, Pinnacle Telecom plc, seeks to sign customers up on direct debit facilities which gives us a tighter control over cash flow.

With positive cash balances, we are exposed to a reduction in interest rates, albeit not materially so as far as the business as a whole is concerned.

Consultancy agreement

As announced on 9 May 2008, the Company entered a consultancy agreement with Graham J Duncan, the former group CEO. In order to assist in lowering the costs of the Company, Graham J Duncan agreed to bring his existing executive service contract to an end on 31 May 2008, without compensation, notwithstanding that it had a one year notice period. Under the provisions of the Companies Act 2006, the existing consultancy agreement was required to be approved by the shareholders, approval to be secured before signature. Such approval was not obtained at the time and the Company therefore proposes that the existing agreement be discharged and a new agreement entered into for the balance of the original term and on the same terms following shareholders' approval at the Annual General meeting to be held on 5 March 2009. This is a related party transaction under the terms of the AIM Rules and further details are contained in Note 8 to this Preliminary Announcement.

Loss of capital

As the net assets of the company represent less than half of its called up share capital, the company is required by statute to convene an extraordinary general meeting. Accordingly, the company will convene an extraordinary general meeting to be held immediately following the annual general meeting at the same venue. Apart from continuing to pursue their stated strategy of building an integrated telecommunications business, however, the directors do not consider that any particular steps need or should be taken to deal with the situation at this time.

Alan J Bonner

CHIEF EXECUTIVE OFFICER

15 January 2009

GLEN GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2008
							Year		Year
							ended		ended
							2008		2007
			Notes				£		£
Revenue			4.1				1,495,267		1,014,870
Cost of sales							(959,301)		(777,911)
							───────		───────
Gross profit							535,966		236,959
Administration expenses							(1,434,116)		(1,445,020)
							───────		───────
Operating loss before amortisation, impairment of goodwill and exceptional cost							(898,150)		(1,208,061)
Amortisation of intangibles							(170,244)		(65,741)
Impairment of goodwill							-		(994,111)
Exceptional cost of fundamental reorganisation							-		(305,415)
							───────		───────
Operating loss			5				(1,068,394)		(2,573,328)
							───────		───────
Interest receivable							4,150		2,771
Interest payable							(2,761)		(12,600)
							───────		───────
Finance costs							1,389		(9,829)
							───────		───────
Loss before tax							(1,067,005)		(2,583,157)
Taxation							2,183		(439)
							───────		───────
Loss for the year from continuing operations							(1,064,822)		(2,583,596)
Discontinued operations		2
Loss for the year from discontinued operations							(566,108)		(421,781)
							───────		───────
Loss for the year  4.2							(1,630,930)		(3,005,377)
							═══════		═══════
Loss per share			6
Loss per share basic and diluted - continuing							(0.09)p		(0.46)p
Loss per share basic and diluted - discontinued							(0.05)p		(0.07)p
Loss per share basic and diluted - total							(0.14)p		(0.53)p
See accompanying notes to the financial statements.

GLEN GROUP PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2008
							2008	2007
							£	£
Assets
Non-current assets
Intangible assets							717,568	751,368
Property, plant and equipment							134,012	105,132
							───────	───────
							851,580	856,500
							───────	───────
Current assets
Inventories							344	22,524
Trade and other receivables							333,372	1,729,599
Cash and cash equivalents							545,521	157,361
							───────	───────
Total current assets							879,237	1,909,484
Assets included in disposal groups							-	2,749,005
							───────	───────
Total assets							1,730,817	5,514,989
							───────	───────
Short term borrowings							(6,936)	(587,308)
Trade payables							(353,698)	(1,234,194)
Other taxes and social security costs							(22,759)	(442,776)
Accruals and other payables							(191,477)	(384,987)
							───────	───────
Total current liabilities							(574,870)	(2,649,265)
Non current liabilities
Long-term borrowings							-	(65,155)
							───────	───────
Total liabilities							(574,870)	(2,714,420)
							───────	───────
Net assets							1,155,947	2,800,569
							═══════	═══════
Equity
Share capital							4,807,680	4,807,680
Share premium account							3,207,593	3,207,593
Other reserve							2,852	16,544
Fair value adjustment							(1,064,130)	(1,064,130)
Profit and loss reserve							(5,798,048)	(4,167,118)
							───────	───────
Total equity							1,155,947	2,800,569
							═══════	═══════

GLEN GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2008
	Share Capital £	Share Premium £	Share to be issued £	Other Reserve £	Fair Value £	Retained Earnings £	Total £
At 1 October 2006	3,276,831	860,817	787,500	20,028	(417,221)	(1,161,741)	3,366,214
Loss for the year	-	-	-	-	-	(3,005,377)	(3,005,377)
Recognised directly in equity
Share issue	1,530,849	-	-	-	(646,909)	-	883,940
Shares to be issued as part
of acquisition	-	-	(787,500)	-	-	-	(787,500)
Premium on share
issue	-	2,438,401	-	-	-	-	2,438,401
Share-based payments	-	-	-	8,272	-	-	8,272
Lapse of share options	-	-	-	(11,756)	-	-	(11,756)
Expenses incurred on
share issue	-	(91,625)	-	-	-	-	(91,625)
	───────	───────	───────	───────	───────	───────	───────
Net change directly
in equity	1,530,849	2,346,776	(787,500)	(3,484)	(646,909)	-	2,439,732
Total movements	1,530,849	2,346,776	(787,500)	(3,484)	(646,909)	(3,005,377)	(565,645)
	───────	───────	───────	───────	───────	───────	───────
Equity at
30 September 2007	4,807,680	3,207,593	-	16,544	(1,064,130)	(4,167,118)	2,800,569
	═══════	═══════	═══════	═══════	═══════	═══════	═══════
At 1 October 2007	4,807,680	3,207,593	-	16,544	(1,064,130)	(4,167,118)	2,800,569
Loss for the year	-	-	-	-	-	(1,630,930)	(1,630,930)
Recognised directly in equity
Share-based payments	-	-	-	2,852	-	-	2,852
Lapse of share options	-	-	-	(16,544)	-	-	(16,544)
	───────	───────	───────	───────	───────	───────	───────
Net change directly
in equity	-	-	-	(13,692)	-	-	(13,692)
Total movements	-	-	-	(13,692)	-	(1,630,930)	(1,644,622)
	───────	───────	───────	───────	───────	───────	───────
Equity at
30 September 2008	4,807,680	3,207,593	-	2,852	(1,064,130)	(5,798,048)	1,155,947
	═══════	═══════	═══════	═══════	═══════	═══════	═══════

GLEN GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2008
			2008	2007
			£	£
Cash flows from operating activities
Operating loss			(1,643,269)	(2,491,961)
Adjustments for:
Depreciation			59,360	93,778
Amortisation			170,244	65,741
Impairment of goodwill			-	994,110
Release of negative goodwill			-	(9,557)
Other non-cash items			19,396	(3,484)
Payment of corporation tax			(3,253)	(8,712)
Decrease in inventories			22,180	11,228
Decrease in trade and other receivables			1,396,227	331,844
(Decrease) / increase in trade payables, accruals and other creditors			(1,494,631)	70,872
			───────	───────
Net cash outflow from operating activities			(1,473,746)	(946,141)
			───────	───────
Cash flows from investing activities
Purchase of property, plant and equipment			(9,850)	(135,220)
Sale of property, plant and equipment			2,360	-
Disposal of subsidiary company			2,635,857	-
Acquisition of subsidiaries			(130,400)	25,292
			───────	───────
Net cash used in investing activities			2,497,967	(109,928)
			───────	───────
Cash flows from financing activities
Interest paid			(10,821)	(62,195)
Interest received			20,287	-
Issue of shares			-	1,380,000
Repayment of bank borrowing			(101,403)	(28,716)
Former subsidiary director's loan notes less repayments			-	(50,000)
Receipt of finance leases less repayments			(44,242)	34,695
Expenses paid in connection with share issues			-	(91,625)
			───────	───────
Net cash used in financing activities			(136,179)	1,182,159
			───────	───────
Net increase in cash			888,042	126,090
Cash and bank overdrafts at beginning of period			(349,457)	(475,547)
			───────	───────
Cash and bank overdrafts at end of period			538,585	(349,457)
			═══════	═══════
Cash and bank overdrafts comprise:
Cash and cash equivalents			545,521	157,361
Bank overdrafts			(6,936)	(506,818)
			───────	───────
			538,585	(349,457)
			═══════	═══════

GLEN GROUP PLC
NOTES
1.		General information
2.		The consolidated financial statements of the group have been prepared in accordance with International Financial Reporting Standards as adopted by the EU. The financial statements for the year ended 30 September 2008 were approved by the board of directors on 15 January 2009. The financial information set out above does not constitute the company's statutory consolidated financial statements for the year ended 30 September 2008 but is derived from those financial statements. The comparative figures are those of the consolidated financial statements for the year ended 30 September 2007. The report of the auditors was unqualified and did not contain a statement under s237 (2) or (3) Companies Act 1985. The statutory financial statements for the year ended 30 September 2008 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The information contained in this Preliminary Statement does not constitute statutory accounts as defined by Section 240 of the Companies Act.  Glen Group plc, a public limited company, is the group's ultimate parent company. It is incorporated in England and Wales. The address of Glen Group plc's registered office is 8-10 New Fetter Lane, London, EC4A 1RS. Its principal place of business is Glen House, 6 Straiton View, Straiton Business Parc, Edinburgh, EH20 9QZ. Disposal group
	The disposal group consists of Eclectic Group Limited ('Eclectic') and its wholly owned subsidiary I G Software Limited ('inGroup'). The assets and undertaking of these businesses were sold to Maxima Information Group Limited, a wholly owned subsidiary of Maxima Holdings plc, effective 31 December 2007.
3.		Acquisition of Colloquium Limited
		On 27 June 2008, Pinnacle Telecom plc acquired 100% of the share capital of Colloquium Limited, a company registered in Scotland. The total cost of acquisition includes the components stated below. The purchase price of £130,400, including acquisition expenses, was settled in cash. With the exception of intangible assets no adjustments have been made to the book values of the assets and liabilities at acquisition. The book value of intangible assets at acquisition was nil. This can be analysed as follows:
		Assets
		Non-current assets Property, plant and equipment	78,430
		Intangible assets	136,444
			───────
			214,874
			───────
		Current assets
		Trade and other receivables	37,460
		Cash and cash equivalents	14,452
			───────
		Total current assets	51,912
			───────
		Total assets	266,786
			───────
		Liabilities
		Current liabilities
		Trade and other payables	88,156
		Other taxes and social security costs	24,714
		Other creditors and accruals	23,516
			───────
		Total current liabilities	136,386
		Total liabilities	136,386
			───────
		Net assets	130,400
			═════════
		Turnover and operating loss of the company acquired for the post acquisition period were £88,304 and £34,598 respectively. For the period 1 March 2008 to 30 September 2008 the turnover was £237,355 and the operating loss was £102,554.

4.	Segment Reporting
	4.1 Analysis of revenue
						2008	2007
						£	£
	By business sector
	Mobile services					168,227	221,939
	IT					126,546	423,503
	Other telecommunication services					1,200,494	369,428
						───────	───────
	Continuing operations					1,495,267	1,014,870
	IT - discontinued operations					1,686,652	5,670,935
						───────	───────
	Total revenue					3,181,919	6,685,805
						═══════	═══════
	By destination
	United Kingdom					3,181,919	6,685,805
						═══════	═══════
	By origin
	Glen Communications - continuing operations					197,008	638,077
	Pinnacle Group					1,298,259	376,793
	Eclectic and inGroup - discontinued operations					1,686,652	5,670,935
						───────	───────
	Total revenue					3,181,919	6,685,805
						═══════	═══════
	4.2 Analysis of net loss after tax
						2008	2007
						£	£
	By business sector
	Mobile services
	Loss from operations before exceptional items					(81,502)	(578,964)
	Reorganisation costs					-	(278,843)
	Impairment of goodwill					-	(935,314)
						───────	───────
	Loss from operations after exceptional items					(81,502)	(1,793,121)
						═══════	═══════
	IT
	Loss from operations before exceptional items					(33,890)	(124,927)
	Reorganisation costs					-	(12,184)
	Amortisation					(20,000)	(20,000)
	Impairment of goodwill					-	(58,796)
						───────	───────
	Loss from operations after exceptional items					(53,890)	(215,907)
						═══════	═══════

	Other telecommunication services	£	£
	(Loss) / profit from operations before exceptional items	(213,202)	49,636
	Reorganisation costs	-	(14,388)
	Amortisation	(150,244)	(45,741)
		───────	───────
	Loss from operations after exceptional items	(363,446)	(10,493)
		═══════	═══════
	Head office
	Loss from operations	(565,984)	(564,075)
		═══════	═══════
	Loss from continuing operations	(1,064,822)	(2,583,596)
	IT - discontinued operations	(566,108)	(421,781)
		───────	───────
	Loss for the year	(1,630,930)	(3,005,377)
		═══════	═══════
	By destination - continuing and discontinued operations
	United Kingdom	(1,630,930)	(3,005,377)
		═══════	═══════
	By origin
	Glen Group	(565,984)	(564,075)
	Glen Communications	(135,392)	(2,009,028)
	Pinnacle Group	(363,446)	(10,493)
		───────	───────
		(1,064,822)	(2,583,596)
	Eclectic and inGroup - discontinued operations	(566,108)	(421,781)
		───────	───────
	Loss for the year	(1,630,930)	(3,005,377)
		═══════	═══════
5.	Operating loss	2008	2007
		£	£
	Loss from operations is stated after charging:
	Exceptional cost of fundamental reorganisation	-	305,415
	Depreciation of owned fixed assets	59,360	93,778
	Other operating lease rentals:
	- buildings	70,953	101,670
	- office equipment	1,413	14,576
	Auditors' remuneration:
	- company	12,400	13,337
	- group	60,575	46,985
	Non-audit fees:
	- company, tax work and advice	-	600
	- group, review of interim accounts	4,887	3,709
	- group, tax work and advice	4,230	6,114
	and after crediting:
	Government grants	-	30,000
		═══════	═══════
	In addition, remuneration paid to the auditors in respect of fundraising totaling £Nil (2007: £17,625) has been included within the share premium account.
6.	Total and continuing loss per share	2008	2007
		£	£
	Loss attributable to ordinary shareholders - continuing operations	1,064,822	2,583,596
	Loss attributable to ordinary shareholders - discontinued operations	566,108	421,781
	Loss attributable to ordinary shareholders	1,630,930	3,005,377
		═══════	═══════
		Number	Number
	Weighted average number of ordinary shares in issue	1,194,099,804	567,346,340
	Loss per share (pence) - continuing operations	0.09	0.46
	Loss per share (pence) - discontinued operations	0.05	0.07
	Loss per share (pence) - total	0.14	0.53
		═══════	═══════
	Both the basic and diluted earnings per share have been calculated using the net loss after taxation attributable to the shareholders of Glen Group plc as the numerator. The weighted average number of outstanding shares used for basic earnings per share amounted to 1,194,099,804 shares (2007: 567,346,340).
	Due to the losses incurred by the group the share options are anti-dilutive.

7.	Dividends
	The Directors do not propose a dividend for the year ended 30 September 2008 (2007: £Nil)
8.	Related party transactions
	The following related party transactions occurred during the year: In connection with the sale of the assets and business of Eclectic Group Limited on 31 December 2007, that company paid a bonus of £191,000 to John Nicoll, its Managing Director.  Graham J Duncan, the former group CEO, became Non-Executive Chairman with effect from 1 June 2008 and entered into a letter of appointment for an initial period of one year with a three-month rolling notice period thereafter. Separately, he entered into a consulting contract to provide a package of services to Glen over a period of three years, covering certain financial and M&A work. Under the terms of the consultancy contract Graham J Duncan is entitled to a consultancy fee of £60,000 during the first year of the contract and £50,000 per annum in subsequent years, paid monthly in arrears. He is also entitled to a transaction fee of 4% of the gross value of any corporate transactions entered into by the Company less the relevant legal fees and after a deduction of the sum of £15,000 in any single year. All payments made are processed through payroll and suffer PAYE and NIC deductions. In order to assist in lowering the costs of the Company Graham J Duncan agreed to bring his existing executive service contract to an end on 31 May 2008, without compensation, notwithstanding that it had a one year notice period.  The entering into the consultancy agreement is a related party transaction under the AIM Rules. As such the Directors, other than Graham J Duncan consider, having consulted with the Company's nominated adviser (Zeus Capital Limited), that the terms of the transaction are fair and reasonable insofar as shareholders are concerned. There are no other related party transactions recorded during the year to 30 September 2008 or to 30 September 2007.
9.	Annual report and accounts
	A copy of the Annual Report and Accounts for the year ended 30 September 2008 will be sent to shareholders at the end of January 2009 and copies will be available from the Company's registered office at 8-10 New Fetter Lane, London, EC4A 1RS or by visiting our website at www.glengroup.co.uk
	The annual general meeting of the Company will be held at the Company's offices, Glen House, 6 Straiton View, Straiton Business Parc, Edinburgh, EH20 9QZ on 5 March 2009 at 1.00 p.m.
	The extraordinary general meeting referred to in the Business Review will be held at the Company's offices, Glen House, 6 Straiton View, Straiton Business Parc, Edinburgh, EH20 9QZ on 5 March 2009 at 1.30 p.m.

 

END

 

 

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