Interim Results

Global Structured Finance Inc 21 September 2006 21 September 2006 GLOBAL STRUCTURED FINANCE Interim Results For the six months ended 30 June 2006 CHAIRMAN'S STATEMENT I am pleased to present the interim results of Global Structured Finance covering the six month period to 30 June 2006. The Company was admitted to AIM in March 2005 through an initial placing of 8 million ordinary shares that generated net funds for the Company of £255,000. The results are prepared for the first time in accordance with International Financial Reporting Standards (IFRS) and in order to give the greatest level of clarity, we have prepared a full set of notes which include a reconciliation to the results on a UK GAAP basis. The results are in line with expectations, and show a loss before tax of £72,000. In its AIM admission document dated 11 March 2005, the Company stated that it would initially seek to develop a group specialising in the provision of structured financing products and services through acquisition of target companies or investments. The Board investigated a number of potential opportunities, none of which your board considered to be sufficiently attractive to put before shareholders and your board decided to consider opportunities outside of the original target sector. On 3 April 2006 the London Stock Exchange suspended trading in the Company's securities on AIM as a consequence of the Company not having completed a reverse takeover or substantially implemented its investing strategy in accordance with the timetable specified under AIM Rule 8 relating to investing companies. Under the AIM rules, any company in this position which has still not completed such a transaction by 30 September 2006 will have its listing cancelled. The board is firmly of the view that it should not compromise shareholder value by completing a transaction purely for the sake of maintaining its listing. Since 3 April, the board has continued to investigate potential transactions, has identified a number of possibilities and is undertaking appropriate initial due diligence work as necessary. However, the Company will not be in a position to complete a transaction by the end of this month and accordingly, the Company's share listing will be cancelled with effect from 3 October 2006. It is the board's intention to apply for readmission to AIM on completion of a transaction. In the AIM Admission document, it was stated that, if the Company had not completed a transaction within 18 months of Admission, the board would convene an extraordinary general meeting ('EGM') at which proposals would be put to shareholders to liquidate the assets of the Company and distribute the proceeds amongst shareholders. Accordingly, a notice to convene an EGM is set out at the end of this statement. The Board is confident that it will be in a position to put an acceptable transaction to shareholders and to apply for readmission of the Company's shares to trading on AIM and has received confirmation from Corvus Capital Inc (representing 46.25% of the Company's issued share capital) that it supports the board in this objective and intends to vote against the EGM resolution. Accordingly, the board recommends that shareholders vote against the resolution. Whether or not shareholders intend to be present at the EGM, they are requested to complete, sign and return the form of proxy or form of direction to the Company's UK Transfer Agents, Capita Registrars as soon as possible and in any event so as to arrive not later than 2.30 p.m. BST on 20 October 2006 for forms of proxy and 2.30 p.m. BST on 19 October 2006 for forms of direction. The completion and return of a form of proxy or form of direction will not preclude shareholders from attending the EGM and voting in person should they subsequently wish to do so. Graham Porter Chairman 21 September 2006 Enquiries: John Bick: 07917 649362 GLOBAL STRUCTURED FINANCE INC. INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Note Unaudited Unaudited £'000 £'000 Continuing operations Administrative expenses (74) (114) Operating loss (74) (114) Finance income 5 2 8 Loss for the period before taxation (72) (106) Tax income 7 - - Net loss for the period (72) (106) Loss per ordinary share - Basic 8 (0.22p) (0.45p) GLOBAL STRUCTURED FINANCE INC. STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2006 Share Share Profit and Total premium based loss Share payment account capital reserve £'000 £'000 £'000 £'000 £'000 At 30 November 2004 - - - - - Issue of new shares 80 399 - - 479 Cost of issue of new shares - (161) - - (161) Net loss for the period - - - (106) (106) Share based payment - (20) 20 - - At 31 December 2005 (Unaudited) 80 218 20 (106) 212 Net loss for the period - - - (72) (72) At 30 June 2006 (Unaudited) 80 218 20 (178) 140 GLOBAL STRUCTURED FINANCE INC. BALANCE SHEET FOR THE SIX MONTHS ENDED 30 JUNE 2006 At 30 At 31 June December 2006 2005 Unaudited Unaudited Note £'000 £'000 Assets Current Trade and other receivables 9 9 8 Cash and cash equivalents 160 224 Total assets 169 232 Liabilities Current Trade and other payables 10 29 20 Total liabilities 29 20 Equity Share capital 12 80 80 Share premium 218 218 Share based payment reserve 20 20 Profit and loss account (178) (106) Total equity 140 212 Total equity and liabilities 169 232 GLOBAL STRUCTURED FINANCE CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Operating activities Operating loss (74) (114) Interest received 2 8 Change in trade and other receivables (1) (8) Change in trade and other payables 9 20 Net cash outflow from operating activities (64) (94) Financing activities Issue of shares - 459 Share issue costs - (141) Net cash inflow from financing activities - 318 Net (decrease)/increase in cash and cash (64) 224 equivalents Cash and cash equivalents at beginning of 224 - period Cash and cash equivalents at end of period 160 224 Global Structured finance inc Notes to the Interim Report For the six months ended 30 June 2006 1 GENERAL INFORMATION The information for the period ended 30 June 2006 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The figures for the period ended 31 December 2005 have been extracted from the 2005 statutory financial statements prepared under UK GAAP and adjusted where necessary in order to comply with International Financial Reporting Standards (IFRS) as shown in note 3. The auditors' report on those accounts was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985. 2 ACCOUNTING POLICIES Basis of preparation The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board had previously resolved that the Company would follow UK Accounting Standards and apply the Companies Act 1985 when preparing its annual financial statements. The Board have now resolved that Global Structured Finance Inc. will adopt IFRS for the first time in its financial statements for the year ending 31 December 2006. This interim financial report has therefore been prepared under the historical cost convention and in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the requirements of International Financial Reporting Standard 1 'First Time Adoption of International Reporting Standards' relevant to interim reports. The transition to IFRS reporting has resulted in a number of changes in the reported financial statements, notes thereto and accounting principals compared to the previous annual report. Note 3 provides further details on the transition from UK GAAP to IFRS. The principal accounting policies of the Company are set out below. Taxation Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement. Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity. Financial assets The Company's financial assets include cash and trade and other receivables. All financial assets are recognised on their settlement date. All financial assets are initially recognised at fair value, plus transaction costs. Non-compounding interest and other cash flows resulting from holding financial assets are recognised in profit or loss when received, regardless of how the related carrying amount of financial assets is measured. Trade and other receivables are provided against when objective evidence is received that the Company will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents comprise cash at bank. Equity Share capital is determined using the nominal value of shares that have been issued. The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Retained earnings include all current and prior period results as disclosed in the income statement. Share based payments All share based payment arrangements are recognised in the financial statements. The Company does not currently operate equity-settled share-based remuneration plans for remuneration of its employees but has issued a share warrant. All services received in exchange for the grant of any share-based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options/warrants awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Share-based payments are ultimately recognised as an expense in profit or loss or included as part of the cost of share issues with a corresponding credit to the share based payment reserve, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options/warrants expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options/warrants expected to vest differs from previous estimates. No adjustment is made to the expense or share issue cost recognised in prior periods if fewer share options/warrants ultimately are exercised than originally estimated. Upon exercise of share options/warrants, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. Financial liabilities The Company's financial liabilities include trade and other payables. Financial liabilities are recognised when the Company becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in 'finance cost' in the income statement. Trade payables are recognised initially at their nominal value and subsequently measured at amortised cost less settlement payments. Dividend distributions to shareholders are included in 'other short term financial liabilities' when the dividends are approved by the shareholders' meeting. Other provisions, contingent liabilities and contingent assets Other provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Company and they can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the balance sheet date, including the risks and uncertainties associated with the present obligation. Any reimbursement expected to be received in the course of settlement of the present obligation is recognised, if virtually certain as a separate asset, not exceeding the amount of the related provision. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. In addition, long term provisions are discounted to their present values, where time value of money is material. All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognised in the balance sheet. Probable inflows of economic benefits to the Company that do not yet meet the recognition criteria of an asset are considered contingent assets. 3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS The transition from previous UK GAAP to IFRS has been made in accordance with IFRS 1, 'First-time Adoption of International Financial Reporting Standards'. The Company's financial statements for the six months ended 30 June 2006 and the comparatives presented for the period ended 31 December 2005 comply with all presentation recognition and measurement requirements of IFRS applicable for accounting periods commencing on or after 1 January 2005. The following reconciliations and explanatory notes thereto describe the effects of the transition for the financial period 2005. All explanations should be read in conjunction with the IFRS accounting policies of Global Structured Finance Inc.. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED) Since Global Structured Finance Inc. was incorporated on 30 November 2004 that is the transition date to IFRS. As that was the date of incorporation of the Company no reconciliation of equity is required at that date. The re-measurement of balance sheet items as at 31 December 2005 may be summarised as follows: Reconciliation as at 31 December 2005 Effect of IFRS UK GAAP transition £'000 £'000 £'000 Share premium 238 (20) 218 Share based payment reserve - 20 20 Total adjustment to assets and equity 238 - 238 There is no difference between the profit and loss reported under UK GAAP for the period ended 31 December 2005 and the profit and loss as reported under IFRS. The Company has modified its former balance sheet and income statement structure on transition to IFRS. The only change is to recognise the share based payment in connection with the warrants issued to the Company's Nominated Advisor as part of their fee for services provided in connection with the Admission of the Company to the AIM market in March 2005. 4 SEGMENTAL REPORTING (a) By business segment (primary segment): As defined under International Accounting Standard 14 (IAS14), the only material business segment the Company has is that of an investment company. (b) By geographical segment (secondary segment): Under the definitions contained in IAS 14, the only material geographic segment that the Company operates in is currently Switzerland. 5 FINANCE INCOME 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Interest on bank deposits 2 8 6 EMPLOYEES REMUNERATION Employee benefits expense Expense recognised for employee benefits is analysed below: 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Directors fees 12 26 The average number of persons (including directors) employed by the Company during the period was: 2 3 7 TAX INCOME There is no tax charge for either period. The Company does not operate in the United Kingdom and there is no tax arising on its operations. The relationship between the expected tax expense at 30% and the tax expense actually recognised in the income statement can be reconciled as follows: 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Loss for the period before taxation (72) (106) Tax rate 30% 30% Expected tax expense (22) (32) Losses not recognised as deferred tax asset 22 32 Actual tax income - - 8 LOSS PER SHARE The calculation of the basic loss per share is based on the net loss for the period of £72,000 (period ended 31 December 2005 : £106,000) divided by the weighted average number of shares in issue during the period of 32,000,000 (period ended 31 December 2005 : 23,622,222). The impact of the warrants on the loss per share is anti-dilutive. 9 TRADE AND OTHER RECEIVABLES 30 June 31 December 2006 2005 £'000 £'000 Trade and other receivables, gross 9 8 Impairment of trade and other receivables - - Trade and other receivables, net 9 8 Trade and other receivables are usually due within 30 - 60 days and do not bear any effective interest rate. The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value. 10 TRADE AND OTHER PAYABLES 30 June 31 December 2006 2005 £'000 £'000 Trade and other payables 29 20 The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value. 11 DEFERRED TAX ASSETS AND LIABILITIES There are no deferred taxes arising from temporary differences at 30 June 2006 or 31 December 2005. 12 SHARE CAPITAL 30 June 31 December 2006 2005 £'000 £'000 Authorised 4,000,000,000 ordinary shares of 0.25p 10,000 10,000 Allotted, issued and fully paid 32,000,000 ordinary shares of 0.25p 80 80 Allotments during the period There were no allotments during the period. SHARE CAPITAL (CONTINUED) Warrants On 2 March 2005 a warrant was issued to Strand Partners Limited, the Company's Nominated Advisor, in connection with their role in the admission of the Company to the AIM market. The warrant entitles Strand Partners Limited to subscribe, at a price of 10p per share, for such number of ordinary shares as are equivalent (on a fully diluted basis) to one per cent. of the issued ordinary share capital of the Company at that time. The issued warrant may be exercised at any time during the period from 24 March 2005 to 23 March 2010. The fair value of warrants granted was determined using the Black-Scholes valuation model. Significant inputs into the calculations were: • share price of 5p per share at date of grant of warrant • exercise price of 10p per warrant as detailed above • 50% volatility based on expected share price • a risk free interest rate of 5.0%. In total £20,000 of share based expense has been included in the share premium account as a cost of the admission to AIM which gave rise to the share based payment reserve. No liabilities were recognised due to share based payment transactions. 13 RELATED PARTY TRANSACTIONS In the period ended 30 June 2006 CVS Management Limited, a subsidiary of Corvus Capital Inc., a shareholder in the Company, charged fees amounting to £15,000 for accounting and administrative services to the Company (period ended 31 December 2005 : £37,500). 14 RISK MANAGEMENT OBJECTIVES AND POLICIES The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Company's risk management is closely monitored by the board of directors, and focuses on actively securing the Company's short to medium term cash flows by minimising the exposure to financial markets. Global Structured Finance Inc. does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed to are described below: Credit risk Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of the balance sheet (or in the detailed analysis provided in the notes to the financial statements). Credit risk, therefore, is only disclosed in circumstances where the maximum potential loss differs significantly from the financial asset's carrying amount. The Company's trade and other receivables are actively monitored to avoid significant concentrations of credit risk. Cash flow risk The Company seeks to manage financial risks to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by the raising of equity and the use of current accounts. NOTICE OF EXTRAORDINARY GENERAL MEETING GLOBAL STRUCTURED FINANCE INC. Notice is given that an extraordinary general meeting of the members of the Company will be held at 30 Quai Gustave-Ador, Geneva 1207, Switzerland on 24 October 2006 at 2.30 pm (BST) (3:30 pm CET) to consider and, if thought fit, to pass the following: Special resolution That the Company be and hereby is placed into voluntary liquidation, that Graham Porter and Ian Williamson be and are hereby appointed joint liquidators (Liquidators) to act jointly or severally for the purposes of such liquidation and that the Liquidators be remunerated at their usual rates as directors of the Company for all their work and expenses reasonably and properly undertaken and incurred in the winding up of the Company. By order of the board Kitwell Consultants Limited Secretary Registered office: Walkers SPV Limited, Walker House, Mary Street, PO Box 908GT George Town, Grand Cayman, Cayman Islands Date: 21 September 2006 NOTES 1. A shareholder who is entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on a poll, vote on his or her behalf, provided that only one proxy may be appointed by a shareholder in respect of a particular share held by him/her. A proxy need not be a shareholder of the Company. 2. To be effective, a completed and signed proxy (and any power of attorney or other authority under which it is signed) must be delivered to the Transfer Agent, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU by no later than 48 hours before the time fixed for the meeting or any adjourned meeting. Completion and return of a proxy will not preclude a shareholder from attending and voting at the meeting in person, in which event the proxy shall be automatically revoked. 3. In the case of joint holders of shares in the Company, the vote of the senior holder shall be accepted to the exclusion of the votes of the other joint holder(s). For this purpose, seniority will be determined by the order in which the names appear in the Company's register of shareholders (or the Company's Registrars records). 4. In the case of holders of depositary interests representing ordinary shares in the Company, a form of direction must be completed in order to appoint Capita IRG Trustees Limited, the Depositary, to vote on the holder's behalf at the meeting or, if the meeting is adjourned, at the adjourned meeting. To be effective, a completed and signed form of direction (and any power of attorney or other authority under which it is signed) must be delivered to the Transfer Agent, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU by no later than 72 hours before the time fixed for the meeting or any adjourned meeting. -------------------------- This information is provided by RNS The company news service from the London Stock Exchange

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