Final Results

Interregnum PLC 28 October 2003 Tuesday, 28th October 2003 PRESS RELEASE INTERREGNUM PLC Financial results for the 12 months ended 30 June 2003 Losses substantially reduced and increase in advisory fees Financial highlights •Losses substantially reduced to £0.9 million (2002: £18.4 million loss) •Turnover increased to £2.06 million (2002: £1.33 million) •Advisory revenues increased by 83% to £1.1 million (2002: £0.6 million) •Adjusted portfolio value* increased to £2.6 million (2002: £2.5 million) •Loss per share 1.39p (2002: 28.12p) •Ongoing administration costs reduced to £2.4 million (2002: £3.9 million) Corporate progress •Advisory role in the sale of Udate.com generated a transaction advisory fee of US$1 million and founder shares, carried into acquirer USA Interactive, valued at $0.6 million •Sale of Computerwire generated sales proceeds of £517,000 with an additional potential contingent consideration of up to £700,000 •Initiated the move from being a traditional venture capital minority equity holder to taking principal investment positions •Appointment of Martin Peck as Executive Director for Corporate Finance and promotion of Rupert Cook to Director •Dr. John Forrest, CBE, appointed, chairman of Advisory board. Progress made to appoint further Advisory Board members to support new advisory business origination. Commenting on the results, Ken Olisa, Chairman of Interregnum plc, said: 'Interregnum continues to operate at the junction of the private equity and IT sectors, both of which have seen significant turmoil during the reporting period. In particular, downward pressure on IT budgets has meant that clients and portfolio companies operate in an environment where revenue is hard to win. This situation has led to a near total lack of interest from the retail investor and private equity community in small and micro-cap IT companies. However, we have begun to see some increase in the demand for IT advisory services from corporates and private equity investors. This leaves Interregnum well placed as it is now practically the only source of in-depth expertise in IT industry wealth generation. We have further strengthened our expertise through strong Board appointments and, as a result, our advisory proposition is greatly enhanced. The growing demand for these services has been reflected in our increased advisory revenues. We are pleased with the developments that have enabled us to become principal equity holders in some of our portfolio stocks. Our traditional focus of driving forward the value of 19 companies by offering hands on service and introductions through our 'venture marketing' concept will continue to ensure that those in our portfolio are well positioned to benefit from slow returning sentiment to IT spending. Interregnum has come through the last difficult year in a financially stable position. Through consolidation of costs, prudent development of core service offerings, strengthened intellectual capital and some very exciting developments for our portfolio holdings, we look forward to an opportunistic financial year ahead.' * Adjusted to include the carrying value of Yospace Technologies (£0.6m) and excluded Interregnum Venture Marketing Limited (£0.1m) in 2003 and to include Computerwire (£0.3m) in 2002. - Ends - For further information, please contact: Interregnum 020 7494 3080 Ken Olisa, Chairman & CEO Martin Cooper, Finance Director Merlin Financial 020 7606 1244 Vanessa Maydon Charlie Jack Attached: Chairman's Statement Financial Results Directors' Report Independent Auditors' Report Profit & Loss Account Balance Sheet Cashflow Statement Notes to the financial statements CHAIRMAN'S STATEMENT Environment: Market Conditions remain tough As an Information and Communications Technology investment and advisory house, Interregnum operates at the junction of the Private Equity and Technology sectors. Both sectors continued to experience significant turmoil during the reporting period. Private Equity and in particular, venture capital and 'angel' finance avoided early stage investments almost entirely. While the larger Private Equity firms concentrated on management buyouts of established businesses - often purchased from other Private Equity owners - individual investors, having seen their wealth reduced by lower public markets, followed the example of most early-stage VCs and declined to invest at all. In parallel, global capital spending continued to fall leading to a further year-on-year decline in revenues for IT and Telecommunications companies. The continued downward pressure on IT budgets within the world's major organizations heightened purchasing officers' sensitivity to risk, which led them, in turn, to concentrate their buying from the largest, most established suppliers. The combination of these effects has been to make for very tough trading conditions for our main markets - small and micro-cap Technology companies - as clients and portfolio companies sought to operate in an environment in which revenues are hard to win and investment capital is all but non-existent. Equally importantly, the difficult markets have had a devastating effect on our competitors with almost none of those with whom we competed at IPO in 2000 surviving into 2003. Further, almost all of the few who have remained in business have radically amended their business models to focus on areas other than Technology . It is an ill wind that blows nobody any good and the most positive result of the collapse in our sector has been to leave Interregnum as practically the only source of in-depth Technology industry wealth generation expertise. Operational Highlights: Company focuses on growth areas In the Interims I described the difficult market conditions then faced by the company (and which I have further described above) and defined our key operational priorities needed to survive and prosper in this environment: •Building portfolio value •Increasing advisory fees •Increasing investment firepower •Reducing costs and overheads As might be expected, this generally difficult backdrop had a negative effect on much of the company's activities, however there were also some significant achievements that proved that progress can be made even in a downturn. Taking each of the above areas in turn. Building portfolio value During the year we stabilized the portfolio following the radical write-downs of 2002/3. Over the twelve months, we effected 7 investments, totalling £0.8m and wrote off 4 investments (and made further provision against 3) reducing the number held in the portfolio to 19. I am happy to report that overall the portfolio value increased modestly from £2.5m to £2.6m*, a result which masks the considerable activity within it which included: • Further investments in Computerwire, Respond, Adaptive and blue arc were made either to maintain our shareholding during further funding rounds or to secure our position on liquidation. • Realizations of Computerwire (sale of assets), Yospace Holdings (on liquidation) and uDdate.com the on its successful sale to USA Interactive for $150 million. • The loss of our investment in Datapoint, which was acquired substantially below cost by its largest shareholder - Alchemy Partners - using the provisions of Section 320 of the Companies Act 1985, a mechanism which permits the disposal of a company's assets to a related party by a simple majority vote of its shareholders. In addition to the above financial activities we have also continued to do what we do best - growing the value of emerging Technology companies through the provision of a range of hands-on services. This is the activity that Interregnum pioneered in the early 1990s and which we term Venture Marketing. Examples of this work include the establishment of strategic alliances between our portfolio companies and major technology distribution partners, redefinition of corporate strategies and raising of funds from third party investors. Finally the nature of the portfolio changed significantly in the period with the acquisition of a majority stake in Yospace - a provider of multimedia messaging, personal storage and handset simulation solutions to the major networks including Vodafone, Orange and 3**. This represents a departure for the company which previously has operated more as a traditional venture capitalist taking minority stakes in a range of companies. The move towards being a principal (i.e. majority) investor offers many advantages for the company because it enables us to work directly with management to influence their strategy and operations rather than being compelled to advise them in concert with other investors whose objectives are not always aligned with our own. It is our intention to extend this aspect of our investment activity in the coming year and accordingly in July, we welcomed back Martin Peck as Executive Director, Corporate Finance. Martin brings a wealth of corporate finance and operational management experience built during his time as an adviser on business development, corporate finance, PFI, and privatisation transactions for Serco Group Plc, Capita Group Plc, and BDO Stoy Hayward. More recently, Martin has been Executive Director, Merchant Banking/Venture Capital (Europe) for CIBC Wood Gundy Oppenheimer, and head of the private equity technology fund at AMP Private Capital. Martin has spent the last three years in business turnaround activity, working for investors to help deliver shareholder value at a number of public and private companies including Transacsys, the listed Smart Card Applications company, which he successfully re-structured and sold. Board Appointment: In recognition of his personal contribution and commitment to the company's success I am delighted to announce the promotion of Rupert Cook, Executive Director, Advisory Service, to the main Board with effect from 28 October 2003 In summary, the Board believes that the portfolio contains significant unrealised potential and is committed to growing the portfolio's value both by working to realise the latent up-side as well as expanding into a small number of principal finance relationships. Increasing advisory fees Our Advisory Services are a vital element of our overall business, maintaining our current market knowledge, enabling us to work with the widest range of industry players and providing a value-added use of our proprietary methodologies such as the Four Pillars of Value (c). Over the course of the last twelve months our advisory revenues grew by 83% from £0.6m to £1.1m. During the period we took steps to strengthen this area of our business, the sale of uDate.com, the packaging of our service offerings and the appointment of an Advisory Board all supported this endeavour. Packaged services: Interregnum staff have over 200 combined years of active operational management within the IT and Telecommunications industries on both sides of the Atlantic. Traditionally, that expertise has been directed towards young companies as and when it was required. Over the last year the company has packaged elements of that expertise in order to offer it to larger organizations. In particular we launched IP Advantage(c) which assists organizations with large pools of Intellectual Property (IP). The value of IP such as patents, products, modules and methodologies can be unlocked, thereby increasing margins by identifying, valuing and then exploiting what are often hidden assets. IP Advantage(c) grew out of an earlier programme which assisted smaller companies to claim R&D Tax credits from the Inland Revenue. During the year we assisted clients and portfolio companies to claim over £2million in credits for which Interregnum earned success fees. Broadening the scope of our client base: With the difficult investment market for early stage technology companies described above, the company has begun to use its skills to advise larger companies and organisations. Such services have embraced strategic advice, corporate recovery, analysis of R&D expenditure, assistance with spin-outs and advice on outsourcing. The full impact of these new activities will only begin to show through in the current year. Board Appointment: In recognition of the importance of this area of our business and his personal contribution and commitment to its success I am delighted to announce the promotion of Rupert Cook, Executive Director, Advisory Services, to the main Board with effect from 23 October 2003 UDate.com: By far the most significant transaction of the year was the successful sale of uDate.com to USA Interactive for $150 million. I have served as a founding director of the company since 2000 and Interregnum held a small equity stake as a result. In addition, Interregnum acted as an advisor to the company during the sale negotiations and earned a fee for so doing. International Advisory Board: To extend the knowledge and reach available to it, the company established an International Advisory Board in April 2003. It is chaired by Dr John Forrest, CBE FREng who is a Non-Executive Director of 3i plc and Chairman of the Spectrum Management Advisory Group, a body set up by the UK Parliament to advise government ministers on the management and use of the wireless spectrum. John was the founder and first CEO of NTL. The other members of the board are: • Philippe Dubrulle - Previously Global Banking Services Director at Societe Generale and now a Director of Transaction Network Services (TNS), a US-based provider of data communications services for transaction-oriented applications, and Alphyra France, based in Ireland, which supplies, installs, manages and maintains electronic payment systems for small to medium sized merchants. • Chris Earnshaw FREng - Previously Group Engineering Director and Chief Technology Officer at BT Group plc. • Professor Brian Johnson - A leading researcher in nanoscale technologies, and Professor of Inorganic Chemistry and Master of Fitzwilliam College in the University of Cambridge. • Jill Wyman - Previously Acting COO at BBC Technology Ltd and prior to that, Managing Director of Metiom UK, a global provider of Internet-based e-marketplace applications used by global 2000 companies. Reducing costs and overheads The last year saw us continue to focus on cost reductions with a further fall in headcount*** to 14 (2002: 23). We also continued our focus on reducing overheads including the sub-letting of vacant space within our offices, maintenance of the Senior Staff salary sacrifice programme and other measures designed to hasten profitability of the business. Increasing investment firepower The climate for venture capital fundraising remains wholly adverse offering little prospect for an early reopening of our own plans to raise Interregnum Fund I - a traditional venture capital fund focused on early-stage European Information and Communications Technology companies. However, with valuations at historically low levels, opportunities to invest are legion. Accordingly, the company has continued to build relationships with providers of both debt and equity finance in order both to maintain the viability of our existing portfolio as well as to fund our move into principal finance. * Adjusted to include the carrying value of Yospace Technologies (£0.6m) and excluded Interregnum Venture Marketing (£0.1m) in 2003 and to include Computerwire (£0.3m) in 2002. ** One consequence of this shift is that accounting standards require us to consolidate the results of any subsidiary, even though it is held for investment purposes. This year's accounts therefore include the results for Yospace. The inclusion of Yospace renders like-for-like comparisons with historical performance rather more difficult than in past years. We have tried to clarify the position where possible and the reader is advised to pay particular regard to the notes attached to the data ***This excludes the head count of Yospace Technologies Limited. FINANCIAL RESULTS The last year saw us make progress against our objectives and although that progress was impeded by the market uncertainties, we were able to increase our advisory revenues by 83% to £1.1m (2002: £0.6m), reduce our retained losses substantially to £0.9m (2002: £18.4m) and increase our cash balance from the half year point to £1.3m (31/12/02: £1.1m). Behind those headline numbers we effected 7 investments amounting to £0.8m. In keeping with our commitment to transparency and full disclosure we present the following table for the 3rd year running describing the key operating indicators of the combined company: Twelve months to 30 Twelve months to 30 June 2003 June 2002 PORTFOLIO Portfolio value (£m) 2.6 2.5 Portfolio base cost (£m) * 5.1 8.9 Investment (£m) 0.8 3.8 Investments made 7 10 Portfolio holdings 19 23 Investments written off 4 3 BALANCE SHEET Cash balance (£m) 1.3 1.8 Net assets/share (issued) 0.065 0.075 (£) DSO (Days sales 52 55 outstanding - based on recent sales) PROFIT & LOSS ACCOUNT Revenue (£m) 2.06 1.33 Advisory (£m) 1.10 0.58 Investment (£m) 0.14 0.75 Software development 0.82 - support and marketing (£m) Costs - Salary(£m) 1.8 1.9 Costs - admin(£m) 1.5 2.0 Interest and other income 0.2 0.3 (£m) Revaluations realised and 0.6 0.2 unrealised (£m) Retained loss (£m) -0.9 -18.4 Headcount - average 31 28 Actual at year end - 14 23 Interregnum Actual at year end - 21 n/a Yospace * Portfolio costs 2003 2002 £m £m Note 13 4.6 7.8 Computerwire - 1.1 Yospace 0.6 - IVM (0.1) - ___ ___ Total 5.1 8.9 === === Outlook Although public technology stocks have recently staged something of a rally, the underlying markets remain unsettled. In particular, the US technology sector is experiencing a flight to scale as the expense of increased regulatory pressures (particularly Sarbanes-Oxley), the absence of analyst coverage (as a result of the separation of investment banks' analysis and trading sides), and a general nervousness in the minds of buyers of Technology, have made life increasingly difficult for public companies whose revenues are below $500m. As a result, the smaller companies' values, as measured by market capitalization, have fallen in aggregate while those of the larger players have risen. One outcome of this will be increased mergers and acquisitions activity as larger companies acquire innovation and as smaller ones consolidate in search of a way to pass through the $500m revenue level. So although there is no prospect of the Technology IPO market opening up in the foreseeable future we can expect an increase in trade sales for companies possessing one or more of the Four Pillars of Value(c) - People, Offerings, Customers and Brand. The challenge facing Interregnum is to husband our scarce resources - expertise, contacts, portfolio and capital - in order to profit from the opportunities which will emerge from the next phase of the market cycle. We are confident that our three business activities - Advisory Services, Portfolio Management and Principal Finance are the most appropriate ones to take advantage of those opportunities and look forward with confidence to the future. As detailed above, this has been a particularly difficult year -the most challenging in my 30 years in business. That Interregnum has not only survived, but has emerged stronger and more focused is in no small part due to the dedication of the Board, the Advisory Board and our staff. I would like to recognize the contributions made by the three Directors who left us last year - Teddy Rosenberg, Stanley Stern and Adrian Merryman and to wish them all well in their careers. It would also be remiss of me not to thank our shareholders for their support over the year. Finally I must pay tribute to the sheer determination to succeed exhibited by the leaders of most of our clients and portfolio companies, without which there would be no reason for Interregnum to exist. Thank you. Ken Olisa Chairman & CEO DIRECTORS' REPORT The directors present their report and financial statements for the year ended 30 June 2003. Results and dividends The group loss for the year after taxation amounted to £908,843 (2002 - £18,397,476). The directors do not recommend a final dividend (2002 - £nil). It is proposed that the retained loss for the year be transferred to reserves. Principal activity The group's principal activities carried out both in the United Kingdom and internationally, were those of management and marketing consultants, business advisers and investors in technology companies. Review of the business, future developments and events since the balance sheet date The review of the business for the year, future developments and events since the end of the year are set out in the Chairman's Statement. Fixed asset investments Fixed asset investments are stated at cost or valuation and in accordance with the 'Guidelines for the valuation and disclosure of venture capital portfolios' published by the British Venture Capital Association. Details of changes in fixed asset investments are set out in note 13 to the financial statements. Creditor payment policy It is group policy to agree and clearly communicate the terms of payment as part of the commercial arrangements negotiated with suppliers and then to pay according to those based on the timely receipt of an accurate invoice. The company supports and follows the CBI Prompt Payers Code. A copy of the code can be obtained from the CBI at Centre Point, 103 New Oxford Street, London WC1A 1DU. Trade creditor days based on creditors at 30 June 2003 were 41 days (2002 - 39 days) for both company and group. Directors and their interests The directors during the year, together with the beneficial interests of those directors holding office as at 30 June 2003 in the shares of the company were as follows: Ordinary shares of £0.05 each At 30 June 2003 At 30 June 2002 K Olisa 36,060,076 35,958,536 G Ransom 2,544,919 2,544,919 R Jeynes 418,384 418,384 A Merryman (resigned 31 December 2002) 1,013,384 1,013,384 M Cooper 45,770 45,770 I Taylor 250,000 135,000 T Rosenberg (resigned 23 December 2002) - - S Stern (resigned 23 December 2002) - - G Shingles - - R Fifield 17,857 17,857 M Peck - - Subsequent to the year end, M Peck was appointed a director on 7 July 2003. The following directors have been granted options: Options Exercise Date of grant granted price K Olisa 13 March 2000 1,174,048 £0.05 R Jeynes 8 April 2003* 4,746,616 £0.05 G Ransom 31 December 2002** 3,500,000 £0.05 M Cooper 8 April 2003*** 250,000 £0.05 I Taylor 8 April 2003*** 5,000,000 £0.05 M Peck 7 July 2003**** 5,000,000 £0.0538 G Shingles 13 March 2000 760,000 £0.05 * Special conditions apply to these shares, whereby 4,385,200 vest immediately on the date of grant. The remaining 361,416 shares vest equally over a five year period. The first fifth vest on the anniversary of the respective grant date. ** Special conditions apply to these shares, whereby 2,000,000 vest immediately on the date of grant the remaining 1,500,000 will vest 18 months after the date of issue. *** Special conditions apply to these shares, whereby they vest equally over a five year period. The first fifth vest on the anniversary of the respective grant date. **** Special conditions apply to these shares, whereby they vest equally over a three year period. The first third vest on the anniversary of the respective grant date. Subject to the above the options can be exercised at any date up to the tenth anniversary of the date of grant. The market price of the company's shares at 30 June 2003 was £0.055 (2002 - £0.0375). The range during the year was £0.015 to £0.05625 (2002 - £0.64 to £0.0375). None of the directors has yet exercised any options. Between 30 June 2003 and 14 October 2003, there have been no changes in the directors' holdings or options. All options granted above related to Interregnum Plc. Substantial shareholdings Other than the directors' interests shown above, the company has been advised of the following substantial shareholdings as at 24 October 2003: No of ordinary % of ordinary shares held shares Liontrust 5,802,885 8.87% Browallia Discount Company 5,600,000 8.56% CIBC Wood Gundy Plc 3,890,000 5.95% Auditors A resolution to reappoint Ernst & Young LLP as auditors will be put to the members at the Annual General Meeting. By order of the board Secretary STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the group and of the profit or loss of the group for that period. In preparing those financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. COMPLIANCE WITH THE COMBINED CODE Under the rules of the Alternative Investment Market (AIM) the company is not required to comply with the Combined Code. However, the Directors are committed to high standards of corporate governance and have regard to the principles of the Combined Code. The Corporate Governance procedures are described below. Board of directors The Board of Directors, currently comprising five executive and three independent non-executive directors, meets regularly throughout the year. Audit committee The audit committee is chaired by Richard Fifield with the other non-executive director member being Geoff Shingles. As executive director Roger Jeynes attends by invitation. Adrian Merryman, formerly an executive director, stood down as a member of the audit committee during the year. The purpose of the committee is to ensure the preservation of good financial practices throughout the group; to monitor that controls are enforced to ensure the integrity of financial information; to review the interim and annual financial statements; and to provide a line of communication between the board and external auditors. Remuneration committee The remuneration committee is chaired by Geoff Shingles with the other non-executive member being Richard Fifield. It is responsible for the executive directors' remuneration, other benefits and terms of employment, including performance related bonuses and share options. Internal control The board is ultimately responsible for the group's system of internal control and for reviewing its effectiveness. A comprehensive budgetary process is completed once a year and is reviewed and approved by the board. The group's results as compared to the budget and prior year are reported to the board on a monthly basis. Revenue is reforecast on a monthly basis. Going concern After making appropriate enquiries that the group has adequate resources to continue in operation for the foreseeable future, the board considers that the group's finances are sound. For this reason they continue to adopt the going concern basis in preparing the financial statements. INDEPENDENT AUDITORS' REPORT to the members of Interregnum Plc We have audited the group's financial statements for the year ended 30 June 2003 which comprise the Group Profit and Loss Account, Note of Historical Cost Profits and Losses, Group Statement of Total Recognised Gains and Losses, Group Balance Sheet, Company Balance Sheet, Group Statement of Cash Flows and the related notes 1 to 23. These financial statements have been prepared on the basis of the accounting policies set out therein. This report is made solely to the company's members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the Statement of Directors' Responsibilities the company's directors are responsible for the preparation of the financial statements in accordance with applicable United Kingdom law and accounting standards. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the group is not disclosed. We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of affairs of the company and of the group as at 30 June 2003 and of the loss of the group for the year then ended and have been properly prepared in accordance with the Companies Act 1985. Ernst & Young LLP Registered Auditor London GROUP PROFIT AND LOSS ACCOUNT for the year ended 30 June 2003 2003 2002 Notes £ £ Turnover Continuing operations Ongoing 1,247,387 1,326,652 Acquisitions 817,219 - __________ __________ Group Turnover 2 2,064,606 1,326,652 Administrative expenses - ongoing (2,420,600) (3,922,786) Administrative expenses - acquisitions (877,313) - Other operating income - ongoing 79,230 81,396 __________ __________ Operating loss Continuing operations Ongoing (1,078,533) (2,514,738) Acquisitions (75,544) - __________ __________ Group operating loss 3 (1,154,077) (2,514,738) Profit on sale of investments - ongoing 251,352 - Interest receivable 117,790 222,368 Amounts written off investments (162,583) (16,092,069) Interest payable 7 (12,388) (13,037) __________ __________ Loss on ordinary activities before taxation (959,906) (18,397,476) Taxation 8 - - __________ __________ Loss on ordinary activities after taxation (959,906) (18,397,476) Minority interest - equity 51,063 - Loss retained for the financial year 20 (908,843) (18,397,476) ========== ============ Loss per share - basic and diluted 10 (1.39p) (28.12p) NOTE OF HISTORICAL COST PROFITS AND LOSSES for the year ended 30 June 2003 2003 2002 £ £ Loss on ordinary activities before taxation (959,906) (18,397,476) Realisation of revaluation gains of previous years 53,006 - Write-down of previous revaluation that would not have been taken to the profit and loss account on a historical cost basis 34,546 3,564,378 __________ __________ Historical cost loss on ordinary activities before tax (872,354) (14,833,098) ========== =========== Historical cost loss for year retained after tax and minority interest (821,291) (14,833,098) ========== =========== GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 June 2003 2003 2002 £ £ Loss for the financial year attributable to members of the parent company (908,843) (18,397,476) Unrealised surplus on revaluation of fixed asset investments 354,559 206,018 ____________ ____________ Total recognised losses relating to the year (554,284) (18,191,458) ============ ============ GROUP BALANCE SHEET at 30 June 2003 2003 2002 Notes £ £ Fixed assets Intangible assets 11 541,021 - Tangible assets 12 243,347 314,516 Investments 13 2,103,417 2,243,190 __________ __________ 2,887,785 2,557,706 __________ __________ Current assets Debtors 14 985,251 855,124 Investments held for resale 15 - 288,586 Cash at bank and in hand 1,293,780 1,754,143 2,279,031 2,897,853 Creditors: amounts falling due within one year 16 (770,878) (538,719) __________ __________ Net current assets 1,508,153 2,359,134 __________ __________ Total assets less current liabilities 4,395,938 4,916,840 Creditors: amounts falling due after more than one year 17 (116,240) - __________ __________ Net assets 4,279,698 4,916,840 Capital and reserves Called up share capital 19 3,271,655 3,271,655 Share premium account 20 18,876,852 18,876,852 Revaluation reserve 20 546,518 279,511 Merger reserve 20 (2,406,655) (2,406,655) Profit and loss account 20 (15,925,814) (15,104,523) Equity shareholders' funds 20 4,362,556 4,916,840 Minority Interests (equity) (82,858) - __________ __________ Total funds employed 4,279,698 4,916,840 ========== ========== Director COMPANY BALANCE SHEET at 30 June 2003 2003 2002 Notes £ £ Fixed assets Tangible assets 12 231,688 314,516 Investments 13 2,888,899 2,523,736 __________ __________ 3,120,587 2,838,252 Current assets Debtors 14 829,819 855,469 Investments held for resale 15 - 288,586 Cash at bank and in hand 1,099,467 1,595,665 __________ __________ 1,929,286 2,739,720 Creditors: amounts falling due within one year 16 (632,722) (670,148) __________ __________ Net current assets 1,296,564 2,069,572 __________ __________ Net assets 4,417,151 4,907,824 ========== ========== Capital and reserves Called up share capital 19 3,271,655 3,271,655 Share premium account 20 18,876,852 18,876,852 Revaluation reserve 20 500,456 151,572 Profit and loss account 20 (18,231,812) (17,392,255) __________ __________ Equity shareholders' funds 20 4,417,151 4,907,824 ========== ========== Director GROUP STATEMENT OF CASH FLOWS for the year ended 30 June 2003 2003 2002 Notes £ £ Net cash flow from operating activities 21(a) (905,993) (2,084,293) Returns on investments and servicing of finance 21(b) 51,625 209,331 Taxation - (796) Capital expenditure and financial investment 21(b) 965,597 (3,942,454) Acquisition 21(b) (696,334) - __________ __________ Cash outflow before financing (585,105) (5,818,212) Financing 21(b) 124,740 (422,399) __________ __________ Decrease in cash (460,365) (6,240,611) ========== ========== Reconciliation of net cash flow to movement in net funds 2003 2002 Notes £ £ Decrease in cash in the year (460,365) (6,240,611) (Increase)/decrease in debt and lease financing (116,240) 1,747 Decrease in loan - 420,652 Exchange movements - 3,437 __________ __________ Movement in net funds (576,603) (5,814,775) Net funds at 1 July 2002 1,754,143 7,568,918 __________ __________ Net funds at 30 June 2003 21(c) 1,177,540 1,754,143 ========== ========== NOTES TO THE FINANCIAL STATEMENTS at 30 June 2003 1. Accounting policies Accounting convention The financial statements are prepared under the historical cost convention modified to include the revaluation of fixed asset investments and in accordance with applicable accounting standards. Basis of consolidation The consolidated financial statements incorporate those of Interregnum Plc and all of its subsidiary undertakings for the year. Subsidiaries acquired during the year are generally consolidated using the acquisition method. Their results are consolidated from the date that control passes. The difference between the acquisition cost of the shares in the subsidiary and the fair value of the separable net assets acquired is carried as goodwill. In accordance with s230 of the Companies Act 1985, the company profit and loss account is not presented. Goodwill Positive goodwill arising on acquisitions is capitalised, classified as an asset on the balance sheet, and amortised on a straight line basis over its useful economic life up to a presumed maximum of 20 years. It is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangible assets created within the business are not capitalised. Intangible assets are amortised on a straight line basis over their estimated useful lives up to a maximum of 10 years. The carrying value of intangible assets is reviewed for impairment at the end of the first full year following acquisition and in other period(s) if events or changes in circumstances indicate the carrying value may not be recoverable. Depreciation Tangible fixed assets are stated at net book value. Depreciation is provided on all tangible fixed assets at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows: Improvements to short leasehold land and buildings - 15% per annum straight line Fixtures, fittings and computer equipment - 15% - 33% per annum straight line The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. Fixed asset investments Fixed asset investments, comprising equity shares and share options, are stated at cost or valuation and in accordance with the 'Guidelines for the valuation and disclosure of venture capital portfolios' published by the British Venture Capital Association on the following basis: • Early stage investments: these are investments in immature companies, including seed, start-up and early stage investments. Such investments are valued at cost less any provision considered necessary, until no longer viewed as early stage or unless a significant transaction involving an independent third party at arm's length values the investment at a materially different value. • Development stage investments: such investments are in mature companies having a maintainable trend of sustainable profits and from which an exit, by way of flotation or trade sale, can be reasonably foreseen. An investment of this stage is periodically revalued by reference to open market value. Valuation will usually be by one of four methods as indicated: i) At cost for at least one period unless such a basis is unsustainable; ii) On a third party basis based on the price at which a subsequent issue of capital is made involving a significant investment by a new investor; iii) On an earnings basis, but not until at least a period since the investment was made, by applying a discounted price/earnings ratio to profit after taxation, either before or after interest; or iv) On a net asset basis, again applying a discount to reflect the illiquidity of the investment. • Quoted investments: such investments are valued using the quoted market price, discounted if the shares are subject to any particular restrictions or are significant in relation to the issued shares capital of a small quoted company. • Share options are subject to vesting and other conditions set out in the options agreements. The valuation is based on the intrinsic value of all share options that have vested. This is the difference between the market value of shares at the balance sheet date and the exercise price. A review of permanent diminution in value is undertaken by reference to funding, investment or offers in progress after the balance sheet date. No adjustment is made for any uplift in value after the balance sheet date. Current asset investments Current asset investments are stated at the lower of cost and net realisable value. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account. Leasing and hire purchase agreements Assets held under finance leases and hire purchase contracts, which are those where substantially all the risks and rewards of ownership of the asset have passed to the group, are capitalised in the balance sheet and are depreciated over their useful lives. The interest element of the rental obligations is charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding. Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the lease term. Deferred taxation Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more tax, with the following exceptions: •Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, or gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold. •Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. •Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Pensions The company contributes 3% of an employee's gross salary into a personal pension fund of their choice. The costs of providing pension contributions for employees are charged to the profit and loss account. Turnover Turnover represents the total invoice value, excluding Value Added Tax, of services rendered during the year. 2. Turnover and segmental analysis Turnover and loss by origin where sourced from the UK. The Investment and Advisory Business represents the ongoing activities in the profit and loss account. The software development support and marketing activity represent the acquired business as disclosed in the profit and loss account. The group operates in two classes of business. Interregnum Plc provides both intellectual and financial capital to technology companies through offerings in research, market assessment, valuation, commercial due diligence, acquisition, venture capital, corporate venturing and recovery. Yospace develops, markets and supports software for the mobile telecommunications industry at the leading edge of wireless development. Sales were made in the following geographical markets: 2003 2002 £ £ UK 1,032,285 1,120,902 Other European countries 956,336 167,800 USA and Canada 63,969 37,950 Other 12,016 - _________ _________ 2,064,606 1,326,652 ========= ========= Software Investment Development and Support and Advisory Marketing Total 2003 2002 2003 2002 2003 2002 £ £ £ £ £ £ Group turnover Continuing operations 1,262,837 1,326,652 817,219 - 2,080,056 1,326,652 Inter-segmental sales (15,459) - - - (15,450) - __________ __________ __________ ___________ __________ __________ 1,247,387 1,326,652 817,219 - 2,064,606 1,326,652 ========== ========== ========== =========== ========== ========== Loss on ordinary activities before taxation Continuing operations (841,977) (18,397,476) (117,929) - (959,906) (18,397,476) ========== ========== ========== =========== ========== ========== Net assets by segment Continuing operations 4,418,304 4,916,840 (138,606) - 4,279,698 4,916,840 __________ __________ __________ ___________ __________ __________ Minority interest - - 82,858 - 82,858 - Equity shareholders funds 4,418,304 4,916,840 (55,748) - 4,362,556 4,916,840 ========== ========== ========== =========== ========== ========== 3. Operating loss This is stated after charging/(crediting): 2003 2002 £ £ Auditors' remuneration - audit 34,000 25,000 - non-audit 18,000 14,502 Depreciation of owned tangible fixed assets 123,445 117,441 Depreciation of tangible fixed assets held under finance leases and hire purchase contracts - 1,518 Depreciation of intangible assets 35,323 - Amortisation of goodwill 6,200 - Operating lease rentals - land and buildings 221,599 170,000 Exchange loss/(gain) 1,555 (5,042) Operating lease rental income (79,230) (81,396) ======= ======= 4. Directors' emoluments 2003 2002 £ £ Emoluments 471,002 568,944 Pension contributions 11,115 13,650 _______ _______ 482,117 582,594 ======= ======= Highest paid director: Emoluments 136,802 121,251 Pension contributions 3,240 2,700 _______ _______ 140,042 123,951 ======= ======= During the year 5 (2002 - 6) directors accrued benefit under a money purchase pension scheme. 5. Staff costs 2003 2002 £ £ Wages and salaries 1,611,803 1,711,037 Social security costs 163,469 174,880 Other pension costs 26,368 38,588 _________ _________ 1,801,640 1,924,505 ========= ========= The average monthly number of employees (including directors) during the year was as follows: 2003 2002 No. No. Office and management 31 28 6. Profit on sale of investments 2003 2002 £ £ Realisation of investments 251,352 - 7. Interest payable 2003 2002 £ £ Non bank loans 12,388 12,513 Finance charges payable under finance leases and hire purchase contracts - 524 ______ ______ 12,388 13,037 ====== ====== 8. Taxation (a) Analysis in year: 2003 2002 £ £ Based on the loss for the year: Corporation tax - - Overprovided in prior year - - ________________________________ Total current tax (note 8(b)) - - (b) Factors affecting the tax for the year The tax for the year differs from the standard rate of corporation tax in the UK (30%). The differences are explained below. 2003 2002 £ £ Loss on ordinary activities before tax (959,906) (18,397,476) =========== =========== Loss on ordinary activities multiplied by the tax rate above (287,972) (5,519,241) Effect of: Expenses not deductible for tax purposes 12,286 136,228 Decelerated capital allowances 36,082 22,393 Investments written down potentially not tax deductible 139,450 4,827,620 Unrelieved tax losses 100,154 21,522,000 Current year capital loss - (20,989,000) ___________ ___________ Current tax for the year (note 8(a)) - - =========== =========== (c) Deferred tax Deferred taxation recognised and the amounts not recognised are as follows: Group Recognised Not recognised 2003 2002 2003 2002 £ £ £ £ Accelerated/(decelerated) capital allowances - 28,612 (8,474) - Tax losses carried forward - (28,612) (23,997,419) (21,574,457) ___________ ___________ ___________ ___________ Undiscounted deferred tax asset - - (24,005,893) (21,574,457) =========== =========== =========== =========== Company Recognised Not recognised 2003 2002 2003 2002 £ £ £ £ Accelerated/(decelerated) capital allowances - 28,612 (8,474) - Tax losses carried forward - (28,612) (23,962,016) (21,574,457) ___________ ___________ ___________ ___________ Undiscounted deferred tax asset - - (23,970,490) (21,574,457) =========== =========== =========== =========== The group has estimated capital and trading losses of £80m (2002 - £72m). Deferred tax assets of £24.1m (2002 - £21.5m) have not been recognised in respect of these losses since the benefit of the unrecognised losses will only accrue when taxable profits are realised on the sale of the company's investments and gains are realised on future disposals. 9. Loss attributable to members of the parent company The loss dealt with in the financial statements of the parent company is £848,036 (2002 - £19,646,373). 10. Loss per share The calculation of basic earnings per share is calculated on a group loss of £774,668 (2002 - £18,397,476) and on a weighted average of 65,433,107 (2002 - 65,433,107) shares in issue during the year. Due to the loss of £774,668 in the year there is no further dilution of the earnings (2002 - £18,397,476) or the number of shares being 64,433,107 (2002 - 65,433,107). 11. Intangible fixed assets Group Intellectual Goodwill property Total £ £ £ Cost or valuation: At 1 July 2002 - - - Additions 529,839 52,705 582,544 _______ _______ _______ At 30 June 2003 529,839 52,705 582,544 _______ _______ _______ Depreciation: At 1 July 2002 - - - Charged in the year 35,323 6,200 41,523 _______ _______ _______ At 30 June 2003 35,323 6,200 41,523 _______ _______ _______ Net book value: At 30 June 2003 494,516 46,505 541,021 ======= ======= ======= At 1 July 2002 - - - ======= ======= ======= 12. Tangible fixed assets Group Improvements Fixtures, to short fittings and leasehold land computer and buildings equipment Total £ £ £ Cost or valuation: At 1 July 2002 87,337 519,398 606,735 Additions 29,229 23,047 52,276 _______ _______ _______ At 30 June 2003 116,566 542,445 659,011 _______ _______ _______ Depreciation: At 1 July 2002 30,257 261,962 292,219 Charged in the year 17,237 106,208 123,445 _______ _______ _______ At 30 June 2003 47,494 368,170 415,664 _______ _______ _______ Net book value: At 30 June 2003 69,072 174,275 243,347 ======= ======= ======= At 1 July 2002 57,080 257,436 314,516 ======= ======= ======= Company Improvements Fixtures, to short fittings and leasehold land computer and buildings equipment Total £ £ £ Cost or valuation: At 1 July 2002 59,266 302,809 362,075 Additions 29,229 8,697 37,926 _______ _______ _______ At 30 June 2003 88,495 311,506 400,001 _______ _______ _______ Depreciation: At 1 July 2002 2,186 45,373 47,559 Charged in the year 17,237 103,517 120,754 _______ _______ _______ At 30 June 2003 19,423 148,890 168,313 _______ _______ _______ Net book value: At 30 June 2003 69,072 162,616 231,688 ======= ======= ======= At 1 July 2002 57,080 257,436 314,516 ======= ======= ======= 13. Investments Group Subsidiary Unlisted Listed undertakings investments investments Loans Total £ £ £ £ £ Cost or valuation: At 1 July 2002 - 2,538,871 328,500 4,887,528 7,754,899 Additions 132,371 7,559 - 158,389 298,319 Disposals - (533) (129,532) (500,000) (630,065) Write off on liquidation - (1,028,941) - (2,065,153) (3,094,094) Revalued upwards - - 354,559 - 354,559 Revalued down - (34,546) - - (34,546) _________ __________ _________ __________ __________ At 30 June 2003 132,371 1,482,410 553,527 2,480,764 4,649,072 _________ __________ _________ __________ __________ Amounts provided: At 1 July 2002 - (1,845,136) - (3,666,573) (5,511,709) Write back on liquidation - 771,706 - 1,676,919 2,448,625 Released during the year - 135,000 - 553,600 688,600 Provided during the year - (171,171) - - (171,171) _________ __________ _________ __________ __________ At 30 June 2003 - (1,109,601) - (1,436,054) (2,545,655) _________ __________ _________ __________ __________ Net book value: At 30 June 2003 132,371 372,809 553,527 1,044,710 2,103,417 ========= ========== ========= ========== ========== At 1 July 2002 - 693,735 328,500 1,220,955 2,243,190 ========= ========== ========= ========== ========== On an historical cost basis, these fixed asset investments would have been included as follows: 2003 2002 £ £ Listed investments - 78,647 Unlisted investments 372,809 664,077 _______ _______ 372,809 742,724 ======= ======= Valuation: Listed investments - market value 553,527 328,500 ======= ======= Estimated taxation on potential capital gain if sold at valuation - - ======= ======= The estimated taxation on a potential capital gain if sold at valuation is £nil since there are sufficient capital losses available to set off any potential gains. Company Subsidiary Unlisted Listed undertakings investments investments Loans Total £ £ £ £ £ Cost or valuation: At 1 July 2002 309,000 2,562,090 325,696 4,887,528 8,084,314 Additions - 18,677 - 781,771 800,448 Disposals - (533) (129,532) (500,000) (630,065) Write off on liquidation - (1,028,941) - (2,065,153) (3,094,094) Revalued upwards - - 357,363 - 357,363 Revalued down (28,390) - - - (28,390) _________ __________ _________ __________ __________ At 30 June 2003 280,610 1,551,293 553,527 3,104,146 5,489,576 _________ __________ _________ __________ __________ Amounts provided: At 1 July 2002 - (1,894,005) - (3,666,573) (5,560,578) Write back on liquidation - 771,706 - 1,676,919 2,448,625 Released during the year - 135,000 - 553,600 688,600 Provided during the year - (177,324) - - (177,324) _________ __________ _________ __________ __________ At 30 June 2003 - (1,164,623) - (1,436,054) (2,600,677) _________ __________ _________ __________ __________ Net book value: At 30 June 2003 280,610 386,670 553,527 1,668,092 2,888,899 ========= ========== ========= ========== ========== At 1 July 2002 309,000 668,085 325,696 1,220,955 2,523,736 ========= ========== ========= ========== ========== On an historical cost basis, these fixed asset investments would have been included as follows: 2003 2002 £ £ Listed investments 52,537 174,124 Unlisted investments 386,670 668,085 _______ _______ 439,207 842,209 ======= ======= Valuation: Listed investments - market value 553,527 325,696 ======= ======= Estimated taxation on potential capital gain if sold at valuation - - ======= ======= Subsidiary undertakings Proportion Name of subsidiary Class of holding held directly Nature of business Interregnum Venture Marketing Limited Ordinary 100% Management in members voluntary liquidation)* and marketing consultants Interregnum Investment Partners Limited Ordinary 100% Fund Manager Interregnum Advisory Partners Limited Ordinary 100% Advisory services Yospace Technologies Limited** Ordinary 54% Provision of wireless software * Since Interregnum Venture Marketing Limited is in members voluntary liquidation, it is not consolidated into the group financial statements, rather it is shown as an investment valued at its net assets at the date on which control passed to the liquidator. ** On a fully diluted basis Interregnum Plc owns 47% of Yospace Technologies Limited. On 18 October 2002 Interregnum plc set up a new subsidiary called Yospace Technologies Limited which was a new company with no previous trading activities. Yospace Technologies Limited acquired the business and certain assets from Yospace Holdings Limited for a consideration of £696,334. The assets acquired have been included in the group's balance sheet at their fair value at the date of acquisition. Analysis of the acquisition of the business and certain assets of Yospace Holdings Limited. Interregnum plc had an investment with a net book value of £325,000 in Yospace Holding Limited at the 30 June 2002. During the year this company went into liquidation. Yospace Technologies Limited, a subsidiary of Interregnum plc, purchased the business and certain assets of Yospace Holdings Limited for £544,840 cash plus associated expenses of £151,494. And following the liquidation of Yospace Holdings Limited, Interregnum plc received £529,840 as a preferred creditor. Net assets at date of acquisition: Book Adjustments Fair value Value Revaluation to group £ £ £ Intellectual property 529,840 - 529,840 Book debts 648 44,812 (a) 45,460 Tangible fixed assets 14,350 - 14,350 Rent deposit - 13,684 (b) 13,684 Investment in subsidiaries 2 (2) (c) - ___________ ___________ ___________ Net assets 544,840 58,494 603,334 =========== =========== =========== Minority Interest 40,295 Goodwill arising on acquisition 52,705 ___________ 696,334 =========== Discharged by: Cash 544,840 Costs associated with the acquisition 151,494 ___________ 696,334 =========== Adjustments: (a) increase in value of trade debts following receipt of cash from debtors. (b) recognition of rent deposit. (c) write off of investments in subsidiaries which are in the process of being wound up. Yospace contributed £8,926 to the group's net operating cash flows, paid £42,385 of interest and received £127,358 of external finance from outside the group, in addition to the £696,334 payment shown in the group cash flows statement for the purchase of the business and assets of Yospace Holdings Limited as shown above. 14. Debtors Group Company 2003 2002 2003 2002 £ £ £ £ Due within one year: Trade debtors 400,877 265,516 201,555 265,516 Amounts due from group undertakings - - 640 640 Other debtors 387,465 372,610 442,242 372,315 Prepayments and accrued income 96,909 116,998 85,382 116,998 ________ ________ ________ ________ 885,251 755,124 729,819 755,469 Due in more than one year: Other debtors 100,000 100,000 100,000 100,000 ________ ________ ________ ________ 985,251 855,124 829,819 855,469 ======== ======== ======== ======== The debtor due in more than one year relates to a rent deposit paid on Interregnum's offices in Old Burlington Street. 15. Current asset investment Group and company £ Cost or valuation: At 1 July 2002 1,154,346 Additions 50,000 Disposals (1,204,346) _________ At 30 June 2003 - _________ Amounts provided: At 1 July 2002 (865,760) Disposals 865,760 _________ At 30 June 2003 - _________ Net book value: At 30 June 2003 - ========= At 1 July 2002 288,586 ========= Interregnum Plc had an investment of £1,224,315 (before provisions for impairment) in a combination of shares and loans secured over the majority of the assets of Computerwire Services Limited, and as a result of the enforcement of this security in the prior year, through a new company called Computerwire Group Limited, the Group acquired the trade and majority of assets of Computerwire Services Limited. Interregnum then had 100% control of the new company on 7 June 2002. In the last financial year, Interregnum Plc made further loans to the new company of £130,346. Following an impairment review, the investment, which represented a new loan of £1,153,346 and equity of £1,000, was written down to £288,586. Interregnum Plc made a further loan of £50,000 during the current financial year to the company. All loans with Computerwire Group Limited were non interest bearing. Computerwire Group Limited was not consolidated in accordance in FRS 2 as it was an asset held exclusively for resale. No material trading transactions took place and no dividends were paid or received between Computerwire Group Limited and the rest of the Group to 30 June 2003. The assets of Computerwire Group Limited were sold on 11 October 2002 for proceeds of £516,912. 16. Creditors: amounts falling due within one year Group Company 2003 2002 2003 2002 £ £ £ £ Trade creditors 231,807 284,108 219,441 283,166 Amounts due to group undertakings 132,371 - 132,371 132,371 Other taxes and social security costs 60,883 53,608 28,888 53,608 Other creditors 116,527 30,000 22,732 30,000 Accruals and deferred income 229,290 171,003 229,290 171,003 _______ _______ _______ _______ 770,878 538,719 632,722 670,148 ======= ======= ======= ======= 17. Creditors: amounts falling due after one year Group Company 2003 2002 2003 2002 £ £ £ £ Loans falling due in more than one year but not more than two years 116,240 - - - 18. Financial instruments (a) Policies and risks The Group's financial instruments comprise term loans, warrants and equity investments held within the portfolio, cash and liquid resources and various items such as trade debtors and trade creditors that arise directly from its operations. The main reason for holding the warrants and equity investments is to achieve capital growth in their value and subsequently dispose of them realising a profit. The main risk arising from the Group's financial instruments is market price risk. The Group has investments denominated in foreign currencies it is therefore subject to an element of foreign exchange risk. The Group does not undertake any foreign exchange hedging activities. The Group has a fixed term loan with a floating interest rate repayable in 2004. The disclosures below exclude short-term debtors and creditors. (b) Currency profile 2003 2002 £ £ Net monetary assets US dollars 75,713 225,612 Net monetary assets Euro - 141,460 ______ _______ 75,713 367,072 ====== ======= (c) Maturity profile of the Group's financial liabilities Other than the term loan referred to note 17 all of the Group's other financial liabilities as at 30 June 2003 and 30 June 2002 mature within one year. (d) Interest rate profile of the Group's financial assets. The interest rate profile on financial assets is: 2003 Floating Fixed No interest Total Sterling 1,318,067 1,045,946 508,072 2,872,085 US dollar 75,713 - 551,755 627,468 _________ _________ _________ _________ 1,393,780 1,045,946 1,059,827 3,499,553 ========= ========= ========= ========= 2002 Floating Fixed No interest Total Sterling 1,796,044 1,201,805 439,839 3,437,688 US dollar 58,099 167,513 581,159 806,771 Euro - 141,460 - 141,460 _________ _________ _________ _________ 1,854,143 1,510,778 1,020,998 4,385,919 ========= ========= ========= ========= The interest on fixed rate financial assets is 8% which is fixed until maturity averaging 4 years. Floating rate financial assets comprise cash deposits on money market at various short term maturity rates. The financial assets on which no interest is earned are the group's fixed asset equity investments which have no maturity date and the debtor due after one year. The interest rate profile on financial liabilities is: 2003 Floating Total Sterling 116,240 116,240 2002 Floating Total Sterling - - Interest is payable at 5% plus the higher of 3% or LIBOR. The loan is payable in one instalment on 22 November 2004. (e) Fair values of financial assets and liabilities Book value 2003 2002 Financial assets and liabilities £ £ Cash and deposits 1,293,780 1,754,143 Debtors due after one year 100,000 100,000 Fixed asset investments - loans 1,044,710 1,220,955 Fixed asset investments - listed equity 553,527 328,500 Fixed asset investments - unlisted equity 372,809 693,735 Current asset investment - 288,586 Long term borrowings 116,240 - The Directors believe that the book values for the financial assets and liabilities above are not materially different from their fair values. Fixed asset investment loans, unlisted equities and the current asset investment have been written down to the directors' assessment of their recoverable amounts, which the directors believe is close to their fair values. Fixed asset investments in listed equities are valued in the books at market value at 30 June 2003 which the directors believe is approximately fair value. (f) Undrawn committed facilities The group had undrawn committed borrowing facilities at 30 June 2003 of £100,000 (2002 - £100,000). These facilities are available for utilisation until February 2004. 19. Share capital Authorised 2003 2002 £ £ Ordinary shares of £0.05 each 5,000,000 5,000,000 Allotted, called up and fully paid 2003 2002 2003 2002 No. No. £ £ Ordinary shares of £0.05 each 65,433,107 65,433,107 3,271,655 3,271,655 Share options During the year the company granted options, which remain exercisable, to subscribe for ordinary shares of £0.05 each as follows: Number of Option price ordinary shares per share Date granted No. £ 31 December 2002 3,500,000 0.05 8 April 2003 11,640,616 0.05 __________ 15,140,616 ========== Vesting of these options is as follows: Number of Ordinary shares Vesting period No. Vest immediately on issue - 31 December 2002 2,000,000 Vest immediately on issue - 8 April 2003 4,765,200 Vest on 30 June 2004 1,500,000 Vest equally over three years* 110,000 Vest equally over five years** 6,765,416 __________ 15,140,616 ========== * First vesting date 8 April 2004 ** First vesting date 1 July 2003 During the year to 30 June 2003 16,579,300 options lapsed. Subject to the above, options can be exercised at any date up to the tenth anniversary of the date of grant. The following options, granted in previous years, were unexercised at 30 June 2002. Their expiry date is 10 years from the date of grant, being dates between 2010 and 2011. Option exercise band No. £0.00 - £0.05 3,919,548 £1.10 - £1.15 4,360,000 During the year to 30 June 2003 no options were exercised. 20. Reconciliation of shareholders' funds and movements on reserves Group Total Share share- Share premium Revaluation Merger Profit and holders capital account reserve reserve loss account funds £ £ £ £ £ £ At 1 July 2001 3,271,655 18,876,852 3,637,871 (2,406,655) (271,425) 23,108,298 Revaluation write down - - (3,564,378) - 3,564,378 - Revaluation upwards - - 206,018 - 206,018 Loss for the year - - - - (18,397,476) (18,397,476) _________ __________ __________ __________ ___________ ___________ At 30 June 2002 3,271,655 18,876,852 279,511 (2,406,655) (15,104,523) 4,916,840 Gains realised in the year - - (53,006) - 53,006 - Revaluation write down - - (34,546) - 34,546 - Revaluation upwards - - 354,559 - - 354,559 Loss for the year - - - - (908,843) (908,843) _________ __________ __________ __________ ___________ ___________ At 30 June 2003 3,271,655 18,876,852 546,518 (2,406,655) (15,925,814) 4,362,556 ========= ========== ========== ========== =========== ========== Company Total Share share- Share premium Revaluation Profit and holders capital account reserve loss account funds £ £ £ £ £ At 1 July 2001 3,271,655 18,876,852 1,850,745 348,927 24,348,179 Revaluation write down - - (1,905,191) 1,905,191 - Revaluation upwards - - 206,018 - 206,018 Loss for the year - - - (19,646,373) (19,646,373) _________ __________ __________ __________ ___________ At 1 July 2002 3,271,655 18,876,852 151,572 (17,392,255) 4,907,824 Gains realised in year - - (8,479) 8,479 - Revaluation upwards - - 357,363 - 357,363 Loss for the year - - - (848,036) (848,036) _________ __________ __________ __________ ___________ At 30 June 2003 3,271,655 18,876,852 500,456 (18,231,812) 4,417,151 ========= ========== ========== ========== =========== 21. Notes to the statement of cash flows (a) Reconciliation of operating loss to net cash outflow from operating activities 2003 2002 £ £ Operating loss (1,154,077) (2,514,738) Depreciation 123,445 118,959 Amortisation of intangible fixed assets 41,523 - Movement in debtors (16,672) 460,924 Movement in creditors 99,788 (144,396) Exchange movement - (5,042) __________ __________ Net cash outflow from operating activities (905,993) (2,084,293) ========== ========== (b) Analysis of cash flows for headings netted in the cash flow statement 2003 2002 £ £ Returns on investments and servicing of finance Interest received 64,013 222,368 Interest paid (12,388) (12,513) Interest element of finance lease rental payments - (524) __________ __________ Net cash inflow from returns on investments and servicing of finance 51,625 209,331 ========== ========== Capital expenditure and financial investment Payments to acquire tangible fixed assets (37,926) (77,684) Payments to acquire fixed asset investments (165,948) (2,236,925) Increase in loan to current asset investments (50,000) (1,654,346) Receipts from sale of fixed asset investments 702,559 26,501 Receipts from sale of current asset investment 516,912 - __________ __________ Net cash inflow/(outflow) from capital expenditure and financial investment 965,597 (3,942,454) ========== ========== Acquisition Purchase of business (696,334) - Financing Repayment of loan - (420,652) Capital element of finance lease rental payments - (1,747) Issue of ordinary share capital in subsidiary 8,500 - Increase in long term borrowings 116,240 - __________ __________ Net cash inflow/(outflow) from financing 124,740 (422,399) ========== ========== (c) Analysis of changes in net funds At At 1 July 30 June 2002 Cash flow 2003 £ £ £ Cash at bank and in hand 1,754,143 (460,365) 1,293,780 Long term loans - (116,240) (116,240) _________ _________ _________ 1,754,143 (576,603) 1,177,540 ========= ========= ========= 22. Other financial commitments At 30 June 2003 the group had annual commitments under non-cancellable operating leases as set out below: Land and buildings 2003 2002 £ £ Operating leases which expire: in over five years 222,500 170,000 23. Ultimate controlling party Ken Olisa is the ultimate controlling party, having a beneficial interest in 36,060,076 ordinary shares. This represents 55.1% of the issued share capital. This information is provided by RNS The company news service from the London Stock Exchange

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Parkmead Group (The) (PMG)
UK 100
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