Preliminary Results
Parkmead Group (The) PLC
19 October 2006
Thursday 19 October 2006
THE PARKMEAD GROUP PLC ('Parkmead' or the 'Group')
Preliminary results for the 12 months ended 30 June 2006
The Parkmead Group plc (PMG) today announces its unaudited preliminary results
for the year ended 30 June 2006.
Financial highlights
• Core investment and advisory revenues increased 143% from £1.352 million
to £3.287 million
• Corporate finance business now trading profitably
• Restructuring plans completed with significant reduction in costs achieved
• Acquisition of Quayside Corporate Services Limited proving cash flow
positive and profitable
• £10.0 million share placing in February 2006; the Company has no net debt
• Operating loss on continuing operations (including restructuring costs) of
£2.314 million (2005 £1.744 million)
• Retained loss for the year of £4.742 million (2005: £0.356 million)
includes a £2.671million charge for provisions against the value of the
Group's portfolio investments
• Loss per share £0.028p (2005: £0.004p)
Commenting on the results, Colin Goodall, Chairman of The Parkmead Group plc,
said:
'In the early part of 2006 we announced our plans to fundamentally restructure
the Group. I am pleased to announce that we have substantially achieved our
goals. We have reduced the Group's cost base such that our core Corporate
Finance Advisory business is now trading profitably. Following the share
placement undertaken in February of this year the Group is now in a net cash
positive position with funds available for investment and to grow the underlying
businesses. The acquisition of Quayside Corporate Services Limited, profitable
since acquisition, has been successfully integrated in to the Group and we are
seeing strong deal flow to our Corporate Finance business. Subsequent to the
year end we announced the sale of Audio Visual Machines Limited, which has
further improved our cash position. We have reconstituted our Board to reflect
the Group's new strategic direction. I look forward to the continued
development of the Group over the coming year. '
-Ends-
For further information:
The Parkmead Group plc 020 7494 3080
Niall Doran CEO
Gordon Ashworth, CFO
Madano Partnership 0207 593 4000
Mathew Moth/Toby Wilkinson
THE PARKMEAD GROUP PLC
CHAIRMAN'S STATEMENT
Development of the Group
During the second half of the year ended 30 June 2006 the Group implemented a
number of significant changes following a strategic review by the Board.
During the first half of the year ended 30 June 2006 it became clear that the
former business model of the Group was not viable, in terms of both
profitability and growth. In particular, the Group's cash resources were in
decline and the Group's trading subsidiaries were not, and were not likely to
be, cash generative in the near term. The Board agreed to implement a number of
significant changes to address these issues:
• to reduce the Group's cost base;
• to seek additional sources of capital;
• to seek an exit from the Group's portfolio investments and subsidiaries;
• to seek acquisitions which would enhance the Group's deal flow and also be
cash generative; and
• to change the core focus of the Group from being technology specific to
multi sector
An integral part of these changes was to re-constitute the Board to reflect the
Group's new strategic direction. Kenneth Olisa, Roger Jeynes, Martin Cooper,
Rupert Cook, Richard Fifield, John Forrest and Geoffrey Shingles stood down from
the Board during the year. Subsequent to the year end Melvyn Morris also stood
down. I should like to take this opportunity to thank them for their
contribution to the Group. During the year Niall Doran was appointed Chief
Executive Officer, David Mills was appointed Executive Director following the
acquisition of Quayside Corporate Services Limited and Gordon Ashworth was
appointed as Chief Financial Officer. Additionally the Group made a number of
Non Executive appointments. These were John Leggate, Brian Wilson, and myself
as Non Executive Chairman. On 13 January 2006, Ian Taylor changed from being an
Executive Director to a Non Executive Director. Subsequent to the year end
Thomas Cross was also appointed as a Non Executive Director.
On 16 May 2006, the Group also changed its named from Interregnum plc to The
Parkmead Group plc.
I am pleased to announce that the Group has substantially completed the changes
arising out of the strategic review:
• the Company's core operating costs have been substantially reduced and
by way of example our annualised payroll costs have reduced from £1.351
million to £0.689 million. A further £0.377 million loss was incurred in
2006 by our US operation prior to its closure during the year;
• in early February 2006 the Group raised £10.0 million before expenses
through a placing with institutional investors;
• our efforts to realise value through the sale of our portfolio and
subsidiary companies have proven more time consuming than envisaged. However,
we continue to keep this position under review and on 6 October 2006 the
Group announced the sale of Audio Visual Machines;
• additionally, the Group acquired the entire share capital of Quayside
Corporate Services Limited ('QCS'). QCS provides business turnaround
consulting services and is highly complimentary to the Group's corporate
finance advisory business. The QCS business is cash generative and is
performing in line with expectations; and
• we have moved away from an exclusive focus on the technology sector
and are now engaging in corporate finance advisory activities across the
telecom, defence, transport and energy sectors.
Results and Dividends
In the interim report for the six months ended 31 December 2005 an operating
loss of £1.593 million was reported. The retained loss for the same period
reported was £3.347 million. Following the completion of our restructuring
plans and the downward revaluation of our portfolio holdings, the overall
operating loss for the year amounted to £2.305 million (after restructuring
costs) and the retained loss for the year amounted to £4.742 million. The Board
is not recommending the payment of a dividend (2005: £nil).
Investment and Advisory
Corporate Finance Business
The Group's corporate finance team operates out of The Parkmead Group plc. Our
2006 revenues grew 143% to £3.287 million (2005: £1.352 million) due to some
significant corporate finance deals and were further enhanced following the
acquisition of QCS. The loss for the year reflects the completion of our
restructuring and cost reduction exercise which was implemented in the early
part of 2006 and the results of our assessment of our portfolio companies
described below. Our corporate finance activity is now well placed to produce
profitable and sustainable growth. Broadening the team's sector focus has
delivered an increased deal flow with the result that performance in the first
quarter of the financial year ending 30 June 2007 has been profitable. We are
particularly pleased to see opportunities flowing into the team out of QCS,
which has also traded profitably since acquisition. Current assignments cover
the energy, aviation and the consulting sectors. The Group's operations in the
USA were heavily loss making during the year and, accordingly, the Group closed
this operation prior to the year end.
Portfolio Investments
Performance of the Group's portfolio of technology investments has been mixed.
The Group values its investments according to the International Private Equity
and Venture Capital Valuation guidelines ('IPEVC'). Applying the IPEVC
guidelines as at 30 June 2006 produced a valuation for the portfolio of £3.059
million (2005: £5.648 million).
Following the appointment of administrators to Keycrypt, Netinfo, Webscreen and
Nanomagnetics the Group recognised additional provisions during the year to
provide fully against the carrying values of these investments. The Group's
holdings in Open Text and Adaptive were disposed of during the year and were
fully provided for prior to their disposal. During the year the Group also
provided fully against the carrying value of its investments in Blue Arc, Elite
Strategies, Futureroute, Knowledge=Power, Oilcats, Raidtec, and Speed Trap.
Following the valuation exercise undertaken in accordance with the IPEVC rules,
the Group has assessed the value of its investments in Respond, Red M and
Metapraxis resulting in a downward valuation. The additional provisions resulted
in a charge to the profit and loss account of £2.671million and the reversal of
prior year revaluations.
As previously stated the Group continues to pursue disposal strategies with
regards to its non core subsidiaries and investments.
Following the change of strategy and direction noted above the Group made its
first investment as principal by way of the acquisition of 4.7% of Thruvision
Limited (Thruvision) for a consideration of £1.052 million. Thruvision has
developed proprietary non intrusive imaging technologies used in the detection
of explosives. Thruvision's technologies are of significant interest to the
security and defence industries and we believe that this investment will be
realised through a trade sale in the near to mid term.
Subsidiaries
The Group's other two trading subsidiaries delivered much improved performance
during the year.
Software Development, Support and Marketing
Yospace Technologies Limited ('Yospace') develops, installs and maintains
message management systems for mobile phone operators and has also developed
user generated content solutions for the mobile phone industry and other content
providers. Yospace's turnover increased to £1.885 million (2005: £1.235
million) due to new contract wins across Europe, and, for the six months ended
30 June 2006, Yospace was profitable at the operating level.
The Group is satisfied with the trading performance of this business.
Audio Visual Systems
Audio Visual Machines Limited ('AVM') designs, installs and services audio
visual systems. Turnover in AVM increased from £1.892 million (for the five
months from acquisition in January 2005 to 30 June 2005) to £7.944 million for
the year ended 30 June 2006. Of this £6.052 million increase, £2.171 million
arose on the acquisition of the Video Meeting Company Limited made by AVM during
the year. AVM traded profitably throughout the year.
As previously stated, the Group has sought to realise value from these trading
subsidiaries and in this regard the Group announced the sale of AVM for a
consideration of £1.275 million before expenses on 6 October 2006. Accordingly
the results of AVM have been classified under discontinued operations in the
profit and loss account.
Key Performance Indicators
The Board monitors performance in its investment and advisory businesses through
the reporting of monthly profit and loss accounts, cash flow forecasts, and
balance sheet reporting. Additionally key performance indicators are set,
against which the Board can assess performance and prospects for the businesses.
With regard to QCS, the Board monitors each assignment undertaken against
budgeted profit and gross profit margin. With regard to the corporate finance
business, revenue is analysed between recurring revenue streams and success
fees. The baseline target is to cover fixed costs with recurring revenues.
The Board continues to monitor the performance of its other investments to seek
the maximum returns on exit.
Principal Risks and Uncertainties
The principal trading risks of the Group's corporate finance business are deal
flow and the Group's ability to recruit and retain experienced corporate finance
executives. With regard to deal flow the acquisition of QCS has improved the
Group's access to advisory, merger and acquisition opportunities significantly
through its established network of banking and intermediary relationships.
Recruitment and retention of experienced corporate finance executives remains
challenging. However, the Board believes that the Group is well placed to create
innovative and attractive packages for suitable staff.
The Group's investment business is also exposed to any downturn in performance
of the underlying businesses in which it holds an interest. The Board regularly
evaluates the financial position of its investment portfolio.
Outlook
This has been a year of significant change for the Group. Following the
placement undertaken in February 2006 we have raised sufficient working capital
to develop the Group and we have reduced the Company's debt. We have refocused
our corporate finance business and this division is now trading profitably. QCS
has traded profitably since acquisition. Importantly, it is also proving highly
effective in creating deal flow for our corporate finance team. Corporate
activity in our business sectors remains strong and the Board believes that the
Group is well placed to benefit from this strength. Furthermore the Board
believes that by widening the Group's sector focus additional advisory
opportunities will arise and this has been borne out by trading in the first
quarter of the current financial year. The acquisition of QCS, whose primary
focus is on turnaround opportunities arising out of over indebted businesses,
effectively mitigates the Group against a general business downturn. We will
continue to seek value through exiting from our portfolio investments and non
core subsidiaries. The Directors are satisfied with the position of the
companies within the Group as at the year ended 30 June 2006. The Group is now
well positioned to grow a profitable and growing business.
Colin Goodall
19 October 2006.
.....................'our business is, fundamentally, in better shape. We have
realigned our cost base with our revenues, our acquisition of QCS is proving
highly complimentary across the wider Group, we have increased our financial
resources and we have eliminated our indebtedness in the Company. We are now
well placed to build a profitable and growing business'............
Niall Doran
Chief Executive
19 October 2006
THE PARKMEAD GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2006
(UNAUDITED)
Continuing Operations Discontinued
Existing Acquisitions Operations Total Total
2006 2006 2006 2006 2005
Notes £ £ £ £ £
Turnover 3 4,551,940 487,575 7,966,872 13,006,387 7,981,615
Cost of sales - (316,625) (4,672,914) (4,989,539) (2,291,818)
Gross profit 4,551,940 170,950 3,293,958 8,016,848 5,689,797
Administrative expenses (7,095,771) (47,296) (3,284,615) (10,427,682) (7,351,725)
Other operating income 106,054 - - 106,054 108,198
Operating (loss)/profit (2,437,777) 123,654 9,343 (2,304,780) (1,553,730)
Profit on sale of investments - 4,434
Exceptional profit on deemed 4 363,715 -
disposal
Release of prior year provision - 1,271,819
against investments
Amounts written off investments 4 (2,670,624) (98,716)
Net interest payable (1,553) (58,687)
Loss on ordinary activities
before taxation 3 (4,613,242) (434,880)
Taxation (41,873) 30,300
Loss on ordinary activities
after taxation (4,655,115) (404,580)
Minority interest - equity (86,587) 49,028
Loss for the financial year 7 (4,741,702) (355,552)
Loss per 5p ordinary share
- basic and diluted 6 (0.028) (0.0039)
THE PARKMEAD GROUP PLC
GROUP NOTE OF HISTORICAL COST PROFITS AND LOSSES
FOR THE YEAR ENDED 30 JUNE 2006
(UNAUDITED)
2006 2005
£ £
Loss on ordinary activities before taxation (4,613,242) (434,880)
Write-down of previous temporary diminution in value of fixed asset investments (306,464)
charged against revaluation reserve
Historical cost loss on ordinary activities before taxation (4,919,706) (434,880)
Historical cost loss for year retained after taxation and minority interest (5,048,166) (355,552)
GROUP STATEMENT OF
TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 JUNE 2006
(UNAUDITED)
2006 2005
£ £
Loss for the financial year attributable to members of the parent company (4,741,702) (355,552)
Unrealised surplus on revaluation of fixed asset investments - 953,305
Write-down of previous revaluation of fixed asset investments (1,095,754) (256,896)
Temporary diminution in value of fixed asset investments - (360,290)
Currency translation of foreign currency investments 9,772 -
Total recognised losses relating to the year (5,827,684) (19,433)
THE PARKMEAD GROUP PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2006
(UNAUDITED)
2006 2005
£ £ £ £
FIXED ASSETS
Intangible assets 8,176,776 863,324
Tangible assets 598,355 617,484
Investments 3,059,365 5,648,003
11,834,496 7,128,811
CURRENT ASSETS
Stock 252,971 160,637
Debtors 6,697,391 2,038,681
Cash at bank and in hand 6,207,315 886,456
13,157,677 3,085,774
CREDITORS
Amounts falling due within
one year (5,187,657) (3,296,519)
NET CURRENT ASSETS /(LIABILITIES) 7,970,020 (210,745)
TOTAL ASSETS LESS CURRENT LIABILITIES 19,804,516 6,918,066
CREDITORS
Amounts falling due after more than
one year (694,982) (825,274)
PROVISION FOR LIABILITIES
AND CHARGES (108,816) (3,944)
NET ASSETS 19,000,718 6,088,848
CAPITAL AND RESERVES
Called up share capital 18,417,089 4,621,263
Share premium account - 19,430,496
Revaluation reserve - 789,290
Merger reserve (952,109) (2,406,655)
Profit and loss account 1,198,507 (16,159,905)
EQUITY SHAREHOLDERS' FUNDS 7 18,663,487 6,274,489
MINORITY INTERESTS 337,231 (185,641)
CAPITAL EMPLOYED 19,000,718 6,088,848
THE PARKMEAD GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2006
(UNAUDITED)
2006 2005
£ £
Net cash flow from operating activities (3,697,293) (1,086,852)
Returns on investments and
servicing of finance (1,553) 235,543
Taxation 83,483 96,724
Capital expenditure and financial investment (1,221,727) (862,582)
Acquisitions and disposals (406,776) (471,714)
Cash outflow before financing (5,243,866) (2,088,881)
Financing 10,584,419 (110,814)
Increase/(decrease) in cash 5,340,553 (2,199,695)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2006 2005
£ £
Increase/ (decrease) in cash in the year 5,340,553 (2,199,695)
Decrease in debt and lease financing 1,632,262 110,814
Finance leases acquired with subsidiaries (9,132) (162,743)
Loan stock issued on acquisition of subsidiary - (300,000)
Other non-cash changes - new finance leases (12,690) -
Movement in net funds/ (debt) 6,950,993 (2,551,624)
Net (debt)/funds at 1 July (1,598,757) 952,867
Net funds/ (debt) at 30 June 5,352,236 (1,598,757)
THE PARKMEAD GROUP PLC
NOTES TO THE PRELIMINARY RESULTS
YEAR ENDED 30 JUNE 2006
1 PRELIMINARY ANNOUNCEMENT
The preliminary results for the year ended 30 June 2006 are unaudited. The
financial information contained in this announcement does not constitute the
Group's audited statutory financial statements for the year ended 30 June 2006
within the meaning of Section 240 of the Companies Act 1985.
The financial information for the period from incorporation to 30 June 2005 has
been extracted from the Group's statutory financial statements for that period
which have been delivered to the Registrar of Companies. The report of the
auditors on those financial statements was unqualified and did not contain any
statements under either Section 237(2) (accounting records or returns
inadequate or accounts not agreeing with records and returns) or 237(3)
(failure to obtain necessary information and explanations) of the Companies' Act
1985. The financial information contained in this announcement has been
prepared under accounting policies set out in Group financial statements for the
period ended 30 June 2005, except where noted below in the basis of preparation.
As at the date of this announcement, the auditors have not reported on the
Group's financial statements for the year ended 30 June 2006, nor have such
financial statements been delivered to the Registrar of Companies. The
financial statements for the year ended 30 June 2006 will be distributed to
shareholders prior to, and filed with the Registrar of Companies following the
Annual General Meeting.
2 ACCOUNTING POLICIES
Basis of preparation
The financial statements are prepared under the historical cost convention
modified to include the revaluation of fixed asset investments and in accordance
with the Companies Act 1985 and applicable accounting standards in the United
Kingdom, except with regard to the specific provisions of the Act relating to
the revaluation of fixed asset investments that constitute associated
undertakings as explained in fixed asset investments below.
Changes in accounting policy
The following accounting standards, which were issued during the year, have been
adopted by the Group with no significant impact on these financial statements,
including the comparatives: FRS 17 'Retirement Benefits', FRS 21' Events after
the balance sheet date', FRS 22 'Earnings per Share', FRS 25 'Financial
Instruments: disclosure and presentation' and FRS 28' Corresponding amounts'.
Going concern
The Group's balance sheet has net funds of £5.352 million which includes
positive cash balances of £6.207 million. Following the restructuring plans
announced in February 2006, and their subsequent implementation, the Group's
cost base has been reduced significantly. A cash flow forecast has been
prepared for the next twelve months which shows that the Group will operate
comfortably within its available cash resources. Accordingly, the directors
continue to adopt the going concern basis in the preparation of these accounts.
Fixed asset investments
Fixed asset investments, comprising equity shares, and loans are stated at cost
or valuation. In 2005, the Group applied the 'True and Fair override' principle
with regard to a departure from the Companies Act 1985, as permitted by FRS 9
for companies within the investment industry. This override allows associated
undertakings to be recorded at fair value rather than to be equity accounted.
The principle has been applied as the investments are held for their marketable
value rather than as a media through which the Group carries out its business.
Certain investment holdings were diluted in the period such that no associated
undertakings were held at the year ended 30 June 2006. The Group has applied the
Alternative Accounting Rules to record its fixed asset investments at market
value as permitted by the Companies Act 1985.
3 SEGMENTAL ANALYSIS
a) Business Segment Analysis
The group is organised into three business segments: Investment and advisory, software development, support and
marketing and design, supply and installation of audio visual systems.
Loss on ordinary
activities before taxation
Turnover and minority interest Net assets
2006 2005 2006 2005 2006 2005
£ £ £ £ £ £
Continuing operations:
Investment and advisory 3,286,875 1,351,612 (4,346,717) (145,163) 18,697,961 6,767,762
Less: inter segmental (132,000) (325,000) - - - -
sales
Software development, 1,884,640 1,234,632 (245,846) (478,698) (963,426) (777,494)
Support and marketing
5,039,515 2,261,244 (4,592,563) (623,861) 17,734,535 5,990,268
Discontinued Operations
Investment and advisory 22,497 - (376,550) - (2,975) -
Mobile and wireless - 3,828,634 - 63,117 - -
Consultancy
Design, supply and 7,944,375 1,891,737 355,871 125,864 1,269,158 98,580
install of audio visual
systems
13,006,387 7,981,615 (4,613,242) (434,880) 19,000,718 6,088,848
The segmental analysis of turnover, loss before tax and net assets for the
investment and advisory business includes £487,575, £128,925 and £140,325 for
the year ended 30 June 2006 in respect of Quayside Corporate Services Limited
which was acquired during the year.
b) Geographical Segment Analysis
All turnover originated in the UK.
i) Turnover by destination is as follows: 2006 2005
£ £
UK 10,342,438 7,342,289
Other European countries 952,594 71,525
USA and Canada 1,697,303 444,651
Other 14,052 123,150
13,006,387 7,981,615
2006 2005
ii) Loss on ordinary activities before taxation £ £
UK (4,236,692) (434,880)
USA and Canada (376,550) -
(4,613,242) (434,880)
3 SEGMENTAL ANALYSIS (CONTINUED)
2006 2005
iii) Net assets £ £
UK 19,003,693 6,088,848
USA and Canada (2,975) -
19,000,718 6,088,848
The segmental analysis of turnover, loss before tax and net assets for the
United Kingdom includes £487,575, £128,925, and £140,325 for the year ended 30
June 2006 in respect of Quayside Corporate Services Limited which was acquired
during the year.
The segmental analysis of turnover, profit before tax and net assets for the
United Kingdom includes £7,944,375 (2005: £5,720,371), £355,871 (2005: loss
(£133,531)) and £1,269,158 (2005: £228,076) at 30 June 2006 in respect of Audio
Visual Machines Limited and its subsidiaries which were discontinued during the
year. The comparative figures for the year ended 30 June 2005 also include the
discontinued activities of Cellular Design Services Limited, a former subsidiary
undertaking of the Group, which was deconsolidated in that year.
The segmental analysis of turnover, loss before tax and net assets for the USA
and Canada includes £22,676, £376,650 and £2,175 in respect of US operations
which were discontinued during the year.
The analysis of operating profit/ (loss) between continuing and discontinued
operations is set out below:
2006 2006 2006 2006 2005 2005 2005
Continuing operations Discontinued Total Continued Discontinued Total
Total
Existing Acquisitions
£ £ £ £ £ £
Turnover 4,551,940 487,575 7,966,872 13,006,387 2,261,244 5,720,371 7,981,615
Cost of sales - (316,625) (4,672,914) (4,989,539) (2,291,818) (2,291,818)
Gross profit 4,551,940 170,950 3,293,958 8,016,848 2,261,244 3,428,553 5,689,797
Administrative (7,095,771) (47,296) (3,284,615) (10,427,682) (4,113,257) (3,238,468) (7,351,725)
expenses
Other 106,054 - - 106,054 108,198 - 108,198
operating
income
Operating (2,437,777) 123,654 9,343 (2,304,780) (1,743,815) 190,085 (1,553,730)
profit/(loss)
4 EXCEPTIONAL PROFIT ON DEEMED DISPOSAL
Audio Visual Machines Limited ('AVM'), a subsidiary of the Group, acquired the
entire share capital of the Video Meeting Company Limited on 30 September 2005
for a consideration of £800,000 satisfied by way of shares in Audio Visual
Machines Limited. The issue of shares by AVM to the previous owners of VMC
resulted in a reduction in the Group's holding in AVM from 77% to 54%. In
accordance with FRS 2, the Group has recognised an exceptional profit of
£363,715 in the profit and loss account following the reduction of the Group's
interest in its subsidiary.
Amounts Written off Investments
In accordance with the Group's accounting policy, the Group has assessed the
fair value of its fixed asset investments at the balance sheet date. The
assessment has resulted in a write-off of £2,670,624 (2005: £98,716) to the
profit and loss account.
5 ACQUISITIONS AND DISPOSALS
On 28 February 2006, The Group acquired the entire share capital of Quayside
Corporate Services Limited for a consideration of 90,909,091 shares in The
Parkmead Group plc plus a cash payment of an amount equal to the net asset value
of Quayside Corporate Services Limited at the date of acquisition being
£1,856,835, giving rise to goodwill of £6,073,962.
On 23 September 2005 AVM acquired 100% of the Video Meeting Company Limited for
a consideration, including costs, of £816,627 satisfied by the issue of
3,067,488 Ordinary B shares of £0.01 p each in AVM. The assets acquired have
been included in the Group's balance sheet at their fair value as at the date of
acquisition and has given rise to goodwill of £1,428,047.
On 16 February 2006, the Group acquired stock of £21,663 and certain contracts
of DDI Lizard Limited for a consideration of £264,000. Acquisition costs of
£4,000 were incurred and goodwill of £238,337 arose on this transaction.
On 29 September 2006 The Parkmead Group plc entered into an agreement to sell
its entire shareholding in AVM for a consideration of £1,275,000 before
expenses.
6 LOSS PER SHARE
The basic loss per share has been calculated by dividing the loss attributable
to equity shareholders funds by the weighted average number of shares in issue
during the year.
The loss and weighted average number of shares used in the calculation of the
loss per share are set out below:
2006 2005
Basic loss per share
Loss attributable to ordinary shareholders (£) (4,741,702) (355,552)
Weighted average number of shares - number 171,332,649 92,425,254
Loss per 5p ordinary share from continuing operations - basic and (0.028p) (0.0038p)
diluted
Diluted Loss per share
Due to the loss in the current and prior year there is no further dilution of
the loss per share as a result of the share options in issue.
The loss and weighted average number of shares used to calculate the loss per
share based on continuing and discontinued operations respectively are set out
below:
2006 2005
Basic loss per share from continuing operations
Loss attributable to ordinary shareholders (£) (4,741,702) (355,552)
Pre-tax losses from discontinued operations (£) (20,679) (188,981)
Tax relating to discontinued operations (£) (141,211) 30,766
Losses from continuing operations (£) (4,579,812) (197,377)
Weighted average number of shares - number 171,332,649 92,425,254
Loss per 5p ordinary share from continuing operations - basic and (0.027p) (0.0021p)
diluted
2006 2005
Basic loss per share from discontinued operations
Pre-tax losses from discontinued operations (£) (20,679) (188,981)
Tax relating to discontinued operations (£) (141,211) 30,766
Losses from discontinued operations (£) (161,890) (158,215)
Weighted average number of shares - number 171,332,649 92,425,254
Loss per 5p ordinary share from discontinued operations- basic and (0.0009p) (0.0017p)
diluted
7 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
2006 2005
Shareholders funds Shareholders funds
£ £
At 1 July 6,274,489 6,293,922
Shares issued
- placing 10,000,000 -
- EBT and on exercise of options 2,679,181 -
- On acquisition of QCS 6,000,001 -
Transaction costs (462,500) -
Revaluation upwards - 953,305
Temporary diminutions in value of investments - (360,290)
Write down of previous revalued investments (1,095,754) (256,896)
Currency translation adjustment 9,772 -
Loss for the year (4,741,702) (355,352)
As at 30 June 18,663,487 6,274,489
8 NOTES TO THE CASH FLOW STATEMENT
(a) Reconciliation of operating loss to net cash outflow from operating activities
2006 2005
£ £
Operating loss (2,304,780) (1,553,730)
Depreciation 178,770 218,074
Amortisation of intangible assets 426,894 178,408
(Increase) / Decrease in stocks (22,566) 115,800
Increase in debtors (2,973,149) (448,215)
Increase in creditors 897,553 398,867
Increase in other provisions 100,000 3,944
Net cash outflow from operating activities (3,697,278) (1,086,852)
b) Analysis of cash flows for headings netted in the cash flow statement
2006 2005
£ £
Returns on investments and servicing of finance
Interest received 300,353 421,154
Interest paid (301,392) (185,257)
Interest element of finance lease rental payments (514) (354)
Net cash (outflow) / inflow from returns on investments
and servicing of finance (1,553) 235,543
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (95,222) (139,616)
Payments to acquire fixed asset investments (1,270,505) (733,716)
Receipts from sale of tangible fixed assets 3,372
Receipts from sale of fixed assets investments 144,000 7,378
Net cash outflow from capital expenditure
and financial investment (1,221,727) (862,582)
Acquisitions and disposals
Purchase of subsidiary (916,596) (232,091)
Deconsolidation of subsidiary (58,575)
Cash /(Overdraft) acquired with subsidiary 509,820 (181,048)
Net cash outflow from acquisitions (406,776) (471,714)
Financing
Issue of ordinary share capital 12,679,181 -
Less placement expenses (462,500) -
Capital element of finance lease rental payments (2,544) (11,063)
Decrease in short term borrowings (31,139) (395,563)
(Decrease)/ increase in long term borrowings (1,598,579) 295,812
Net cash inflow /(outflow) from financing 10,584,419 (110,814)
c) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
At At
1 July 2005 Cash flow Acquisitions Other 30 June 2006
non-cash
changes
£ £ £ £ £
Cash 886,456 4,811,039 509,820 6,207,315
Overdraft (227,005) 19,694 (207,311)
Short term loans (82,934) 31,139 (51,795)
Finance lease obligations - 2,544 (9,132) (12,690) (19,278)
Long term loans (675,274) 248,579 - (426,695)
Loan stock (1,500,000) 1,350,000 (150,000)
(1,598,757) 6,462,995 500,688 (12,690) 5,352,236
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