Final Results

RNS Number : 4596X

Screen Technology Group plc

25 June 2008

 



25 June 2008

Screen Technology Group plc
("Screen Technology" or "the Company" or "the Group")

Preliminary Announcement of Results for the year to 31 December 2007

Business review

2007 proved to be a difficult year for Screen Technology and sales were substantially below expectations. The Group's situation has improved significantly in 2008 with a restructuring of the Group's balance sheet and a new major shareholder. However, these financial statements cover the period to 31 December 2007 and should therefore be read in this context. Details of the recent restructuring and the Placing and Open Offer are summarised in the post balance sheet events note, note 10. 

Screen Technology's ITrans® product continues to meet favourable market reaction and offers a unique and attractive solution for the mid/large sized digital advertising/signage market. However the "out of home" advertising market in particular has proven to be conservative when it comes to new technology and has been slow to adopt a novel offering from a young business. In addition production scale up has taken significantly longer than expected. 

These factors have put the Group's finances under serious strain in 2007. In the latter part of the year the Group focussed on conserving resources and conducted a full strategic review. This reached a successful resolution in 2008 with a financial restructuring and culminated in the Placing and Open Offer which was finalised on 17 June 2008, led by Scaent Holdings Cooperatie UA, an Amsterdam based conglomerate. However, the severe financial pressures in 2007 resulted in the need to significantly reduce overhead and caused further delays to sales and production.

I am pleased to report that the key engineering partnerships have survived this difficult time and the business is well placed to scale up low cost, high quality production internationally to meet sales demand.

The Group has a large world wide latent market to target and has adopted a highly scaleable business model in order to maximise its opportunity. This involves working with manufacturing partners to produce ITrans® tiles under licence using Screen Technology processes and Original Equipment Manufacturing (OEM) partners who build these ITrans® tiles into a number of display products and supply these to their own and third party customers. In addition the Group sells a small amount of product directly, typically sourced from OEM partners, to seed the market and prove the value of the technology to the digital signage and out of home advertising markets.

On 5 November 2007, the Company entered into a loan agreement under which Shearline Precision Engineering Limited, a manufacturing partner, has provided up to £500,000 of product for early sales. The first high speed tile assembly machine is currently located in Scotland and following an agreement reached in early 2008 will be transferred to a manufacturing partner, probably in the Far East late in 2008. A further high speed machine is available subject to revised terms for its supply. Two low speed tile assembly machines are in production in the UK, the first of which will be transferred to a lower cost location over the summer of 2008.

The Group has a number of OEM partnerships in place and will seek to build on this in 2008 to increase the availability and range of ITrans® products.

Direct sales have been extremely limited. In addition, the Group has had to deal with the near failure of two early customers which has resulted in a significant bad debt charge.

Three factors have contributed to delays in achieving sales: The availability of a modular display product; the inability of the business to scale up tile production and the conversion of sales opportunities. During 2007, the Group launched its own modular display product and has supported an OEM partner to complete their own. Further modular product variants from other OEM's are expected in 2008. Production capacity of ITrans tiles has significantly increased during 2007 and this is expected to accelerate in 2008. The third factor, conversion of sales opportunity is the key focus for the business now, and the prospects with new OEM partners and sales channels, together with steadily improving acceptance of the new technology are encouraging.

Throughout 2007, the Group placed great emphasis on cost control and by the end of 2007 costs had been significantly reduced, with staff numbers halved from the 24 employed in January 2007. This process has continued into 2008 and we now have 7 full time employees supported by a further 5 part time self employed consultants. Despite this contraction we remain confident that the cores skills remain intact and that, as enquiries convert into sales, we can scale up as required.

I would like to say a special thank you to all the staff who worked for Screen Technology during 2007 and to those who continue to work for the Group in 2008. Despite the difficult financial situation and the slow conversion of enquiries into sales, everyone continued to support the business to their maximum. We may not have achieved our objectives for 2007 but that was not through lack of effort and focus on the part of our employees - you are all to be congratulated for the commitment that you have shown in such difficult circumstances.

Financial Review

Sales for the year were £34,919 (2006: £642,713) comprising the sale of a small number of ITrans® displays. In the previous year sales were significantly increased by the sale of bought in non- ITrans® display equipment amounting to just over £500,000 to a potential ITrans® customer, who subsequently ran into financial difficulty. This transaction eventually resulted in a significant bad debt charge which has been disclosed as an exceptional item in 2007. The loss before tax increased to £3.4 million (2006: loss £4.8 million). The Group loss for the year represents the continued development of ITrans®, the development of high-speed production facilities and the development of the modular product.  

Cash resources have been under considerable strain during 2007 and into 2008. As at 31 December 2007 the Group had cash resources of £83,505. On 17 June 2008 the Company completed a Placing and Open Offer which raised £1,006,164 (before expenses). This has relieved the immediate pressure although, going forward, we shall continue to manage carefully the Company's cash resources. 

The Board does not recommend payment of a final dividend for the year to 31 December 2007 (2006: nil).

Outlook for 2008

The Board continues to be encouraged by the high level of interest expressed in the ITrans® product by a number of existing and new potential customers. However, whilst the Board remains confident of sales in 2008 and beyond it is clear that further funding is needed to support the business through this early adoption phase.  

The proceeds of the Placing and Open Offer together with the implementation of the CVA in Screen Technology Limited and arrangements with a number of creditors in Screen Technology Group plc (see note 10), will provide the Group with sufficient resources to pursue the current business plan and provide general working capital for the Group for the immediate future. The business has in the past experienced delays and difficulties which have impacted on working capital and the business continues to be cash consumptive. The Directors believe that, following the Placing and Open Offer, the working capital available to the Group will be sufficient to fund the Group's costs to at least 31 December 2008 assuming that the Group makes no new sales before then. Beyond 31 December 2008 the business will need additional funding through either further investment or new sales which the Directors anticipate will be forthcoming.

For more information please contact

Screen Technology Group plc	01223 559600
Tom Jarman, CEO
Charles Stanley Securities Russell Cook	020 7149 6000

  Group Income Statement

for the year ended 31 December 2007

	Year ended   31 December	Year ended   31 December
	2007	2006
	£	£
Revenue	34,919	642,713
Cost of sales	(10,577)	(606,208)
Gross profit	24,342	36,505
Administrative expenses - other	(2,817,611)	(4,912,061)
Operating loss before exceptional items	(2,793,269)	(4,875,556)
Administrative expenses - exceptional item	(437,916)	-
Operating loss after exceptional items	(3,231,185)	(4,875,556)
Finance income	34,177	113,868
Finance expense	(156,698)	(7,845)
Loss before taxation	(3,353,706)	(4,769,533)
Income taxes	324,207	164,042
Retained loss for the year attributable to equity shareholders	(3,029,499)	(4,605,491)
Loss per ordinary share (basic and diluted)	(8.61)p	(14.06)p

  Group Balance Sheet

as at 31 December 2007

	31 December 2007	31 December 2006
ASSETS	£	£
Non-current assets
Property, plant and equipment	2,478,424	2,080,721
	-------------	-------------
Current assets
Inventories	105,500	249,534
Trade and other receivables	103,674	953,228
Current tax assets	-	164,042
Cash and cash equivalents	83,505	615,998
	-------------	-------------
	292,679	1,982,802
	-------------	-------------
TOTAL ASSETS	2,771,103	4,063,523
	-------------	-------------
LIABILITIES
Non-current liabilities
Borrowings	814,681	4,656
	-------------	-------------
Current liabilities
Trade and other payables	1,402,116	722,653
Borrowings	517,014	2,555
Provisions	20,927	20,927
	-------------	-------------
	1,940,057	746,135
	-------------	-------------
Total liabilities	2,754,738	750,791
	-------------	-------------
EQUITY
Share capital	1,762,573	1,755,448
Share premium account	8,001,921	7,997,621
Share based payment reserve	140,277	418,570
Other reserve	7,602,857	7,602,857
Retained losses	(17,491,263)	(14,461,764)
	-------------	-------------
	16,365	3,312,732
	-------------	-------------
TOTAL EQUITY AND LIABILITIES	2,771,103	4,063,523
	-------------	-------------

  Group Statement of Changes in Equity

for the year ended 31 December 2007

	Share capital	Share premium	Share based payment reserve	Other reserve	Retained losses	Total
	£	£	£	£	£	£
Balance at 1 January 2006	1,624,448	6,682,989	37,067	7,602,857	(9,856,273)	6,091,088
Changes in equity during 2006:
Total recognised income and expense and loss for the year	-	-	-	-	(4,605,491)	(4,605,491)
Issue of share capital	131,000	1,314,632	-	-	-	1,445,632
Share based payment charge	-	-	381,503	-	-	381,503
	-------------	-------------	-------------	-------------	-------------	-------------
Balance at 31 December 2006 and 1 January 2007	1,755,448	7,997,621	418,570	7,602,857	(14,461,764)	3,312,732
Changes in equity during 2007:
Total recognised income and expense and loss for the year	-	-	-	-	(3,029,499)	(3,029,499)
Issue of share capital	7,125	4,300	-	-	-	11,425
Share based payment credit	-	-	(278,293)	-	-	(278,293)
	-------------	-------------	-------------	-------------	-------------	-------------
Balance at 31 December 2007	1,762,573	8,001,921	140,277	7,602,857	(17,491,263)	16,365
	-------------	-------------	-------------	-------------	-------------	-------------

  Group Cash Flow Statement

for the year ended 31 December 2007

	Year ended  31 December	Year ended  31 December
	2007	2006
Cash flow from operating activities	£	£
Loss for the period	(3,029,499)	(4,605,491)
Depreciation and other non-cash items:
Depreciation charges	234,819	163,584
Loss on disposal of property, plant and equipment	-	2,907
Share based payment (credit)/charge	(278,293)	381,503
Decrease/(increase) in trade and other receivables	849,554	(477,417)
Decrease/(increase) in inventories	144,034	(159,571)
Increase in trade and other payables	81,339	267,382
Finance income	(34,177)	(113,868)
Finance expense	156,698	7,845
Income taxes	(324,207)	(164,042)
	-------------	-------------
Cash generated from operations	(2,199,732)	(4,697,168)
Income taxes received	488,249	-
	-------------	-------------
Net cash flow from operating activities	(1,711,483)	(4,697,168)
	-------------	-------------
Cash flows from investing activities
Purchase of property, plant and equipment	(94,912)	(1,882,627)
Decrease in short term deposits	-	5,400,000
	-------------	-------------
Net cash flows from investing activities	(94,912)	3,517,373
	-------------	-------------
Cash flows from financing activities
Proceeds from issue of share capital	11,425	1,445,632
Proceeds from sale and finance leaseback	1,145,000	-
Proceeds from drawdown of loan	344,327	-
Repayment of loan	(5,719)	-
Repayment of capital element of finance leases	(159,124)	(2,366)
Interest received	34,177	113,868
Interest paid	(96,184)	(7,845)
	-------------	-------------
Net cash flows from financing activities	1,273,902	1,549,289
	-------------	-------------
(Decrease)/increase in cash and cash equivalents for the period	(532,493)	369,494
Cash and cash equivalents at the start of the period	615,998	246,504
	-------------	-------------
Cash and cash equivalents at the end of the period	83,505	615,998
	-------------	-------------

Notes to the financial statements

1.     Basis of preparation

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2007 and 31 December 2006, but is derived from them. Statutory accounts for Screen Technology Group plc for 2006 have been delivered to the Registrar of Companies. The Auditors have reported on the accounts to 31 December 2007 and to 31 December 2006. Their reports were unqualified but contained a modified audit opinion relating to both the year ended 31 December 2006 and the year ended 31 December 2007. The reports did not contain statements under section 237 (2) or (3) of the Companies Act 1985. This preliminary announcement was approved by the Board on 24 June 2008.

.

The Company will hold its Annual General Meeting on 23 July 2008, following which the statutory accounts for 2007 will be delivered to the Registrar of Companies.

The Annual Report and Accounts will be posted to shareholders on 27 June 2008. Copies of the Annual Report and Accounts and of this announcement will be available at the Company's registered office, The Maris Centre, Hauxton Road, Cambridge, CB2 2LQ. 

The financial statements are for the year ended 31 December 2007. They have been prepared in accordance with the requirements of IFRS 1 "First-time Adoption of International Financial Reporting Standards", because they represent the period covered by the Group's first IFRS financial statements.

These financial statements have been prepared under the historical cost convention.

These Group financial statements have been prepared in accordance with IFRSs in issue as adopted by the European union (EU) and effective at 31 December 2007, the first annual reporting date at which we are required to use IFRS Accounting Standards adopted by the EU.

Screen Technology's Group financial statements were previously prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) until 31 December 2006. The date of transition to IFRS was 1 January 2006. The comparative figures in respect of 2006 have been restated to reflect changes in accounting policies as a result of adoption of IFRS. The Group has taken advantage of exemptions under IFRS and no restatement has been made to the accounting treatment of previous business combinations, including the acquisition of Screen Technology Limited by Screen Technology Group plc on 28 July 2005.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of the Group financial statements.

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based upon management's knowledge and experience of the amounts, events or actions. Actual results may differ from such estimates.

Going Concern

The financial statements have been prepared on a going concern basis, notwithstanding the loss for the year of £3.0m (2006: £4.6m), which the directors believe is appropriate for the following reasons.

The Board has prepared working capital forecasts for the period ending 12 months from the date of the approval of these financial statements. The Directors believe that the working capital available to the Company, following the Placing and Open Offer on 17 June 2008, which raised £1,006,164 (before expenses), will be sufficient to fund the Company's costs to at least 31 December 2008 assuming that the Company makes no new sales before then. Beyond 31 December 2008 the business will need additional funding through either further investment or new sales which the Directors anticipate will be forthcoming.

On the basis that adequate funding is available the Board consider that the Company will continue to operate for the foreseeable future and is capable of achieving significant levels of new sales of ITrans®. However, there can be no certainty in relation to these matters, which may cast significant doubt on the Company's ability to continue as a going concern. The Company may, therefore, be unable to continue realising its assets and discharging its liabilities in the normal course of business. These financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.  

2.    Explanation of transition to IFRS

These are the Group's first Group financial statements prepared in accordance with IFRS.

An explanation of how the transition from UK GAAP to IFRS has effected the Group's financial position, financial performance and cash flows is set out below.

IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. These financial statements have been prepared on the basis of taking the following exemptions:

·         cumulative translation differences on foreign operations are deemed to be nil at 1 January 2006. Any gains or losses recognised in the Group income statement on subsequent disposal of foreign operations will exclude translation differences arising prior to the transition date;

 

·         only share based payment arrangements granted after 7 November 2002 that had not vested prior to 1 January 2006 are recognised in the financial statements; and

 

·         Business combinations prior to 1 January 2006, the Group's date of transition to IFRS have not been restated to comply with IFRS 3 "Business Combinations". Accordingly there has been no adjustment to the accounting treatment adopted by the Group on the acquisition of Screen Technology Limited by Screen Technology Group plc on 28 July 2005 which was accounted for at that date as a merger under UK GAAP.

Application of IFRS has resulted in reclassification of certain items in the cash flow statement as follows:

·         Under UK GAAP, payments to acquire property, plant and equipment were classified as part of “Capital expenditure and financial investment”. Under IFRS, payments to acquire property, plant and equipment have been classified as part of “Investing activities”;

 

·         Income taxes received by the Group in respect of Research and Development tax credits are now classified as an operating cash flow under IFRS, however these were included in a separate category of tax cash flows under UK GAAP; and

 

·         The definition of cash is narrower under UK GAAP than under IAS 7 "Cash Flow Statements". Under IFRS highly liquid investments, readily convertible to a known amount of cash with an insignificant risk of changes in value are regarded as cash equivalents.

Explanation of reconciliation from UK GAAP to IFRS for the balance sheet and income statement

The adoption of IFRS by the Group has resulted in some reordering of the presentation of certain balances within both the income statement and the balance sheet. However there has been no impact on previously reported equity, liabilities or assets at 31 December 2006 and 1 January 2006, or comparative amounts disclosed in the income statement for the year ended 31 December 2006.

  3.    Exceptional items

All exceptional items are included within administrative expenses.

		Year ended 31 December	Year ended 31 December
		2007	2006
		£	£
Write off of bad debt		437,916	–
		-------------	-------------

4.    Operating loss

Loss for the year has been arrived after charging/(crediting):

	Year ended 31 December	Year ended  31 December
	2007	2006
	£	£
Research and development expenditure	822,903	1,457,490
Depreciation of property, plant and equipment - owned	231,026	159,791
- leased	3,793	3,793
Staff costs (see note 5)	917,176	1,637,808
(Credit)/charge for share-based payments	(278,293)	381,503
Auditors remuneration:
Fees payable for the audit of Group companies and the Group accounts:
Company	4,000	5,000
Fees payable for other services:
Tax compliance services	2,500	4,000
Tax advisory services	-	9,500
Subsidiary companies	5,000	20,000
	-------------	-------------

5.    Staff numbers and costs

The average number of persons employed by the Group (including Directors) during the year was as follows:

	Year ended 31 December	Year ended 31 December
	2007	2006
	No	No
Average number of employees	18	21
The aggregate payroll costs of these persons were as follows:
	Year ended 31 December	Year ended 31 December
	2007	2006
	£	£
Fees	55,000	127,800
Wages and salaries	985,472	978,405
Share based payment (credit) / charge	(278,293)	381,503
Social security costs	108,990	104,062
Other pension costs	45,999	46,038
	-------------	-------------
	917,176	1,637,808
	-------------	-------------

6.    Remuneration of Directors

Directors’ remuneration	Year ended 31 December	Year ended 31 December
	2007	2006
	£	£
Salary and benefits	285,048	427,439
Share based payment (credit) / charge	(221,898)	296,772
Company contributions to money purchase pension schemes	13,367	18,622
Amounts paid to third parties in respect of directors’ services	55,000	50,000
Damages for breach of contract	36,900	-
	-------------	-------------
	168,417	792,833
	-------------	-------------

7.    Loss per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

The share options in issue are anti-dilutive in respect of the basic loss per share calculation and have therefore not been included.

		Year ended 31 December	Year ended 31 December
		2007	2006
Attributable loss(£)		(3,029,499)	(4,605,491)
		-------------	-------------
Average number of ordinary shares in issue for basic and diluted earnings per share		35,200,484	32,760,696
		-------------	-------------
Basic and diluted loss per share (pence)		(8.61)p	(14.06)p
		-------------	-------------

8.    Property, plant and equipment

	Leasehold improvements	Fixtures, fittings, tools and equipment	Plant and machinery	Motor vehicles	Total
	£	£	£	£	£
Cost
At 1 January 2006	50,937	281,455	327,108	11,495	670,995
Additions	117,031	72,455	1,693,141	-	1,882,627
Disposals	(50,937)	(184,462)	-	-	(235,399)
	-------------	-------------	-------------	-------------	-------------
At 31 December 2006	117,031	169,448	2,020,249	11,495	2,318,223
Additions	-	11,192	621,330	-	632,522
	-------------	-------------	-------------	-------------	-------------
At 31 December 2007	117,031	180,640	2,641,579	11,495	2,950,745
	-------------	-------------	-------------	-------------	-------------
Depreciation
At 1 January 2006	50,937	251,422	2,470	1,581	306,410
Depreciation for the year	44,712	22,772	92,307	3,793	163,584
Disposals	(50,937)	(181,555)	-	-	(232,492)
	-------------	-------------	-------------	-------------	-------------
At 31 December 2006	44,712	92,639	94,777	5,374	237,502
Depreciation for the year	58,515	26,263	146,248	3,793	234,819
Reclassification	-	2,470	(2,470)	-	-
	-------------	-------------	-------------	-------------	-------------
At 31 December 2007	103,227	121,372	238,555	9,167	472,321
	-------------	-------------	-------------	-------------	-------------
Carrying amounts
At 31 December 2006	72,319	76,809	1,925,472	6,121	2,080,721
	-------------	-------------	-------------	-------------	-------------
At 31 December 2007	13,804	59,268	2,403,024	2,328	2,478,424
	-------------	-------------	-------------	-------------	-------------

The carrying amount of property, plant and equipment at 31 December 2007 includes an amount of £2,058,463 (2006:£984,334) in respect of manufacturing machinery in the course of construction.

Included in the above table are assets held under sale and finance leaseback as follows, these are secured on the asset concerned:

	31 December	31 December
	2007	2006
Fixtures, fittings, tools and equipment	£	£
Carrying value	-	-
Depreciation	-	-
Plant and machinery
Carrying value	1,140,000	-
Depreciation	-	-
Motor vehicles
Carrying value	2,328	6,121
Depreciation	9,167	5,374

9.    Borrowings

This note provides information about the contractual terms of the Group's interest bearing borrowings.

	31 December	31 December
	2007	2006
Current liabilities	£	£
Current portion of secured loan	68,869	-
Current portion of finance lease liabilities	448,145	2,555
	-------------	-------------
	517,014	2,555
	-------------	-------------
Non-current liabilities
Secured loan	269,739	-
Finance lease liabilities	544,942	4,656
	-------------	-------------
	814,681	4,656
	-------------	-------------
	-------------	-------------
	1,331,695	7,211
	-------------	-------------

Terms and debt repayment schedule

Terms and conditions of outstanding loans were as follows:

	Currency	Nominal interest rate (%)	Year of maturity	31 December	31 December
				2007	2006
				£	£
Secured loan	GBP	10.1	2008	68,869	-
			2009	68,869	-
			2010	68,869	-
			2011	68,869	-
			2012	63,132	-
Finance lease liabilities	GBP	17.3	2008 - 2010	993,087	7,211
				-------------	-------------
				1,331,695	7,211
				-------------	-------------

The loan is secured by a fixed charge over the intellectual property of the Group and bears interest at 5.1% over bank base rate.

Finance lease liabilities

Finance lease liabilities are payable as follows:

		Minimum lease payments	Interest	Principal	Minimum lease payments	Interest	Principal
		2007	2007	2007	2006	2006	2006
		£	£	£	£	£	£
In the next year		599,750	151,605	448,145	2,971	416	2,555
In more than one year but less than two		483,311	53,354	429,957	2,971	227	2,744
In more than two years but less than five		118,705	3,720	114,985	1,959	47	1,912
		1,201,766	208,679	993,087	7,901	690	7,211

Obligations under finance leases are secured by the related leased assets. The weighted average interest rate is 17.3% (2006: 7.2%) and the weighted average period for which the rate is fixed and the weighted average period until maturity is 2.2 years (2006: 2.5 years).

10.    Post balance sheet events

On 14 March 2008, Screen Technology Limited ("STL"), the Group's principal trading subsidiary, entered into a Company Voluntary Arrangement ("CVA") under which all unsecured creditors of STL agreed to accept that amounts owing to them up to that date would be settled by a distribution of dividends from a fixed sum of £75,000 lodged with the supervisor of the CVA. Under the terms of the CVA, STL must pay to the CVA Supervisor, for the benefit of creditors, a further amount equal to 50% of the profits made by STL in the period from 14 March 2008 to 31 August 2008. In the event that STL defaults on any obligations under the CVA and/or fails to remedy these after 30 days of being required to do so by the Supervisor either by fully meeting all outstanding obligations or by agreeing terms of variation with Creditors, the Supervisor shall petition for a winding up order.

On 2 April 2008, the Company entered into an interim loan agreement and debenture with Scaent Corporate Finance Limited ("the Lender") under which the Lender lent the Company €325,000 repayable on 31 May 2008, or such later date as the Lender may agree in writing, and secured by way of a fixed and floating charge over the assets and undertaking of the Company. On 18 June 2008, a deed of variation was signed extending the repayment date to 30 June 2008 and increasing the loan by up to a further €100,000.

In March and May 2006 STL, entered into two contracts with AGR Automation Limited (AGR) for the supply of custom machines. Under the terms of the contracts, these machines were due to be completed in 2006. The first machine, although physically complete, has still not passed final Factory Acceptance Test (FAT) at AGR and the second machine has yet to be completed. On 12 May 2008, STL entered into a Settlement Agreement under which both original contracts were cancelled and both companies agreed to drop all claims and actions against the other. The Settlement Agreement also gives STL the right to require AGR to complete FAT on the first machine and prepare it for shipping for a fixed fee of £47,000 plus VAT and a further option to complete the purchase of the second machine for an amount equal to the outstanding amount on the original contract. In the event that this second option is not exercised on or before 30 June 2008 there will be no requirement for AGR to supply the second (partially complete) machine and AGR will be entitled to retain instalments of £404,757 plus VAT already paid to them. Payment of £47,000 plus VAT was made to AGR on 19 June 2008. 

On 16 May 2008, the Company entered into a settlement agreement with MTI Partners Limited ("MTI") and Thomas Swan & Co Limited ("TSC") under which MTI and TSC agreed, inter alia, to accept the issue to them of an aggregate of 757,576 New Ordinary Shares with a deemed value of £5,000 in return for them waiving their rights against the Company in respect of arrangements in connection with the Investec Lease under which MTI and TSC provided a guarantee of £450,000 to Investec. This agreement was conditional on completion of the Placing and Open Offer which was completed on 17 June 2008.

On 19 May 2008, the Company entered into a settlement agreement with Investec Bank (UK) Limited ("Investec") under which Investec agreed, inter alia, to accept the issue to them of 14,393,939 New Ordinary Shares with a deemed value of £95,000 in return for them waiving their rights against the Company and all amounts due under the lease of a high speed manufacturing machine from Investec ("the Investec Lease"). This agreement was conditional on completion of the Placing and Open Offer which was completed on 17 June 2008.

On 17 June 2008, a restructuring was completed under which:

• The company's Ordinary shares of 5p were sub-divided into one Ordinary share having a nominal value of 0.01p and one Deferred share with a nominal value of 4.99p:

• 152,449,062 ordinary shares of 0.01p were issued via a Placing and Open Offer at 0.66p per share to raise £1,006,164 before expenses;

• Scaent Holdings Cooperatie ("Scaent") and certain directors and officers of Scaent became holders of 59.64% of the issued Ordinary share capital as a result of their subscription in the Placing;

• Scaent invested a further £200,000 through subscription for convertible loan notes at an annual interest rate of 12%, repayable in the event of default by the Company or by mutual agreement, at a premium of 180%, or convertible in whole or in part into 54,545,455 Ordinary shares and secured by a fixed and floating charge over the assets of the Company;

• The interim loan became repayable to Scaent Corporate Finance Limited; 

• Kevin Gate and Derek McLennan became Directors of the Company and Ernie Richardson resigned;

• A warrant was issued to Tom Swan over 1,000,000 Ordinary shares and warrants were issued to Icon Corporate Finance Limited and Charles Stanley over 2,174,696 Ordinary shares and 500,000 Ordinary shares, respectively, all at an exercise price of 0.66p per share and exercisable at any time during the next 5 years

• Share options and warrants were to be issued to Directors, management and other key contractors over 56,253,788 Ordinary shares at an exercise price of 0.66p per share. These options / warrants are capable of exercise from periods of between three months and three years after the Placing and Open Offer and are available for exercise for a period of five years from the date of the Placing and Open Offer. Included in this total are options / warrants over 25,030,303 Ordinary shares to be granted to Tom Jarman and Peter Smyth. 

 

END

 

 

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