Final Results

Harrier Group PLC 27 April 2006 HARRIER GROUP PLC FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 CHAIRMAN'S STATEMENT During the year ended 31 December 2005 the Harrier Group plc disposed of its operating subsidiaries for the sum of £4.5 million, which completed on 10 March 2005. The Group's turnover to the date of sale was £1.36 million and the operating loss was £249,000. The disposal of the subsidiaries means that at 31 December 2005 your company is a cash shell and the Board have been seeking, with their advisors, a suitable business in which to invest. In reporting the profit and loss for the year to 31 December 2005 the company is no longer controlling a group and the results are reported as a single company, whereas last year's profit and loss account was the consolidated statement for the group. As a result of this change of format, some of the proceeds of the sale of the subsidiaries which were used to repay inter group debt, fell into the previous years accounts of Harrier Group plc. In order to better explain the effective result for the year to 31 December 2005 to shareholders we have provided a pro-forma profit and loss account on a 'consolidated' basis as detailed in this announcement and would draw your attention to the following: •Whilst the interim results to 30 June 2005 were prepared on a consolidated basis, due to the expectation that a group would be in existence at 31 December 2005, it is inappropriate to prepare the full years results on a consolidated basis as the group did not exist at 31 December 2005. •The gain on release of the intra group debt provision was recognised in the parent company's own accounts during the year ended 31 December 2004 as the effect on the previous provisions against the intercompany debt was an adjusting event. •Shareholders may initially be surprised by the reported result for the full year accounts to 31 December 2005 having previously seen unaudited consolidated figures at the interim stage reporting a profit of £3.2m. •The difference is however due to technical accounting differences in the treatment of consolidated accounts and individual company accounts. As such the consolidated and unconsolidated figures do not give a meaningful comparison. •The difference between the reported profits on disposal at the interim and full year is essentially the timing difference on the recognition of the intra group loan provision release of £3.6m in the consolidated and individual company accounts. The pro-forma consolidated profit and loss account shows an overall profit on sale of the operating subsidiaries of £3.2 million creating a profit before interest of £2.9 million, after net interest receivable of £177,000, and the profit on ordinary activities before taxation was £3.09 million. Year end bank balances were £4,594,842. Harrier Group plc is now an investment company and has continued to evaluate potential investment opportunities, focusing on the UK services, information technology and financial sectors. We thank all shareholders for their patience and support during this process. A L R MORTON Chairman 26 April 2006 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £ £ Turnover 333,062 1,722,373 Cost of sales - - --------- ---------- Gross Profit 333,062 1,722,373 Administrative expenses (468,111) (1,683,399) --------- ---------- Operating (loss)/profit (135,049) 38,974 Other Income 72,002 - --------- ---------- Operating (loss)/profit before exceptional items (63,047) 38,974 Fees relating to an abortive merger - (90,059) Release of provision against intra-group debt - 3,693,145 Loss on sale of investment in subsidiary undertakings (522,384) - --------- ---------- (Loss)/profit before interest (585,431) 3,642,060 Interest receivable 177,457 51,348 Interest payable (20) (267) --------- ---------- (Loss)/profit on ordinary activities before taxation (407,994) 3,693,141 Taxation - - --------- ---------- ========= ========== (Loss)/profit on ordinary (407,994) 3,693,141 activities after taxation ========= ========== Basic (loss)/profit per share £(0.0133) £0.1261 Diluted (loss)/profit per £(0.0130) £0.1149 share COMPANY BALANCE SHEET AS AT 31 DECEMBER 2005 2005 2004 £ £ £ £ Fixed assets Tangible assets - 302,569 Investments - 1,074,741 -------- -------- - 1,377,310 Current assets Debtors 4,466 3,448,422 Cash at bank and in 4,594,842 1,434,018 hand --------- -------- 4,599,308 4,882,440 Creditors: Amounts falling Due within one year (35,532) (1,401,404) --------- -------- Net current assets 4,563,776 3,481,036 -------- -------- Total assets less current Liabilities 4,563,776 4,858,346 ======== ======== Capital and reserves Called up share 315,294 293,103 capital Share premium 91,233 - account Profit and loss 4,157,249 4,565,243 account -------- -------- Equity shareholders' 4,563,776 4,858,346 funds ======== ======== Approved by the Board on 26 April 2006 and signed on its behalf by .......................................... A L R Morton COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £ £ £ £ Net cash inflow from operating 2,041,286 202,965 activities Returns on investments and servicing of finance Interest received 177,457 51,348 Interest paid (20) (267) -------- --------- 177,437 51,081 Capital expenditure and financial investment Sales proceeds from sale of 4,500,000 - subsidiaries Proceeds used in repayment of (3,589,780) - intercompany debt Professional fees on (73,495) - sale Purchases of fixed (8,048) (114,021) assets Sales of tangible - 2,255 fixed assets -------- --------- Net cash inflow/ (outflow) from 828,677 (111,766) investing activities --------- --------- Financing Issue of ordinary share capital 113,424 9,573 -------- --------- 113,424 9,573 --------- --------- Increase in cash 3,160,824 151,853 ========= ========= Reconciliation of net cash Flow to movement in net funds Increase in cash in the year 3,160,824 151,853 --------- --------- Movement in net funds in the year 3,160,824 151,853 Net funds at start 1,434,018 1,282,165 of year --------- --------- Net funds at end of 4,594,842 1,434,018 year ========= ========= NOTES TO THE FINANCIAL INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2005 1 The preliminary announcement of results has been prepared under the historical cost convention in accordance with the Company's accounting policies for the year ended 31 December 2005. 2 The above financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The summarised balance sheet at 31 December 2005 and the summarised profit and loss account and cash flow statement for the year then ended have been extracted from the Group's financial statements. These financial statements have not yet been delivered to the Registrar of Companies. 3 The calculation of basic and diluted loss per ordinary share of 1p each is based on the loss on ordinary activities after taxation and minority interests of (£407,994) divided by the weighted average number of ordinary shares of 1p each 30,635754 (basic) and 31,310,103 (diluted). 4 Reconciliation of (loss)/profit to net 2005 2004 cash inflow from £ £ operating activities Operating loss before exceptional items (63,047) (51,085) Depreciation 26,249 178,588 Loss on sale of fixed assets - 6,698 Decrease /(Increase) in debtors 3,443,956 (3,240,930) Inter company debtor written back on sale of subsidiaries - 3,693,145 (Decrease)/Increase in creditors (1,365,872) (383,451) --------- ---------- Net cash inflow from operating activities 2,041,286 202,965 ========= ========== 5 All of the Group's activities are classed as discontinuing due to the sale of the subsidiary trading companies on the 10th March 2005. There are no gains and losses other than those disclosed in the Consolidated Profit and Loss Account. 6 No dividends are proposed or were paid during the period. 7 The Report and Accounts together with a Notice of Annual General Meeting which will contain a summary of the Company's investment strategy will be sent to shareholders shortly. Further copies may be obtained on application to the Company's Registered Office, (Lion House, Red Lion Street London WC1R 4GB) or will be available for collection at the same address for a period of 1 month from the date of publication. UNAUDITED PRO-FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005 The following is an unaudited pro-forma consolidated profit and loss account prepared on the basis that the company continued to prepare consolidated accounts and, as such, the release of provision for intra-group debt had been deferred until 2005 to match against the sales proceeds. 2005 2004 Continuing Discontinued Total £ Operations £ Operations £ £ Turnover - 1,358,380 1,358,380 11,214,119 Cost of sales - (728,319) (728,319) (6,682,404) -------- ---------- --------- --------- Gross Profit - 630,061 630,061 4,531,715 Administrative expenses (466,960) (495,376) (962,336) (4,616,405) -------- ---------- --------- --------- Operating (loss)/profit (466,960) 134,485 (332,475) (84,690) Before exceptional costs Other Income 72,002 72,002 -------- ---------- --------- --------- Exceptional fees relating - - - (90,058) to an abortive merger -------- ---------- --------- --------- Operating (loss)/profit (394,958) 134,485 (260,473) (174,748) Profit on sale of discontinued operations 3,170,761 - 3,170,761 - -------- ---------- --------- --------- Profit/(loss) before interest 2,775,803 134,485 2,910,288 (174,748) ======== ========== ========= ========= Interest receivable 177,457 51,348 Interest payable (1,618) (778) --- --- --------- --------- Profit/(Loss) on ordinary activities before taxation 3,086,127 (124,178) ========= ========= UNAUDITED PRO-FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005 Summary In relation to the unaudited pro-forma consolidated profit and loss account the following points are relevant: •Whilst the interim results to 30 June 2005 were prepared on a consolidated basis, due to the expectation that a group would be in existence at 31 December 2005, it is inappropriate to prepare the full years results on a consolidated basis as the group did not exist at 31 December 2005. •The gain on release of the intra group debt provision was recognised in the parent company's own accounts during the year ended 31 December 2004 as the effect on the previous provisions against the intercompany debt was an adjusting event. •Shareholders may initially be surprised by the reported result for the full year accounts to 31 December 2005 having previously seen unaudited consolidated figures at the interim stage reporting a profit of £3.2m. •The difference is however due to technical accounting differences in the treatment of consolidated accounts and individual company accounts. As such the consolidated and unconsolidated figures do not give a meaningful comparison. •The difference between the reported profits on disposal at the interim and full year is essentially the timing difference on the recognition of the intra group loan provision release of £3.6m in the consolidated and individual company accounts. This information is provided by RNS The company news service from the London Stock Exchange

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