Interim Results

Zareba PLC 23 March 2006 Zareba Plc ('Zareba' or 'the Company' Interim results for the six months ended 31 December 2005 CHAIRMAN'S STATEMENT The Company announces its results for the six months ended 31 December 2005, which show a loss for the period of Â£123,000 and total assets of Â£1.28 million. Zareba has also announced today that it has conditionally agreed to acquire Quadrise International Limited. Full details of the transaction and the future prospects of the Company are contained in the Admission Document being posted to shareholders today. An electronic copy of the Admission Document is also available on the Company's website, www.zarebaplc.com Brian Moritz Chairman 22 March 2006 INCOME STATEMENT 6 months Period ended ended 31 Dec 30 June Note 2005 2005 Â£'000 Â£'000 (unaudited) (unaudited) General and Administrative expenses (61) (56) Impairment loss on investments (85) - ----- ----- Operating loss (146) (56) ----- ----- Other interest receivable and similar income 23 17 - ----- ----- Loss from continuing activities before income tax (123) (39) ----- ----- Income tax credit/(expense) 2 - - ----- ----- Loss from continuing activities (123) (39) ===== ===== Net loss per share: Basic and diluted (pence) 3 (0.06)p (0.02)p ===== ===== Shares used in net loss per share calculation Basic and diluted 3 203,300,000 203,300,000 =========== =========== BALANCE SHEET At 31 December 2005 As at As at 31 Dec 30 June Note 2005 2005 Â£'000 Â£'000 (unaudited) (unaudited) Current assets Cash and cash equivalents 1,279 1,350 Receivables 3 5 ---------- ---------- Total current assets 1,282 1,355 Non-current assets Investments 4 - 41 ---------- ---------- Total non-current assets - 41 Total assets 1,282 1,396 ========== ========== Current liabilities Other payables 16 7 ---------- ---------- Total current liabilities 16 7 ---------- ---------- Total liabilities 16 7 Shareholders' equity Share capital 5 203 203 Share premium account 1,205 1,205 Profit and loss account (162) (39) Other equity reserves 20 20 ---------- ---------- Total shareholders' equity 1,266 1,389 ---------- ---------- Total liabilities and shareholders' equity 1,282 1,396 ========== ========== CASH FLOW STATEMENT 6 months Period Ended ended 31 Dec 30 June 2005 2005 Â£'000 Â£'000 (unaudited) (unaudited) Cash flows from operating activities Operating loss before working capital changes (146) (56) Impairment loss 85 - (Increase) Decrease in receivables 2 (5) (Decrease) Increase in accounts payable 9 7 ---------- ---------- Net cash outflow from operating activities (50) (54) ---------- ---------- Capital expenditure and financial investments Payments to acquire fixed asset investments (69) (41) Receipts from disposal of fixed asset investments 25 - ---------- ----------- Net cash used in investing activities (44) (41) ---------- ----------- Cash flows from financing activities Issue of share capital - 1,583 Costs of issue of share capital - (155) Interest on cash deposits 23 17 ---------- ---------- Net cash inflow from financing 23 1,445 ---------- ---------- Net increase (decrease) in cash in the period (71) 1,350 ========== ========== Reconciliation of net cash flow to movement in funds Increase (Decrease) in cash in the period (71) 1,350 ---------- ---------- Movement in net funds in the period (71) 1,350 Opening net funds 1,350 - ---------- ---------- Closing net funds 1,279 1,350 ========== ========== STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Period ended 31 December 2005 Shares in Share Share Retained Other Total issue capital Premium earnings reserves Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance on incorporation 2 - - - - - Issue of new shares 203,299,998 203 1,380 - - 1,583 Costs of issue - - (155) - - (155) of shares Fair value of options - - (20) - 20 - Loss for the period - (39) (39) At 30 June 203,300,000 203 1,205 (39) 20 1,389 2005 Loss for the period - - - (123) - (123) At 31 December 203,300,000 203 1,205 (162) 20 1,266 2005 NOTES TO THE INTERIM REPORT 1. Basis of preparation This interim financial statement is the second such statement prepared by the Company, which has not yet published statutory financial statements. The Company's first statutory financial statements will cover the period from incorporation on 22 October 2004 to 31 March 2006 The financial information relating to the period from incorporation on 22 October 2004 to 30 June 2005 and the six month period ended 31 December 2005 is unaudited. The information for the period ended 31 December 2005 has been prepared on the basis of the accounting policies set out below, which are in accordance with applicable International Financial Reporting Standards ('IFRS'). The financial information for the period from incorporation to 30 June 2005 has been restated on the basis of the accounting policies set out below and in accordance with IFRS. The effects of the Company's conversion to IFRS are explained in Note 7 below. The statutory financial statements for the Company for the period ending 31 March 2006 with be prepared in accordance with the accounting policies set out below and with IFRS. The above financial information does not constitute statutory accounts within the meaning of Section 240 Companies Act 1985. Use of estimates The preparation of the financial information in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Net loss per ordinary share Basic net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding in the period. For the purpose of calculating diluted earnings per share, the net loss attributable to ordinary shareholders and the weighted average number of shares outstanding is adjusted for the effects of all dilutive potential ordinary shares. The effects of anti-dilutive potential ordinary shares are ignored in calculating diluted earnings per share. Potential ordinary shares are anti-dilutive when their conversion to ordinary shares would decrease loss per share from continuing operations. Fair value of financial instruments Carrying amounts of certain financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short maturities, based on borrowing rates currently available to the Company. Share based payments Share-based payments are recognised at fair value at the date of grant and the recognition of liabilities for cash-settled share-based payments at the current fair value at each balance sheet date. The fair value of share options issued in the period is measured according to the estimated market value of the services received in consideration of the issue of those share options. Where it is not possible to reliably measure the estimated market value of the services received in consideration of the issue of those share options, share options issued in the period are according to the market price of the options or in accordance with a generally accepted valuation methodology. Deferred taxation Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are recorded for deferred tax assets that are not more likely that not to be realised. Deferred tax assets are recognised only to the extent that future taxable profit will be available such that realisation of the related tax benefit is more likely than not. Impairment of tangible and intangible assets At each balance sheet date a review of carrying amounts is undertaken to determine whether there is any indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the amount of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset an estimate is made of the recoverable amount of the cash generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. Estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Cash and cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. 2. Income tax credit/expense The Company has not submitted any computations in respect of income tax. No provision has been made for income tax in this financial information due to the likely availability of trading losses at the end of its first statutory period of account, being the period from incorporation to 31 March 2006. No deferred tax asset has been recognised in relation to the possible availability of losses as the Company has yet to reach the conclusion of the accounting reference period in respect of any claim for such losses and the realisation of any related tax benefit cannot therefore be said to be more likely than not. 3. Loss per share Loss per share is based on the weighted average number of shares in issue during the period ended 31 December 2005 of 203,300,000 (30 June 2005: 203,300,000). The weighted average number of shares in issue used in the basic loss per share calculation for the period ended 30 June 2005 has been restated to reflect the effect of the conversion to IFRS referred to above. 4. Investments Fixed asset investments represent investments as follows: Â£'000 Cost On incorporation - Additions at cost 41 ------ 30 June 2005 41 Additions at cost 69 Disposal to directors (25) Impairment loss (85) ------ 31 December 2005 - ====== The disposal to directors related to an investment in the early stages of a South African diamond mining project which, due to the imminent acquisition of Quadrise International Limited, was considered to be no longer viable as an ongoing proposition for the Company. The investment was therefore sold to J Burgess and B Moritz at cost. Amounts provided for impairment loss relates to a provision made against the cost of a holding of 10 per cent in a Namibian mineral exploration and mining project following receipt of a competent person's report which deemed the project to have a significantly lower value than previously expected. The Board agreed to relinquish the Company's rights in relation to the investment in return for the cancellation of the Company's commitments to future funding of the project under the investment agreement. 5. Share capital 2005 Â£'000 Authorised: 1,000,000,000 ordinary shares of Â£0.001 each 1,000 ======= 2005 Â£'000 Allotted, issued and fully paid: 203,300,000 ordinary shares of Â£0.001 each 203 ===== On Admission to AIM on 14 February 2005 the Company granted options to its professional advisers to subscribe for 9,000,000 ordinary shares at 1p per share at any time up to the fifth anniversary of Admission. No adjustment has been made to basic earnings per share for the purpose of calculating diluted earnings per share because the effect of including the 9,000,000 outstanding share options referred to above would be to further dilute the net loss. There were 9,000,000 share options outstanding at 31 December 2005, with a weighted average exercise price of 1p per share. 6. Post Balance Sheet Events Subsequent to the balance sheet date, the Company announced that it had entered into an agreement to acquire the entire issued share capital of Quadrise International Limited for aggregate consideration of Â£45 million, to be satisfied by the issue of new ordinary shares in the Company. The Company also announced a placing of new ordinary shares at 1.75 to 2.0 pence per share to raise a minimum of Â£12.1 million before costs of the issue to be used to fund Â£4.5 million of acquisition costs and to provide working capital to support the growth and development of the enlarged group. 7. Effects of transition to IFRS a) The financial information for the period ended 30 June 2005 has been restated to comply with IFRS. Asummary of the adjustments required is set out below. UK GAAP Effect of IFRS (unaudited) transition (unaudited) Â£'000 Â£'000 Â£'000 Current assets Cash and cash equivalents 1,350 - 1,350 Receivables 5 - 5 --------- -------- Total current assets 1,355 - 1,355 Non-current assets Investments 41 - 41 --------- -------- Total non-current assets 41 - 41 Total assets 1,396 - 1,396 ========= ======== Current liabilities Other payables 7 - 7 --------- -------- Total current liabilities 7 - 7 --------- -------- Total liabilities 7 - 7 Shareholders' equity Share capital 203 - 203 Share premium account 1,225 (20) 1,205 Profit and loss account (39) - (39) Other equity reserves - 20 20 --------- -------- Total shareholders' equity 1,389 - 1,389 --------- -------- Total liabilities and shareholders' equity 1,396 - 1,396 ========= ======== b) The financial information for the period ended 31 December 2005 has been presented on the basis of compliance with IFRS. A reconciliation of equity at 31 December 2005 is set out below. UK GAAP Effect of IFRS (unaudited) transition (unaudited) Â£'000 Â£'000 Â£'000 Current assets Cash and cash equivalents 1,279 - 1,279 Receivables 3 - 3 --------- -------- Total current assets 1,282 - 1,282 Non-current assets Investments - - - --------- -------- Total non-current assets - - - Total assets 1,282 - 1,282 ========= ======== Current liabilities Other payables 16 - 16 --------- -------- Total current liabilities 16 - 16 --------- -------- Total liabilities 16 - 16 Shareholders' equity Share capital 203 - 203 Share premium account 1,225 (20) 1,205 Profit and loss account (162) - (162) Other equity reserves - 20 20 --------- -------- Total shareholders' equity 1,266 - 1,266 --------- -------- Total liabilities and shareholders' equity 1,282 1,282 ========= ======== Adjustment in respect of share based payments On Admission to AIM on 14 February 2005 the Company granted options to its professional advisers to subscribe for 9,000,000 ordinary shares at 1p per share at any time up to the fifth anniversary of Admission. The adjustment represents the estimated fair value of the services received in consideration for the issue of the options, measured at the date of grant. The recognition of additional value in relation to the services received has been set against the Company's share premium account on Admission. 8. Copies of the interim statement Copies of the interim statement will be available from Smith & Williamson Corporate Finance Limited, 25 Moorgate London EC2R 6AY. This information is provided by RNS The company news service from the London Stock Exchange END IR DLLFLQXBZBBK

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