23 Sep 2008 07:00
LEGENDARY INVESTMENTS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2008
HIGHLIGHTS
* Record profit (before and after tax) of £524,000 (2007: £Nil).
* Company net asset position restored, with £484,000 of net assets (2007: £(40,000)).
In the year under review, the Company assessed investments, both on and off-market, where the investee companies might benefit from the Company's hands-on investment process in which the investees are assisted in certain areas such as product development and marketing. No suitable candidates were found.
In order to utilise available assets, certain medium term investments were made in listed equity securities. The Board is pleased to report that the realisation of certain of these trading investments resulted in gains of £633,000. This compares with net losses on investments of £93,000 for the previous year. This year's gains clear the shareholders' deficit of £40,000 and return the Company to positive net assets of £484,000.
Administrative expenses amounted to £110,000. This compares with administrative expenses of £77,000 for last year (see note 2). Last year, the Chief Executive waived his salary of £35,000, whereas this year, in light of the Company's performance, he drew his salary.
Overall, your Company had profit (before and after tax) of £524,000 (2007: £Nil). The balance sheet is also stronger with cash of £711,000 as at the year end.
OUTLOOK
The Board looks forward to building on this year's success. The Company will continue to assess investments, both on and off-market, and where appropriate, invest.
For further information please contact:
PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2008
| | Note | 2008 £’000 | 2007 £’000 |
| Net gain/(loss) on investments held for trading | | 633 | (93) |
| Net administrative (expenses)/income | 2 | (110) | 93 |
| | | | |
| Gross profit | | 523 | - |
| Interest receivable | | 1 | - |
| | | | |
| Profit on ordinary activities before taxation | 1 | 524 | - |
| Tax on profit on ordinary activities | 4 | - | - |
| | | | |
| Profit for the financial year | 10 | 524 | - |
| | | | |
| Earnings per share - basic and fully diluted | 5 | 0.08p | (0.0p) |
| | | | |
A separate statement of recognised gains and losses has not been prepared as the Company has no recognised gains or losses in the current or prior period other than the profit noted above.
All activities derive from continuing operations.
BALANCE SHEET
As at 31 March 2008
| | | 2008 | 2007 |
| | Notes | £’000 | £’000 |
| Current assets | | | |
| Financial assets held for trading | 6 | 3,125 | 75 |
| Cash at bank and in hand | | 711 | 4 |
| | | | |
| | | 3,836 | 79 |
| CREDITORS: amounts falling due within one year | 7 | (3,352) | (119) |
| | | | |
| NET ASSETS/(LIABILITIES) | | 484 | (40) |
| | | | |
| Capital and reserves | | | |
| Called up share capital | 8 | 628 | 628 |
| Share premium account | | 8,270 | 8,270 |
| Profit and loss reserve - deficit | 10 | (8,414) | (8,938) |
| | | | |
| Equity Shareholders’ FUNDS/(DEFICIT) | 11 | 484 | (40) |
| | | | |
CASH FLOW STATEMENT
For the year ended 31 March 2008
| | Notes | 2008 £’000 | 2007 £’000 |
| Net cash outflow from operating activities | 12 | (140) | (77) |
| returns on investments and servicing of finance | | | |
| Interest received | | 1 | - |
| CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS | | | |
| Payments to acquire current asset investments | | (7,590) | (199) |
| Receipts form current asset investments | | 8,479 | 132 |
| | | | |
| NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES | | 889 | (67) |
| | | | |
| NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING | | 750 | (144) |
| Financing | | | |
| Director’s loan | | (43) | 105 |
| | | | |
| INCREASE/(DeCREASE) in cash | 14 | 707 | (39) |
| | | | |
NOTES TO THE PRELIMINARY RESULTS
Accounting convention
The accounts have been prepared in accordance with applicable accounting standards and under the historical cost convention, modified by the revaluation of investments.
Impairment of asset values
Fixed assets are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable or as otherwise required by relevant accounting standards.
Shortfalls between the carrying value of fixed assets and their recoverable amounts, being the higher of net realisable value and value-in-use, are recognised as impairments. Impairments of revalued assets, except those caused by a clear consumption of economic benefit, are recognised in the statement of total recognised gains and losses until the carrying amount reaches depreciated historic cost. All other impairment losses are recognised in the profit and loss account
Financial instruments
Financial assets and financial liabilities are recognised on the company's balance sheet when the company has become a party to the contractual provisions of the instrument.
All investments are initially recognised at cost, being the fair value of the consideration given.
After initial recognition, investments that are classified as held for trading are measured at fair value. Gains or losses on investments held for trading are recognised in income.
For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted bid prices at the close of business on the balance sheet date. Unlisted investments have been based on cost less impairment as there is insufficient information to enable a valuation to be performed.
Deferred taxation
Deferred tax is recognised in respect of differences between the Company's taxable profits and its results as stated in the financial statements that have originated but not reversed at the balance sheet date.
Deferred tax assets are only recognised where there is an expectation that they will result in a reduction in corporation tax payments in the foreseeable future.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the accounting date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account.
Going concern
The directors have carried out cost projections for the company and compared these with the availability of finance. Based on this, the Directors have formed a judgement, at the time of approving the accounts, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the accounts.
| 1. PROFIT ON ORDINARY ACTIVITIES BEFORE TAX | 2008 £’000 | 2007 £’000 | |
| Profit on ordinary activities before tax for the year is stated after charging/ (crediting): | | | |
| | | | |
| | Auditor’s remuneration - statutory audit | 14 | 12 |
| | - Services relating to taxation | 3 | 7 |
| | - Other services | 4 | 7 |
| | Waiver of loan | - | (170) |
| | | | |
| 2. NET ADMINISTRATIVE EXPENSES/(INCOME) | 2008 £’000 | 2007 £’000 | |
| | | | |
| Administrative expenses | 110 | 77 | |
| Waiver of loan | - | (170) | |
| | | | |
| | 110 | (93) | |
| | | | |
| 3. DIRECTORS | 2008 Number | 2007 Number |
| Number of employees The average monthly number of employees, including directors, during the year was: | 2 | 2 |
| | | |
| | £’000 | £’000 |
| Directors’ emoluments Aggregate emoluments | 47 | 12 |
| | | |
| Emoluments of highest paid director: Remuneration | 35 | 12 |
| | | |
Emoluments amounting to £Nil (2007 - £35,000) have been waived by 1 director.
| 4. TAX ON PROFIT ON ORDINARY ACTIVITIES | 2008 £’000 | 2007 £’000 | |
| Analysis of charge in the year: | | | |
| Current tax | - | - | |
| Deferred tax | - | - | |
| | | | |
| | - | - | |
| | | | |
| Factors affecting tax charge for year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below: | | | |
| Profit on ordinary activities before tax | 524 | - | |
| | | | |
| Profit on ordinary activities multiplied by standard rate of corporation tax in the UK 30% (2007: 30%) | 157 | - | |
| Expenses not deductible for tax purposes | 9 | - | |
| Tax losses utilised | (166) | - | |
| | | | |
| Current tax charge for year | - | - | |
| | | | |
As at 31 March 2008 the Company had corporation tax revenue losses of approximately £5.2m (2007: £5.6m) available to carry forward against future income. No deferred tax asset is recognised in respect of these losses due to the uncertainty as to the utilisation of the losses in the foreseeable future.
Future tax charges will be dependent on the split of profits for tax purposes as between revenue and capital items, and the utilisation of losses incurred to date.
| 5. EARNINGS PER ORDINARY SHARE | 2008 £’000 | 2007 £’000 |
| Profit for the financial year | 524 | - |
| | | |
| Average number of ordinary shares in issue ('000) | 627,667 | 627,667 |
| | | |
| Basic profit per share (pence) | 0.08p | 0.0p |
| | | |
| Fully diluted profit per share (pence) | 0.08p | 0.0p |
| | | |
The share options and warrants do not give rise to any dilution and therefore the fully diluted profit per share is equal to the basic profit per share.
| 6. FINANCIAL ASSETS HELD FOR TRADING | 2008 £'000 | 2007 £'000 |
| Listed investments | 3,125 | 75 |
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| 7. CREDITORS: amount falling due within one year | 2008 £'000 | 2007 £'000 |
| Trade creditors | 3,307 | - |
| Accruals | 30 | 61 |
| Directors' loan (note 16) | 15 | 58 |
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| 3,352 | 119 | |
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Trade creditors and directors' loans represent the Company's financial liabilities measured at amortised cost. Due to their short term nature, carrying value approximated to fair value.
| 8. SHARE CAPITAL | 2008 £'000 | 2007 £'000 |
| AUTHORISED 3,000,000,000 ordinary shares of £0.001 each | 3,000 | 3,000 |
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| ALLOTTED, CALLED UP AND FULLY PAID | ||
| 627,667,198 ordinary shares of £0.001 each | 628 | 628 |
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9. Share options
The Company has unapproved and approved share option schemes in which the Directors participate. Details of Directors' outstanding share options are shown below:
| | | Exercise | Number at | Number at |
| | | Price | 31 March | 1 April |
| | | (per share) | 2008 | 2007 |
| | | | | |
| Eaitisham Ahmed | | 2p | 125,000,000 | 125,000,000 |
| Zafarullah Karim | | 0.8p | 75,000,000 | 75,000,000 |
The options remain extant, as long as their holder remains an employee of the company. All share options are exercisable at 31 March 2008.
The Market price of the Company's ordinary shares ranged from a high of 00.27p to a low of 00.06p during the year and was 00.12p on 31 March 2008. Since 31 March 2008 to the date of this report, no options have been granted or exercised.
There have been no movement in the share options in the current or prior year. The company has not recognised a charge in respect of these options as it would not be material to the financial statements.
| 10. PROFIT AND LOSS RESERVE | 2008 £'000 | 2007 £'000 | |||
| At 1 April 2007 | (8,938) | (8,938) | |||
| Profit for the year | 524 | - | |||
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| At 31 March 2008 | (8,414) | (8,938) | |||
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| 11. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS/(DEFICIT) | 2008 £'000 | 2007 £'000 |
| Opening shareholders' deficit | (40) | (40) |
| Profit for the financial year | 524 | - |
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| Closing shareholders' funds/(deficit) | 484 | (40) |
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| 12. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES | 2008 £'000 | 2007 £'000 |
| Operating profit | 524 | - |
| Gains on investment | (633) | 93 |
| Waiver of director's loan | - | (170) |
| Decrease in creditors | (31) | - |
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| Net cash outflow from operating activities | (140) | (77) |
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| 13. ANALYSIS OF NET (DEBT)/ FUNDS | | At 31 March 2007 £’000 | Cash flows £’000 | At 31 March 2008 £’000 | |
| Cash at bank and in hand | | 4 | 707 | 711 | |
| Director’s loan | | (58) | 43 | (15) | |
| | | | | | |
| | | (54) | 750 | 696 | |
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| 14. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) | 2008 £’000 | 2007 £’000 | |
| Increase/(decrease) in cash in the year | 707 | (39) | |
| Cash inflow/(outflow) from financing activities | 43 | (105) | |
| Non-cash movement | - | 170 | |
| Net debt at 31 March 2007 | (54) | (80) | |
| | | | |
| Net funds/(debt) at 31 March 2008 | 696 | (54) | |
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15. FINANCIAL INSTRUMENTS
Interest rate risk
Floating rate financial liabilities of £Nil (2007: £Nil) bear interest at rates based on LIBOR plus 1-1.5%. Cash at bank earns interest at floating rates based on LIBOR.
Borrowing facilities
At the year end the company had no overdraft facility (2007: £Nil).
Currency risk
Due to the short term nature of trading in foreign currency investments, the company has limited exposure to currency risk.
Credit risk
The Directors believe that due to the nature of the Company's debtors, primarily brokers, credit risk is limited.
Liquidity risk
The Company manages liquidity risk by investing primarily in listed investments. In addition, the Chief Executive has historically provided to the Company sufficient short term funding to cover its needs. The Directors believe that these factors limit the Company's exposure to liquidity risk.
Market risk
The Company monitors its investments in listed investments on a regular basis, and takes action when it deems appropriate.
16. RELATED PARTY TRANSACTIONS
During the year the Company received funding from the Chief Executive and incurred expenditure on his behalf. As at the balance sheet date, the amount advanced by the Chief Executive to the Company amounted to £14,597 (2007: £57,890). This sum is interest free and there are no fixed terms for repayment. The maximum balance that was outstanding during the year was £90,890 (2007: £176,448).