28 Sep 2010 13:30
LEGENDARY INVESTMENTS PLC
("Legendary" or the "Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2010
CHIEF EXECUTIVE'S STATEMENT
Review of Activities
The year under review was primarily spent disposing of old investments while at the same time preserving capital as far as possible. New investments were assessed but it was felt that few were of a profile suitable for your Company. A number of investments were made in UK listed companies. Overall, net losses on investments were £7,000. For the prior year, your Company had net gains on investments of £131,000.
Efforts were made to reduce costs. As a result administrative costs fell from £132,000 to £81,000. As part of the effort to support the company's financial position, the directors drew little or no salary. Post year end I waived the salary due to me (£13,750), and Zafar Karim has received only £7,000 of the £12,000 due to him.
As at 31 March, no recoveries of the debt owed by Echelon Wealth Management Limited had been made. As a consequence and the lack of clear information in this regard, the remainder of the debt, £63,000, has been written off. There was a non-cash charge of £123,000 recognised in the first half relating to options granted to the directors. Overall, for the year under review, your Company made net losses of £274,000. Net losses for the prior year amounted to £551,000.
Post the balance sheet date, the Company's prospects were assessed in light of the capital available for investment and the investment environment. It was decided that the Company needed to raise funds to be able to continue in business. In August 2010, a group of investors were found who agreed to provide to the Company a £30,000 loan facility bearing no interest and having no fixed payment term. At the time the shares of your Company were trading at 0.075p. The investors were granted 260 million warrants with an exercise price of 0.1p, or a 33% premium to the then share price. In order to minimise dilution of current shareholders, the directors cancelled 250 million options which were granted to them in May 2009. Thus funding was obtained for the Company's immediate needs with an increase in the fully diluted shares of 10 million shares or 1%.
As a result of the actions during the year, and post the balance sheet date, all of the Company's investments have been disposed of or written off, and the Company has funds for its immediate needs.
OUTLOOK AND GOING CONCERN
As explained in the Review of Activities, subsequent to the year end, the Company obtained a facility of £30,000 in exchange for the issue of warrants. These funds are sufficient to cover the Company's short-term cash flow requirements. Currently your Company is exploring various options, including discussions regarding various investments, to secure your Company's future in the best interest of the shareholders' and Company. Discussions are ongoing with various investors. Based on discussions conducted to date, the directors have a reasonable expectation that additional investment might be made into the Company, although there can be no certainty over this position.
Gavin Preston
Chief Executive
24 September 2010
The annual report and accounts and notice of AGM are being sent to shareholders today and will shortly be available at the Company's website www.legendaryinvestments.net.
For further information please contact:
Gavin Preston, Legendary Investments Plc 0207 205 4923
Gavin Burnell, Astaire Securities plc 0207 492 4750
PROFIT AND LOSS ACCOUNT
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| Note | 2010 £'000 | 2009 £'000 |
| Net (loss)/gain on investments held for trading |
| (7) | 131 |
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Net administrative expenses |
| (81) | (132) |
| Exceptional provision against debtors | 2 | (63) | (550) |
| Share option charge | 11 | (123) | - |
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| Operating loss |
| (274) | (551) |
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| Loss on ordinary activities before taxation | 1 | (274) | (551) |
| Tax on loss on ordinary activities | 4 | - | - |
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| Loss for the financial year | 13 | (274) | (551) |
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| Loss per share - basic and fully diluted (pence) |
5 | (0.04)p | (0.08)p |
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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 loss noted above.
All activities derive from continuing operations.
BALANCE SHEET
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| 2010 | 2009 |
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| Notes | £'000 | £'000 |
| Current assets
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| Financial assets held for trading | 6 | - | 8 |
| Debtors due within one year | 7 | 39 | 66 |
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| 39 | 74 |
| CREDITORS: amounts falling due within one year | 8 | (122) | (141) |
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| NET LIABILITIES |
| (83) | (67) |
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| Capital and reserves |
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| Called up share capital | 9 | 695 | 628 |
| Share premium account | 10 | 8,338 | 8,270 |
| Share option reserve |
| 123 | - |
| Profit and loss - deficit | 13 | (9,239) | (8,965) |
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| Equity Shareholders' DEFICITS | 13 | (83) | (67) |
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CASF FLOW STATEMENT
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| Notes | 2010 £'000 | 2009 £'000 |
| Net cash outflow from operating activities | 14 | (139) | (75) |
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Financing |
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| Increase in other loan |
| 4 | 69 |
| Issue of new ordinary shares |
| 135 | - |
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| DeCREASE in cash | 16 | - | (6) |
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NOTES TO THE FINANCIAL STATEMENTS
| 1 LOSS ON ORDINARY ACTIVITIES BEFORE TAX | 2010 £'000 | 2009 £'000 |
| Loss on ordinary activities before tax for the year is stated after charging: |
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| Auditor's remuneration - statutory audit | 12 | 17 |
| - Services relating to taxation | 7 | 9 |
| - Other services | 4 | 10 |
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| 2 EXCEPTIONAL PROVISION AGAINST DEBTORS | 2010 £'000 | 2009 £'000 |
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| Exceptional provision against balances held with brokers | 63 | 550 |
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As announced on 28 November 2008, the company received notification that Echelon Wealth Management Limited ("Echelon") was in provisional liquidation. On the basis of the lack of progress made in recovering amounts owed by Echelon, a provision has been taken against the outstanding amount of the monies due.
| 3 DIRECTORS
| 2010 Number | 2009 Number |
| Number of employees The average monthly number of employees, including directors, during the year was: | 2 | 2 |
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| £'000 | £'000 |
| Directors' emoluments Directors' fees | 26 | 47 |
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| 4 TAX ON LOSS ON ORDINARY ACTIVITIES
| 2010 £'000 | 2009 £'000 |
| Analysis of charge in the year: |
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| Current tax | - | - |
| Deferred tax | - | - |
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| - | - |
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| 4 TAX ON LOSS ON ORDINARY ACTIVITIES (continued)
| 2010 £'000 | 2009 £'000 |
| Factors affecting tax charge for year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK (28%). The differences are explained below: |
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| Loss on ordinary activities before tax | (274) | (551) |
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| Loss on ordinary activities multiplied by standard rate of corporation tax in the UK 28% (2009: 28%) | (77) | (154) |
| Expenses not deductible for tax purposes | - | 5 |
| Tax losses unutilised | 77 | 149 |
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| Current tax charge for year | - | - |
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As at 31 March 2010 the Company had losses of approximately £5.7m (2009: £5.6m) available to carry forward against future income arising from the same trade. 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.
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5 LOSS PER ORDINARY SHARE
| 2010 £'000 | 2009 £'000 |
| Loss for the financial year | (274) | (551) |
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| Average number of ordinary shares in issue ('000) | 683,917 | 627,667 |
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| Basic loss per share (pence) | (0.04)p | (0.08)p |
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| Fully diluted loss per share (pence) | (0.04)p | (0.08)p |
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The share options and warrants do not give rise to any dilution and therefore the fully diluted loss per share is equal to the basic loss per share.
| 6 FINANCIAL ASSETS HELD FOR TRADING
| 2010 £'000 | 2009 £'000 |
| Listed investments | - | 8 |
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| 7 Debtors: amounts due within one year | 2010 £'000 | 2009 £'000 |
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| Balances held with brokers | 652 | 616 |
| Less: provision for impairment | (613) | (550) |
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| 39 | 66 |
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Balances held with brokers represent the company's financial assets, upon which no interest is received.
There have been no movements in the provisions against debtors other than the charge for the year.
| 8 CREDITORS: amount falling due within one year
| 2010 £'000 | 2009 £'000 |
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Trade creditors | 13 | - |
| Accruals | 21 | 57 |
| Other loans | 88 | 84 |
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| 122 | 141 |
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Trade creditors and other loans represent the company's financial liabilities measured at amortised cost. Due to their short term nature, carrying value approximated to fair value.
The other loans bear no interest and are due within one year.
| 9 SHARE CAPITAL
| 2010 £'000 | 2009 £'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 |
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| 695,167,198 (2009: 627,667,198) ordinary shares of £0.001 each | 695 | 628 |
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On 28 May 2009, the Company placed 67,500,000 ordinary shares of nominal value 0.1p per share at 0.2p per share thereby raising £135,000.
| 10 SHARE PREMIUM
| Called up Share Capital £'000
| Share Premium Account £'000
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| At 1 April 2009 | 628 | 8,270 |
| Ordinary shares of 0.1 pence each issued | 67 | 68 |
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| At 31 March 2010 | 695 | 8,338 |
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On 28 May 2009 the Company issued 67,500,000 ordinary shares of nominal value 0.1p per share at a premium of 0.1p per share there by raising £135,000.
11 SHARE BASED PAYMENT
Legendary Investment Plc unapproved Share Option Plan
The Company has a share option plan under which it grants options and shares to certain directors and employees of the Company. If the options remain unexercised for a period after 10 years from the date of grant, the options expire.
The Company has unapproved and approved share option schemes in which the Directors participate. Details of Directors' outstanding share options as at the year ended 31 March 2010 are shown below.
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| Exercise | Number at | Number at |
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| Price | 31 March | 1 April |
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| per share | 2010 | 2009 |
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| Gavin Preston |
| 0.4p | 150,000,000 | - |
| Eaitisham Ahmed |
| 2p | - | 125,000,000 |
| Zafarullah Karim |
| 0.4p | 100,000,000 | 75,000,000 |
The options remain in force, as long as their holder remains an employee of the Company and are exercisable immediately.
The market price of the Company's ordinary shares ranged from a high of 0.235p to a low of 0.105p during the year and shares had been suspended up until 28 May 2009.
Since 31 March 2010 all options were cancelled (see note 18).
For the year ended 31 March 2010
Movements in ordinary share options outstanding
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| Weighted average exercise price |
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| Number | pence |
| 1 April 2009 | 200,000,000 | 1.4p |
| Granted during the | 175,000,000 | 0.4p |
| Cancelled in the year | (125,000,000) | 2p |
| At 31 March 2010 | 250,000,000 | 0.4p |
All options were exercisable at the end of the year.
During the year 75,000,000 share options were repriced from an exercise price of 0.8p to 0.4p.
There were no movements in the number of share options in issue in 2009.
11 SHARE BASED PAYMENT (continued)
Fair value
The fair value of the options is estimated at the date of grant using a Black-Scholes option pricing model that uses assumptions noted in the table below. No performance conditions were included in the fair value calculations.
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| Expected life of options (years) | 5 |
| Exercise price | 0.4p |
| Share price at grant date | 0.19p |
| Risk free rate | 2.84% |
| Expected share price volatility | 50% |
| Expected dividend yield | - |
| Estimate of % of options vesting | 100% |
| Assumed staff attrition | 0% |
| Fair value of options | 0.049p |
The company uses historical data to estimate option exercise and employee termination within the valuation model. Expected volatilities are based on implied volatilities as determined by simple average of a sample of listed companies base in similar sectors. The risk free rate for period within the contractual life of the option is based on the UK gilt yield curve at the time of the grant.
Other Information
The share based payment charged for the year was £123,000 (2009: £Nil).
| 12 PROFIT AND LOSS RESERVE
| 2010 £'000 | 2009 £'000 |
| At the start of the year | (8,965) | (8,414) |
| Loss for the year | (274) | (551) |
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| At the end of the year | (9,239) | (8,965) |
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| 13 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' DEFICIT | 2010 £'000 | 2009 £'000 |
| Opening shareholders' (deficit)/funds | (67) | 484 |
| Loss for the financial year | (274) | (551) |
| Share issue | 135 | - |
| Share option charge | 123 | - |
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| Closing shareholders' deficit | (83) | (67) |
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| 14 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES | 2010 £'000 | 2009 £'000 |
| Operating loss | (274) | (551) |
| Loss/(gains) on investments | 7 | (131) |
| Exceptional provision against debtors | 63 | 550 |
| Share option charge | 123 | - |
| Cash outflow on trading of current asset investments | 1 | (59) |
| (Decrease)/increase in creditors | (23) | 27 |
| (Increase)/decrease in debtors | (36) | 89 |
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| Net cash outflow from operating activities | (139) | (75) |
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| 15 ANALYSIS OF NET DEBT
| At 31 March 2009 £'000 | Cash flows £'000 | At 31 March 2010 £'000 |
| Other loan | (84) | (4) | (88) |
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| 16 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT | 2010 £'000 | 2009 £'000 |
| Decrease in cash in the year | - | (6) |
| Cash outflow from financing activities | (4) | (69) |
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| Net debt at start of year | (84) | (9) |
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| Net debt at end of year | (88) | (84) |
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17 FINANCIAL INSTRUMENTS
Interest rate risk
The Company had no floating rate financial liabilities at 31 March 2009 and 31 March 2010.
Borrowing facilities
At the year end the Company had no overdraft facility (2009: £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 events of the credit crunch led to extreme market conditions and a number of financial institutions failing. Following this event, the Directors have adopted the policy of diversifying the brokers that the Company utilises. The Directors believe that this reduces the credit risk to which the Company is exposed.
Liquidity risk
The Company manages liquidity risk by investing primarily in listed investments. The Directors believe that these factors limit the Company's exposure to liquidity risk.
17 FINANCIAL INSTRUMENTS (continued)
Market risk
The Company monitors its investments in listed investments on a regular basis, and takes action when it deems appropriate.
18 POST BALANCE SHEET EVENTS
Subsequent to the balance sheet date, all of the Company's investments were liquidated. In addition, £88,379 of other loans that was interest free and had no fixed term for repayment was waived.
An investor group provided a facility of £30,000 to the Company in return for 260,000,000 warrants with an exercise price of 0.1p per share. At the time of the grant, the Company's shares were trading at 0.075p per share.
In addition, subsequent to the provision of the facility and grant of warrants, 250,000,000 options held by the directors of the Company were cancelled as detailed below:
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Exercise | Number | Resultant Number as at |
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| Price per share |
| 23 September 2010 |
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| Gavin Preston | Cancelled | 0.4p | 150,000,000 | - |
| Zafarullah Karim | Cancelled | 0.4p | 100,000,000 | - |
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Basis of Preparation
The financial information in this announcement, which was approved by the Board on 24 September 2010, does not comprise statutory accounts for the purpose of Section 435 of the Companies Act 2006 for the years ended 31 March 2009 and 2010. It has been extracted from the Company's statutory accounts for the year ended 31 March 2010. Those statutory accounts will be delivered to the Registrar of Companies in due course.
The auditor's report on the financial statements for the year ended 31 March 2010, whilst unqualified, contains the following emphasis of matter in relation to going concern:
"Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note on page 15 of the financial statements concerning the company's ability to continue as a going concern. The company incurred a net loss of £274,000 during the year ended 31 March 2010 and, at that date, the company's current liabilities exceeded its total assets by £83,000. The Company is currently seeking new finance in order to fund its operations. The directors have a reasonable expectation that additional investment might be made into the Company, although there can be no certainty over this position. These conditions, along with the other matters explained on page 15 of the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments, if any, that would result if the company was unable to continue as a going concern."
The statutory accounts for the year ended 31 March 2009 have been delivered to the Registrar of Companies and included an audit report which was qualified under Section 237 (2) and (3) of the Companies Act 1985 as follows:
"Qualified opinion arising from limitation in audit scope
Except for the financial effects of such adjustments, if any, on the gain or loss on investments and the provision against balances held with brokers disclosed in the profit and loss account and the notes thereto, in our opinion:
- the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Company's affairs at 31 March 2009 and of its loss for the year then ended and have been properly prepared in accordance with the Companies Act 1985; and
- we have not obtained all the information and explanations that we considered necessary for the purpose of the audit; and
- we were unable to determine whether proper accounting records had been maintained."