Aeorema Comm. Regulatory News (AEO)

23 Mar 2007 12:46

Addworth PLC23 March 2007 Addworth plc23 March 2007 Final Results for the Year Ended 31 December 2006 Addworth plc ("Addworth" or the "Company"), the AIM listed active capitalinvestor today announces its final results for the year ended 31 December 2006. Highlights: •A £400,000 swing into our first year of profit of £81,514,before a positive share-based payment adjustment of £32,400 •Investments stated at cost of £1,277,342 increased in value to £2,084,694 •The year ended with cash balances of £743,714 •Flotation of The Core Business plc (AIM: CORE) •Realised gains of Myhome International plc (AIM: MYH) of £386,583 •Realised gains of EBTM plc (AIM: EBTM) of £252,104 •Establishment of Risk Transfer Ltd since year end •Creation and flotation of Oil and Gas Support Services plc (PLUS: OGSP) in January 2007 Executive Chairman, Mark Watson-Mitchell commented: "2006 was a great year for Addworth, signalled by our move into profit andincreased unrealised gains on our investments. Our strong portfolio of investments in fast-growing companies has been furtherimproved by the formation since year end of Risk Transfer Limited, a specialistinsurer, and Oil and Gas Support Services. We have a solid pipeline of additional investment opportunities under review,and have had a very encouraging start to 2007." For further information: Addworth Plc 020 7638 8750Mark Watson-Mitchell, Executive Chairman www.addworth.co.uk Nabarro Wells & Co Ltd 020 7710 7400Hugh Oram Aquila Financial Ltd 020 7202 2609Yvonne Fraser www.aquila-financial.com Chairman's Statement & Investment Review I am delighted to present my Chairman's Statement for the 12 month period ended31 December 2006. In 2006 we turned a loss of £319,272 in 2005 (before expenses arising fromshare-based payments of £900,000) into a pre-tax profit of £81,514 (beforeincome arising from share-based payments of £32,400). This turnarounddemonstrates the potential of our business model that not only provides anuplift on investments but - in the pursuit of increasing capital value andprofitability - is able to derive fee income from the provision of managementand financial assistance to our core investments. During the period under review our investments at cost increased to £1,277,342(2005: £933,039), whilst the overall market value of our investment portfolio asat 31 December 2006 was £2,084,694, showing a 22.8% increase compared to thesame date in the corresponding period (2005: £1,697,070). The year ended with cash balances of £743,714. This was partly due to therealisation of our shareholding in EBTM plc, which we floated in June 2005. Thedisposal of our stake in EBTM showed an increase of £252,104 on our initialinvestment of £95,000. Although we sold the whole of our shareholding we haveretained 9m warrants which are exercisable over the next three years at 3.5p pershare, which will, hopefully, provide us with even further profit. We traded out of the majority of our investment in Myhome International plc -the profit of which helped to fund the operation of Addworth in 2006. Werealised a gain of £386,583 on those shares, which compares with our originalinvestment of just £99,208. We still hold a block of Myhome shares, worthconsiderably more than the initial cost for the original stake. The future looksvery good for the franchise group. To fund our growing portfolio in early December we bolstered our cash balancesby a further £500,000 through the placing of 25m new shares, the bulk of whichwere subscribed for by prolific investor Nigel Wray. In addition, at the end of the year the majority of our outstanding warrantswere exercised by the Board, Bruce Rowan and Starvest Plc, thereby injecting newcash into the business and reducing any future drag existing warrants maypotentially have on the share price. Our substantial investmentsA proportion of the cash raised in December was used to invest in Oil and GasSupport Services plc (PLUS: OGSP), which was admitted to PLUS markets in earlyJanuary 2007. In 2006 we identified, researched and formed this company with thepurpose of acquiring investments in the oil and gas support services sector. Ourinitial investment of £125,000 is currently valued at £1,375,000. We continue toprogress discussions with a number of companies in this sector and look forwardto adding further value to our initial investment. In 2006 we also made our first acquisition - Partner Bryant Limited - a companyinvolved in the development of specific insurance products. This also includedthe establishment and funding of Risk Transfer Limited, which in turn invested£250,000 in establishing its own authorised insurance company in Guernsey inearly 2007. The acquisition of Partner Bryant Limited gives us control of someunique intellectual property and connections and the potential of the productthat Risk Transfer will initially be introducing to the insurance market.Addworth will be making a substantial commitment to aid Risk Transfer's futuredevelopment, including a possible introduction to the AIM market later in 2007. Our £60,000 investment in Branded Entertainment plc (PLUS: BREP) in 2005 wassubstantially increased when this company was introduced to PLUS markets inNovember 2006. Addworth has a 19.2% shareholding in this company and as at the31 December 2006 the value of this investment had risen significantly. Cheerful Scout plc (AIM: CLS) recently announced excellent figures and futurecontract news encouraging us to hold on firmly to our 4.76% stake in thecorporate programming and DVD production group. The Core Business plc (AIM: CORE) has rallied from the loss of the Ministry ofSound contract to form a strong relationship with Boots, with whom it is workingon the second stage of a consultancy agreement. It has also acquired the UKdistribution rights for a leading accessories brand developed by the Elitefashion modeling agency. In addition the company has signed a consultancyagreement with Cosnova, which owns Germany's fastest growing colour cosmeticsbrand 'essence'. Our investment in this company was worth £381,128 as at 31December 2006, compared to a cost of £220,362. This is a long term investment,which holds tremendous potential for expansion. We hold 23.66% of its equity. Although delighted at the Maypole Group plc (AIM: MPG) admission to AIM fromPLUS markets in April 2006, we have been very disappointed at the performance ofthe shares to date. However, we are pleased to see that this company isexpanding its hotel estate and we will look to retain our shareholding inMaypole for the near term. Our holding is 8.26%. We recently almost doubled our holding in the fast recovering NCI Vehicle Rescueplc (PLUS: NCI) to 6.61%. The company specialises in the provision of vehiclebreakdown and roadside assistance recovery. The cover, which is currentlyprovided to individual and business customers based in the UK, caters forvehicles used in the UK and Europe. The latest trading update from NCI looks fora turnaround from losses into a small profit for the last year and a greaterprofit for this coming year. As at 31 December 2006 our initial investment in Yellowcake plc (PLUS: YEL) of£90,000 was worth £252,750. Yellowcake announced at its AGM on 21 December 2006that its portfolio of investments in the uranium sector had risen at that timeby 112.3% since commencing investment at the end of September 2005. Furthermoreit informed shareholders that the Yellowcake portfolio had been re-positioned toconcentrate on emerging uranium exploration and development companies. Theperformance in the first quarter of this current year has reflected the surge inthe price of uranium and excites us to expect even greater value increases in2007. Our non-substantial investmentsWe continually seek to invest in undervalued smaller quoted companies and as atthe year end we had a portfolio of 28 shorter term investments. The poorperformance of the market in the second half of last year certainly had itsimpact. As is to be expected in the smaller cap sector, we have had ourselection of misses as well as hits. Shareholder supportWe are delighted to have key shareholder support from Bruce Rowan, Starvest plcand recently from Nigel Wray. Since the year end we have also been fortunate togain investment support from Richard Goulding and Simon Perree, who subscribedfor new shares and separately have both declared holdings just short of 5% inour equity. Board and staff appointmentsAs part of the Starvest plc investment in January 2006 we welcomed theappointment of Anthony Scutt to our board as a Non-executive Director. Anthonyis an experienced private investor and investment analyst as well as a directorof Agricola Resources plc, Beowulf Mining plc, Oracle Coalfields plc andStarvest plc and is making an invaluable contribution to our business. He hasalso joined the Board of Oil and Gas Support Services plc. Upon the departure of Robin Abeyesinhe, Rob Painting stepped up to take on therole of Finance Director enabling us to utilise his chartered accountancy andextensive corporate experience. During the year we also made three staff appointments expanding our expertiseand capability. New offices and websiteIn July 2006 we took on the lease to new offices in Carthusian Street near theBarbican in the City of London. After months of refurbishment and decoration inDecember last we eventually moved in and are now operating from these newoffices. They mean we are able to take early stage investments and grow themmore quickly as we can house some of our seed investments in the offices andprovide them with management and services. This also provides us with anadditional income stream. Currently we are providing administrative andmanagement services to Risk Transfer Ltd, Oil and Gas Support Services plc andYellowcake plc. We welcome visits from shareholders who may wish to visit our offices, but onlyat pre-arranged times. Please contact our office by e-mailingmark@addworth.co.uk or telephoning on 020 7638 8750 if you would like to come inand discuss your company. In line with the new office move we have also redeveloped our website to enableshareholders to stay up to date with the business as it evolves over theforthcoming period. We have invested in a new website at www.addworth.co.ukwhich provides constantly updated information on the Company and contains acomprehensive investor relations section, providing latest news and share pricedata. Going forwardWe are continually seeking new opportunities and currently are in the process offloating Gaming Ventures plc. We have invested £35,000 in this investor inmobile and online gaming companies, which will be floated on PLUS markets inearly April 2007. We look forward to a sizeable uplift on that initialinvestment. Further examples of current projects include initial investments inthe energy, film, gaming, construction and facilities management sectors, whichwe are looking to bring to the market in the next six months. As part of our strategy going forward in 2007 we are beginning to increase ourcorporate profile. Not only are we participating in investor exhibitions likeThe Master Investor Show 2007 held in March this year and The Growth CompanyInvestor Exhibition 2007 on 13 June - but we now also have our share pricequoted daily in the Financial Times, the Daily Telegraph, the Daily Mail and theEvening Standard. The current year has started well. We have found a fresh impetus has been givento our operations by working out of the new offices. There are a number of newinvestment opportunities to develop into either AIM or PLUS market quotedsituations. We foresee strong corporate growth from Oil and Gas Support Servicesplc as it quickly builds up into a group of service companies. We also look fora significant impact from the development of Risk Transfer Ltd as its nicheinsurance product breaks through into its appropriate markets. Following suchsuccess we will then seek to take it on to the AIM market. I would like to take this opportunity to thank our Board and staff who areworking extremely hard to fulfil our business goals of creating and addingworth. Finally we would like to thank all of our shareholders for their support. Mark Watson-MitchellExecutive Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 DECEMBER 2006 Notes 2006 Period ended 31 December 2005 As restated (note 5) £ £ Turnover 1, 2 3,915,712 275,568 Cost of sales (3,302,369) (320,633) ---------- --------- Gross profit/(loss) 613,343 (45,065) Administrative expenses (537,564) (288,938)Income/(expense) arising from share-basedpayment transaction 5 32,400 (900,000) ---------- --------- Total administrative costs (505,164) (1,188,938) ---------- --------- Operating profit/(loss) 6 108,179 (1,234,003) Interest receivable 7 5,735 14,731 ---------- --------- Profit/(loss) on ordinary activities beforetaxation 113,914 (1,219,272) Tax on profit/(loss) on ordinary activities 8 - - ---------- --------- Profit/(loss) for the financial year 16 113,914 (1,219,272) ========== ========= Earnings per share Basic earnings/(loss) per share 22 0.2p (2.6p) ========== ========= Diluted earnings/(loss) per share 22 0.1p (2.6p) ========== ========= All of the Group's operations are classed as continuing. There were no gains orlosses in the year other than those included in the above profit and lossaccount. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 DECEMBER 2006 Notes 2006 Period ended 31 December 2005 As restated £ £ Profit for the financial year 113,914 (1,219,272) ==========Prior year adjustment 1, 5 (900,000) ---------- Total gains and losses recognisedsince last annual accounts (786,086) ========== CONSOLIDATED BALANCE SHEETas at 31 DECEMBER 2006 Notes 2006 2005 As restated (note 5) £ £Fixed assetsIntangible fixed asset 9 49,998 -Tangible fixed assets 10 53,302 - ---------- --------- 103,300 - ---------- --------- Current assetsDebtors 13 64,554 70,501Investments 12 1,277,342 933,039Cash at bank 743,714 60,139 ---------- --------- 2,085,610 1,063,679 Creditors: amounts falling due within one year 14 (320,785) (112,067) ---------- --------- Net current assets 1,764,825 951,612 ---------- --------- Net assets 1,868,125 951,612 ========== ========= Capital and reservesCalled up share capital 15 583,333 285,000Share premium account 16 1,522,550 985,884Share based payment reserve 16 57,600 900,000Profit and loss account 16 (295,358) (1,219,272) ---------- --------- Equity shareholders' funds 18 1,868,125 951,612 ========== ========= The accounts were approved by the Board of Directors on 22 March 2007 and weresigned on its behalf by: M Watson-MitchellDirector COMPANY BALANCE SHEETas at 31 DECEMBER 2006 Notes 2006 2005 As restated (note 5) £ £ Fixed assetsTangible fixed assets 10 53,302 -Investments 11 300,000 - ---------- --------- 353,302 - ---------- ---------Current assetsDebtors 13 127,581 70,501Investments 12 1,277,342 933,039Cash at bank 743,714 60,139 ---------- --------- 2,148,637 1,063,679 Creditors: amounts falling due within one year 14 (570,785) (112,067) ---------- --------- Net current assets 1,577,852 951,612 ---------- --------- Net assets 1,931,154 951,612 ========== ========= Capital and reservesCalled up share capital 15 583,333 285,000Share premium account 17 1,522,550 985,884Share based payment reserve 17 57,600 900,000Profit and loss account 17 (232,329) (1,219,272) ---------- --------- Equity shareholders' funds 18 1,931,154 951,612 ========== ========= The accounts were approved by the Board of Directors on 22 March 2007 and weresigned on its behalf by: M Watson-MitchellDirector CONSOLIDATED CASHFLOW STATEMENTfor the year ended 31 DECEMBER 2006 Notes 2006 Period ended 31 December 2005 £ £ Net cash outflow from operating activities a (50,238) (1,229,097) Returns on investmentsInterest received 5,735 14,731 Capital expenditurePurchase of tangible fixed assets (53,302) - ---------- --------- Cash outflow before financing (97,805) (1,214,366) Financing Issue of ordinary share capital 785,001 1,270,884 ---------- --------- Increase in cash in the year 19 687,196 56,518 ========== ========= a Reconciliation of operating profit to net cash 2006 Period ended 31 outflow from operating activities December 2005 As restated (note 5) £ £ Operating profit/(loss) 108,179 (1,234,003) Share-based payment transaction (32,400) 900,000 Increase in current asset investments (344,303) (933,039) Decrease/(increase) in debtors 5,947 (70,501) Increase in creditors 212,339 108,446 ---------- --------- Net cash outflow from operating activities (50,238) (1,229,097) ========== ========= NOTES TO THE CONSOLIDATED ACCOUNTS for the year ended 31 DECEMBER 2006 1 Accounting policies The accounts have been prepared in accordance with applicable accountingstandards. Basis of accounting The accounts have been prepared under the historical cost convention. Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe company and all group undertakings. These are adjusted, where appropriate,to conform to group accounting policies. Acquisitions are accounted for underthe acquisition method and goodwill on consolidation is capitalised and writtenoff over twenty years from the year of acquisition. The results of companiesacquired or disposed of are included in the profit and loss account after or upto the date that control passes respectively. As a consolidated profit and lossaccount is published, a separate profit and loss account for the parent companyis omitted from the group financial statements by virtue of section 230 of theCompanies Act 1985. Turnover Turnover, which excludes VAT, represents amounts receivable during the year: • on sale of current asset investments; • from management fees earned providing services to certain companies in which the Group holds a short term investment; and • dividends receivable. Intangible fixed asset Intangible fixed assets represent Intellectual Property Rights in insuranceproducts developed by Partner Bryant Limited, a company acquired in December2006. The Intellectual Property Rights are being amortised over their estimateduseful economic life of five years. Fixed assets Tangible fixed assets Fixed assets are stated at cost less depreciation and less impairment. Depreciation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: Leasehold improvements - over the period of the leaseOffice furniture and equipment - 25% straight line Investments Fixed asset investments are stated at cost less any provision for impairment. Operating leases Rentals payable under the terms of the lease on the Group's new offices arecharged against profits on a straight line basis over the period of the lease. Current asset investments Current asset investments are stated at the lower of cost and net realisablevalue. Net realisable value is determined from mid-market prices for listedinvestments. For non listed investments net realisable value is determined bythe directors via a review of the related Group's financial position and futureprospects. Deferred taxation Deferred tax is provided for on a full provision basis on all timingdifferences, which have arisen but not reversed at the balance sheet date.Deferred tax assets are recognised to the extent that they are recoverable, thatis, on the basis of all available evidence, it is more likely than not thatthere will be suitable taxable profits from which the future reversal of theunderlying timing differences can be deducted. Any assets and liabilitiesrecognised have not been discounted. Share-based payments The Group has applied the requirements of FRS 20 "Share-based Payment" for thefirst time and represents a change in accounting policy on prior year. Theadoption of the new policy has been made by way of a prior year adjustment topreviously published results as though the revised policy has always beenapplied by the Group. FRS 20 has been implemented with effect from 29 October2004, the first date of the Group's prior period. The Group issues equity-settled share-based payments to certain employees.Equity settled share-based payments are measured at fair value (excluding theeffect of non-market-based vesting conditions) at the date of grant and thecharged is recognised immediately as there is no vesting period. At each periodend outstanding warrants are revalued on an intrinsic basis. 2 Segmental reporting 2006 Period ended 31 December 2005 £ £ Turnover can be analysed as follows: Management fees 61,250 17,837 Proceeds from disposal of current asset investments 3,852,200 257,731 Dividends receivable 2,262 - -------- --------- 3,915,712 275,568 ======== ========= The Group's activities are carried out in the United Kingdom. For the year ended31 December 2006 the Group only had one activity, that being an active capitalinvestor 3 Directors' emoluments 2006 2005 £ £ All Directors: Aggregate emoluments 229,852 1,009,521 ========== ========= Emoluments in respect of highest paid director: £ £ Emoluments 102,500 41,500Share-based payment - 657,000 ---------- --------- 102,500 698,500 ========== ========= 4 Employee information The average number of persons, including executive and non-executive Directors, employed by the Group during the year were as follows: 2006 Period ended 31 December 2005 Administration 7 4 ========== ========= Staff costs for the above persons were: £ £ Wages and salaries 279,849 103,438 Directors' fees 9,167 6,083 Social security costs 32,324 10,913 Share-based payment transaction - 900,000 ---------- --------- 321,340 1,020,434 ========== ========= 5 Income/(expense) arising from share based payment transaction In accordance with FRS 20, the Group has changed its policy for accounting for share-based payments. On admission to AIM in February 2005 the Group issued 27,000,000 warrants (20,000,000 of which were to the Directors) exercisable at any time or times from admission until the fifth anniversary of admission. These warrants have an exercise price of 0.5p. Upon admission to AIM on 3rd February 2005, the shares were traded at 5.0p. The Group's accounts for the period to 31 December 2005 have been restated by a charge of £900,000 to reflect the cost of the 20,000,000 warrants issued to the Directors, based on a net cost to the Group of 4.5p per warrant. During the year 18,000,000 of the 20,000,000 warrants granted to directors were exercised. At the date of exercise the Company's share price was 3.38p. The remaining 2,000,000 warrants were revalued on an intrinsic basis, using the Company's share price at 31 December 2006. 6 Operating profit/(loss) is stated after charging: £ £ Auditors' remuneration - audit 11,000 9,500 - non-audit services 7,435 4,500 - taxation services 1,000 - - other services Operating leases - land and buildings 8,682 - ========== ========= For the period ended 31 December 2005, £2,000 was paid to the auditors and £2,500 was paid to related companies of the auditors in respect of services provided in relation to the flotation of the Company and were charged against share premium. 7 Interest receivable £ £ Bank interest 5,735 14,731 ========== ========= 8 Taxation There was no corporation tax charge incurred due to the tax loss carried forward from the previous period. 2006 Period ended 31 December 2005 Tax reconciliation £ £ Profit/(loss) on ordinary activities before tax 108,179 (1,219,272) ========== ========= Profit/(loss)on ordinary activities multiplied by standard rate corporation tax in the UK of 19% (2005: 30%) 20,554 (365,782) Tax effects of: Expenses not deductible for tax purposes 6,055 21,390 Trading losses not utilised - 344,392 Trading losses utilised (26,609) - ---------- --------- Total current tax charge - - ========== ========= The Company has an unrecognised deferred tax asset of £120,819 (2005: £344,392) relating to trading losses not utilised. The deferred tax asset has not been recognised in the accounts due to the uncertainty surrounding its recoverability. The deferred tax asset can be recovered against suitable future trading profits. 9 Intangible fixed assets - Group £ £ Intellectual property rights 49,998 - ========== ========= Addworth invested £50,000 in Partner Bryant Limited in December 2006. The company had net assets of £2 cash with its intellectual property rights over an insurance product being valued at £49,998. Since the intellectual property rights over the insurance product was only acquired in December 2006, amortisation will commence in 2007. 10 Tangible fixed assets - Computer Leasehold Office Total Group and Company equipment improvements furniture and fittings £ £ £ £ Cost At 1 January 2006 - - - - Additions 11,321 31,905 10,076 53,302 -------- ---------- ------- ------- At 31 December 2006 11,321 31,905 10,076 53,302 -------- ---------- ------- ------- Depreciation At 1 January 2006 - - - - Charge for the year - - - - -------- ---------- ------- ------- At 31 December 2006 - - - - -------- ---------- ------- ------- Net book value At 31 December 2006 11,321 31,905 10,076 53,302 ======== ========== ======= ======= At 31 December 2005 - - - - ======== ========== ======= ======= All the capital expenditure was incurred at the Group's new offices. Since these offices were only occupied in December 2006, depreciation will commence in 2007. 11 Fixed asset investments - Company 2006 2005 £ £ Partner Bryant Limited 50,000 - Risk Transfer Limited 250,000 - ----------- ----------- 300,000 - =========== =========== The Group bought 100% of the issued share capital of Partner Bryant Limited and established Risk Transfer Limited as a 100% subsidiary in December 2006. 12 Investments - Group and Company 2006 2005 £ £ Investments 1,277,342 933,039 =========== =========== Current asset investments, as at 31 December 2006, comprise of investments in the following companies: Name of Company Agricola Resources plc NBCC plcArmour Group plc NCI Vehicle Rescue plcBranded Entertainment plc Novae Group plcCelsis International plc Oil and Gas Support Services plcCheerful Scout plc Petrolatina Energy plcConcorde Oil & Gas plc Petsome plcEBTM plc PLUS Markets Group plcEnergy Asset Management plc Revenue Assurance Services PlcFishworks plc Sexual Health Group plc (10% loan notes)Franchise Investment Strategies plc Sportingbet plcGledhow Investments plc St Helens Private Equity plcGolden Dragon Explorations Inc Sunvest incHalma plc The Core Business plcHitachi Capital (UK) plc The Innovation Group plcInnovative Software Direct plc Transense Technologies plcMaypole Group plc Twenty plcMears Group plc Yellowcake plcMyhome International plc At 31 December 2006 the aggregate market value of the investments was £2,084,694 (2005: £1,697,070), resulting in an unrecognised gain of £807,352 (2005: £764,031) as at 31 December 2006. If this gain were to be realised this would result in a potential tax charge of £242,260 (2005: £229,209) being incurred by the Company, based on a corporation tax rate of 30% (2005: 30%). Market value is based on mid-market price where applicable. Where no such price is available, the market value of the investment is determined by the directors via a review of the relative company's financial position and future prospects. As at 31 December 2006 the Group held 9,000,000 (2005: 9,000,000) warrants in respect of EBTM plc which are exercisable at 3.5p per ordinary share during a period of five years from flotation of EBTM plc. As at 31 December 2006 the Group held 4,600,000 (2005: 4,600,000) warrants in respect of Yellowcake plc which are exercisable at 2.0p per ordinary share during a period of five years from flotation of Yellowcake plc. As at 31 December 2006 the Group held 3,000,000 (2005: 3,000,000) warrants in respect of The Core Business plc which are exercisable at 6.0p per ordinary share during a period of five years from flotation of The Core Business plc. 13 Debtors 2006 2006 2005 Group and Group Company Company £ £ £ Trade debtors 19,054 19,054 - Other debtors 27,004 27,002 64,785 Prepayments and accrued income 18,496 18,496 5,716 Amounts owed by subsidiary - 63,029 - ----------- ---------- ---------- 64,554 127,581 70,501 =========== ========== ========== 14 Creditors: amounts falling due within one 2006 2006 2005 year Group Company Group and Company £ £ £ Bank overdraft - - 3,621 Trade creditors 232,983 232,983 38,670 Taxation and social security 12,940 12,940 5,840 Other creditors - - 40,000 Accruals and deferred income 74,862 74,862 23,936 Amounts owed to subsidiary - 250,000 - ---------- ---------- ---------- 320,785 570,785 112,067 ========== ========== ========== 15 Share capital 2006 2005 £ £ Authorised 200,000,000 ordinary shares (2005: 100,000,000) of 1,000,000 500,000 0.5p each ========== ========== Allotted and called up 116,666,666 ordinary shares (2005: 57,000,000) of 583,333 285,000 0.5p each ========== ========== At 31 December 2006, 2,000,000 (2005: 27,000,000) warrants, with an exerciseprice of 0.5p, were outstanding. As at 31 December 2006 8,000,000 (2005: nil)warrants, with an exercise price of 3p, were outstanding. As at 31 December 20068,855,000 (2005: 855,000) warrants, with an exercise price of 5p, wereoutstanding. All warrants can be exercised at any time during a five year periodfrom date of grant. At 31 December 2005 57,000,000 ordinary shares of 0.5p each had been allottedand called up. On 5 January 2006, the Company issued 8,000,000 ordinary shares of 0.5p each fora total consideration of £180,000. At the Annual General Meeting of the Company held on 30 June 2006, theauthorised share capital of the Company was increased to 200,000,000 ordinaryshares of 0.5p each. On 18 December 2006, the Company issued 25,000,000 ordinary shares of 0.5p eachfor a total consideration of £500,000. On 29 December 2006, the Company issued 1,666,666 ordinary shares of 0.5p eachfor a total consideration of £50,000 in consideration of 100% of the issuedshare capital of Partner Bryant Limited. On 29 December 2006, holders of 25,000,000 warrants exercised their warrantsupon which the Company issued 25,000,000 ordinary shares at 0.5p each for atotal consideration of £125,000. 16 Reserves - Group Share based Share premium Profit and payment reserve loss account £ £ £ At 31 December 2005 - as previously stated - 985,884 (319,272) Prior year adjustment (note 5) 900,000 - (900,000) --------- --------- --------- At 31 December 2005 - restated 900,000 985,884 (1,219,272) Retained profit for the year - - 113,914 Exercise of warrants (810,000) - 810,000 Premium on shares issued and placed - 556,666 - Share issue expenses - (20,000) - Share-based income (32,400) - - --------- --------- --------- At 31 December 2006 57,600 1,522,550 (295,358) ========= ========= ========= 17 Reserves - Company Share based Share premium Profit and payment reserve loss account £ £ £ At 31 December 2005- as previously stated - 985,884 (319,272) Prior year adjustment (note 5) 900,000 - (900,000) --------- --------- --------- At 31 December 2005 - restated 900,000 985,884 (1,219,272) Retained profit for the year - - 176,943 Exercise of warrants (810,000) - 810,000 Premium on shares issued and placed - 556,666 - Share issue costs - (20,000) - Share-based income (32,400) - - --------- --------- --------- At 31 December 2006 57,600 1,522,550 (232,329) ========= ========= ========= 18 Reconciliation of movements in equity 2006 2006 2005 shareholders' funds Group Company Group and company £ £ £ Profit/(loss) for the financial year - as previously stated 113,914 176,943 (319,272) Prior year adjustment - - (900,000) --------- --------- --------- Profit/(loss) for the financial year - restated 113,914 176,943 (1,219,272) Credit to equity for equity-settled share-based payments - - 900,000 Shares issued, net of expenses 834,999 834,999 1,270,884 Share-based income (32,400) (32,400) - --------- --------- --------- Net addition to shareholders' funds 916,513 979,542 951,612 Opening shareholders' funds 951,612 951,612 - --------- --------- --------- Closing shareholders' funds 1,868,125 1,931,154 951,612 ========= ========= ========= 19 Reconciliation of net cash flow to movement in net 2006 2005 funds £ £ Increase in cash in the year 687,196 56,518 Net funds at 31 December 2005 56,518 - --------- --------- Net funds at 31 December 2006 743,714 56,518 ========= ========= 20 Analysis of net funds At 31 December Cash flow At 31 December 2005 2006 £ £ £ Cash at bank and in hand 60,139 683,575 743,714 Bank overdraft (3,621) 3,621 - --------- -------- --------- 56,518 687,196 743,714 ========= ======== ========= 21 Lease commitments At 31 December 2006 the company had an annual commitment for a lease expiring in the following period: Land and Total buildings £ £ Within 2-5 years 22,500 22,500 ========= ======== 22 Earnings per share The basic earnings/(loss) per share is based upon a profit of £113,914 (2005: loss of £1,219,272) and the weighted average number of shares of 66,119,178 (2005: 46,344,989) in issue during the year. The diluted earnings/(loss) per share is based upon a profit of £113,914 (2005: loss of £219,272) and the weighted average number of shares of 93,837,192 (2005: 46,344,989) in issue during the year. 23 Financial instruments The Group's financial instruments comprise cash or investments that can be converted into cash within a short period of time that arises directly from its operations. The main purpose of these financial instruments is to provide profitability and working capital to the Group. The Group's policy is to obtain the highest rate of return on its cash and investment balances, subject to having sufficient resources to manage the business on a day to day basis and not exposing the Group to unnecessary risk of default. As permitted by FRS 13, short term debtors and creditors have been excluded from the disclosures. Interest rate risk - financial assets Financial assets comprise cash at bank, all of which is held in sterling. Cashat bank was earning interest at a floating rate of 2.75% p.a. at 31 December2006 (2005: 3.75%). Fair values of financial assets and financial liabilities Note 12 sets out a comparison of book value and fair value of the Group'scurrent asset investments. All other book values disclosed in respect of theGroup's financial assets and financial liabilities are deemed to reflect fairvalue. 24 Related party transactions The Directors of the Company have the following shareholdings in companies in which the Company has made a current asset investment, as disclose in note 12. Director Name of Number of Director Company ordinary shares of Company and warrants held M Watson-Mitchell EBTM plc 2,000,000 warrants - Oil and Gas 1,400,000 shares Yes Support Services plc Yellowcake plc 1,600,000 shares; Yes 1,000,000 warrants The Core Business plc 1,000,000 shares; Yes 500,000 warrants M Gilmour Oil and Gas 400,000 shares - Support Services plc Yellowcake plc 50,000 shares - The Core Business plc 200,000 shares; Yes 100,000 warrants R Painting Yellowcake plc 500,000 shares - Oil and Gas 500,000 shares - Support Services plc The Core Business Plc 760,000 shares; - 50,000 warrants A Collins Oil and Gas 250,000 shares - Support Services plc Yellowcake plc 400,000 shares; Yes 200,000 warrants The Core Business plc 225,000 shares; - 50,000 warrants A Scutt Oil and Gas 75,000 shares Yes Support Services plc During the year ended 31 December 2006, SQC Research charged the Group £21,156 (2005: £16,500) in respect of rent and office expenses and £17,625 (2005: £15,000) in respect of investor relation services. As at 31 December 2006, there was no amount outstanding by the Group (2005:£nil). M Watson-Mitchell is the principal of SQC Research. During the year ended 31 December 2006, the Group charged EBTM plc £27,906 (2005: £8,750) in respect of consultancy services, all of which was paid during the year (2005: £nil). During the year ended 31 December 2006, the Group charged Yellowcake plc £17,625 (2005: £8,750) for consultancy services and £1,113 in respect of recoverable expenses (2005: £nil). As at 31 December 2006 Yellowcake plc owed an amount of £1,113 (2005: £nil) to the Group. During the year ended 31 December 2006, the Group charged The Core Business plc £14,688 (2005: £nil) in respect of consultancy services and £2,364 (2005: £nil) in respect of recoverable expenses. As at 31 December 2006 The Core Business plc owed the Company £5,875 (2005: £nil). On the 27th December 2006 the Company charged Oil and Gas Support Services plc the sum of £11,750 (2005: £nil) in respect of services rendered during the flotation on PLUS of that company. As at 31 December 2006 Oil and Gas Support Services plc owed the Company £11,750 (2005:£nil). 25 Post balance sheet events On 13 February 2007 the Company issued 4,000,000 ordinary shares at 2.25p per share for a total consideration of £90,000. On 16 February 2007, the Company issued 20,000,000 ordinary shares at 2.25p per share for a total consideration of £450,000. Share issue costs of £18,000 were incurred. This information is provided by RNS The company news service from the London Stock Exchange