Crawshaw Group Regulatory News (CRAW)

20 Feb 2008 07:00

Felix Group PLC20 February 2008 Felix Group Plc Interim Results for the Six Months Ended 30 November 2007 HIGHLIGHTS • Post detailed business review, decision made to cease funding its trading subsidiary, Felix Corp Ltd. • Felix Corp Ltd went into administration in December • Investing strategy for Felix Group Plc approved by shareholders Chairman's Statement The interim financial results for the six months ended 30 November 2007 arereported upon under the International Financial Reporting Standards (IFRS) for the first time. The comparative results for the year to 31 May 2007 and six months to 30 November 2006 have been re-stated in accordance with IFRS principles. On 10 December, within the results of our business review, I advised that theGroup Board had been in discussions regarding a potential merger with a company operating in the same market sector. There was much synergy between the two companies and the Board believed a merger would have provided opportunities for cost savings and growth. Following due diligence on the company in question the prospective merger was terminated. The costs associated with this aborted transaction were £0.7m. The results of the trading subsidiary, Felix Corporation Limited ("Felix Corp")have been included in the consolidated financial results of the Group as Felix Group plc was in control of that company as at 30 November 2007. However, on 10 December 2007, it was announced that following a detailed review of the Group's business model the Company would cease to fund Felix Corp. Subsequently on 12 December 2007 it was announced that Felix Corp had enteredadministration and David Costley-Wood and Brian Green of KPMG LLP had been appointed Joint Administrators. Given the nature and the timing of this event, asset values in the Felix Corpbalance sheet have been included at their written-down values based on information subsequently provided by the Joint Administrators. Felix Group plc has effectively divested itself of its trading business and iscurrently being treated as an investing company as described below. Under the AIM Rules for Companies published by the London Stock Exchange plc(the "AIM Rules") where a company whose shares are traded on AIM divests itself of all or substantially all of its trading business activities it will be treated as an "investing company". Effectively a cash shell. Such a company must then state its investing strategy going forward and implement its investing strategy, to the satisfaction of the London Stock Exchange plc (the "London Stock Exchange"), within twelve months of Shareholders approving the investing strategy. After careful consideration the Board has determined that the investing strategywill be to acquire a trading business displaying one or more of the following characteristics: currently and historically profitable, cash generative and capable of organic growth or growth by acquisition. A resolution to approve the proposed investing strategy of the Group was duly passed at an EGM held on14 January 2008. It is intended that any such acquisition will be completedwithin 12 months of the date of the EGM. If no such acquisition is completed within this timescale, the London Stock Exchange will suspend the Company's quotation on AIM. The Board remains confident that an acquisition fulfilling the above criteriawill be completed within the required timescale. Richard S RoseExecutive Chairman Consolidated Income StatementSix months ended 30 November 2007 As re-stated As re-stated 6 Months 6 Months Year ended ended ended 30.11.07 30.11.06 31.05.07 Note £'000 £'000 £'000 Revenue 115 24 81Cost of sales (236) (68) (598)Gross loss (121) (44) (517) Administrative expenses (1,919) (1,783) (3,680)Aborted acquisition costs (712) - -Impairment of goodwill 1 (8,756) (648) (1,296)Asset write-downs in subsidiary 2 (1,419) - -Operating loss (12,657) (2,475) (5,493) Financial income 72 78 119Loss before taxation (12,585) (2,397) (5,374) Tax - - -Loss for the period (12,585) (2,397) (5,374) Loss per share - basic (pence) 3 (5.537) (1.320) (2.951) There are no recognised gains or losses other than those passing through theincome statement. Consolidated Balance SheetAs at 30 November 2007 As re-stated As re-stated As at As at As at 30.11.07 30.11.06 31.05.07 Note £'000 £'000 £'000Non-current assetsInvestments 135 250 250Intangible assets 1 - 9,480 8,756Tangible assets 170 1,621 901 305 11,351 9,907Current assetsStock 88 13 600Trade and other receivables 120 229 144Cash and cash equivalents 3,057 2,578 680 3,265 2,820 1,424 Total assets 3,570 14,171 11,331 Current liabilitiesTrade and other payables (898) (361) (239)Current tax liabilities (38) - (46)Obligations under finance leases (10) (10) (10) (946) ((371) (295)Non-current liabilitiesObligations under finance leases (43) (53) (48) Total liabilities (989) (424) (343) Net assets 2,581 13,747 10,988 EquityShare capital 2,407 1,827 1,827Other reserves - 191 -Share premium account 15,982 12,401 12,401Retained earnings (15,808) (672) (3,240)Total equity 2,581 13,747 10,988 Consolidated Cash Flow StatementSix months ended 31 May 2007 As re-stated As re-stated 6 Months 6 Months Year ended ended ended 30.11.07 30.11.06 31.05.07 £'000 £'000 £'000 Net cash outflow from operating activities (1,701) (1,741) (4,386)Investing Activities Interest received 76 80 124Interest paid (4) (2) (5)Purchases of property, plant and equipment (150) (1,150) (514)Purchases of intangible assets - (75) -Purchase of shares in investments - (250) (250)Net cash used in investing activities (78) (1,397) (645) FinancingProceeds on issue of shares 4,161 5,187 5,187Repayment of obligations under hire purchase (5) (5) (10)Net cash generated from financing activities 4,156 5,182 5,177 Net increase in cash and cash equivalents 2,377 2,044 146 Cash and cash equivalents and the beginning of the period 680 534 534 Cash and cash equivalents at the end of the period 3,057 2,578 680 Note to the cash flow statementLoss for the period (12,657) (2,475) (5,493) Adjustments for:Depreciation on property, plant and equipment 85 23 89Loss on disposal of property, plant and equipment 4 7 25Write-down in carrying value of investments 115 - -Impairment of intangible fixed assets 8,756 648 1,296Write-down in assets in subsidiary 1,419 - -Share option charge 17 67 285Operating cash flows before movements in working capital (2,261) (1,730) (3,798) Decrease in stocks - - (587)(Increase)/decrease in receivables (91) 184 270Increase/(decrease) in payables 651 (195) (271)Net cash outflow from operating activities (1,701) (1,741) (4,386) Notes: Note 1 - Impairment of goodwill Goodwill at cost of £12.9m was created when Felix Group plc acquired Felix Corpin March 2004. This cost (less provision for impairment) was included in the consolidatedbalance sheet and had a book value of £8.8m at 31 May 2007. A detailed review of the Group's business model was announced on 30 November2007, which subsequently resulted in the Group withdrawing funding to Felix Corp and Joint Administrators being appointed on 11 December 2007. As a result of the appointment of administrators to this subsidiary the Boardhas decided to fully impair the value of goodwill and have included it at £nil in the consolidated balance sheet at 30 November 2007. Note 2 - Asset write-downs in subsidiary Following the announcement of the review of the Group's business model on 30November 2007 and appointment of administrators to Felix Corp referred to in note 1, the asset values of ths entity have been included in the consolidated balance sheet at their realisable values on a break-up basis. The book values have been written down by £1.4m from a going concern to break-up basis. Note 3 - Loss per share The calculation of basic loss per share is based on the following weightedaverage number of shares in issue during the each period. 6 Months 6 Months Year ended ended ended 30.11.07 30.11.06 31.05.07 Weighted average number of shares 227,312,646 181,456,040 182,055,486 A copy of the full interim report will be sent to all shareholders today andwill be available from the Company's registered office: Manchester BusinessPark, 3000 Aviator Way, Manchester M22 5TG. It will also be published on theCompany's website www.felixgroupplc.com For further information please contact: Media Enquiries:Susanna VoyleCelia Gordon ChuteTulchan Communications +44 (0) 20 7353 4200 Other Enquiries:Mark DickensonSimon BrownLandsbanki Securities (UK) LimitedNominated Adviser & Broker +44 (0) 20 7426 9000 This information is provided by RNS The company news service from the London Stock Exchange