Earthport Regulatory News (EPO)

30 Mar 2006 07:01

Earthport PLC30 March 2006 30 March 2006 INTERIM RESULTS For the six months ended 31 December 2005 * Strategic review completed during the period and benefits from its implementation starting to flow in the second half * Net Liabilities reduced by 60% to £3.9m (30 June 2005: £9.7m as restated) * £4.4m equity and £0.6m convertible loan stock raised during the period * Follow-on funding of up to £6.2m available * Turnover up 5% to £395,000 compared to the second half of last year * Operating losses reduced by 26% * Pre-tax profit of £468,000 compared to a loss of £2.8m for the comparative period, after an exceptional gain on the reorganisation of debt of £2.6m * Basic earnings per share of 4.4p (2004: loss 38.5p) Mike Harrison, Executive Chairman of Earthport, commented: "We are now beginningto see the benefits of the strategic review and the refocusing andreorganisation of the Company. This is reflected in the agreements that havebeen entered into over the last few months, which are now producing revenuegrowth." We are optimistic that the second half of the year will show an improvement overthe first half both in terms of revenue and operating contribution. We arecontinuing to identify opportunities for further agreements which should enhanceboth our distribution channels and our customer base." For further information: Mike Harrison Chairman - Earthport plc +44 20 7220 9700Mark Ashurst - Canaccord Adams +44 20 7518 2777Lulu Bridges/Paul Dulieu - Tavistock Communications +44 20 7920 3150 EARTHPORT PLC Interim results Six months ended 31 December 2005 Earthport plc------------------------------------------------------------------------------- INTERIM RESULTSFOR THE SIX MONTHS ENDED 31 DECEMBER 2005 STATEMENT FROM THE BOARD OF DIRECTORS This report covers the period from 1 July 2005 to 31 December 2005, a period ofrefocussing and reconstruction. Michael Harrison, Chief Executive, joined theCompany in May 2005 and immediately undertook a strategic review of the companyand its activities, which was announced in December 2005. This identified fourmain aims: in the short term - restructuring the balance sheet and raisingadditional funds; and in the longer term - building a sales and marketing team;upgrading the technical and operational aspects of the business including theenlargement of its banking network; and indentifying specific market sectors totarget. Results Turnover in the first half of the year increased 5% compared to the second halfof last year. However turnover compared to the first half of last year reducedby 23% to £395,000 (2004: £511,000). The increase over the second half of lastyear, reflects the progress the company has made in replacing income that waslost in the second half of last year. The Board is pleased to report that theoperating loss before exceptional items for the period has reduced by 26% to£1,774,000 (2004: £2,401,000) as a result of a significant reduction inadministrative expenses for the period. An exceptional gain arising on thereorganisation of debt amounted to £2,570,000 (2004: £Nil) and has enabled theGroup to report a profit before tax of £468,000 (2004: loss £2,793,000). Basicearnings per share are 4.4p (2004: loss 38.5p). The headline loss per share,which excludes exceptional items and reflects the capital restructuring for thecomparative periods has improved to 19.6p (2004: loss 38.5p). Balance sheet restructuring The capital and debt restructuring of the Group's balance sheet was key to thecontinuation and improvement of the Company's status both in terms of attractinginvestors and assuring customers of the longevity of the business. Capital restructuring At an Extraordinary General Meeting held on 29 July 2005, the shareholdersapproved a reorganisation of the share capital by: a. consolidating and converting the issued share capital of 638,040,880 ordinary shares of 2.5p each into new consolidated shares of 190p each at a rate of 1 new consolidated share of 190p each for 76 existing ordinary shares of 2.5p each;b. sub-dividing and converting each consolidated share of 190p into 24 deferred shares of 7.5p each and 1 new ordinary share of 10p;c. consolidating and converting the 4,069,472 authorised but unissued ordinary shares of 2.5p each into new ordinary shares of 10p each at the rate of 1 new ordinary share of 10p each for every 4 authorised but unissued ordinary shares of 2.5p each. This regularised the Company's capital structure and enabled your board to issueequity as part of its funding strategy. Debt restructuring As previously announced, £3.9m of secured loans and unsecured finance leaseshave been settled for £1m cash and £0.25m in loan notes. The cash element wasfinanced by a £1.25m secured loan facility, repayable over five years, thusreducing obligations by £2.6m and extending the maturity of this debt. Duringthe period, £0.2m of convertible loan notes were converted into equity. Inaddition, the Group has adopted FRS 25 Financial instruments: disclosure andpresentation, which requires the valuation of the convertible loan notes toreflect their underlying debt and equity components. As a result a further £2.4mof debt has been treated as equity prior to its formal automatic conversion onor before 30 June 2006. Fundraising The raising of sufficient funds to enable the Company to complete its moveto profitability was an important focus for the period. During the periodEarthport has raised £4.4m in equity and £0.6 in convertible loan notes, throughthe issue of stock to existing and new investors. Further follow-on funding ofup to £6.2m has been secured in the form of warrants as set out in note 10.Warrants for £1.5m maturing on 31st March 2006 have been taken up, furtherstrengthening the balance sheet. We are very pleased with the progress made in restructuring the balance sheetduring the period. This will enable us to further develop the Company and giveus the flexibility to achieve the aims set out in the strategic review andoutlined in more detail below. Litigation A thorough review was carried out and all outstanding litigation (as outlined inthe circular to shareholders dated 5 July 2005) has been resolved. Sales and marketing Earthport aims to establish itself as the independent utility of choice in themoney movement marketplace. Commencing in October 2005, sales and marketingteams have been recruited with the target of achieving this aim. The strategic review identified that the Company needed to focus its efforts onmarket sectors that could benefit from Earthport's banking network and proventechnology. The sales team is concentrating on providing infrastructure paymentservices to the following key sectors: send money home services, foreignexchange, payment service providers and the corporate market and had signedbusiness by end December. Earthport's global banking network, comprises 35 local territory accounts whichprovide the ability to collect funds in those 35 countries and pay out funds inmore than 190 territories, up from 120 territories at the year end. This bankingnetwork, combined with Earthport's proprietary software, which manages thenetwork, makes up the Universal Payments Network (UPN) which provides Earthportwith its unique position in the marketplace. The review also identified the products to be included in Earthport's portfolio.We believe that the new marketing team has the relevant skills to reposition thebusiness as the money movement utility of choice and we are establishing theCompany as one that is "easy to do business with" and providing the quality ofservice required by customers at the right price. As a founder member of the International Association of Money Transfer Networksand with its membership of the UK Money Transfer Association, Earthport iscommitted to servicing the Money Transfer Operators and their consumers. 'Sendmoney home' remittances are estimated to total more than double official aid todeveloping countries and Earthport can provide a secure and cost effectivealternative to the traditional service provided by the banks. In parallel, the Earthport is concentrating on the Foreign Exchange Sectorpositioning the Company in this core aspect of global money movements. The review also identified new market segmentswhich contain organisations whichhave a need to make and receive multiple international payments. A new marketing plan has been established to increase awareness of Earthport andits offerings to the payment services market. This includes promotion atinternational money movement conferences through sponsorship, exhibiting andproviding key-note speakers. A major review of pricing and margins was also undertaken to ensure we arecompetitive in our chosen markets, whilst being able to make a respectablemargin. In addition, we began work on the Earthport channels strategy, identifyingpartners and agents who have access to customer bases needing payment services.We have been successful in signing our first channel partners, who have alreadybrought Earthport new customers requiring payment services. The Earthport website has been rebuilt and was launched on 23 December 2005. Itreflects the new stance of the Company as the Money Movement Utility of Choice. Technical This has been a busy period for the software development team. A complete reviewof all of Earthport's software and hardware systems was carried out. This review focused on ensuring that Earthport's systems were fully compatiblefor simple integration with new customers' systems, can be easily modified inresponse to new market opportunities and can readily process projectedtransaction volumes. Our commitment to becoming an integral part of our clients' paymentinfrastructure means that all Earthport's banking technology is beingstandardised on the latest generation of IBM's WebSphere application servers togive ultra-high availability, scalability and security. ensurePay The Company has entered into a reseller agreement to service the existingclients of ensurePay with the aim of further building the customer base in therapidly growing sector of on-line gaming and other selected market segments on anon exclusive basis. Outlook We are now beginning to see the benefits of the strategic review and therefocusing and reorgoanisation of the Company. This is reflected in theagreements that have been entered into over the last few months, which are nowproducing revenue growth. We are optimistic that the second half of the year will show an improvement overthe first half both in terms of revenue and operating contribution. We arecontinuing to identify opportunities for further agreements which should enhanceboth our distribution channels and our customer base. Earthport plc------------------------------------------------------------------------------- CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the period ended 31 December 2005 Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 As restated Notes £'000 £'000 £'000 TURNOVER 395 511 888Administrative expenses (2,169) (2,912) (6,744) ------------- ------------- -------------OPERATING LOSS (1,774) (2,401) (5,856) Exceptional income 3 2,570 - - ------------- ------------- -------------Profit / (LOSS) on Ordinary Activities before Interest and taxation 796 (2,401) (5,856) Interest payable and similar charges 4 (328) (392) (1,203) ------------- ------------- -------------Profit / (loss) on ordinary activities before taxation 468 (2,793) (7,059)Taxation - - - ------------- ------------- -------------PROFIT /(LOSS) ON ORDINARY ACTIVITES AFTER TAXATION 468 (2,793) (7,059) ============= ============= =============Earnings / (loss) per share - basic 5 4.4p (38.5p) (96.7p) - diluted 5 3.5p (38.5p) (96.7p) ============= ============= ============= Earthport plc------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETat 31 December 2005 Unaudited Unaudited Unaudited 31 Dec 2005 31 Dec 2004 30 June 2005 As restated As restated Notes £'000 £'000 £'000 FIXED ASSETS Tangible assets 153 262 185Investments 6 160 - - ------------- ------------- ------------- 313 262 185 ------------- ------------- -------------CURRENT ASSETS Debtors 7 1,513 501 1,351Cash at bank and in hand 1,485 15 8 ------------- ------------- ------------- 2,998 516 1,359 CREDITORS: amounts failing within one year 8 (6,331) (8,528) (10,250) ------------- ------------- -------------NET CURRENT LIABILITIES (3,333) (8,012) (8,891) TOTAL ASSETS LESS NET CURRENT LIABILITIES (3,020) (7,750) (8,706) CREDITORS: amounts falling due after more than one year 9 (893) (1,335) (1,010) ------------- ------------- -------------NET LIABILITIES (3,913) (9,085) (9,716) ------------- ------------- -------------CAPITAL AND RESERVES Called up share capital 10 25,572 22,076 23,898Share premium account 11 33,169 29,827 29,827Other reserve 11 11,471 9,318 11,131Profit and loss account 11 (74,125) (70,306) (74,572) ------------- ------------- -------------EQUITY SHAREHOLDERS' FUNDS (3,913) (9,085) (9,716) ============= ============= ============= Earthport plc------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWSfor the period ended 31 December 2005 Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 Notes £'000 £'000 £'000 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 12 (3,246) (965) (3,253) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (10) (392) (769) ------------- ------------- -------------NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (10) (392) (769) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible assets (14) (53) (97)Trade investment (160) - - ------------- ------------- -------------NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (174) (53) (97) NET CASH OUTFLOW BEFORE FINANCING (3,430) (1,410) (4,119) FINANCING Issue of ordinary share capital 4,216 300 300Net movement in borrowings 13 691 1,102 4,129Capital element of finance lease rental payments - - (325) ------------- ------------- -------------NET CASH INFLOW FROM FINANCING 4,907 1,402 4,104 ------------- ------------- -------------INCREASE / (DECREASE) IN CASH IN THE PERIOD 13 1,477 (8) (15) ============= ============= ============= Earthport plc------------------------------------------------------------------------------- NOTES TO THE INTERIM RESULTSfor the period ended 31 December 2005 1. FUNDAMENTAL ACCOUNTING CONCEPT This statement has been prepared on the assumption that the Group is a goingconcern. When assessing the foreseeable future, the directors have looked at a period oftwelve months from the date of approval of this interim report. Whilstconsiderable progress has been made in securing funding to date, the follow-oninvestment in the form of warrants, outlined in note 10, is contingent upon theability of the Group to generate future sales. The uncertainty as to the timingof the future growth in sales, together with the potential impact on thefollow-on funding arrangements require the directors to consider the Group'sability to continue as a going concern. Notwithstanding this uncertainty, thedirectors believe that the Group has demonstrated progress in achieving itsobjective of positioning the Group as an infrastructure supplier to the globalpayments industry, and therefore consider that it is appropriate to prepare theGroup's financial statements on a going concern basis, which assumes that theCompany is to continue in operational existence for the foreseeable future. The financial statements do not include any adjustment that would result shouldthe Group not generate sufficient revenues, free cash flow or raise additionalfinance through further injections of debt or equity. It is not practical toquantify the adjustments that might be required, but should any adjustments berequired they may be significant. 2. ACCOUNTING POLICIES Basis of preparationThe interim financial statement is prepared under the historical cost conventionand on the same basis as the audited accounts for the year ended 30 June 2005,except that the Group has implemented the provisions of Financial ReportingStandard 25 Financial instruments: disclosure and presentation. Appropriateadjustments have been made in respect of prior years (see note 11). Compound financial instrumentsThe Group has adopted FRS25 Financial instruments: disclosure and presentation.Convertible loan notes are treated as debt where the conversion terms of thenote state that conversion is at the choice of the noteholder. Certain notesconvert automatically into equity upon maturity. In such cases the discountedvalue of the interest income is treated as debt, with the balance of theprincipal taken to equity and accounted for in other reserves. Upon conversion,the appropriate transfer is made from reserves to ordinary share capital. 3. EXCEPTIONAL INCOME 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 Debt restructuring 2,570 - - ============= ============= ============= On 14 December 2005, the Company announced the completion of the restructuringof its secured loans and unsecured finance leases, whereby £3.9m of debt wassettled for £1.3m, financed with a new £1.25m secured loan facility, repayableover five years. 4. INTEREST 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 As restated Interest payable (325) (392) (771)Loan arrangement fees and other finance costs (3) - (432) ------------- ------------- ------------- (328) (392) (1,203) ============= ============= ============= 5. EARNINGS PER SHARE The calculation of the basic, diluted and headline earnings / (loss) per shareis based on the following data 6 months 6 months 12 months ended ended endedWeighted average number of shares 31 Dec 2005 31 Dec 2004 30 June 2005 Number Number Number As restated As restatedWeighted average number of shares in issue for basic and headline earnings / (loss) per share 10,732,949 7,263,376 7,297,775Dilutive effect of share options/warrants 6,888,055 - -Weighted average number of shares in issue for diluted earnings / (loss) per share 17,621,004 7,263,376 7,263,376 ============= ============= ============= The weighted average number of shares in issue for the comparative periods hasbeen adjusted to reflect the reorganisation of share capital, approved byshareholders at the Extraordinary General Meeting held on 29 July 2005. 6 months 6 months 6 months 6 months ended ended ended endedEarnings 31 Dec 2005 31 Dec 2005 31 Dec 2004 31 Dec 2004 Basic and Basic and Basic Diluted diluted diluted £'000 £'000 £'000 £'000 As restated As restated Profit / (loss) attributable to shareholders 468 468 (2,793) (7,059)Plus: interest on convertible loan stock - 154 - -Less: exceptional income (2,570) - - - ------------- ------------- ------------- -------------Headline loss (2,102) 622 (2,793) (7,059) ============= ============= ============= ============= 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 Number Number Number As restated As restated Basic earnings / (loss) per share 4.4p (38.5p) (96.7p)Diluted earnings / (loss) per share 3.5p (38.5p) (96.7p)Headline loss per share (19.6p) (38.5p) (96.7p) 6. INVESTMENTS At At At 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 Investment 160 - - ============= ============= ============= The Company holds 0.6 % of Altair Financial Services International plc, anunquoted company specialising in the area of prepaid debit cards. 7. DEBTORS At At At 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 Trade debtors 265 123 142Other debtors 1,180 198 1,022Prepayments and accrued income 68 180 187 ------------- ------------- ------------- 1,153 501 1,351 ============= ============= ============= Included in other debtors is an amount in respect of unpaid share capital of£875,000 (2004: £Nil). 8. CREDITORS: amounts falling due within one year At At At 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 As restated As restated Secured loans 357 1,154 1,287Unsecured loans 445 175 195Trade creditors 1,564 1,607 1,745Other creditors 31 - -Other taxation and social security 1,950 1,953 2,278Accruals and deferred income 1,313 1,600 2,116Finance leases and hire purchase - 1,427 1,509Convertible loan notes 671 612 1,120 ------------- ------------- ------------- 6,331 8,528 10,250 ============= ============= ============= On 9 December 2005, secured creditors of £3.9m were settled for £1m in cash and£250,000 7% unsecured loan note. The settlement has been financed by a newsecured facility of £1,250,000 amortising over five years, provided by GeneralCapital Venture Finance Limited and Michael Gerson Finance plc. At 31 December 2005, the convertible loan notes in issue were subject to thefollowing terms: Series Principal Conversion Terms Maturity Date Value £'000 No. shares per £'000 £1 loan note No. 1 2004 600 1.053 30 June 2006 600No. 3 2004 1,000 2.395 31 March 2006 NilNo. 1 2005 400 2.395 31 May 2006 16No. 1 2005 1,102 2.395 30 June 2006 55 ------------- ------------- 3,102 671 ============= ============= All notes have a coupon of 10% payable in arrears in cash or shares at theoption of the Company. The No.1 Loan Notes 2004 are convertible into shares atthe option of the note holder and therefore have been treated as debt under FRS25 Financial instruments: disclosure and presentation. The remaining loan notesconvert into shares at the maturity date, at the option of the Company. Thediscounted value of the interest out flows has been included in creditors:amounts falling due within one year, with the balance of the principal taken toequity in other reserves (see note 11). 9. CREDITORS: Amounts falling due after more than one year At At At 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 Secured loans 893 1,335 1,010 ============= ============= ============= A £1.25m loan facility has been provided by General Capital Venture FinanceLimited and Michael Gerson Finance plc. The facility is repayable over 5 yearsat an IRR of 15% and is secured by means of an all monies mortgage debenture. 10. SHARE CAPITAL At At At 31 Dec 2005 31 Dec 2004 30 June 2005Issued Number Number NumberNumber of ordinary shares in issue 25,129,174 565,133,738 638,110,352Nominal value of each ordinary share 10p 2.5p 2.5p Number of 7.5p deferred shares in issue 307,449,810 105,963,216 105,963,216 £'000 £'000 £'000 Ordinary share capital 2,513 14,129 15,951Deferred share capital 23,059 7,947 7,947 ------------- ------------- ------------- 25,572 22,076 23,898 ============= ============= ============= At an Extraordinary General Meeting held on 29 July 2005, the shareholdersapproved a capital reorganisation whereby the 638,040,880 ordinary shares of2.5p each in issue, were consolidated and converted into new consolidated sharesof 190p each at a rate of 1 consolidated share of 190p each for 76 ordinaryshares of 2.5p each. Each consolidated share of 190p was then sub-divided into24 deferred ordinary shares of 7.5p each and 1 new ordinary share of 10p each. Following the consolidation and sub-division, the issued share capital comprised8,395,275 new ordinary shares of 10p each and 307,449,810 deferred shares of7.5p each. In the period ended 31 December 2005, a further 16,733,899 shares have beenallotted, of which 14,573,065 were allotted for cash consideration of£4,435,000; a further 1,610,752 were allotted in satisfaction of creditorsamounting to £605,000 and 550,082 upon conversion of £229,695 of convertibleloan stock. As part of the Company's funding strategy, warrants have been issued to securefollow-on funding on the following terms: Maturity date Number of shares Strike price £'000 31 March 2006 4,046,172 36p - 41.8p 1,52630 April 2006 2,400,000 36.0p 86430 June 2006 4,410,458 35p - 41.8p 1,62531 October 2006 6,343,533 31.5p - 41.8p 2,179 During the period, warrants over a further 2.8m shares have been granted withmaturity dates ranging from 30 June 2006 to 31 December 2007 with strike pricesfrom 31.5p to 105p The maximum number of shares which could be issued upon the conversion ofconvertible loan notes is £5.3m. Together with rights subsisting at 30 June2005, the fully diluted share capital, excluding employee options, is 52.5mshares. 11. OTHER RESERVES At At At Share Other Profit and premium Reserves loss account account At 1 July 2005 (as previously stated) 29,827 9,200 (74,626)Prior period adjustment - 1,931 54 ------------- ------------- -------------At 1 July 2005 (as restated) 29,827 11,131 (74,572)Profit for the period - - 468Premium on shares issued 3,342 - -Equity component of loan notes issued - 548 -Conversion of loan notes - (208) (21) ------------- ------------- ------------- 33,169 11,471 (74,125) ============= ============= ============= The prior period adjustment reflects the adoption of FRS 25 Financialinstruments: disclosure and presentation, whereby the equity component of thoseconvertible loan notes (see note 8), which convert automatically into equity,has been included in other reserves. The impact of the adoption of FRS 25 Financial instruments: disclosure andpresentation is as follows: Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 Increase in profit / reduction in loss for the period 127 - 54 ============= ============= =============Increase in equity shareholders' funds at the end of the period 2,430 117 1,985 ============= ============= ============= 12. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2005 31 Dec 2004 30 June 2005 £'000 £'000 £'000 Operating loss (1,774) (2,401) (5,856)Depreciation of tangible fixed assets 46 181 301(Increase) / decrease in debtors (172) 192 261(Decrease) / increase in creditors (1,346) 1,063 2,041 ------------- ------------- -------------Net cash outflow from operating activities (3,246) (965) (3,253) ============= ============= ============= 13. ANALYSIS AND RECONCILIATION OF NET DEBT Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended endedReconciliation of cash flow to net debt 31 Dec 2005 31 Dec 2004 30 June 2005 As restated As restated £'000 £'000 £'000 Increase /(decrease) in cash 1,477 (8) (15)Cash inflow from increase in debt finance (691) (1,102) (3,804) ------------- ------------- -------------Decrease / (increase) in net debt resulting from cash flows 786 (1,110) (3,819)Conversion of loans into share capital 230 - 875Issue of compound financial instruments 445 118 1,985Debt restructuring 2,570 - -Other non-cash movements 180 - (163) ------------- ------------- -------------Decrease / (increase) in net debt in period 4,211 (992) (1,122)Net debt at the beginning of the period (as restated) (5,093) (3,971) (3,971) ------------- ------------- -------------Net debt at the end of the period (882) (4,963) (5,093) ============= ============= ============= At 30 June 2005 Cash Flow Other non cash At 31 DecemberAnalysis of net debt As restated movements 2005 £'000 £'000 £'000 £'000Cash 8 1,477 - 1,485Secured and unsecured loans (2,472) (383) 1,159 (1,696)Finance lease obligations (1,509) 293 1,216 -Convertible loan notes (1,120) (601) 1,050 (671) ------------- ------------- ------------- ------------- (5,093) 786 3,425 (882) ============= ============= ============= ============= The non-cash movement in the period relates to unpaid interest rolled intoprincipal outstanding, the debt restructuring, conversion of loans into equityand movements in respect of compound financial instruments. 14. PUBLICATION OF NON-STATUTORY ACCOUNTS The results for the six months ended 31 December 2005 and 2004 are unaudited andunreviewed by the auditors. The results for the year ended 30 June 2005 do notconstitute statutory financial statements as defined in section 240 of theCompanies Act 1985, but have been derived (prior to restatement) from the fullaudited financial statements for the year ended 30 June 2005. The report of theauditors on the financial statements for the year ended 30 June 2005 wasqualified. This information is provided by RNS The company news service from the London Stock Exchange