MIRA.L Regulatory News (MIRA)

29 Sep 2006 07:04

Yoomedia PLC29 September 2006 YooMedia plc / Ticker: YOO / Market: AIM / Sector: Media 29 September 2006 YooMedia plc ('YooMedia' or 'the Company') Interim Results YooMedia plc, the AIM traded interactive media and gaming group, announces itsinterim results for the six months ended 30 June 2006. Overview • Period of reconstruction aimed at rationalising the business, strengthening balance sheet and re-positioning product offering • Groundwork in place to secure an improved performance in the second half • Financial restructuring programme initiated to alleviate debt and the cost of financing such a facility and to support remaining stages of re-structuring • Business focus moved from operating own-branded businesses into offering a portfolio of products and services to major brands • Results reflect the steps taken to re-position the business • Loss before interest, depreciation, tax and amortisation of £2.2m (2005: £1.1m) on a turnover, excluding gambling winnings of £10m (2005: £11.2m) • Operating costs reduced by 17% to £5.1m CHAIRMAN'S STATEMENT As indicated in previous announcements and trading updates, this has been aperiod of dramatic reconstruction for the Company aimed at rationalising thebusiness, strengthening its balance sheet and re-positioning YooMedia's productoffering to capitalise on growing opportunities within the interactive mediamarket. Much groundwork has been done to secure an improved performance in thesecond half, and the Directors are confident that the process of transformationis important to the mid and long-term interests of the Company and shareholders.The results for the first six months of 2006 reflect the steps taken torestructure and re-position YooMedia's business in the UK, along with the impactof rapid changes and developments within its core markets, with the aim ofplacing it on the path towards profitability. Business Transformation In order to improve the balance sheet, the Board initiated a financialrestructuring programme. This was aimed at alleviating its debt, predominantlycaused by problems in the Games & Gambling division in 2005, and the cost offinancing such a facility which amounted to interest and similar charges of £1mfor the first half of 2006 (2005: £0.2m). This financial initiative included theraising of £6m through a convertible loan with two US funds, and a share placingof £1.3m with an existing institutional investor, announced in May 2006.Latterly, new banking arrangements and a credit facility were agreed with MentorMarketing & Investments, designed to support the remaining stages of there-structuring. In parallel with the financial re-structuring process, YooMedia has continued toexecute the commercial and operational transformation of its business. It hasmoved its business focus away from operating own-branded businesses, intooffering a portfolio of products and services to major brands that are seekingto exploit the opportunity of interactive transactions with users of digitalmedia. This transformation and progress is highlighted by our relationship withFreeview. In 2005 the Yooplay channel on Freeview offered pay-to-play games,whereas in 2006 we have used the same bandwidth to provide a data-castingservice for the Freeview platform. This business line now has approximately£0.9m of revenue per annum and has deals with Virgin Radio, Gemstar, Sony'stvtv, and Electra Entertainment. Games & Gambling YooMedia expects the online and interactive gambling sector to transform in thenext two years as a consequence of changes in legislation and investment bymajor operators. In order to exploit the new opportunities that will arise, wehave re-positioned our gambling business as a service provider and operator forthird party brands. In line with this we signed an agreement with Gala Group, which will see theAvago channel coming off air in the autumn of 2006, to be replaced by aGala-branded channel on our bandwidth and platform. This agreement, along withthe revised terms agreed with William Hill in late 2005, has meant a reversal inperformance of the division which I am happy to report delivered a gross profitcontribution of £0.7m in the first half of 2006, compared with a loss for thesame period last year. On 29th June we also signed a £2m agreement with Catalyst Media Group plc toprovide them with an interactive digital head-to-head gaming platform andvarious games licences. Revenues generated through this contract will bereflected as earned in the year end results. Prospects remain strong for this business, and the recently announced agreementwith Playboy is evidence of the strength of the competitive offering YooMediahas in this sector. We are still at a relatively early stage and have some wayto go, but I believe the quality and increasing regularity of contract winsbodes well for the future. The Directors would however like to note that YooMedia does not operate "call TV" services using premium rate telephone numbers or any service that takes betsfrom outside the UK. It is therefore not subject to the gambling legislationwhich has been recently highlighted in the US in particular. Dating As part of the strategic review of the YooMedia Dating division, the Companyreached an agreement with the 25% minority shareholders in YooMedia Dating toacquire their shares for a consideration of 19,230,770 shares in YooMedia plc. Afurther consideration of £500,000, also payable in YooMedia plc shares, will bepaid on certain performance criteria being met. The dating business, which operates two branded services - Dateline and Avenueswas a tale of two halves. The Dateline business has achieved continued growth inthe competitive online dating sector, although the pre-dominantly offlinebusiness of Avenues has been impacted by competition from the online sector. Netrevenues declined to £1.89m (2005: £2.51m) and both businesses are nowundergoing re-structuring. Although not core to the Company's activities, theBoard is conscious of the value of the dating division, which will be realisedeither from in-house development or disposal at an appropriate time. Interactive Services The Interactive Services division won significant new business in the first halfof 2006 and continued to deliver innovative interactive services for itsexisting clients. The contract for the NHS Direct interactive channel wasrenewed for a further two years and new services were launched for clients suchas Budweiser, Boots and Nestle. The "red button" interactive TV sector has seena reduced level of investment compared with 2005, although audience usagecontinues to be strong. Whilst the interactive marketing business has seen strong growth in line withincreased overall investment in online marketing, changes in the Sky electronicprogramme guide have had an impact on a number of our clients in the period andthis contributed to a reduction in gross margin from broadcast-relatedactivities. Turnover for the period was £4.5m (2005: £5.8m). Management During the first half of 2006 there were a number of changes to the Board. TheFinance Director, Robin Robbins, stepped down for health reasons, and EddieAbrams, YooMedia's Strategy and Development Director, is now managing thefinance function in the interim. Leo Noe, non-executive Director, also steppeddown from the board but maintains an active interest in the Company as a majorshareholder. Recent events We continue to make headway and since the period end, YooMedia has entered ajoint venture agreement with SGI Limited, a company backed by entrepreneur PeterShalson who currently controls three channels on Sky, into which it has vestedthe rights to YooMedia's time stamped SMS messaging system and the televisionrights to the Tringo game. It is intended that, together with our new partners,these rights will be developed and exploited in the UK market andinternationally. Outlook The actions taken so far in 2006, have contributed significantly in transformingthe nature of YooMedia's activities and developing a profitable business. Whilstrisk remains, the Directors are nevertheless confident that the revised strategyfor the business is correct and that YooMedia has significant opportunities forgrowth in its core markets. It is unlikely that the full year result for 2006will be ahead of market expectations considering the extent of thetransformation undertaken, however the foundations for future have been laid. Finally I'd like to thank all those involved with the business for their hardwork and support, which has been key in the implementation of our re-structuringprogramme and positioning the Company as a leading interactive content andservices provider. Michael SinclairExecutive Chairman29 September 2006 Profit and loss account for the six months to 30 June 2006 Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 30 June 2006 30 June 2005 December 2005 Total Notes £000's £000's £000's Turnover 2 31,233 48,527 85,580Cost of sales (28,352) (43,471) (76,890)Gross profit 2,881 5,056 8,691Administrative costs (5,088) (6,162) (11,641) Earnings before Interest, Tax, Depreciation, 4 Amortisation and Exceptionals (2,207) (1,106) (2,950) Depreciation 4 (817) (991) (2,128) Amortisation and Impairment of goodwill and 4 deferred development costs (1,961) (1,292) (2,998) Exceptional items 3 - (1,074) (2,376) Operating loss (4,985) (4,463) (10,452)Interest receivable and similar income 1 51 50Interest payable and similar charges (991) (222) (775)Loss on ordinary activities before taxation (5,975) (4,634) (11,177)Tax recoverable on ordinary activities - - -Loss on ordinary activities after taxation (5,975) (4,634) (11,177)Equity minority interest - 77 23Loss for the financial period (5,975) (4,557) (11,154) Loss per share- basic 5 (1.14p) (0.99p) (2.37p)- diluted 5 (1.09)p (0.97p) (2.32p) The above results are derived entirely from continuing operations There were no other gains or losses recognised in the period There is no difference between the loss on ordinary activities before taxationand the loss for the periods stated above, and their historical costequivalents. Balance sheet as at 30 June 2006 Unaudited Unaudited Audited Six months Six months Year ended 31 ended 30 ended 30 December June 2006 June 2005 2005 Notes £000's £000's £000'sFixed assetsGoodwill 42,594 45,161 43,980Other intangible assets 1,886 1,848 1,925Tangible assets 3,014 3,235 2,737Investments 1,493 - 13 48,987 50,244 48,655Current assetsDebtors 7,767 6,562 7,634Cash at bank and in hand 401 498 117 8,168 7,059 7,751Creditors - Amounts falling due within one year (14,763) (11,970) (15,076)Net current liabilities (6,595) (4,910) (7,325)Total assets less current liabilities 42,392 45,334 41,330Creditors - Amounts falling due after more than one year 6 (6,522) (3,000) (1,816)Provisions for liabilities 7 (1,731) (1,058) (1,834)Accruals and deferred income (1,977) - (881)Net assets 32,162 41,276 36,799 Capital and reservesCalled -up share capital 12,786 11,620 12,060Share premium account 76,490 73,029 75,521Shares to be issued 281 281 281Capital redemption reserve 455 455 455Profit and loss account (57,850) (44,412) (51,875)Equity shareholders' funds 8 32,162 40,973 36,442Equity minority interest - 303 357Total capital employed 8 32,162 41,276 36,799 Cash flow statement for six months to 30 June 2006 Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 December June 2006 June 2005 2005 Notes £000's £000's £000'sContinuing activitiesOperating loss (4,985) (4,463) (10,452)Depreciation charge 817 991 2,127Amortisation and impairment of goodwill 1,386 1,117 2,323Amortisation and impairment of deferred development costs 575 175 675Exceptional impairment of development costs - - 680UITF 25 provision for National Insurance on share options - (71) 1,116UITF 17 charge on grant of share options - 865 -Movement in provisions (103) (895) (1,307)(Decrease) / increase in other non-current assets - - (13)Increase / (decrease) in debtors (133) (502) (1,618)(Decrease)/Increase in creditors 737 (4,169) (1,340)(Decrease)/Increase in deferred income 377 - (526)Net cash inflow/(outflow) from operating activities (2,085) (6,953) (8,334) Returns on investments and servicing of financeInterest received 1 51 50Interest paid (965) (161) (705)Interest element of finance lease rental payments (26) (61) (70)Net cash (outflow)/inflow from returns on investments and servicing of finance (990) (171) (725)Taxation - 27 -Capital expenditure and financial investmentPayments to acquire investments (5) (12) (12)Payments to acquire intangible assets (536) (572) (1,878)Payments to acquire tangible fixed assets (1,095) (721) (1,808)Net cash outflow from capital expenditure and financial investment (1,636) (1,305) (3,698)AcquisitionsPurchase of subsidiary undertakings - (13) (264)Net cash received with subsidiary undertaking - 23 (2)Net cash (outflow)/inflow from acquisitions and disposals - 10 (266)Net cash outflow before management of liquid resources and financing (4,711) (8,392) (13,023) Management of liquid resourcesIncrease in short term deposits with banks - - 6,417FinancingIssue of ordinary share capital and convertible debt 7,695 50 2,981Loans and finance lease acquired with subsidiary undertaking - - 650Increase / (Decrease) in loans (1,000) 1,000 -Repayment of capital element of finance leases and hire purchase contracts (146) (158) (371)Net cash inflow from financing 6,549 892 3,260Increase/(Decrease) in net cash 1,838 (7,500) (3,346) Reconciliation to net funds Notes Unaudited Audited Unaudited Six months Year ended Six months ended ended 30 June 31 December 30 June 2006 2005 2005 £000's £000's £000's Increase/(Decrease) in net cash 1,838 (7,500) (3,346)Increase in short-term deposits with banks - - (6,417)Convertible debt, loans and finance leases acquired (6,000) (650) (650)Repayment of capital elements on finance leases 146 158 371Repayment of loans 1,000 - -Movement in net (debt)/funds for the period (3,016) (7,991) (10,042)Net (debt)/ funds at commencement of period (4,997) 5,045 5,045 Net debt at end of period (8,013) (2,947) (4,997) Analysis of net funds At 1 January Convertibles Cash flow At 2006 and Loans 30 June 2006 £'000 £000's £000's £000's Cash at bank and in hand 117 - 284 401Overdrafts (3,488) - 1,554 (1,934) Net cash and cash equivalents (3,371) - 1,838 (1,533)Debt due within one yearFinance leases (160) - 146 (14)Debt due after one yearLoans (1,000) - 1,000 -Convertible debt - (6,000) - (6,000)Finance leases (466) - - (466) Total (4,997) (6,000) 2,984 (8,013) Notes to the financial information for the six months to 30 June 2006 1 Basis of Preparation Unless stated otherwise, the interim financial information has been prepared onthe basis of the accounting policies set out in the Group's financial statementsfor the year ended 31 December 2005. The financial information contained in this interim report is unaudited. It doesnot constitute statutory accounts as defined in section 240 of the Companies Act1985. Copies of the statutory accounts for the year to 31 December 2005 havebeen filed with the Registrar of Companies. The Auditors report on theseaccounts was not qualified and did not contain statements under Section 237 (2)or (3) of the Companies Act 1985. Further copies of this report are available from our registered office:Northumberland House, 155-157 Great Portland Street, London, W1W 6QP. Going Concern The Group has made significant progress in financing the restructuring of thebusiness since 29 June 2006. In particular, the Group concluded new bankingarrangements and an on demand £2.9 million credit facility with Mentor Marketing& Investments Ltd on 21 July 2006, of which £2.5 million has been drawn down sofar, replacing the previous on-demand credit facilities provided by Lloyds TSB. In addition, the Group signed agreements with Catalyst Media Group Plc and SGILtd on 29 June and 24 August 2006 respectively, for which the Company hasreceived consideration of £2.5 million in cash and listed securities. On 24 August 2006, the Group granted an option, subject to shareholder approval,at a price of £250,000 over ordinary shares in YooMedia plc at an issue price of£0.04p per share. Additionally, the Company carried out a further equity placingon 1 September 2006, raising £700,000. Finally, the Group has agreed terms withMr Leo Noe, subject to shareholder approval, under which a £500,000 loan to theGroup will be converted to equity. The Directors believe that the actions above, taken in conjunction with otherfinancing options, including ongoing restructuring will ensure adequate workingcapital is available to the Group. Consequently, the directors consider that itis appropriate to prepare accounts on the going concern basis. However, theDirectors recognise that a material uncertainty remains over the Group's abilityto realise future profitability and positive cashflows until the Group hasestablished a track record of profitable trading and cash generation. 2 Turnover Turnover, which excludes value added tax, comprises revenue from interactivemedia services and dating services and is recognised as these services areprovided. Gaming revenues, where the Group holds a gaming licence, arerecognised on a gross basis and winnings are recognised as a cost of sale. Allturnover is generated in the United Kingdom. 3 Exceptional items Exceptional items, within administrative expenses, are detailed below: Unaudited Unaudited Audited Six months ended 30 Six months ended Year ended 31 June 2006 30 June 2005 December 2005 £000's £000's £000'sRecognised in arriving at operating loss:Redundancy costs1 - 363 437Exceptional bonus payments2 - (154) -Exceptional professional fees - - 143UITF 17 charge3 - 865 1,116Write-off of deferred development costs - - 680 - 1,074 2,376 1 Including all relevant taxes and other related costs of redundancy. 2 Including all relevant taxes. 2Under Urgent Issue Task Force abstract 17 (UITF 17), the Company is required torecognise as a charge in the profit and loss account, the amount by which thefair market value of any share options issued to employees exceeds theirrespective exercise prices at the date of grant. The charge is notional in thatthere is no underlying cash flow or other financial liability associated withthe charge, nor does it give rise to a reduction in net assets or shareholders'funds. In addition there is no impact on distributable profits. This chargerelates to the share options granted on the acquisition of Digital InteractiveTelevision Group Ltd on 20 December 2004 which are fully vested. 4 Loss before interest, tax, depreciation, amortisation and exceptional items Unaudited Unaudited Six months Six months Audited Year ended 30 June ended 30 June ended 31 2006 2005 December 2005 £000's £000's £000'sOperating loss (4,985) (4,463) (10,452)Depreciation 817 991 2,128Amortisation and impairment of goodwill 1,386 1,117 2323Amortisation and impairment of deferred development costs 575 175 675Exceptional items - 1,074 2,376Earnings before interest, tax, depreciation, amortisation and (2,207) (1,106) (2,950)exceptional items 5 Loss per share The basic loss per share has been calculated by dividing the net loss of £5,975kfor the period (six months ended 30 June 2005 - £4,557k; 31 December 2005 -£11,154k) by the weighted average number of 522,615,242 shares in issue duringthe period (six months ended 30 June 2005 - 460,511,906; year ended 31 December2005 - 469,655,350). The Company has potentially dilutive ordinary shares beingshare options issued to staff and shares contracted to be issued. The diluted loss per share has been calculated in accordance with FinancialReporting Standard 22: Earnings per share, using 549,914,536 shares in issueduring the period (six months ended 30 June 2005 - 471,282,331; year ended 31December 2005 - 480,426,774). As per Financial Reporting Standard 22: Earningsper share, the diluted loss per share calculation is without reference toadjustments in respect of certain share options that are considered to beanti-dilutive. The deferred shares are not included in the earnings per share or dilutedearnings per share. These shares have no voting rights and are non-convertibleand therefore do not form part of the ordinary share capital used for the lossper share calculation in accordance with Financial Reporting Standard 22:Earnings per share. 6 Creditors - Amounts falling due after more than one year Unaudited Unaudited Six months Six months Audited Year ended 30 June ended 30 June ended 31 2006 2005 December 2005 £000's £000's £000'sLoans - 2,650 1,000Convertible debt 5,722 - -Obligations under finance leases and hire purchase contracts 450 - 466Other creditors 350 350 350 6,522 3,000 1,816 The Convertible debt of £5,722k relates to a credit facility granted to theGroup by Platinum Partners LLP and Highbridge International LLC. This facilityattracts interest at a rate of 5% per annum. 7 Provisions for liabilities Employers' National Insurance on Provision for Other Total share options restructuring £000's £000's £000's £000's At 1 January 2006 1,137 519 178 1,834Arising during the period - - - -Utilised - (5) (98) (103)Unused amounts reversed in the - - - -periodAt 30 June 2006 1,137 514 80 1,731 Employers' National Insurance on share options On exercise of share options issued after 5 April 1999, under an unapprovedexecutive option scheme, the Company is required to pay National Insurance onthe difference between the exercise price and the market value at the exercisedate of the shares issued. The Company will become unconditionally liable to paythe National Insurance upon exercise of the options, which are exercisable overa period of 10 years from date of grant. The Company therefore makes a provisionfollowing the grant of options as opposed to on vesting or on exercise. Theamount of National Insurance payable will depend on the number of employees whoremain with the Company and exercise their options, the market price of theCompany's ordinary shares at the time of exercise, and the prevailing NationalInsurance rate at that time. Provision for restructuring costs The provision relates to certain items such as redundancy costs and losses ononerous contracts that were incurred or expected to be incurred as part of theGroup's restructuring arising mainly upon the acquisition of the DigitalInteractive Television Group on 20 December 2004. These are fully detailed inthe statutory accounts for the year ended 31 December 2004. The Utilisation ofthe provision taken in the period relates to further restructuring. 8 Reconciliation of movement in shareholders' funds Unaudited Unaudited Six months Six months Audited Year ended 30 June ended 30 June ended 31 2006 2005 December 2005 £000's £000's £000'sLoss for the period (5,975) (4,557) (11,154)New shares issued and convertible debt 1,414 1,172 7,150Shares to be issued 281 281 281Shares to be issued in prior year issued in current year - - (3,047)UITF 17 credit - 865 -Net reduction in shareholders' funds (4,280) (2,239) (6,770)Opening shareholders' funds 36,442 43,212 43,212Closing shareholders' funds 32,162 40,973 36,442 9 Post balance sheet events On the 21 July 2006 the group concluded new banking arrangements and a creditfacility with Mentor Marketing & Investment Ltd ('MMI') which replaced theprevious credit facilities provided by Lloyds TSB. MMI, an active investor andfinance provider in the marketing and marketing services sector, agreed toprovide equivalent financing to the bank debt and in addition, further financingto a combined total facility of £2.9 million towards the completion of there-structuring of the Company's business activities. On the 24 August 2006, YooMedia plc, signed an agreement with SGI Ltd ("SGI") toform a new company to exploit the UK and international interactive TV marketsthrough new forms of participation TV and gaming. The 50/50 joint venture,controlled by SGI, has acquired and will further utilise YooMedia's innovativeReal Time Messaging System, which allows viewers at home to participate inprogrammes and win prizes. In addition, the joint venture acquired the rightsto Tringo, a game which combines bingo and Tetris, for use on TV. Tringo willbe developed into a live presented interactive multiplayer game for TV with cashprizes for the most skilful players. Venture capital firm SGI is backed by Peter Shalson, who currently controlsthree channels on Sky. Under the terms of the agreement, SGI has capitalisedthe joint venture with a £1.1m loan. The joint venture has acquired the IP andownership of the Real Time Messaging System and the Tringo rights for TV fromYooMedia for a consideration of £1m to be satisfied in cash. Contemporaneous with this joint venture, the Group has entered into an agreementwith Yieldtown Limited ("Yieldtown"), a company owned by Mr Peter Shalson, underwhich subject to shareholder approval it is proposed to grant Yieldtown a twoyear option to subscribe £250,000 of Ordinary Shares in the YooMedia plc, basedon an issue price of £0.04p per share On the 1 September 2006 YooMedia raised £700,000 (gross) through a placing of35,000,000 new ordinary shares of 1p each with an existing institutionalshareholder at 2p per share. As part of the placing, the placee will receivewarrants to subscribe for 3,900,000 new ordinary shares at 1.75p per share,exercisable at any time until three years from issue. On the 7 September 2006, YooMedia plc signed a multi-year exclusive agreementwith Playboy Enterprises, Inc. ('Playboy') (NYSE: PLA, PLAA), the leadingentertainment and lifestyle company, to provide a casino-type-style gamingservice for Playboy's range of satellite TV channels and mobile phones services. Under the terms of the agreement, Playboy will offer state-of-the-art,fixed-odds, casino-style gaming to all its customers in the UK and Ireland, andwill market these services to its customers and databases via TV, the Web,direct communications and both above and below-the-line promotions. YooMediawill provide other third-party distribution via mobile operators, retail storesand other means of physical and digital distribution. The companies will alsojointly explore other value-added services, including enhancing the Playboychannels with gaming and other interactive TV programming. The services will include a red-button gaming portal as well as a Java-basedwireless portal, and will comprise over 20 gaming titles such as roulette, keno,bingo-keno, hi-lo as well as various card games by Final Delivery. The portalsare backed by YooMedia's proprietary back-end gaming systems, multi-platformE-Wallet and game client software. YooMedia's wireless portal is operator andhandset-agnostic and functions on almost all handsets in circulation. Except for those matters referred to above, there were no material events afterthe balance sheet date that requires disclosure. INDEPENDENT REVIEW REPORT TO YOOMEDIA PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprises the profit and loss account,the balance sheet, the cash flow statement, and related notes 1 to 9. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting policies and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Going concern - Emphasis of Matter In arriving at a review conclusion, we draw attention to the disclosures made innote 1 of the financial information concerning the company's ability to continueas a going concern. The group incurred a net loss of £5.9 million during theperiod ended 30 June 2006 and, as of that date, the group had net currentliabilities of £6.5 million. These conditions, along with other matters as setforth in note 1, indicate the existence of a material uncertainty which may castsignificant doubt about the company's ability to continue as a going concern.The financial information does not include the adjustments that would result ifthe company was unable to continue as a going concern as it is not practicableto determine or quantify them. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLP London 29 September 2006 This information is provided by RNS The company news service from the London Stock Exchange