Parkmead Regulatory News (PMG)

30 Nov 2007 07:01

Parkmead Group (The) PLC30 November 2007 Friday 30 November 2007 THE PARKMEAD GROUP PLC ("Parkmead" or the "Group") Audited results for the 12 months ended 30 June 2007 The Parkmead Group plc (PMG) today announces its audited results for the yearended 30 June 2007. The Group's preliminary results were announced on 27 September 2007, however,the sale of Quayside Corporate Services Limited, announced 8 November 2007, gaverise to a subsequent adjusting event. As a result of this the Group has amendedits results as follows: • the Group's investment in Quayside has been revalued by £0.5 million from £2.7 million to £2.2 million; and, • further provisions of £0.2 million for bad debts have been made given the continued uncertainty in the distressed company debt markets. The Group's Annual Report for the year ended 30 June 2007 was posted toshareholders today. Financial highlights • Further progress in returning toward profitability with £0.4 million loss after tax and minority interest (2006: loss £6.4 million restated) • Cash balances increased by 106% from £6.2 million to £12.8 million • Debt free balance sheet • Successful sale of the Group's technology based former trading subsidiaries and certain other technology investments • Loss per share 0.11 pence (2006: Loss per share 3.71 pence, restated) Commenting on the results, Colin Goodall, Chairman of The Parkmead Group plc,said: "We have successfully restructured the Group and have made further progress inreturning towards profitability. Our balance sheet has been strengthened thoughthe successful exit from our former technology portfolio; as at the year end theGroup had £12.8 million in cash and no debt. The Group will now focus on theenergy sector; providing corporate finance services and making principalinvestments. I look forward to the continued development of the Group over thecoming year. " For further information: The Parkmead Group plc 020 7494 5770Niall Doran CEOGordon Ashworth, CFO Madano Partnership 0207 593 4000Matthew Moth Charles Stanley Securities (Nominated Adviser) 0207 149 6482Rick Thompson / Henry Fitzgerald-O'Connor CHAIRMAN'S STATEMENT Development of the Group, Results and Dividends I am pleased to announce that the Group has made further progress in returningtowards profitability in the year ended 30 June 2007 recording a loss before taxand minority interests of £0.5 million (2006: loss £6.2 million, restated).This is a significant improvement over 2006 and is indicative of the progressthat the Group has made. At the operating level the Group recorded a loss of £5.3 million (2006: loss£3.9 million restated). There were, however a number of exceptional items, oneoff costs, amortisation of goodwill and impairment charges which gave rise tothis. In particular, the Group wrote down the carrying value of QuaysideCorporate Services Limited ("Quayside" the Group's turnaround business) by £3.1million from £5.3 million to £2.2 million and also expensed £0.6 million ofamortisation relating to Quayside. During the year, the Group invested in anumber of business development activities. The costs associated with thisinvestment of £0.6 million were expensed in the year. Prior to the Grouprelocating in August this year a provision was made for dilapidations, onerouslease commitments and accelerated depreciation (relating to the Group's formeroffices) of £0.3 million. Finally, subsequent to the year end, the Group hasreached agreement to dispose of its entire holding in Quayside for aconsideration of £0.6 million in cash and deferred consideration of up to £2.0million. Accordingly, the operating loss before these exceptional andimpairment costs was £0.7 million; a significant improvement on 2006 (loss £3.9million restated). The Group was particularly successful in divesting of anumber of its trading subsidiaries and certain portfolio investments. Overall aprofit on sale of subsidiaries of £4.6 million was recorded (2006: £nil). Inaccordance with its accounting policy, the Group revalued its remainingportfolio investments which gave rise to a charge of £0.2 million in the year(2006 charge: £2.7 million). Net interest income was significantly higher at£0.4 million (2006: £nil) due mainly to higher than anticipated proceeds fromasset sales. Overall the Group recorded a loss for the year, after tax and minority interestsof £0.4 million (2006: £6.4 million restated). The Board is not recommendingthe payment of a dividend (2006: £nil). Principal Investment and Advisory Our revenues grew 17% to £3.7 million (2006: £3.2 million). The Group providedcorporate finance and advisory services to clients predominantly in the energysector including advising on disposals, acquisitions and corporaterestructurings. Following the successful realisation of proceeds from thedisposal of the Group's former subsidiaries, the Group will look to makeinvestments either as principal or along side financing partners in energyrelated assets during the course of the coming year. Our turnaround business activities are carried out through Quayside. Beforeprovisions for doubtful debts Quayside recorded a profit of £0.2 million,however, at present, given the unpredictable nature of the distressed companydebt markets, we have set aside £0.6 million for doubtful debts associated withtrade receivables. The impact of this provision caused Quayside to record aloss for the year of £0.4 million. Portfolio and Subsidiary Investments The Group was successful in disposing of the majority of its technology assets.The Group sold its holding in AVM in September 2006 for a cash consideration of£1.3 million before expenses. AVM was carried in the Company's balance sheet at£0.5 million giving a profit before expenses of £0.8 million, however, ondeconsolidation this profit reduced to £0.2 million. The Group's holding inYospace was sold for a cash consideration of £4.9 million before expenses inFebruary 2007. On deconsolidation and repayment of debt the sale realised aprofit of £4.0 million. In February of this year the Group disposed of itsholding in Respond Group Limited for a cash consideration of £2.1 million beforeexpenses, which after repayment of debt, gave rise to a profit of £0.4 million.The successful conclusion of these deals demonstrates the Group's capacity toexecute transactions. Furthermore, as a result, the Group's balance sheet hasbeen strengthened significantly which provides funds for the Group's principalinvestment activities. The Group's remaining technology portfolio is comprised of small holdings inFuture Route Limited, Metapraxis Limited, Red M Group Limited, Retento Limitedand Speed Trap Limited. The Group revalued these holdings with an overallcharge of £0.2 million being recognised during the year. The Group's investmentin Thruvision Limited has been revalued by £0.2 million from £1.1 million to£1.3 million following a further funding round subsequent to the Group'sinvestment. Key Performance Indicators The Board monitors the performance of its businesses through the reporting ofmonthly management accounts that show progress against budget, highlightingsignificant variances, positive and negative. The Board also receives cash flowreports on a monthly basis. The Board considers the Group's pipeline ofbusiness at each Board meeting and tests Executive Management's expectation ofconversion. Additionally, key performance indicators are set, against which theBoard can assess performance and prospects for the businesses. With regard toQuayside, the Board monitors each assignment undertaken against budgeted profitand gross profit margin and for the year ended 30 June 2007 gross marginsaveraged 54%. With regard to the corporate finance business, revenue isanalysed between recurring revenue streams and success fees. The baselinetarget is to cover fixed costs with recurring revenues and for the year underreview fixed costs were covered 127% by recurring revenues. Executive Directorsreport progress on the Group's investments at each Board meeting. Principal Risks and Uncertainties The principal trading risks of the Group's business are the sourcing of suitabletransactions (deal flow) and the ability to recruit and retain experiencedexecutives. With regard to deal flow, the Group has via its Board and otherintermediary relationships, access to a number of sources of deal flow which theBoard believes is satisfactory to grow the business. With regard to recruitmentthe Group has been actively recruiting at senior levels over the past year,however, the market remains tight for high quality individuals. As a mitigatingstrategy the Group has entered into a number of retainer relationships wherebyit has access to high quality corporate finance and investment experts such thatit can resource deals in a cost effective manner. Outlook Overall it has been a satisfactory year, we have taken steps to focus ourbusiness and our core division is performing well. Our balance sheet issignificantly strengthened, with cash balances more than doubled to £12.8million (2006: £6.2 million) following the asset realisation programme. We havenow successfully restructured the Group. Our strategy will be to focus on the energy sector; providing corporate financeservices and making principal investments to create shareholder value, at anacceptable level of risk. I look forward to the continued development of theGroup over the coming year. Colin Goodall23 November 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2007(AUDITED) NOTES CONTINUING DISCONTINUED OPERATIONS OPERATIONS TOTAL TOTAL 2007 2007 2007 2006 As restated £ £ £ £ Turnover 3 3,687,006 3,960,081 7,647,087 13,006,387 Cost of sales 3 (563,840) (1,741,234) (2,305,074) (4,989,539) Gross Profit 3,123,166 2,218,847 5,342,013 8,016,848Administrative expenses 3 (8,676,625) (2,117,975) (10,794,600) (12,037,581)Other operating income 3 150,987 150,987 106,054 Operating (loss)/profit 3 (5,402,472) 100,872 (5,301,600) (3,914,679)Profit on disposal of subsidiaries/ investments 5 4,613,262 - Exceptional profit on deemed disposal - 363,715Amounts written off 4 investments (154,286) (2,670,624)Net interest receivable/ (payable) 389,295 (1,553) Loss on ordinary activities before taxation 3 (453,329) (6,223,141)Taxation (5,342) (41,873) Loss on ordinary activities after taxation (458,671) (6,265,014) Minority interest 49,851 (86,587) Loss for the financial year (408,820) (6,351,601) Loss per 5 pence ordinaryshare (pence)- basic 6 (0.11p) (3.71p)- diluted 6 (0.11p) (3.71p) GROUP NOTE OF HISTORICAL COST PROFITS AND LOSSESFOR THE YEAR ENDED 30 JUNE 2007(AUDITED) 2007 2006 As restated £ £ Loss on ordinary activities before taxation (453,329) (6,223,141)Write-down of previous temporary diminution in value of fixed asset investments charged against revaluation reserve - (306,464) Historical cost loss on ordinary activities before taxation (453,329) (6,529,605) Historical cost loss for the year retained after taxation and minority interest (408,820) (6,658,065) GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 30 JUNE 2007(AUDITED) 2007 2006 As restated £ £ Profit/(Loss) for the financial year attributable to members of the parent Company (408,820) (6,351,601)Unrealised surplus on revaluation of fixed asset investments 235,943 -Write-down of previous revaluation of fixed asset investments - (1,095,754)Currency translation adjustment - 9,772 Total recognised gains/(losses) relating to the year (172,877) (7,437,583) Prior year adjustment - FRS 20 (1,750,798)Total recognised loss since the last annual report (1,923,675) CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2007(AUDITED) NOTES 2007 2007 2006 2006 As restated As restated £ £ £ £Fixed assetsIntangible assets 2,177,829 8,176,776Tangible assets 127,660 598,355Investments 1,547,308 3,059,365Investments in joint ventures Share of gross assets 50,000 - 3,902,797 11,834,496Current assets Stock - 252,971Debtors 905,168 4,127,827Cash at bank and in hand 12,758,804 6,207,315 13,663,972 10,588,113CreditorsAmounts falling due within one year (1,192,949) (5,187,657) Net current assets 12,471,023 5,400,456 Total assets less current liabilities 16,373,820 17,234,952 CreditorsAmounts falling due after more than oneyear - (694,982) Provision for liabilities and charges (343,798) (108,816) Net assets 16,030,022 16,431,154 Capital and reservesCalled up share capital 18,417,089 18,417,089Merger reserve (952,109) (952,109) Revaluation reserve 235,943 -Other reserve (1,128,008) (1,128,008)Profit and loss account (542,893) (243,049) Equity shareholders' funds 7 16,030,022 16,093,923Minority interests - 337,231Capital employed 16,030,022 16,431,154 CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2007(AUDITED) NOTES 2007 2006 £ £ Net cash inflow/(outflow) from operating activities 8(a) 384,107 (1,018,444) Returns on investments and servicing of finance 8 (b) 314,084 (1,553) Taxation (791,859) 83,483 Capital expenditure and financial investment 8 (b) 1,925,921 (1,221,727) Acquisitions and disposals 8 (b) 5,574,315 (406,776) Cash inflow/(outflow) before financing 7,406,568 (2,565,017) Financing 8 (b) (647,768) 10,584,419 Increase in cash 6,758,800 8,019,402 CONSOLIDATED RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS NOTES 2007 2006 £ £ Increase in cash in the year 6,758,800 8,019,402Decrease in debt and lease financing 647,768 1,632,262Finance leases acquired with subsidiaries - (9,132) Other non-cash changes - new finance leases - (12,690)Other non-cash changes - share based award - (2,678,849) Movement in net funds 7,406,568 6,950,993 Net funds/(debt) at 1 July 5,352,236 (1,598,757) Net funds at 30 June 8 (c) 12,758,804 5,352,236 NOTES TO THE PRELIMINARY RESULTSYEAR ENDED 30 JUNE 2007 1 PRELIMINARY ANNOUNCEMENT This restated consolidated financial information has been extracted from the 2007 Annual Report and has been prepared inaccordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP) and accounting policies consistent with those described in the Annual Report and Financial Statements for the year ended 30 June 2006, except where noted in thebasis of preparation below. The financial information set out in this document does not constitute statutory accounts for the years ended 30 June 2006 or 30 June 2007 within the meaning of Section 240 of the Companies Act 1985. The Annual Report and Financial Statements for 2006 have been delivered to the Registrar of Companies and the Annual Report and Financial Statements for 2007 will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts and have given an unqualified report which does not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2 ACCOUNTING POLICIES Basis of preparation The financial statements are prepared on a going concern basis, under thehistorical cost convention modified to include the revaluation of fixed assetinvestments and in accordance with the Companies Act 1985 and applicableaccounting standards in the United Kingdom. Changes in accounting policy The Group has adopted FRS 20 'Share based payments' during the year. Theadoption of this standard represents a change in accounting policy and thecomparative figures have been restated accordingly. The effect was to increaseadministrative expense by £108,976 for share options (2006: £168,343 for shareoptions and £1,441,556 for other share based awards). The effect on net assetsas at 1 July 2006 for the share options was £nil as the credit entry for thecumulative option charge of £309,242 to 1 July 2006 has been taken directly toequity in accordance with FRS 20. With regard to other share based awards, theeffect was to reduce net assets by £2,569,564 which comprised recognition of thecharge of £1,441,556 included in administrative expenses plus a debit to otherreserves of £1,128,008 representing the remainder of the transaction through theemployee benefit trust. 3 SEGMENTAL ANALYSIS a. Business Segment The Group is organised into three business segments: Investment and advisory,Software development, support and marketing and Design, supply and install ofaudio visual systems. Turnover Profit/(Loss) on Ordinary Net Assets Activities Before Taxation and Minority Interest 2007 2006 2007 2006 2007 2006 As restated As restated £ £ £ £ £ £Continuing Operations:Investment and advisory 3,719,006 3,286,875 (349,550) (5,956,616) 16,030,022 16,128,397Less: inter segmental sales (32,000) (132,000) - - - - 3,687,006 3,154,875 (349,550) (5,956,616) 16,030,022 16,128,397Discontinued Operations:Software development, support and marketing 1,153,658 1,884,640 (266,455) (245,846) - (963,426) Investment and advisory - 22,497 3,834 (376,550) - (2,975)Design, supply and install of audio visual systems 2,806,423 7,944,375 158,842 355,871 - 1,269,158 3,960,081 9,851,512 (103,779) (266,525) - 302,757 7,647,087 13,006,387 (453,329) (6,223,141) 16,030,022 16,431,154 b. Geographical Analysis All turnover originated in the UK. 2007 2006i. Turnover by destination £ £UK 7,074,432 10,342,438Europe 572,655 952,594USA and Canada - 1,697,303Other - 14,052 7,647,087 13,006,387 2007 2006 As restatedii. (Loss)/Profit on ordinary activities before taxation £ £UK (457,163) (5,846,591)USA and Canada 3,834 (376,550) (453,329) (6,223,141) 2007 2006 As restatediii. Net assets/(liabilities) £ £UK 16,030,022 16,434,129USA and Canada - (2,975) 16,030,022 16,431,154 The segmental analysis of turnover, profit before tax and net assets for theUnited Kingdom includes £2,806,423 (2006: £7,944,375), £158,842 (2006: £355,871)and £nil (2006: £1,269,158) at 30 June 2007 in respect of Audio Visual MachinesLimited and its subsidiaries which were sold during the year. The segmental analysis of turnover, loss before tax and net assets for theUnited Kingdom includes £588,366 (2006: £962,046), loss £(266,455) (2006: loss £(245,846)) and £nil (2006: (£963,426)) at 30 June 2007 in respect of YospaceTechnologies Limited which was sold during the year. The segmental analysis of turnover for Europe also includes £565,292 (2006:£922,594) in respect of Yospace Technologies Limited which was sold during theyear. The segmental analysis of turnover, profit/(loss) before tax and net assets forthe USA and Canada includes £nil (2006: £22,497), £3,834 (2006: loss £(376,550))and £nil (2006: £(2,975)) in respect of US operations which were discontinuedduring the prior year. The analysis of operating (loss)/profit between continuing and discontinuedoperations is set out below: 2007 2006 Continuing Discontinued Total Continuing Discontinued Total Operations Operations As restated As restated As restated £ £ £ £ £ £ Turnover 3,687,006 3,960,081 7,647,087 3,154,875 9,851,512 13,006,387Cost of sales (563,840) (1,741,234) (2,305,074) (316,625) (4,672,914) (4,989,539)Gross profit 3,123,166 2,218,847 5,342,013 2,838,250 5,178,598 8,016,848Administrative expenses (8,676,625) (2,117,975) (10,794,600) (6,820,469) (5,217,112) (12,037,581)Other operating income 150,987 - 150,987 106,054 - 106,054Operating (loss)/ profit (5,402,472) 100,872 (5,301,600) (3,876,165) (38,514) (3,914,679) 4 AMOUNTS WRITTEN OFF INVESTMENTS In accordance with the Group's accounting policy, the Group has assessed thefair value of its fixed asset investments at the balance sheet date. Theassessment has resulted in a write-down of £154,286 (2006: £2,670,624) to theprofit and loss account. 5 PROFIT ON DISPOSAL OF SUBSIDIARIES/INVESTMENTS On 29 September 2006 the Group sold its entire holding in Audio Visual MachinesLimited for a cash consideration of £1,275,000. After expenses the Grouprecognised a profit on disposal of £162,940 in the profit and loss account. On 2 February 2007 the Group sold its entire holding in Yospace TechnologiesLimited for a total cash consideration of £4,896,164, including repayment ofdebt and interest. After expenses the Group recognised a profit on disposal of£4,004,167 in the profit and loss account. On 20 February 2007 the Group sold its entire holding in Respond Group Limitedfor a consideration of £2,067,969, including repayment of debt and interest.After expenses the Group recognised a profit on disposal of £446,155. 6 LOSS PER SHARE The basic loss per share has been calculated by dividing the loss attributableto equity shareholders funds by the weighted average number of shares in issueduring the year. The loss and weighted average number of shares used in the calculation of theloss per share are set out below: 2007 2006 As restated Basic loss per share Loss attributable to ordinary shareholders (£) (408,820) (6,351,601) Weighted average number of shares - number 368,341,780 171,332,649 Loss per 5 pence ordinary share (pence) - basic (0.11p) (3.71p) Diluted Loss per share Due to the loss in the current and prior year there is no further dilution ofthe loss per share as a result of the share options in issue. 7 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS As restated 2007 2006 £ £ At 1 July as previously reported 18,663,487 6,274,489 Prior year adjustments- FRS 20 (Note 2) (2,569,564) - At 1 July as restated 16,093,923 6,274,489 - Shares Issued - placing - 10,000,000 - EBT and share options - 2,679,181 - on acquisition of Quayside - 6,000,001 Transaction Costs - (462,500) Revaluation of investment upwards 235,943 - Write down of previously revalued investments - (1,095,754) Currency translation adjustment - 9,772 Other reserve - Shared based award - (1,128,008) Cost of share options 108,976 168,343 Loss for the year (408,820) (6,351,601) At 30 June 16,030,022 16,093,923 8 NOTES TO THE CASH FLOW STATEMENT (a) Reconciliation of operating (loss)/profit to net cash inflow/(outflow) from operating activities 2007 2006 CONTINUING DISCONTINUED TOTAL TOTAL OPERATIONS OPERATIONS £ £ £ £ Operating (loss)/profit (5,402,472) 100,872 (5,301,600) (3,914,679) Depreciation 72,688 18,164 90,852 178,770 Amortisation and impairment of intangible assets 3,693,256 74,377 3,767,633 426,894Gain on disposal of fixed assets (1,144) 66 (1,078) -Provision for share based payments 108,976 - 108,976 1,609,899Decrease /(Increase) in stocks - 25,299 25,299 (22,566)Decrease /(Increase) in debtors 856,095 (806,237) 49,858 (294,315)Increase/(Decrease) in creditors (210,631) 1,611,000 1,400,369 897,553 Increase in other provisions 243,798 - 243,798 100,000Net cash (outflow)/inflow from operating activities (639,434) 1,023,541 384,107 (1,018,444) (b) Analysis of cash flows for headings netted in the cash flowstatement 2007 2006 £ £Returns on investments and servicing of financeInterest received 452,676 300,353Interest paid (137,474) (301,392) Interest element of finance lease rental payments (1,118) (514) Net cash inflow/(outflow) from returns on investments and servicing of finance 314,084 (1,553) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (113,104) (95,222)Payments to acquire fixed asset investments - (1,270,505) Receipts from sale of tangible fixed assets 423 -Receipts from sale of fixed asset investments 2,038,602 144,000 Net cash inflow/(outflow) from capital expenditure and financial investment 1,925,921 (1,221,727) Acquisitions and disposals Purchase of subsidiary - (916,596) Sale of subsidiaries 5,506,445 - Overdraftdisposed of with subsidiaries 67,870 - Cashacquired with subsidiary - 509,820 Net cash inflow/(outflow) from acquisitions and disposals 5,574,315 (406,776) Financing Issue of ordinary share capital - 12,679,181 Transaction costs - (462,500)Capital element of finance lease rental payments (19,278) (2,544)Decrease in short term borrowings (51,795) (31,139)Decrease in long term borrowing (576,695) (1,598,579)Net cash (outflow)/inflow from financing (647,768) 10,584,419 (c) Analysis of Change in Net Funds At 1 July 2006 Cash flow Disposals At 30 June 2007 £ £ £ £ Cash 6,207,315 6,622,786 (71,297) 12,758,804Overdraft (207,311) 68,144 139,167 -Short term loans (51,795) 25,000 26,795 -Finance lease obligations (19,278) 12,176 7,102 -Long term loans (426,695) (2,500) 429,195 -Loan stock (150,000) 150,000 - - 5,352,236 6,875,606 530,962 12,758,804 9 POST BALANCE SHEET EVENTS On 8 November 2007 the Company entered into an agreement to sell its entireshareholding in Quayside Corporate Services Limited to David Mills, a Directorof the Group during the year. Proceeds from this sale amounted to an initialconsideration of £0.6 million before expenses and a further deferred payment ofup to £2.0 million. This information is provided by RNS The company news service from the London Stock Exchange