Parkmead Regulatory News (PMG)

27 Sep 2007 14:02

Parkmead Group (The) PLC27 September 2007 Thursday 27 September 2007 THE PARKMEAD GROUP PLC ("Parkmead" or the "Group") Preliminary results for the 12 months ended 30 June 2007 The Parkmead Group plc (PMG) today announces its unaudited preliminary resultsfor the year ended 30 June 2007. Financial highlights - Return to profitability with £0.3 million profit 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 - Profit per share 0.08 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 returned it toprofitability. Our balance sheet has been strengthened though the successfulexit from our former technology portfolio; as at the year end the Group had£12.8 million in cash and no debt. The Group will now focus on the energysector; providing corporate finance services and making principal investments.I look forward to the continued development of the Group over the coming year. " -Ends- 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/Carl Holmes CHAIRMAN'S STATEMENT Development of the Group, Results and Dividends I am pleased to announce that the Group returned to profitability for the yearended 30 June 2007 recording a profit before tax and minority interests of £0.3million (2006: loss £6.2 million, restated). This is a significant improvementover 2006 and is indicative of the progress that the Group has made. At the operating level the Group recorded a loss of £4.6 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 £2.6million from £5.3 million to £2.7 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. Accordingly, the operating loss before theseexceptional and impairment costs was £0.5 million; a significant improvement on2006 (loss £3.9 million restated). The Group was particularly successful in divesting of a number of its tradingsubsidiaries and certain portfolio investments. Overall a profit on sale ofsubsidiaries of £4.6 million was recorded (2006: £nil). In accordance with itsaccounting policy, the Group revalued its remaining portfolio investments whichgave 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) duemainly to higher than anticipated proceeds from asset sales. Overall the Group recorded a profit for the year, after tax and minorityinterests and share based payments of £0.3 million (2006 loss: £6.4 millionrestated). The Board is not recommending the 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 decided to set aside £0.5 million for doubtful debtsassociated with trade receivables. The impact of this provision caused Quaysideto record a loss for the year of £0.3 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 £5.0 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 havesuccessfully restructured the Group and have returned it to profitability. 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 Goodall 27 September 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2007(UNAUDITED) NOTES CONTINUING DISCONTINUED TOTAL TOTAL OPERATIONS OPERATIONS 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 (7,968,244) (2,117,975) (10,086,219) (12,037,581)Other operating income 3 150,987 150,987 106,054 - Operating (loss)/profit 3 (4,694,091) 100,872 (4,593,219) (3,914,679)Profit on disposal of 5 4,613,262subsidiaries/ investments -Exceptional profit on deemed - 363,715disposalAmounts written off 4 (154,286) (2,670,624)investmentsNet interest receivable/ 389,295(payable) (1,553) Profit/(Loss) on ordinary 3 255,052 (6,223,141)activities before taxationTaxation (5,342) (41,873) Profit/(Loss) on ordinary 249,710 (6,265,014)activities after taxationMinority interest 49,851 (86,587) Profit/(Loss) for the 299,561 (6,351,601)financial year Profit/(Loss) per 5 penceordinary share (pence)- basic 6 0.08p (3.71p)- diluted 6 0.08p (3.71p) GROUP NOTE OF HISTORICAL COST PROFITS AND LOSSES FOR THE YEAR ENDED 30 JUNE 2007 (UNAUDITED) 2007 2006 As restated £ £ Profit/(Loss) on ordinary activities before taxation 255,052 (6,223,141)Write-down of previous temporary diminution in value of fixed asset - (306,464)investments charged against revaluation reserve Historical cost profit/(loss) on ordinary activities before taxation 255,052 (6,529,605) Historical cost profit/(loss) for the year retained after taxation and 299,561 (6,658,065)minority interest GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 30 JUNE 2007 (UNAUDITED) 2007 2006 As restated £ £ Profit/(Loss) for the financial year attributable to members of the parent 299,561 (6,351,601)CompanyUnrealised 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 535,504 (7,437,583) Prior year adjustment - FRS 20 (1,750,798)Total recognised loss since the last annual report (1,215,294) CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 (UNAUDITED) NOTES 2007 2007 2006 2006 As restated As restated £ £ £ £Fixed assetsIntangible assets 2,672,793 8,176,776Tangible assets 127,660 598,355Investments 1,547,308 3,059,365Investments in joint ventures Share of gross assets 50,000 - 4,397,761 11,834,496Current assetsStock 252,971 -Debtors 1,118,585 4,127,827Cash at bank and in hand 12,758,804 6,207,315 13,877,389 10,588,113CreditorsAmounts falling due within one year (1,192,949) (5,187,657) Net current assets 12,684,440 5,400,456 Total assets less current liabilities 17,082,201 17,234,952 CreditorsAmounts falling due after more than oneyear - (694,982) Provision for liabilities and charges (343,798) (108,816) Net assets 16,738,403 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 165,488 (243,049) Equity shareholders' funds 7 16,738,403 16,093,923Minority interests - 337,231Capital employed 16,738,403 16,431,154 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2007 (UNAUDITED) 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 RESULTS YEAR ENDED 30 JUNE 2007 1 PRELIMINARY ANNOUNCEMENT The preliminary results for the year ended 30 June 2007 are unaudited. Thefinancial information contained in this announcement does not constitute theGroup's audited statutory financial statements for the year ended 30 June 2007within the meaning of Section 240 of the Companies Act 1985. The financial information for the period from incorporation to 30 June 2006 hasbeen extracted from the Group's statutory financial statements for that periodwhich have been delivered to the Registrar of Companies. The report of theauditors on those financial statements was unqualified and did not contain anystatements under either Section 237(2) (accounting records or returnsinadequate or accounts not agreeing with records and returns) or 237(3)(failure to obtain necessary information and explanations) of the Companies' Act1985. The financial information contained in this announcement has been preparedunder accounting policies set out in Group financial statements for the periodended 30 June 2006, except where noted below in the basis of preparation. As at the date of this announcement, the auditors have not reported on theGroup's financial statements for the year ended 30 June 2007, nor have suchfinancial statements been delivered to the Registrar of Companies. The financialstatements for the year ended 30 June 2007 will be distributed to shareholdersprior to the Annual General Meeting, and then filed with the Registrar ofCompanies. 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 (2006: £169,343 for share options and£1,441,556 for other share based awards). The effect on net assets as at 1 July2006 for the share options was £nil as the credit entry for the option chargehas been taken directly to equity in accordance with FRS 20. With regard toother share based awards, the effect was to reduce net assets by £2,569,564which comprised recognition of the charge of £1,441,556 included inadministrative expenses plus a debit to other reserves of £1,128,008representing the remainder of the transaction through the employee benefittrust. 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 3,286,875 358,831 (5,956,616) 16,738,403 16,128,397Less: inter segmental sales (32,000) (132,000) - - - - 3,687,006 3,154,875 358,831 (5,956,616) 16,738,403 16,128,397Discontinued Operations:Software development, support 1,153,658 1,884,640 (266,455) (245,846) (963,426)and marketing -Investment and advisory - 22,497 3,834 (376,550) - (2,975)Design, supply and install of 2,806,423 7,944,375 158,842 355,871 - 1,269,158audio visual systems 3,960,081 9,851,512 (103,779) (266,525) - 302,757 7,647,087 13,006,387 255,052 (6,223,141) 16,738,403 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 1,697,303 -Other - 14,052 7,647,087 13,006,387 2007 2006 As restatedii. Profit/(Loss) on ordinary activities before taxation £ £UK 251,218 (5,846,591)USA and Canada 3,834 (376,550) 255,052 (6,223,141) 2007 2006 As restatediii. Net assets/(liabilities) £ £UK 16,738,403 16,434,129USA and Canada - (2,975) 16,738,403 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 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 (7,968,244) (2,117,975) (10,086,219) (6,820,469) (5,217,112) (12,037,581)expensesOther operating - 150,987 106,054 106,054income 150,987 -Operating (loss)/ (4,694,091) 100,872 (4,593,219) (3,876,165) (38,514) (3,914,679)profit 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 PROFIT/(LOSS) PER SHARE The basic profit/(loss) per share has been calculated by dividing the profit/(loss) attributable to equity shareholders funds by the weighted average numberof shares in issue during the year. The profit/(loss) and weighted average number of shares used in the calculationof the profit/(loss) per share are set out below: 2007 2006 As restated Basic profit / (loss) per share Profit / (Loss) attributable to ordinary shareholders (£) 299,561 (6,351,601) Weighted average number of shares - number 368,341,780 171,332,649 Profit / (Loss) per 5 pence ordinary share (pence) 0.08p (3.71p) - basic Diluted Loss per share The diluted profit/(loss) per share has been calculated by dividing the profit/(loss) attributable to equity shareholders funds by the weighted average numberof diluted shares in issue during the year. The profit/(loss) and weighted average number of shares used in the calculationof the profit/(loss) per share are set out below: 2007 2006 As restated Basic profit/(loss) per share Profit/(Loss) attributable to ordinary shareholders (£) 299,561 (6,351,601) Weighted average number of shares - number 368,341,780 171,332,649 Weighted average number of options - number 4,511,549 - Weighted average number of diluted shares - number 372,853,329 171,332,649 Profit/(Loss) per 5 pence ordinary share (pence) 0.08p (3.71p) - diluted 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 (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 Profit / (Loss) for the year 299,561 (6,351,601) At 30 June 16,738,403 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 (4,694,091) 100,872 (4,593,219) (3,914,679)Depreciation 90,852 178,770 72,688 18,164Amortisation and impairment of 3,198,292 74,377 3,272,669 426,894intangible assetsGain on disposal of fixed assets (1,144) (1,078) 66 -Provision for share based payments 108,976 - 108,976 1,609,899(Increase)/ Decrease in stocks 25,299 25,299 (22,566) -(Increase)/Decrease in debtors 642,678 (163,559) (294,315) (806,237)Increase/(Decrease) in creditors (210,631) 1,611,000 1,400,369 897,553Increase in other provisions 243,798 243,798 100,000 -Net cash inflow/(outflow) from (639,434) 1,023,541 384,107 (1,018,444)operating activities (b) Analysis of cash flows for headings netted in the cash flow statement 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 314,084finance (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 1,925,921 (1,221,727)investment Acquisitions and disposalsPurchase of subsidiary (916,596) -Sale of subsidiaries 5,506,445 -Overdraft/(Cash) disposed of with subsidiaries 67,870 -Cash/(Overdraft) acquired with subsidiary 509,820 - Net cash inflow/(outflow) from acquisitions and disposals 5,574,315 (406,776) FinancingIssue 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 inflow/(outflow) 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 This information is provided by RNS The company news service from the London Stock Exchange