PTCM.L Regulatory News (PTCM)

29 Sep 2006 17:15

Media Steps Group PLC29 September 2006 Media Steps Groups Plc (the "Company") Preliminary Statement for the 14 month period ending 31 March 2006 Chairmans Statement This report covers the 14 month period ending 31 March 2006. INTRODUCTION The Company was incorporated on 4 February 2005 and on 15 February 2005 acquiredMedia Steps (UK) Limited in return for the allotment of ordinary shares. On 16thFebruary 2005, in order to assist with the Company's working capitalrequirements, the Company issued £225,000 loan notes ("the Pre Admission LoanNotes"). In June 2005 the entire issued share capital of the Company was admitted totrading ("Admission") to AIM when it raised £1,500,000 before expenses by way ofa placing of 25 million new ordinary shares at £0.06 per share. Upon Admissionthe Pre Admission Loan Notes were converted into 5,000,000 ordinary shares. As the amount raised fell considerably short of the original plan it wasnecessary to issue £330,000 of Series B Convertible Loan Notes to satisfycreditor obligations including certain advisory fees incurred in relation toAdmission. RESULTS The results for the period from 4 February 2005 to 31 March 2006 show anOperating Loss, before taxation, of £906,081 based on a Turnover of £172,949. Losses on ordinary activities, before taxation, after provisions for the sale ofMedia Steps (UK) Limited and Media Steps (Sports) Limited (the "Subsidiaries")were £2,126,099. TRADING Following Admission, the Company began installing the Media Steps innovative 'StepLok' system in railway stations throughout the South East of England. Atthe same time a sales team was recruited to sell these poster sites to the majoroutdoor advertising companies. Unfortunately the Group found it impossible to attract major advertisers to itssites and by early 2006 it became evident that the Company would not havesufficient financial resources to see it through to profitability. It also became clear that it was not possible to attract additional investmentgiven the Group's poor sales performance. It was therefore decided to seekeither a commercial partner for the business or a buyer. Following a number ofunsuccessful discussions the Company announced, on 3 July 2006, that it hadcompleted the disposal of the Subsidiaries for a total consideration of £1 to anunconnected party, with the purchaser agreeing to assume debts of approximately£145,000. The profit and loss account for the period from 4 February 2005 to 31 March 2006reflects these trading losses and the losses incurred on the disposal of theSubsidiaries. CURRENT POSITION Once it became clear that a further fundraising for the Group was impossible andfollowing the sale of the Subsidiaries, measures were taken to reduce outgoingsincluding a waiver of salary entitlements by all the Directors with theexception of James Farmer, the Commercial Director at the time. In order to reduce further cash outgoings Mr Farmer's contract was terminated on31 July 2006 and he subsequently resigned as a Director. While to date no claim arising from the termination of Mr Farmer's contract hasbeen received, a provision has been made in the accounts to cover any suchclaim. Mr Farmer had two years of his contract outstanding at the date of termination,which included a salary of £60,000 per annum plus other allowances. In the eventa claim is received the Directors intend to dispute it forcefully, butshareholders should be aware that were Mr Farmer to institute proceedings and besuccessful it would inevitably cause the Company to become insolvent. Further, as a consequence of the disposal of the Subsidiaries the Company is indefault of the terms of the Series B Loan Notes. Were the Series B Loan Noteholders to call for repayment it would again cause the Company to becomeinsolvent. At present the Company has net cash of approximately £90,000 with outstandingcreditors of approximately £45,000. THE FUTURE The Board is intent on securing a profitable future for the Company and at anExtraordinary General Meeting on 21 August 2006 shareholders approved the newstrategy for the Company which is to seek a reverse takeover of the Company atthe same time as raising additional equity finance. A proposal has been received which would include a substantial cash injectioninto the Company and further discussions are being undertaken by the Company.The Directors anticipate that further proposals may also be received and theBoard will evaluate these on their merits with a view to ensuring the bestpossible outcome for shareholders. The Directors are currently considering theterms and conditions attached to the current proposal which includes aresolution of any possible claim that may be made by James Farmer and a solutionfor dealing with the default on the Series B Loan Notes. As detailed above a failure to resolve either or both of these issues quicklywill probably make any further fundraising impossible. The Directors aretherefore seeking to resolve these positions quickly and I will be writing toshareholders again in the near future once the outcome is clear. In the meantime I would like to thank my colleagues on the Board for theirperseverance and resolve in seeking solutions to the problems of the last 18months and can assure shareholders that the Board is focused on delivering asatisfactory outcome to our current problems. Neil McClureChairman15 November 2005 Enquiries: Media Steps Group plc Tel: 07768 201315Tony Jansen, Managing Director AUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31 MARCH 2006 31 Mar 2006 £ Turnover 172,949 Cost of sales (157,203) Gross profit 15,746 Administrative expenses (921,827) Operating loss (906,081) Profit/loss on sale of tangible assets (500) Exceptional Items (1,232,443) Other interest receivable and similar income 24,101 Interest payable and similar charges (11,176) Loss on ordinary activities before taxation (2,126,099) Tax on loss on ordinary activities - Loss on ordinary activities after taxation (2,126,099) Loss for the period (2,126,099) Basic EPS (£0.03) Diluted EPS (£0.03) AUDITED CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2006 31 March 2006 £ Fixed assets Intangible assets 171,438 Tangible assets 221,145 392,583 Current assets Debtors 79,047 Cash at bank and in hand 320,918 399,965 Creditors: amounts falling due within one year (251,069) Net current assets 148,896 Total assets less current liabilities 541,479 Creditors: amounts falling due after more than one year (347,953) Provision for Liabilities and Charges (577,310) (383,784) Capital and reserves Called up share capital 720,000 Share premium account 1,022,315 Profit and loss account (2,126,099) Shareholders' funds - equity interests (383,784) UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 MARCH 2006 31 March 2006 £ £ Net cash outflow from operating activities (708,738) Returns on investments and servicing of financeInterest paid (11,176)Interest received 24,101 Net cash inflow for returns on investments and servicing of finance 12,925 Taxation (1,250) Capital Expenditure Receipts from sales of tangible assets 470 Net cash inflow for capital expenditure 470Acquisitions and Disposals Purchase of subsidiary undertakings (400,000) Goodwill written off (655,133) Net cash outflow for Acquisitions and disposals (1,055,133) Net cash outflow before management of liquid resources and financing (1,751,726)Financing Share capital issued (net of expenses) 1,742,315 Loan notes 330,000 Net cash inflow/(outflow) from financing 2,072,315 Increase/(decrease) in cash in the period 320,589 NOTES TO THE AUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 MARCH 2006 1 Reconciliation of operating loss to net cash outflow from operating activities 31 March 2006 £ Operating (loss)/profit (906,081) Depreciation of tangible assets 59,164 Amortisation of intangible assets 5,000 Increase in debtors (77,797) Increase in creditors 210,976 Net cash outflow from operating activities (708,738) 2 Analysis of net funds Other non- 4Feb Cash cash 31 Mar 2005 Flow changes 2006 £ £ £ £ Net Cash Cash at bank and in hand - 320,918 - 320,918 Bank overdrafts - (329) - (329) - 320,589 - 320,589 Finance leases - (4,373) - (4,373) Debts falling due within one year - (40,000) - (40,000) Debts falling due after one year - (346,667) - (346,667) - (391,040) - (391,040) Net debt - (70,451) - (70,451) 3 Reconciliation of net cash flow to movement in net debt 31 Mar 2006 £ Increase in cash in the period 320,589 Cash inflow from increase in debt (391,040) Movement in net debt in the period (70,451) Opening net debt - Closing net debt (70,451) 4 Basis of Preparation The financial statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 and were approved by the Directors on 29th September 2006. The earnings per share are calculated on the basis of the weighted average of shares in issue during the period being 58,283,285. 5 Copies of this statement and the report and accounts are available at the registered office of Media Steps Group Plc, c/o Stringer Saul, 5th Floor, 17 Hanover Square, London, W1S 1HU and will be posted to shareholders. 6 Going concern Following the disposal of the company's operating subsidiaries after the balance sheet date, the Directors have been actively negotiating with the holders of the loan notes and pursuing alternative sources of finance. One proposal has been received, others are expected and the Directors are in active discussions in relation to these proposals. These financial statements are drawn up on the basis that these negotiations will be successful and do not reflect any adjustments that may be necessary if the company is unable to continue as a going concern. 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