Sosandar Regulatory News (SOS)

29 Sep 2006 13:03

HHK plc29 September 2006 HHK plcResults for the year ended 31 March 2006 HHK Plc is pleased to announce their first results for the period fromincorporation on 2 March 2005 to 31 March 2006. The Annual General Meeting will be held on 30 October 2006 at 11am at theoffices of Altium Capital, 30 St James Square, London SW1Y 4AL Chairman's Statement The year since HHK's incorporation has been an active time, during which theCompany has been admitted to the Alternative Investment Market of the LondonStock Exchange plc ("AIM") and has undertaken the first of what your Boardbelieves will be a series of significant investments. In March 2006, your Company acquired a 19.2% stake in ErgoDynamic ApplicationsBV ("Ergo") via an acquisition of 25.6% of the issued share capital of HLJParticipations BV and a 5% equity stake in Medavinci Development BV ("Medavinci"). Ergo has developed a patented technology for the prevention and relief oflower back pain and the technology has already been launched in the office andtransportation markets in Europe. Your Directors anticipate that Ergo'stechnology will show a rapid international growth path. Medavinci is a serviceand sourcing agent and also offers brokering services for medical and healthcareinnovations, a business which your Directors believe will be of great benefit toHHK by giving it direct access to Medavinci's international network ofscientists, doctors, universities and research institutes. Both Ergo andMedavinci are in their development stage, which your Directors believe offersHHK the opportunity to benefit from their growth potential. The considerationfor these acquisitions was satisfied by the allotment, in aggregate, of 5.39million ordinary shares in the Company at a price of 10 pence per share, valuingthe deal at £539,900, plus expenses. In its first year since incorporation, HHK's investment in terms of joining AIMand securing assets, has placed the Company on a firm foundation upon which tobuild. Your Board's strategy is to invest in technologies in the medical,health and healthcare industries to ensure long term shareholder value and toguard the Company's cash resources. At 31 March 2006, the Company's cashposition was £334,000. Your Board has selected the medical, health and healthcare sectors as we believethey offer excellent advantages to the Company, as the world demands advances inpersonal care and wellbeing, thereby presenting market opportunities forhomecare and healthcare monitoring, analysis and preventative measures. YourBoard's investment strategy is to focus on technologies, products and serviceswhich have distinctive intellectual property, to set them apart fromalternatives. At the time of the acquisitions of Ergo and Medavinci, I joined the Board asChairman to support Glyn Hirsch and Michael Hough, two of the Company's foundersand significant shareholders. I am pleased to have joined this young and dynamic Company which, I believe, hasa very exciting future. The year ahead offers further opportunities to developthe investment portfolio; your Board is currently investigating severalpotential acquisitions and we shall advise you of developments as and when theyoccur. P Teerlink Chairman Profit and loss account Period from 2 March 2005 to 31 March 2006 Notes £000 Turnover -Cost of sales - ------Gross Profit - Administrative expenses (340) ------Operating Loss (340) Interest receivable 5 14 -----------Loss on ordinary activities before tax (326)Taxation 6 - -----------Loss for the financial year (326) =========== Loss per share - Basic and diluted 7 (4.1p) All amounts relate to continuing activities. All recognised gains and losses are included in the profit and loss account The notes on pages 12 to 17 form part of these financial statements Balance sheet 2006 Notes £000Fixed assets Investments 8 597 ----------- 597Current assetsCash at bank and in hand 334 ----------- 334 Creditors: amounts falling due within one year 9 (100) -----------Net current assets 234 -----------Total assets less current liabilities 831 =========== Capital and reservesCalled up share capital 10 136Share premium account 11 743Warrant reserve 11 278Profit and loss account 11 (326) -----------Shareholders' funds 12 831 =========== The notes on pages 12 to 17 form part of these financial statements Cash Flow Statement Period from 2 March 2005 to 31 March 2006 Notes £000 Net cash inflow from operating activities 13 38 Returns on investments and servicing of financeInterest received 14 Capital expenditure and financial investmentAcquisition of investments (57) -----------Net cash outflow before financing (5) Financing Issue of ordinary shares 410Share issue costs (71) -----------Net cash inflow from financing 339 -----------Increase in cash in the year 13 334 ----------- The notes on pages 12 to 17 form part of these financial statements Notes to the financial statements 1. Accounting policies Basis of preparation The financial statements are prepared under the historic cost convention and inaccordance with applicable accounting standards. Investments Fixed asset investments are carried at cost unless the directors are of theopinion that an impairment in value has occurred, in which case a provision ismade to reflect the impairment in value. Foreign currencies Assets and liabilities denominated in foreign currencies are translated at therate of exchange ruling at the balance sheet date. Exchange differences aretaken to the profit and loss account. Taxation Current tax is the expected tax payable or receivable on taxable profit or lossfor the period, using tax rates enacted or substantively enacted at the balancesheet date and any adjustment to tax payable in respect of previous years. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date. Deferred taxliabilities and assets are not discounted. Share based payments The company has adopted FRS20 'Share based payments' early with effect fromincorporation. FRS20 requires that the fair value of equity settled share basedpayments, such as share option awards, is determined at the date of grant and isexpensed on a straight line basis over the vesting period based on the Company'sestimate of the options that will eventually vest. In the case of warrants,fair value is measured by a Black Scholes pricing model. 2. Operating Loss The operating loss is stated after charging: 2006 £000Auditors' remuneration- audit 12- non audit 3Share warrant charge (note 3) 278National insurance on share warrants 28 =========== In addition to the above, fees of £23,000 were charged by the auditors inrelation to their role as Reporting Accountants to the Company; this has beensplit between the cost of investment for the acquisitions and offset against theshare premium account. 3. Share Warrants At 31 March the following warrants were in issue: No. of ordinary Warrant price shares of 1p each Exercise period per share Glyn Hirsch 2,000,000 24 Mar 2005 - 23 Mar 2015 5pMichael Hough 2,000,000 24 Mar 2005 - 23 Mar 2015 5pOther non directors 1,000,000 24 Mar 2005 - 23 Mar 2015 5p 2006 2006 Weighted average Exercise price (pence) Number Outstanding at the beginning of period - -Granted during the period 5.56 5,000,000 -------- ---------Outstanding at the end of the period 5.56 5,000,000 =========== ========== All warrants are exercisable at period end. The following information is relevant in the determination of the fair value ofwarrants granted during the year. 2006 Warrant pricing model used Black-ScholesWeighted average share price at date of grant (pence) 9.75Exercise price (pence) 5.00 Contractual life (years) 4 Expected volatility 14% Risk free interest rate 4.4% The volatility assumption is based on statistical analysis of share prices. The share based remuneration expense (note 2) comprises 2006 £'000 Employees 222Other parties 56 ------- 278 ======= 4. Employees There was no directors' remuneration during the year. The average number of employees, including directors, employed by the companyfor the year was: 2006 No.Non-Executive Directors 2 =========== 5. Interest receivable 2006 £000 Bank interest 14 =========== 6. Taxation There is no tax charge for the period due to the loss arising. Deferred taxassets are recognised when it is more likely than not that they will berecovered. 7. Loss per ordinary share The calculation of the basic and diluted loss per share is based on the net lossafter tax attributable to the ordinary shareholders for the period of £326,000and a weighted average number of shares in issue for the period 2 March 2005 to31 March 2006 of 7,891,623. 2006 No. Weighted average ordinary shares in issued during the year 7,891,623 ========== The effect of all potential ordinary shares under warrant is anti-dilutive. 8. Investments 2006 £000 At 2 March 2005 -Additions at cost 597 -----------At 31 March 2006 597 =========== Investments Proportion of Country of ordinaryCompany share capital held incorporation HLJ Participations BV 25.6% The Netherlands Medavinci Development BV 5.0% The Netherlands HLJ Participations BV has not been included as an associate in the financialstatements as the directors consider that HHK Plc does not exert significantinfluence as defined by FRS9 'Associates and Joint Ventures'. The investments are unlisted. The directors consider there to be no differencebetween the book value and the fair value of these investments. 9. Creditors: amounts falling due within one year 2006 £000 Trade creditors 59Accruals and deferred income 41 ----------- 100 =========== 10. Share capital 2006Ordinary shares of 1p each No. £000 Authorised 100,000,000 1,000 ============= ============ Issued, called up and fully 13,599,000 136paid ============= ============ The Company was incorporated on 2 March 2005 with an authorised share capital of£1,000,000 divided into 100,000,000 ordinary shares of £0.01 each of which 2ordinary shares were issued and subsequently fully paid in cash. On 22 March 2005, the Directors allotted a total of 4,999,998 ordinary sharesfor cash at 5p per ordinary share. On 24 March 2005, the Directors allotted a total of 3,200,000 ordinary sharesfor cash at 5p per ordinary share. On 23 March 2006, the Directors allotted a total of 5,399,000 ordinary shares byway consideration for investments purchased, the consideration valued the sharesissued at 10p per ordinary share. As at 31 March 2006 there were 1,000,000 unexercised warrants held bynon-directors at an exercise price of 5p, these options are exercisable to 23March 2015. 11. Reserves Warrant Profit and Share Premium Reserve Loss account Account £'000 £'000 £'000At beginning of period - - -Premium on shares issued - - 814during the periodIssue costs charged to the - - (71)share premium accountLoss for the period - (326) -Share warrant charge 278 - - ______ _______ _______At 31 March 2006 278 (326) 743 =========== ============ ============ 12. Reconciliation of movements in shareholders' funds 2006 £000At the beginning of period -Loss for the period (326)Share warrant charge 278Issue of ordinary shares 136Share Premium (net of share issue expenses) 743 ________Shareholders' funds at 31 March 2006 831 ========= 13. Notes to the statement of cash flows (a) Reconciliation of operating loss to net cash inflow from operatingactivities 2006 £000 Operating loss (340)Increase in creditors 100Increase in equity - share warrant 278charge -----------Net cash inflow from operating 38activities =========== (b) Reconciliation of net cash inflow to movement in net debt 2006 £000Net cash at 2 March 2005 - Increase in cash in the 334year -----------Net cash at 31 March 2006 334 =========== 13. Notes to the statement of cash flows (continued) (c) Analysis of net cash At At 2 March 31 March 2005 Cash flow 2006 £000 £000 £000 Cash at bank - 334 334 ----------- ----------- ----------- 14. Financial risk management The company's financial instruments comprise of cash and deposits andinvestments in unlisted companies that arise directly from its operations. Itis not the company's policy to trade in financial instruments. There is nomaterial difference between book value and fair value of financial instruments. Liquidity risk The company's earnings may be affected by changes in interest rates available onits cash deposits. The company aims to maximise returns from funds held ondeposit. This information is provided by RNS The company news service from the London Stock Exchange