RNS Number:6836E
Addworth PLC
27 September 2007
ADDWORTH PLC
("Addworth" or the "Company")
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2007
Chairman's Statement
Highlights for the six month period to 30 June 2007 (compared to 30 June 2006)
*Turnover #2.89 million (#1.88 million)
*Pre-tax profit #0.02 million (#0.05 million)
*Current investments stated at fair value of #0.86 million (#0.35 million)
*Non-current investments stated at fair value of #3.23 million (#1.74
million)
*Total assets up 112% year on year at #4.89 million (#2.30 million), and
up 63% in first half
*Board confident of further asset advances being made in the second half
year
I am delighted to be reporting our Interim Results for the period ended 30 June
2007. This is our first period of reporting to comply with International
Financial Reporting Standards (IFRS).
In this period under review we have concentrated on PLUS Markets for our new
issues. We have also used PLUS Markets to heighten our own profile, by admitting
our shares to trading on this platform. In January 2007 we introduced Oil and
Gas Support Services plc (PLUS: OGSP) to PLUS Markets following a #500,000
fundraising. We have a number of opportunities available to reverse into this
vehicle and it is hoped that it will announce an acquisition by the end of this
year. Having identified the oil and gas support services sector as one that had
a range of 'buy and build' opportunities, we have not been disappointed by the
potential. We hold 46.94% of the Oil and Gas Support Services plc equity.
In March 2007 we were pleased to be able to introduce Gaming Ventures Plc (PLUS:
GAMP) to PLUS Markets following an oversubscribed fundraising. Addworth has a
9.32% stake in this vehicle, which was established for the purpose of investing
in and/or acquiring assets, businesses and companies in the online and mobile
gaming markets.
Our stake in Yellowcake plc (PLUS: YEL), the global investor in uranium
equities, has increased to 29.73%. The uranium sector is experiencing excellent
sentiment and we are delighted to have been involved in this exciting market at
an early stage. To further our participation in this sector we introduced
Uranium Prospects plc (PLUS: URPP), in which we hold a 16.43% equity stake, to
PLUS Markets in July 2007. Once again, we are not short of opportunities to
invest in global uranium prospects.
In January 2007 we made a significant investment in Risk Transfer Limited, a
wholly-owned subsidiary of the Company, and now own an insurance company in
Guernsey, Channel Islands. Risk Transfer Limited has significantly progressed
negotiations with a number of major companies with a 'lease care' policy. We
envisage the company will have embedded its business model and will be
fee-earning by the end of this year, and we will subsequently look to introduce
it to the AIM market.
The Core Business plc (AIM: CORE), in which we have a 7.99% interest, has
completed its #2.6 million acquisition of Amirose International Limited
following a #1 million fundraising in July 2007.
In the period under review we raised a total of #540,000 (less costs of #18,000)
through the issue of new ordinary shares at a price of 2.25p per share to enable
us to participate at significant levels in our new issues. We are currently
working on bringing three more companies to market by the year end. We also have
a very interesting selection of prospective funding opportunities in our
'pipeline'.
Addworth has continued to move from its entrepreneurial phase of business and we
are now fully operational in our new offices in Carthusian Street. Our staff
levels increased from seven to twelve, eight of whom are full-time. We are now
able to provide facilities and management services through our offices to
companies we bring to market.
I would like to take this opportunity to thank our substantial shareholders for
their strong support of our Company and I am confident that we will be able to
continue our momentum to announce further positive news at the year end.
Mark Watson-Mitchell
Executive Chairman
27 September 2007
Further information:
Mark Watson-Mitchell, Executive Chairman Tel: 020 7368 8750
www.addworth.co.uk
Note to Editors:
Addworth (ADW), which gained admission to AIM on 3rd February 2005, was formed
primarily to act as an 'active capital investor'. The focus is upon the growth
of capital value and the generation of fee income from: establishing and funding
newly quoted sector focused companies; acquiring and developing companies with
growth potential; and taking minority equity positions in undervalued smaller
listed companies.
In the middle of January 2007 the Company established its own insurance company
in Guernsey, Channel Islands, called Risk Transfer Insurance Company Limited.
In late January 2007 it also floated Oil and Gas Support Services plc on PLUS
Markets, a special purpose acquisition company planning to acquire companies
providing services to the global oil and as sector. In late March 2007 it
floated Gaming Ventures plc, an investor in the mobile and online gaming sector.
In July 2007 it floated Uranium Prospects plc, which is involved on the funding
of exploration and development of uranium prospects.
INDEPENDENT REVIEW REPORT TO ADDWORTH PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2007 which comprises the Consolidated Income Statement, the Consolidated Balance
Sheet and the Summarised Consolidated Cash Flow Statement and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the next annual financial statements of the Group will
be prepared in accordance with IFRSs adopted by the European Union. The
condensed set of financial statements included in this half-yearly report has
been prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with international Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2007 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Saffery Champness
Chartered Accountants Lion House
Registered Auditors Red Lion Street
27 September 2007 London WC1R 4GB
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2007
Notes Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
# # #
Income
Sale of investments 2,587,127 1,716,977 3,852,200
Fee income 66,741 33,750 61,250
Gains on investments at
fair value through
profit or loss 224,548 130,552 710,975
Other income 12,992 1,636 2,262
Total income 2,891,408 1,882,915 4,626,687
Cost of sales (2,451,983) (1,659,042) (3,957,818)
Gross profit 439,425 223,873 668,869
Expenses
Administration expenses (425,780) (177,356) (537,564)
Share based payment
transactions - - 32,400
Total administration (425,780) (177,356) (505,164)
expenses
Operating profit 13,645 46,517 163,705
Interest income 5,463 1,679 5,735
Profit before taxation 19,108 48,196 169,440
Taxation 3 - - -
Net profit after tax
for the period 13 19,108 48,196 169,440
Return per ordinary
share
Basic 4 0.01p 0.07p 0.26p
Diluted 0.01p 0.05p 0.18p
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 June 2007
Notes 30 June 2007 30 June 2006 31 December
# # 2006 #
Non-current assets
Plant & equipment 62,255 - 53,302
Intellectual property 45,225 - 49,998
Investments 5,6 3,230,091 1,744,647 1,603,545
Total non-current assets 3,337,571 1,744,647 1,706,845
Current assets
Trade and other 261,763 103,046 64,554
receivables
Cash and cash 433,779 107,867 743,714
equivalents
Investments at fair 5 856,701 349,212 481,140
value through profit or
loss
Total current assets 1,552,243 560,125 1,289,408
Total assets 4,889,814 2,304,772 2,996,253
Equity and liabilities
Ordinary share capital 9 703,333 325,000 583,333
Share premium 9 1,924,550 1,125,883 1,522,550
Share based payment 57,600 900,000 57,600
reserve
Retained earnings 10 1,335,679 (510,731) 293,479
Total equity 13 4,021,162 1,840,152 2,456,962
Non current liabilities
Deferred tax liability 3 656,974 272,950 218,506
Current liabilities
Trade and other payables 211,678 191,670 320,785
Total liabilities 868,652 464,620 539,291
Total equity and 4,889,814 2,304,772 2,996,253
liabilities
UNAUDITED SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 30 June 2007
Notes Half year Half year Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
# # #
Net cash inflow/
(outflow) from operating
activities 7 (216,170) 195,190 261,214
Investing activities
Interest received 5,463 1,679 5,735
Increase in non-current
investments (603,454) (329,141) (315,072)
Purchases of tangible
assets (17,774) - (53,302)
Net cash inflow/
(outflow) from investing
activities (615,765) (327,462) (362,639)
Financing activities
Proceeds from share 522,000 180,000 695,000
issues
Directors' exercise of
share warrants - - 90,000
Net cash inflow from
financing activities 522,000 180,000 785,000
Net increase/(decrease)
in cash and cash
equivalents (309,935) 47,728 683,575
Cash and cash
equivalents at start of
period 743,714 60,139 60,139
Cash and cash
equivalents at end of
period 433,779 107,867 743,714
These interim financial statements have been prepared in compliance with the
recognition and measurement criteria of IFRS. See note 13.
Notes to the Interim Financial Statements
As at 30 June 2007
1. Accounting policies
Basis of preparation
The next annual financial statements of Addworth Plc (the "Company" or the
"Group") will be prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the EU applied in accordance with the
provisions of the Companies Act 1985.
Accordingly, the interim financial information in this report has been prepared
using accounting policies consistent with IFRS. IFRS is subject to amendment and
interpretation by the International Accounting Standards Board (IASB) and the
International Financial Reporting Committee (IFRIC) and there is an ongoing
process of review and endorsement by the European Commission. The interim
financial information has been prepared on the basis of IFRS that the Directors
expect to be applicable as at 31 December 2007.
The interim financial information has been prepared under the historical cost
convention as modified by the revaluation of available-for-sale investments. The
principal accounting policies set out below have been consistently applied to
all financial periods presented.
IFRS transition
The disclosures required by IFRS 1 concerning the transition from UK Generally
Accepted Accounting Practice (UK GAAP) to IFRS 1 are given in note 13.
Non-statutory accounts
The financial information set out in this interim report does not comprise the
Group's statutory accounts as defined in section 240 of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2006, which were prepared
under UK GAAP, have been delivered to the Registrar of Companies. The auditors
of the Group at the time, Nexia Smith & Williamson, reported on those accounts:
their report was unqualified and did not contain a statement under either
Section 237 (2) or Section 237 (3) of the Companies Act 1985.
The interim financial information for the six months ended 30 June 2007 and 30
June 2006 is unaudited, but a review has been carried out by Saffery Champness,
an independent firm of chartered accountants, on the six month period ended 30
June 2007.
Basis of consolidation
The interim financial information incorporates the results of the Company and
entities controlled by the Company (its subsidiaries). Control is achieved where
the Company has the power to govern the financial and operating polices of an
investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the period are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the results of subsidiaries to bring
the accounting policies into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Associated companies
In accounting for investments in associates, the Group has taken advantage of
the exemption granted in International Accounting Standard (IAS) 28 to venture
capital organisations. Such investments are included on the Consolidated Balance
Sheet at fair value under non-current asset investments.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, VAT and other sales related
taxes.
Revenue arising from the sale of investments is recognised on the date that the
contract for the transaction is entered into.
Revenue arising from the sale of services is recognised when and to the extent
that the Group obtains the right to consideration in exchange for the
performance of its contractual obligations as follows: on a monthly basis, in
accordance with the terms of the relevant contract or upon full delivery of the
services provided.
Foreign currency
Transactions in foreign currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date. Exchange gains
and losses on short term foreign currency borrowings and deposits are included
with net interest payable. Exchange differences on all other transactions,
except relevant foreign currency loans, are taken to operating profit.
Taxation
The tax expense represents the tax currently payable and any deferred tax.
The tax currently payable is based on the estimated taxable profit for the
period. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expenditure that are taxable or
deductible in other years and further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is expected to be payable or recoverable on differences between the
carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not be reversible in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Share based payments
The cost of share based employee compensation arrangements, whereby employees
receive remuneration in the form of shares or share options, is recognised as an
employee benefit expense in the income statement.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of non-market
based vesting conditions) at the date of grant. The assumptions underlying the
number of awards expected to vest are subsequently adjusted for the effects of
non-market-based vesting to reflect the conditions prevailing at the balance
sheet date. Fair value is measured by the use of a binomial model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of the non-transferability, exercise restrictions and
behavioural considerations.
Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost of assets over their
estimated useful lives using the straight-line method, on the following basis:
Leasehold improvements - over the period of the lease
Office furniture and equipment - 25% per annum on a straight line basis
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Investments are classified as either held-for-trading or available for sale at
initial recognition and this designation is re-evaluated at each balance sheet
date. At the balance sheet date all such investments are classified as available
for sale. Investments are initially measured at cost, including transaction
costs. At subsequent reporting dates available-for-sale investments are measured
at fair value or at cost where fair value is not readily ascertainable. Gains
and losses arising from changes in fair value are recognised directly in equity
until the investment is disposed of or is determined to be impaired, at which
time the cumulative gain or loss recognised previously in equity is included in
the net profit or loss for the period.
Trade and other receivables are measured at initial recognition at fair value,
and are subsequently measured at amortised cost using the effective interest
method. A provision is established when there is objective evidence that the
Group will not be able to collect all amounts due. The amount of any provision
is recognised in the income statement.
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less.
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective interest rate
method.
Financial liabilities and equity instruments issued by the Group are classified
in accordance with the substance of the contractual arrangements entered into
and the definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of
the Group after deducting all of its liabilities. Equity instruments issued by
the company are recorded at the proceeds received, net of direct costs.
Interest bearing bank loans, overdrafts and other loans are recorded at the
proceeds received, net of direct issue costs. Finance costs are accounted for on
an accruals basis in the income statement using the effective interest method.
2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial information in conformity with IFRS requires
management to make estimates and judgements that affect the reported amounts of
assets and liabilities as well as the disclosure of contingent assets and
liabilities at the balance sheet date and the reported amounts of revenues and
expenses during the reporting period.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The significant judgements
made by management in applying the Group's accounting policies were:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in
use of the cash generating units to which goodwill has been allocated. The value
in use calculation requires the Group to estimate the future cash flows expected
to arise from the cash-generating unit and a suitable discount rate in order to
calculate the present value. No goodwill was recognised in the period.
Share based payments
In determining the fair value of equity settled share based payments and the
related charge to the income statement, the Group makes assumptions about future
events and market conditions. In particular judgement must be made as to the
likely number of shares that will vest, and the fair value of each award
granted. The fair value is determined using a valuation model which is dependent
on further estimates, including the Group's future dividend policy, employee
turnover, the timing with which options will be exercised and the future
volatility in the price of the Group's shares. Such assumptions are based on
publicly available information and reflect market expectations and advice taken
from qualified personnel. Different assumptions about these factors to those
made by the Group could materially affect the reported value of share based
payments.
Valuation of financial instruments
At each reporting date the Group values its financial instruments at fair value.
In the case of listed securities this is deemed to be the bid price of the share
at the close of business on the reporting date. In the case of unlisted
securities the value is deemed to be the cost price less any impairment the
directors may feel it prudent to provide.
3. Taxation
Six months Six months Year ended 31
ended 30 June ended 30 December 2006
2007 June 2006
# # #
Current tax - - -
Deferred tax liability at 218,506 177,911 177,911
start of period
Deferred tax liability at end 656,974 272,950 218,506
of period
Total tax expense for the 438,468 95,039 40,595
period
The deferred tax charge represents 30% of the fair value gain on non-current
asset investments during the period. See also note 10.
4. Earnings per share
Six months Six months Year ended 31
ended 30 June ended 30 June December 2006
2007 2006
# # #
Earnings
Earnings for the purpose
of basic and diluted
earnings per share being
net profit 19,108 48,196 169,440
attributable to equity
shareholders
Number of shares
Weighted average number
of ordinary shares for
the purpose of basic
earnings per share 134,633,517 64,823,204 66,068,493
Weighted average number
of dilutive shares under
warrant 2,855,000 27,855,000 27,649,521
Weighted average number
of ordinary shares for
the purpose of dilutive
earnings per share 137,488,517 92,678,204 93,718,014
Basic earnings per share in each period are based on the return on ordinary
activities after taxation attributable to equity shareholders.
The calculation of diluted earnings per share assumes conversion of all
potentially dilutive ordinary shares, all of which arise from share warrants.
5. Investments
All investments are accounted for at fair value through profit and loss or
available for sale, as defined by IAS 39. The classification depends on the
purpose for which the investment was acquired. Management determines the
classification of its investments at initial recognition.
(a) Investments at fair value through profit or loss
Investments at fair value through profit or loss are investments held for
trading. An investment is classified in this category if acquired principally
for the purpose of selling in the short term. Investments in this category are
classified as current assets.
(b) Available for sale investments
Available for sale investments are non-derivatives that are either designated in
this category or not classified in any other category. This category also
includes the Group's investments in associates. They are included in non-current
assets unless management intends to dispose of the investment within 12 months
of the balance sheet date.
All investments are designated upon initial recognition as held at fair value
through profit or loss and are measured at subsequent reporting dates at fair
value, which in the case of listed investments is the bid price.
Unlisted investments are valued at cost price, subject to a review by the
Directors taking into account relevant information as appropriate including
market prices, accounting information and professional advice.
6. Investments in associates
The Group accounts for its investments in associates under the rules set out in
IAS 28 for venture capital organisations. Such investments are included on the
balance sheet at fair value under non-current asset investments.
The following valuations are included in non-current asset investments and are
based on each associate's bid price at close of business on the reporting date,
except that the valuation for Oil and Gas Support Services plc at 31 December
2006 is the cost price, as the shares were not yet listed at that date:
Six months Six months Year ended 31
ended 30 June ended 30 December 2006
2007 June 2006
# # #
Yellowcake plc 519,577 294,875 252,750
Oil and Gas Support Services 1,375,000 - 125,000
plc
1,894,577 294,875 377,750
Other investments at fair 1,335,514 1,449,772 1,225,795
value
Total non-current asset 3,230,091 1,744,647 1,603,545
investments
Summarised financial information of associates that are not accounted for using
the equity method:
Six months Six months Year ended 31
ended 30 ended 30 December 2006
June 2007 June 2006
# # #
Yellowcake plc
Total assets 527,404 318,335 320,642
Total liabilities 33,750 27,299 45,101
Revenues 431,371 170,221 99,825
Profit/(loss) 181,028 (123,381) (15,506)
Oil and Gas Support Services plc
Total assets 467,045 - -
Total liabilities 980 - -
Revenues - - -
(Loss) (72,787) - -
The financial information for the periods ended 31 December 2006 and 30 June
2007 for Yellowcake plc and Oil and Gas Support Services plc is based on
internal management accounts and has not been audited and as a result may be
subject to change.
7. Cash generated from/(used in) operations
Six months Six months Year ended 31
ended 30 June ended 30 December 2006
2007 June 2006
# # #
Operating profit 13,645 46,517 163,705
Depreciation charge 13,594 - -
Share based (income) - - (32,400)
(Increase)/decrease in debtors (197,209) (32,545) 5,947
(Increase)/decrease in current
asset investments (375,561) 6,575 (125,353)
Increase in creditors 329,361 174,643 249,315
Cash (used in)/arising from
operations (216,170) 195,190 261,214
Tax paid - - -
8. Dividends
The directors do not propose payment of an interim dividend.
9. Share capital
Six months Six months Year ended 31
ended 30 June ended 30 December 2006
2007 June 2006
# # #
Authorised
At 1 January 2006
100,000,000 ordinary shares of
0.5p each 500,000 500,000 500,000
Increase June 2006
100,000,000 ordinary shares of
0.5p each 500,000 500,000 500,000
Increase March 2007
200,000,000 ordinary shares of
0.5p each 1,000,000 - -
Balance at end of period:
400,000,000 ordinary shares of 2,000,000 1,000,000 1,000,000
0.5p
Six months Six months Year ended 31
ended 30 June ended 30 December 2006
2007 June 2006
# # #
Allotted and called up
At 1 January 2006
57,000,000 ordinary shares of
0.5p each 285,000 285,000 285,000
Allotted to 30 June 2006
8,000,000 ordinary shares of
0.5p each 40,000 40,000 40,000
Allotted to 31 December 2006
51,666,666 ordinary shares of
0.5p each 258,333 - 258,333
Allotted to 30 June 2007
24,000,000 ordinary shares of
0.5p each 120,000 - -
Balance at end of period:
140,666,666 ordinary shares of
0.5p each 703,333 325,000 583,333
Reconciliation of movements on
Share Premium account
Allotted and called up
At 1 January 2006
57,000,000 ordinary shares of
0.5p each 985,883 985,883 985,883
Allotted to 30 June 2006
8,000,000 ordinary shares of
0.5p each 140,000 140,000 140,000
Allotted to 31 December 2006
51,666,666 ordinary shares of
0.5p each 396,667 - 396,667
Allotted to 30 June 2007
24,000,000 ordinary shares of
0.5p each 402,000 -
Balance at end of period 1,924,550 1,125,883 1,522,550
10. Reconciliation of Retained Earnings
Six months Six months Year ended 31
ended 30 June ended 30 December 2006
2007 June 2006
#
# #
Opening balance 293,479 (780,684) (780,684)
Elimination of share based
payment reserve 810,000
Profit from Consolidated
Income Statement 19,108 48,196 169,440
Gains arising from fair value
statement of non-current asset
investments 1,461,560 316,796 135,318
Deferred tax charge (438,468) (95,039) (40,595)
Balance as stated on
Consolidated Balance Sheet 1,335,679 (510,731) 293,479
11. Contingent liabilities
The Company acquired 500,000 ordinary shares of #1.00 each in Risk Transfer
Limited at the end of the last financial year, representing 100% of the issued
share capital of that company. The Company has made a payment of 50p on each
share acquired, leaving a contingent liability for the remaining 50p, or
#250,000 in total.
12. Events after balance sheet date
On 16 April 2007 the Group subscribed for 10,000,200 ordinary shares of 0.5p
each in Uranium Prospects plc at a total cost of #50,001. This amount is
included in non-current asset investments on the Consolidated Balance Sheet at
30 June 2007. On 27 July 2007 Uranium Prospects plc was admitted to PLUS
Markets. The bid price for Uranium Prospects plc as at the date of this report
is 4.75p per share, resulting in an unrealised gain on this investment of
#425,000.
13. Transition to IFRS
Addworth Plc reported under UK GAAP in its previously published financial
statements for the year ended 31 December 2006. The analysis below shows a
reconciliation of net assets and profit as reported under UK GAAP as at 31
December 2006 to the revised net assets and profit under IFRS as reported in
these interim financial statements. In addition, there is a reconciliation of
net assets under UK GAAP to IFRS at the transition date for the Group, being 1
January 2006. There is also a reconciliation of net assets under UK GAAP to IFRS
at the comparative interim financial reporting date, being 30 June 2006.
Reconciliation of equity
Reconciliation of equity at Previous GAAP Effect of IFRS
1 January 2006 transition
to IFRS
# # #
Net assets 951,612 438,588 1,390,200
Share capital 285,000 - 285,000
Share premium 985,884 - 985,884
Share based payment reserve 900,000 - 900,000
Profit and loss account (1,219,272) 438,588 (780,684)
Total equity 951,612 438,588(1) 1,390,200
Reconciliation of equity at Previous GAAP Effect of IFRS
31 December 2006 transition
to IFRS
# # #
Net assets 1,868,125 588,837 2,456,962
Share capital 583,333 - 583,333
Share premium 1,522,550 - 1,522,550
Share based payment reserve 57,600 - 57,600
Profit and loss account (295,358) 588,837 293,479
Total equity 1,868,125 588,837(2) 2,456,962
Reconciliation of equity at Previous Effect of IFRS
30 June 2006 GAAP transition
to IFRS
# # #
Net assets 1,167,234 672,918 1,840,152
Share capital 325,000 - 325,000
Share premium 1,125,883 - 1,125,883
Share based payment reserve 900,000 - 900,000
Profit and loss account (1,183,649) 672,918 (510,731)
Total equity 1,167,234 672,918(3) 1,840,152
Explanation of effects of transition to IFRS:
#
1) Fair value gain on current asset investments 23,463
Fair value gain on non-current asset investments 593,036
Less deferred taxation (177,911)
438,588
2) Fair value gain on current asset investments 78,989
Fair value gain on non-current asset investments 728,354
Less deferred taxation (218,506)
588,837
3) Fair value gain on current asset investments 36,036
Fair value gain on non-current asset investments 909,832
Less deferred taxation (272,950)
672,918
Reconciliation of net profit
Reconciliation of profit for Previous Effect of IFRS
the year ended 31 December GAAP transition
2006 to IFRS
# # #
Total income 3,915,712 710,975 4,626,687
Cost of sales (3,302,369) (655,449) (3,957,818)
Administrative expenses (537,564) - (537,564)
Share based payment 32,400 - 32,400
transactions
Taxation - - -
Interest receivable 5,735 - 5,735
Net profit 113,914 55,526(1) 169,440
Reconciliation of profit for Previous Effect of IFRS
the six months ended 30 June GAAP transition
2006 to IFRS
# # #
Total income 1,752,363 130,552 1,882,915
Cost of sales (1,541,063) (117,979) (1,659,042)
Administrative expenses (177,356) - (177,356)
Share based payment - - -
transactions
Taxation - - -
Interest receivable 1,679 - 1,679
Net profit 35,623 12,573(2) 48,196
Explanation of effect of transition to IFRS:
#
1) Fair value gain on current asset investments 710,975
Increase in cost of sales resulting from the
application of fair value (655,449)
55,526
2) Fair value gain on current asset investments 130,552
Increase in cost of sales resulting from the
application of fair value (117,979)
12,573
Consolidated Cash Flow Statement
The Group's Consolidated Cash Flow Statements are presented in accordance with
IAS 7. The Consolidated Cash Flow Statements present substantially the same
information as that required under UK GAAP, with the following principal
exceptions:
1. Under UK GAAP, cash flows are presented under nine standard headings,
whereas IFRS requires the classification of cash flows resulting from operating,
investing and financing activities.
2. The cash flows reporting under IAS 7 relates to movements in cash and
cash equivalents, which include cash and short term liquid investments. Under UK
GAAP, cash comprises cash in hand and deposits repayable on demand.
14. Financial information
The financial information contained in this interim report does not constitute
full statutory accounts as defined in Section 240 of the Companies Act 1985. The
financial information for the six months ended 30 June 2007 and 30 June 2006 has
not been audited.
The information for the year ended 31 December 2006 has been extracted from the
latest published accounts. Those accounts have been filed with the Registrar of
Companies and included the report of the auditors which was unqualified and did
not contain a statement under either Section 237(2) or 237(3) of the Companies
Act 1985. Those statutory accounts were prepared in accordance with UK GAAP.
-Ends-
For further information:
Mark Watson-Mitchell, Executive Chairman Tel: 020 7638 8750
Addworth plc
Hugh Oram, Nominated Adviser Tel: 020 7710 7400
Nabarro Wells & Co. Limited
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MGGZLRNDGNZM
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