RNS Number : 5676V
Addworth PLC
30 May 2008
30 May 2008
Addworth plc
Final Results for the Year Ended 31 December 2007
Addworth plc ("Addworth" or the "Company"), the AIM listed active capital investor today announces its final results for the year ended
31 December 2007.
Highlights:
* Net assets up 55.27% year on year at �3.82 million (�2.46 million)
* Group turnover �4.97 million (�4.63 million - restated on first application of IFRS)
* Pre-tax loss �0.63 million (profit: �0.17 million - restated on first application of IFRS)
* Board confident of further asset advances being made in the current year
Executive Chairman, Mark Watson-Mitchell commented:
"Year on year we increased our Group net assets by 55.27% to �3.82 million, which compares with the 76.73% advance in 2006. Our
consolidated pre-tax loss of �0.63 million partly reflects the added costs of operating the business model. In spite of the operating loss,
the year saw a significant increase in our net asset value.
Although markets continue to prove difficult we are preparing a number of new flotations in 2008, with interests including insurance
claims management, pre-IPO investments, farmer's markets, and greener investments."
For further information:
Addworth Plc 020 7638 8750
Mark Watson-Mitchell, www.addworth.
Executive Chairman co.uk
Nabarro Wells & Co. Limited 020 7634 4705
Hugh Oram
CHAIRMAN'S STATEMENT AND INVESTMENT REVIEW
This is our first full year of reporting in accordance with International Financial Reporting Standards (IFRS).
The Directors believe net asset value and pre-tax profit/(loss) to be key performance indicators for the Group.
Year on year we increased our Group net assets by 55.27% to �3.82 million, which compares with the 76.73% advance in 2006. Our
consolidated pre-tax loss of �0.63 million partly reflects the added costs of operating the business model. In spite of the operating loss,
the year saw a significant increase in our net asset value.
During the year under review our turnover on share trading amounted to �4.59 million (2006: �3.85 million), rendering gross profits of
�0.08 million (2006: loss �0.11 million). There were significant gains on a number of our early investments, such as Myhome International
plc, where we made �149,819 and EBTM plc, �44,991. Unfortunately these gains were to some extent offset by losses elsewhere, notably on
Maypole Group Plc and Sportingbet Plc, where we suffered losses of �56,004 and �60,202 respectively.
One very satisfying result of the increase in our investing activity was the corresponding increase in the fees we earned from the
provision of management and strategic consultancy services, rising to �168,503 from �61,250 in 2006.
Substantial investments
The last year was not easy as markets proved difficult to assess, especially in the light of the US sub-prime crisis and the acute
problems at Northern Rock Plc. However, we managed to float five new companies on the PLUS-quoted market, whilst we helped one of our AIM
companies to make a near �3.0 million acquisition.
The companies that we introduced to the PLUS-quoted market in 2007 were: Oil and Gas Support Services Plc (PLUS: OGSS), which is seeking
to acquire support services companies operating in the global oil and gas sector; Gaming Ventures Plc (PLUS: GAMP), involved in the online
and mobile gaming sector; Uranium Prospects Plc (PLUS: URPP), which is funding exploration for uranium in Canada's Athabasca Basin; Early
Equity Plc (PLUS: EEQP), which is involved in helping to fund companies in the Midlands and the North of England; and finally Three's A
Crowd Plc (PLUS: TACP), an events management company that is also developing an online lifestyle portal.
In addition to those investments we retain substantial investments in Livewave Media Plc (PLUS: LIVP) (previously Branded Entertainment
Plc), Cheerful Scout Plc (PLUS: CLS), NCI Vehicle Rescue Plc (PLUS: NCI), The Core Business Plc (LSE: CORE) and Yellowcake Plc (PLUS: YEL).
The market value, at bid prices of this group of investments which we consider our long term investments, is included on the Consolidated
balance sheet (see page 13) under the heading Non current assets: Available-for-sale investments at �3,664,272 (2006: �1,603,545). The cost
of acquiring these assets was �945,898 (2006: �875,191).
Non-substantial investments
We continue to seek out opportunities to invest in smaller quoted companies which we consider to be undervalued. The continuing poor
performance of the market has contributed in reducing the number of such investments at the end of the period under review to 22 from 28 at
the end of the previous year, although the aggregate cost of our holdings saw an increase.
The restructuring work done on this category of investments saw a gain in market value against cost, reversing last year's loss. These
shorter term investments are shown on the consolidated balance sheet (see page 13) under the heading Current assets: Investments at fair
value through profit and loss at �790,247 (2006: �481,140). The cost of acquiring these assets was �692,936 (2006: �590,330).
Share options award
As envisaged on page 9 of the original Admission Document for the Company, an appropriate share option award has been granted to the
Directors and staff in recognition for their contribution to the success of the business to date. A total of 17,000,000 options were
awarded, to acquire shares in the Company at a subscription price of 3p per share over a seven year period from 28 September 2010. Details
of each individual's entitlement are set out in the Directors' Report (see page 7). The Company's share price at the time of the award was
2.6p.
Going forward
We are beginning to realise that we have developed an interesting niche in helping to fund early-stage companies and take them rapidly
on to the PLUS-quoted market. This particular market holds substantial potential for Addworth, an emphasis we will continue to pursue in the
current year.
Our budgeted target for 2008 is to help fund and promote onto the PLUS-quoted market a total of eight companies. Companies which are
currently being lined up for Introduction onto that market cover a wide range of interests including: insurance claims management; investing
in 'green' projects; operating farmer's markets; pre-IPO investments; Savile Row tailoring; and investing in tourism projects in Zanzibar.
In the near future we will be helping to float plus+investors plc on the PLUS-quoted market, which will operate as a pre-IPO investment
company. Its establishment will help Addworth Plc insomuch as its business model is that of taking stakes in companies ahead of their
Introduction to the PLUS-quoted market. That should add to Addworth's fund-raising abilities on behalf of 'client' companies, whilst giving
plus+investors plc attractive buying opportunities for its own portfolio.
Early in 2007 we made a substantial investment in Risk Transfer Limited, establishing a fully authorised insurance company in Guernsey,
in the Channel Islands. Whilst this company has been developing its unique LeaseCare policy Addworth has continued to fund its working
capital requirement. That cost, which totalled �233,393 in 2007 (2006: �63,029), was a large contributor to the Group's pre-tax loss.
The LeaseCare product covers the insurance risk of contractual lease end refurbishment costs, and is aimed at vehicle leasing companies,
who wish to protect their assets at the end of a lease. The marketing of this policy will proceed in 2008.
After enduring a tricky period of development in 2006 the last year or so has proved to be impactive for The Core Business Plc (AIM:
CORE). Its acquisition of Amirose International Ltd in the middle of the year has contributed significantly to the distribution
infrastructure. New brands now being represented are being marketed through some of the UK's leading retail multiples. We remain convinced
that management of The Core Business will reward our continued faith in their ability.
Addworth's longer-term investment portfolio remains committed to companies with whom we have either Board connections or strategic and
facilities management consultancies.
The short term portfolio has been reduced, and trading pared back considerably with equity market conditions as tricky as they are at
present.
We continue to seek out possible acquisition targets for the Group, with an emphasis upon the financial sector, and we will continue to
search for such opportunities in 2008.
The Company is seeking to expand its established horizons of funding and floating AIM and PLUS-quoted companies, but guarded in its
moves into areas where its knowledge and experience is less well-based. Even so it will not stop us looking.
Risk and uncertainties
Risks and uncertainties which the Group faces as part of its business are discussed in note 30 of the attached financial statements.
Other business risks
Other risks faced by the Group include the following:
* an inappropriate investment strategy could result in poor returns to shareholders and widening the discount of the share price to
net asset value per share. The Board conducts regular reviews in relation to a range of issues including the allocation of assets across
industrial sectors;
* inadequate financial controls could result in misappropriation of assets, loss of income and debtor receipts and overstatement of
net asset values. The Board regularly reviews internal procedures and management accounts and subjects the books and records of the Group to
an annual audit;
* loss of key staff could affect investment returns. The quality of the management team is a crucial factor in delivering good
performance and the Group develops its remuneration packages in order to retain key staff.
I would like to take this opportunity to thank our Board and staff who are working extremely hard to fulfill our business goals of
creating and adding worth. Finally we would like to thank all of our shareholders for their support.
Mark Watson-Mitchell
Executive Chairman
DIRECTORS' REPORT
The Directors present their report and the audited consolidated financial statements for the year ended 31 December 2007.
Activities
The principal activity of the Group is that of an equity investor. It helps to finance and subsequently take to either the AIM or
PLUS-quoted markets small entrepreneurially managed companies, to whom it also provides strategic consultancy services for their
development. The Company invests in undervalued smaller quoted companies, whilst also seeking to acquire trading entities.
Results for the year and dividends
A review of developments during the year and of future prospects is included in the Chairman's statement on pages 3 to 5. The audited
financial statements, including notes, are presented on pages 11 to 45. The subsidiaries principally affecting the profits and net assets of
the Group during the year are listed in note 14 on page 30 of the financial statements.
The consolidated net loss after taxation amounted to �628,340 (2006: profit of �169,440 as restated on first application of IFRS). The
Directors do not recommend the payment of a dividend for the year (2006: �nil).
Directors
The present Directors of the Company are listed on page 2.
The Director retiring by rotation and seeking re-election at the forthcoming Annual General meeting in accordance with the articles of
association is R Painting. The Board has considered and reviewed his appointment prior to the submission for recommendation. The board
believes that the performance of R Painting continues to be effective, that he demonstrates commitment to his role and has a range of
business, financial and management skills and experience relevant to the direction and control of the Company.
The continuing Directors recommend that shareholders vote in favour of the re-election of the director retiring by rotation.
Directors' interests
The Directors who served during the year and their beneficial interests in the share capital of the Company as at 31 December 2007
were:
Ordinary shares of 0.5p Ordinary shares of 0.5p each
each
2007 2006
M Watson-Mitchell 28,500,000 28,500,000
M Gilmour 800,000 800,000
R Painting 4,780,000 4,780,000
A Collins 2,070,000 2,070,000
A Scutt 15,000 15,000
M Partner and W Bryant, both directors of Risk Transfer Limited, a 100% owned subsidiary of the Company, own 3,245,666 Addworth ordinary
shares between them, representing 2.31% of the issued share capital.
Company Secretary
F Timmermans was appointed Company Secretary on 1 January 2008, replacing R Painting.
Discretionary share options award
The following share options were awarded in September 2007:
Executive directors
M Watson-Mitchell 10,000,000
M Gilmour 2,500,000
F Timmermans 500,000
Non-executive directors
A Collins 1,000,000
R Painting 1,000,000
A Scutt 1,000,000
A further one million options were granted to other staff members. The options are exercisable at any time on or after 28 September
2010, for a period of seven years, at the exercise price of 3.0p per share. The bid price at the time the options were granted was 2.6p per
share.
Substantial shareholdings
At the date of this report the Company is aware of the following substantial holdings in shares carrying voting rights:
Percentage shareholding
Number of shares
Pershing Keen Nominees Limited * 37,725,000 26.82%
M Watson-Mitchell 26,500,000 18.84%
R Bruce Rowan 13,500,000 9.60%
Starvest Plc 12,670,000 9.01%
Hythe Nominees Limited 8,559,500 6.08%
First Equity Nominees Limited ** 5,372,946 3.82%
JIM Nominees Ltd 4,883,800 3.47%
R Painting 4,780,000 3.40%
* The above stated nominee holding includes declared holdings by the following individuals:
Percentage shareholding
Number of shares
N Wray 23,000,000 16.35%
S Perree 7,000,000 4.98%
R Goulding 6,944,071 4.94%
** The above stated nominee holding includes shares held by M Watson-Mitchell, M Partner and W Bryant.
Financial risk management
The principal current assets of the business are cash or investments that can be converted into cash within a short period of time.
Therefore the principal financial instruments employed by the Group are cash or cash equivalents and the Directors ensure that the business
maintains surplus cash reserves to minimise liquidity risk. Conversion of current asset investments into cash in accordance with the
contractual arrangements is closely monitored. Current asset investments and non-current available-for-sale investments are subject to
price risk as a result of movement in market values. The Directors monitor movement in market values closely and take appropriate
action, if required, as a result of those movements. The Group's management fees are based on pre-agreed contractual arrangements with
clients, thereby reducing price risk and credit risk.
Creditor payment policy
It is the Group's policy to settle all investment transactions in accordance with the terms and conditions of the relevant market in
which it operates. All other expenses are paid on a timely basis in the ordinary course of business, provided that goods and services are
supplied in accordance with the contractual conditions.
At the year end, the Group had an average of 22 days purchases owed to trade creditors (2006: 22).
Other risks and uncertainties facing the Group are disclosed in note 30 of the attached financial statements. Other business risks are
discussed on page 5 of the Chairmans' statement.
Corporate governance
The Directors intend, in so far as is practicable given the Group's size and the constitution of the board, to comply with the main
provisions of the Combined Code: Principles of Corporate Governance and Code of Best Practice which is consistent with the recommendations
on Corporate Governance of the Quoted Companies Alliance.
The Directors intend to comply with Rule 21 of the AIM Rules relating to the Directors' dealings as applicable to AIM companies and will
also take all reasonable steps to ensure compliance with Rule 21 by the Group's relevant employees.
Statement regarding disclosure of information to the auditor
Each Director of the Company has confirmed that, in fulfilling their duties as a director, they are aware of no relevant audit
information of which the Company's Auditors are not aware and that they have taken all the steps that they ought to have taken as a director
to make themselves aware of any relevant audit information and to establish that the Company's Auditors are aware of that information.
Auditors
A resolution to reappoint Nexia Smith & Williamson as auditors will be proposed at the next Annual General Meeting.
Approved by the Board of Directors
and signed on behalf of the Board
M Watson-Mitchell
Director
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom
law and the International Financial Reporting Standards (IFRS) as adopted by the European Union.
The Directors are required to prepare financial statements for each financial year which present fairly the financial position of the
Company and of the Group and the financial performance and cash flows of the Company and of the Group for that period. In preparing those
financial statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
* provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance;
and
* state that the Company and the Group have complied with IFRS, subject to any material departures disclosed and explained in the
financial statements.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Act 1985. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors confirm that they have complied with these requirements and, having a reasonable expectation that the Company and the
Group has adequate resources to continue in operational existence for the foreseeable future, continue to adopt the going concern basis in
preparing the financial statements.
The financial statements are published on www.addworth.co.uk, which is a website maintained by the Company. The directors are
responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in
the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Independent auditors' report to the shareholders of Addworth plc
We have audited the group and parent company financial statements (the 'financial statements') of Addworth plc for the year ended 31
December 2007 which comprise the Consolidated Income Statement, the Consolidated Statement of Change in Shareholders' Equity, the
Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Parent Company Statement of Change in Shareholders' Equity, the Parent
Company Balance Sheet, the Parent Company Cash Flow Statement and the related notes 1 to 34. These financial statements have been prepared
under the accounting policies set out therein.
This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work
has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company
and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union applied in accordance with the provisions of the
Companies Act 1985 are set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance
with the Companies Act 1985. We report to you whether in our opinion the information given in the Directors' Report is consistent with the
financial statements. The information given in the Directors' Report includes that specific information presented in the Chairman's
Statement that is cross referred from the Business Review section of the Directors' Report. We also report to you if, in our opinion, the
company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if
the information specified by law regarding directors' remuneration and transactions with the company is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements.
This other information comprises only the Directors' Report and the Chairman's Statement. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to
any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and
of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of
information in the financial statements.
Opinion
In our opinion:
* the financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union applied in
accordance with the provisions of the Companies Act 1985, of the state of the group's and parent company's affairs as at 31 December 2007
and of the group's loss for the year then ended; and
* the financial statements have been properly prepared in accordance with the Companies Act 1985 and
* the information given in the Directors' Report is consistent with the financial statements.
Nexia Smith & Williamson 25 Moorgate
Chartered Accountants London
Registered Auditors EC2R 6AY
Date: 29 May 2008
The maintenance and integrity of the Addworth plc web site is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have
occurred to the accounts since they were initially presented on the web site.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2007
Notes Year ended Year ended
31 December 31 December
2007 2006
� �
Revenue 3 4,965,857 4,626,687
Cost of sales
Cost of investments sold (3,957,818)
(4,505,772)
Gross profit 460,085 668,869
Expenses
Administration expenses excluding
share based expenses
Share based payment transactions
4 (1,095,895) (537,564)
29 (17,000) 32,400
Total expenses (1,112,895) (505,164)
Operating (loss)/profit
Finance income
8
(Loss)/profit before taxation
(652,810) 163,705
26,448 5,735
(626,362) 169,440
Taxation 9 (1,978) -
(Loss)/profit after tax for the year
(628,340) 169,440
Analysis of (loss)/profit after tax
for the year between equity and
minority interests
Equity shareholders (628,340) 169,440
(628,340) 169,440
Earnings per share from continuing
operations attributable to the
equity shareholders:
Basic
Diluted 10 (0.46)p 0.26p
10 (0.46)p 0.20p
The notes on pages 16 to 43 form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2007
Share capital Share premium Other reserves Retained earnings Total
� � � � equity
�
Balance at 285,000 985,884 1,315,125 (1,195,809) 1,390,200
1 January 2006
- - 506,128 - 506,128
Gain on revaluation of
available-for-sale investments
Release of gain on disposal of - - (370,810) - (370,810)
available for sale investments
Tax on items taken directly to - - (40,595) - (40,595)
equity
Profit for the year - - - 169,440 169,440
Total recognised income and - - 94,723 169,440 264,163
expenses for the year
Share based payments - - (842,400) 810,000 (32,400)
Issue of equity share capital 298,334 536,666 - - 835,000
Balance at 1 January 2007 583,334 1,522,550 567,448 (216,369) 2,456,963
Gain on revaluation of - - 2,106,002 - 2,106,002
available-for-sale investments
Release of gain on disposal of - - (115,982) - (115,982)
available for sale investments
Tax on items taken directly to - - (542,639) - (542,639)
equity
Loss for the year - - - (628,340) (628,340)
Total recognised income and - - 1,447,381 (628,340) 819,041
expenses for the year
Share based payments - - 17,000 - 17,000
Issue of equity share capital 120,000 402,000 - - 522,000
Balance at 703,334 1,924,550 2,031,829 (844,709) 3,815,004
31 December 2007
Other reserves are further analysed in note 23.
The notes on pages 16 to 43 form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
as at 31 December 2007
Notes 31 December 31 December
2007 2006
� �
Non-current assets
Plant and equipment 11 52,097 53,302
Intangible assets 12 - 49,998
Available-for-sale investments 13 3,664,272 1,603,545
Total non-current assets 3,716,369 1,706,845
Current assets
Trade and other receivables 15 174,180 64,554
Investments at fair value through profit 790,427 481,140
and loss
Cash and cash equivalents 17 318,681 743,714
Total current assets 1,283,288 1,289,408
Total assets 4,999,657 2,996,253
Equity and liabilities
Ordinary share capital 22 703,334 583,334
Share premium 1,924,550 1,522,550
Investment revaluation reserve 23 1,957,229 509,848
Share based payment reserve 23,29 74,600 57,600
Retained earnings (844,709) (216,369)
Total equity 3,815,004 2,456,963
Non-current liabilities
Deferred tax liabilities 21 763,123 218,506
Current liabilities
Trade and other payables 19 421,530 320,784
Total liabilities 1,184,653 539,290
Total equity and liabilities 4,999,657 2,996,253
Authorised by the board and signed on its behalf on 29 May 2008
Mark Watson-Mitchell
The notes on pages 16 to 43 form an integral part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2007
Notes Year ended Year ended
31 31
December December
2007 2006
� �
Net cash (used in)/from operating activities 25 (883,697) 220,619
Investing activities
Purchase of non-current investments (336,071) (435,680)
Disposal of non-current investments 265,364 161,203
Purchases of tangible assets (18,827) (53,302)
Increase in intangible assets (250) -
Net cash used in investing activities (89,784) (327,779)
Financing activities
Finance income 26,448 5,735
Proceeds on issue of shares 522,000 695,000
Directors' exercise of share warrants - 90,000
Net cash from financing activities 548,448 790,735
Net (decrease)/increase in cash and cash (425,033) 683,575
equivalents
Cash and cash equivalents at start of year 743,714 60,139
Cash and cash equivalents at end of year
17 318,681 743,714
The notes on pages 16 to 43 form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2007
Share capital Share premium Other reserves Retained earnings Total
� � � � equity
�
Balance at 285,000 985,884 1,315,125 (1,195,809) 1,390,200
1 January 2006
- - 506,128 - 506,128
Gain on revaluation of
available-for-sale investments
Release of gain on disposal of - - (370,810) - (370,810)
available for sale investments
Tax on items taken directly to - - (40,595) - (40,595)
equity
Profit for the year - - - 232,469 232,469
- - 94,723 232,469 327,192
Total recognised income and
expenses for the year
Share based payments - - (842,400) 810,000 (32,400)
Issue of equity share capital 298,334 536,666 - - 835,000
Balance at 1 January 2007 583,334 1,522,550 567,448 (153,340) 2,519,992
- - 2,106,002 - 2,106,002
Gain on revaluation of
available-for-sale investments
Release of gain on disposal of - - (115,982) - (115,982)
available for sale investments
Tax on items taken directly to - - (542,639) - (542,639)
equity
Loss for the year - - - (443,441) (443,441)
- - 1,447,381 (443,441) 1,003,940
Total recognised income and
expenses for the year
Share based payments - - 17,000 - 17,000
Issue of equity share capital 120,000 420,000 - - 522,000
Balance at 703,334 1,924,550 2,031,829 (596,781) 4,062,932
31 December 2007
Other reserves are further analysed in note 23.
The notes on pages 16 to 43 form an integral part of these financial statements.
COMPANY BALANCE SHEET
as at 31 December 2007
Notes 31 December 31 December
2007 2006
� �
Non-current assets
Plant and equipment 11 52,097 53,302
Investments in subsidiaries 14 250,004 250,002
Intangible assets 12 - 49,998
Available-for-sale investments 13 3,656,272 1,603,545
Total non-current assets 3,958,373 1,956,847
Current assets
Trade and other receivables 16 388,957 127,581
Investments at fair value through profit 790,427 481,140
and loss
Cash and cash equivalents 18 58,049 743,714
Total current assets 1,237,433 1,352,435
Total assets 5,195,806 3,309,282
Equity and liabilities
Ordinary share capital 22 703,334 583,334
Share premium 1,924,550 1,522,550
Investment revaluation reserve 23 1,957,229 509,848
Share based payment reserve 23,29 74,600 57,600
Retained earnings (596,781) (153,340)
Total equity 4,062,932 2,519,992
Non-current liabilities
Deferred tax liabilities 21 763,123 218,506
Current liabilities
Trade and other payables 20 369,751 570,784
Total liabilities 1,132,874 789,290
Total equity and liabilities 5,195,806 3,309,282
Authorised by the board and signed on its behalf on 29 May 2008
Mark Watson-Mitchell
The notes on pages 16 to 43 form an integral part of these financial statements.
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2007
Notes Year ended Year ended
31 December 31
2007 December
� 2006
�
Net cash (used in)/from operating activities
26 (1,137,987) 470,619
Investing activities
Purchase of non-current investments (328,071) (435,680)
Disposal of non-current investments 265,364 161,203
Increase in tangible assets (18,829) (253,304)
Increase in intangible asset (250) (49,998)
Net cash used in investing activities (81,786) (577,779)
Financing activities
Finance income 12,108 5,735
Proceeds on issue of shares 522,000 695,000
Directors' exercise of share warrants - 90,000
Net cash from financing activities 534,108 790,735
Net (decrease)/increase in cash and cash
equivalents (685,665) 683,575
Cash and cash equivalents at start of year 743,714 60,139
Cash and cash equivalents at end of year 18 58,049 743,714
The notes on pages 16 to 43 form an integral part of these financial statements.
Notes to the Financial Statements
for the year ended 31 December 2007
1. Authorisation of financial statements and statement of compliance with IFRSs
Addworth plc is a public limited company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the
Alternative Investment Market.
The Group and the Company's financial statements have been prepared in accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The principal
accounting policies adopted by the Group and by the Company are set out in note 2.
The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 32.
The Company has taken advantage of the exemption provided under section 230 of the Companies Act 1985 not to publish its individual
income statement and related notes.
2. Accounting policies
Basis of preparation
These Group and Company financial statements have been prepared under the historical cost convention, as modified by the revaluation of
available-for-sale financial assets and financial assets and financial liabilities at fair value through profit or loss.
Going concern
The accounts have been prepared on a going concern basis. The Directors have reviewed the financial performance of the Group since 31
December 2007 and have considered the Group's cash projections for the 12 months from the date of approval of these accounts. Based on these
projections, the Directors believe the going concern assumption remains valid. On this basis the Directors of the Group consider it
appropriate to draw up the accounts on a going concern basis. The accounts do not include any adjustments that would result if the Group was
no longer a going concern.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted accounting practice 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 main areas of judgement and estimation relate to valuation of share options, recoverability of trade and other receivables and fair
valuation of investments, both available-for-sale and at fair value through profit or loss.
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, 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 those factors to those made by the Group could materially affect the reported value of
share based payments. The carrying amounts of share based payments in these financial statements came to �74,600 (2006: �57,600).
Recoverability of debtors and other receivables
The trade debtors and other receivables balances in the Group's balance sheet relate to a relatively small number of individual debtors.
All individual balances are reviewed on a month by month basis.
Whilst every attempt is made to ensure that any bad debt provision is as accurate as possible, there remains a risk that the provisions
do not match the level of debt which may ultimately prove to be uncollectible. The carrying amounts for Group and Company debtors in these
financial statements, net of provisions, are �174,180 and �388,957 respectively (2006: �64,554 and �127,581).
Investments
Investments listed on a stock exchange are valued at their quoted market bid prices at each year end. Unlisted investments are valued
annually by the Directors taking into account such relevant information as financial performance, quality of management, funding prospects
and flotation potential. The carrying amounts for Group and Company investments in these financial statements are �4,454,699 and �4,446,699
respectively (2006: �2,084,685 for both Group and Company).
New standards and interpretations
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in
these financial statements were in issue but not yet effective:
IAS 1 Presentation of financial statements (revised 2007; effective 1 January 2009)
IAS 27 Consolidated and separate financial statements (amended 2008; effective 1 July 2009)
IAS 23 Borrowing costs (revised 2007; effective 1 January 2009)
IFRIC 11 IFRS 2 - Group and treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer loyalty programmes (effective 1 July 2008)
IFRIC 14 The limit on a defined benefit asset minimum funding requirements and their interaction (effective 1 January 2008)
The Directors anticipate that the adoption of these statements and interpretations will have no material impact on the Group's financial
statements in the period of initial application. IFRS 3 Business combinations (effective 1 July 2009) may have an impact on the financial
statements of the Group in the event that acquisitions are undertaken, and IFRS 8 Operating segments (effective 1 July 2009) will amend the
disclosure of business and geographical segments as presented in note 6.
Consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a
shareholding of more than 50% of the voting rights.
Subsidiaries are fully consolidated from the date that control passes to the Group. They are deconsolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. The excess of the cost of the acquisition over the fair value of the Group's share of the
identifiable net assets acquired is recorded as goodwill. Goodwill arising on consolidation is recognised as an asset and reviewed for
impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights.
In accounting for investments in associates the group has taken advantage of the exemption granted in International Accounting Standard
(IAS) 28 "Investments in Associates", to venture capital organisations. Such investments are measured at fair value and classified as
investments available-for-sale.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it
operates (its functional currency). For the purposes of the consolidated financial statements the results and financial position of each
Group company are expressed in pounds sterling, which is the functional currency of all the group companies, and the presentation currency
for the consolidated financial statements.
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 differences on all such transactions are recognised in the income statement, except for those on investments
classified as available-for-sale financial assets, which are included in the revaluation reserve in equity.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable and represents amounts receivable for sales of services
provided in the normal course of business, net of discounts, VAT and other sales related taxes.
Sales of services
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:
Revenues arising from contractual arrangements with third parties for the provision of services are recognised by reference to the
stages of completion of each individual transaction at the end of the reporting period.
Interest income
Interest income is recognised on a time proportion basis using the effective interest method.
Dividend income
Dividend income is recognised when the Group's right to receive payment is established.
Income from the sale of financial assets
Income from the sale of financial assets such as shares in listed companies is recognised when the contract for the sale is entered
into.
Share based payments
The Group has applied the requirements of IFRS 2 "Share-based payments". The Group has issued equity settled share based payments to
certain employees. Equity-settled share-based payments are measured at fair value determined at the date of grant, which is expensed on a
straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. In determining the fair
value of equity settled share based payments and in calculating the fair value and the related charge to the income statement,
by use of a Black-
Scholes model, the group makes assumptions about future events and market conditions and the likely number of shares that will vest.
Different assumptions about these factors to those made by the Group could materially affect the reported value of share based payments. The
proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when
the options are exercised.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or
substantially enacted by the balance sheet date.
Deferred tax is the tax 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 reverse 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.
Plant and equipment
All equipment is stated at cost less accumulated depreciation, residual value and any recognised impairment loss.
Depreciation is calculated so as to write off the cost of each asset, over their estimated useful lives, using the straight-line method,
on the following bases:
Fixtures and fittings - 39 months
Office equipment - 48 months
The assets' residual value and useful life are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying
amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable
amount.
Leases
The Group has a lease on its current business premises, which is classified as an operating lease, as the lessor retains a significant
portion of the risks and rewards of ownership. Payments under this operating lease, after adjusting for a rent free period, are charged to
the income statement on a straight line basis over the period of the lease.
Investments
For accounting periods up to 1 January 2006, the Group's fixed assets included investments in subsidiaries, recorded at cost. Current
assets included investments in companies, including associates, which were valued at the lower of cost and net realisable value, based upon
market bid prices.
From 1 January 2006, under IFRS, the Group classifies its investments in the following categories: financial assets at fair value
through profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on the purpose for which
the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this
designation at every reporting date.
Financial assets at fair value through profit or loss
A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this
category are classified as current assets if they are either held for trading or are expected to be realised within 12 months from the
balance sheet date.
Available-for-sale financial assets
Available-for-sale financial assets are investments that are either designated in this category or not classified in any other
categories. They are included in non current assets unless management intends to dispose of the investment within 12 months from the balance
sheet date.
Purchases and sales of investments are recognised on trade date, the date on which the Group commits to purchase or sell the asset.
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and
the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair
value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective
interest method. Realised and unrealised gains and losses arising from changes in the fair value of the "financial assets at fair value
through profit or loss" category are included in the income statement in the period in which they arise. Unrealised gains and losses arising
from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired,
the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.
The fair values of quoted investments are based on current bid prices.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale
financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income
statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual
provisions of the instrument.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money or services directly to a debtor with no intention of trading the receivable. They are included in
current assets, except for maturities expected to be greater than 12 months after the balance sheet date. These are classified as non
current assets. Loans and receivables are included in trade and other receivables in the balance sheet.
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 according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is
recognised in the income statement. No provision is recognised in these financial statements.
Cash and cash equivalents
Cash and cash equivalents comprise cash held by the company and short-term bank deposits with an original maturity of three months or
less.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective
interest rate method.
Intangible assets
Intellectual property
Through its subsidiary, Partner Bryant Limited, the Group owns the intellectual property rights to a certain insurance product. These
are deemed to have a definite useful life and are carried at cost less accumulated amortisation and impairment provision. Amortisation is
calculated using the straight line method to allocate the cost of the IP rights over their useful life of five years. At each balance sheet
date the Directors assess whether there is any indication that the intellectual property rights may be impaired, and if such indication
exists, the recoverable amount of the asset is determined.
Share capital
The Group's share capital comprises ordinary shares, which are classified as equity. All costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds. Costs directly attributable to the issue of new shares
or options for the acquisition of a business are included in the cost of acquisition as the whole or part of the purchase consideration.
3 Revenue 2007 2006
� �
An analysis of the Group's revenue is as follows:
Sales of investments at fair value through profit or loss 3,991,630 2,910,327
Available for sale investments sold 480,447 571,063
Release of gain on disposals of available for sale investments 115,982 370,810
Gains on investments at fair value through profit or loss 206,501 710,975
Investment income 2,789 2,262
4,797,349 4,565,437
Rendering of services 168,508 61,250
Total revenue 4,965,857 4,626,687
4 Administration expenses 2007 2006
� �
Operating (loss)/profit for the year is
stated after charging:
Staff costs (note 7) 661,451 265,477
Other staff costs 31,823 74,243
Establishment costs 38,072 33,271
Management fees 50,000 -
Impairment of intangible asset 50,248 -
Depreciation of plant and equipment 20,032 -
Marketing expenses 53,203 26,670
Insurances 12,866 9,099
Auditor's fees - Audit 22,979 13,114
Auditor's fees - other services 17,822 15,680
Professional fees 113,218 60,770
Other 24,181 39,240
1,095,895 537,564
The Company has taken advantage of the exemption provided under section 230
of the Companies Act 1985 not to publish its individual income statement and
related notes. The loss dealt with in the financial statements of the parent
Company was �443,441 (2006: profit of �232,469).
5 Auditors remuneration 2007 2006
� �
Fees payable to the Company*s auditors for the audit 13,979 13,114
of the Group*s financial statements
Fees payable to the Company*s auditor and its
associates for other services:
Other services relating to taxation 17,822 7,435
Services relating to corporate finance transactions - 8,245
31,801 28,794
6 Business and geographical segments
For management purposes, the Group is currently organised into three operating sections: investment activities, provision of
management services and insurance activities.
These divisions are the business segments for which the Group reports its primary segment information. The Group's operations are
predominantly in one geographical segment,
the United Kingdom.
Investment Management services Insurance activities
activities
Total
Year ended � � �
�
31 December 2007
External revenue 4,797,349 168,508 -
4,965,857
Total revenues 4,797,349 168,508 -
4,965,857
Segment result 308,547 151,538 -
460,085
Investment income 12,456 - 13,992
26,448
and finance costs
Loss before tax (142,664) (250,306) (233,392)
(626,362)
Tax (1,060) (918) -
(1,978)
Loss for the year (143,723) (251,225) (233,392)
(628,340)
Segment assets 4,607,043 132,032 260,582
4,999,657
Total assets 4,607,043 132,032 260,582
4,999,657
Segment liabilities 198,615 172,133 50,782
421,530
Unallocated - - -
763,123
liabilities
Total liabilities 198,615 172,133 50,782
1,184,653
Investment Management services Insurance activities
activities Total
Capital expenditure: � � � �
Tangible assets 10,086 8,741 - 18,827
Depreciation charge 10,731 9,301 - 20,032
Impairment of
intangible asset - - 50,248 50,248
Investment activities Management Insurance activities
services Total
Year ended � � � �
31 December 2006
External revenue 4,565,437 61,250 - 4,626,687
Total revenues 4,565,437 61,250 - 4,626,687
Segment result 607,619 61,250 - 668,869
Investment income 5,735 - - 5,735
and finance costs
Profit/(loss) before 391,539 (159,070) (63,029) 169,440
tax
Profit/(loss) for
the year 391,539 (159,070) (63,029) 169,440
Segment assets 2,546,240 400,015 49,998 2,996,253
Total assets 2,546,240 400,015 49,998 2,996,253
Segment liabilities 171,849 148,935 - 320,784
Unallocated - - - 218,506
liabilities
Total liabilities 171,849 148,935 - 539,290
Capital expenditure:
Tangible assets 28,555 24,747 - 53,302
Intangible assets - - 49,998 49,998
7 Staff costs
The average number of persons, including executive directors, was:
2007 2006
Administration 11 7
2007 2006
� �
Staff costs for the above persons were:
Wages and salaries 438,284 229,849
Directors' fees 10,000 9,167
Social security costs 50,011 26,461
National Insurance Contributions on exercise of warrants 163,156 -
661,451 265,477
Share based payment expense/(gain) 17,000 (32,400)
678,451 233,077
2007 2006
Directors' emoluments: � �
Aggregate emoluments 309,251 229,853
Unrealised gains made on exercise of share warrants - 450,000
309,251 679,853
On 29 December 2006 the Directors exercised all of the share warrants that
were issued to them on Admission of the Company to AIM, resulting in the
unrealised gain shown here. None of the Directors have sold any of the shares
acquired through this exercise.
The Group does not operate a retirement benefits scheme.
Highest paid director, amounts included above: 2007 2006
� �
Aggregate emoluments 120,000 102,500
Unrealised gains made on exercise of share warrants - 365,000
120,000 467,500
Reconciliation of provision for National Insurance Contributions due on exercise of share
warrants
2007 2006
� �
Charge for the year 163,156 -
Closing balance 163,156 -
As for companies trading on a recognised stock exchange, employer*s National
Insurance Contributions are due on the unrealised gains made in any exercise
of warrants or options by employees including directors. The Directors
believe it to be prudent to make a provision, which is measured as the best
estimate of the expenditure required to settle the obligation at the balance
sheet date.
8 Finance income 2007 2006
� �
Bank interest receivable 26,448 5,735
9 Taxation - Group
2007 2006
� �
Current tax - -
Deferred tax (note 21) 1,978 -
1,978 -
Reconciliation of
current tax charge
The tax expense in the income statement for the year is lower than the small companies
rate of corporation tax in the UK of 19% (2006: 20%). The differences are reconciled
below:
2007 2006
� �
(Loss)/profit on (626,362) 169,440
ordinary activities
before tax
Tax on (loss)/profit
on ordinary (123,706) 33,888
activities at the
average
standard rate of
corporation tax of
19.75% (2006: 20%)
Effects of:
Expenses not 39,115 6,055
deductible for
taxation
Other fixed asset 718 -
differences,
adjustments and
movements
Unrelieved/( 83,873 (39,943)
utilized) tax losses
and other deductions
arising in the year
Temporary 1,978 -
differences on fixed
assets (note 21)
1,978 -
The effective tax rate for the period is 0.32% (2006: 0%)
10 Earnings per share from continuing operations attributable to the equity
shareholders
2007 2006
Earnings � �
Earnings for the
purposes of basic and (628,340) 169,440
diluted earnings per
share being net
(loss)/profit
attributable to
equity shareholders
Number of shares
Weighted average
number of ordinary 137,684,885 66,068,493
shares for the
purposes of basic
earnings per share
23,279,658 18,635,822
Weighted average
number of dilutive
shares under option
and warrant
Weighted average
number of ordinary
shares for the 160,954,543 84,704,315
purposes of dilutive
earnings per share
2007 2006
Return per ordinary share:
Basic (0.46)p 0.26p
Diluted (0.46)p 0.20p
The calculation of diluted earnings per share assumes conversion of all
potentially dilutive ordinary shares, all of which arise from share options and
warrants. A calculation is done to determine the number of shares that could
have been acquired at fair value, based upon the monetary value of the
subscription rights attached to outstanding share options and warrants.
Basic earnings per share are calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
Given the Group*s reported loss for the year, outstanding share options and
warrants are not taken into account when determining the weighted average
number of ordinary shares in issue during the year, and therefore the basic and
diluted earnings per share are the same.
11 Plant and equipment - Group and Company
Fixtures and fittings Office equipment
Total
� � �
Cost
Additions 31,905 21,397 53,302
At 1 January 2007 31,905 21,397 53,302
Additions 2,758 16,069 18,827
At 31 December 2007 34,663 37,466 72,129
Depreciation
Charge for the year 10,666 9,366 20,032
At 31 December 2007 10,666 9,366 20,032
Net book amount
At 31 December 2006 31,905 21,397 53,302
At 31 December 2007 23,997 28,100 52,097
12 Intangible assets - Group and Company
Intellectual property
2007 2006
� �
Cost
At 1 January 2007 49,998 -
Additions 250 49,998
Impairment provision (50,248) -
Net book amount
At 31 December 2007 - 49,998
The asset represents a product that covers the insurance risk of contractual
lease end refurbishment costs. As no revenue has been earned from the asset
the Directors consider it to be impaired as at the year end. The impairment
has been recognized for the whole carrying amount of the asset. Value of use
was calculated for the product with the discount rate equaling the weighted
average cost of capital of the entity.
13 Available-for-sale investments
Group Company
2007 2006 2007
2006
� � �
�
Fair value 3,664,272 1,603,545 3,656,272
1,603,545
The investments included above principally represent investments in listed equity securities with no fixed maturity or coupon rate. The
fair values of these securities are
based on quoted market bid prices at each year end. See note 30 for market price, liquidity and other risk analyses of financial
instruments.
14 Investment in
subsidiaries -
Company
2007 2006
Cost � �
At 1 January 250,002 -
Additions 2 250,002
At 31 December 2007 250,004 250,002
Details of the investments in which the Group and the Company hold 20% or more of the
nominal value of any class of share capital are as follows:
Holding Ordinary % voting rights and shares held
shares
Name of company Nature of business
Risk Transfer Ltd Insurance 250,000 100%
Investors In Film Investment in film 1 100%
Ltd production
Logistics Ltd Dormant company 1 100%
Partner Bryant Ltd Insurance 2 100%
Oil and Gas Support Investor in oil and
Services plc gas sector 25,000,000 46.94%
Early Equity plc Active investor 12,000,000 30.43%
Plus Investors Ltd Investor in PLUS 33,333,333 33.33%
quoted stocks
Yellowcake plc Investor in uranium 17,319,225 29.73%
sector
All the companies listed above are registered in England and Wales.
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 under Non-current assets: available-for sale
investments(note 13).See note 30 for market price, liquidity and other risk
analyses of financial instruments.
15 Trade and other 2007 2006
receivables - Group
� �
Trade receivables 62,005 19,054
Other debtors 35,332 45,500
Loans to related 76,843 -
parties (note 28)
174,180 64,554
See note 30 for market price, liquidity and other risk analyses of financial
instruments.
16 Trade and other receivables - Company 2007 2006
� �
Trade receivables 62,005 19,054
Amounts owed by Group undertakings 279,014 63,029
Other debtors 27,250 45,498
Loans to related parties (note 28) 76,843 -
Less:
Impairment provision (56,155) -
388,957 127,581
The Group and Company*s credit risk is primarily attributable to its trade
and other debtors. Based on prior experience and an assessment of the
current economic environment, the directors have provided �56,155 against
amounts due from a subsidiary. The Directors believe the carrying amount of
these assets, net of the provision, to approximate their fair value. See
note 30 for market price, liquidity and other risk analyses of financial
instruments.
17 Cash and cash 2007 2006
equivalents - Group
� �
Cash at bank and in 59,390 743,714
hand
Short term bank 259,291 -
deposits
318,681 743,714
See note 30 for market price, liquidity and other risk analyses of financial
instruments.
18 Cash and cash 2007 2006
equivalents - Company
� �
Cash at bank and in 58,049 743,714
hand
See note 30 for market price, liquidity and other risk analyses of financial
instruments.
19 Trade and other 2007 2006
payables - Group
� �
Other tax and social 28,991 12,939
security payable
National Insurance 163,156 -
Contributions on
warrants exercised
Other creditors 158,248 232,587
Accruals and deferred 71,135 75,258
income
421,530 320,784
See note 30 for market price, liquidity and other risk analyses of financial
instruments.
The Directors believe the carrying amount of trade and other payables to
approximate their fair value.
20 Trade and other payables - Company 2007 2006
� �
Amounts owed to subsidiary company 3 250,000
Other tax and social security payable 21,516 12,939
National Insurance Contributions on warrants exercised 163,156 -
Other creditors 118,941 232,587
Accruals and deferred income 66,135 75,258
369,751 570,784
The Directors believe the carrying amount of trade and other payables to
approximate their fair value. See note 30 for market price, liquidity and
other risk analyses of financial instruments.
21 Deferred tax
The deferred tax included on the balance sheets for the Group and the Company is as
follows:
2007 2006
� �
At 1 January 218,506 177,911
Charged to equity 542,639 40,595
Charged to Income Statement 1,978 -
At 31 December 763,123 218,506
Sources of temporary differences giving rise to deferred tax liabilities are
as follows:
Balance sheet - Group
2007 2006
� �
Deferred tax liabilities
Fixed assets 1,978 -
Revaluation of investments 761,145 218,506
Total liabilities 763,123 218,506
Movement in the period - Group
2007 2006
Income Equity Income Equity
Deferred tax liabilities
Fixed assets 1,978 - - -
Revaluation of investments - 542,639 - 40,595
Total liabilities 1,978 542,639 - 40,595
A potential deferred tax asset of �306,364 (2006: �193,805) has not been
recognised on trading losses not utilised, as it is not certain that the
Group will have sufficient taxable profits in future periods to utilise the
asset.
Balance sheet - Company
2007 2006
� �
Deferred tax liabilities
Fixed assets 1,978 -
Revaluation of investments 761,145 218,506
Total liabilities 763,123 218,506
Movement in the period - Company
2007 2006
Income Equity Income Equity
Deferred tax liabilities
Fixed assets 1,978 - - -
Revaluation of investments - 542,639 - 40,595
Total liabilities 1,978 542,639 - 40,595
21 Deferred tax (continued)
A potential deferred tax asset of �236,944 (2006: �174,896) has not been
recognised on trading losses not utilised, as it is not certain that the
Group will have sufficient taxable profits in future periods to utilise the
asset.
22 Called up share capital 2007 2006
� �
Authorised
400,000,000 ordinary shares of 0.5p each (2006: 2,000,000 1,000,000
200,000,000)
Allotted, called up and fully paid
Opening balance: 116,666,666 ordinary shares (2006: 583,334 285,000
57,000,000)
Issued during year: 24,000,000 fully paid up (2006:
59,666,666) 120,000 298,334
Closing balance: 140,666,666 ordinary shares of
0.5p each (2006; 116,666,666) 703,334 583,334
At 31 December 2005 57,000,000 ordinary shares of 0.5p each had been
allotted and called up.
On 5 January 2006, the Company issued 8,000,000 ordinary shares of 0.5p each
for a total consideration of �180,000.
At the Annual General Meeting of the Company held on 30 June 2006, the
authorised share capital of the Company was increased to 200,000,000
ordinary shares of 0.5p each
On 18 December 2006, the Company issued 25,000,000 ordinary shares of 0.5p
each for a total consideration of �500,000.
On 29 December 2006, the Company issued 1,666,666 ordinary shares of 0.5p
each for a total consideration of �50,000 in consideration of 100% of the
issued share capital of Partner Bryant Limited.
On 29 December 2006, holders of 25,000,000 warrants exercised their warrants
upon which the Company issued 25,000,000 ordinary shares at 0.5p each for a
total consideration of �125,000.
On 18 January 2007, the Company issued 4,000,000 ordinary shares of 0.5p
each for a total consideration of �90,000.
On 16 February 2007, the Company issued 20,000,000 ordinary shares of 0.5p
each for a total consideration of �432,000, net of commission of �18,000.
At the Annual General Meeting of the Company held on 23 April 2007, the
authorised share capital of the Company was increased by 200,000,000 to
400,000,000 ordinary shares of 0.5p each.
At 31 December 2007, 2,000,000 (2006: 2,000,000) warrants, with an exercise
price of 0.5p, were outstanding.
At 31 December 2007, 8,000,000 (2006: 8,000,000) warrants, with an exercise
price of 3.0p, were outstanding.
At 31 December 2007, 8,855,000 (2006: 8,855,000) warrants, with an exercise
price of 5.0p, were outstanding. All warrants can be exercised at any time
during a five year period from date of grant.
At 31 December 2007, 17,000,000 (2006: nil) share options, with an exercise
price of 3.0p, were outstanding. All share options can be exercised at any
time during a seven year period commencing 28 September 2010.
23 Other reserves -
Group and Company
Share based payment Investment
reserve revaluation reserve Total
� � �
At 1 January 2006 900,000 415,125 1,315,125
Share based payments (842,400) - (842,400)
Gain on revaluation - 506,128 506,128
of
available-for-sale
investments
Release of gains on - (370,810) (370,810)
disposals of
available-for-sale
investments
-
Tax on items taken (40,595) (40,595)
directly to equity
At 1 January 2007 57,600 509,848 567,448
Share based payments 17,000 - 17,000
Gain on revaluation of available-for-sale - 2,106,002 2,106,002
investments
Release of gains on disposals of - (115,982) (115,982)
available-for-sale investments
Tax on items taken directly to equity - (542,639) (542,639)
At 31 December 2007 74,600 1,957,229 2,031,829
The Share based payment reserve reflects the impact on the Group and
Company*s equity caused by the issue of share options and warrants. The
Investment revaluation reserve reflects the changes in fair values of the
Group and Company*s available for sale investments.
See note 29 for further details on share based payments.
24 Net Asset Value 2007 2006
� �
Group
Net assets 3,815,004 2,456,963
Shares in issue: 140,666,666 (2006:
116,666,666)
Basic Net Asset Value per share 2.71p 2.11p
Total shares including outstanding options and
warrants: 176,521,666 (2006: 135,521,666)
Diluted Net Asset Value per share 2.16p 1.81p
Company
Net assets 4,062,932 2,519,992
Shares in issue: 140,666,666 (2006:
116,666,666)
Basic Net Asset Value per share 2.89p 2.16p
Total shares including outstanding options and
warrants: 176,521,666 (2006: 135,521,666)
Diluted Net Asset Value per share 2.30p 1.86p
24 Net Asset Value (continued)
Basic Net Asset Value per share is derived by dividing the total net assets
attributable to the equity shareholders by the number of ordinary shares in
issue at the balance sheet date. To arrive at the Diluted Net Asset Value
per share, the same total net assets attributable to the equity
shareholders is divided by the sum of the total number of shares issued
plus the total outstanding warrants and share options as at the balance
sheet date.
25 Cash (used in)/from operations - Group
2007 2006
� �
Cash flows from operating activities
(Loss)/profit before taxation (626,362) 169,440
Adjustments for:
Depreciation charges 20,032 -
Effect of transition to IFRS (see note 32) - (55,526)
Impairment of intangible asset 50,248 -
Interest receivable (26,448) (5,735)
Share based payment transactions 17,000 (32,400)
(565,530) 75,779
(Increase)/decrease in debtors (109,626) 5,949
Increase in current asset investments (309,287) (69,827)
Increase in creditors 100,746 208,718
Net cash from operating activities (883,697) 220,619
26 Cash (used in)/from operations - Company
2007 2006
� �
Cash flows from operating activities
(Loss)/profit before taxation (441,463) 232,469
Adjustments for:
Depreciation charges 20,032 -
Effect of transition to IFRS (see note 32) - (55,526)
Impairment of intangible asset 50,248 -
Interest receivable (12,108) (5,735)
Share based payment transactions 17,000 (32,400)
(366,291) 138,808
Increase in debtors (261,376) (57,080)
Increase in current asset investments (309,287) (69,827)
(Decrease)/increase in creditors (201,033) 458,718
Net cash from operating activities (1,137,987) 470,619
27 Operating lease commitments - Group and Company
At the year end date the Group has lease agreements in respect of properties and equipment for which the payments extend
over a number of years.
2007 2006
Due: � �
Within one year 22,500 11,250
Within two to five 27,616 50,116
years
50,116 61,366
28 Related parties
Category/Company Relationship Common directors
Subsidiaries
Risk Transfer Ltd 100% owned M Watson-Mitchell, A Collins
Investors In Film 100% owned M Watson-Mitchell, A Collins,F
Ltd Timmermans
Partner Bryant Ltd 100% owned
Logistics Ltd 100% owned M Watson-Mitchell
Associates
Early Equity plc 30.43% shareholding R Painting
Oil and Gas Support 46.94% shareholding M Watson-Mitchell, A Scutt
Services plc
Yellowcake plc 29.73% shareholding M Watson-Mitchell,A Collins, F
Timmermans
Plus Investors Ltd 33.33% shareholding M Watson-Mitchell,A Collins, M
Gilmour,F Timmermans
Companies with common directors and/or
shareholding
BestGames Holdings 0.15% shareholding M Watson-Mitchell
plc
The Core Business 7.99% shareholding M Watson-Mitchell,M Gilmour
plc
Gaming Ventures plc 9.32% shareholding M Watson-Mitchell
Three*s A Crowd plc 11.55% shareholding M Watson-Mitchell,M Gilmour
Three*s a Crowd 100% owned by M Gilmour
Events Ltd Three*s A Crowd plc
Three*s a Crowd 100% owned by M Gilmour
Online Ltd Three*s A Crowd plc
Uranium Prospects 16.43% shareholding M Watson-Mitchell
plc
Related due to other
reasons
SQC Research Owned byM
Watson-Mitchell
Corporate Liaison Controlled byM M Watson-Mitchell
Ltd Watson-Mitchell
Key management
W Bryant R Painting F Timmermans
A Collins M Partner M Watson-Mitchell
M Gilmour A Scutt
Related party transactions * summary of transactions and balances for
2007
Description Sub-sidiaries Asso-ciates Companieswith Commondirectors Other Manage-ment
Total
Balances31 December 279,014 55,000 24,549 822 -
359,385
2007
Expenses:
Purchase of services - - - 17,625 -
17,625
Remuneration of key - - - - 347,544
347,544
management
Revenue:
Provision of 17,625 54,039 31,014 - -
102,678
consultancy services
Provision of 7,050 7,050 6,609 14,100 -
34,809
facilities
Flotation fees - 17,625 64,625 - -
82,250
Expenses recharged - 6,366 473 6,152 -
12,991
Total transactions 24,675 85,080 102,721 37,877 347,544
597,897
Loans made to related
parties:
Company Amount Interest Other
terms
Plus Investors Ltd 55,000 9% pa No fixed repayment
date
Three*s A Crowd Events Ltd 1,843 - No fixed repayment
date
Uranium Prospects plc 20,000 9% pa No fixed repayment date, but repaid February
2008
76,843
The Company made a doubtful debt provision of �56,155 (2006: �nil) against a
total debt of �256,221 owed it by Risk Transfer Insurance Management Ltd, a
subsidiary of Risk Transfer Limited.
Related party transactions * summary of transactions and balances for 2006
Description Sub-sidiaries Asso-ciates Companieswith Other Manage-ment Total
Commondirectors
Balances31 December 63,029 12,863 5,875 317 - 82,084
2006
Expenses:
Purchase of services - - - 18,564 - 18,564
Remuneration of key - - - - 233,503 233,503
management
Revenue:
Provision of - 32,313 - - - 32,313
consultancy services
Provision of - - - - - -
facilities
Flotation fees - 11,750 - - - 11,750
Expenses recharged - - - 317 - 317
Total transactions - 44,063 - 18,881 233,503 296,447
29 Share based payments
At 31 December 2007, 2,000,000 warrants were outstanding to acquire shares
in the Company at an exercise price of 0.5p each. These were issued on
Admission to AIM in February 2005, and are exercisable at any time from
admission until the fifth anniversary of admission, without any further
conditions attached. At 31 December 2007, 8,000,000 (2006: 8,000,000)
warrants, with an exercise price of 3.0p, were outstanding. These were
granted in January 2006, and are exercisable at any time during a five year
period from that date. At 31 December 2007, 8,855,000 (2006: 8,855,000)
warrants, with an exercise price of 5.0p, were outstanding. 855,000 were
granted on the Company*s Admission to AIM, and 8,000,000 were granted in
January 2006. All warrants can be exercised at any time during a five year
period from date of grant. On 28 September 2007, the Board issued
17,000,000 discretionary share options to the directors and certain staff,
exercisable at a price of 3.0p per share over a seven year period from 28
Septem
2007
Number of share Weighted average
options and warrants exercise price (�)
Outstanding at the 18,855,000 3.7p
beginning of the
period
Granted during the 17,000,000 3.0p
period
Forfeited during the -
period
Exercised during the -
period
Expired during the -
period
Outstanding at the 35,855,000 3.4p
end of the period
Exercisable at the 18,855,000 3.7p
end of the period
The weighted average remaining contractual life of the options
and warrants outstanding as at 31 December 2007 was 6.66 years.
2006
Number of share Weighted average
options and warrants exercise price (�)
Outstanding at the 27,855,000 0.6p
beginning of the
period
Granted during the 16,000,000 4.0p
period
Forfeited during the -
period
Exercised during the 25,000,000 0.5p
period
Expired during the -
period
Outstanding at the 18,855,000 3.7p
end of the period
Exercisable at the 18,855,000 3.7p
end of the period
The weighted average remaining contractual life of the options
and warrants outstanding as at 31 December 2006 was 4.86 years.
The cost of the warrants issued on Admission to AIM was calculated using a Black-Scholes model and was charged to profit and loss in
the financial
statements for the year ended 31 December 2005. The share based payment reserve of �57,600 remaining on the balance sheet at 31 December
2007 is in respect
of the outstanding 18,855,000 warrants.
The value of the options at the balance sheet date is measured using a Black-Scholes pricing model. The total cost of these options to be
charged to profit
and loss over the vesting period (3 years) is �204,000, resulting in a charge for the year ended 31 December 2007 of �17,000 (2006: gain
of �32,400). Inputs
into the model included the following assumptions:
Share price at grant date 2.6p
Exercise price 3p
Volatility 70%
Dividend yield -
Risk free interest rate 5%
Number of options to be exercised 17,000,000
Number of years to exercise 3
Expected volatility was determined by reference to the historical volatility of the Company's share price over the period from Admission
to AIM to 31
December 2007.
The Group recognised total expenses of �17,000 and total gain of �842,400 related to equity-settled share-based payment transactions in
2007 and 2006
respectively.
30 Financial instruments and risk profile
The Group and Company*s financial instruments comprise available-for-sale
investments, investments at fair value through profit or loss, cash and
cash equivalents, and items such as trade payables and trade receivables
which arise directly from its operations. The Group does not use
derivatives for hedging purposes.
The Company*s main activity is that of an equity investor and as such it
invests in securities for the long term. The Company also engages in short
term share trading. The principal risks that the Company encounters are:
market price, liquidity, credit, foreign currency and interest rate risk.
Given the size of the Company, the directors have not delegated the
responsibility of monitoring financial risk management to a sub-committee
of the board. The policies set by the board of directors are implemented by
the executive directors.
Market price risk
Market price risk arises through the movements in the value of the
investment holdings caused by factors other than interest rate or currency
movements. The Group is exposed to these movements in value. Future changes
in market prices of the Group*s investments create uncertainty, and the
Group closely monitors the performance of individual investments within a
strategy approved by the board.
Most of the Group*s equity investments are listed on either AIM or PLUS
Markets in London. A 5% increase in market prices at the reporting date
would have increased equity by �127,970 (2006: �56,124) and reduced the
pre-tax loss by �38,262 (2006: �22,807). If market prices had been 5% lower
at the reporting date, this would have resulted in a decrease in equity of
�127,970 (2006: �56,124) and an increase in the pre-tax loss for the year
by �38,262 (2006: �22,807).
The Group had unlisted investments totaling �94,238 (2006: �183,525). The
maximum exposure to a reduction in market values for this category was
therefore equal to the carrying values of the financial assets which
directors believe to be insignificant for these financial statements. A 5%
increase in their market value would have reduced the pre-tax loss by
�4,712 (2006: �9,176).
Liquidity risk
The Group has a policy to manage liquidity risk by monitoring its cash
balances and the availability of marketable securities. The Group*s core
funding comes from the proceeds of share issues and its trading activities.
The Group has no external borrowing facilities, and no financial assets
have been pledged as collateral for any liabilities or contingent
liabilities.
The following table shows the contractual maturities of the Group*s financial liabilities as at 31 December 2007 and 31
December 2006:
As at 31 December On demand 1-6 months
7*12 months More than 12 months
Total
2007
� �
� �
�
Trade and other - 177,604
51,779 -
229,383
payables
As at 31 December
2006
Trade and other - 307,844
- -
307,844
payables
The following table shows the contractual maturities of the Company*s financial liabilities as at 31 December 2007 and 31
December 2006:
As at 31 December 2007 On demand 1*6 months
7*12 months More than 12 months
Total
� �
� �
�
Trade and other - 177,604
- -
177,604
payables
As at 31 December 2006
Trade and other - 557,844
- -
557,844
payables
Foreign
currency risk
The Group operates mainly in the UK. Two insignificant investments denominated in foreign currencies are included in
*Investments at fair value through profit and loss*. These are measured at prevailing exchange rates on each balance sheet date, and are
summarised in the table
below.
Foreign currency investmentsGroup and Company
2007 2006
� �
Investments denominated in:
Australian dollar
1,519 82,212
Canadian dollar
36,238 33,532
Total
37,757 115,744
The impact on operating profit and equity resulting from a 5% movement in the average exchange rate
for these currencies against sterling is �1,888 or 0.30% (2006: �5,787 or 3.42%).
Credit risk
The Company has no formal policy that requires appropriate credit checks on potential customers before
sales are made, however, the amount of exposure to any individual counterparty is not
significant and outstanding balances are assessed on a monthly basis by the board. Credit risk on cash
balances is limited because the counterparty is a bank with a high credit rating.
Apart from the provision disclosed
in note 16, none of the Group*s or Company*s receivables are past due or impaired.
Interest rate risk
The Group has interest bearing assets, which include cash balances earning interest at a variable rate, and loans
to subsidiaries and associates, which carry interest at fixed rates. The directors
will revisit the
appropriateness of this policy should the Group*s operations change in size or nature.
The Group*s cash balances earned interest at a variable rate based on Royal Bank of Scotland Group*s rates on
deposits during the year. If the rate at which interest was earned had been 10% higher
throughout the year under review, the pre-tax loss would have been reduced, and equity increased, by �2,645
(2006: profit and equity increase by �574). Conversely, if interest rates had been 10%
lower, the pre-tax loss would have increased, and
equity decreased, by �2,645 for 2007 and profit and equity reduced by �574 for 2006.
The Group has not entered into derivatives transactions or traded in
financial instruments other than ordinary shares during the period under review.
Group*s financial instruments
The Group*s financial instruments comprised the following:
Book Fair
Book Fair
Value Value
Value Value
2007 2007
2006 2006
� �
� �
Financial assets * Group
Available for sale investments 3,664,272 3,664,272
1,603,545 1,603,545
Investments at fair value through profit 790,427 790,427
481,140 481,140
or loss
Trade and other receivable 148,040 148,040
46,057 46,057
Cash 318,681 318,681
743,714 743,714
Total financial assets 4,921,420 4,921,420
2,874,456 2,874,456
Financial liabilities * Group
Trade and other payables 229,383 229,383
307,844 307,844
Company*s financial instruments
The Company*s financial instruments comprised the following:
Book Fair
Book Fair
Value Value
Value Value
2007 2007
2006 2006
� �
� �
Financial assets * Company
Available for sale investments 3,656,272 3,656,272
1,603,545 1,603,545
Investments at fair value through profit 790,427 790,427
481,140 481,140
or loss
Investments in subsidiaries 250,004 250,004
250,002 250,002
Trade and other receivable 418,972 362,817
109,084 109,084
Cash 58,049 58,049
743,714 743,714
Total financial assets 5,173,724 5,117,569
3,187,485 3,187,485
Financial liabilities * Company
Trade and other payables 177,604 177,604
557,844 557,844
31
Capital risk management
The Group*s objectives when managing capital are to safeguard the Group*s ability to continue as a going concern
in order to provide returns for shareholders and maintain an
optimal capital structure to reduce the cost of capital.
The group defines capital as being share capital plus reserves. The Board of Directors makes judgements
concerning the total capital required and whether these requirements
can be met by issuing new shares, reducing or increasing
debt, paying dividends and returning capital to shareholders.
The Group is
not subject to any externally imposed capital requirements.
32
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 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.
Reconciliation of Previous GAAP Effect of transition
IFRS
equity at1 January to IFRS
2006 - Group
� �
�
Net assets 951,612 438,588
1,390,200
Share capital 285,000 -
285,000
Share premium 985,884 -
985,884
Share based payment 900,000 -
900,000
reserve
Profit and loss (1,219,272) 438,588
(780,684)
account
Total equity 951,612 438,588
1,390,200
Reconciliation of Previous GAAP Effect of transition IFRS
equity at 31 to IFRS
December 2006 -
Group
� � �
Net assets 1,868,125 588,837 2,456,963
Share capital 583,334 - 583,334
Share premium 1,522,550 - 1,522,550
Share based payment 57,600 - 57,600
reserve
Profit and loss (295,358) 588,837 293,479
account
Total equity 1,868,126 588,837 2,456,963
Explanation of transition to IFRS: �
i At 1 January 2006
Fair value gain on securities measured at fair value through 23,463
profit and loss
Revaluation of securities available for sale 593,036
Less deferred taxation (177,911)
438,588
�
ii At 31 December 2006
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
Reconciliation of Previous GAAP Effect of transition IFRS
equity at 1 January to IFRS
2006 - Company
� � �
Net assets 951,612 438,588 1,390,200
Share capital 285,000 - 285,000
Share premium 985,884 - 985,884
Share based payment 900,000 - 900,000
reserve
Profit and loss (1,219,272) 438,588 (780,684)
account
Total equity 951,612 438,588 1,390,200
Reconciliation of Previous GAAP Effect of transition IFRS
equity at 31 to IFRS
December 2006 -
Company
� � �
Net assets 1,931,155 588,837 2,519,992
Share capital 583,334 - 583,334
Share premium 1,522,550 - 1,522,550
Share based payment 57,600 - 57,600
reserve
Profit and loss (232,329) 588,837 356,508
account
Total equity 1,931,155 588,837 2,519,992
Explanation of transition to IFRS: �
i At 1 January 2006
Fair value gain on securities measured at fair value through 23,463
profit and loss
Revaluation of securities available for sale 593,036
Less deferred taxation (177,911)
438,588
ii At 31 December 2006
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
Reconciliation of Previous GAAP Effect of transition IFRS
profit for the year to IFRS
ended
31 December 2006 -
Group
� � �
Total income 3,915,712 710,975 4,626,687
Cost of sales (3,302,369) (655,449) (3,957,818)
Administrative (537,564) (537,564)
expenses
Share based payment 32,400 - 32,400
transactions
Interest receivable 5,735 - 5,735
Net profit 113,914 55,526 169,440
Explanation of adjustments to profit �
Fair value gain on asset investments 710,975
Increase in cost of sales resulting from (655,449)
the application of fair value
55,526
33 Ultimate controlling
party
The Group and the Company had no ultimate controlling party as at
31 December 2007 and 2006.
34 Contingent
liabilities
The Group and the Company had no contingent liabilities as at 31
December 2007 and 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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