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RNS Number:3796R
Interregnum PLC
28 October 2003
Tuesday, 28th October 2003
PRESS RELEASE
INTERREGNUM PLC
Financial results for the 12 months ended 30 June 2003
Losses substantially reduced and increase in advisory fees
Financial highlights
*Losses substantially reduced to #0.9 million (2002: #18.4 million loss)
*Turnover increased to #2.06 million (2002: #1.33 million)
*Advisory revenues increased by 83% to #1.1 million (2002: #0.6 million)
*Adjusted portfolio value* increased to #2.6 million (2002: #2.5 million)
*Loss per share 1.39p (2002: 28.12p)
*Ongoing administration costs reduced to #2.4 million (2002: #3.9 million)
Corporate progress
*Advisory role in the sale of Udate.com generated a transaction advisory
fee of US$1 million and founder shares, carried into acquirer USA
Interactive, valued at $0.6 million
*Sale of Computerwire generated sales proceeds of #517,000 with an
additional potential contingent consideration of up to #700,000
*Initiated the move from being a traditional venture capital minority
equity holder to taking principal investment positions
*Appointment of Martin Peck as Executive Director for Corporate Finance
and promotion of Rupert Cook to Director
*Dr. John Forrest, CBE, appointed, chairman of Advisory board. Progress
made to appoint further Advisory Board members to support new advisory
business origination.
Commenting on the results, Ken Olisa, Chairman of Interregnum plc, said:
"Interregnum continues to operate at the junction of the private equity and IT
sectors, both of which have seen significant turmoil during the reporting
period. In particular, downward pressure on IT budgets has meant that clients
and portfolio companies operate in an environment where revenue is hard to win.
This situation has led to a near total lack of interest from the retail investor
and private equity community in small and micro-cap IT companies.
However, we have begun to see some increase in the demand for IT advisory
services from corporates and private equity investors. This leaves Interregnum
well placed as it is now practically the only source of in-depth expertise in IT
industry wealth generation. We have further strengthened our expertise through
strong Board appointments and, as a result, our advisory proposition is greatly
enhanced. The growing demand for these services has been reflected in our
increased advisory revenues.
We are pleased with the developments that have enabled us to become principal
equity holders in some of our portfolio stocks. Our traditional focus of driving
forward the value of 19 companies by offering hands on service and introductions
through our "venture marketing" concept will continue to ensure that those in
our portfolio are well positioned to benefit from slow returning sentiment to IT
spending.
Interregnum has come through the last difficult year in a financially stable
position. Through consolidation of costs, prudent development of core service
offerings, strengthened intellectual capital and some very exciting developments
for our portfolio holdings, we look forward to an opportunistic financial year
ahead."
* Adjusted to include the carrying value of Yospace Technologies (#0.6m) and
excluded Interregnum Venture Marketing Limited (#0.1m) in 2003 and to include
Computerwire (#0.3m) in 2002.
- Ends -
For further information, please contact:
Interregnum 020 7494 3080
Ken Olisa, Chairman & CEO
Martin Cooper, Finance Director
Merlin Financial 020 7606 1244
Vanessa Maydon
Charlie Jack
Attached: Chairman's Statement
Financial Results
Directors' Report
Independent Auditors' Report
Profit & Loss Account
Balance Sheet
Cashflow Statement
Notes to the financial statements
CHAIRMAN'S STATEMENT
Environment: Market Conditions remain tough
As an Information and Communications Technology investment and advisory house,
Interregnum operates at the junction of the Private Equity and Technology
sectors. Both sectors continued to experience significant turmoil during the
reporting period. Private Equity and in particular, venture capital and "angel"
finance avoided early stage investments almost entirely. While the larger
Private Equity firms concentrated on management buyouts of established
businesses - often purchased from other Private Equity owners - individual
investors, having seen their wealth reduced by lower public markets, followed
the example of most early-stage VCs and declined to invest at all.
In parallel, global capital spending continued to fall leading to a further
year-on-year decline in revenues for IT and Telecommunications companies. The
continued downward pressure on IT budgets within the world's major organizations
heightened purchasing officers' sensitivity to risk, which led them, in turn, to
concentrate their buying from the largest, most established suppliers.
The combination of these effects has been to make for very tough trading
conditions for our main markets - small and micro-cap Technology companies - as
clients and portfolio companies sought to operate in an environment in which
revenues are hard to win and investment capital is all but non-existent.
Equally importantly, the difficult markets have had a devastating effect on our
competitors with almost none of those with whom we competed at IPO in 2000
surviving into 2003. Further, almost all of the few who have remained in
business have radically amended their business models to focus on areas other
than Technology .
It is an ill wind that blows nobody any good and the most positive result of the
collapse in our sector has been to leave Interregnum as practically the only
source of in-depth Technology industry wealth generation expertise.
Operational Highlights: Company focuses on growth areas
In the Interims I described the difficult market conditions then faced by the
company (and which I have further described above) and defined our key
operational priorities needed to survive and prosper in this environment:
*Building portfolio value
*Increasing advisory fees
*Increasing investment firepower
*Reducing costs and overheads
As might be expected, this generally difficult backdrop had a negative effect on
much of the company's activities, however there were also some significant
achievements that proved that progress can be made even in a downturn. Taking
each of the above areas in turn.
Building portfolio value
During the year we stabilized the portfolio following the radical write-downs of
2002/3. Over the twelve months, we effected 7 investments, totalling #0.8m and
wrote off 4 investments (and made further provision against 3) reducing the
number held in the portfolio to 19.
I am happy to report that overall the portfolio value increased modestly from
#2.5m to #2.6m*, a result which masks the considerable activity within it which
included:
* Further investments in Computerwire, Respond, Adaptive and blue arc
were made either to maintain our shareholding during further funding rounds or
to secure our position on liquidation.
* Realizations of Computerwire (sale of assets), Yospace Holdings (on
liquidation) and uDdate.com the on its successful sale to USA Interactive for
$150 million.
* The loss of our investment in Datapoint, which was acquired
substantially below cost by its largest shareholder - Alchemy Partners - using
the provisions of Section 320 of the Companies Act 1985, a mechanism which
permits the disposal of a company's assets to a related party by a simple
majority vote of its shareholders.
In addition to the above financial activities we have also continued to do what
we do best - growing the value of emerging Technology companies through the
provision of a range of hands-on services. This is the activity that Interregnum
pioneered in the early 1990s and which we term Venture Marketing. Examples of
this work include the establishment of strategic alliances between our portfolio
companies and major technology distribution partners, redefinition of corporate
strategies and raising of funds from third party investors.
Finally the nature of the portfolio changed significantly in the period with the
acquisition of a majority stake in Yospace - a provider of multimedia messaging,
personal storage and handset simulation solutions to the major networks
including Vodafone, Orange and 3**. This represents a departure for the company
which previously has operated more as a traditional venture capitalist taking
minority stakes in a range of companies. The move towards being a principal
(i.e. majority) investor offers many advantages for the company because it
enables us to work directly with management to influence their strategy and
operations rather than being compelled to advise them in concert with other
investors whose objectives are not always aligned with our own. It is our
intention to extend this aspect of our investment activity in the coming year
and accordingly in July, we welcomed back Martin Peck as Executive Director,
Corporate Finance.
Martin brings a wealth of corporate finance and operational management
experience built during his time as an adviser on business development,
corporate finance, PFI, and privatisation transactions for Serco Group Plc,
Capita Group Plc, and BDO Stoy Hayward. More recently, Martin has been Executive
Director, Merchant Banking/Venture Capital (Europe) for CIBC Wood Gundy
Oppenheimer, and head of the private equity technology fund at AMP Private
Capital.
Martin has spent the last three years in business turnaround activity, working
for investors to help deliver shareholder value at a number of public and
private companies including Transacsys, the listed Smart Card Applications
company, which he successfully re-structured and sold.
Board Appointment: In recognition of his personal contribution and commitment to
the company's success I am delighted to announce the promotion of Rupert Cook,
Executive Director, Advisory Service, to the main Board with effect from 28
October 2003
In summary, the Board believes that the portfolio contains significant
unrealised potential and is committed to growing the portfolio's value both by
working to realise the latent up-side as well as expanding into a small number
of principal finance relationships.
Increasing advisory fees
Our Advisory Services are a vital element of our overall business, maintaining
our current market knowledge, enabling us to work with the widest range of
industry players and providing a value-added use of our proprietary
methodologies such as the Four Pillars of Value (c).
Over the course of the last twelve months our advisory revenues grew by 83% from
#0.6m to #1.1m.
During the period we took steps to strengthen this area of our business, the
sale of uDate.com, the packaging of our service offerings and the appointment of
an Advisory Board all supported this endeavour.
Packaged services: Interregnum staff have over 200 combined years of active
operational management within the IT and Telecommunications industries on both
sides of the Atlantic. Traditionally, that expertise has been directed towards
young companies as and when it was required. Over the last year the company has
packaged elements of that expertise in order to offer it to larger
organizations. In particular we launched IP Advantage(c) which assists
organizations with large pools of Intellectual Property (IP). The value of IP
such as patents, products, modules and methodologies can be unlocked, thereby
increasing margins by identifying, valuing and then exploiting what are often
hidden assets. IP Advantage(c) grew out of an earlier programme which assisted
smaller companies to claim R&D Tax credits from the Inland Revenue. During the
year we assisted clients and portfolio companies to claim over #2million in
credits for which Interregnum earned success fees.
Broadening the scope of our client base: With the difficult investment market
for early stage technology companies described above, the company has begun to
use its skills to advise larger companies and organisations. Such services have
embraced strategic advice, corporate recovery, analysis of R&D expenditure,
assistance with spin-outs and advice on outsourcing. The full impact of these
new activities will only begin to show through in the current year.
Board Appointment: In recognition of the importance of this area of our business
and his personal contribution and commitment to its success I am delighted to
announce the promotion of Rupert Cook, Executive Director, Advisory Services, to
the main Board with effect from 23 October 2003
UDate.com: By far the most significant transaction of the year was the
successful sale of uDate.com to USA Interactive for $150 million. I have served
as a founding director of the company since 2000 and Interregnum held a small
equity stake as a result. In addition, Interregnum acted as an advisor to the
company during the sale negotiations and earned a fee for so doing.
International Advisory Board: To extend the knowledge and reach available to it,
the company established an International Advisory Board in April 2003. It is
chaired by Dr John Forrest, CBE FREng who is a Non-Executive Director of 3i plc
and Chairman of the Spectrum Management Advisory Group, a body set up by the UK
Parliament to advise government ministers on the management and use of the
wireless spectrum. John was the founder and first CEO of NTL. The other members
of the board are:
* Philippe Dubrulle - Previously Global Banking Services Director at
Societe Generale and now a Director of Transaction Network Services (TNS), a
US-based provider of data communications services for transaction-oriented
applications, and Alphyra France, based in Ireland, which supplies, installs,
manages and maintains electronic payment systems for small to medium sized
merchants.
* Chris Earnshaw FREng - Previously Group Engineering Director and
Chief Technology Officer at BT Group plc.
* Professor Brian Johnson - A leading researcher in nanoscale
technologies, and Professor of Inorganic Chemistry and Master of Fitzwilliam
College in the University of Cambridge.
* Jill Wyman - Previously Acting COO at BBC Technology Ltd and prior to
that, Managing Director of Metiom UK, a global provider of Internet-based
e-marketplace applications used by global 2000 companies.
Reducing costs and overheads
The last year saw us continue to focus on cost reductions with a further fall in
headcount*** to 14 (2002: 23). We also continued our focus on reducing overheads
including the sub-letting of vacant space within our offices, maintenance of the
Senior Staff salary sacrifice programme and other measures designed to hasten
profitability of the business.
Increasing investment firepower
The climate for venture capital fundraising remains wholly adverse offering
little prospect for an early reopening of our own plans to raise Interregnum
Fund I - a traditional venture capital fund focused on early-stage European
Information and Communications Technology companies. However, with valuations at
historically low levels, opportunities to invest are legion. Accordingly, the
company has continued to build relationships with providers of both debt and
equity finance in order both to maintain the viability of our existing portfolio
as well as to fund our move into principal finance.
* Adjusted to include the carrying value of Yospace Technologies (#0.6m) and
excluded Interregnum Venture Marketing (#0.1m) in 2003 and to include
Computerwire (#0.3m) in 2002.
** One consequence of this shift is that accounting standards require us to
consolidate the results of any subsidiary, even though it is held for
investment purposes. This year's accounts therefore include the results for
Yospace. The inclusion of Yospace renders like-for-like comparisons with
historical performance rather more difficult than in past years. We have
tried to clarify the position where possible and the reader is advised to pay
particular regard to the notes attached to the data
***This excludes the head count of Yospace Technologies Limited.
FINANCIAL RESULTS
The last year saw us make progress against our objectives and although that
progress was impeded by the market uncertainties, we were able to increase our
advisory revenues by 83% to #1.1m (2002: #0.6m), reduce our retained losses
substantially to #0.9m (2002: #18.4m) and increase our cash balance from the
half year point to #1.3m (31/12/02: #1.1m).
Behind those headline numbers we effected 7 investments amounting to #0.8m.
In keeping with our commitment to transparency and full disclosure we present
the following table for the 3rd year running describing the key operating
indicators of the combined company:
Twelve months to 30 Twelve months to 30
June 2003 June 2002
PORTFOLIO
Portfolio value (#m) 2.6 2.5
Portfolio base cost (#m) * 5.1 8.9
Investment (#m) 0.8 3.8
Investments made 7 10
Portfolio holdings 19 23
Investments written off 4 3
BALANCE SHEET
Cash balance (#m) 1.3 1.8
Net assets/share (issued) 0.065 0.075
(#)
DSO (Days sales 52 55
outstanding - based on
recent sales)
PROFIT & LOSS ACCOUNT
Revenue (#m) 2.06 1.33
Advisory (#m) 1.10 0.58
Investment (#m) 0.14 0.75
Software development 0.82 -
support and marketing (#m)
Costs - Salary(#m) 1.8 1.9
Costs - admin(#m) 1.5 2.0
Interest and other income 0.2 0.3
(#m)
Revaluations realised and 0.6 0.2
unrealised (#m)
Retained loss (#m) -0.9 -18.4
Headcount - average 31 28
Actual at year end - 14 23
Interregnum
Actual at year end - 21 n/a
Yospace
* Portfolio costs
2003 2002
#m #m
Note 13 4.6 7.8
Computerwire - 1.1
Yospace 0.6 -
IVM (0.1) -
___ ___
Total 5.1 8.9
=== ===
Outlook
Although public technology stocks have recently staged something of a rally, the
underlying markets remain unsettled. In particular, the US technology sector is
experiencing a flight to scale as the expense of increased regulatory pressures
(particularly Sarbanes-Oxley), the absence of analyst coverage (as a result of
the separation of investment banks' analysis and trading sides), and a general
nervousness in the minds of buyers of Technology, have made life increasingly
difficult for public companies whose revenues are below $500m. As a result, the
smaller companies' values, as measured by market capitalization, have fallen in
aggregate while those of the larger players have risen.
One outcome of this will be increased mergers and acquisitions activity as
larger companies acquire innovation and as smaller ones consolidate in search of
a way to pass through the $500m revenue level. So although there is no prospect
of the Technology IPO market opening up in the foreseeable future we can expect
an increase in trade sales for companies possessing one or more of the Four
Pillars of Value(c) - People, Offerings, Customers and Brand.
The challenge facing Interregnum is to husband our scarce resources - expertise,
contacts, portfolio and capital - in order to profit from the opportunities
which will emerge from the next phase of the market cycle. We are confident that
our three business activities - Advisory Services, Portfolio Management and
Principal Finance are the most appropriate ones to take advantage of those
opportunities and look forward with confidence to the future.
As detailed above, this has been a particularly difficult year -the most
challenging in my 30 years in business. That Interregnum has not only survived,
but has emerged stronger and more focused is in no small part due to the
dedication of the Board, the Advisory Board and our staff. I would like to
recognize the contributions made by the three Directors who left us last year -
Teddy Rosenberg, Stanley Stern and Adrian Merryman and to wish them all well in
their careers. It would also be remiss of me not to thank our shareholders for
their support over the year.
Finally I must pay tribute to the sheer determination to succeed exhibited by
the leaders of most of our clients and portfolio companies, without which there
would be no reason for Interregnum to exist.
Thank you.
Ken Olisa
Chairman & CEO
DIRECTORS' REPORT
The directors present their report and financial statements for the year ended
30 June 2003.
Results and dividends
The group loss for the year after taxation amounted to #908,843 (2002 -
#18,397,476). The directors do not recommend a final dividend (2002 - #nil). It
is proposed that the retained loss for the year be transferred to reserves.
Principal activity
The group's principal activities carried out both in the United Kingdom and
internationally, were those of management and marketing consultants, business
advisers and investors in technology companies.
Review of the business, future developments and events since the balance sheet
date
The review of the business for the year, future developments and events since
the end of the year are set out in the Chairman's Statement.
Fixed asset investments
Fixed asset investments are stated at cost or valuation and in accordance with
the "Guidelines for the valuation and disclosure of venture capital portfolios"
published by the British Venture Capital Association. Details of changes in
fixed asset investments are set out in note 13 to the financial statements.
Creditor payment policy
It is group policy to agree and clearly communicate the terms of payment as part
of the commercial arrangements negotiated with suppliers and then to pay
according to those based on the timely receipt of an accurate invoice. The
company supports and follows the CBI Prompt Payers Code. A copy of the code can
be obtained from the CBI at Centre Point, 103 New Oxford Street, London WC1A
1DU.
Trade creditor days based on creditors at 30 June 2003 were 41 days (2002 - 39
days) for both company and group.
Directors and their interests
The directors during the year, together with the beneficial interests of those
directors holding office as at 30 June 2003 in the shares of the company were as
follows:
Ordinary shares of #0.05 each
At 30 June 2003 At 30 June 2002
K Olisa 36,060,076 35,958,536
G Ransom 2,544,919 2,544,919
R Jeynes 418,384 418,384
A Merryman (resigned 31 December 2002) 1,013,384 1,013,384
M Cooper 45,770 45,770
I Taylor 250,000 135,000
T Rosenberg (resigned 23 December 2002) - -
S Stern (resigned 23 December 2002) - -
G Shingles - -
R Fifield 17,857 17,857
M Peck - -
Subsequent to the year end, M Peck was appointed a director on 7 July 2003.
The following directors have been granted options:
Options Exercise
Date of grant granted price
K Olisa 13 March 2000 1,174,048 #0.05
R Jeynes 8 April 2003* 4,746,616 #0.05
G Ransom 31 December 2002** 3,500,000 #0.05
M Cooper 8 April 2003*** 250,000 #0.05
I Taylor 8 April 2003*** 5,000,000 #0.05
M Peck 7 July 2003**** 5,000,000 #0.0538
G Shingles 13 March 2000 760,000 #0.05
* Special conditions apply to these shares, whereby 4,385,200 vest
immediately on the date of grant. The remaining 361,416 shares vest equally
over a five year period. The first fifth vest on the anniversary of the
respective grant date.
** Special conditions apply to these shares, whereby 2,000,000 vest
immediately on the date of grant the remaining 1,500,000 will vest 18
months after the date of issue.
*** Special conditions apply to these shares, whereby they vest equally over
a five year period. The first fifth vest on the anniversary of the
respective grant date.
**** Special conditions apply to these shares, whereby they vest equally over
a three year period. The first third vest on the anniversary of the
respective grant date.
Subject to the above the options can be exercised at any date up to the tenth
anniversary of the date of grant. The market price of the company's shares at 30
June 2003 was #0.055 (2002 - #0.0375). The range during the year was #0.015 to
#0.05625 (2002 - #0.64 to #0.0375). None of the directors has yet exercised any
options.
Between 30 June 2003 and 14 October 2003, there have been no changes in the
directors' holdings or options.
All options granted above related to Interregnum Plc.
Substantial shareholdings
Other than the directors' interests shown above, the company has been advised of
the following substantial shareholdings as at 24 October 2003:
No of ordinary % of ordinary
shares held shares
Liontrust 5,802,885 8.87%
Browallia Discount Company 5,600,000 8.56%
CIBC Wood Gundy Plc 3,890,000 5.95%
Auditors
A resolution to reappoint Ernst & Young LLP as auditors will be put to the
members at the Annual General Meeting.
By order of the board
Secretary
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the group and of the profit or loss 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;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
COMPLIANCE WITH THE COMBINED CODE
Under the rules of the Alternative Investment Market (AIM) the company is not
required to comply with the Combined Code. However, the Directors are committed
to high standards of corporate governance and have regard to the principles of
the Combined Code. The Corporate Governance procedures are described below.
Board of directors
The Board of Directors, currently comprising five executive and three
independent non-executive directors, meets regularly throughout the year.
Audit committee
The audit committee is chaired by Richard Fifield with the other non-executive
director member being Geoff Shingles. As executive director Roger Jeynes attends
by invitation. Adrian Merryman, formerly an executive director, stood down as a
member of the audit committee during the year. The purpose of the committee is
to ensure the preservation of good financial practices throughout the group; to
monitor that controls are enforced to ensure the integrity of financial
information; to review the interim and annual financial statements; and to
provide a line of communication between the board and external auditors.
Remuneration committee
The remuneration committee is chaired by Geoff Shingles with the other
non-executive member being Richard Fifield. It is responsible for the executive
directors' remuneration, other benefits and terms of employment, including
performance related bonuses and share options.
Internal control
The board is ultimately responsible for the group's system of internal control
and for reviewing its effectiveness.
A comprehensive budgetary process is completed once a year and is reviewed and
approved by the board. The group's results as compared to the budget and prior
year are reported to the board on a monthly basis. Revenue is reforecast on a
monthly basis.
Going concern
After making appropriate enquiries that the group has adequate resources to
continue in operation for the foreseeable future, the board considers that the
group's finances are sound. For this reason they continue to adopt the going
concern basis in preparing the financial statements.
INDEPENDENT AUDITORS' REPORT
to the members of Interregnum Plc
We have audited the group's financial statements for the year ended 30 June 2003
which comprise the Group Profit and Loss Account, Note of Historical Cost
Profits and Losses, Group Statement of Total Recognised Gains and Losses, Group
Balance Sheet, Company Balance Sheet, Group Statement of Cash Flows and the
related notes 1 to 23. These financial statements have been prepared on the
basis of 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
As described in the Statement of Directors' Responsibilities the company's
directors are responsible for the preparation of the financial statements in
accordance with applicable United Kingdom law and accounting standards.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and United Kingdom Auditing
Standards.
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 also report to you if, in our opinion, the Directors' Report is not
consistent with the financial statements, if 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 information specified by law regarding
directors' remuneration and transactions with the group is not disclosed.
We read the Directors' Report and consider the implications for our report if we
become aware of any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards
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 group'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 of the state
of affairs of the company and of the group as at 30 June 2003 and of the loss of
the group for the year then ended and have been properly prepared in accordance
with the Companies Act 1985.
Ernst & Young LLP
Registered Auditor
London
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2003
2003 2002
Notes # #
Turnover
Continuing operations
Ongoing 1,247,387 1,326,652
Acquisitions 817,219 -
__________ __________
Group Turnover 2 2,064,606 1,326,652
Administrative expenses - ongoing (2,420,600) (3,922,786)
Administrative expenses - acquisitions (877,313) -
Other operating income - ongoing 79,230 81,396
__________ __________
Operating loss
Continuing operations
Ongoing (1,078,533) (2,514,738)
Acquisitions (75,544) -
__________ __________
Group operating loss 3 (1,154,077) (2,514,738)
Profit on sale of investments - ongoing 251,352 -
Interest receivable 117,790 222,368
Amounts written off investments (162,583) (16,092,069)
Interest payable 7 (12,388) (13,037)
__________ __________
Loss on ordinary activities before taxation (959,906) (18,397,476)
Taxation 8 - -
__________ __________
Loss on ordinary activities after taxation (959,906) (18,397,476)
Minority interest - equity 51,063 -
Loss retained for the financial year 20 (908,843) (18,397,476)
========== ============
Loss per share - basic and diluted 10 (1.39p) (28.12p)
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30 June 2003
2003 2002
# #
Loss on ordinary activities before taxation (959,906) (18,397,476)
Realisation of revaluation gains of previous
years 53,006 -
Write-down of previous revaluation that would
not have been taken to the profit and loss account
on a historical cost basis 34,546 3,564,378
__________ __________
Historical cost loss on ordinary activities
before tax (872,354) (14,833,098)
========== ===========
Historical cost loss for year retained after
tax and minority interest (821,291) (14,833,098)
========== ===========
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 June 2003
2003 2002
# #
Loss for the financial year attributable to members
of the parent company (908,843) (18,397,476)
Unrealised surplus on revaluation of fixed asset
investments 354,559 206,018
____________ ____________
Total recognised losses relating to the year (554,284) (18,191,458)
============ ============
GROUP BALANCE SHEET
at 30 June 2003
2003 2002
Notes # #
Fixed assets
Intangible assets 11 541,021 -
Tangible assets 12 243,347 314,516
Investments 13 2,103,417 2,243,190
__________ __________
2,887,785 2,557,706
__________ __________
Current assets
Debtors 14 985,251 855,124
Investments held for resale 15 - 288,586
Cash at bank and in hand 1,293,780 1,754,143
2,279,031 2,897,853
Creditors: amounts falling due within
one year 16 (770,878) (538,719)
__________ __________
Net current assets 1,508,153 2,359,134
__________ __________
Total assets less current liabilities 4,395,938 4,916,840
Creditors: amounts falling due after more than
one year 17 (116,240) -
__________ __________
Net assets 4,279,698 4,916,840
Capital and reserves
Called up share capital 19 3,271,655 3,271,655
Share premium account 20 18,876,852 18,876,852
Revaluation reserve 20 546,518 279,511
Merger reserve 20 (2,406,655) (2,406,655)
Profit and loss account 20 (15,925,814) (15,104,523)
Equity shareholders' funds 20 4,362,556 4,916,840
Minority Interests (equity) (82,858) -
__________ __________
Total funds employed 4,279,698 4,916,840
========== ==========
Director
COMPANY BALANCE SHEET
at 30 June 2003
2003 2002
Notes # #
Fixed assets
Tangible assets 12 231,688 314,516
Investments 13 2,888,899 2,523,736
__________ __________
3,120,587 2,838,252
Current assets
Debtors 14 829,819 855,469
Investments held for resale 15 - 288,586
Cash at bank and in hand 1,099,467 1,595,665
__________ __________
1,929,286 2,739,720
Creditors: amounts falling due
within one year 16 (632,722) (670,148)
__________ __________
Net current assets 1,296,564 2,069,572
__________ __________
Net assets 4,417,151 4,907,824
========== ==========
Capital and reserves
Called up share capital 19 3,271,655 3,271,655
Share premium account 20 18,876,852 18,876,852
Revaluation reserve 20 500,456 151,572
Profit and loss account 20 (18,231,812) (17,392,255)
__________ __________
Equity shareholders' funds 20 4,417,151 4,907,824
========== ==========
Director
GROUP STATEMENT OF CASH FLOWS
for the year ended 30 June 2003
2003 2002
Notes # #
Net cash flow from operating
activities 21(a) (905,993) (2,084,293)
Returns on investments and
servicing of finance 21(b) 51,625 209,331
Taxation - (796)
Capital expenditure and financial
investment 21(b) 965,597 (3,942,454)
Acquisition 21(b) (696,334) -
__________ __________
Cash outflow before financing (585,105) (5,818,212)
Financing 21(b) 124,740 (422,399)
__________ __________
Decrease in cash (460,365) (6,240,611)
========== ==========
Reconciliation of net cash flow to movement in net funds
2003 2002
Notes # #
Decrease in cash in the year (460,365) (6,240,611)
(Increase)/decrease in debt and lease financing (116,240) 1,747
Decrease in loan - 420,652
Exchange movements - 3,437
__________ __________
Movement in net funds (576,603) (5,814,775)
Net funds at 1 July 2002 1,754,143 7,568,918
__________ __________
Net funds at 30 June 2003 21(c) 1,177,540 1,754,143
========== ==========
NOTES TO THE FINANCIAL STATEMENTS
at 30 June 2003
1. Accounting policies
Accounting convention
The financial statements are prepared under the historical cost convention
modified to include the revaluation of fixed asset investments and in accordance
with applicable accounting standards.
Basis of consolidation
The consolidated financial statements incorporate those of Interregnum Plc and
all of its subsidiary undertakings for the year. Subsidiaries acquired during
the year are generally consolidated using the acquisition method. Their results
are consolidated from the date that control passes. The difference between the
acquisition cost of the shares in the subsidiary and the fair value of the
separable net assets acquired is carried as goodwill.
In accordance with s230 of the Companies Act 1985, the company profit and loss
account is not presented.
Goodwill
Positive goodwill arising on acquisitions is capitalised, classified as an asset
on the balance sheet, and amortised on a straight line basis over its useful
economic life up to a presumed maximum of 20 years. It is reviewed for
impairment at the end of the first full financial year following the acquisition
and in other periods if events or changes in circumstances indicate that the
carrying value may not be recoverable.
Intangible assets
Intangible assets acquired as part of an acquisition of a business are
capitalised separately from goodwill if the fair value can be measured reliably
on initial recognition. Intangible assets created within the business are not
capitalised.
Intangible assets are amortised on a straight line basis over their estimated
useful lives up to a maximum of 10 years. The carrying value of intangible
assets is reviewed for impairment at the end of the first full year following
acquisition and in other period(s) if events or changes in circumstances
indicate the carrying value may not be recoverable.
Depreciation
Tangible fixed assets are stated at net book value. Depreciation is provided on
all tangible fixed assets at rates calculated to write each asset down to its
estimated residual value over its expected useful life, as follows:
Improvements to short leasehold land and buildings - 15% per annum
straight line
Fixtures, fittings and computer equipment - 15% - 33% per
annum straight line
The carrying values of tangible fixed assets are reviewed for impairment in
periods if events or changes in circumstances indicate the carrying value may
not be recoverable.
Fixed asset investments
Fixed asset investments, comprising equity shares and share options, are stated
at cost or valuation and in accordance with the "Guidelines for the valuation
and disclosure of venture capital portfolios" published by the British Venture
Capital Association on the following basis:
* Early stage investments: these are investments in immature companies,
including seed, start-up and early stage investments. Such investments are
valued at cost less any provision considered necessary, until no longer viewed
as early stage or unless a significant transaction involving an independent
third party at arm's length values the investment at a materially different
value.
* Development stage investments: such investments are in mature
companies having a maintainable trend of sustainable profits and from which an
exit, by way of flotation or trade sale, can be reasonably foreseen. An
investment of this stage is periodically revalued by reference to open market
value. Valuation will usually be by one of four methods as indicated:
i) At cost for at least one period unless such a basis is unsustainable;
ii) On a third party basis based on the price at which a subsequent issue of
capital is made involving a significant investment by a new investor;
iii) On an earnings basis, but not until at least a period since the
investment was made, by applying a discounted price/earnings ratio to
profit after taxation, either before or after interest; or
iv) On a net asset basis, again applying a discount to reflect the illiquidity
of the investment.
* Quoted investments: such investments are valued using the quoted
market price, discounted if the shares are subject to any particular
restrictions or are significant in relation to the issued shares capital of a
small quoted company.
* Share options are subject to vesting and other conditions set out in
the options agreements. The valuation is based on the intrinsic value of all
share options that have vested. This is the difference between the market
value of shares at the balance sheet date and the exercise price.
A review of permanent diminution in value is undertaken by reference to funding,
investment or offers in progress after the balance sheet date. No adjustment is
made for any uplift in value after the balance sheet date.
Current asset investments
Current asset investments are stated at the lower of cost and net realisable
value.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the balance sheet
date. All differences are taken to the profit and loss account.
Leasing and hire purchase agreements
Assets held under finance leases and hire purchase contracts, which are those
where substantially all the risks and rewards of ownership of the asset have
passed to the group, are capitalised in the balance sheet and are depreciated
over their useful lives.
The interest element of the rental obligations is charged to the profit and loss
account over the period of the lease and represents a constant proportion of the
balance of capital repayments outstanding.
Rentals paid under operating leases are charged to the profit and loss account
on a straight line basis over the lease term.
Deferred taxation
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or right to pay less or to receive more tax, with the following exceptions:
*Provision is made for tax on gains arising from the revaluation (and
similar fair value adjustments) of fixed assets, or gains on disposal of
fixed assets that have been rolled over into replacement assets, only to the
extent that, at the balance sheet date, there is a binding agreement to
dispose of the assets concerned. However, no provision is made where, on the
basis of all available evidence at the balance sheet date, it is more likely
than not that the taxable gain will be rolled over into replacement assets
and charged to tax only where the replacement assets are sold.
*Deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.
*Deferred tax is measured on an undiscounted basis at the tax rates that
are expected to apply in the periods in which timing differences reverse,
based on tax rates and laws enacted or substantively enacted at the balance
sheet date.
Pensions
The company contributes 3% of an employee's gross salary into a personal pension
fund of their choice. The costs of providing pension contributions for employees
are charged to the profit and loss account.
Turnover
Turnover represents the total invoice value, excluding Value Added Tax, of
services rendered during the year.
2. Turnover and segmental analysis
Turnover and loss by origin where sourced from the UK. The Investment and
Advisory Business represents the ongoing activities in the profit and loss
account. The software development support and marketing activity represent the
acquired business as disclosed in the profit and loss account. The group
operates in two classes of business. Interregnum Plc provides both intellectual
and financial capital to technology companies through offerings in research,
market assessment, valuation, commercial due diligence, acquisition, venture
capital, corporate venturing and recovery. Yospace develops, markets and
supports software for the mobile telecommunications industry at the leading edge
of wireless development. Sales were made in the following geographical markets:
2003 2002
# #
UK 1,032,285 1,120,902
Other European countries 956,336 167,800
USA and Canada 63,969 37,950
Other 12,016 -
_________ _________
2,064,606 1,326,652
========= =========
Software
Investment Development
and Support and
Advisory Marketing Total
2003 2002 2003 2002 2003 2002
# # # # # #
Group turnover
Continuing operations 1,262,837 1,326,652 817,219 - 2,080,056 1,326,652
Inter-segmental sales (15,459) - - - (15,450) -
__________ __________ __________ ___________ __________ __________
1,247,387 1,326,652 817,219 - 2,064,606 1,326,652
========== ========== ========== =========== ========== ==========
Loss on ordinary
activities before taxation
Continuing operations (841,977) (18,397,476) (117,929) - (959,906) (18,397,476)
========== ========== ========== =========== ========== ==========
Net assets by segment
Continuing operations 4,418,304 4,916,840 (138,606) - 4,279,698 4,916,840
__________ __________ __________ ___________ __________ __________
Minority interest - - 82,858 - 82,858 -
Equity shareholders
funds 4,418,304 4,916,840 (55,748) - 4,362,556 4,916,840
========== ========== ========== =========== ========== ==========
3. Operating loss
This is stated after charging/(crediting):
2003 2002
# #
Auditors' remuneration - audit 34,000 25,000
- non-audit 18,000 14,502
Depreciation of owned tangible fixed assets 123,445 117,441
Depreciation of tangible fixed assets held under finance leases
and hire purchase contracts - 1,518
Depreciation of intangible assets 35,323 -
Amortisation of goodwill 6,200 -
Operating lease rentals - land and buildings 221,599 170,000
Exchange loss/(gain) 1,555 (5,042)
Operating lease rental income (79,230) (81,396)
======= =======
4. Directors' emoluments
2003 2002
# #
Emoluments 471,002 568,944
Pension contributions 11,115 13,650
_______ _______
482,117 582,594
======= =======
Highest paid director:
Emoluments 136,802 121,251
Pension contributions 3,240 2,700
_______ _______
140,042 123,951
======= =======
During the year 5 (2002 - 6) directors accrued benefit under a money purchase
pension scheme.
5. Staff costs
2003 2002
# #
Wages and salaries 1,611,803 1,711,037
Social security costs 163,469 174,880
Other pension costs 26,368 38,588
_________ _________
1,801,640 1,924,505
========= =========
The average monthly number of employees (including directors) during the year
was as follows:
2003 2002
No. No.
Office and management 31 28
6. Profit on sale of investments
2003 2002
# #
Realisation of investments 251,352 -
7. Interest payable
2003 2002
# #
Non bank loans 12,388 12,513
Finance charges payable under finance leases and hire
purchase contracts - 524
______ ______
12,388 13,037
====== ======
8. Taxation
(a) Analysis in year:
2003 2002
# #
Based on the loss for the year:
Corporation tax - -
Overprovided in prior year - -
________________________________
Total current tax (note 8(b)) - -
(b) Factors affecting the tax for the year
The tax for the year differs from the standard rate of corporation tax in the UK
(30%). The differences are explained below.
2003 2002
# #
Loss on ordinary activities before tax (959,906) (18,397,476)
=========== ===========
Loss on ordinary activities multiplied by the tax rate above (287,972) (5,519,241)
Effect of:
Expenses not deductible for tax purposes 12,286 136,228
Decelerated capital allowances 36,082 22,393
Investments written down potentially not tax deductible 139,450 4,827,620
Unrelieved tax losses 100,154 21,522,000
Current year capital loss - (20,989,000)
___________ ___________
Current tax for the year (note 8(a)) - -
=========== ===========
(c) Deferred tax
Deferred taxation recognised and the amounts not recognised are as follows:
Group Recognised Not recognised
2003 2002 2003 2002
# # # #
Accelerated/(decelerated) capital allowances - 28,612 (8,474) -
Tax losses carried forward - (28,612) (23,997,419) (21,574,457)
___________ ___________ ___________ ___________
Undiscounted deferred tax asset - - (24,005,893) (21,574,457)
=========== =========== =========== ===========
Company Recognised Not recognised
2003 2002 2003 2002
# # # #
Accelerated/(decelerated) capital allowances - 28,612 (8,474) -
Tax losses carried forward - (28,612) (23,962,016) (21,574,457)
___________ ___________ ___________ ___________
Undiscounted deferred tax asset - - (23,970,490) (21,574,457)
=========== =========== =========== ===========
The group has estimated capital and trading losses of #80m (2002 - #72m).
Deferred tax assets of #24.1m (2002 - #21.5m) have not been recognised in
respect of these losses since the benefit of the unrecognised losses will only
accrue when taxable profits are realised on the sale of the company's
investments and gains are realised on future disposals.
9. Loss attributable to members of the parent company
The loss dealt with in the financial statements of the parent company is
#848,036 (2002 - #19,646,373).
10. Loss per share
The calculation of basic earnings per share is calculated on a group loss of
#774,668 (2002 - #18,397,476) and on a weighted average of 65,433,107 (2002 -
65,433,107) shares in issue during the year.
Due to the loss of #774,668 in the year there is no further dilution of the
earnings (2002 - #18,397,476) or the number of shares being 64,433,107 (2002 -
65,433,107).
11. Intangible fixed assets
Group Intellectual Goodwill
property Total
# # #
Cost or valuation:
At 1 July 2002 - - -
Additions 529,839 52,705 582,544
_______ _______ _______
At 30 June 2003 529,839 52,705 582,544
_______ _______ _______
Depreciation:
At 1 July 2002 - - -
Charged in the year 35,323 6,200 41,523
_______ _______ _______
At 30 June 2003 35,323 6,200 41,523
_______ _______ _______
Net book value:
At 30 June 2003 494,516 46,505 541,021
======= ======= =======
At 1 July 2002 - - -
======= ======= =======
12. Tangible fixed assets
Group Improvements Fixtures,
to short fittings and
leasehold land computer
and buildings equipment Total
# # #
Cost or valuation:
At 1 July 2002 87,337 519,398 606,735
Additions 29,229 23,047 52,276
_______ _______ _______
At 30 June 2003 116,566 542,445 659,011
_______ _______ _______
Depreciation:
At 1 July 2002 30,257 261,962 292,219
Charged in the year 17,237 106,208 123,445
_______ _______ _______
At 30 June 2003 47,494 368,170 415,664
_______ _______ _______
Net book value:
At 30 June 2003 69,072 174,275 243,347
======= ======= =======
At 1 July 2002 57,080 257,436 314,516
======= ======= =======
Company Improvements Fixtures,
to short fittings and
leasehold land computer
and buildings equipment Total
# # #
Cost or valuation:
At 1 July 2002 59,266 302,809 362,075
Additions 29,229 8,697 37,926
_______ _______ _______
At 30 June 2003 88,495 311,506 400,001
_______ _______ _______
Depreciation:
At 1 July 2002 2,186 45,373 47,559
Charged in the year 17,237 103,517 120,754
_______ _______ _______
At 30 June 2003 19,423 148,890 168,313
_______ _______ _______
Net book value:
At 30 June 2003 69,072 162,616 231,688
======= ======= =======
At 1 July 2002 57,080 257,436 314,516
======= ======= =======
13. Investments
Group Subsidiary Unlisted Listed
undertakings investments investments Loans Total
# # # # #
Cost or valuation:
At 1 July 2002 - 2,538,871 328,500 4,887,528 7,754,899
Additions 132,371 7,559 - 158,389 298,319
Disposals - (533) (129,532) (500,000) (630,065)
Write off on liquidation - (1,028,941) - (2,065,153) (3,094,094)
Revalued upwards - - 354,559 - 354,559
Revalued down - (34,546) - - (34,546)
_________ __________ _________ __________ __________
At 30 June 2003 132,371 1,482,410 553,527 2,480,764 4,649,072
_________ __________ _________ __________ __________
Amounts provided:
At 1 July 2002 - (1,845,136) - (3,666,573) (5,511,709)
Write back on liquidation - 771,706 - 1,676,919 2,448,625
Released during the year - 135,000 - 553,600 688,600
Provided during the year - (171,171) - - (171,171)
_________ __________ _________ __________ __________
At 30 June 2003 - (1,109,601) - (1,436,054) (2,545,655)
_________ __________ _________ __________ __________
Net book value:
At 30 June 2003 132,371 372,809 553,527 1,044,710 2,103,417
========= ========== ========= ========== ==========
At 1 July 2002 - 693,735 328,500 1,220,955 2,243,190
========= ========== ========= ========== ==========
On an historical cost basis, these fixed asset investments would have been
included as follows:
2003 2002
# #
Listed investments - 78,647
Unlisted investments 372,809 664,077
_______ _______
372,809 742,724
======= =======
Valuation:
Listed investments - market value 553,527 328,500
======= =======
Estimated taxation on potential capital gain if sold at valuation - -
======= =======
The estimated taxation on a potential capital gain if sold at valuation is #nil
since there are sufficient capital losses available to set off any potential
gains.
Company Subsidiary Unlisted Listed
undertakings investments investments Loans Total
# # # # #
Cost or valuation:
At 1 July 2002 309,000 2,562,090 325,696 4,887,528 8,084,314
Additions - 18,677 - 781,771 800,448
Disposals - (533) (129,532) (500,000) (630,065)
Write off on liquidation - (1,028,941) - (2,065,153) (3,094,094)
Revalued upwards - - 357,363 - 357,363
Revalued down (28,390) - - - (28,390)
_________ __________ _________ __________ __________
At 30 June 2003 280,610 1,551,293 553,527 3,104,146 5,489,576
_________ __________ _________ __________ __________
Amounts provided:
At 1 July 2002 - (1,894,005) - (3,666,573) (5,560,578)
Write back on liquidation - 771,706 - 1,676,919 2,448,625
Released during the year - 135,000 - 553,600 688,600
Provided during the year - (177,324) - - (177,324)
_________ __________ _________ __________ __________
At 30 June 2003 - (1,164,623) - (1,436,054) (2,600,677)
_________ __________ _________ __________ __________
Net book value:
At 30 June 2003 280,610 386,670 553,527 1,668,092 2,888,899
========= ========== ========= ========== ==========
At 1 July 2002 309,000 668,085 325,696 1,220,955 2,523,736
========= ========== ========= ========== ==========
On an historical cost basis, these fixed asset investments would have been
included as follows:
2003 2002
# #
Listed investments 52,537 174,124
Unlisted investments 386,670 668,085
_______ _______
439,207 842,209
======= =======
Valuation:
Listed investments - market value 553,527 325,696
======= =======
Estimated taxation on potential capital gain if sold at valuation - -
======= =======
Subsidiary undertakings
Proportion
Name of subsidiary Class of holding held directly Nature of business
Interregnum Venture Marketing Limited Ordinary 100% Management
in members voluntary liquidation)* and marketing
consultants
Interregnum Investment Partners Limited Ordinary 100% Fund Manager
Interregnum Advisory Partners Limited Ordinary 100% Advisory services
Yospace Technologies Limited** Ordinary 54% Provision of
wireless software
* Since Interregnum Venture Marketing Limited is in members voluntary
liquidation, it is not consolidated into the group financial statements,
rather it is shown as an investment valued at its net assets at the date on
which control passed to the liquidator.
** On a fully diluted basis Interregnum Plc owns 47% of Yospace Technologies
Limited.
On 18 October 2002 Interregnum plc set up a new subsidiary called Yospace
Technologies Limited which was a new company with no previous trading
activities. Yospace Technologies Limited acquired the business and certain
assets from Yospace Holdings Limited for a consideration of #696,334.
The assets acquired have been included in the group's balance sheet at their
fair value at the date of acquisition.
Analysis of the acquisition of the business and certain assets of Yospace
Holdings Limited. Interregnum plc had an investment with a net book value of
#325,000 in Yospace Holding Limited at the 30 June 2002. During the year this
company went into liquidation. Yospace Technologies Limited, a subsidiary of
Interregnum plc, purchased the business and certain assets of Yospace Holdings
Limited for #544,840 cash plus associated expenses of #151,494. And following
the liquidation of Yospace Holdings Limited, Interregnum plc received #529,840
as a preferred creditor.
Net assets at date of acquisition:
Book Adjustments Fair value
Value Revaluation to group
# # #
Intellectual property 529,840 - 529,840
Book debts 648 44,812 (a) 45,460
Tangible fixed assets 14,350 - 14,350
Rent deposit - 13,684 (b) 13,684
Investment in subsidiaries 2 (2) (c) -
___________ ___________ ___________
Net assets 544,840 58,494 603,334
=========== =========== ===========
Minority Interest 40,295
Goodwill arising on acquisition 52,705
___________
696,334
===========
Discharged by:
Cash 544,840
Costs associated with the acquisition 151,494
___________
696,334
===========
Adjustments:
(a) increase in value of trade debts following receipt of cash from debtors.
(b) recognition of rent deposit.
(c) write off of investments in subsidiaries which are in the process of being
wound up.
Yospace contributed #8,926 to the group's net operating cash flows, paid #42,385
of interest and received #127,358 of external finance from outside the group, in
addition to the #696,334 payment shown in the group cash flows statement for the
purchase of the business and assets of Yospace Holdings Limited as shown above.
14. Debtors
Group Company
2003 2002 2003 2002
# # # #
Due within one year:
Trade debtors 400,877 265,516 201,555 265,516
Amounts due from group undertakings - - 640 640
Other debtors 387,465 372,610 442,242 372,315
Prepayments and accrued income 96,909 116,998 85,382 116,998
________ ________ ________ ________
885,251 755,124 729,819 755,469
Due in more than one year:
Other debtors 100,000 100,000 100,000 100,000
________ ________ ________ ________
985,251 855,124 829,819 855,469
======== ======== ======== ========
The debtor due in more than one year relates to a rent deposit paid on
Interregnum's offices in Old Burlington Street.
15. Current asset investment
Group and company
#
Cost or valuation:
At 1 July 2002 1,154,346
Additions 50,000
Disposals (1,204,346)
_________
At 30 June 2003 -
_________
Amounts provided:
At 1 July 2002 (865,760)
Disposals 865,760
_________
At 30 June 2003 -
_________
Net book value:
At 30 June 2003 -
=========
At 1 July 2002 288,586
=========
Interregnum Plc had an investment of #1,224,315 (before provisions for
impairment) in a combination of shares and loans secured over the majority of
the assets of Computerwire Services Limited, and as a result of the enforcement
of this security in the prior year, through a new company called Computerwire
Group Limited, the Group acquired the trade and majority of assets of
Computerwire Services Limited. Interregnum then had 100% control of the new
company on 7 June 2002.
In the last financial year, Interregnum Plc made further loans to the new
company of #130,346. Following an impairment review, the investment, which
represented a new loan of #1,153,346 and equity of #1,000, was written down to
#288,586.
Interregnum Plc made a further loan of #50,000 during the current financial year
to the company.
All loans with Computerwire Group Limited were non interest bearing.
Computerwire Group Limited was not consolidated in accordance in FRS 2 as it was
an asset held exclusively for resale.
No material trading transactions took place and no dividends were paid or
received between Computerwire Group Limited and the rest of the Group to 30 June
2003.
The assets of Computerwire Group Limited were sold on 11 October 2002 for
proceeds of #516,912.
16. Creditors: amounts falling due within one year
Group Company
2003 2002 2003 2002
# # # #
Trade creditors 231,807 284,108 219,441 283,166
Amounts due to group undertakings 132,371 - 132,371 132,371
Other taxes and social security costs 60,883 53,608 28,888 53,608
Other creditors 116,527 30,000 22,732 30,000
Accruals and deferred income 229,290 171,003 229,290 171,003
_______ _______ _______ _______
770,878 538,719 632,722 670,148
======= ======= ======= =======
17. Creditors: amounts falling due after one year
Group Company
2003 2002 2003 2002
# # # #
Loans falling due in more than one year
but not more than two years 116,240 - - -
18. Financial instruments
(a) Policies and risks
The Group's financial instruments comprise term loans, warrants and equity
investments held within the portfolio, cash and liquid resources and various
items such as trade debtors and trade creditors that arise directly from its
operations. The main reason for holding the warrants and equity investments is
to achieve capital growth in their value and subsequently dispose of them
realising a profit. The main risk arising from the Group's financial instruments
is market price risk.
The Group has investments denominated in foreign currencies it is therefore
subject to an element of foreign exchange risk. The Group does not undertake any
foreign exchange hedging activities.
The Group has a fixed term loan with a floating interest rate repayable in 2004.
The disclosures below exclude short-term debtors and creditors.
(b) Currency profile
2003 2002
# #
Net monetary assets US dollars 75,713 225,612
Net monetary assets Euro - 141,460
______ _______
75,713 367,072
====== =======
(c) Maturity profile of the Group's financial liabilities
Other than the term loan referred to note 17 all of the Group's other financial
liabilities as at 30 June 2003 and 30 June 2002 mature within one year.
(d) Interest rate profile of the Group's financial assets.
The interest rate profile on financial assets is:
2003 Floating Fixed No interest Total
Sterling 1,318,067 1,045,946 508,072 2,872,085
US dollar 75,713 - 551,755 627,468
_________ _________ _________ _________
1,393,780 1,045,946 1,059,827 3,499,553
========= ========= ========= =========
2002 Floating Fixed No interest Total
Sterling 1,796,044 1,201,805 439,839 3,437,688
US dollar 58,099 167,513 581,159 806,771
Euro - 141,460 - 141,460
_________ _________ _________ _________
1,854,143 1,510,778 1,020,998 4,385,919
========= ========= ========= =========
The interest on fixed rate financial assets is 8% which is fixed until maturity
averaging 4 years. Floating rate financial assets comprise cash deposits on
money market at various short term maturity rates. The financial assets on which
no interest is earned are the group's fixed asset equity investments which have
no maturity date and the debtor due after one year.
The interest rate profile on financial liabilities is:
2003 Floating Total
Sterling 116,240 116,240
2002 Floating Total
Sterling - -
Interest is payable at 5% plus the higher of 3% or LIBOR. The loan is payable in
one instalment on 22 November 2004.
(e) Fair values of financial assets and liabilities
Book value
2003 2002
Financial assets and liabilities # #
Cash and deposits 1,293,780 1,754,143
Debtors due after one year 100,000 100,000
Fixed asset investments - loans 1,044,710 1,220,955
Fixed asset investments - listed equity 553,527 328,500
Fixed asset investments - unlisted equity 372,809 693,735
Current asset investment - 288,586
Long term borrowings 116,240 -
The Directors believe that the book values for the financial assets and
liabilities above are not materially different from their fair values.
Fixed asset investment loans, unlisted equities and the current asset investment
have been written down to the directors' assessment of their recoverable
amounts, which the directors believe is close to their fair values.
Fixed asset investments in listed equities are valued in the books at market
value at 30 June 2003 which the directors believe is approximately fair value.
(f) Undrawn committed facilities
The group had undrawn committed borrowing facilities at 30 June 2003 of #100,000
(2002 - #100,000). These facilities are available for utilisation until February
2004.
19. Share capital
Authorised
2003 2002
# #
Ordinary shares of #0.05 each 5,000,000 5,000,000
Allotted, called up and fully paid
2003 2002 2003 2002
No. No. # #
Ordinary shares of #0.05 each 65,433,107 65,433,107 3,271,655 3,271,655
Share options
During the year the company granted options, which remain exercisable, to
subscribe for ordinary shares of #0.05 each as follows:
Number of Option price
ordinary shares per share
Date granted No. #
31 December 2002 3,500,000 0.05
8 April 2003 11,640,616 0.05
__________
15,140,616
==========
Vesting of these options is as follows:
Number of
Ordinary shares
Vesting period No.
Vest immediately on issue - 31 December 2002 2,000,000
Vest immediately on issue - 8 April 2003 4,765,200
Vest on 30 June 2004 1,500,000
Vest equally over three years* 110,000
Vest equally over five years** 6,765,416
__________
15,140,616
==========
* First vesting date 8 April 2004
** First vesting date 1 July 2003
During the year to 30 June 2003 16,579,300 options lapsed.
Subject to the above, options can be exercised at any date up to the tenth
anniversary of the date of grant.
The following options, granted in previous years, were unexercised at 30 June
2002. Their expiry date is 10 years from the date of grant, being dates between
2010 and 2011.
Option exercise band No.
#0.00 - #0.05 3,919,548
#1.10 - #1.15 4,360,000
During the year to 30 June 2003 no options were exercised.
20. Reconciliation of shareholders' funds and movements on reserves
Group
Total
Share share-
Share premium Revaluation Merger Profit and holders
capital account reserve reserve loss account funds
# # # # # #
At 1 July 2001 3,271,655 18,876,852 3,637,871 (2,406,655) (271,425) 23,108,298
Revaluation write down - - (3,564,378) - 3,564,378 -
Revaluation upwards - - 206,018 - 206,018
Loss for the year - - - - (18,397,476) (18,397,476)
_________ __________ __________ __________ ___________ ___________
At 30 June 2002 3,271,655 18,876,852 279,511 (2,406,655) (15,104,523) 4,916,840
Gains realised in the year - - (53,006) - 53,006 -
Revaluation write down - - (34,546) - 34,546 -
Revaluation upwards - - 354,559 - - 354,559
Loss for the year - - - - (908,843) (908,843)
_________ __________ __________ __________ ___________ ___________
At 30 June 2003 3,271,655 18,876,852 546,518 (2,406,655) (15,925,814) 4,362,556
========= ========== ========== ========== =========== ==========
Company
Total
Share share-
Share premium Revaluation Profit and holders
capital account reserve loss account funds
# # # # #
At 1 July 2001 3,271,655 18,876,852 1,850,745 348,927 24,348,179
Revaluation write down - - (1,905,191) 1,905,191 -
Revaluation upwards - - 206,018 - 206,018
Loss for the year - - - (19,646,373) (19,646,373)
_________ __________ __________ __________ ___________
At 1 July 2002 3,271,655 18,876,852 151,572 (17,392,255) 4,907,824
Gains realised in year - - (8,479) 8,479 -
Revaluation upwards - - 357,363 - 357,363
Loss for the year - - - (848,036) (848,036)
_________ __________ __________ __________ ___________
At 30 June 2003 3,271,655 18,876,852 500,456 (18,231,812) 4,417,151
========= ========== ========== ========== ===========
21. Notes to the statement of cash flows
(a) Reconciliation of operating loss to net cash outflow from operating
activities
2003 2002
# #
Operating loss (1,154,077) (2,514,738)
Depreciation 123,445 118,959
Amortisation of intangible fixed assets 41,523 -
Movement in debtors (16,672) 460,924
Movement in creditors 99,788 (144,396)
Exchange movement - (5,042)
__________ __________
Net cash outflow from operating activities (905,993) (2,084,293)
========== ==========
(b) Analysis of cash flows for headings netted in the cash flow statement
2003 2002
# #
Returns on investments and servicing of finance
Interest received 64,013 222,368
Interest paid (12,388) (12,513)
Interest element of finance lease rental payments - (524)
__________ __________
Net cash inflow from returns on investments and
servicing of finance 51,625 209,331
========== ==========
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (37,926) (77,684)
Payments to acquire fixed asset investments (165,948) (2,236,925)
Increase in loan to current asset investments (50,000) (1,654,346)
Receipts from sale of fixed asset investments 702,559 26,501
Receipts from sale of current asset investment 516,912 -
__________ __________
Net cash inflow/(outflow) from capital expenditure and
financial investment 965,597 (3,942,454)
========== ==========
Acquisition
Purchase of business (696,334) -
Financing
Repayment of loan - (420,652)
Capital element of finance lease rental payments - (1,747)
Issue of ordinary share capital in subsidiary 8,500 -
Increase in long term borrowings 116,240 -
__________ __________
Net cash inflow/(outflow) from financing 124,740 (422,399)
========== ==========
(c) Analysis of changes in net funds
At At
1 July 30 June
2002 Cash flow 2003
# # #
Cash at bank and in hand 1,754,143 (460,365) 1,293,780
Long term loans - (116,240) (116,240)
_________ _________ _________
1,754,143 (576,603) 1,177,540
========= ========= =========
22. Other financial commitments
At 30 June 2003 the group had annual commitments under non-cancellable operating
leases as set out below:
Land and buildings
2003 2002
# #
Operating leases which expire:
in over five years 222,500 170,000
23. Ultimate controlling party
Ken Olisa is the ultimate controlling party, having a beneficial interest in
36,060,076 ordinary shares. This represents 55.1% of the issued share capital.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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