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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Science Group Plc | LSE:SAG | London | Ordinary Share | GB00B39GTJ17 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 467.00 | 460.00 | 474.00 | 467.00 | 467.00 | 467.00 | 40,406 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Consulting Svcs,nec | 133.07M | 5.52M | 0.1214 | 38.47 | 212.44M |
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RNS Number:2061Q
Smart Approach Group PLC
26 September 2003
26 September 2003
Smart Approach Group plc
("Smart Approach" or "the Company")
Preliminary Results for the 5 month period ended 31 March 2003
The Board of Smart Approach Group plc is pleased to announce its preliminary
results for the 5-month period ended 31 March 2003.
Key points:
* Successful reverse takeover of Robert H Lowe plc completed in March 2003.
* Introduction of new executive management team.
* Pre tax loss for year including 3 week contribution from Smart Approach
Limited of #461,000 (12 months to 31 October 2002 restated #325,000).
* Annual Screener licence renewal awarded by Lockheed Martin in June 2003.
* New joint venture announced to address maritime security market.
* Continued investment will have an adverse impact on short-term results
but will produce an improvement to the medium to long-term revenue streams.
Mr Rodney Potts, Chairman of Smart Approach Group plc commented as follows:
"During the current financial year we are planning to change from an investment
led, development phase organisation into a market led business. Whilst our
financial plans show further losses during the six-month period to September
2003 we are building an encouraging and growing pipeline of prospects both in
the aviation market and the maritime industry. It is still too early to predict
with certainty the outcome for the full year, which remains heavily dependent on
the closure and timing of the opportunities we are currently working on. By the
time we report our interim results we anticipate greater clarity in this
respect."
Enquiries:
Smart Approach Group plc
Mike Ormesher, Chief Executive
tel: (01472) 250 300
Chairman's statement
Following the disposal of its traditional textile businesses in previous years
Robert H Lowe plc had become a cash shell. As at 31 October 2002 the company had
cash balances of approximately #2.69 million. The board had examined a number of
proposals with a view to identifying an appropriate business to reverse into the
company and as announced on 31 March 2003 the acquisition of the entire issued
share capital of Smart Approach Limited and an associated fund raising was
completed. Following completion of this acquisition the company changed its name
to Smart Approach Group plc and the enlarged share capital was re-admitted to
trading on the Alternative Investment Market. Also on that date I was appointed
Non-executive Chairman and I am pleased to present these first financial
statements for the new group for the five month period ended 31 March 2003.
Acquisition of Smart Approach Limited
Smart Approach's principal activity is the design, development, sale and support
of computer based training software and associated courseware and services to
the aviation and other security markets. The initial consideration for the
purchase of Smart Approach was #3.55 million, which was satisfied by the issue
of 142 million new shares. Subject to the achievement of certain commercial
milestones and financial targets further consideration of up to #9.6 million may
become payable in shares or loan notes. In order to provide additional funding
for the ongoing working capital requirements of the enlarged group the company
raised #2.46 million gross (#1.86 million net of expenses) by way of a placing
and open offer. The details of the transaction are more fully described in the
financial review below.
Smart Approach has achieved particular success in North America. In the United
States in 2002, its subsidiary Smart Approach Inc was a key member of the team
led by Lockheed Martin Mission Systems Inc to provide software and associated
courseware for the initial training of over 44,000 new security personnel in
threat identification and X-ray screen training. It also delivered software and
associated courseware to the Canadian Air Transport Security Authority, which
has responsibility for 89 designated airports in Canada. Smart Approach has
supplied software and associated courseware for use in training personnel
employed at Chep Lap Kok Airport in Hong Kong and Heathrow airport. Its products
have also been sold for use by HM Prison Service and by the United Nations in
their building in The Hague.
Smart Approach has spent a number of years developing its products and
credentials in the aviation security market. Following on from its initial
success in the North American market its key strategies for the future are:
*To consolidate its position in the US aviation security market
*To broaden the range of training courseware offered
*To enter relevant non-aviation market sectors
*To deliver courseware on third party learning management systems
*To increase recurring revenues
Board of Directors
I am pleased that David Sebire and Martin Canty have remained on the board of
the company as non-executive directors and they have been joined by David
Hurst-Brown who was a director of Smart Approach Limited. On completion of the
acquisition Christopher Roots resigned from the board and Mike Ormesher, Glenn
Bartholomew and Pete Brosnan were appointed as executive directors of the
company. Christopher Goulden, an original founder of the business also joined
the board on 10 March 2003 but subsequently resigned on 4 July 2003.
Results
As a result of the change in the Company's year-end to 31 March these financial
statements cover a 5-month period to 31 March 2003. The three weeks trading of
Smart Approach Limited since the date of its acquisition have been included in
the consolidated profit and loss account. However the results principally
reflect a period when the group was not trading.
The group recorded a loss on ordinary activities before taxation of #461,000 (12
months to 31 October 2002 restated #325,000) of which #155,000 relates to the
costs in respect of the acquisition of Smart Approach Limited.
Dividends
Although an appropriation has been made for the dividend on the Company's
cumulative preference shares, company law prevents payment to shareholders until
the company has sufficient distributable reserves. No dividend is proposed on
the company's ordinary share capital.
Financing
Following the fund raising and the acquisition, at 31 March 2003, the group had
cash and short-term deposits of #2,517,000 (31 October 2002 #2,690,000).
Going Concern
The company's sales and cash flow projections indicate that it has sufficient
funds to finance its current development. However, as highlighted in the Chief
Executive's review, the lower than anticipated value of the Lockheed Martin
contract renewal and the requirement to invest in product and market
opportunities is having an adverse impact on short-term results. In addition
there is a degree of inherent uncertainty in relation to the timing and
occurrence of sales in what is a fledgling company. Consequently, the board
continues carefully to review forecast cash flows and the availability of debt
and equity funding. The directors anticipate being able to raise additional
funds should this be necessary. Therefore the financial statements have been
prepared on a going concern basis.
Outlook
During the current financial year we are planning to change from an investment
led, development phase organisation into a market led business. Whilst our
financial plans show further losses during the six-month period to September
2003 we are building an encouraging and growing pipeline of prospects both in
the aviation market and the maritime industry. Our success in securing the
renewal by Lockheed Martin of the license for our screener suite of products
cements our position as the leading supplier of computer based training in the
US aviation market and we expect this to serve as a reference point for future
customers. Outside of North America we are now experiencing a more regular flow
of deals in particular from the Middle East and India. However it is still too
early to predict with certainty the outcome for the full year, which remains
heavily dependent on the closure and timing of the opportunities we are
currently working on. By the time we report our interim results we anticipate
greater clarity in this respect.
Rodney Potts
Chairman
Chief Executive's review
Operating review
On 10 March 2003 I joined the Board of Smart Approach as Chief Executive
together with Glenn Bartholomew as Sales Director and Pete Brosnan as Technical
Director. During our respective careers we have all worked for leading companies
in the IT software industry and have significant experience in developing early
stage businesses.
We were attracted to Smart Approach for three primary reasons. Firstly, we saw
an outstanding market opportunity for the company's training products and
services. Secondly, the company has a good pool of knowledge and expertise in
aviation security; and thirdly, the company has a world leading product set. The
business also had a limited number of very high quality customers. Despite these
positives, as is customary in an early stage company of this nature, we also
knew to expect a company lacking business processes, structure and the
discipline required to enable the rapid growth that we are now seeking.
Since joining the company in March 2003 the executive team has concentrated its
efforts on strengthening business processes, particularly in the finance and
product development functions and also on building an effective international
sales unit. As can be expected, these changes required that some difficult
decisions be made and have resulted in the departure of a small number of
individuals from the group, as well as the addition of new recruits. I am
delighted to say that employees have responded very positively to the new
management style and we now have a robust, motivated organisation with greatly
improved systems.
I detail below the progress that we have already made in respect of some of the
key strategies and procedures which were outlined in the circular sent to
shareholders in March and which are repeated in the Chairman's report.
* Consolidation of Smart Approach's position in the North American Aviation
market:
In early July we announced that Lockheed Martin, our partner in the recently
awarded Transportation Security Administration's 'Specialised Security Training
Contract', had renewed its license to use our screener suite of products, which
are deployed across all major US airports. This 12-month contract cements Smart
Approach's position as the pre-eminent provider of computer based training to
the American aviation security market and will act as a strong reference point
for other potential users throughout the world. Furthermore, we have now
identified and are addressing other opportunities in this market with a
strengthened sales team.
Given the importance of this market, not only in its own right, but also in
acting as a gateway to the global marketplace, Glenn Bartholomew has relocated
to Washington DC to direct our US operation.
* Develop business in relevant non-aviation market sectors:
We have discussed security-training issues within the Marine & Maritime industry
with various relevant organisations and have concluded, partly because of recent
international regulations imposed by the International Maritime Organisation
("IMO"), that there is a new and substantial opportunity for our products and
expertise in this market. In order to take advantage of this opportunity quickly
and effectively the Board of Smart Approach has decided that the best way
forward is to work with a small group of different organisations and individuals
who bring together the key skill sets needed to address the market. Accordingly
we have recently signed a joint venture agreement with various parties including
the principal of the McRoberts Protective Agency, a long established, US based,
marine security company. Smart Approach will own a 44% equity interest in the
joint venture company, which has been named Smart Security Group LLC.
Outside the maritime and aviation sector we have also identified other
substantial opportunities for our products and skills.
* Broaden the range of courseware available:
We have introduced a number of new courseware products, particularly in the
explosive detection area, including mail bomb and threat image projection. Also,
work continues according to schedule for delivery of our new web based screener
product ('Version 6'), which will allow delivery of screener training over the
web. We believe that this new product will enable existing and prospective
customers to deliver training more effectively both to central and remote
operators, and will bring us into a closer alignment with our customers' and
prospective customers' IT strategies. Our existing product will continue to be
offered and maintained for the foreseeable future, until it becomes uneconomic
to do so. Customers who wish to move to web based technology will, of course, be
offered a migration path.
* Delivery of courseware on third party management systems:
All newly developed courseware is SCORM (Shareable Content Object Reference
Model) compliant which enables it to be run on third party management systems
and we have started a review of existing courseware to update it such that it
will also be SCORM compliant. Furthermore the introduction of Version 6 will
make the integration of third party courseware with our internally produced
courseware a simpler process. This should help to satisfy our customer's
requirements for the delivery of a complete security solution.
* To increase recurring revenues:
As we move forward we will seek to extend our support and maintenance offering,
which will provide a recurring and stable base to our revenue stream. With this
in mind our contract with Lockheed Martin contained a substantial element of
support services. We will seek to repeat this balance on future transactions.
In order to ensure the company has the manpower and capability to execute these
key strategies we have established a services division, comprising experienced
implementation staff from all areas of the business. This division is focused
primarily on delivering our new products and services to market profitably,
whilst ensuring that the highest standards of customer's satisfaction are met.
Current trading and prospects
As mentioned above, in July 2003 the company was successful in winning the
renewal of the Lockheed Martin contract. While this contract is considered to be
an important success, it was valued at a lower level than had been anticipated,
with the relevant authorities taking a more measured approach to the procurement
process than in the period immediately following 11 September 2001. However the
worldwide aviation market remains buoyant and we have already secured a number
of smaller deals in Dubai, India and Korea. The lower value of the Lockheed
Martin contract together with the investment in new market opportunities,
investment in the development of our products and the need to make changes in
the organisation will have an adverse impact on short-term results. However the
directors believe that this investment will produce an improvement to the
company's medium to long-term revenue streams. In particular progress has been
made in the opening of new opportunities for the sale of our products and
services in related but non-aviation markets and in the development of a web
based version of our principal screener product.
Finance Review
As at 31 March 2003 the group had cash of #2.52 million and net assets of #9.2
million, including goodwill of #7.9 million.
The initial #3.55 million consideration for the acquisition of Smart Approach
Limited was funded by the issue of 142 million shares at 2.5p per share funded.
Accordingly no funds left the group as a result of the acquisition itself other
than the legal and professional expenses incurred. Further consideration of 64
million shares (#1.6 million) will become payable on the attainment of certain
commercial milestones details of which were set out in the circular sent to
shareholders in March 2003. The vendors of Smart Approach Limited may also
receive an earn-out payment of up to a further #8.0 million in shares or loan
notes dependent on the level of profit achieved by Smart Approach Group plc in
the two years to 31 March 2005.
The associated placing of 79.8 million shares at 2.5p per share and open offer
of 18.7 million shares at 2.5p raised #2.46 million gross (#1.86 million net of
expenses).
Financial instruments
The group's principal financial instruments comprised preference shares, loan
notes, cash and short-term deposits. The group has various other financial
instruments such as trade debtors and trade creditors that arise directly from
its operations.
The group did not in the period enter into derivative transactions. It is the
group's policy that no trading in financial instruments shall be undertaken.
The main risk arising from the Group's financial instruments are interest rate
risk, liquidity risk and foreign currency exchange risk. The policies for
managing these risks are as follows:
* Interest rate risk
The Group is currently cash positive and places cash balances on short-term
deposit with a UK clearing bank.
* Liquidity risk
As at 31 March 2003 the group had cash and bank balances of #2.52 million. Most
of these funds are being be utilised in the broadening of the group's range of
training courseware, the consolidation of its position in the US aviation
security market and the entry into relevant non-aviation market sectors.
The Company's current cash flow projections indicate that it has sufficient
funds to finance its current development. However the Directors continue to
review forecast cash flows and the availability of debt and equity funding. With
this in mind resolutions are being put to the Annual General Meeting to
facilitate the raising of additional funds should this be required.
* Foreign currency risk
The majority of the Group's current cash flows are in Sterling or US dollars.
Expenditure is mainly Sterling or US dollar denominated and income arises from
contracts that are predominantly in Sterling and US dollars. In the five month
period to 31 March 2003 the Company did not use forward exchange contracts to
hedge its exposure to movements in currencies other than Sterling. As the Group
expands the Directors intend to review these policies.
Taxation
The group incurred a loss in the 5 months to 31 March 2003 and accordingly no
corporation taxation was payable. Within the group there are substantial brought
forward tax losses. These tax losses will be available to offset against the
profits expected from future trading although no tax asset in relation to these
sums has been recognised in the financial statements.
Acquisitions
Smart Approach Limited was acquired for an initial consideration of #3.55
million on 10 March 2003. As described above further consideration of up to #9.6
million could become payable on the achievement of certain commercial milestones
and financial targets. For the purposes of the calculation of the goodwill on
acquisition it has been assumed that further consideration will amount to #1.6
million and that this will be satisfied by the issue of a further 64,000,000
shares at a price of 2.5p. The fair value of liabilities acquired amounted to
#2.52 million and costs were incurred amounting to #0.49 million. Therefore the
goodwill capitalised in respect of the acquisition was #8.15 million.
Accounting policies
The change in the nature of the trading of the group has required a review of
its accounting policies. These policies are detailed on below. Attention is
however drawn to the following important policies.
Revenue recognition
The group will take a conservative approach to the recognition of its revenues
as follows.
1. Revenues from the sale of fixed period licenses will be spread evenly over
the period of the contract.
2. Revenues from the sale of licenses in perpetuity will be recognised, in
full, upon satisfaction of all of the principal terms of the transaction.
3. Revenues from the sale of support and maintenance will be spread evenly
over the period of the contract.
Goodwill
The company has reviewed the useful economic life of the goodwill arising from
the acquisition of Smart Approach Limited and considers that in view of the
nature of the business the goodwill should be written off over a five-year
period.
Mike Ormesher
Chief Executive
Consolidated Profit and Loss Account
for the 5 months ended 31 March 2003
5 months to Year to
31 March 31 October
2003 2002
Restated
#'000 #'000
Turnover - acquisition 19 -
Cost of sales - acquisition (1) -
---------- ----------
Gross profit 18
---------- ----------
Administration expenses - continuing (247) (424)
operations
- acquisition (138) -
---------- ----------
(385) (424)
---------- ----------
Operating loss before - continuing (247) (424)
amortisation of goodwill operations
- acquisition (120) -
---------- ----------
Operating loss before (367) (424)
amortisation of goodwill
Amortisation of goodwill - acquisition (94) -
---------- ----------
---------- ----------
Operating loss - continuing (247) (424)
operations
- acquisition (214) -
---------- ----------
Operating loss (461) (424)
Net interest receivable 16 91
Net interest (charges)/income on (16) 8
defined benefit pension scheme ---------- ----------
Loss on ordinary activities (461) (325)
before taxation
Taxation - 19
---------- ----------
Loss on ordinary activities after (461) (306)
taxation
Non-equity appropriations (2) (4)
---------- ----------
Loss retained for the period/ (463) (310)
year ---------- ----------
Loss per ordinary share (basic (0.32)p (0.24)p
and diluted)
Group Balance Sheet
at 31 March 2003
31 March 31 October
2003 2002
Restated
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 7,938 -
Tangible assets 36 -
--------- ---------
7,974 -
Current assets
Debtors 408 168
Cash at bank and in hand 2,517 2,690
--------- ---------
2,925 2,858
Creditors
Amounts falling due within (1,282) (275)
one year --------- ---------
Net current assets 1,643 2,583
-------- --------
Total assets less current 9,617 2,583
liabilities
Provisions for liabilities (27) (27)
and charges
Pension (deficit)/ (390) 44
surplus -------- --------
9,200 2,600
-------- --------
Capital and reserves
Called up share capital - 3,715 1,310
Equity
- Non equity 60 60
-------- --------
3,775 1,370
Share premium account 3,550 76
Special capital reserve 3,328 3,328
Profit and loss account (3,053) (2,174)
Shares to be issued 1,600 -
-------- ---------
Shareholders' funds 9,200 2,600
-------- ---------
Equity shareholders' 9,126 2,528
funds
Non-equity shareholders' 74 72
funds -------- ---------
9,200 2,600
-------- ---------
Consolidated Statement of Cash Flows
for the 5 months ended 31 March 2003
5 Months to Year to
31 March 2003 31 October 2002
Restated
Operating activities #'000 #'000
Net cash (outflow)/inflow from operating (230) 64
activities before exceptional items
Cash inflow from exceptional items - (215)
---------- ----------
Net cash outflow from operating activities (230) (151)
---------- ----------
Returns on investment and servicing of debt
Interest paid (2) (2)
Interest received 18 93
---------- ----------
Net cash inflow from returns on investments and 16 91
servicing of finance ---------- ----------
Capital expenditure and financial investment
Purchase to acquire tangible fixed assets (2) -
Loans made to acquisition target (1,000) -
---------- ----------
Net cash outflow from capital expenditure (1,002) -
---------- ----------
Acquisitions and disposals
Purchase of subsidiary undertaking (488) -
Net overdraft acquired with subsidiary (793) -
undertaking ---------- ----------
Net cash outflow from acquisitions and (1,281) -
disposals ---------- ----------
Management of liquid resources
Withdrawals from short term deposit 2,650 50
---------- ----------
Net cash inflow from management of liquid 2,650 50
resources ---------- ----------
Financing
Issue of ordinary share capital 2,463 -
Share issue costs (134) -
Decrease in short term borrowings (5) (21)
---------- ----------
Net cash inflow from financing 2,324 (21)
---------- ----------
Movement in cash 2,477 (31)
---------- ----------
Reconciliation of net cash flow to movement in
net funds
Movement in cash 2,477 (31)
Cash outflow from decrease in loans 5 21
Management of liquid resources (2,650) (50)
---------- ----------
Movement in net funds in the period/year from (168) (60)
cashflows
Loans acquired with subsidiary (150) -
Net funds at 1 November 2002/1 November 2001 2,614 2,674
---------- ----------
Net funds at 31 March 2003/31 October 2002 2,296 2,614
---------- ----------
Consolidated Statement of Total Recognised Gains and Losses
for the 5 months ended 31 March 2003
5 months to Year to
31 March 31 October
2003 2002
Restated
#'000 #'000
Retained loss for the financial period/year (461) (306)
Actuarial losses recognised in the defined benefit (437) (122)
pension scheme
UK deferred tax on pension surplus 19 36
---------- ----------
(879) (392)
----------
Prior year adjustment as a result of FRS 17 44
----------
Total recognised losses since last annual report (835)
----------
Notes to the Financial Statements
1. Accounting Policies
Basis of preparation
The financial statements are prepared under the historical cost convention in
accordance with applicable accounting standards.
In preparing the financial statements for the current period, the Group has
adopted FRS 17 'Retirement Benefits' in full. The adoption of FRS 17 has
resulted in a change in accounting policy for defined benefit pension schemes,
as recognized in the policy below. Pensions were previously accounted for in
accordance with SSAP 24.
This change in accounting policy has resulted in a prior year adjustment for
both the Group and the Company. For both the Group and the Company,
shareholders' funds at 31 October 2001 have been increased by #378,000 and the
loss retained for the year ended 31 October 2002 has been increased by #248,000.
The losses brought forward have been increased as a result of the inclusion of
the pension surplus in the opening balance sheet. A pension surplus of #63,000
and a deferred tax liability of #19,000 have been created at 31 October 2002.
The loss for the current period has been increased by #16,000 as a result of the
change in accounting policy.
Going Concern
The directors have prepared cash flow forecasts for the group that reflect the
group's forecast revenues and costs. It is envisaged by the directors that these
forecast revenue streams will provide adequate funds for Smart Approach Group
plc and all its subsidiary companies for the foreseeable future
In the event that the group is unable to achieve its forecast revenues, further
funding would be required. The directors have reviewed the availability of debt
and equity funding and anticipate being able to raise additional funds should
this be necessary. As a result, the directors have formed a view that adequate
funds will be available for Smart Approach plc and all its subsidiary companies
for the foreseeable future.
The financial statements have therefore been prepared on a going concern basis.
The financial statements do not contain any adjustments that would result if the
group does not generate sufficient revenue and free cash flows from its trading
activities or if a fund raising exercise was not successful.
Basis of consolidation
The group financial statements consolidate the financial statements of Smart
Approach Group plc and all its subsidiary undertakings drawn up to 31 March
2003. No profit and loss account is presented for Smart Approach Group plc as
permitted by section 230 of the Companies Act 1985.
Smart Approach Limited has been included in the group financial statements using
the acquisition method of accounting. Accordingly, the group profit and loss
account and statement of cash flows include the results and cash flows of Smart
Approach Limited for the three-week period from its acquisition on 10 March
2003. The purchase consideration has been allocated to the assets and
liabilities on the basis of fair value at the date of acquisition.
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. 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. Goodwill arising on the acquisition of Smart Approach Limited will
be amortised over a period of 5 years.
Turnover
Turnover represents revenues derived from the sale of licenses, support and
maintenance, which fall within the group's ordinary activities, stated net of
value added tax.
Revenues from the sale of fixed period licenses are spread evenly over the
period of the contract. Revenues from the sale of licenses in perpetuity are
recognised, in full, upon satisfaction of the principal terms of the
transaction.
Revenues from the sale of support and maintenance are spread evenly over the
period of the contract.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost, less estimated residual value based on prices prevailing at
the date of acquisition, of each asset over its expected useful life as follows:
Computer equipment 2 years
Other plant and machinery 4 to 6 years
The carrying values of tangible fixed assets are reviewed for impairment when
events or changes in circumstances indicate the carrying values may not be
recoverable.
Research and development
Research and development expenditure is written off as incurred.
Deferred tax
Deferred tax 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 a 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, and 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 appropriate
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.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction or at the contracted rate if the transaction is covered by a
forward foreign currency contract.
Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet date or if
appropriate at the forward contract rate. All differences are taken to the
profit and loss account.
The financial statements of overseas subsidiary undertakings are translated at
the rate of exchange ruling at the balance sheet date. The exchange difference
arising on the retranslation of opening net assets is taken directly to
reserves.
Leased assets
Rentals payable under operating leases are charged in the profit and loss
account on a straight-line basis over the lease term.
Pensions
The Group operated two defined benefit pension schemes, which are closed to new
members and have no active members. Operating profit is charged with the cost of
providing pension benefits earned during the period. The expected return on
pension scheme assets less the interest on pension scheme liabilities is shown
as a finance cost within the profit and loss account. Actuarial gains and losses
arising in the period from the difference between the actual and expected
returns on pension scheme assets, experience gains and losses on pension scheme
liabilities and the effects of changes in demographics and financial assumptions
are included in the statement of total recognized gains and losses.
Recoverable pension scheme surpluses and deficits are recognized in full on the
balance sheet.
Current employees are members of a defined contribution scheme whereby
contributions are charged to the profit and loss account as incurred.
2. Loss per Ordinary Share
The loss per share is calculated by reference to the average number of ordinary
shares in issue of 145,544,009 (2002:131,046,137) and losses of #444,000 (2002:
restated #274,000), after preference dividends of #1,625 (2002:#3,900). There is
no difference between basic and diluted earnings per share
3. Reconciliation of Movement in Shareholders' Funds
for the 5 months ended 31 March 2003
5 months to Year to
31 March 31 October
2003 2002
Restated
#'000 #'000
Total recognised losses for the period/year as (879) (392)
restated
Preference dividends (2) (4)
Credit back of preference dividends not paid 2 12
---------- ----------
(879) (384)
New shares issued 5,879 -
Shares to be issued 1,600 -
---------- ----------
Net increase/(decrease) 6,600 (384)
At 1 November 2002 restated 2,600 2,984
---------- ----------
At 31 March 2003 9,200 2,600
---------- ----------
4. Reconciliation of operating loss to net cash outflow
for the 5 months ended 31 March 2003
5 months to Year to
31 March 31 October
2003 2002
Restated
#'000 #'000
Operating loss (461) (424)
Depreciation of tangible assets 3 -
Amortisation of goodwill 94 -
Exceptional items - 215-
Cash inflow from refund of pension surplus net of - 275
tax
Decrease/(increase) in debtors 15 (103)
Increase in creditors and provisions 119 101
---------- ----------
Net cash (outflow)/inflow from operating (230) 64
activities ---------- ----------
5. Analysis of net funds
31 October Cashflow Non cash 31 March
2002 movement 2003
#'000 #'000 #'000 #'000
Cash at bank and in 40 2,477 - 2,517
hand
Short-term deposits 2,650 (2,650) - -
Debts less than 1 (76) 5 (150) (221)
year ---------- ---------- ---------- ----------
2,614 (168) (150) 2,296
---------- ---------- ---------- ----------
The financial information set out above does not constitute the Company's
statutory financial statements for the period ended 31 March 2003 and the year
ended 31 October 2002 but is derived from those financial statements. Statutory
financial statements for 2002 have been delivered to the Registrar of Companies
and those for 2003 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those financial statements; their report
for 2003 referred to going concern but was not qualified, their report for 2002
was unqualified and neither contained statements under section 237(2) or 237(3)
of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEAFAISDSELU
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