RNS Number:2152R
Durlacher Corporation PLC
23 October 2003
Immediate release 23 October 2003
DURLACHER CORPORATION PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003
CHAIRMAN'S STATEMENT
Following a successful restructuring of Durlacher Corporation Plc (the '
Company') and its subsidiaries (together the 'Group' or 'Durlacher'), the Group
is now focused primarily on investment banking in the UK small to mid-cap listed
and unlisted business sectors. Services offered include Corporate Finance,
Institutional Broking, Equity Research, Market Making and Fund Management.
HIGHLIGHTS
* Significant restructuring of the Group with business now focused on
traditional UK investment banking. Principal vestiges of "dot.com"
bubble now removed
* Pre-tax losses reduced to #1.5 million (2002: loss of #9.9 million)
* Board restructured: new appointments include Simon Hirst as Director
of Corporate Finance, Robert Boardman as Finance Director and Howard
Flight MP as Non-executive Director
* Annualised cost base projected to reduce by #3 million to below #7
million from October 2003
* Successful placing and open offer raising #4 million cash and sale of
stake in Kvault Software Ltd raised #2.8 million cash. Post balance
sheet sale of stake in Online Travel Corporation Plc, raising
approximately #2 million
* Share capital reorganisation - 1 : 140 share consolidation increasing
market value per share above the nominal value per share
* Repayment of Convertible Debentures realising #5.5 million gain
* In 17 July 2003 acquisition of web-angel plc for shares, raised
further #2.7 million in cash
* Sale of Private Client Stockbroking business and sale of
Nothing-Ventured business completed post year end
* Trading outlook improved, with strong pipeline of investment banking
business
Tony Caplin, Chairman, said:
"During the financial year we have successfully restructured the business.
Compared to 12 months ago, Durlacher is now a very different business. We
continue to seek further opportunities to drive the business forwards.
While our cost base has been significantly rationalised we have been able to
make important investments in the Group. We have an excellent team of people to
deliver our strategy and are well positioned within the cycle to take advantage
of the improvements in market conditions."
For further information please contact:
Christopher Stainforth, Chief Executive 020 7459 3600
David Rydell / Billy Clegg, Bell Pottinger Financial 020 7861 3232
CHAIRMAN'S STATEMENT
INTRODUCTION
During the financial year to 30 June 2003 the Board has restructured the
Durlacher business and has taken firm action to reduce its cost base and to
refocus the Group as a UK investment bank offering traditional corporate
finance, institutional broking, market making, equity research and fund
management services.
Total personnel employed during the previous financial year was 139. By December
2003 we will employ approximately 70 people who we are confident will drive the
business forwards profitably. We continue to seek opportunities to grow the
business, both through organic and acquisitive means.
During the year we took the opportunity to strengthen the Board. On 28 November
2002, Simon Hirst was appointed as Director of Corporate Finance. Simon has
worked in corporate finance for 22 years for a number of leading banks in both
London and New York including Lehman Brothers, Salomon Smith Barney, ABN Amro
Corporate Finance Ltd and Commerzbank Securities. Simon's experience includes
initial public offerings, secondary offerings, mergers and acquisitions and
leveraged buyouts. Significant transactions he has worked on include the Euro2.5
billion Alitalia equity offering and the IPO of Teva Pharmaceutical. Simon's
role at Durlacher is to bring large cap corporate finance experience to bear on
the UK small to mid-cap sector.
Howard Flight MP joined the Board as a Non-executive Director in November 2002,
bringing with him significant experience. Howard's career in the financial
services and banking sectors spans 32 years. He started in 1970 with NM
Rothschild & Sons as an Investment Advisor. Since then he has worked at Cayzer
Ltd and Wardley Ltd (Hong Kong Bank). He later joined Guinness Mahon & Co as an
Investment Director and became joint Managing Director of newly formed Guinness
Flight Global Asset Management in 1987. Since 1988, Howard has been joint
Chairman of Investec Asset Management. He was elected a Conservative Member of
Parliament for Arundel & South Downs in 1997 and subsequently re-elected in
2001.
In April 2003 Robert Boardman was appointed as Finance Director. Robert joined
from Altium Capital Limited, a corporate finance and securities group. Robert
qualified as a Chartered Accountant with Arthur Andersen in 1997, before joining
Altium Capital in 2000 as both Finance Director and part of the corporate
finance team.
It is the Board's view that Durlacher is now well positioned with experienced
personnel in place and is taking advantage of the current improvements in market
conditions. The Group is growing its client base and has a strong pipeline of
investment banking business. The Corporate Finance department, for instance, is
currently working on approximately 30 transactions, of which only the most
likely need to be successful to deliver a profitable outcome. Our institutional
broking and market making operations have expanded with the number of clients
nearly doubling to 48. The research department now covers a wider range of
sectors and actively covers more than 50 quoted stocks.
RESTRUCTURING
Since the beginning of the financial year under review, and following a
strategic review undertaken by KPMG Audit Plc, many changes have been
instigated. While the major restructuring is now complete with all of the main
vestiges of the Group's "dot.com" history eradicated, the platform created
allows for growth where appropriate earnings-enhancing opportunities arise.
During the period, we restructured the Company's share capital. Consequently the
share capital was reorganised on a 1 for 140 basis. This provided Durlacher with
a more substantial market price per share and reduced the large number of
existing ordinary shares in issue. The reorganisation also ensured that the
market value of each new ordinary share was above the nominal value, allowing
the Company to issue new shares.
In November 2002, Durlacher negotiated the repayment of its Convertible
Debentures and the cancellation of Warrants at a discount of 60% to the nominal
value of the Convertible Debentures. In December and January, by way of a
Placing and Offer for Subscription, the Company raised #4 million for the
repayment of the Convertible Debentures at #3.5 million. The placing was
completed at the end of January attracting significant new shareholders onto the
register.
In January 2003 we sold our stake in Kvault Software to Cazenove New European
Access Fund No 1 and Cazenove New European Access Fund No 2 ("CPE") at 17 pence
per share. The sale resulted in an investment gain of #2.4 million and a 580%
premium to the carrying value of the shares as at 30 June 2002. These funds were
retained within the Group for application to the Group's on-going working
capital requirements.
Since the year end we have acquired the entire issued share capital of web-angel
plc, a cash shell with a cash balance of approximately #2.7 million at the date
of acquisition. This cash balance has also been retained to be applied to the
Group's on-going working capital requirements.
In order to focus resources and management time on investment banking, in
September 2003 we sold our Private Client Stockbroking business to Charles
Stanley Group Plc for a maximum consideration of #3.5 million in cash. In
addition, Charles Stanley agreed to buy elements of the Nothing-Ventured
business for a maximum consideration of #1 million. Historically we have
struggled to make this business economical due to the high costs associated with
its infrastructure. Charles Stanley already has that infrastructure and the
business will sit comfortably within the Charles Stanley Group.
FINANCIAL RESULTS
During the period under review, the Group reduced its pre-tax losses to #1.5
million (2002: loss of #9.9 million), on a slightly reduced turnover of #6.7
million, (2002: #7.2 million). The reduced turnover reflects difficult market
conditions during the financial year and the focus on restructuring the
business. The benefits of the restructuring are apparent in that continuing
operations for the period produced a pre-tax profit of #1 million.
The Group incurred exceptional charges and termination costs of #2.4 million
(2002: #1.8 million) associated with the sale of the Private Client Stockbroking
business, Nothing-Ventured and other restructuring charges. It is not expected
that there will be significant additional costs associated with these
discontinued operations.
The loss per share was reduced to 17.57p (2002: loss per share 247.15p).
Turnover for the discontinued operations was #3.6 million and the operating loss
on discontinued operations was #1.6 million. The Group has successfully
divested itself of an infrastructure and management intensive, low margin, loss
making operations.
During the period, profit on disposals of fixed asset investments include #2.4
million associated with the sale of Kvault Software Ltd. In a number of sale
transactions throughout September and October 2003, the Group has disposed of
its entire stake in Online Travel Corporation Plc, raising approximately #2
million.
The estimated annualised cost base has been cut by #3 million to below #7
million (2002: #10 million). This reduction has been a result of the decrease in
headcount and other cost reduction measures. We expect the cost base to settle
at around #6.5 million.
The cancellation of the convertible debentures at the beginning of the financial
year means our interest charge going forward relates purely to a short-term loan
and will be less than #0.04 million on a reducing balance basis (2002: #0.6
million).
As at 30 June 2003 the Group had cash balances of #3 million (2002: #8.3
million) with the net asset position standing at #4.4 million (2002: #1.6
million). The acquisition of web-angel plc on 17 July and the sale of the stake
in Online Travel Corporation Plc represented an important further step in the
strengthening of the balance sheet. The Board is confident that the Group has
adequate working capital to fulfil its plans but, as is normal in investment
banking, this is dependent on the successful conclusion of a proportion of the
strong pipeline of investment banking revenues budgeted.
The Board does not recommend the payment of a final dividend (2002: nil).
OPERATING REVIEW
Public Markets - Corporate Finance, Private Equity, Equity Research and
Institutional Broking
It has been a year of rapid change for the department. In the Corporate Finance
division we now have 29 clients. We have recently seen a pick up in corporate
fund-raisings, completing four in August 2003 alone.
We have strengthened our team. As well as the appointment of Simon Hirst, we
were please to appoint his brother Julian as Managing Director of Corporate
Finance. Julian joined from UBS Warburg where he was a Managing Director of its
UK investment banking operation and led its coverage of the European cable TV
sector. He previously led UBS Warburg's European technology investment banking
team.
During 2003 we successfully completed seven fund raisings, including Medal
Entertainment and Media, enabling it to complete two acquisitions. In addition,
we completed two large secondary placings for Personal Group Holdings Plc and
Lawrence Plc. The number of institutional clients with which we dealt rose from
27 to 48 in 2003.
In June, David Banks joined as Head of Equities from Old Mutual Securities/
Arbuthnot Securities where he was Director of Institutional Sales. David was
previously at WestLB Panmure, where he helped build a formidable small and
mid-cap client base as head of mid-cap projects. David has built his team up to
sixteen people and has brought in significant new business.
The secondary commissions business is growing well as David and his team forge
closer relationships with institutions and corporate clients alike.
Durlacher researched 50 stocks and closed the year on 30 June 2003 with an
increased number of analysts covering a range of industries including financial
services, support services, leisure, technology and engineering. Since the
close of the year we have increased the number of companies we cover to 70 and
expanded the range of industries we cover to include healthcare. We continue to
look to appoint key personnel in order to build this business area.
Fund management
Nicholas Taylor joined the Group in February 2003 to head up the Private Wealth
Management division. By March 2003 Durlacher had formed its own discretionary
fund management service. The key feature to the approach is an unambiguous
focus on absolute returns.
The two Durlacher funds, the Durlacher Growth Fund and the Durlacher Blue Chip
Fund, have generated positive investment returns during the year . The Growth
Plus fund is up 11.1% against the FTSE All Share gain of 9.6% over the 9 months
to 30 September 2003. Durlacher expects to expand and broaden this division
organically and by acquisition.
Market-Making
Until April 2003, we starved the market-making book of cash. Since April we have
grown the book back and it has performed well.
DISCONTINUED OPERATIONS - PRIVATE CLIENT BROKING AND ONLINE SERVICES
As indicated above, we have taken the opportunity to sell our Private Client
Stockbroking business and elements of the Nothing-Ventured business to Charles
Stanley Group Plc.
Although this has had a short-term negative impact on our working capital, these
sales have enabled us to cut our ongoing cost base without significantly eroding
our profitability. We now have less than 1,000 clients with whom we can manage a
close relationship, as opposed to some 15,000 previously. These businesses fit
well with Charles Stanley, who have the scaleable infrastructure to make the
business profitable.
OUTLOOK
During the financial year we have successfully restructured the Group. Compared
to 12 months ago, Durlacher is now a very different business. We continue to
seek further opportunities to drive the business forwards.
Trading in the first three months of the new financial year has been stronger
compared to the same period last year. Our markets are improving and there is a
genuine appetite within institutions to invest in small to mid-cap growth
companies. Positive sentiment is currently returning to the market, which augurs
well for the future. Our cost base has been rationalised and we have been able
to make significant investments in the Group. We have an excellent team of
people to deliver our strategy and are well positioned within the cycle to take
advantage of the improvements in market conditions.
Anthony Caplin
Chairman
23 October 2003
DURLACHER CORPORATION PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2003
Audited Audited
Note Continuing Discontinued 2003 2002
#'000 #'000 #'000 #'000
#'000
Turnover
Continuing/discontinued 2,528 3,600 6,128 7,146
Under contract for sale 517 - 517 -
Total turnover 3 3,045 3,600 6,645 7,146
Cost of sales
Continuing/discontinued (175) (2,165) (2,340) (3,118)
Under contract for sale (313) - (313) -
Total cost of sales 5 (488) (2,165) (2,653) (3,118)
Gross profit 2,557 1,435 3,992 4,028
Administrative expenses
Continuing/discontinued (7,469) (2,994) (10,463) (9,865)
Under contract for sale (702) - (702) -
Exceptional expenses 6 (733) (85) (818) (1,843)
Total administrative expenses (8,904) (3,079) (11,983) (11,708)
Operating loss (6,347) (1,644) (7,991) (7,680)
Profit on disposal of fixed asset investments 2,617 - 2,617 4,219
Termination costs on discontinued activities - (890) (890) -
Net interest and similar costs
Exceptional gain on debenture redemption 5,531 - 5,531 -
Other interest receivable 243 - 243 1
Total net interest and similar costs 5,774 - 5,774 1
Amounts written off fixed asset investments (1,007) - (1,007) (6,446)
Profit/(loss) on ordinary activities before 1,037 (2,534) (1,497) (9,906)
taxation
Over/(under) provision of taxation in prior years 8 516 (118)
Loss on ordinary activities after taxation (981) (10,024)
Basic loss per ordinary share 9 (17.57)p (247.15)p
Diluted loss per share 9 (17.57)p (247.15)p
The Group has no recognised gains or losses other than the result for the year.
The Consolidated Financial Information (consisting of the consolidated profit
and loss account, balance sheet, cash flow statement and related notes) has been
prepared on the same basis of the accounting policies set out in Durlacher's
2002 Annual Report. The Consolidated Financial information does not constitute
the Group's statutory accounts for the year ended 30 June 2003 or 2002 but is
derived from those accounts. The statutory accounts for the year ended 30 June
2002 have been delivered to the Registrar of Companies and those for the year
ended 30 June 2003 will be delivered following the Company's annual general
meeting. The auditors have reported on those accounts; their reports were
unqualified and did not contain statements under Section 237(2) or (3) of the
Companies Act 1985.
DURLACHER CORPORATION PLC
CONSOLIDATED BALANCE SHEET AS AT 30 June 2003
Audited Audited
2003 2002
Notes #'000 #'000
Fixed assets
Intangible fixed assets 475 -
Tangible fixed assets 499 517
Investments 10 6 1,790
Total fixed assets 980 2,307
Current assets
Investments 2,968 3,253
Debtors 11 3,065 1,492
Cash and bank balances 3,041 8,317
9,074 13,062
Creditors: amounts falling due within one year 12 (3,904) (3,918)
Net current assets 5,170 9,144
Total assets less current liabilities 6,150 11,451
Creditors: amounts falling due after one year 13 (221) (9,065)
Provisions for liabilities and charges 14 (1,541) (709)
Net assets 4,388 1,677
Ordinary shares 326 28,493
Deferred shares 28,330 -
Called up share capital 28,656 28,493
Share premium account 18,072 14,543
Profit and loss account (42,340) (41,359)
Equity shareholders' funds 15 4,388 1,677
Approved by the Board on 23 October 2003 and signed on its behalf by:
C Stainforth R Boardman
Chief Executive Officer Finance Director
DURLACHER CORPORATION PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2003
Audited Audited
Notes 2003 2002
#'000 #'000
Net cash flow from operating activities 16 (9,453) (6,809)
Returns on investments (115) 675
Taxation - 702
Capital expenditure and financial investment 3,106 3,534
Acquisitions and disposals (65) -
Cash outflow before financing (6,527) (1,898)
Financing
Issue of ordinary share capital 4,001 45
New loan 750 -
Repayment of convertible debentures (3,500) -
Net cash inflow from financing activities 1,251 45
Decrease in cash (5,276) (1,853)
Reconciliation of cash outflow to movement
in net funds/(debt)
Decrease in cash for the year (5,276) (1,853)
Loans (750) -
Non-cash movement on conversion of debentures 5,250 5,040
Repayment of debt 3,500 -
Change in net debt resulting from cash flows 2,724 3,187
Net debt brought forward (433) (3,620)
Net funds/(debt) 30 June 17 2,291 (433)
An analysis of the cash flows from discontinued operations is included in note
16. Except as described above, the cash flows arising from acquisitions have
not been disclosed as they are immaterial. Unless explicitly stated all other
cash flows above arise from continuing operations.
DURLACHER CORPORATION PLC
NOTES TO THE PRELIMINARY CONSOLIDATED RESULTS
for the year ended 30 June 2003
1. Basis of preparation
The results for 2003 have been prepared in accordance with the accounting
policies of Durlacher Corporation Plc as set out in its 2002 Annual Report and
Accounts.
As detailed in the Chairman's Statement, during the year the Group has
restructured its operations following a review of the Group's strategy and
operational performance. The strategic review of the business included the
analysis of the projected trading results and cash flow for the twelve month
period from the anticipated date of signing of the 2003 annual report and
accounts. As with any projections, the assumptions underlying their preparation
are subject to a degree of risk. Having regard to the projections and the terms
of borrowing currently available to the Group, the Directors envisage that the
Group has sufficient cash reserves to provide adequate funding to satisfy the
Group's obligations for the following twelve month period.
Based on the above and taking account of all known influencing factors, the
Directors consider it appropriate to prepare the accounts on a going concern
basis.
2. Segmental analysis
The Directors consider that the Group operates in one segment, being investment
banking.
3. Turnover
The following provides an analysis of turnover by major activity:
Audited Audited
2003 2002
#'000 #'000
Commissions 3,571 4,319
Fees 2,642 1,520
Dealing profits and losses 432 1,307
6,645 7,146
4. Discontinued activities
Audited 2003 Audited
2002
Continuing Discontinuing Total Continuing Discontinued Total
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 3,045 3,600 6,645 2,506 4,640 7,146
Cost of sales (488) (2,165) (2,653) (584) (2,534) (3,118)
Gross Profit 2,557 1,435 3,992 1,922 2,106 4,028
Administrative expenses (8,904) (3,079) (11,983) (8,645) (3,063) (11,708)
Operating loss (6,347) (1,644) (7,991) (6,723) (957) (7,680)
The results of Life Capital Limited acquired during the year are not material and have not been separately disclosed.
5. Cost of sales
Audited Audited
2003 2002
#'000 #'000
Write down of current asset investments - (247)
Commission payable (2,653) (2,871)
(2,653) (3,118)
DURLACHER CORPORATION PLC
NOTES TO THE PRELIMINARY CONSOLIDATED RESULTS
for the year ended 30 June 2003
6. Administrative expenses - exceptional expenses
Audited Audited
2003 2002
Included with administration expenses are the #'000 #'000
following non-recurring exceptional expenses:
Restructuring costs - (1,111)
Redundancy and reorganisation (818) (732)
(818) (1,843)
7. Dividend
The Board does not recommend the payment of a final dividend (2002: nil). No
interim dividend was declared (2002: nil).
8. Taxation
The current tax charge for the period is different to the standard rate of
corporation tax in the UK of 30% (2002:30%). The amounts are compared below:
2003 2002
Analysis of current tax charge in year #'000 #'000
Current year UK corporation tax - -
Prior year corporation tax (over)/under provision (516) 118
Current tax (credit)/charge (516) 118
9. Loss per share Restated
Audited Audited
2003 2002
The loss per ordinary share has been calculated as follows: #'000 #'000
Loss attributable to ordinary shareholders:
Loss on ordinary activities after taxation (981) (10,024)
Weighted average number of ordinary shares in issue 5,582,246 4,055,778
Adjusted weighted average number of ordinary shares in issue 5,582,246 4,055,778
Due to the reorganisation of the share capital the prior year figures have been
restated for comparison purposes.
FRS 14 requires presentation of diluted EPS when a company would be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding options, net loss per share would
only be decreased by the exercise of these share options therefore no adjustment
has been made to the weighted average number of shares in issue.
10. Investments
Audited Audited
2003 2002
#'000 #'000
Fixed Assets
Carrying value of investments at 1 July 1,790 7,913
Additions 6 401
Disposals (783) (78)
Impairment (1,007) (6,446)
Investments at 30 June 6 1,790
Fixed asset investments include participating interests which it is not
appropriate to either consolidate or equity account on the basis that the Group
exercises no control or significant influence over them.
DURLACHER CORPORATION PLC
NOTES TO THE PRELIMINARY CONSOLIDATED RESULTS
for the year ended 30 June 2003
11. Debtors
Audited Audited
2003 2002
#'000 #'000
Trade debtors 430 153
Market debtors 1,863 517
Other debtors 232 265
Prepayments and accrued income 540 557
3,065 1,492
12. Creditors: amounts falling due within one year
Audited Audited
2003 2002
#'000 #'000
Bank Loan (625) -
Market creditors (967) (580)
Trade creditors (946) (646)
Other taxation and social security (215) (300)
Other creditors (366) (72)
Accruals and deferred income (785) (2,320)
(3,904) (3,918)
13. Creditors: amounts falling due after one year
Audited Audited
2003 2002
#'000 #'000
Bank loan (125) -
Convertible debentures - (8,750)
Other (96) (315)
(221) (9,065)
14. Provisions for liabilities and charges
Reorganisation & Legal Other Total
Reconstruction
action
#'000 #'000 #'000 #'000
Provisions at 1 July 2002 (601) - (108) (709)
Utilised during the period 516 - 68 584
Charged during the year (712) (600) (104) (1,416)
As at 30 June 2003 (797) (600) (144) (1,541)
Before the year end the Directors determined that they would dispose of certain
elements of the Private Client Stockbroking business and terminate the remainder
and communicated that decision to the staff affected. A provision has been
established in the respect of the Directors' best estimate of the redundancy and
other termination costs. The obligations represented by the provision are
expected to be settled within five months of the year end.
One of the Group's subsidiaries has received a small number of complaints
regarding the management of certain investment portfolios. Legal action has
been served against the Subsidiary in respect of certain of the complaints while
others have been referred to the Financial Ombudsman Service. Having carefully
considered the Company's position and after taking legal advice on specific
complaints the Directors have established a provision representing their best
estimate of the liabilities likely to arise in respect of these complaints. The
timing of any payment is dependent on how the cases develop.
DURLACHER CORPORATION PLC
NOTES TO THE PRELIMINARY CONSOLIDATED RESULTS
for the year ended 30 June 2003
The other provisions relate to redundancy and reorganisation costs which have
been quantified on the basis of a commitment to pay the relevant parties. It is
envisaged that these payments will be made in the course of the next financial
year.
15. Share capital and reserves
Share Share Profit & Total
Capital Premium Loss
Account
#'000 #'000 #'000 #'000
At 1 July 2002 28,493 14,543 (41,359) 1,677
Shares issued 163 3,529 - 3,692
Loss for the year - - (981) (981)
As at 30 June 2003 28,656 18,072 (42,340) 4,388
On 1 November 2002 the Ordinary Shares were sub-divided into one Interim
Ordinary Share and 174 Interim Deferred Shares. The Interim Ordinary Shares and
Interim Deferred Shares were then consolidated and holders received one New
Ordinary Share and one Deferred Share for every 140 existing Interim Ordinary
Shares and 140 existing Interim Deferred Shares respectively. The New Ordinary
Shares rank pari passu, save as to the nominal value, with the original Ordinary
Shares which they replaced.
The Deferred Shares have no rights to vote or participate in dividends and only
carry limited rights on any return of capital on liquidation.
The authorised but unissued Ordinary Share Capital was sub-divided into 175
Interim Ordinary Shares. Every 140 Interim Ordinary Shares which arose out of
the sub-division was then consolidated into one New Ordinary Share.
The authorised Share Capital of the Company was reduced to #29 million by the
cancellation of the relevant number of authorised but unissued New Ordinary
Shares.
Following the Share Capital Reorganisation, the authorised Share Capital of the
Company is #29 million made up of 16,757,117 New Ordinary Shares of 4p nominal
value each (#670,285) and 708,242,883 unquoted Deferred Shares of 4p nominal
value each (#28,329,715).
On 31 January 2003 the shareholders approved the issue of 4,000,500 Ordinary
Shares issued at #1 each which raised cash of #4m.
On 17 March 2003 the Company issued 74,000 Ordinary Shares together with 100,000
warrants, as part of payment for the acquisition of Life Capital Limited. The
market value of the Ordinary Shares issued on 17 March 2003 was #59,200. The
warrants were issued at #1 per Warrant Share and can be exercised between
eighteen months and seven years from the date of issue.
DURLACHER CORPORATION PLC
NOTES TO THE PRELIMINARY CONSOLIDATED RESULTS
for the year ended 30 June 2003
16. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Audited Audited
2003 2002
Cont Discont Total Cont Discont Total
#'000 #'000 #'000 #'000 #'000 #'000
Operating Loss (6,347) (1,644) (7,991) (6,723) (957) (7,680)
Depreciation and write down of fixed assets 295 - 295 668 - 668
Unrealised loss on current asset investments 285 - 285 51 - 51
(Increase)/decrease in debtors (1,439) (175) (1,614) 414 261 675
Decrease in creditors and provisions (275) (153) (428) (355) (215) (570)
Provision for share options granted - - - 47 - 47
Net cash outflow from operating activities (7,481) (1,972) (9,453) (5,898) (911) (6,809)
17. Analysis of net debt/funds
At 30 June Cash Non-cash At 30 June
2002 Flow movements 2003
#'000 #'000 #'000 #'000
Cash in hand and at bank 8,317 (5,276) - 3,041
Convertible debentures (8,750) 3,500 5,250 -
Loans - (750) - (750)
Net (debt)/funds (433) (2,526) 5,250 2,291
18. Contingent liabilities
In a number of instances split capital investment trusts ("splits") have either
failed or performed poorly in the past 18 months. The Financial Services
Authority and the Financial Ombudsman Service are currently undertaking a review
of the splits sector. There has also been speculation that legal action may be
brought against a range of parties involved in the sector. No legal action has
been served against the Company and in the event that the Company were to be
included in any such proceedings these would be defended robustly. A review of
the Company's exposure to clients deriving from their holdings of split trusts
has been undertaken. Based on this review and the present progress of the
regulatory proceedings the Board does not consider that any material provision
is required. It is not possible to calculate the value of this contingent
liability.
19. Related party transaction
Subsequent to the year end the Company purchased web-angel plc (see note 20).
Christopher Stainforth, Chief Executive Officer of the Company, was a potential
discretionary beneficiary, via a discretionary employee benefit trust
established through his former employment with Ermgassen & Co Limited, in
4,965,290 web-angel plc shares representing approximately 3.8 per cent of
web-angel plc's issued share capital. This has resulted in Mr Stainforth being
a discretionary beneficiary, via a discretionary trust, in 124,132 New Durlacher
shares which represents 1.1 per cent of Durlacher's share capital as enlarged by
the offer for web-angel plc.
DURLACHER CORPORATION PLC
NOTES TO THE PRELIMINARY CONSOLIDATED RESULTS
for the year ended 30 June 2003
20. Post balance sheet events note
On 23 July 2003 Durlacher acquired the entire share capital of web-angel plc.
Had the transaction happened prior to the year end the consolidated balance
sheet would appear as follows:
Durlacher
Post-
acquisition
#'000
Fixed assets
Intangible fixed assets 475
Tangible fixed assets 506
Investments 6
Total fixed assets 987
Current assets
Investments 2,968
Debtors 3,069
Cash and bank balances 5,709
Total current assets 11,746
Creditors : amounts falling due within one year (4,821)
Net current assets 6,925
Total assets less current liabilities 7,912
Creditors : amounts falling due after one year (221)
Provisions for liabilities and charges (1,541)
Net assets 6,150
Ordinary shares 456
Deferred shares 28,330
Called up share capital 28,786
Share premium account 17,941
Capital reserve -
Merger Reserve 3,901
Profit and loss account (44,478)
Equity shareholders' funds 6,150
web-angel plc was purchased as a cash shell with no current trading. The
goodwill on acquisition will therefore been charged to the profit and loss
account in the year of acquisition. The details of the transaction and
individual company balance sheets can be found in the Circular recommending the
offer by Durlacher for web-angel plc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UUSWROBRRUAA
