RNS Number : 2655C
Z Group PLC
29 August 2008
29 August 2008
Z GROUP Plc
("Z GROUP" or the "Company")
Final results for the year ended 29 February 2008
CHAIRMAN'S STATEMENT
The Company announces its final results for the year ended 29 February 2008.
RESULTS
The loss on ordinary activities after taxation for the year amounted to �4,910,515 (2007 - loss �632,269) representing a loss per share
of 20.68 pence (2007 - loss 3.12 pence).
EVENTS DURING THE YEAR
With continuing trading losses in the Company's subsidiaries which arose from the commercial failure of the OnShare product combined
with the continuing decline in turnover of the principal product, ONSPEED, the Board commenced discussions to sell the operating
subsidiaries of the Company to the then joint CEOs and directors of the Company, Jack Bekhor and Jamie True.
It was announced, when the interim results for the year were released on 29 November 2007, that the directors believed that shareholders
interests' would be best served by securing a speedy solution to the problems of the Company and that accordingly a deal with the joint
CEOs, or any other comparable solution, would be pursued by the Board as a matter of urgency.
On 20 December 2007, the Company entered into an agreement, conditional on shareholder approval, for the sale of CallPal Limited,
Net2Roam Limited, Onshare Limited and Turbodial Limited (the "Disposal Companies"), which comprised substantially all of the trading assets
of the Company, to the joint CEOs.
The proposed agreement was for a cash consideration of �60,000. The CEOs would remain as part-time executive directors of the Company
following Completion, but agreed to waive any remuneration due under their service agreements (other than their entitlement to receive the
statutory minimum wage, which cannot legally be waived). The Board also negotiated with the CEOs further potential payments in the event of
onward sale of shares and/or assets of the Disposal Companies, which has the potential to yield further sums to the Company where any of the
Disposal Companies are sold, or any of the Disposal Companies sell any of their assets, within 15 months of a proposed general meeting of
the Company's shareholders.
A circular dated 21 December 2007 was posted to shareholders setting out:
* the background to the sale
* why the directors of the Company considered the sale to be in the best interests of the Company and its shareholders
* the Company's proposed "Investing Strategy" following completion
* the approval of shareholders for the proposals at an extraordinary general meeting of the Company.
The general meeting took place on 7 January 2008, and the resolutions outlined in the circular to shareholders were duly passed. The
results of the proxy voting on the resolutions put to shareholders were 11,755,315 of the issued shares (49.51% of the issued share capital)
voting in favour of the resolutions and with no shareholders voting against the resolutions.
John Standen, Jonathan Slater and Polly Williams resigned as directors with effect from the date of the general meeting.
Also at this meeting, the shareholders approved the Company's "Investing Strategy" which is to seek high growth, profitable, cash
generative businesses in the Technology, Media or Science sectors.
CHANGES IN DIRECTORS AFTER THE YEAR-END
On 18 March 2008, Ian Smith was appointed as a non-executive director of the Company and Marcus Yeoman was appointed as a part-time
executive director of the Company. On the same day, Jack Bekhor and Jamie True stepped down as joint CEOs and as executive directors of the
Company.
CASH POSITION
The cash position at 29 February 2008 was �1,203,118. The (unaudited) cash position at 27 August 2008, being the last practicable date
prior to the publication of this document, was �1,324,682.
PROSPECTS
The directors' objective is to preserve cash resources while actively pursuing potential acquisitions, which are at various stages of
discussion at this time. Under the AIM rules the Company's shares would be suspended from trading on AIM if a suitable acquisition has not
been made in accordance with the stated investing strategy by 7 January 2009. The directors will keep shareholders informed of any
significant developments over the coming months.
JON CLAYDON
Non-executive Chairman
29 August 2008
Further Enquiries
Z GROUP plc
Duncan Neale (Finance Director) Tel: +44 (0) 20 7952 4043
John East & Partners Limited
Bidhi Bhoma Tel: +44 (0) 20 7628 2200
CONSOLIDATED INCOME STATEMENT
for the year ended 29 February 2008
Notes 29 February 28 February
2008 2007
� �
Share based payments credit / (charge) 383,667 (344,071)
Other administrative expenses (860,830) (400,990)
Proceeds on disposal of investments 60,000 -
Write down of investments (4,638,803) -
2 (5,055,966) (745,061)
OPERATING LOSS
Finance income 3 53,404 103,973
Other income 91,231 8,819
(4,911,331) (632,269)
LOSS BEFORE INCOME TAX
Income tax credit 4 816 -
(4,910,515) (632,269)
LOSS FOR THE YEAR
LOSS PER SHARE (pence)
Basic and diluted 5 (20.68) (3.12)
CONSOLIDATED BALANCE SHEET
as at 29 February 2008
Notes 29 February 28 February
2008 2007
(as restated)
� �
ASSETS
Investments 6 - 16,991,305
Property, plant and equipment 7 10,898 137,918
Intangible assets 8 - 2,317
Other receivables 9 117,500 117,500
128,398 17,249,040
Non-current assets
Trade and other receivables 9 374,552 2,762,813
Cash and cash equivalents 10 1,203,824 1,405,766
Current assets 1,578,376 4,168,579
1,706,774 21,417,619
Total assets
EQUITY AND LIABILITIES
Capital and reserves attributable to equity
holders of the Company
Share capital 12 1,187,294 1,187,294
Share premium account 5,967,758 5,967,758
Share option reserve 700,382 1,084,049
Retained losses (6,299,194) (1,388,679)
1,556,240 6,850,422
Total equity
11 150,534 14,567,197
Trade and other payables
150,534 14,567,197
Current liabilities
150,534 14,567,197
Total liabilities
1,706,774 21,417,619
Total equity and liabilities
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 29 February 2008
Year ended Year ended
29 February 28 February
2008 2007
� �
Cash flows from operating activities
Operating loss (5,055,966) (745,061)
Depreciation 32,711 20,587
Amortisation 510 133
Share option expense (383,667) 344,071
Foreign exchange movement - (6,175)
Write down of investments sold in the year 16,991,305 -
Decrease / (Increase) in trade and other 2,388,261 (2,467,983)
receivables
(Decrease) / Increase in trade and other payables (14,417,368) 779,839
Write down of web development costs and domain 1,807 -
names
(442,407) (2,074,589)
Cash used in operations
Interest paid - -
816 -
Income tax credit
(441,591) (2,074,589)
Net cash (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment (5,340) (147,347)
Purchase of other intangible assets - (161)
Proceeds from the sale of property, plant and 99,649 -
equipment
Interest received 53,404 103,973
Other income 91,231 8,819
238,944 (34,716)
Net cash from / (used in) investing activities
Cash flows from financing activities
Proceeds from the issue of share capital - 52,403
Credit on issue of share expenses - 2,500
Net cash from financing activities - 54,903
Net (decrease) in cash and cash equivalents (202,647) (2,054,402)
Cash and cash equivalents at the beginning of the 1,405,765 3,460,167
year
1,203,118 1,405,765
Cash and cash equivalents at the end of the year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 29 February 2008
Share based payments
reserve
Share capital Share premium Retained earnings
Total
� � � � �
Balance at 1 March 2006, as 973,529 2,322,461 - (16,432) 3,279,558
originally stated
Prior year adjustment: share - - 739,978 (739,978) -
based payment charge
Balance at 1 March 2006, as 973,529 2,322,461 739,978 (756,410) 3,279,558
restated
Issue of equity on exercise of 16,659 35,744 - - 52,403
options
Issue of equity to purchase 197,106 3,607,053 - - 3,804,159
the 49% minority interest in
Onshare Limited
Credit on share issue expenses - 2,500 - - 2,500
Share option charge in the - - 344,071 - 344,07
year
Loss for the period - - - (632,269) (632,269)
Total recognised income and 213,765 3,645,297 344,071 (632,269) 3,570,864
expense for the period
1,187,294 5,967,758 1,084,049 (1,388,679) 6,850,422
Balance at 1 March 2007
Share option credit in the - - (383,667) - (383,667)
year
- - (4,910,515) (4,910,515)
Loss for the period
Total recognised income and
expense for the period - - (383,667) (4,910,515) (5,294,182)
1,187,294 5,967,758 700,382 (6,299,194) 1,556,240
Balance at 29 February 2008
NOTES TO THE FINANCIAL STATEMENTS
For year ended 29 February 2008
1. BASIS OF PREPARATION AND PUBLICATION OF NON-STATUTORY ACCOUNTS
(a) First time adoption of IFRSs
From 1 March 2007, the Company has adopted International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU")
in the preparation of the financial statements.
Prior to this accounting period, the Company prepared its audited annual financial statements under United Kingdom Generally Accepted
Accounting Principles (UK GAAP). For periods commencing 1 March 2007, the Company is required to prepare its annual consolidated financial
statements in accordance with IFRS as adopted by the EU and implemented in the UK. As the financial statements for the year to 29 February
2008 will include comparatives for the year ended 28 February 2007, the Company's date of transition to IFRS is 1 March 2006 and the
comparatives need to be restated to IFRS. Accordingly, the financial information for the year to 28 February 2007 has been restated to
present the comparative information in accordance with IFRS based on a transition date of 1 March 2006. Note 14 sets out how the Company's
previous financial position is affected by the change to IFRS.
As at the date of approval of the financial statements, the following standards and interpretations were in issue but not yet effective:
IFRS 3 (revised) Consolidated financial statements
IFRS 8 Operating Segments
IFRIC 12 Service concession arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 14 IAS19 - The limit on a defined benefit asset, minimum funding requirements and their interaction
IAS 1 (revised) Presentation of financial statements
IAS 23 (revised) Borrowing costs
IAS 27 (revised) Consolidated and separate financial statements
The Directors do not anticipate that the adoption of these standards and interpretations in future reporting periods will have a material
impact on the Company's results.
(b) Going concern
The financial statements are presented on a going concern basis. In assessing the Company's ability to continue as a going concern, the
directors have taken into consideration all available information relating to the 12 month period from the date of approval of these
accounts. In particular the directors have assessed expenditure, budgets and cash flow forecasts of the Company.
The budgets and forecasts have been reflected to reflect the current position of the Company as listed on AIM. The directors are
actively seeking an acquisition in line with the Company's Investing Strategy which is to seek high growth, profitable, cash generative
businesses in the Technology, Media or Science sectors.
The financial implications of potential transactions and the consequences of not being listed on AIM have not been included in the
consideration of the going concern status of the Company at this time.
(c) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, Including expectations of
future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of asset and liabilities within the next financial year are discussed below.
Share-based payments
The Company issues share-based payments to certain employees. The fair value and the vesting periods use management assumptions in their
calculation. While management believes that the assumptions used are appropriate, a change in the assumptions used would impact the results
of the Company.
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. The financial information for the year ended 28 February 2007 has been extracted from the Company's financial
statements to that date which have received an unqualified auditors' report but have not yet been delivered to the Registrar of Companies.
The financial information for the year ended 29 February 2008 has been extracted from the Company's financial statements to that date,
which have been delivered to the Registrar of Companies. The auditors opinion on those financial statements was not qualified but contained
an emphasis of matter paragraph relating to the valuation of the intangible asset.
2. OPERATING LOSS
Year ended Year ended
29 February 28 February
2008 2007
� �
The Company's operating loss is shown after
charging / (crediting):
Significant items:
Write down on sale of fixed asset investments 4,638,803 -
Share based payments (credit) / charge (383,667) 344,071
Depreciation 32,711 20,587
Amortisation 510 133
Auditors' remuneration for the audit 12,000 7,850
Other services related to taxation 14,600 12,000
3. FINANCE INCOME
Year ended Year ended
29 28
February February
2008 2007
� �
Bank interest receivable 53,404 103,973
Finance income 53,404 103,973
4. INCOME TAX CREDIT
Year ended Year ended
29 February 28 February
2008 2007
� �
Factors affecting tax charge for period:
The tax assessed for the period is higher than the
standard rate of corporation tax in the UK. The
differences are explained below:
Loss on ordinary activities before tax (4,911,331) (632,269)
Profit on ordinary activities multiplied by (1,473,399) (189,681)
standard rate of corporation tax in the UK of 30%
(2007: 30%)
Effects of:
Expenses not deductible for tax purposes 133,326 13,710
Temporary differences in the recognition of profits 15,507 (17,159)
or losses not recognised for tax purposes
Losses not recognised for tax purposes 1,439,666 97,469
Adjustment in respect of previous period's income (816) -
tax
Share based payments not recognised for tax (115,100) 95,661
purposes
(816) -
Tax credit for the year
The Company has tax losses of approximately �419,000 (2007: �228,000) which, subject to agreement with HM Revenue & Customs, are
available to carry forward against future profits of the same trade.
5. LOSS PER SHARE
29 February 28 February
2008 2007
No. No.
Weighted average number of shares:
For basic earnings per share 23,745,885 20,284,347
Dilutive effect of share options - -
For diluted earnings per share 23,745,885 20,284,347
Loss for the year �(4,910,515) �(632,269)
Earnings per share:
pence pence
- Basic and diluted (20.68) (3.12)
Due to the losses in the above years, there is no dilutive effect from the issue of share options.
6. INVESTMENTS
Cost and net book value:
�
At 1 March 2007 16,991,305
Book value of investments sold in the year (16,991,305)
-
At 29 February 2008
Details of the subsidiary undertaking of the company are as follows:
Class of Proportion
share held Nature of business
Z GROUP Investments Limited Ordinary 100% Non trading
This subsidiary undertaking is incorporated in England and Wales.
7. PROPERTY, PLANT AND EQUIPMENT
Computer equipment Furniture, fittings Total
� and equipment �
�
Cost
01 March 2006 7,589 - 7,589
Additions 4,147 147,085 151,232
11,736 147,085 158,821
28 February 2007
Depreciation
At 1 March 2006 (316) - (316)
Charged in the period (2,250) (18,337) (20,587)
2,566) (18,337) (20,903)
At 28 February 2007
Cost
01 March 2007 11,735 147,085 158,820
Additions 5,341 - 5,341
Disposals (1,371) (147,085) (148,456)
15,705 - 15,705
29 February 2008
Depreciation
At 1 March 2007 (2,566) (18,337) (20,903)
Charged in the period (2,552) (30,159) (32,711)
Disposals 311 48,496 48,807
(4,807) - (4,807)
At 29 February 2008
Net book value
29 February 2008 10,898 - 10,898
28 February 2007 9,170 128,748 137,918
28 February 2006 7,273 - 7,273
The Company holds no assets under finance leases or hire purchase contracts (2007: none).
The Company assigned its lease on 31 Vernon Street in December 2007, and the fixtures and fittings of the Company were assigned at the
same time.
8. INTANGIBLE ASSETS
Web development Domain names Total
� � �
Cost
01 March 2006 - - -
Additions 2,250 200 2,450
2,250 200 2,450
28 February 2007
Depreciation
At 1 March 2006 - - -
Charge for period (94) (39) (133)
(94) (39) (133)
At 28 February 2007
Cost
01 March 2007 2,250 200 2,450
Additions - - -
Write down (2,250) (200) (2,450)
- - -
29 February 2008
Depreciation
At 1 March 2007 94 39 133
Charge for period 468 42 510
Write back (562) (81) (643)
- - -
At 29 February 2008
Net Book Value
29 February 2008 - - -
28 February 2007 2,156 161 2,317
28 February 2006 - - -
9. TRADE AND OTHER RECEIVABLES
29 February 28 February
2008 2007
� �
Non-current
117,500 117,500
Other debtors
Current
10,287 -
Trade receivables
23,765 34,088
Prepayments
- 2,575,821
Amounts due from subsidiaries
328,534 -
Amounts due from related parties (Note 13)
11,966 152,904
Other debtors
374,552 2,762,813
The carrying value of trade and other receivables is consistent with their book values. Trade and other receivables are unsecured.
10. CASH AND CASH EQUIVALENTS
29 February 29 February 28 February 28 February
2008 2008 2007 2007
� Fixed interest rate � Weighted variable
thereon interest rate thereon
Current account 43,614 0.00% 9,876 0.00%
Deposit accounts 1,160,210 5.65% 1,395,890 3.91%
1,203,824 1,405,766
11. TRADE AND OTHER PAYABLES
Amounts falling due within one year 29 February 2008 28 February 2007
� �
Bank overdraft 705 -
Trade creditors 22,171 94,052
Amounts due to subsidiaries 70,000 14,337,876
Corporation tax - 111,678
Other taxation and social security 7,054 11,608
Accruals and deferred income 38,638 11,983
Provisions 11,966 -
14,567,197
150,534
The carrying value of trade and other payables is consistent with their book values. Trade and other payables are unsecured. It is the
Company's policy to settle trade and other payables within normal credit terms.
12. SHARE CAPITAL
29 February 2008 28 February 2007
� �
Authorised
100,000,000 ordinary shares of �0.05 each 5,000,000 5,000,000
5,000,000 5,000,000
Allotted, called up and fully paid
29 February 2008 28 February 2007
� �
At 1 March 1,187,294 973,529
Subscriber shares - -
Issue of additional shares:
Share for share agreement - -
AIM listing - -
Allotted under share option scheme - 16,659
(333,172 shares)
Allotted on acquisition of the 49%
minority interest in Onshare Limited - 197,106
(3,942,134 shares)
At 29 February 1,187,294 1,187,294
13. RELATED PARTY TRANSACTIONS
The only key management personnel of the Company are the Directors. Details of the compensation of the key management personnel, as
required by IAS 24 "Related Party Disclosures", are disclosed in the Remuneration Report within the Annual Report and Accounts, which have
been posted to shareholders and are available on the Company's website www.zgroupplc.com.
During the year Directors fees of �1,500 (2007: �18,000) were paid to Computer Marketing Services Limited of which Ian Smith is a
Director and controlling shareholder. During the year Directors fees of �37,452 (2007: �40,000) were paid to Standen Consult Limited of
which John Standen is a Director and controlling shareholder.
As detailed in the Chairman's Statement, Jack Bekhor and Jamie True purchased the trading subsidiaries of the Company on 7 January 2008
(the "MBO"). Jack Bekhor and Jamie True remain related parties of the Company in their capacity as significant shareholders of the Company.
A summary follows of the movements in the debt due to and from these related parties up to 29 February 2008:
Year ended 29 February Year ended 28 February 2007
2008
� �
Opening debt due from / (to) 590,447 (987,181)
related parties
Cash forwarded by the Company 4,512,109 1,877,894
to the related parties
Cash forwarded by the related (4,757,361) (817,698)
parties to the Company
Other re-charges from the 332,552 517,432
related parties
Other re-charges from the (20,205) -
Company
Loan waiver to ex-subsidiary (329,008) -
Closing debt due from related 328,534 590,447
parties
It is anticipated that this closing debt of �328,534 will be paid to the Company when R&D tax credits estimated at �328,534 are received
by Net2Roam Limited and OnShare Limited, as these credits are due to the Company under the terms of the MBO agreement.
14. EXPLANATION OF TRANSITION TO ADOPTED IFRSs
The Company's financial statements for the year ended 28 February 2008 will be the first financial statements that comply with
International Financial Reporting Standards (IFRS). The Company's financial statements prior to and including 28 February 2007 had been
prepared in accordance with Generally Accepted Accounting Principles in the United Kingdom (UK GAAP).
As required by IFRS 1, the impact of the transition from UK GAAP to IFRS is explained below. The accounting policies set out above have
been applied consistently to all periods presented in this interim financial information and in preparing an opening IFRS balance sheet at 1
March 2006 for the purposes of transition to IFRS.
IAS 1 - Presentation of Financial Statements. The form and presentation in the UK GAAP financial statements has been changed to be in
compliance with IAS 1.
IAS 7 - Cash Flow Statements. The IFRS Cash Flow Statement, prepared under IAS 7, presents cash flows in thee categories: cash flows
from operating activities, cash flows from investing activities and cash flows from financing activities. Other than the reclassification of
cash flow into the new disclosure categories, there are no significant differences between the Company's Cash Flow Statement under UK GAAP
and IFRS. Consequently, no cash flow reconciliations are provided. Purchases of tangible fixed assets under UK GAAP have been reclassified
to purchases of intangible assets and purchases of property, plant and equipment under IFRS.
There is no change to the reported losses in the year ended 28 February 2007 as a result of the transition to IFRS.
Reconciliation of Balance Sheet at 1 March 2006
Notes 1 March Transition 1 March
2006 to IFRS 2006
(UKGAAP) (as restated)
� � �
ASSETS
Investments 13,187,145 - 13,187,145
Property, plant and equipment a 7,273 - 7,273
Other intangible assets a - - -
Non-current assets 13,194,418 - 13,194,418
Trade and other receivables 412,327 - 412,327
Cash and cash equivalents 3,460,168 - 3,460,168
Current assets 3,872,495 - 3,872,495
Total assets 17,066,913 - 17,066,913
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity holders
of the Company
Share capital 973,529 - 973,529
Share premium account 2,322,461 - 2,322,461
Share option reserve 739,978 - 739,978
Retained losses (756,413) - (756,413)
Total equity 3,279,555 - 3,279,555
Trade and other payables 13,786,542 - 13,786,542
Short-term provisions 816 - 816
Current liabilities 13,787,358 - 13,787,358
Total liabilities 13,787,358 - 13,787,358
Total equity and liabilities 17,066,913 - 17,066,913
Reconciliation of Balance Sheet at 28 February 2007
Notes 28 February Transition 28 February
2007 to IFRS 2007
(UKGAAP) (as restated)
� � �
ASSETS
Investments 16,991,305 - 16,991,305
Property, plant and equipment a 140,074 (2,156) 137,918
Other intangible assets a 161 2,156 2,317
Other receivables 117,500 117,500
Non-current assets 17,249,040 - 17,249,040
Trade and other receivables 2,762,813 - 2,762,813
Cash and cash equivalents 1,405,766 - 1,405,766
Current assets 4,168,579 - 4,168,579
Total assets 21,417,619 - 21,417,619
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity holders
of the Company
Share capital 1,187,294 - 1,187,294
Share premium account 5,967,758 - 5,967,758
Share option reserve 1,084,049 - 1,084,049
Retained losses (1,388,679) - (1,388,679)
Total equity 6,850,422 - 6,850,422
Trade and other payables 14,567,197 - 14,567,197
Short-term provisions - - -
Current liabilities 14,567,197 - 14,567,197
Total liabilities 14,567,197 - 14,567,197
Total equity and liabilities 21,417,619 - 21,417,619
Notes to the reconciliation of Balance Sheets
(a) Classification of website costs
Website development cost is included within intangibles under IFRS rather than tangible assets as is the norm under UK GAAP. The effect
of this is to reclassify website development cost of �2,156 at February 2007 from tangible assets to intangible assets. Total net assets
remain unchanged by this adjustment. There is no adjustment at March 2006, because no website development costs had been incurred up to that
date.
15. DIVIDENDS
No dividends were paid or are proposed in respect of the year ended 29 February 2008.
16. REPORT AND ACCOUNTS
Copies of the Annual Report and Accounts have been sent to all shareholders and are available from the Company's registered office 31
Vernon Street, London W14 0RN and on the Company's website www.zgroupplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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