Consolidated Vending plc
('CV' or 'the Company')
Final Results for the year ended 31 December 2007
Date: 27 June 2008
Chairman's statement
Our first full year as an AIM company has been challenging and difficult. As
previously reported, we ceased the development of Aqua Polar (pure water
vending), ceased our activities with Powerpod (mobile telephone battery
recharging vending) and sold the trade, assets and liabilities of BFresh
(toiletry vending). We acquired Kiddies Rides (UK) Limited, which operates
children's rides. We have not been able to place our stock-pile of ex-post
office photobooths in suitable retailers because the market terms dictated by
the dominant company in photobooth vending (our main competitor) remain
commercially unattractive. In summary, we have made some progress towards the
promises made when we listed on AIM, but not enough progress.
We currently have 407 photobooths in operation (approximately 7% of the UK
market) and 330 children's rides in operation (approximately 4% of the UK
market). These are similar levels of machines to those which we had on 31
December 2006 for photobooths and as at 28 June 2007 for children's rides (the
day after the acquisition of Kiddies Rides (UK) Limited).
Revenue for the year from continuing operations was �3,403,000 (2006:
�1,459,000), which analyses as �2,962,000 (2006: �1,459,000) from photobooths
and �441,000 (2006: �Nil) from children's rides and revenue from discontinued
operations was �111,000 (2006: �86,000) from BFresh units (the children's ride
turnover is effectively six months turnover from the date of acquisition). Loss
before taxation was �1,160,000 (2006: �1,268,000), adding back interest,
depreciation and amortisation produces a continuing operations EBITDA figure of
a loss of �353,000 (2006: loss of �677,000) which is a more appropriate way of
looking at our achievements. The comparative figures for 2006 are not
comparable as they cover some seven months of photobooth turnover and include
the period of the run off of the post office contract and they do not include
any turnover for children's rides.
Our control of overheads and cash flows remains tight as is to be expected of
such a relatively small company.
We continue to seek new opportunities to grow the business. This can be
frustrating because of our cash constraints and the commercial conditions set by
our main competitor. To retailers, we are the only realistic alternative for
photobooths and children's rides as a package of operating equipment.
I applaud the determination shown by the executive team in their search for
commercially viable opportunities.
RJ Steele
Chairman
27 June 2008
Enquiries:
Andrew Coll
01494 513927
Chief Executive Officer
Nick Harriss
020 7489 4500
Blomfield Corporate Finance Ltd (Nomad)
Peter Ward
020 7638 5600
SVS Securities plc (Broker)
Consolidated income statement
for the year ended 31 December 2007
Note Year ended 209 day
31 December period ended
2007 31 December
2006
�000 �000
Continuing operations
Revenue 2 3,403 1,459
Cost of sales (2,190) (765)
______ ______
Gross profit 1,213 694
Other operating income 2 155
Distribution expenses (736) (437)
Administrative expenses (2,089) (1,675)
______ ______
Operating loss (1,610) (1,263)
Financial income (including
exceptional item of �450,000
(2006: �Nil)) 479 48
Financial expenses (29) (53)
______ ______
Net financing costs 450 (5)
______ ______
Loss before tax (1,160) (1,268)
Taxation 6 233 67
______ ______
Loss from continuing operations (927) (1,201)
Discontinued operation
(Loss)/profit from discontinued 3 (25) 76
operations, net of tax ______ ______
Loss for the year being
attributable to equity holders of
the parent (952) (1,125)
Earnings per share
Loss per share 7 0.4p 0.8p
====== ======
Continuing operations
Loss per share 7 0.4p 0.8p
====== ======
Consolidated statement of changes in equity
for the year ended 31 December 2007
Issued Share Retained Total
share premium earnings
capital account
�000 �000 �000 �000
Year ended 31 December 2007
At 1 January 2007 206 1,387 43 1,636
Loss for the period being
total recognised income
and expense for the period - - (952) (952)
Shares issued 54 466 - 520
Issue of convertible debt 94 - - 94
Share based payments - - 274 274
______ ______ ______ ______
At 31 December 2007 354 1,853 (635) 1,572
====== ====== ====== ======
209 day period ended 31
December 2006
At 6 June 2006 - - - -
Loss for the period being
total recognised income - - (1,125) (1,125)
and expense for the period
Share-based payments - - 1,168 1,168
Shares issued 206 1,387 - 1,593
______ ______ ______ ______
At 31 December 2006 206 1,387 43 1,636
====== ====== ====== ======
Consolidated balance sheet
at 31 December 2007
Note Year ended 209 day
31 December period ended
2007 31 December
2006
�000 �000
Non-current assets
Property, plant and equipment 1,495 1,688
Intangible assets 978 1,052
Other receivables 8 - 42
______ ______
2,473 2,782
______ ______
Current assets
Inventories 299 336
Trade and other receivables 8 398 591
Cash and cash equivalents 171 955
______ ______
868 1,882
______ ______
Total assets 3,341 4,664
______ ______
Current liabilities
Interest bearing loans and 7 210 1,335
borrowings
Trade and other payables 10 940 1,069
______ ______
1,150 2,404
______ ______
Non-current liabilities
Interest bearing loans and 7 341 309
borrowings
Deferred tax liabilities 278 315
______ ______
619 624
______ ______
Total liabilities 1,769 3,028
______ ______
Net assets 1,572 1,636
====== ======
Equity attributable to equity
holders of the parent
Share capital 11 354 206
Share premium 1,853 1,387
Retained earnings (635) 43
______ ______
Total equity 1,572 1,636
====== ======
These financial statements were approved by the board of directors on 27 June
2008 and were signed on its behalf by:
AP Coll
Director
Consolidated cash flow statement
for the year ended 31 December 2007
Year ended 209 day
31 Decemeber period ended
2007 31 Decemeber
2006
�000 �000
Cash flows from operating
activities
Loss for the year/period (952) (1,125)
Adjustments for:
Depreciation and amortisation 1,257 586
Impairment of negative goodwill - (70)
Financial income (479) (48)
Financial expense 29 53
Loss on sale of property, plant - (126)
and equipment
Equity settled share-based 140 1,168
payment expenses
Gain on sale of discontinued (8) -
operation
Taxation (233) (67)
______ ______
(246) 371
Decrease/(increase) in trade and 329 (180)
other receivables
Decrease(increase) in inventories 25 (272)
(Decrease) in trade and other (616) (979)
payables
______ ______
Net cash generated from operating (508) (1,060)
activities
Cash flows from investing
activities
Interest received 29 48
Proceeds from sale of property, 87 377
plant and equipment
Disposal of discontinued operation, 85 -
net of cash disposed of
Acquisition of subsidiary, net of (275) 774
cash acquired
Acquisition of property, plant and (52) (12)
equipment
______ ______
Net cash from investing activities (126) 1,187
______ ______
Cash flows from financing activities
Proceeds from the issue of share 370 1,511
capital
Proceeds from new loan 692 1,300
Repayment of borrowings (1,183) (1,930)
Interest payable (29) (53)
______ ______
Net cash from financing activities (150) 828
Net (decrease)/increase in cash and (784) 955
cash equivalents
Cash and cash equivalents at start 955 -
of year/period ______ ______
Cash and cash equivalents at end of 171 955
year/period
Notes
(forming part of the financial statements)
1 Transition to International Financial Reporting Standards
These annual financial statements are the first annual financial statements
following the adoption of International Financial Reporting Standards as adopted
by the European Union ("Adopted IFRSs") for Consolidated Vending Plc and its
subsidiaries ("the Group"). These financial statements have been prepared in
accordance with the accounting policies set out below and take into account the
requirements in IFRS 1 "First time adoption of International Financial Reporting
Standards".
The transition date for the Group's application of adopted IFRS was the date of
incorporation on 6 June 2006 and the comparative figures for 31 December 2006
have been restated accordingly. Reconciliations of the income statement,
balance sheet and net equity from previously reported UK GAAP to IFRS are shown
in note 26. The consolidated statements are prepared on the basis of adopted
IFRS published by the International Accounting Standards Board ("IASB") that are
currently in issue.
The information presented for the year ended 31 December 2007 represents the
consolidated results of the Consolidated Vending Group for that period.
2 Accounting policies
Consolidated Vending Plc ("the Company") is a company incorporated and domiciled
in the UK.
The group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group") and equity account the
Group's interest in associates and jointly controlled entities. The parent
company financial statements present information about the Company as a separate
entity and not about its group.
The group financial statements have been prepared and approved by the directors
in accordance with International Financial Reporting Standards as adopted by the
EU. The Company has elected to prepare its parent company financial statements
in accordance with UK GAAP, these are presented on pages 43 to 51.
The Group's significant accounting policies are listed below:
First time adoption
The Group has applied IFRS 1 "First time adoption of International Financial
Reporting Standards" in its initial application of IFRS. The Group is required
to select appropriate accounting policies under IFRS and apply them
retrospectively to its financial statements such that all comparative
information is presented on the same basis.
Basis of preparation
The financial statements are presented in sterling, rounded to the nearest
thousand. They are prepared on the historical cost basis.
The financial statements are prepared on a going concern basis notwithstanding
the consolidated deficit of current assets over current liabilities position at
31 December 2007. The directors believe this to be appropriate for the
following reason. The directors have prepared projected cash flow information
for the period to December 2009. On the basis of this cash flow information,
the directors consider that the company will continue to operate within its
available cash resources and bank facilities. Any financial forecasts by their
nature contain uncertainty.
The preparation of financial statements in conformity with Adopted IFRSs
requires management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and future periods if the revision affects both current and future
periods.
In particular, information about significant areas of estimation, uncertainty
and critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the financial statements is
included in the following notes:
* Note 5 - business combination
* Note 10 - utilisation of tax losses
* Note 20 - measurement of share based payments
The financial information set out in this announcement does not constitute the
company's statutory accounts for the years ended 31 December 2007. Statutory
accounts for the year ended 31 December 2007 will be delivered to shareholders
on Friday 27 June 2008 and will be available on the Company's website (www.cv-
plc.com). The report of the auditors on these accounts was unqualified and did
not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by Consolidated Vending Plc ("the
Company"). Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses, or income and expenses
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
New standards and interpretations not yet adopted
The following Adopted IFRS's were available for early application but have not
been applied by the Group in these financial statements. Their adoption is not
expected to have a material affect on the financial statements unless otherwise
indicated:
* IFRS 8 "Operating segments" introduces the "management approach" to segment
reporting. 2008 financial statements will require the disclosure of segment
information based on the internal reports regularly reviewed by the Group's
Chief Operating Decision Maker in order to assess each segment's performance and
to allocate resources to them. Currently, the Group presents segment
information in respect of its business and geographical segments (see note 4).
Under the management approach, the Group does not expect the presentation of its
segment information to be significantly different.
3 Discontinued operations
Discontinued operation
In October 2007, the Group sold the trade, assets and liabilities of BFresh
Limited.
The company could no longer continue to suffer the losses of BFresh Limited
(toiletries vending) and successfully sold the trade, assets and liabilities of
the company on 3 October to Underlease Limited. The consideration for the sale
was �85,000 which was fully paid with a final instalment of �60,000 on 15
January 2008.
A pre-tax gain of �8,000 was recorded. The attributable tax was �Nil, leaving a
gain after tax of �8,000.
During the year ended 31 December 2007, BFresh Limited had cash inflows from
operating activities of �31,000 (2006: �263,000), cash inflows from investing
activities of �58,000 (2006: �3,000) and cash flows from financing activities of
�17,000 outflow (2006: �273,000 inflow).
Results of the discontinued operations
Year ended 209 day period
31 December ended
2007 31 December
2006
�000 �000
Revenue 111 86
Expenses (144) (10)
Profit before tax (33) 76
Tax on profit - -
Gain recognised on disposal of assets 8 -
Tax on gain on disposal - -
====== ======
(Loss)/profit per share (see note 11) 0p 0p
====== ======
Due to the tax losses generated in both the current and proceeding periods,
there is no tax expense on the discontinued operation.
Effect of the disposals on individual assets and liabilities
Year ended 209 day period
31 December ended
2007 31 December
2006
�000 �000
Property, plant and equipment 58 75
Inventories 28 35
Trade payables (9) (161)
_____ _____
Net identifiable assets and liabilities 77 (51)
===== =====
Consideration received, satisfied in cash 85
_____
Gain recognised on disposal 8
=====
4 Acquisitions of subsidiaries
On 27 June 2007, the Group acquired 100% of the ordinary shares in Kiddies
Rides (UK) Limited for �638,000, satisfied by �338,000 of cash on completion,
�150,000 of contingent cash payment and the issue of �150,000 of ordinary
shares in Consolidated Vending Plc. Kiddies Rides (UK) Limited's clients
include Tesco, Mothercare and Asda. In the year to 31 December 2007, the
subsidiary contributed a profit of �29,000 before amortisation to the
consolidated net loss for the year.
As the financial statements for Kiddies Rides (UK) Limited were historically
prepared for 12 months to October, management cannot estimate the impact on the
group revenue and loss as if the acquisition took place on 1 January 2007.
Effect of acquisitions
The acquisitions had the following effect on the Group's assets and liabilities:
Acquiree's Fair value Recognised
book adjustments value
value on acquisition
�000 �000 �000
Acquiree's net assets at the
acquisition date:
Customer relationships - 701 701
Property, plant and equipment 382 - 382
Inventories 16 - 16
Trade and other receivables 94 - 94
Cash and cash equivalents 63 - 63
Interest-bearing loans and (126) - (126)
borrowings
Trade and other payables (296) - (296)
Deferred tax liabilities - (196) (196)
______ ______ ______
Net identifiable assets and 133 505 638
liabilities ______
Contingent consideration 150
Shares allotted 150
______
300
______
Consideration paid satisfied in cash 338
Cash (acquired) (63)
______
Net cash outflow to date 275
======
The contingent consideration is due on 30 June 2008, management expect the
conditions for the consideration to be paid to be substantially met.
Notes (continued)
4 Acquisitions of subsidiaries (continued)
Acquisitions in prior years
Snap Digital Imaging Limited
Acquiree's Fair value Recognised
book adjustments value
value on acquisition
�000 �000 �000
Net assets acquired:
Customer relationships - 1,274 1,274
Property, plant and equipment 2,047 - 2,047
Trade and other receivables 410 - 410
Cash and cash equivalents 807 - 807
Trade and other payables (1,910) - (1,910)
Interest bearing loans (2,200) - (2,200)
and borrowings
Deferred tax liabilities - (382) (382)
______ ______ ______
Net liabilities (846) 892 46
====== ====== ======
Total consideration 46
======
Consideration paid 46
satisfied in cash
Cash (acquired) (807)
______
Net cash inflow 761
======
BFresh Limited
Acquiree's book
values and
acquisition amount
�000
Net assets acquired:
Property, plant and equipment 244
Inventories 64
Trade and other receivables 43
Cash and cash equivalents 13
Trade and other payables (138)
Interest bearing loans and borrowings (74)
______
Net assets 152
Negative goodwill (70)
______
Total consideration 82
======
Satisfied by:
Shares allotted 82
Cash (acquired) 13
______
Net cash inflow 13
======
The full value of the negative goodwill of �70,000 was taken to the income
statement in 2006 and is included within administrative expenses.
5 Remuneration of directors
Year ended 209 day
31 Decemeber period ended
2007 31 Decemeber
2006
�000 �000
Directors' emoluments 231 110
Company contributions to money 15 7
purchase pension schemes
______ ______
246 117
====== ======
The aggregate emoluments of the highest paid director were �149,000 and company
pension contributions of �15,000 were made to a money purchase pension scheme on
his behalf.
6 Taxation
Recognised in the income statement
Year ended 209 day
31 Decemeber period ended
2007 31 Decemeber
2006
�000 �000
Deferred tax expense
Origination and reversal of 233 67
temporary differences ______ ______
Deferred tax credit 233 67
______ ______
Total tax expense 233 67
====== ======
Reconciliation of effective tax rate
Year ended 209 day
31 Decemeber period ended
2007 31 Decemeber
2006
�000 �000
Loss for the year (952) (1,125)
Total tax credit (including tax (233) (67)
on discontinued operations) ====== ======
Loss excluding taxation (1,185) (1,192)
====== ======
Tax using the UK corporation tax (356) (358)
rate of 30% (2006: 30%)
Effects of:
Capital allowances for the period (36) (83)
in excess of depreciation
Expenses not deductible for tax 32 256
purposes
Increase in tax losses 129 85
Other items (2) 33
______ ______
Total tax credit (233) (67)
====== ======
Factors that may affect future tax charges
The group has unrecognised tax losses of approximately �839,000. The net
resulting deferred tax asset at 28% of �235,000 has not been recognised due to
the level of uncertainty regarding its utilisation through the generation of
future taxable trading profits.
The corporation tax rate applicable to the company changed from 30% to 28% from
1 April 2008.
Due to the tax losses generated in both the current and proceeding periods,
there is no tax expense on the discontinued operation.
7 Loss per share
Basic
The basic loss per share is calculated by dividing the loss after taxation of
�952,000 (2006: �1,125,000) by the weighted average number of ordinary shares in
issue during the period of 233,873,230 (2006: 153,412,178) ordinary shares of
0.1p each.
Loss attributable to ordinary shareholders
2007 2006
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
�000 �000 �000 �000 �000 �000
Loss
attributable to (927) (25) (952) (1,201) 76 (1,125)
ordinary shareholders
Weighted average number of ordinary shares
2007 2006
Issued ordinary shares at 1 January 205,789,474 -
Effect of shares issued 28,083,756 153,412,178
___________ ___________
Weighted average number of 233,873,230 153,412,178
ordinary shares at 31 December =========== ===========
2007 2006
Loss Weighted Loss per Loss/ Weighted Loss per
number of share (profit) number of share
shares (pence) shares (pence)
�000 �000
Basic earnings per share 952 233,873,230 0.4 1,125 153,412,178 0.8
Basic earnings per share
from continuing operations 927 233,873,230 0.4 1,201 153,412,178 0.8
Basic earnings per share
from discontinued operations25 233,873,230 0.0 (76) 153,412,178 0.0
==== =========== === ===== =========== ===
8 Trade and other receivables
2007 2006
�000 �000
Non-current assets
Pre-contract costs - 42
===== ====
2007 2006
�000 �000
Current assets
Trade receivables 47 190
Other receivables 277 316
Pre-contract costs 42 50
Prepayments 32 35
______ ____
398 591
====== ====
Pre-contract costs relate to expenses incurring in tendering for a 6 year
contract. These costs are being written off over the life of the contract which
ends in October 2008.
9 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's
interest-bearing loans and borrowings, which are measured at amortised cost. For
more information about the Group's exposure to interest rate and foreign
currency risk, see note 24.
2007 2006
�000 �000
Non-current liabilities
Finance lease liabilities 14 5
Trafalgar capital loan 273 -
3i Group plc - 250
Arc convertible debt 54 54
____ ____
341 309
==== ====
Current liabilities
Current portion of bank loans - 29
Current portion of finance lease 25 6
liabilities
Other loan 68 -
Trafalgar capital loan 117 -
3i Group plc - 1,300
____ ____
210 1,335
==== ====
The bank loan shown in 2006 represented an amount advanced to a subsidiary under
the Small Firms Loan Guarantee Scheme and was unsecured.
Obligations under finance leases are secured on the assets to which they relate.
The other loan of �68,000 is payable to Lawrence Collins and was part of the
Share Purchase Agreement on acquisition of Kiddies Rides (UK) Limited. The debt
is payable in equal instalments of �5,667 until December 2008. No interest is
payable.
The ARC loan of �54,000 was a convertible loan agreement set up between BFresh
and Arc, which has since moved into the holding company Consolidated Vending
Plc. This loan is for a term of five years from 6 February 2006 and is interest
bearing at 7% per annum. The loan is convertible at the option of the lender in
exchange for 2,834,483 ordinary shares of Consolidated Vending plc. The fair
value of the convertible element of the loan is immaterial to these financial
statements.
The debt due to 3i Group plc of �1,550,000 was repaid in 2007 with a discount of
�450,000 as part of their exit from the group.
A convertible loan agreement was entered into on 27 June 2007 with Trafalgar
Capital Specialised Investment Fund for an amount of �625,000. This carries an
initial interest rate of 8%. The first capital repayment becomes due in June
2008 and the loan is repaid by July 2009. From July 2008, the interest rate
increases to 12% and is then incremental by 1% per month to 24% at the end of
the term. The loan becomes convertible at the request of the lender.
Trafalgar loan
�000
Face value of loan 625,000
Transaction costs paid in cash (54,000)
Transaction costs paid through (134,000)
share issue
Transaction costs taken to 47,000
income statement
Amount classified as equity (94,000)
________
Carrying amount as at 31 390,000
December 2007 ========
Finance lease liabilities
Finance lease liabilities are payable as follows:
2007 2006
Minimum Minimum
lease lease
payments Interest Principal payments Interest Principal
�000 �000 �000 �000 �000 �000
Less than one year 27 2 25 6 - 6
Between one and five
years 18 4 14 6 1 5
_________________________________________________________
45 6 39 12 1 11
=========================================================
10 Trade and other payables
Group
2007 2006
�000 �000
Current
Trade payables 539 701
Other taxes and social security 82 144
Accruals 319 224
_______________
940 1,069
===============
11 Share capital
Ordinary shares
2007 2006
On issue at 1 January 205,789,474 -
Issued for cash 54,524,352 205,789,474
________________________
On issue at 31 December
- fully paid 260,313,826 205,789,474
========================
2007 2006
�000 �000
Authorised:
Ordinary shares of 0.1p each 1,000 1,000
========================
Allotted, called up and fully
paid:
Ordinary shares of 0.1p each 260 206
Equity element of convertible 94 -
debt ________________________
354 206
========================
On 27 June 2007, the company issued 3,361,344 shares to Lawrence Collins at
1.4875p per share as part of the Share Purchase Agreement of Kiddies Rides (UK)
Limited.
On 27 June 2007, the company issued 10,084,034 shares to Collins Holdings at
1.4875p per share as part of the purchase consideration of Kiddies Rides (UK)
Limited.
On 27 June 2007, the company issued 22,667,209 shares to Arc Shares Nominees at
1.4875p per share in exchange for an investment in the company of �350,000.
This was used to part fund the purchase of Kiddies Rides (UK) Limited.
On 27 June 2007, the company issued 2,689,076 shares to Arc Fund Management
Limited at 0.1p per share which was satisfied in cash of �2,689.08. The shares
were issued at a discount to market value in order to reimburse Arc Shares
Nominees for their fees in relation to their investment in the business. The
difference between issue cost and market value of �40,000 has been treated as a
share based payment.
On 27 June 2007, the company issued 6,722,689 shares to SVS Securities at 0.1p
per share satisfied in cash of �6,722.69. The shares were issued at a discount
to market value in order to reimburse SVS Securities for their fees in relation
to their introduction of Trafalgar Capital to the business. The difference
between issue cost and market value of �100,000 has been treated as a share
based payment.
On 27 June 2007, the company issued 9,000,000 shares to Trafalgar Capital at
0.1p per share as a condition of the loan agreement. This was part used to
repay 3i debt and aid the purchase of Kiddies Rides (UK) Limited. The shares
were issued at a discount to market value in order to reimburse Trafalgar
Capital for their fees in relation to their investment in the business. The
difference between issue cost and market value of �134,000 has been treated as a
share based payment and offset against the debt.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company.
12 Share based payments
Employee share scheme
The following options over the company shares were in issue and unexercised at
the beginning and end of the year:
Name of Option Holder Number of Option Option Exercise
Shares Price
AP Coll 34,000,000 0.1p
AP Coll 6,000,000 3p
RJ Steele 6,000,000 0.1p
RJ Steele 4,000,000 3p
JC Dowse 6,000,000 3p
Other 4,000,000 3p
Share based payments
All of the options are exercisable at any time following grant on 23 June 2006
until 23 June 2016. The holders of 0.1p options have entered into an agreement
with the company, SVS Securities Plc (the company's broker) and Blomfield
Corporate Finance Limited (the company's nominated advisor) under which they
have accepted a 24 month restriction on their ability to dispose of any options
held by them and on any shares deriving from their exercise, this expires on 22
June 2008.
Measurement
In order to measure the value of the shares under the options granted, a version
of the Black-Scholes model was used. The following factors were used in
arriving at the value of the scheme:
Exercise price - 0.1p or 3p respectively
Fair value per option - 2.9p per option and 0.04p per option respectively
Life of option - vested immediately upon date of grant
Risk free interest rate - 6%
Volatility - 54%
Shares issued in exchange for services
Shares were issued in exchange for services as outlined in note 19. As the
shares were issued on the same day as the service was performed their fair value
has been taken as the market price on that day of 1.4875p per share.
Total shares issued were 18,411,765 with a total market value of �274,000.
�134,000 of these costs were eligible to be capitalised as loan issue costs, the
remaining �140,000 has been charged to the income statement.
The total charge to the income statement in respect of equity settled share
based payments was �140,000 (2006: �1,168,000). This charge is shown within
administrative expenses.
13 Contingent liability
Powerpod Holdings Plc
On 20 February 2006, BFresh entered into a share sale agreement with some of the
shareholders of Powerpod Holdings Plc whereby for a consideration of �5,000,
BFresh acquired 6,500,000 ordinary shares in Powerpod Holdings comprising 65% of
the issued ordinary share capital of Powerpod Holdings. This triggered an
obligation on BFresh under the City Code on Takeovers and Mergers to make an
offer to acquire the remaining shares in Powerpod Holdings not already owned by
it. The acquisition cost of the compulsory offer was estimated to be �2,692.31.
As at 31 December 2007, BFresh owned 94.1% of Powerpod Holdings Plc and
initiated the process of Compulsory Share Purchase Procedure for the remaining
shares, via our company secretary (Woodside Corporate Services Limited).
14 Related parties
Transactions with key management personnel
Directors of the Company and their immediate relatives control 4.7 (2006: 6.0)
per cent of the voting shares of the Company.
The compensation of key management personnel (the directors) is as follows:
2007 2006
�000 �000
Key management emoluments 231 110
Social security costs 22 16
Company contributions to money purchase 15 7
pension schemes
Share options granted - 1,166
_________________
268 1,299
=================
The share options granted are still outstanding as at 31 December 2007.
On 23 June 2006, the company issued 8,200,000 ordinary shares of 0.1p each at
the subscription price of 1.65p each to Arc Fund Management Limited, a company
of which RR Haddow is a director, in consideration for services in coordinating
the raising of equity finance for the company.
On 23 June 2006, the company issued 7,600,000 ordinary shares of 0.1p each at
the subscription price of 1.65p each to Arc Management Services Limited, a
company of which RR Haddow is a director, in consideration for a finders fee in
respect of the investment made by the Arc EIS 4 Fund and corporate finance
advice in relation to the structure of the investment in the company.
On 23 June 2006, the company issued 800,000 ordinary shares of 0.1p each at the
subscription price of 1.65p each to Arc Corporate Services Limited, a company of
which RR Haddow is a director, in consideration for corporate services.
On 27 June 2007, the company issued 22,667,209 ordinary shares of 0.1p each to
Arc Shares Nominees at 1.4875p per share, a company of which RR Haddow is a
director, in consideration for corporate services.
On 27 June 2007, the company issued 2,689,076 ordinary shares to Arc Shares
Nominees at 0.1p per share which was satisfied in cash of �2,689.08, a company
of which RR Haddow is a director, in consideration for corporate services
Notes (continued)
15 Pension costs
The group makes contributions to defined contribution pension arrangements on
behalf of certain employees. The pension cost charge for the period represents
the contributions payable by the group and amounted to �24,000 (2006: �12,000).
The amount outstanding at the end of the financial period amounted to �3,000
(2006: �3,000).
Notes (continued)
16 Explanation of transition to Adopted IFRSs
As stated in note 1, these are the Group's first consolidated financial
statements prepared in accordance with Adopted IFRSs.
The accounting policies set out in notes 1 and 2 have been applied in preparing
the financial statements for the year ended 31 December 2007, the comparative
information presented in these financial statements for the 209 day period ended
31 December 2006 and in the preparation of an opening IFRS balance sheet at 6
June 2006 (the Group's date of transition).
In preparing its opening IFRS balance sheet, the Group has adjusted amounts
reported previously in financial statements prepared in accordance with its old
basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP
to Adopted IFRSs has affected the Group's financial position, financial
performance and cash flows is set out in the following tables and the notes that
accompany the tables.
No reconciliation at the date of transition (6 June 2006) has been presented
since the company was newly incorporated on that date and therefore no
adjustments arose on transition to IFRS.
Reconciliation of equity
31 December
Effect of
transition to
Adopted Adopted
UK GAAP IFRSs IFRSs
�000 �000 �000
Non-current assets
Property, plant and 1,688 - 1,688
equipment
Intangible assets:
Goodwill 800 (800) -
Customer relationships - 1,052 1,052
Other receivables 42 - 42
___________________________
2,530 252 2,782
___________________________
Current assets
Inventories 336 - 336
Trade and other 591 - 591
receivables
Cash and cash 955 - 955
equivalents ___________________________
1,882 - 1,882
___________________________
Total assets 4,412 252 4,664
===========================
Current liabilities
Other interest-bearing(1,335) - (1,335)
loans and borrowings
Trade and other
payables (1,069) - (1,069)
___________________________
(2,404) - (2,404)
===========================
Non-current liabilities
Interest-bearing loans (309) - (309)
and borrowings
Deferred tax liability - (315) (315)
___________________________
(309) (315) (624)
___________________________
Total liabilities (2,713) (315) (3,028)
===========================
Net assets 1,699 (63) 1,636
===========================
Equity attributable to
equity holders of the parent
Share capital 206 - 206
Share premium 1,387 - 1,387
Retained earnings 106 (63) 43
__________________________
Total equity 1,699 (63) 1,636
==========================
Notes to the reconciliation of equity
(a) Under Adopted IFRS an exercise has been undertaken to restate previous
acquisitions under IFRS 3 "Business combinations" which has resulted in the
derecognition of goodwill previously arising on business combinations under
UK GAAP and the recognition of customer contracts as intangible assets
arising from previous acquisitions. These amounts have further increased at
30 June 2007 following the acquisition of Kiddies Rides (UK) Limited.
(b) The decrease in retained earnings at 31 December 2006 is made up as
follows:
- net adjustments to income statement of �63,000
Reconciliation of loss
2006
Effect of
transition to
Adopted Adopted
UK GAAP IFRSs IFRSs
�000 �000 �000
Revenue 1,545 (86) 1,459
Cost of sales (856) 91 (765)
_________________________
Gross profit 689 5 694
Other operating income 369 (214) 155
Distribution expenses (502) 65 (437)
Administrative expenses(1,613) (62) (1,675)
_________________________
Operating loss before
net financing costs (1,057) (206) (1,263)
Financial income 48 - 48
Financial expenses (53) - (53)
_________________________
Net financing costs (5) - (5)
_________________________
Loss before tax (1,062) (206) (1,268)
Taxation - 67 67
_________________________
Loss after tax but before
gain on discontinued
operation (1,062) (139) (1,201)
Profit from discontinued - 76 76
operation, net of tax
_________________________
Loss for the year (1,062) (63) (1,125)
=========================
Attributable to:
Equity holders of the (1,062) (63) (1,125)
parent _________________________
Loss for the year (1,062) (63) (1,125)
=========================
Notes to the reconciliation of loss
(a) Under UK GAAP, goodwill was amortised over its estimated useful life.
Under IFRS 3 "Business combinations, goodwill is not amortised but is subject to
annual impairment review. In addition, the directors have reviewed the balance
of negative goodwill upon transition to IFRS and in accordance with IFRS 3 they
have written off this balance of negative goodwill. The reversal of goodwill
amortisation resulted in a credit of �21,000. The write off of negative
goodwill resulted in a credit of �68,000 and the amortisation of the customer
contracts and the associated deferred tax liability resulted in a debit of
�152,000. The net effect on the loss for the year was a debit of �63,000.
(b) The trade assets and liabilities of BFresh Limited were sold in 2007.
Under IFRS this has resulted in all income and expenditure relating to BFresh
being reclassified into the profit from discontinued operations line in the
income statement.
Reconciliation of cash flow
There has been no effect on the Company's cash flows as a result of the
transition to Adopted IFRS.
The Annual Report and Accounts for the year ended 31 December 2007 were posted to
shareholders on 27 June 2008.
-END-
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