DietBrown PLC
27 June 2008
DietBrown Plc
(formerly Citel PLC)
Interim Results for the 6 months ended 31 March 2008
Asset Sale and Investing Strategy
The Board of Citel plc ("Citel" or the "Company") announced on 4 June 2008 that
Citel had completed the sale of the business and certain assets, comprising
substantially all the assets underlying the Company's trading operations, to
Tortel USA, LLC for US$2,600,000 (the "Disposal") and received a payment of
US$1,850,000, less a US$50,000 deposit received on signing the Letter of Intent.
The remaining amount of US$750,000 is due to be received on 30 September 2008.
The strategy of the Company remains to use the proceeds from the Disposal to
satisfy obligations to creditors and employees and to then seek, as soon as
possible after 30 September 2008, to return residual cash (if any) to
shareholders. Residual proceeds (if any) and timing will be a function of the
successful negotiation of outstanding obligations, collectability from debtors
as well as the outcome of outstanding legal cases (including the Entrada legal
case as announced on 25 June 2008). Whilst these variables make forecasting
imprecise, the Company expects to have a cash balance of approximately �250,000
at 30 September 2008. Once any residual proceeds have been distributed to
shareholders management intend to seek a members' voluntary liquidation and
cancel the Company's listing on AIM.
Review of the 6 months to 31 March 2008
Operating results, which are now classified in the income statement as
discontinued, showed an operating loss of �1.1 million for the six months ended
31 March 2008 compared with an operating loss of �1.5 million for the six months
ended 31 March 2007. The Company let a majority of the operating personnel go
when the decision to sell the trading assets was made, as a result the sales
resource within the firm was diminished, causing sales in the period to fall to
�1.0 million from �1.3 million in the equivalent prior year period. Operating
expenses were lower at �1.8 million (2007: �2.5 million) due to lower staff
costs.
The sale of the operating assets resulted in a provision for loss on sale of the
assets of �1.3 million. The largest portion was a �0.7 million write-off of
goodwill. The remaining loss was spread across the sold assets and other assets
with approximately �0.4 million attributable to inventory.
Net finance income (expense) included only �10,000 of interest income for the
six months ended 31 March 2008. For the six months ended 31 March 2007 net
finance income was �95,000.
Change of Name
As announced on 13 June 2008 the Company changed its name to DietBrown plc and
the London Stock Exchange TIDM code for the Company was changed to DTB.
Tortel USA, LLC plans to operate the business and support the existing customer
base under Citel Technology LLC in the USA and Citel Technology Limited in the
UK.
Change of Accounting Date
The Company has received notice that the accounting reference date of the
Company has changed from 31 March to 30 June. As a result the deadline for
publication of the audited accounts for the 15 months to 30 June 2008 will be 31
December 2008 on the basis that the Company remains listed on AIM.
Contact Details:
DietBrown Plc
Jose David, CEO 001 206 965 8925
Panmure Gordon (UK) Limited
Dominic Morley +44 (0)20 7459 3600
Giles Stewart
DIETBROWN PLC
(formerly CITEL PLC)
INTERIM REPORT
For the six months ended 31 March 2008
Directors and Professional Advisers
Company registration number 05690534
Registered office Wheatcroft Business Park
Landmere Lane
Edwalton, Nottingham
NG12 4DG
Website www.citel.com
Directors C. Heintzlemen (Chairman)
J. Cunningham
S. Davies
J. David (Interim CEO, CFO and
Secretary)
Bankers National Westminster Plc
Nottingham City Branch
148 - 149 Victoria Centre
Nottingham, NG1 3QT
Auditor Grant Thornton UK LLP
Chartered Accountants
Registered Auditor
30 Hounds Gate
Nottingham, NG1 7DH
Legal Advisor DLA Piper UK LLP
Victoria Square House
Victoria Square
Birmingham, B2 4DL
Nominated Adviser and Broker Panmure Gordon (UK) Limited
Moorgate Hall
155 Moorgate
London, EC2M 6XB
Registrar Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
CEO's statement
Asset Sale and Investing Strategy
The Board of Citel plc ("Citel" or the "Company") announced on 4 June 2008 that
Citel had completed the sale of the business and certain assets, comprising
substantially all the assets underlying the Company's trading operations, to
Tortel USA, LLC for US$2,600,000 (the "Disposal") and received a payment of
US$1,850,000, less a US$50,000 deposit received on signing the Letter of Intent.
The remaining amount of US$750,000 is due to be received on 30 September 2008.
The strategy of the Company remains to use the proceeds from the Disposal to
satisfy obligations to creditors and employees and to then seek, as soon as
possible after 30 September 2008 to return residual cash (if any) to
shareholders. Residual proceeds (if any) and timing will be a function of the
successful negotiation of outstanding obligations, collectability from debtors
as well as the outcome of outstanding legal cases (including the Entrada legal
case as announced on 25 June 2008). Whilst these variables make forecasting
imprecise, the Company expects to have a cash balance of approximately �250,000
at 30 September 2008. Once any residual proceeds have been distributed to
shareholders management intend to seek a members' voluntary liquidation and
cancel the Company's listing on AIM.
Review of the 6 months to 31 March 2008
Operating results, which are now classified in the income statement as
discontinued, showed an operating loss of �1.1 million for the six months ended
31 March 2008 compared with an operating loss of �1.5 million for the six months
ended 31 March 2007. The Company let a majority of the operating personnel go
when the decision to sell the trading assets was made, as a result the sales
resource within the firm was diminished, causing sales in the period to fall to
�1.0 million from �1.3 million in the equivalent prior year period. Operating
expenses were lower at �1.8 million (2007: �2.5 million) due to lower staff
costs.
The sale of the operating assets resulted in a provision for loss on sale of the
assets of �1.3 million. The largest portion was a �0.7 million write-off of
goodwill. The remaining loss was spread across the sold assets and other assets
with approximately �0.4 million attributable to inventory.
Net finance income (expense) included only �10,000 of interest income for the
six months ended 31 March 2008. For the six months ended 31 March 2007 net
finance income was �95,000.
Change of Name
As announced on 13 June 2008 the Company changed its name to DietBrown plc and
the London Stock Exchange TIDM code for the Company was changed to DTB.
Tortel USA, LLC plans to operate the business and support the existing customer
base under Citel Technology LLC in the USA and Citel Technology Limited in the
UK.
Change of Accounting Date
The Company has received notice that the accounting reference date of the
Company has changed from 31 March to 30 June. As a result the deadline for
publication of the audited accounts for the 15 months to 30 June 2008 will be 31
December 2008 on the basis that the Company remains listed on AIM.
Dietbrown plc (formerly Citel plc)
Condensed Consolidated Interim Income Statement
For the Six Months Ended 31 March 2008
Six months Six Months
To 31 Mar To 31 Mar
2008 2007
�000s �000s
Note Unaudited Unaudited
Discontinued operations 2
Revenue �998 �1,342
Cost of sales (394) (507)
---------- ----------
Gross profit 604 835
Operating expenses (1,788) (2,549)
---------- ----------
Operating loss before tax (1,184) (1,714)
Income taxes 3 52 213
---------- ----------
Operating loss (1,132) (1,501)
Provision for loss on sale of assets (1,304) -
---------- ----------
Loss on discontinued operations (2,436) (1,501)
Finance income (expense)
Interest income 10 127
Borrowing costs - (30)
Finance cost of conversion of debt to equity - (2)
---------- ----------
Net finance income (expense) 10 95
---------- ----------
Loss for the period �(2,426) �(1,406)
========== ==========
Loss for the period per share 4
Basic and diluted (11.1p) (6.5p)
Dietbrown plc (formerly Citel plc)
Condensed Consolidated Interim Balance Sheet
31 March 2008
31 Mar 2008 31 Mar 2007
�000s �000s
Note Unaudited Unaudited
Assets (all held for sale) 2
Goodwill �- �742
Other intangible assets - 12
Plant and equipment - 153
----------- -----------
Non-current assets held for sale - 907
Current assets
Cash and cash equivalents 219 4,595
Trade and other receivables 381 1,159
Assets held for sale 2
Inventories 1,335 589
Prepayments - 72
----------- -----------
Total held for sale 1,335 661
----------- -----------
Total current assets 1,935 6,415
Current liabilities
Borrowings 150 1,524
Trade and other payables 672 462
Provisions 219 61
Liabilities held for sale 2
Provisions - 88
----------- -----------
Total current liabilities 1,041 2,135
Net current assets 894 4,280
----------- -----------
Net assets �894 �5,187
=========== ===========
Equity
Share capital �830 �825
Share premium 8,757 8,724
General reserves 21,286 21,286
Foreign exchange reserve 13 (25)
Retained earnings (29,992) (25,623)
----------- -----------
Total equity �894 �5,187
=========== ===========
Dietbrown plc (formerly Citel plc)
Condensed Consolidated Interim Cash Flow Statement
For the Six Months Ended 31 March 2008
Six Months Six Months
To 31 Mar To 31 Mar
2008 2007
�000s �000s
Note Unaudited Unaudited
Operating activities - continuing operations
Loss for the period �(2,426) �(1,406)
Less discontinued and non-operating (loss)
income
Loss on discontinued operations 2,436 1,501
Net finance (income) expense (10) (95)
(Increase) decrease in receivables 259 (526)
(Decrease) increase in payables 298 129
(Decrease) increase in provisions 160 (36)
---------- ----------
717 (433)
Operating activities - discontinued operations 2
Loss on discontinued operations (2,436) (1,501)
Non-cash expenses
Depreciation and amortization 31 37
Impairments of non-current assets 831 -
Share based payments 26 196
Foreign exchange translation 61 66
(Increase) decrease in inventories (354) (102)
(Increase) decrease in prepayments 98 (48)
(Decrease) increase in provisions (74) (101)
---------- ----------
(1,817) (1,453)
Investing activities - discontinued operations 2
Purchase of a business - (80)
Purchases of non-current assets - (44)
---------- ----------
- (124)
Financing activities - continuing operations
Issue of equity share capital - 8
Expenses of initial public offerings - (23)
Net (payments) receipts of borrowings 150 (2)
Foreign exchange effects of borrowings - (90)
Net interest (paid) received 10 85
---------- ----------
160 (22)
---------- ----------
Net (decrease) in cash, cash equivalents and
bank overdrafts �(940) �(2,023)
Cash, cash equivalents, and bank overdrafts
at beginning of period 1,159 6,205
---------- ----------
Cash, cash equivalents, and bank overdrafts
at end of period �219 �4,173
Dietbrown plc (formerly Citel plc)
Condensed Consolidated Interim Statement of Changes in Equity
For the Six Months Ended 31 March 2008
Foreign
Share Share General Exchange Retained Total
Capital Premium Reserves Reserve Earnings Equity
�000s �000s �000s �000s �000s �000s
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Balance 30 September �824 �8,742 �21,284 �(91) �(24,413) �6,346
2006
Loss for the period - - - - (1,406) (1,406)
Share based payments - - - - 196 196
Foreign exchange
differences - - - 66 - 66
-----------------------------------------------------------
Subtotal - gains
and losses - - - 66 (1,210) (1,144)
Expenses of issuing
new shares (25) 2 - - (23)
Exercise of stock
options 1 7 - - - 8
Balance 31 March �825 �8,724 �21,286 �(25) �(25,623) �5,187
2007
Loss for the period - - - - (1,995) (1,995)
Share based payments - - - - 26 26
Foreign exchange
differences - - - (29) - (29)
-----------------------------------------------------------
Subtotal - gains
and losses - - - (29) (1,969) (1,998)
Shares issued in
debt buyout 2 33 - - - 35
Exercise of stock
options 3 - - - - 3
Balance 30 September �830 �8,757 �21,286 �(54) �(27,592) �3,227
2007
Loss for the period - - - - (2,426) (2,426)
Share based payments - - - - 26 26
Foreign exchange
differences - - - 67 - 67
-----------------------------------------------------------
Subtotal - gains
and losses - - - 67 (2,400) (2,333)
-----------------------------------------------------------
Balance 31 March �830 �8,757 �21,286 �13 �(29,992) �894
2008
Dietbrown plc (formerly Citel plc)
Notes to Condensed consolidated Interim Financial Statements
For the Six Months Ended 31 March 2008
1. Basis of presentation
The accompanying condensed consolidated interim financial statements reflect a
change in the Group's fiscal year. The current fiscal year will include the 15
months ending 30 June 2008. Previously the Group's fiscal years were composed of
12 month periods ending every 31 March. The change is being made following the
changes in the Group explained in Note 2.
The comparative reporting basis for the six months ended 31 March 2008 is the
six months ended 31 March 2007, the corresponding period in the prior fiscal
year. The financial information for the six months ended 31 March 2007 has been
restated for effects of the Group's new accounting policies, which reflect the
recognition and measurement principles of International Financial Reporting
Standards (IFRS) as adopted by the EU. The new policies replaced those used in
the Group's financial statements for the fiscal year ended 31 March 2007 that
reflected United Kingdom Generally Accepted Accounting Principles (UK GAAP). The
new accounting policies and reconciling changes to IFRS from UK GAAP were
reported in the notes to condensed consolidated interim financial statements
included in the Group's interim report for the six months ended 30 September
2007.
The condensed consolidated interim financial statements do not represent full
financial statements and should be read in conjunction with the interim
financial statements issued for the six months ended 30 September 2007 and the
full financial statements issued for the year ended 31 March 2007.
Although most of the Group's trading is denominated in US dollars, which
therefore is the Group's functional currency, the Group has retained � sterling
as its presentation currency being consistent with previous periods and the
currency of investment.
2. Sale of operating assets and discontinued operations
During January 2008 the board of directors made the decision to sell the Group's
operating assets and discontinue all operations. The decision reflected a
judgment that the Group would be unlikely to reach cash breakeven within a
reasonable period of time counting from the Group's initial public offering in
July 2006. A buyer was found, and a purchase and sale agreement was signed on 2
May 2008. The sale closed on 3 June 2008.
The sold assets include inventory, plant and equipment, and intangible assets
except goodwill. Other net assets abandoned in conjunction with the sale include
goodwill, prepayments, and provisions relating to operating activities.
A summary of the sale transaction is as follows (�000):
Estimated proceeds of sale �1,304
Estimated carrying basis of sold assets plus expenses of sale
Inventory 1,688
Plant and equipment 82
Intangible assets except goodwill 9
Expenses of sale 108
--------
1,887
Estimated loss on sold assets 583
Estimated carrying basis of net assets abandoned in
conjunction with sale
Goodwill 740
Prepayments 87
Provisions (106)
--------
721
--------
Provisions for loss on sale of assets �1,304
Upon completion of the sale of its operating assets, the Group will commence
closing its administrative activities preparatory to liquidating all of its net
assets and distributing the residual to shareholders.
3. Income taxes
No deferred tax assets have been recorded because a profit trend was never
established in the Group.
4. Loss per Share
Six Months Six Months
to 31 Mar to 31 Mar
2008 2007
---------- ----------
Loss for the period (�000) �(2,426) �(1,406)
Weighted average number of outstanding shares (000) 21,817 21,720
Basic and diluted loss per share (11.1p) (6.5p)
5. Publication of non-statutory accounts
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information presented for the six months ended 31 March 2008 and six
months ended 31 March 2007 is unaudited.
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