Half-yearly Report
December 19 2008 - 9:08AM
UK Regulatory
TURFTRAX PLC (the "Group")
UNAUDITED HALF-YEARLY RESULTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2008
CHAIRMAN'S STATEMENT
As reported in the Annual Report for the year ended 31 March 2008, the first
half of the current year ending in March 2009 has been extremely difficult for
the Group. The Group was unable to secure contracts with bookmakers for its in
running betting product within the anticipated timetable. It was also unable to
secure funding to enable it to continue to trade in TurfTrax Racing Data Ltd,
the subsidiary within which this product had been developed, to exploit other
opportunities, including international sales. Accordingly, the Board saw no
alternative and placed this subsidiary into Administration on 17 July 2008, and
to seeking commercial opportunities for other parts of the Group's technology
and products.
Financial review
Operating loss in the period was �10,000 (2007: �12,000). The loss from
discontinued operations for the period was �551,000 and the total loss for the
6 months ended 30 September 2008 was �478,000 (2007: �924,000). Cash and cash
equivalents at the period end were �195,000 (2007: �42,000).
To generate cash to provide working capital for the remaining Group, the Board
also sold the business of the consultancy subsidiary, TurfTrax Ground
Management Systems Ltd to its management for a consideration of approximately
�300,000 on 11 July 2008, realising a profit of some �202,000.
On 1 August 2008, following negotiations with the Administrator, the Group
bought the business and assets of the Course Services business, which had been
operated as a division of TurfTrax Racing Data Ltd, for �8,000. This business
sells and supports the patented GoingStick, which provides an objective and
scientifically valid measure of the going for a horse race, and also supplies
and supports automated weather station systems at a number of sporting venues.
The impact of its period in Administration on this business has been to
eliminate a prepayment from a key customer, and this in turn has necessitated
the provision of additional working capital to support it in the short term.
The business and assets have been injected into an existing dormant company
within the Group which has been renamed TurfTrax Course Services Ltd.
Following these events, the Group's activities currently consist of TurfTrax
Course Services Ltd and a small technically based team seeking to exploit the
Group's Intellectual Property assets. Management is also heavily involved in a
rapid programme to reduce residual costs in line with the contraction of the
Group's scale of operations including making the majority of employees
redundant and disposing of leases.
The Board has also completed a review its remaining opportunities and options.
The review has considered the future development of the Course Services
business and the opportunities for the application of the patented technology
in a number of areas in addition to horse racing. Regrettably, the conclusions
are that Course Services is currently of insufficient scale and profitability
to support the overheads associated with a publicly listed company status and
the lengthy and potentially high risk process of commercialisation of the
Intellectual Property. Further, it is likely that this process will require
significant additional investment in developing new applications as well as
further expenditure on patent applications. These commercial risks are, of
course, further compounded by the credit crunch and the extremely difficult
commercial and financial climate.
In these circumstances the Board has concluded that it would not be in
Shareholders' interests, and it might not be possible, to raise additional
capital to support the continuation of the Group's existing activities and, as
announced on 7 November 2008, has entered talks to secure investment into the
Group to convert it into an investment company, divesting the existing
activities.
The financial report reflects the trading of subsidiaries until their disposal
or Administration, the performance of Course Services since it was bought out
and the running costs, both exceptional in nature and ongoing of the Group's
operations during the run down of activities. Virtually all the Group's assets
were subject to major impairment provisions in the preceding annual accounts;
in these accounts certain other tangible assets have been written down to
reflect their realisable value in the current circumstances.
During the period under review, Nicky Green, our finance director, resigned for
personal reasons, and on 6 October 2008, Mark Kent, Group Managing Director,
also resigned. Both have worked extremely hard to develop the Group and its
products and I am only sorry that their considerable efforts were not rewarded
with commercial success. I have taken on both their roles.
Adam Mills
19 December 2008
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2008
Unaudited Unaudited
Six months Six months Audited
ended 30 ended 30 year-ended
September September 31 March
2008 2007 2007
Notes �000 �000 �000
Revenue - Continuing 58 67 139
operations
Gross profit 58 67 139
Administrative expenses (68) (79) (163)
Operating loss - (10) (12) (24)
Continuing operations
Finance income 84 2 11
Finance costs (1) (45) (78)
Profit/(loss) before 73 (55) (91)
income tax - Continuing
operations
Income tax expense - - -
Profit/(loss) from 73 (55) (91)
continuing operations
Loss from discontinuing (551) (869) (4,705)
operations
Loss for the period (478) (924) (4,796)
Loss per share (Basic) 3 1p 11p
Included in discontinued operations:
In the year to 31 March 2008, cost of sales included a charge of �696,000 in
relation to the impairment of intangible and tangible fixed assets.
An impairment review of goodwill as at 31 March 2008, following TurfTrax Racing
Data Limited being placed in Administration on 17 July 2008 has meant a one-off
charge of �1,582,000 is included in administrative expenses in the year.
This loss includes a gain on the disposal of TurfTrax Ground Management Systems
Limited of �202,000.
CONSOLIDATED BALANCE SHEET
as at 30 September 2008
Unaudited Unaudited
30 30 Audited
September September 31 March
2008 2007 2008
�000 �000 �000
Assets
Non-current assets
Property, plant and equipment 40 544 81
Intangible assets - 1,760 -
40 2,304 81
Current assets
Inventories 4 41 16
Trade and other receivables 83 261 281
Income tax receivable - - 1
Cash and cash equivalents 195 42 771
282 344 1,069
Total assets 322 2,648 1,150
Capital and reserves attributable to
equity holders of the Group
Share capital 4,429 595 4,429
Share premium 1,972 13,647 1,972
Share option reserve 92 - 133
Merger reserve 10,730 - 10,730
Other reserves - 48 -
Accumulated deficit (17,086) (12,713) (16,649)
Total equity 137 1,577 615
Current liabilities
Trade and other payables 185 460 535
Financial liabilities - 3 -
Borrowings - 608 -
185 1,071 535
Total liabilities 185 1,071 535
Total equity and liabilities 322 2,648 1,150
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2008
Unaudited Unaudited
Six Six
months months Audited
ended 30 ended 30 year-ended
September September 31 March
2008 2007 2008
�000 �000 �000
Cash flows from operating activities
Cash used in operations (see note 4) (889) (718) (2,141)
Interest paid (1) (45) (78)
Income tax received - - 59
Net cash used in operating activities (890) (763) (2,160)
Cash flows from investing activities
Proceeds from sale of property, plant 241 - -
and equipment
Purchase of property, plant and - (118) (202)
equipment
Purchases of intangible assets - (4) (214)
Interest received 84 2 11
Payments to acquire intangible fixed (6) - -
assets
Payment to acquire Course Services (5) - -
Net cash generated from/(used in) 314 (120) (405)
investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary - 1,573 4,595
shares
Repayments of borrowings - - (9)
Repayments of capital elements of hire - (6) -
purchase contracts
Net cash generated from financing - 1,567 4,586
activities
Net (decrease)/increase in cash, cash (576) 684 2,021
equivalents and bank overdrafts
Cash, cash equivalents and bank 771 (1,250) (1,250)
overdrafts at beginning of the year
Cash, cash equivalents and bank 195 (566) 771
overdrafts at end of the year
NOTES TO THE FINANCIAL INFORMATION
for the six months ended 30 September 2008
1. Going concern
The Group had net current assets of �97,000 at 30 September 2008 (30 September
2007: net current liabilities �727,000). The directors have prepared the
consolidated financial statements on a going concern basis but there is
inherent uncertainty of future cash flows in the Group. The effect and impact
of the Group not being a going concern have not been reflected.
The failure to secure contracts has resulted in the failure to generate
revenues sufficient to cover the ongoing costs of operation which if left
unaddressed would have placed a significant and potentially unsupportable
burden on the Group cash position. To mitigate the effect of this and ensure
the security of short term working capital while a number of initiatives were
explored, the Group sold the business of TurfTrax Ground Management Systems
Limited to its management with effect from 1 July 2008 and placed TurfTrax
Racing Data Limited into Administration on 17 July 2008. Part of the TurfTrax
Racing Data Limited business was bought from the administrator on 1 August 2008
for �8,000 and transferred into Thoroughbred Professional Limited which had its
name changed to Course Services Limited on 10 September 2008.
2. Basis of preparation
(a) Basis of preparation
The next annual financial statements of TurfTrax Plc (the "Group") will be
prepared in accordance with International Financial Reporting Standard (IFRS)
as adopted for use in the EU, applied in accordance with the provisions of the
Companies Act 1985.
Accordingly, the interim financial information in this report has been prepared
using accounting policies consistent with IFRS. IFRS is subject to amendment
and interpretation by the International Accounting Standards Board (IASB) and
the International Financial Reporting Interpretation Committee (IFRIC) and
there is an ongoing process of review and endorsement by the European
Commission. The financial information has been prepared on the basis of IFRS,
which the Directors expect to be applicable as at the year end 31 March 2009.
(b) Basis of measurement
The consolidated financial statements have been prepared under the historic
cost convention.
(c) Non-statutory accounts
The financial information for the year end 31 March 2008 set out in this
interim report does not comprise the Group's statutory accounts as defined in
section 240 of the Companies Act 1985.
The statutory accounts for the year ended 31 March 2008, which were prepared
under International Financial Reporting Standards (IFRSs), have been delivered
to the Registrar of Companies. The auditors reported on those accounts; their
report included a disclaimer of opinion and contained a statement under Section
237(3) of the Companies Act 1985 because they were unable to obtain sufficient
evidence that it was appropriate to prepare the financial statements on the
going concern basis.
The financial information for the 6 months ended 30 September 2008 is
unaudited.
3. Loss per share
The loss and number of shares used in the calculation of loss per share are as
follows:
Unaudited
Six months Audited
ended 30 year-ended
September 31 March
2008 2008
Basic:
Loss for the financial period 478,000 4,796,000
Weighted average number of shares 44,290,188 44,290,188
Loss per share 1p 11p
There is no dilutive effect from the share options outstanding in the period.
4. Cash used in operations
Reconciliation of operating loss to cash
flows from operating activities Unaudited Unaudited
Six months Six months Audited
ended 30 ended 30 year-ended
September September 31 March
2008 2007 2008
�000 �000 �000
Operating loss (561) (881) (4,729)
Adjustments for:
- Depreciation 14 175 316
- Amortisation - - 33
- (Profit)/Loss on disposal of property, (202) 42 42
plant and equipment
- Impairment of intangible assets - - 306
- Impairment of tangible fixed assets - - 390
- Impairment of goodwill - - 1,582
- Movement on other reserves - 48 -
Changes in working capital
- Inventories 12 (12) 13
- Trade and other receivables 198 51 (21)
- Trade and other payables (350) (141) (73)
Cash flows from operating activities (889) (718) (2,141)
For further information:
TurfTrax plc
Adam Mills, Chairman
Tel: 01722 434 000
Nominated Adviser to TurfTrax plc
Dowgate Capital Advisers Limited
Liam Murray/Aaron Smyth
Tel: 020 7492 4777
Broker to TurfTrax plc
Newland Stockbrokers Limited
Steven Goschalk
Tel: 020 7290 2414
END
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