2nd Nov 2005 08:36
Avanti Capital PLC02 November 2005 Company statement Key highlights • Profit of £882,000 (2004: £716,000) before exceptional items and excluding Barvest consolidation. The consolidated loss on ordinary activities for the group was £346,000 (2004: £805,000) • Barvest turnover of £20.4 million and EBITDA of £1.2 million. • mBlox Inc makes considerable progress. • A further two exits from the legacy portfolio at a profit over book value. • Buy back authority fully utilised. Results of the Group As at 30 June 2005, the group had net assets of £17.6 million (2004: £19.1million) or 178 pence per share (2004: 185 pence per share). Excluding negativegoodwill, the group had net assets of £17.8 million (2004: £19.8 million) or 180pence per share (2004: 190 pence per share). The reduction in net assets is substantially accounted for by the use of companyfunds to make purchases of its own shares. In the period to 30 June 2005, the profit before exceptional items, excludingthe consolidation of Barvest, was £882,000 (2004: £716,000). The profit on the disposal of investments during the year was £197,000. During the period the turnover of Barvest was £20.4 million and the EBITDA was£1.2 million. Under accounting regulations the group accounts have consolidatedthe results and net assets of Barvest. By way of additional information to ourshareholders we have shown on pages 31 and 32, supplementary informationcomprising pro forma accounts, which reflect the separate activities of thegroup. Company Background Avanti Capital is a private equity company. Unlike conventional close endedprivate equity funds, Avanti has no set investment timetable and focuses on thequality of individual investments rather than a portfolio strategy-led highquantity investment ethic. Avanti has an executive team with extensive experience of investing in andrunning companies across a wide range of sectors. The professional backgroundsand business experience of the executive team enable Avanti to see value insituations which may be unattractive to other investors. The presence ofstructural issues within business are seen as an opportunity to create morevalue from any particular investment. Avanti's approach to investments is both rigorous and discerning and reflectsthe fact that it is seeking exceptional opportunities to invest in businesseswith high quality management teams and where Avanti's own management can feeltruly passionate about the business's prospects. Avanti's investment criteria are as follows: • European businesses. • Strong management with a proven track record. • Wide ranging businesses, which show the potential for material growth in the short to medium term, including consumer brands, leisure, retail and specialist support services. • Undervalued businesses or assets in both the public and private arena. • Where appropriate, the company will seek to raise debt finance to part fund any investment. Avanti Capital is listed on the Alternative Investment Market of the LondonStock Exchange and therefore offers shareholders participation in private equitydeals through a quoted vehicle. Portfolio Investments Barvest Limited During the period the turnover of Barvest was £20.4 million and the EBITDA was£1.2 million. It is our current intention to realise the group's entire interestin Barvest and the sale process continues. An announcement will be made if andwhen there is material development in this regard. mBlox Inc During the period mBlox strengthened its position as a leading European and USprovider of mobile messaging services. It has continued to build its business inexisting markets and to selectively enter new markets offering the mostcompelling earning potential. Its growing customer base uses standard and premium rate outbound and inboundSMS to provide information, entertainment and communication services to theircustomers through mBlox's connections with the major mobile networks. In the US the growth of premium rate SMS has met the company's expectations andit has firmly established itself as a leader in this market and is ideallyplaced to continue to capture a significant share of this growth. In March 2005 mBlox secured $7.5 million of loan finance from ORIX VentureFinance to fund the development of mBlox's technological infrastructure and helpfund its international expansion. The Group owns 7.7% of the fully diluted equity of mBlox. Medcenter Inc Medcenter, an investment made on 27 June 2005, aims is to improve communicationsbetween the pharmaceutical industry and the prescribing and dispensing communityconcerning the use and efficiency of pharmaceutical products and treatments. Medcenter raised US$4m on 27 June 2005 in a fifth round financing. In this roundthe company invested US$500,000 (£274,000) for a minority stake. The funds areto be used for international expansion. Since investment, Medcenter has successfully expanded its geographical reach andhas performed in line with its internal budgets and forecasts. Uswitch Limited On 29 December 2004, the group realised its entire interest in Uswitch. Theproceeds amounted to £207,000, which showed a profit over its book value of£125,000. Others In relation to the other investments in the group's portfolio, as previouslyindicated we are continuing to seek ways of maximising the value to the group. As at 30 June 2005, the carrying value of the group's portfolio was £5.92million. A summary of the carrying value of the portfolio is shown below. Balance SheetInvestment value Shareholding £000 % Barvest Limited 3,372 81.7mBlox Inc 1,832 7.7Medcenter Inc 274 1.6Others 441 Under 5.0Total 5,919 Wordmap Limited On 14 October 2005, the company invested £285,000 in Wordmap for a 20%shareholding. Wordmap is a software company that sells enterprise taxonomysoftware primarily to local authorities and the pharmaceutical industry. Taxonomy is a set of related categories and terms that are used to organiseinformation, for example Dewey Decimal in libraries. In an enterprise, it wouldfollow business concepts such as products, activities and business units. Taxonomy is becoming an important aspect of information compliance, particularlyin light of the Freedom of Information Act 2005, and Wordmap is well positionedto achieve significant growth in this sector. iDefence Inc Following the year end, the group realised its entire interest in iDefence. Theamount received was £27,000 and accordingly the book value of this investment,which had previously been included at £1, was increased to £27,000 at thebalance sheet date. Company purchase of own shares The average mid market price of ordinary shares in the company for the 5 daysprior to 31 October 2005 was 139p. As stated, the net asset value per ordinaryshare as at 30 June 2005 was 178p. Your Board believes that up to certainmaximum prices, it is in the best interests of shareholders for the company tomake market purchases of shares in the company. At the company's forthcoming Annual General Meeting a resolution will seek toauthorise the company to purchase its own shares up to a maximum number ofshares (which is equivalent to 15% of the current issued ordinary share capital)and at certain minimum and maximum prices. The authority shall expire at theAnnual General Meeting next year, or, if earlier, twelve months after the dateof passing this resolution. Board changes During the year, Adrian Collins stepped down as a non-executive director.Adrian served as a director of the company since 1999 and the board would liketo extend its thanks to Adrian for the valuable role he has played over the last5 years. Further, Anton Bilton, who was a part-time executive director of the company,became a non-executive director of the company, following the acquisition of theRaven Group by Raven Mount plc, where he is executive chairman. Post balance sheet event Subsequent to the year end, the company made two further purchases of its ownshares: 407,000 shares at 150 pence per share and 170,000 shares also at 150pence per share. As at 31 October 2005, there were in issue 9,337,092 shares of 60p each in thecompany. J M Fellerman R H Kleiner Joint Chief Executives Statement of corporate governance Compliance with the 2003 FRC Combined Code The company is not required to comply with the 2003 FRC Combined Code. Set outbelow are the corporate procedures that have been adopted. The Board The Board of Avanti Capital plc is the body responsible for the group'sobjectives, its policies and the stewardship of its resources. At the balancesheet date, the board comprised two executive directors (Julian Fellerman andRichard Kleiner) and three non-executive directors (Anton Bilton, PhilipCrawford, and William Crewdson). The Board has eight board meetings during the year. There are two non-executivesthat sit on both the audit and the remuneration committees, namely PhilipCrawford and William Crewdson. Philip Crawford is both the chairman of the auditcommittee and the remuneration committee. The terms of reference of both thesecommittees have been approved by the Board. Remuneration committee The committee's responsibilities include the determination of the remunerationand options of other directors and senior executives of the group and theadministration of the company's option schemes and arrangements. The committeetakes appropriate advice, where necessary, to fulfil this remit. Audit committee The committee meets twice a year including a meeting with the auditors shortlybefore the signing of the accounts. The terms of reference of the auditcommittee include: any matters relating to the appointment, resignation ordismissal of the external auditors and their fees; discussion with the auditorson the nature, scope and findings of the audit; consideration of issues ofaccounting policy and presentation; monitoring the work of the review functioncarried out to ensure the adequacy of accounting controls and procedures. Nomination committee The company does not maintain a nomination committee. Any board appointments aredealt with by the Board itself. Internal control The Board of directors is responsible for the group's system of internal controland for reviewing the effectiveness of the system of internal control. Internalcontrol systems are designed to meet the particular needs of a business andmanage the risks but not to eliminate the risk of failure to achieve thebusiness objectives. By its nature, any system of internal control can onlyprovide reasonable, and not absolute, assurance against material misstatement orloss. The 2003 FRC Combined Code introduced a requirement for the board to review theeffectiveness of the group's system of internal control, including financial,operational, compliance and risk management. Guidance for directors on theCombined Code: Internal Control: Guidance for Directors on the Combined Code ("The Turnbull Report") was published in September 1999. In view of the relativesize of the organisation and the "hands-on" approach of the executive directorstoward systems and risk, the Board does not have the resources to meet therequirements outlined in The Turnbull Report. Internal audit Given the size of the group, the Board does not believe it is appropriate tohave a separate internal audit function. The group's systems are designed toprovide the directors with reasonable assurance that problems are identified ona timely basis and are dealt with appropriately. Relations with shareholders Aside from announcements that the company makes periodically to the market, theBoard uses the annual general meeting to communicate with private andinstitutional investors and welcomes their participation. Going concern On the basis of the current financial projections, the directors have areasonable expectation that the company and the group have adequate financialresources to continue in operational existence for the foreseeable future. Thedirectors accordingly have adopted the going concern basis in the preparation ofthe group's accounts. Directors and advisers Directors P J Crawford (Non-Executive Chairman)J M Fellerman (Joint Chief Executive Officer)R H Kleiner (Joint Chief Executive Officer and Chief Financial Officer)A J G Bilton (Non-Executive)W A H Crewdson (Non-Executive) Secretary J M Fellerman Auditors Ernst & Young LLP1 More London PlaceLondon SE1 2AF Bankers Barclays Bank plcKensington and ChelseaPO Box 4599London SW3 1XE Royal Bank of Scotland plc PO Box 3415 BishopsgateLondon EC2P 2AP Nominated adviser and broker Collins Stewart Limited9th Floor,88 Wood StreetLondon EC2V 7QR Solicitors Berwin Leighton PaisnerSt Magnus House3 Lower Thames StreetLondon EC3 Registered Office 2 Motcomb StreetLondon SW1X 8JU www.avanticap.com Directors' report for the year ended 30 June 2005 The directors present their report and accounts for the year ended 30 June 2005. Results and dividends The loss for the year before taxation of the group amounted to £450,000 (2004 -loss £671,000) and the loss for the year after taxation and minority interest ofthe group amounted to £149,000 (2004 - loss £912,000) which was equivalent to aloss of 1.46p per share (2004 - 8.79p per share) and the net assets of the groupwere £17.6m (2004 - £19.1m). The directors do not recommend the payment of a dividend for the year ended 30June 2005 (2004 - £nil). Principal activity and review of the business The company's principal activity during the year continued to be that of aprivate equity and ancillary services company and further details are set out inthe company statement on pages 1 to 3. Directors and their interests The directors during the year were as follows: P J Crawford J M Fellerman R H Kleiner A J G Bilton A J R Collins (resigned 29 April 2005) W A H Crewdson The interests of the directors and their immediate families and the interests ofpersons connected with the directors for the purposes of section 346 of theCompanies Act 1985 in the issued ordinary share capital of the company as at 30June 2005 (all of which are beneficial unless otherwise noted) are as follows: Number of ordinary issued shares As at 1 July 2004 or at date of appointment, if later As at 30 June 2005 P J Crawford 315,000 315,000J M Fellerman 189,000 405,720R H Kleiner 216,720 405,720A J G Bilton - -W A H Crewdson - - The rights of the directors to subscribe for shares in Avanti Capital plc, theirimmediate families and persons connected with the directors for the purposes ofsection 246 of the Companies Act 1985 are as follows: At 1 Jul 2004 or date of appointment At 30 JuneRights to subscribe for shares if later Granted Cancelled Exercised 2005 J M Fellerman 416,667 - - - 416,667R H Kleiner 416,667 - - - 416,667A J G Bilton 416,667 - - - 416,667 As at 30 June 2005 there were 2,500,000 options to subscribe for ordinary sharesin the capital of the company at 150 pence per share under the company's LongTerm Incentive Share Scheme ("LTISS"). The directors holding options hadpreviously agreed to cancel the LTISS options granted to them conditional on theimplementation of a new management scheme the terms, which is yet to beimplemented. There remains 1,250,000 options granted under the LTISS to previous directors. Report on directors' remuneration The remuneration of the directors for the year ended 30 June 2005 is as follows: Compensation Basic salary for loss 2004 and fees Benefits Bonus of office Total TotalExecutive directors £ £ £ £ £J M Fellerman 150,000 2,484 13,084 - 165,568 317,362R H Kleiner 150,000 1,953 13,084 - 165,037 315,833A J G Bilton 41,667 306 - 50,000 91,973 100,000 Non-executive directorsP J Crawford 25,000 741 - - 25,741 25,000A J R Collins 20,000 - - - 20,000 20,000W A H Crewdson 15,000 - - - 15,000 6,250A J G Bilton 2,500 - - - 2,500 - Former executive directorsD J B Taylor - - - - - 75,000J D A Aspinall - - - - - 75,000 Former Non-executivedirectorsA D Pereira - - - - - 8,750G V Hirsch - - - - - 7,500 404,167 5,484 26,168 50,000 485,819 950,695 (1) The above figures represent the due proportion of each director's annualsalary reflecting the period during the year for which each director was adirector of the company. (2) The respective dates of appointment and resignation for those directors whowere not directors for the whole year are set out on page 9. (3) There were no pension payments in respect of either year. The remuneration committee comprises Philip Crawford (chairman) and WilliamCrewdson. Its terms of reference are concerned principally with the remunerationpackages offered to executive directors in that they should be competitive andare designed to attract, retain and motivate executives of the right calibre. Remuneration for executive directors consists of basic salary and benefitsincluding management incentive arrangements and are on a 12 months rollingnotice basis. Significant Shareholding As at 17 October 2005, the company's significant shareholders were MoorfieldGroup Limited 10.71%, Marlborough Fund Managers Limited 5.39%, GartmoreInvestment Management plc 4.7% and Aviation Adventures Limited 3.1% Policy and practice on payment of creditors It is the group's policy to settle all agreed liabilities within the termsestablished with suppliers. During the year the average credit period taken was60 days (2004 - 60 days). Auditors In accordance with section 385 of the Companies act 1985, a resolution thatErnst & Young LLP be re-appointed will be put to the members at the AnnualGeneral Meeting. By order of the board J M Fellerman Secretary 1 November 2005 Statement of directors' responsibilities in respect of the accounts Company law requires the directors to prepare accounts for each financial yearwhich give a true and fair view of the state of affairs of the company and ofthe group and of the profit or loss of the group for that period. In preparingthose accounts, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts; and • prepare the accounts on the going concern basis unless it is inappropriate to presume that the group will continue in business. The directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of thegroup and which enable them to ensure that the accounts comply with theCompanies Act 1985. They are also responsible for safeguarding the assets of thegroup and hence for taking reasonable steps for the prevention and detection offraud and other irregularities. Report of the independent auditors to the members of avanti capital plc We have audited the group's accounts for the year ended 30 June 2005, whichcomprise the consolidated profit and loss account, the consolidated statement oftotal recognised gains and losses, the consolidated balance sheet, the companybalance sheet, the consolidated statement of cash flows, the consolidatedstatement of total recognised gains and losses and the related notes 1 to 26.These accounts have been prepared on the basis of the accounting policies setout therein. This report is made solely to the company's members, as a body, in accordancewith Section 235 of the Companies Act 1985. Our audit work has been undertakenso that we might state to the company's members those matters we are required tostate to them in an auditors' report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the company and the company's members as a body, for our audit work,for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the statement of directors' responsibilities, the company'sdirectors are responsible for the preparation of the accounts in accordance withapplicable United Kingdom law and accounting standards. Our responsibility is to audit the accounts in accordance with relevant legaland regulatory requirements and United Kingdom auditing standards. We report to you our opinion as to whether the accounts give a true and fairview and are properly prepared in accordance with the Companies Act 1985. Wealso report to you if, in our opinion, the directors' report is not consistentwith the accounts, if the company has not kept proper accounting records, if wehave not received all the information and explanations we require for our audit,or if information specified by law regarding directors' remuneration andtransactions with the group is not disclosed. We read other information contained in the Annual Report and consider whether itis consistent with the audited financial statements. This other informationcomprises the company statement, directors' report and the statement ofcorporate governance. We consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencies with thefinancial statements. Our responsibilities do not extend to any otherinformation. Basis of audit opinion We conducted our audit in accordance with United Kingdom auditing standardsissued by the Auditing Practices Board. An audit includes examination, on atest basis, of evidence relevant to the amounts and disclosures in the accounts.It also includes an assessment of the significant estimates and judgements madeby the directors in the preparation of the accounts, and of whether theaccounting policies are appropriate to the group's circumstances, consistentlyapplied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the accounts are free frommaterial misstatement, whether caused by fraud or other irregularity or error.In forming our opinion we also evaluated the overall adequacy of thepresentation of information in the accounts. Opinion In our opinion the accounts give a true and fair view of the state of affairs ofthe company and of the group as at 30 June 2005 and of the loss of the group forthe year then ended and have been properly prepared in accordance with theCompanies Act 1985. Ernst & Young LLP Registered Auditor London 1 November 2005 Consolidated profit and loss accountfor the year ended 30 June 2005 2005 2004 Notes £000 £000 Turnover 2 20,485 19,003Cost of sales (3,782) (3,697) Gross profit 16,703 15,306Operating expenses:Administrative expenses - exceptional - warrant cancellation 3(a) (87) (1,106)paymentAdministrative expenses - other exceptional items 3(b) (410) (791)Administrative expenses - others 4 (17,061) (14,894) (17,558) (16,791) Total operating loss (855) (1,485)Profit on disposal of investments 197 432 Loss on ordinary activities before interest and taxation (658) (1,053)Interest receivable 7 607 468Interest payables and similar charges - other loans (429) (86) Loss on ordinary activities before taxation (480) (671)Taxation 8 134 (134) Loss on ordinary activities after taxation (346) (805)Minority interest - equity 197 (107) Loss retained for the financial year (149) (912) Loss per equity share 10Basic (loss) per equity share (1.46)p (8.79)pDiluted (loss) per equity share (1.46)p (8.79)p Note: All of the above relate to continuing operations Consolidated statement of total recognised gains and lossesfor the year ended 30 June 2005 2005 2004 Notes £000 £000 (Loss) for the financial year (149) (912)Surplus on share re-organisation - 12 Loss for the financial year attributable to members of the parent company 21 (149) (900) Consolidated balance sheet at 30 June 2005 2005 2004 Notes £000 £000Fixed assetsIntangible assets - positive goodwill 11 4,915 5,167Intangible assets - negative goodwill 11 (218) (656) 4,697 4,511 Tangible assets 12 1,974 1,807Investments 13 2,547 2,468 9,218 8,786 Current assetsStocks 14 321 343Debtors 15 1,572 1,739Cash at bank and in hand and short term deposits 11,447 15,606 13,340 17,688 Creditors: amounts falling due within one year 16 (2,804) (4,343) Net current assets 10,536 13,345 Total assets less current liabilities 19,754 22,131Creditors: amounts falling due after more than one year 17 (2,154) (2,984)Provisions 18 - (50) 17,600 19,097 Capital and reservesCalled up share capital 19 5,948 6,224Share premium account 20 - 33,851Capital redemption reserves 20 276 -Other reserves 20 2,045 2,045Profit and loss account 20 9,298 (23,530) Equity shareholders' funds 21 17,567 18,590Minority interest - equity 33 507 17,600 19,097 Director J M Fellerman Director R H Kleiner 1 November 2005 Balance sheetat 30 June 2005 2005 2004 Notes £000 £000 Fixed assetsTangible assets 12 351 366Investments 13 4,098 3,516 4,449 3,882 Current assetsDebtors 15 3,659 2,127Cash at bank and in hand and short term deposits 10,950 15,293 14,609 17,420Creditors: amounts falling due within one year 16 (1,132) (2,554)Net current assets 13,477 14,866Net assets 17,926 18,748 Capital and reservesCalled up share capital 19 5,948 6,224Share premium account 20 - 33,851Capital redemption reserves 20 276 -Other reserves 20 2,045 2,045Profit and loss account 20 9,657 (23,372)Equity shareholders' funds 21 17,926 18,748 Director J M Fellerman Director R H Kleiner 1 November 2005 Consolidated statement of cash flowsfor the year ended 30 June 2005 2005 2004 Notes £000 £000 Net cash (outflow)/inflow from operating activities 22(a) (1,488) 754Returns on investments and servicing of financeInterest received 607 468Interest paid (429) (11)Bank loan issue cost - (264) Capital expenditure and financial investmentPurchase of tangible fixed assets (559) (1,033)Purchase of intangible assets (233) -Purchase of investments (275) (608)Proceeds from sale of tangible assets 8 30Proceeds from sale of fixed asset investments 252 644 Net cash outflow from capital expenditure and financial (807) (967)investment Acquisitions and disposalsPurchase of subsidiary undertaking - (6,647)Purchase of minority interest in subsidiary undertaking (339) -Net cash acquired with subsidiary undertakings - 74Proceeds of share issue in Barvest received from minority - 400interestNet cash outflow from acquisition and disposal (339) (6,173) Net cash outflow before management of liquid resources and (2,456) (6,193)financing Management of liquid resourcesMovement on liquid resources 3,214 3,112 FinancingIssue of share capital 1 36Payments for share buy back (874) -New short term borrowings - 817New long term borrowings - 3,142Other new loans - 357Repayment of other new loans (830) (251) (Decrease)/increase in cash in the year (945) 1,020 Analysis of changes in net funds Cash at bank Short term and in hand deposits Loans Total £000 £000 £000 £000 At 1 July 2004 1,706 13,900 (3,801) 11,805Net cash flow (945) (3,214) 830 (3,329)At 30 June 2005 761 10,686 (2,971) 8,476 Short term deposits are included within cash at bank and in hand in the balancesheet. Notes to the accounts at 30 June 2005 1. Accounting policies Accounting convention The accounts are prepared under the historical cost convention and in accordancewith applicable accounting standards. Basis of consolidation The group accounts consolidate the accounts of the company and all itssubsidiary undertakings drawn up to 30 June each year. No profit and lossaccount is presented for the company as permitted by section 230 of theCompanies Act 1985. Barvest Limited has been included in the group accounts using the acquisitionmethod of accounting. Accordingly, the group profit and loss account andstatement of cash flows include the results and cashflows of Barvest Limited forthe 52 weeks ended 26 June 2005. The purchase consideration has been allocatedto the assets and liabilities on the basis of fair value at the date ofacquisition. The profit attributable to the parent company is £52,000 (2004 - loss £1.788million). Turnover Turnover, which is stated net of value added tax, represents amounts due fromthird parties on its ongoing activities, and amounts received and receivablefrom the management and operation of late night bars and nightclubs. Theanalysis of turnover is set out in note 2 below. Income from fixed asset Investments Dividends on fixed asset investments are accounted for when received and arereported in the profit and loss account exclusive of the related tax credit inaccordance with Financial Reporting Standard 16. Depreciation Depreciation is provided on all tangible fixed assets at rates calculated towrite off the cost, less estimated residual value based on prices prevailing atthe date of acquisition, of each asset evenly over its expected useful life asfollows: Leasehold property - Life of leaseLeasehold improvements - 4 yearsFurniture and fittings - 4 yearsIT equipment - 3 yearsMotor vehicles - 3 to 5 years The carrying values of tangible fixed assets are reviewed for impairment whenevents or changes in circumstances indicate the carrying value may not berecoverable. Stocks Stocks are stated at the lower of cost and net realisable value Foreign currency translation Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction. Monetary assets and liabilities denominated in foreign currencies areretranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account. Intangible fixed assets Intangible fixed assets relate to goodwill. Goodwill is the difference betweenthe cost of an acquired entity and the aggregate of the fair value of theentity's identifiable assets and liabilities. Positive goodwill is capitalised,classified as an asset of the balance sheet and amortised on a straight linebasis over its useful economic life. It is reviewed for impairment at the end ofthe first full financial year following the acquisition and in other periods ifevents or changes in circumstances indicate that the carrying value may not berecoverable. If a subsidiary or business is subsequently sold or closed, any goodwill arisingon acquisition that was written off directly to reserves is taken into accountin determining the profit or loss on sales or closure. The amount of goodwillwritten off directly to reserves is not readily ascertainable. Where the fair value of the net assets acquired exceeds the fair value of theconsideration for an acquired undertaking, the difference is treated as negativegoodwill and is capitalised and amortised through the profit and loss account inthe period in which the non-monetary assets are recovered. In the case of fixedassets this is the period over which they are depreciated, and in the case offixed asset investments, the period over which they are sold or otherwiserealised. Fixed asset investments Fixed asset investments, comprising equity shares and share options, are statedat the lower of cost and valuation and in accordance with the "Guidelines forthe valuation and disclosure of venture capital portfolios" published by theBritish Venture Capital Association on the following basis: (a) Early stage investments: these are investments in immature companies,including seed, start-up and early stage investments. Such investments arevalued at cost less any provision considered necessary, until no longer viewedas early stage or unless a significant transaction involving an independentthird party at arm's length, values the investment at a materially differentvalue; (b) Development stage investments: such investments are in mature companieshaving a maintainable trend of sustainable profits and from which an exit, byway of flotation or trade sale, can be reasonably foreseen. An investment ofthis stage is periodically revalued by reference to open market value. Valuationwill usually be by one of four methods as indicated below: (i) At cost for at least one period unless such a basis is unsustainable; (ii) On a third party basis based on the price at which a subsequent issue of capital is made involving a significant investment by a new investor; (iii) On an earnings basis, but not until at least a period since the investment was made, by applying a discounted price/earnings ratio to profit after taxation, either before or after interest; or (iv) On a net asset basis, again applying a discount to reflect the illiquidity of the investment. (c) Quoted investments: such investments are valued using the quoted marketprice, discounted if the shares are subject to any particular restrictions orare significant in relation to the issued share capital of a small quotedcompany; (d) Share options are subject to vesting and other conditions set out in thevarious option agreements. The valuation is based on the intrinsic value of allshare options that have vested. This is the difference between the market valueof shares at the balance sheet date and the exercise price. A review of permanent diminution in value is undertaken by reference to funding,investment or offers in progress after the balance sheet date. Financial instruments The group uses financial instruments comprising cash and short term deposits andborrowings. It does not enter into derivative transactions such as interest rateswaps, forward rate agreements or forward currency contracts. Deferred taxation Deferred taxation is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents have occurred at that date that will result in an obligation to pay more,or right to pay less or to receive more tax, with the following exceptions: Provision is made for tax on gains arising from the revaluation (and similarfair value adjustments) of fixed assets, or gains on disposal of fixed assetsthat have been rolled over into replacement assets, only to the extent that, atthe balance sheet date, there is a binding agreement to dispose of the assetsconcerned. However, no provision is made where, on the basis of all availableevidence at the balance sheet date, it is more likely than not that the taxablegain will be rolled over into replacement assets and charged to tax only wherethe replacement assets are sold. Deferred tax assets are recognised only to the extent that the directorsconsider that it is more likely than not that there will be suitable taxableprofits from which the future reversal of the underlying timing differences canbe deducted. Deferred tax is measured on an undiscounted basis at the tax rates that areexpected to apply in the periods in which timing differences reverse, based ontax rates and laws enacted or substantively enacted at the balance sheet date. Leasing commitments Rentals paid under operating leases are charged to income on a straight linebasis over the lease term. 2. Turnover(a) Analysis of turnover and loss before taxation Loss on ordinary Turnover* activities before tax** 2005 2004 2005 2004 £000 £000 £000 £000Business sectors: Investment and ancillary services* 53 74 754 *** (1,852)Bar & night clubs 20,432 18,929 (1,234) 1,181 20,485 19,003 (480) (671) Geographical markets:United Kingdom 20,485 19,003 (480) (671) * Turnover by geographical segmentation to third parties is by origin of turnover and destinations. ** Loss on ordinary activities before tax includes inter-company interest of £711,000 and fees of £100,000. *** Included in this figure is £87,000 relating to the warrant cancellation payment. (b) Analysis of net assets 2005 2004 £000 £000Business sectors:Investment and ancillary services 17,524 17,830Bar and night clubs 43 760 17,567 18,590 Geographical location:United Kingdom 15,460 16,758Rest of World 2,107 1,832 17,567 18,590 3. Exceptional items (a) Warrant cancellation payment 2005 2004 £000 £000 Payment for cancellation of 178,315 warrants at 50p each 88 1,078Associated legal costs (1) 28 87 1,106 (b) Other 2005 2004 £000 £000Provision for impairment of fixed asset investments (net of write backs) 41 434Deal and merger costs:- Redundancy costs 342 230Restructuring charges 27 127 410 791 4. Analysis of administrative expenses - other 2005 2004 £000 £000Auditors' remuneration:- audit 70 65- non audit - 2Depreciation 382 228Amortisation of goodwill 136 43Operating lease rentals - land and buildings 2,087 1,777Other 14,386 12,779 17,061 14,894 5. Staff costs 2005 2004 £000 £000 Wages and salaries 4,137 3,626Social security costs 394 376 4,531 4,002 There were no pension contributions during the year. The average monthly number of employees during the year was as follows: 2005 2004 No. No. Investment holdings 5 5Bar and night clubs- Bar staff 428 425- Head office 29 28 463 458 6. Directors' remuneration 2005 2004 £000 £000 Emoluments 436 835Compensation for loss of office 50 116 486 951 An analysis of directors' remuneration is set out in the directors' report.There were no pension payments in respect of either year. 7. Interest receivable and similar income 2005 2004 £000 £000 On deposits and liquid funds 607 468 8. Taxation (a) Analysis of charge in year: 2005 2004 £000 £000Current taxUK corporation tax on the profit for the year (84) 84Deferred taxExcess capital allowances over depreciation (note 8(c)) (50) 50Total tax charge for year (134) 134 (b) Factors affecting current tax charge for the year: The tax assessed for the year differs from the standard rate of corporation taxin the UK (30%). The differences are explained below: 2005 2004 £000 £000 Loss on ordinary activities before tax (480) (671)Loss on ordinary activities multiplied by standard rateof corporation tax in the UK of 30% (2004 - 30%) (144) (201)Effects of:Disallowable expenses and non-taxable income 61 221Depreciation in excess of capital allowances 8 (49)Losses arising in the current year not relievable against current tax 112 170Losses brought forward utilised (121) (57)Current tax for the year (note 8a) (84) 84 (c) Deferred tax 2005 2004 £000 £000 Excess capital allowances over depreciation (50) 50 (d) Factors affecting future tax charges: The group has tax losses arising in the UK of approximately £21.1 million (2004- £20.0 million) that are available indefinitely for offset against futuretaxable profits of those companies in which the losses arose. Deferred taxassets of £6.2 million (2004 - £5.9 million) have not been recognised in respectof these losses as they may not be used to offset taxable profits elsewhere inthe group. 9. Dividends No dividend will be declared for the year ended 30 June 2005 (2004 - £nil). 10. Loss per share The basic (loss) per share calculation is based on the group's loss for the yearof £149,000 (2004 - £912,000) and the weighted average number of shares in issuefor the year of 10,220,758 (2004 - 10,350,118). The loss attributed to ordinaryshareholders and the weighted average number of shares for the purposes ofcalculating the diluted earnings per share are identical to those used for thebasic earnings per share. This is because the exercise of options would havethe effect of reducing the loss per ordinary share and is therefore not dilutiveunder the terms of FRS 14. 11. Intangible Assets Positive Negative Goodwill Goodwill 2005 2005 £000 £000 Cost:At 1 July 2004 5,647 (1,749)Additions - Barvest Limited assets 233 - Acquisition of additional shares in Barvest Limited 89 -At 30 June 2005 5,969 (1,749) Amortisation:At 1 July 2004 480 (1,093)Provided during the year 574 (438)At 30 June 2005 1,054 (1,531)Net book value as at 30 June 2005 4,915 (218)Net book value as at 30 June 2004 5,167 (656) Negative goodwill is written off over a period of 4 years and positive goodwillis written off over a period of 10 years. During the year the group increased its shareholding in Barvest Limited from 60%to 81.7%. During the year, Barvest Limited paid a further £233,000 to theadministrators of Po Na Na in respect of the completion of the remaining leases. 12. Tangible fixed assets Short Short Leasehold Leasehold IT Furniture Motor Property Improvements Equipment and fittings Vehicles TotalGroup £000 £000 £000 £000 £000 £000Cost: At 1 July 2004 420 230 316 1,199 160 2,325Additions - 162 25 372 - 559Disposals - - - - (21) (21)At 30 June 2005 420 392 341 1,571 139 2,863 Depreciation:At 1 July 2004 62 33 231 183 9 518Provided during the year 13 30 43 265 31 382Disposals - - - - (11) (11)At 30 June 2005 75 63 274 448 29 889Net book value:At 30 June 2005 345 329 67 1,123 110 1,974 At 30 June 2004 358 197 85 1,016 151 1,807 Short Short Leasehold Leasehold IT Furniture Property Improvements Equipment and fittings TotalCompany £000 £000 £000 £000 £000Cost: At 1 July 2004 420 25 189 39 673Additions - - 2 - 2At 30 June 2005 420 25 191 39 675Depreciation:At 1 July 2004 62 25 184 36 307Provided during the year 13 - 3 1 17At 30 June 2005 75 25 187 37 324Net book value:At 30 June 2005 345 - 4 2 351 At 30 June 2004 358 - 5 3 366 13. Investments Group Company Group Company 2005 2005 2004 2004 £000 £000 £000 £000Unlisted investments- Quoted - - 42 -- Unquoted 2,547 - 2,426 -Unlisted investments - 4,098 - 3,516 2,547 4,098 2,468 3,516 The movement in the net book value of investment in subsidiaries of £582,000comprises additional investments in Barvest of £339,000 and a new investment inMedcenter Inc of £274,000 together with a net movement in long term intercompany balances of £32,000. Cost Provision Book value £000 £000 £000 At 1 July 2004 11,815 (9,347) 2,468Additions 247 (96) 151Disposals (295) 168 (127)Write back - 55 55At 30 June 2005 11,767 (9,220) 2,547 Details of the investments in which the group and the company holds 20% or moreof the nominal value of any class of share capital are as follows: - Name of Company Holding Proportion of voting Nature of business rights and shares held Subsidiary undertakings:Avanti Holdings plc Ordinary shares 100% Private equityAvanti Partners (UK) Limited Ordinary shares 100% Management servicesAvanti Partners Limited Ordinary shares 100% Corporate finance advisersAvanti Partners NV * Ordinary shares 100% Private equityBarvest Limited ** Ordinary shares 81.7% Operation of late night bars and night clubs Avanti Partners (UK) Limited and Avanti Partners NV are directly owned by AvantiHoldings plc and the rest of the subsidiaries are directly owned by AvantiCapital plc. * Incorporated in Belgium** Interest is shown on the basis of pre-dilution of options and warrants. Theeffective interest on a post-dilution basis is 73.5%. 14. Stocks 2005 2004 £000 £000Goods for re-sale 321 343 15. Debtors Group Company Group Company 2005 2005 2004 2004 £000 £000 £000 £000 Trade debtors 19 15 459 26Corporation tax 17 - - -Other taxes 5 - 2 -Amounts due from subsidiary company - 2,407 - 1,482Other debtors 1,531 1,237 1,278 619 1,572 3,659 1,739 2,127 16. Creditors: amounts falling due within one year Group Company Group Company 2005 2005 2004 2004 £000 £000 £000 £000 Loans (note 17) 817 - 817 -Trade creditors 1,078 20 749 24Corporation tax - - 84 -Other taxes and social security costs 320 18 474 18Amounts due to subsidiary companies - 880 - 663Accruals 589 214 2,219 1,849 2,804 1,132 4,343 2,554 17. Creditors: amounts falling due after more than one year 2005 2004 £000 £000 Bank loans 2,047 2,878Other loans 107 106 2,154 2,984 2005 2004 £000 £000 Amounts falling due:in one year or less 875 875in more than one year but no more than two years 875 875in more than two years but no more than five years 1,440 2,315 3,190 4,065Less: issue cost 221 264 2,971 3,801 Less: included in creditors: amounts due within one year 817 817 2,154 2,984 The bank loan which was made in April 2003 consists of two tranches: Tranche A - A facility of £3,500,000 at 2.5% above LIBOR repayable over 4 years. Tranche B - A facility of £1,000,000 at 3.0% above LIBOR repayable on 30 April2008. The bank loan is secured by a fixed and floating charge over the assets ofBarvest Limited. 18. Provisions for liabilities and charges 2005 2004Deferred tax (note 8c) £000 £000 At 1 July 2004 50 -(Credited)/charged to profit and loss account (50) 50At 30 June 2005 - 50 19. Share capital Allotted, called up Allotted, called up Authorised and fully and fully paid paid 2005 2004 2005 2004 2005 2004 No. No. No No £000 £000 Ordinary shares of £0.60 each 20,833,333 20,833,333 9,914,092 10,373,592 5,948 6,224 As at 30 June 2004 there were 10,373,592 ordinary shares of 60 pence each in thecapital of the company. In July 2004, 500 shares were issued as a result of awarrant exercise. In March 2005, 460,000 ordinary shares of 60 pence each in thecapital of the company were bought back by the company for cancellation at aprice of 190 pence per share. As at 30 June 2005 there were 9,914,092 ordinary shares of 60 pence each inissue. As at 30 June 2004 there were 2,500,000 options to subscribe for ordinary sharesin the capital of the company at 150 pence per share under the company's LongTerm Incentive Share Scheme ("LTISS"). The executive directors had previouslyagreed to cancel the LTISS options granted to them conditional on theimplementation of a new management scheme the terms, which is yet to beimplemented. 20. Reserves Share Capital Profit and Premium Redemption Other Loss Account Reserve Reserves Account TotalGroup £000 £000 £000 £000 £000 At 1 July 2004 33,851 - 2,045 (23,530) 12,366Loss retained for the financial year - - - (149) (149)Transfer - cancellation of share premium account (33,851) - - 33,851 -Share buy back in the year - 276 - (874) (598)Shares issued in the year - - - - -At 30 June 2005 - 276 2,045 9,298 11,619 Share Capital Profit and Premium Redemption Other Loss Account Reserve Reserves Account TotalCompany £000 £000 £000 £000 £000 At 1 July 2004 33,851 - 2,045 (23,372) 12,524Profit retained for the financial year - - - 52 52Transfer - cancellation of share premium account (33,851) - - 33,851 -Share buy back in the year - 276 - (874) (598)Shares issued in the year - - - - -At 30 June 2005 - 276 2,045 9,657 11,978 Following the approval of resolution 10 at the 2004 Annual General Meeting thecompany received the requisite approval from the court to credit the entireshare premium account amounting to £33,851,000 to the distributable reserves ofthe company. 21. Reconciliation of movements in shareholders' funds 2005 2004 £000 £000 (Loss) for the financial year attributable tothe members of the parent company (149) (912)Surplus on share re-organisation - 12Shares and warrants issued - 36Share buyback (874) -Shareholders' funds at 1 July 2004 18,590 19,454At 30 June 2005 17,567 18,590 22. Notes to the consolidated cash flow statement (a) Reconciliation of operating loss to net cash inflow/(outflow) from operating activities 2005 2004 £000 £000 Operating loss (855) (1,485)Loss on disposal of fixed assets 1 -Depreciation charges 382 228Goodwill amortisation 136 43Provision against fixed asset investment 41 434Decrease in stock 22 43Increase/(decrease) in debtors 184 (1,602)(Decrease)/increase in creditors (1,399) 3,093Net cash (outflow)/inflow from operating activities (1,488) 754 (b) Reconciliation of net cash flow to movement in net funds 2005 2004 £000 £000 (Decrease) in net funds (3,329) (5,893)Net funds at 1 July 2004 11,805 17,698At 30 June 2005 8,476 11,805 (c) Exceptional Items Cash flows relating to operating exceptional items The provision for impairment of fixed asset investments of £41,000 (2004 -£434,000) did not have an effect on cash flows. In the current year there were £342,000 of operating cash outflows fromexceptional items relating to redundancy and restructuring charges. 23. Financial Instruments The group's financial instruments comprise fixed asset investments, cash andliquid resources, and various items, such as trade debtors and trade creditorsthat arise directly from its operations. The vast majority of the group'sfinancial investments are denominated in sterling The group does not enter into derivatives or hedging transactions. It is, and has been throughout the period under review, the group's policy thatno trading in financial instruments shall be undertaken. The main risks arising from the group's financial instruments are investmentrisk, interest rate risk and liquidity risk. The group does not have a materialexposure to foreign currency risk. The board reviews policies for managing eachof these risks, and they are summarised as follows: Investment risk Investment risk includes investing in companies that may not perform asexpected. The group's investment criteria focus on the quality of the businessand the management team of the target company, market potential and the abilityof the investment to attain the returns required within the time horizon set forthe investment. Due diligence is undertaken on each investment. The groupregularly reviews the investments in order to monitor the level of risk andmitigate exposure where appropriate. Interest rate risk The group borrows in currencies to match the denomination at fixed or floatingrates of interest to generate the desired interest profile and to manage thegroup's exposure to interest fluctuations. Liquidity risk The group's policy is to finance its operations and expansion through workingcapital and, in the case of investing in target companies, to raise anappropriate level of acquisition finance. Short term debtors and creditors Amounts dealt with in the numerical disclosures in this note exclude short termdebtors and creditors. There is no material difference between the fair values and book values of thegroup's financial instruments. Financial assets The group has financial assets as shown below: Floating Non-interest Floating Non-interest rate bearing rate bearing financial financial financial financial assets assets assets assets 2005 2005 2004 2004 Currency £000 £000 £000 £000Sterling 11,372 2,547 15,525 2,468Others 75 - 81 - 11,447 2,547 15,606 2,468 The floating rate assets earn interest at rates based upon LIBOR. Non-interestbearing financial assets are available on demand. Financial liabilities Floating Non-interest rate bearing financial financial liabilities liabilities 2004 2004Currency £000 £000Sterling 2,971 3,801 2,971 3.801 These loans relate to Barvest Limited and are used to help finance capitalexpenditure. The weighted average interest rate for the variable rate financial liabilitiesis LIBOR plus 2.6% and the weighted average period for which the rate is fixedis 2.9 years. 24. Other financial commitments At 30 June 2005, the group had annual commitments under non-cancellableoperating leases as set out below: Group Company Group Company £000 £000 £000 £000 2005 2005 2004 2004Land and BuildingsOperating leases which expire: - in less than one year 26 - 26 -- within two to five years 95 - 95 -- in over five years 1,982 - 1,954 - 2,103 - 2,075 - 25. Commitments The Company has a cash commitment in respect of one its investments, namely XDLIntervest (USA) Limited Partnership. The company was originally committed topay a total of CAN$1m to XDL Intervest (USA) Limited Partnership but thecommitment has now been capped at CAN$800,000. As at 30 June 2005, CAN$668,000had been paid leaving an outstanding commitment of CAN$132,000. 26. Contingent liability The Company has (jointly and severally with Jeremy Sturgess and TwigmarketLimited) entered into a guarantee of the obligations of Barvest Limited inrespect of its lease at its Edinburgh site. At the same time, Barvest Limitedhas entered into an indemnity and guarantee fee agreement with the guarantors.The annual rent of Barvest's Edinburgh site is £57,000. Supplementary information (unaudited) Proforma profit & loss and balance sheets Notes to the proforma profit & loss and balance sheets The pro forma financial information has not been audited. The pro forma financial information has been prepared to illustrate the effectof not consolidating the results and net assets of Barvest Limited and thereforesets out the investment activity of Avanti Capital plc as distinct from the barsand clubs activity operated by Barvest Limited. The adjustments shown within the pro forma financial information enables areconciliation to be made to the audited figures included within this annualreport and which comprise the usual consolidation items including fees andinterest charged by the group to Barvest Limited and the inclusion, within thepro forma profit & loss, of EBITDA for Barvest Limited in respect of the 52-weekperiod from 28 June 2004 to 26 June 2005. Avanti Barvest Adjustment Group TotalProfit & loss £000 £000 £000 £000 Turnover 153 20,432 (100) 20,485Cost of sales - (3,782) - (3,782)Gross profit 153 16,650 (100) 16,703Operating expenses (998) (15,447) 100 (16,345)EBITDA (845) 1,203 - 358Depreciation & goodwillamortisation 414 (934) - (520)Interest payable - (1,139) 710 (429)Interest receivable 1,313 4 (710) 607 Profit/(loss) on ordinary activities before 882 (866) - 16taxation and exceptional itemsExceptional items - warrants cancellation (87) - - (87)paymentExceptional items - other (41) (368) - (409) Profit/(loss) on ordinary activities before 754 (1,234) - (480)taxationTaxation - 134 - 134 Profit/(loss) on ordinary activities after 754 (1,100) - (346)taxationMinority interest - - 197 197 Profit/(loss) for the period after minority 754 (1,100) 197 (149)interest Avanti Barvest Adjustment Group TotalNet assets £000 £000 £000 £000Fixed assets Goodwill (218) 4,826 89 4,697Tangible assets 351 1,623 1,974Investments 5,919 - (3,372) 2,547 6,052 6,449 (3,283) 9,218Current assetsStock - 321 - 321Debtors 1,346 1,414 (1,188) 1,572Cash at bank and in-hand 11,106 341 - 11,447 12,452 2,076 (1,188) 13,340Creditors: amounts falling due within one year 193 3,799 (1,188) 2,804Net current assets 12,259 (1,723) - 10,536 18,311 4,726 (3,279) 19,754Creditors: amounts falling due after one year - (4,560) 2,406 (2,154)Provisions - - - - Net assets 18,311 166 (873) 17,600 Represented by:Share capital 5,948 1,000 (1,000) 5,948Share premium account - - - -Capital redemption reserves 276 - - 276Other reserves 2,045 - - 2,045Profit & loss accounts 10,042 (834) 100 9,298Shareholders' funds 18,311 166 (900) 17,567Minority interest - - 33 33 18,311 166 (867) 17,600 Notice of annual general meeting Notice is hereby given that the 2005 Annual General Meeting of Avanti Capitalplc ("the Company") will be held at the offices of Berwin Leighton Paisner, St.Magnus House, 3 Lower Thames Street, London EC3 on the 28th day of November 2005at 9.30 am to transact the following business. Ordinary Business 1. To receive and adopt the directors report, the financial statementsand the auditors report for the year ended 30 June 2005. 2. That the Directors' Remuneration Report as set out on pages 6 to 8 ofthe report and accounts (as referred to in 1 above) be and is hereby approved. 3. To re-elect Julian Fellerman as a director. 4. To re-elect Richard Kleiner as a director. 5. To confirm the re-appointment of Ernst & Young LLP as auditors of theCompany and to authorise the directors to fix their remuneration. Special Business As special business, to consider and, if thought fit, pass the followingresolutions of which Resolution 6 will be proposed as an ordinary resolution and Resolutions 7 and 8 will be proposed as special resolutions: Ordinary resolution 6. That the Directors be and they are hereby generally andunconditionally authorised (in substitution for all previous authorities in thatregard) to exercise all of the powers of the Company to allot relevantsecurities (within the meaning of Section 80 of the Companies Act 1985 ("the Act")) up to an aggregate nominal amount of £5,602,255 provided that this authorityshall expire on the conclusion of the annual general meeting of the Company heldin 2006 or 31 December 2006 (whichever is earlier) unless and to the extent thatsuch authority is renewed or extended prior to such date so that the Company maybefore such expiry make an offer or agreement which would or might requirerelevant securities to be allotted in pursuance of such offer or agreement as ifthe authority conferred hereby had not expired. Special Resolutions 7. That the Directors be and they are hereby empowered pursuant toSection 95 of the Companies Act 1985 ("the Act") in substitution for allprevious powers granted thereunder, to allot equity securities (as defined inSection 94 of the Act) pursuant to the authority granted by Resolution 6 aboveof this resolution as if Section 89(1) of the Act did not apply to any suchallotment provided that this power should be limited to: (a) the allotment of equity securities on a pro rata basis in favour ofshareholders where the equity securities respectively attributable to theinterests of all shareholders are proportionate (as nearly as may be) to therespective number of ordinary shares held by them, but subject to suchexclusions and other arrangements as the directors may deem necessary orexpedient to deal with legal or practical problems in respect of overseasholders, fractional entitlement or otherwise; (b) the allotment of equity securities (in addition to the allotment ofequity securities pursuant to the foregoing paragraph) with an aggregate valueof up to £1,867,418 being 33.3 per cent of the issued share capital of theCompany on 31 October 2005 and the power hereby conferred shall expire on the conclusion of the annualgeneral meeting of the Company held in 2006 or 31 December 2006 (whichever isearlier) unless renewed or extended prior to such time except that the Companymay, before the expiry of any power contained in this resolution, make an offeror agreement which would, or might, require equity securities to be allotted,after such expiry and the directors may allot equity securities in pursuance ofsuch offer or agreement as if the power hereby conferred has not expired. 8. That the Company be generally and unconditionally authorised for thepurposes of section 166 of the Act to make market purchases (within the meaningof Section 163 of the Act) of ordinary shares of 60p each in the capital of theCompany ("Ordinary Shares") provided that: (a) the maximum aggregate number of Ordinary Shares hereby authorised to bepurchased is 1,400,563 (representing 15 per cent of the Ordinary Shares inissue); (b) the minimum price which may be paid for an Ordinary Share is 60p pershare; (c) the maximum price which may be paid for an Ordinary Share is an amountequal to 105% of the average of the middle market quotations for an OrdinaryShare as derived from the London Stock Exchange Daily Official List for the fivebusiness days immediately preceding the day on which the Ordinary Share ispurchased; (d) the authority hereby conferred expires at the conclusion of the nextannual general meeting of the Company to be held in 2006 or, if earlier, twelvemonths after the date of the passing of this resolution unless such authority isrenewed, varied or revoked prior to such time; and the Company may make a contract or contracts to purchase Ordinary Shares underthis authority before the expiry of the authority which will or may be executedwholly or partly after the expiry of the authority; and may make a purchase ofOrdinary Shares in pursuance of any such contract or contracts. BY ORDER OF THE BOARD Julian Fellerman Secretary 1 November 2005 Registered Office: 2 Motcomb Street, London SW1X 8JU Notes: (1) A member entitled to attend and vote at the above-mentionedAnnual General Meeting may appoint one or more proxies to attend and, on a poll,to vote instead of him. A proxy need not be a member of the Company. (2) A pre-paid form of proxy is enclosed. To be valid, the formof proxy (together with the power of attorney or other authority (if any) underwhich it is signed or a notarially certified copy of such authority) must bedeposited at the offices of the Company's Registrars, Capita IRG, PO Box 25,Beckenham, Kent BR3 4BR no later than 10 a.m. on 24 November 2005. Completionof the form of proxy will not preclude a member from attending and voting inperson. (3) The Company, pursuant to regulation 41 of The UncertificatedSecurities Regulations 2001, specifies that only those shareholders registeredin the register of members of the Company as at 6.00pm on 24 November 2005 shallbe entitled to attend or vote at the Annual General Meeting in respect of thenumber of shares registered in their name at that time. Changes to entries onthe relevant register of securities after that time will be disregarded indetermining the rights of any person to attend or vote at the Annual GeneralMeeting. (4) There will be available for inspection at the registeredoffice of the Company, during usual business hours on any weekday from the dateof this notice until the date of the meeting, and at the place of the meetingfor 15 minutes prior to and during the meeting, copies of any directors' serviceagreements with the Company and particulars for the period up to 31 October 2005of the transactions of each director and, so far as he can reasonably ascertain,of his family in the share capital of the Company. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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