21st Sep 2006 08:15
Global Structured Finance Inc21 September 2006 21 September 2006 GLOBAL STRUCTURED FINANCE Interim Results For the six months ended 30 June 2006 CHAIRMAN'S STATEMENT I am pleased to present the interim results of Global Structured Financecovering the six month period to 30 June 2006. The Company was admitted to AIMin March 2005 through an initial placing of 8 million ordinary shares thatgenerated net funds for the Company of £255,000. The results are prepared for the first time in accordance with InternationalFinancial Reporting Standards (IFRS) and in order to give the greatest level ofclarity, we have prepared a full set of notes which include a reconciliation tothe results on a UK GAAP basis. The results are in line with expectations, andshow a loss before tax of £72,000. In its AIM admission document dated 11 March 2005, the Company stated that itwould initially seek to develop a group specialising in the provision ofstructured financing products and services through acquisition of targetcompanies or investments. The Board investigated a number of potentialopportunities, none of which your board considered to be sufficiently attractiveto put before shareholders and your board decided to consider opportunitiesoutside of the original target sector. On 3 April 2006 the London Stock Exchange suspended trading in the Company'ssecurities on AIM as a consequence of the Company not having completed a reversetakeover or substantially implemented its investing strategy in accordance withthe timetable specified under AIM Rule 8 relating to investing companies.Under the AIM rules, any company in this position which has still not completedsuch a transaction by 30 September 2006 will have its listing cancelled. The board is firmly of the view that it should not compromise shareholder valueby completing a transaction purely for the sake of maintaining its listing.Since 3 April, the board has continued to investigate potential transactions,has identified a number of possibilities and is undertaking appropriate initialdue diligence work as necessary. However, the Company will not be in a positionto complete a transaction by the end of this month and accordingly, theCompany's share listing will be cancelled with effect from 3 October 2006. Itis the board's intention to apply for readmission to AIM on completion of atransaction. In the AIM Admission document, it was stated that, if the Company had notcompleted a transaction within 18 months of Admission, the board would convenean extraordinary general meeting ("EGM") at which proposals would be put toshareholders to liquidate the assets of the Company and distribute the proceedsamongst shareholders. Accordingly, a notice to convene an EGM is set out at theend of this statement. The Board is confident that it will be in a position to put an acceptabletransaction to shareholders and to apply for readmission of the Company's sharesto trading on AIM and has received confirmation from Corvus Capital Inc(representing 46.25% of the Company's issued share capital) that it supports theboard in this objective and intends to vote against the EGM resolution.Accordingly, the board recommends that shareholders vote against the resolution. Whether or not shareholders intend to be present at the EGM, they are requestedto complete, sign and return the form of proxy or form of direction to theCompany's UK Transfer Agents, Capita Registrars as soon as possible and in anyevent so as to arrive not later than 2.30 p.m. BST on 20 October 2006 for formsof proxy and 2.30 p.m. BST on 19 October 2006 for forms of direction. Thecompletion and return of a form of proxy or form of direction will not precludeshareholders from attending the EGM and voting in person should theysubsequently wish to do so. Graham Porter Chairman 21 September 2006 Enquiries: John Bick: 07917 649362 GLOBAL STRUCTURED FINANCE INC. INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Note Unaudited Unaudited £'000 £'000 Continuing operationsAdministrative expenses (74) (114)Operating loss (74) (114)Finance income 5 2 8Loss for the period before taxation (72) (106)Tax income 7 - -Net loss for the period (72) (106) Loss per ordinary share- Basic 8 (0.22p) (0.45p) GLOBAL STRUCTURED FINANCE INC.STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 30 JUNE 2006 Share Share Profit and Total premium based loss Share payment account capital reserve £'000 £'000 £'000 £'000 £'000 At 30 November 2004 - - - - -Issue of new shares 80 399 - - 479Cost of issue of new shares - (161) - - (161)Net loss for the period - - - (106) (106)Share based payment - (20) 20 - -At 31 December 2005 (Unaudited) 80 218 20 (106) 212 Net loss for the period - - - (72) (72)At 30 June 2006 (Unaudited) 80 218 20 (178) 140 GLOBAL STRUCTURED FINANCE INC.BALANCE SHEETFOR THE SIX MONTHS ENDED 30 JUNE 2006 At 30 At 31 June December 2006 2005 Unaudited Unaudited Note £'000 £'000 Assets CurrentTrade and other receivables 9 9 8Cash and cash equivalents 160 224Total assets 169 232 LiabilitiesCurrentTrade and other payables 10 29 20Total liabilities 29 20 EquityShare capital 12 80 80Share premium 218 218Share based payment reserve 20 20Profit and loss account (178) (106)Total equity 140 212 Total equity and liabilities 169 232 GLOBAL STRUCTURED FINANCE CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Operating activities Operating loss (74) (114) Interest received 2 8 Change in trade and other receivables (1) (8) Change in trade and other payables 9 20 Net cash outflow from operating activities (64) (94) Financing activities Issue of shares - 459 Share issue costs - (141) Net cash inflow from financing activities - 318 Net (decrease)/increase in cash and cash (64) 224 equivalents Cash and cash equivalents at beginning of 224 - period Cash and cash equivalents at end of period 160 224 Global Structured finance inc Notes to the Interim Report For the six months ended 30 June 2006 1 GENERAL INFORMATION The information for the period ended 30 June 2006 does not constitute statutoryaccounts as defined in Section 240 of the Companies Act 1985. The figures forthe period ended 31 December 2005 have been extracted from the 2005 statutoryfinancial statements prepared under UK GAAP and adjusted where necessary inorder to comply with International Financial Reporting Standards (IFRS) as shownin note 3. The auditors' report on those accounts was unqualified and did notcontain a statement under section 237(2) of the Companies Act 1985. 2 ACCOUNTING POLICIES Basis of preparation The Company was incorporated as a Corporation in the Cayman Islands which doesnot prescribe the adoption of any particular accounting framework. The Boardhad previously resolved that the Company would follow UK Accounting Standardsand apply the Companies Act 1985 when preparing its annual financial statements. The Board have now resolved that Global Structured Finance Inc. will adopt IFRSfor the first time in its financial statements for the year ending 31 December2006. This interim financial report has therefore been prepared under thehistorical cost convention and in accordance with International AccountingStandard 34 "Interim Financial Reporting" and the requirements of InternationalFinancial Reporting Standard 1 "First Time Adoption of International ReportingStandards" relevant to interim reports. The transition to IFRS reporting has resulted in a number of changes in thereported financial statements, notes thereto and accounting principals comparedto the previous annual report. Note 3 provides further details on the transitionfrom UK GAAP to IFRS. The principal accounting policies of the Company are set out below. Taxation Current income tax assets and/or liabilities comprise those obligations to, orclaims from, fiscal authorities relating to the current or prior reportingperiod, that are unpaid at the balance sheet date. They are calculated accordingto the tax rates and tax laws applicable to the fiscal periods to which theyrelate, based on the taxable result for the year. All changes to current taxassets or liabilities are recognised as a component of tax expense in the incomestatement. Deferred income taxes are calculated using the liability method on temporarydifferences. This involves the comparison of the carrying amounts of assets andliabilities in the consolidated financial statements with their respective taxbases. In addition, tax losses available to be carried forward as well as otherincome tax credits to the Company are assessed for recognition as deferred taxassets. Deferred tax liabilities are always provided for in full. Deferred tax assetsare recognised to the extent that it is probable that they will be able to beoffset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply totheir respective period of realisation, provided they are enacted orsubstantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a componentof tax expense in the income statement. Only changes in deferred tax assets orliabilities that relate to a change in value of assets or liabilities that ischarged directly to equity are charged or credited directly to equity. Financial assets The Company's financial assets include cash and trade and other receivables. All financial assets are recognised on their settlement date. All financialassets are initially recognised at fair value, plus transaction costs. Non-compounding interest and other cash flows resulting from holding financialassets are recognised in profit or loss when received, regardless of how therelated carrying amount of financial assets is measured. Trade and other receivables are provided against when objective evidence isreceived that the Company will not be able to collect all amounts due to it inaccordance with the original terms of the receivables. The amount of thewrite-down is determined as the difference between the asset's carrying amountand the present value of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents comprise cash at bank. Equity Share capital is determined using the nominal value of shares that have beenissued. The share premium account represents premiums received on the initial issuing ofthe share capital. Any transaction costs associated with the issuing of sharesare deducted from share premium, net of any related income tax benefits. Retained earnings include all current and prior period results as disclosed inthe income statement. Share based payments All share based payment arrangements are recognised in the financial statements.The Company does not currently operate equity-settled share-based remunerationplans for remuneration of its employees but has issued a share warrant. All services received in exchange for the grant of any share-based remunerationare measured at their fair values. These are indirectly determined by referenceto the fair value of the share options/warrants awarded. Their value isappraised at the grant date and excludes the impact of any non-market vestingconditions (for example, profitability and sales growth targets). Share-based payments are ultimately recognised as an expense in profit or lossor included as part of the cost of share issues with a corresponding credit tothe share based payment reserve, net of deferred tax where applicable. Ifvesting periods or other vesting conditions apply, the expense is allocated overthe vesting period, based on the best available estimate of the number of shareoptions/warrants expected to vest. Non-market vesting conditions are included inassumptions about the number of options that are expected to become exercisable.Estimates are subsequently revised, if there is any indication that the numberof share options/warrants expected to vest differs from previous estimates. Noadjustment is made to the expense or share issue cost recognised in priorperiods if fewer share options/warrants ultimately are exercised than originallyestimated. Upon exercise of share options/warrants, the proceeds received net of anydirectly attributable transaction costs up to the nominal value of the sharesissued are allocated to share capital with any excess being recorded as sharepremium. Financial liabilities The Company's financial liabilities include trade and other payables. Financial liabilities are recognised when the Company becomes a party to thecontractual agreements of the instrument. All interest related charges arerecognised as an expense in "finance cost" in the income statement. Trade payables are recognised initially at their nominal value and subsequentlymeasured at amortised cost less settlement payments. Dividend distributions to shareholders are included in 'other short termfinancial liabilities' when the dividends are approved by the shareholders'meeting. Other provisions, contingent liabilities and contingent assets Other provisions are recognised when present obligations will probably lead toan outflow of economic resources from the Company and they can be estimatedreliably. Timing or amount of the outflow may still be uncertain. A presentobligation arises from the presence of a legal or constructive commitment thathas resulted from past events, for example, legal disputes or onerous contracts. Provisions are measured at the estimated expenditure required to settle thepresent obligation, based on the most reliable evidence available at the balancesheet date, including the risks and uncertainties associated with the presentobligation. Any reimbursement expected to be received in the course ofsettlement of the present obligation is recognised, if virtually certain as aseparate asset, not exceeding the amount of the related provision. Where thereare a number of similar obligations, the likelihood that an outflow will berequired in settlement is determined by considering the class of obligations asa whole. In addition, long term provisions are discounted to their presentvalues, where time value of money is material. All provisions are reviewed at each balance sheet date and adjusted to reflectthe current best estimate. In those cases where the possible outflow of economic resource as a result ofpresent obligations is considered improbable or remote, or the amount to beprovided for cannot be measured reliably, no liability is recognised in thebalance sheet. Probable inflows of economic benefits to the Company that do not yet meet therecognition criteria of an asset are considered contingent assets. 3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS The transition from previous UK GAAP to IFRS has been made in accordance withIFRS 1, "First-time Adoption of International Financial Reporting Standards".The Company's financial statements for the six months ended 30 June 2006 and thecomparatives presented for the period ended 31 December 2005 comply with allpresentation recognition and measurement requirements of IFRS applicable foraccounting periods commencing on or after 1 January 2005. The following reconciliations and explanatory notes thereto describe the effectsof the transition for the financial period 2005. All explanations should be readin conjunction with the IFRS accounting policies of Global Structured FinanceInc.. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED) Since Global Structured Finance Inc. was incorporated on 30 November 2004 thatis the transition date to IFRS. As that was the date of incorporation of theCompany no reconciliation of equity is required at that date. The re-measurement of balance sheet items as at 31 December 2005 may besummarised as follows:Reconciliation as at 31 December 2005 Effect of IFRS UK GAAP transition £'000 £'000 £'000 Share premium 238 (20) 218Share based payment reserve - 20 20Total adjustment to assets and equity 238 - 238 There is no difference between the profit and loss reported under UK GAAP forthe period ended 31 December 2005 and the profit and loss as reported underIFRS. The Company has modified its former balance sheet and income statement structureon transition to IFRS. The only change is to recognise the share based paymentin connection with the warrants issued to the Company's Nominated Advisor aspart of their fee for services provided in connection with the Admission of theCompany to the AIM market in March 2005. 4 SEGMENTAL REPORTING (a) By business segment (primary segment): As defined under International Accounting Standard 14 (IAS14), the only materialbusiness segment the Company has is that of an investment company. (b) By geographical segment (secondary segment): Under the definitions contained in IAS 14, the only material geographic segmentthat the Company operates in is currently Switzerland. 5 FINANCE INCOME 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Interest on bank deposits 2 8 6 EMPLOYEES REMUNERATION Employee benefits expense Expense recognised for employee benefits is analysed below: 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Directors fees 12 26 The average number of persons (including directors)employed by the Company during the period was: 2 3 7 TAX INCOME There is no tax charge for either period. The Company does not operate in theUnited Kingdom and there is no tax arising on its operations. The relationshipbetween the expected tax expense at 30% and the tax expense actually recognisedin the income statement can be reconciled as follows: 6 months 30 November ended 30 2004 to June 31 December 2006 2005 Unaudited Unaudited £'000 £'000 Loss for the period before taxation (72) (106) Tax rate 30% 30% Expected tax expense (22) (32) Losses not recognised as deferred tax asset 22 32Actual tax income - - 8 LOSS PER SHARE The calculation of the basic loss per share is based on the net loss for theperiod of £72,000 (period ended 31 December 2005 : £106,000) divided by theweighted average number of shares in issue during the period of 32,000,000(period ended 31 December 2005 : 23,622,222). The impact of the warrants on the loss per share is anti-dilutive. 9 TRADE AND OTHER RECEIVABLES 30 June 31 December 2006 2005 £'000 £'000 Trade and other receivables, gross 9 8Impairment of trade and other receivables - -Trade and other receivables, net 9 8 Trade and other receivables are usually due within 30 - 60 days and do not bearany effective interest rate. The fair value of these short term financial assets is not individuallydetermined as the carrying amount is a reasonable approximation of fair value. 10 TRADE AND OTHER PAYABLES 30 June 31 December 2006 2005 £'000 £'000 Trade and other payables 29 20 The fair value of trade and other payables has not been disclosed as, due totheir short duration, management considers the carrying amounts recognised inthe balance sheet to be a reasonable approximation of their fair value. 11 DEFERRED TAX ASSETS AND LIABILITIES There are no deferred taxes arising from temporary differences at 30 June 2006or 31 December 2005. 12 SHARE CAPITAL 30 June 31 December 2006 2005 £'000 £'000Authorised4,000,000,000 ordinary shares of 0.25p 10,000 10,000 Allotted, issued and fully paid32,000,000 ordinary shares of 0.25p 80 80 Allotments during the period There were no allotments during the period. SHARE CAPITAL (CONTINUED) Warrants On 2 March 2005 a warrant was issued to Strand Partners Limited, the Company'sNominated Advisor, in connection with their role in the admission of the Companyto the AIM market. The warrant entitles Strand Partners Limited to subscribe,at a price of 10p per share, for such number of ordinary shares as areequivalent (on a fully diluted basis) to one per cent. of the issued ordinaryshare capital of the Company at that time. The issued warrant may be exercisedat any time during the period from 24 March 2005 to 23 March 2010. The fair value of warrants granted was determined using the Black-Scholesvaluation model. Significant inputs into the calculations were: • share price of 5p per share at date of grant of warrant • exercise price of 10p per warrant as detailed above • 50% volatility based on expected share price • a risk free interest rate of 5.0%. In total £20,000 of share based expense has been included in the share premiumaccount as a cost of the admission to AIM which gave rise to the share basedpayment reserve. No liabilities were recognised due to share based paymenttransactions. 13 RELATED PARTY TRANSACTIONS In the period ended 30 June 2006 CVS Management Limited, a subsidiary of CorvusCapital Inc., a shareholder in the Company, charged fees amounting to £15,000for accounting and administrative services to the Company (period ended 31December 2005 : £37,500). 14 RISK MANAGEMENT OBJECTIVES AND POLICIES The Company is exposed to a variety of financial risks which result from bothits operating and investing activities. The Company's risk management isclosely monitored by the board of directors, and focuses on actively securingthe Company's short to medium term cash flows by minimising the exposure tofinancial markets. Global Structured Finance Inc. does not actively engage in the trading offinancial assets for speculative purposes nor does it write options. The mostsignificant financial risks to which the Company is exposed to are describedbelow: Credit risk Generally, the maximum credit risk exposure of financial assets is the carryingamount of the financial assets as shown on the face of the balance sheet (or inthe detailed analysis provided in the notes to the financial statements).Credit risk, therefore, is only disclosed in circumstances where the maximumpotential loss differs significantly from the financial asset's carrying amount. The Company's trade and other receivables are actively monitored to avoidsignificant concentrations of credit risk. Cash flow risk The Company seeks to manage financial risks to ensure sufficient liquidity isavailable to meet foreseeable needs and to invest cash assets safely andprofitably. Short term flexibility is achieved by the raising of equity and theuse of current accounts. NOTICE OF EXTRAORDINARY GENERAL MEETING GLOBAL STRUCTURED FINANCE INC. Notice is given that an extraordinary general meeting of the members of theCompany will be held at 30 Quai Gustave-Ador, Geneva 1207, Switzerland on 24October 2006 at 2.30 pm (BST) (3:30 pm CET) to consider and, if thought fit, topass the following: Special resolution That the Company be and hereby is placed into voluntary liquidation, that GrahamPorter and Ian Williamson be and are hereby appointed joint liquidators(Liquidators) to act jointly or severally for the purposes of such liquidationand that the Liquidators be remunerated at their usual rates as directors of theCompany for all their work and expenses reasonably and properly undertaken andincurred in the winding up of the Company. By order of the board Kitwell Consultants Limited Secretary Registered office: Walkers SPV Limited, Walker House, Mary Street, PO Box 908GTGeorge Town, Grand Cayman, Cayman Islands Date: 21 September 2006 NOTES 1. A shareholder who is entitled to attend and vote at the meetingmay appoint one or more proxies to attend and, on a poll, vote on his or herbehalf, provided that only one proxy may be appointed by a shareholder inrespect of a particular share held by him/her. A proxy need not be a shareholderof the Company. 2. To be effective, a completed and signed proxy (and any power ofattorney or other authority under which it is signed) must be delivered to theTransfer Agent, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham,Kent BR3 4TU by no later than 48 hours before the time fixed for the meeting orany adjourned meeting. Completion and return of a proxy will not preclude ashareholder from attending and voting at the meeting in person, in which eventthe proxy shall be automatically revoked. 3. In the case of joint holders of shares in the Company, the voteof the senior holder shall be accepted to the exclusion of the votes of theother joint holder(s). For this purpose, seniority will be determined by theorder in which the names appear in the Company's register of shareholders (orthe Company's Registrars records). 4. In the case of holders of depositary interests representingordinary shares in the Company, a form of direction must be completed in orderto appoint Capita IRG Trustees Limited, the Depositary, to vote on the holder'sbehalf at the meeting or, if the meeting is adjourned, at the adjourned meeting.To be effective, a completed and signed form of direction (and any power ofattorney or other authority under which it is signed) must be delivered to theTransfer Agent, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham,Kent BR3 4TU by no later than 72 hours before the time fixed for the meeting orany adjourned meeting. -------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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