23rd Aug 2006 15:00
Hot Tuna (International) plc23 August 2006 Press Release 23 August 2006 Hot Tuna (International) PLC ("Hot Tuna" or "the Company") Preliminary Results Hot Tuna (International) PLC (AIM:HTT), a lifestyle apparel brand with authenticsurf heritage, is pleased to announce its maiden set of Preliminary Resultssince being admitted to AiM for the period ended 30 June 2006. Highlights • raised £1.9 million at AiM listing and a further £2.5 million in February 2006 • completed acquisitions of US and Australian subsidiary licensee companies • key operational management appointments completed to support growth • launch of Spring / Summer 2007 collection in the USA and the UK • appointment of Elle Macpherson as an Executive Director • turnover boosted by sales of Hot Tuna trial clothing in the Cocoa Beach concept store Commenting on the results, Ranjit Murugason, Chairman of Hot Tuna(International) PLC, said: "Significant progress has been made since theCompany's flotation on AiM 10 months ago and strong foundations have now beenlaid to support Hot Tuna's future growth. We now have direct ownership over theHot Tuna brand in all key markets including the USA, the UK and Australia, andhave also appointed several highly-regarded and experienced personnel to drivethe Company's design, marketing and sales. "We have just launched Hot Tuna's first clothing collection, which is for Spring/ Summer 2007, and are encouraged from feedback we have received so far frompotential buyers." - Ends - For further information:Hot Tuna (International) PLCRanjit Murugason, Chairman Tel: +44 (0) 20 7372 9799ranjit_murugason@hottunaplc.com Seymour Pierce LimitedSarah Wharry / Parimal Kumar Tel: +44 (0) 20 7107 8000parimalkumar@seymourpierce.com www.seymourpierce.com Media enquiries:AbchurchHenry Harrison-Topham / Chris Lane Tel: +44 (0) 20 7398 7700henry.ht@abchurch-group.com www.abchurch-group.com Chairman's Statement The Directors of Hot Tuna (International) PLC have pleasure in presenting theCompany's results for the period from incorporation to 30 June 2006. As we approach 2007 with optimism, I am pleased to report upon the progress ofHot Tuna (International) PLC over the last ten months since the Company'sAdmission to AiM, which raised £1.9 million. Since the Company's flotation, wehave made significant progress in re-establishing Hot Tuna as a leading globalsurf and youth lifestyle brand. Amongst Hot Tuna's many achievements during the course of 2006, the Companyconsolidated its previously fragmented licensed interests into a verticaloperating business. The Company has also co-ordinated design, marketing anddistribution competence in its largest markets: the United States, Australiaand the United Kingdom. The net result has been increased control of the brandinternationally as well as the introduction of economies-of-scale benefits withincreased potential for profitability in the short term. Even more important to the immediate and long term success of the business wasthe infusion of talent into Hot Tuna's ranks. A team of inspired, experiencedand young designers, marketers, salespeople and management with apparelexpertise have joined us, united by a common mantra: to purvey throughworld-class products, events and personalities, the authenticity, creativity andgood times for which the iconic Hot Tuna piranha logo stands. Consistent with the Hot Tuna's roots as a core surf lifestyle brand, the Companycontinues to support the sport of surfing through sponsoring athletes, eventsand grass roots surfing and surf schools. In January 2006, the Companysponsored its first ASP-sanctioned surf competition, the "Hot Tuna SummerClassic," held in Australia. This month, Hot Tuna is the lead sponsor for theprestigious European surf competition, the fifth leg of the BPSA UK Tour, to beheld at Porthmeor Beach, St. Ives, Cornwall. In July 2006 the Company launched its women's swimwear collection at the MiamiSwim Show and, during this summer, plans to launch its first comprehensivewomen's swim and men's and women's apparel collection from Hot Tuna for 2007 atMAGIC and ASR trade shows in Las Vegas and San Diego respectively. These arethe two most important apparel and action sports trade shows in the USA. In theUK, the Spring / Summer 2007 Hot Tuna collection will be launched at the SurfShop in September 2006, the leading surf, skate and boardriding trade show inthe UK. Through significant strategic effort and alignment, Hot Tuna has ended thisfiscal year with a solid global infrastructure and strong leadership. Thisincludes the addition of fashion entrepreneur Elle Macpherson to the Company'sBoard of Directors, as well as a growing team of branded athletes, artists andmusicians whose sensibilities exemplify Hot Tuna's brand. The Company is nowrevitalised: the foundations of a truly global lifestyle brand are in place,industry luminaries have joined the business and Hot Tuna product is findingitself shoulder-to-shoulder with the biggest names in surf fashion. Operational Review United States In November 2005, Hot Tuna (International) PLC purchased a 51 percentcontrolling interest in the Company's licensed business in the United States,reincorporating the new joint venture as Hot Tuna International Inc. In May2006, the Company completed its acquisition of the remaining 49 percent of HotTuna's U.S. operations, further testament to our financial commitment to globalinfrastructure and a critical step in the evolution of the Company, laying thegroundwork for direct control and greater returns in the largest surf lifestylemarket in the world. In concert with the consolidation of our North American business and in linewith our goals of better specialty and department store distribution, theCompany successfully inaugurated the "Hot Tuna Core Store", a concept 'storewithin a store' within Cocoa Beach Surf Company in Florida, the world's largestsurf complex. Other retail successes include a successful Hot Tuna men's wearlaunch with Jack's Surf Shop in Huntington Beach, California, the reigning 'Retailer of the Year' as determined by the Surf Industry ManufacturersAssociation. Hot Tuna concluded its fiscal period with the move of global design, marketingand sales operations to the epicentre of surfing: coastal Orange County,California. To steer the Company from its Stateside berth, a top level designand executive team has been recruited. New staff were attracted from the ranksof Quiksilver, Ocean Pacific, Perry Ellis International and Ripcurl, with TimBernardy, a lauded 15 year veteran of O'Neill, leading the team as ChiefOperating Officer of our US operations. United Kingdom In December 2005, the Company negotiated a 75 percent interest in Map Print Ltd("MAP"), a UK-based street wear label and retailer of several promisinglifestyle apparel and accessories brands. In addition to the opportunitiesassociated with growing the MAP brands within the UK and internationally, itsexisting infrastructure and associated design, manufacturing and distributioncompetencies have allowed Hot Tuna to fast track its operations in Europe, aswell as adding to the Company's overall creative efforts in the US andAustralia. Management was bolstered with the appointment of Chris Dewbury asChief Operating Officer for UK operations. Chris is an industry veteran of manyyears, with an extensive knowledge of the lifestyle industry. He has workedwith some major brands and, as sales manager for Quiksilver, led the exponentialgrowth of Quiksilver sales in the UK during the last decade. Australia In furtherance of its overall strategy to absorb our licensed businesses in coremarkets, Hot Tuna (International) PLC entered into a contract with MCU Pty Ltd(the Hot Tuna license-holder in Australia) on 30 June 2006, to acquire ourlicensing rights in our heritage market. The purchase allowed us entry into HotTuna's birthplace and into the perennial surf destinations of New Zealand, NewGuinea, Fiji, New Caledonia and Samoa. Industry veteran Dean Harrigan, who inthe past has owned the license to such brands as Bad Boy and Ocean Pacific inAustralia, was brought on board as Chief Operating Officer for the Australianand New Zealand operations. In Australia, there remains a strong allegiance to the brand that has not beendiluted. Summer 2007 will be the focus of a comprehensive sales launch althoughthe brand had early success with a trial range opening in several core surfaccounts including City Beach and Glue in Australia, and Point Break inIndonesia. Results Summary The Company's aggressive global launch and subsequent expansion has resulted inhigh cash expenditures in the period to 30 June 2006. The Group loss for theperiod was £1.98 million, comprised mainly of employee costs £1.03 million andmarketing costs £0.38 million. Additional unexpected expenditure was incurredas the Company absorbed the pre-acquisition losses of Hot Tuna InternationalInc. and the outside equity interest value of this current reporting period'sloss £0.15 million. The high cash expenditure in the first year reflects theGroup's commitment to commissioning the right management and personnel to drivethe Group into the next phase of the Company's strategy. This includes buildingthe designs, sample ranges and infrastructure required to enter our targetmarkets with a comprehensive range of men's, women's and women's swim apparelfor Spring/Summer 2007. The Company continues to seek highly visibleaffirmations of its commitment to the sport and spirit of surfing, and itssupport of Hot Tuna's retail partners and customers. Moving Forward Hot Tuna's immediate focus is, quite simply, product and sales: to takeadvantage of its consolidated business operations in Australia, the UnitedKingdom and the United States, leveraging the economies of scale benefits indesign, production, distribution and marketing during what promises to be a busytrade season. As a vertical operating business, Hot Tuna will be focused on 2007, withcutting-edge design, product quality and delivery of service to a core andupscale retail distribution in key markets. The Company will continue tomaximise its existing human resources and infrastructure, supporting itsdistribution strategy, whilst further supporting the business in our coreregions through innovative online, print and event marketing. On behalf of the Board I wish to thank my fellow directors, our employees,manufacturing partners, and all those who have assisted Hot Tuna (International)PLC in its endeavours during the year. We look forward to a rewarding futurefor all our friends and stakeholders, and to taking the business of surf to newheights through the merits of Hot Tuna. Ranjit Murugason Chairman 23 August 2006 CONSOLIDATED INCOME STATEMENTFOR THE PERIOD ENDING TO 30 JUNE 2006 NOTES Period ended 30/06/06 £Continuing Operations Revenue 367,992Cost of sales (204,658)Gross profit 163,334Other operating income 4,642Selling and marketing expenses (383,196)General and Administrative expenses (1,833,161)Depreciation and amortisation (3,095)Loss from operations 1 (2,051,476)Investment income 39,474Loss on disposal of property, plant and equipment (949)Finance costs (4,841)Loss before tax (2,017,792)Tax -Loss after tax (2,017,792)Loss for the period (2,017,792) Attributable to:Equity holders (1,975,718)Minority interest (42,074) (2,017,792) Loss per shareBasic and Diluted 2 (£0.06) CONSOLIDATED AND COMPANY BALANCE SHEETas at 30 June 2006 NOTES 2006 2006 Group Company £ £ASSETSNon-current assetsGoodwill 237,338 -Other intangible assets 5,251,429 3,083,000Property, plant and equipment 73,616 18,969Investments - 1,998,226Intercompany loan assets - 1,567,576 5,562,383 6,667,771Current assetsInventories 171,674 -Trade and other receivables 183,624 63,663Cash and cash equivalents 1,524,255 1,372,271 1,879,553 1,435,934 TOTAL ASSETS 7,441,936 8,103,705 LIABILITIESCurrent liabilitiesBank loans and overdraft 110,842 -Trade and other payables 281,626 145,117Current liabilities 392,468 145,117Net current assets 1,487,085 1,290,817 NET ASSETS 7,049,468 7,958,588 EQUITY Share capital 488,010 488,010Share-based payment reserve 576,855 576,855Share premium reserve 6,092,232 6,092,232Merger reserve 1,474,000 1,474,000Warrant reserve 486,557 486,557Foreign exchange reserve (4,017) -Shares to be issued 25,000 25,000Retained loss (1,975,718) (1,184,066) Equity attributable to equity holders of the parent 7,162,919 7,958,588Minority interest (113,451) -TOTAL EQUITY 7,049,468 7,958,588 STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2006 Attributable to equity holders of the Group CONSOLIDATED Share Share Share based Other Warrant Retained Total capital premium payment reserves reserve profit/(loss) equity account reserve £ £ £ £ £ £ £Balance at 1 April 2005 - - - - - - -Share conversion and issue 488,010 7,390,490 - 1,474,000 - - 9,352,500Costs of share issue and - (1,298,258) - - - - (1,298,258)conversionWarrants Subscribed - - - - 486,557 - 486,557Shares to be issued - - - 25,000 - - 25,000Employee share option - - 90,695 - - - 90,695schemeShare based payments to - - 312,172 - - - 312,172advisorsShare based payment on - - 173,988 - - - 173,988acquisitionNet loss for the period - - - - - (1,975,718) (1,975,718)Currency translation - - - (4,017) - - (4,017)adjustmentsBalance at 30 June 2006 488,010 6,092,232 576,855 1,494,983 486,557 (1,975,718) 7,162,919COMPANYBalance at 1 April 2005 - - - - - - -Share conversion and issue 488,010 7,390,490 - 1,474,000 - - 9,352,500Costs of share issue and - (1,298,258) - - - - (1,298,258)conversionWarrants Subscribed - - - - 486,557 - 486,557Shares to be issued - - - 25,000 - - 25,000Employee share option - - 90,695 - - - 90,695schemeShare based payments to - - 312,172 - - - 312,172advisorsShare based payment on - - 173,988 - - - 173,988acquisitionNet loss for the period - - - - - (1,184,066) (1,184,066)Currency translation - - - - - - -adjustmentsBalance at 30 June 2006 488,010 6,092,232 576,855 1,499,000 486,557 (1,184,066) 7,958,588 CONSOLIDATED CASH FLOW STATEMENTFOR THE PERIOD ENDED 30 JUNE 2006 Group Company Period Ending Period Ending NOTES 30/06/06 30/06/06 £ £NET CASH USED IN OPERATING ACTIVITIES 3 (1,925,622) (2,550,011) INVESTING ACTIVITIESCurrency revaluation reserve (4,017) -Payments for purchase of controlled entity (606,770) (153,499)Cash funding on purchase of controlled entities (178,333) (178,333)Payments for intangible assets (283,000) (283,000)Interest received 39,474 35,853Purchases of property, plant and equipment (38,446) (19,708)NET CASH USED IN INVESTING ACTIVITIES (1,071,092) (598,687)FINANCING ACTIVITIESProceeds from issue of share capital 4,520,969 4,520,969 Net Increase (decrease) in cash and cash equivalents 1,524,255 1,372,271 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - -CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,524,255 1,372,271 CONSOLIDATED FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) General Information Hot Tuna (International) PLC is a company incorporated in the United Kingdomunder the Companies Act 1985. The address of the registered office is given onpage 2. The nature of the Group's operations and its principal activities areset out in note 13 and in the Chairman's Statement. These financial statements are presented in pounds sterling because that is thecurrency of the primary economic environment in which the Group operates.Foreign operations are included in accordance with the policies set out in note(f). At the date of authorisation of these financial statements the followingStandards and Interpretations which have not been applied in these financialstatements were in issue but not yet effective: IFRS 6 Exploration for and Evaluation of Mineral Resources IFRS 7 Financial instruments: Disclosures; and the related amendment to IAS 1 on capital disclosures IFRIC 4 Determining whether an Arrangement contains a Lease IFRIC 5 Rights to Interest Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of IFRS 2 Share-based Payment IFRIC 9 Reassessment of Embedded Derivatives The directors anticipate that the adoption of these Standards andInterpretations in future periods will have no material impact on the financialstatements of the Group when the relevant standards and interpretations comeinto effect. (b) Basis of preparation The financial information for the period ended 30 June 2006 has not been auditedand does not constitute the Company's statutory financial statements within themeaning of s240 of the Companies Act 1985. The preliminary report was approvedby the Board on 22 August 2006. The statutory accounts for the year ended 30June 2006 have not been filed with the Registrar of Companies nor reported on bythe Companies auditors. (c) Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and enterprises controlled by the Company (and its subsidiaries)made up to 30 June. The results of subsidiaries acquired or disposed of during the period areincluded in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies used into line with those used byother members of the Group. All intra-group transactions, balances, and unrealised gains on transactionsbetween group companies are eliminated on consolidation. Unrealised losses arealso eliminated unless the transaction provides evidence of an impairment of theasset transferred. The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of the exchange, of assets given, liabilities incurred or assumed, andequity instruments issued by the Group in exchange for control of the acquiree,plus any costs directly attributable to the business combination. Theacquiree's identifiable assets, liabilities and contingent liabilities that meetthe conditions for recognition under IFRS 3 are recognised at their fair valueat the acquisition date. Goodwill arising on acquisition is recognised as an asset and initially measuredat cost, being the excess of the cost of the business combination over theGroup's interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities recognised. If, after re-assessment the Group'sinterest in the net fair value of the acquiree's identifiable assets,liabilities and contingent liabilities exceeds the cost of the businesscombination, the excess of recognised immediately in the profit or loss. The interest of minority shareholders in the acquiree is initially measured atthe minority's proportion of the net fair value of the assets, liabilities andcontingent liabilities recognised. (d) Investments in subsidiaries and associates There are no associates, nor joint ventures in the Group. (e) Leasing Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to the lessee. All otherleases are classified as operating leases. The Group as lessee Rentals payable under operating leases are charged to income on a straight-linebasis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operatinglease are also spread on a straight line basis over the lease term. (f) Foreign currencies Transactions in currencies other than Pounds Sterling are recorded at the ratesof exchange prevailing on the dates of the transactions. At each balance sheetdate, monetary assets and liabilities that are denominated foreign currenciesare retranslated at the rates prevailing on the balance sheet date. Non-monetaryassets and liabilities carried at fair value that are denominated in foreigncurrencies are translated at the rates prevailing at the date when the fairvalue was determined. Gains and losses arising on retranslation are included inthe income statement for the period, except for exchange differences onnon-monetary assets and liabilities where the changes in fair value arerecognised directly in equity. On consolidation, the assets and liabilities of the Group's overseas operationsare translated at exchange rates prevailing on the balance sheet date. Incomeand expense items are translated at the average exchange rates for each month inthe period. Exchange differences arising, if any, are classified as equity andtransferred to the Group's foreign exchange reserve. Such translationdifferences are recognised as income or as expenses in the period in which theoperation is disposed of. (g) Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit/(loss) differs from net profit/(loss) reported in the income statementbecause it excludes items of income or expense that are taxable or deductible inother years and it further excludes items that are never taxable or deductible. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if thetemporary differences arises from the initial recognition of goodwill or fromthe initial recognition (other than in a business combination) of other assetsor liabilities in a transaction that affects neither the tax profit nor theaccounting profit. The carrying amount of deferred tax assets are reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax uscharged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case deferred tax is also dealtwith in equity. (h) Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulateddepreciation (see below) and impairment losses (see accounting policy j). Where parts of an item of property, plant and equipment have different usefullives, they are accounted for as separate items of property, plant andequipment. Leases in terms of which the Group assumes substantially all the risks andrewards of ownership are classified as finance leases. Lease payments areaccounted for as described in accounting policy e. Depreciation is provided on all other property, plant and equipment at ratescalculated to write each asset down to its estimated residual value evenly overits expected useful life as follows:- Freehold Buildings and Improvements 3-5 years straight lineMotor Vehicles 3-5 years straight lineFixtures and fittings 3-5 years straight lineOffice Equipment 3-5 years straight line (i) Intangible assets and goodwill Goodwill is stated at cost less any accumulated impairment losses. Goodwill isallocated to cash generating units and is tested annually for impairment (seeaccounting policy j). On disposal of a subsidiary, associate or jointly controlled entity, theattributable amount of goodwill is included in the determination of the profitor loss on disposal. Negative goodwill arising on acquisition is recognised directly in the incomestatement. The value of the Hot Tuna brand has been derived on acquisition of the licenseholding subsidiaries. It has been measured as the excess of the cashconsideration over the net asset position of the subsidiary. The value of the Hot Tuna brand and associated licenses have not been amortisedas they are considered to have an indefinite life. (j) Impairment The carrying amounts of the Group's assets are reviewed at each balance sheetdate to determine whether there is any indication of impairment. If any suchindication exists, the asset's recoverable amount is estimated. For goodwilland assets that have an indefinite useful life, the recoverable amount isestimated at each balance sheet date. An impairment loss is recognised wheneverthe carrying amount of an asset or its cash generating unit exceeds itsrecoverable amount. Impairment losses are recognised in the income statement. (k) Inventories Stock is stated at the lower of cost and net realisable value. Net realisablevalue is the estimated selling price in the ordinary course of business, lessthe estimated costs of completion and selling expenses. (l) Share based payments The Group has applied the requirements of IFRS 2 to share option schemesallowing certain employees within the Group to acquire shares of the Company.For all grants of share options, the fair value as at the date of grant iscalculated using the Black and Scholes option pricing model, taking into accountthe terms and conditions upon which the options were granted. The amountrecognised as an expense is adjusted to reflect the actual number of shareoptions that are likely to vest, except where forfeiture is only due to marketbased conditions not achieving the threshold for vesting. The expense isrecognised over the expected life of the option. (m) Provisions Provisions are recognised when the Group has a present obligation as a result ofa past event which it is probable will result in an outflow of economic benefitsthat can be reliably estimated. (n) Trade and other receivables Trade and other receivables are stated at their cost less impairment losses (seenote j). (o) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bankoverdrafts that are repayable on demand and form an integral part of the Group'scash management are included as a component of cash and cash equivalents for thepurpose of the statement of cash flows. (p) Revenue Revenue results from a) amounts received and receivable for goods and servicesprovided (excluding value added tax) and b) royalty income receivable on theexisting license agreements Royalty income is recorded when it becomes receivable in accordance with theindividual contractual agreements. Sales are recognised when goods are when goods are invoiced to the customer. (q) Financial instruments The Company's financial instruments comprise cash together with various itemssuch as trade and other receivables and trade and other payables etc, that arisedirectly from its operations. The main purpose of these financial instrumentsis to provide working capital. Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group has become a party to the contractual provisions of theinstrument. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Financial liability and equity Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the Group afterdeducting all of its liabilities. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct issue costs. Finance charges, including premiums payableon settlement or redemption, are accounted for on an accrual basis and are addedto the carrying amount of the instrument to the extent that they are not settledin the period in which they arise. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD 3 MARCH 2005 TO 30 JUNE 2006 1 LOSS FROM OPERATIONS Loss from operations has been arrived at after charging/(crediting): Period ended 30/06/06 £ Depreciation - owned assets 3,095 Loss on disposal of fixed assets 949 Staff costs 1,039,085 Net foreign exchange gains/(losses) 11,501 2 LOSS PER SHARE The calculation of the basic and diluted earnings per share is based on the following data: Period ended 30/06/06 Earnings £ Earnings for the purposes of basic earnings per share net loss (1,975,718) for the period attributable to equity holders of the parent) Number of shares Weighted average number of ordinary shares for the purposes 32,471,760 of basic earnings per share The denominator for the purpose of calculating the basic earnings per share has been adjusted to reflect all capital raisings. Due to the loss incurred in the period, there is no dilution effect resulting from the issue of share options, warrants and shares to be issued. 3 RECONCILIATION OF PROFIT FROM OPERATIONS TO NET USED IN OPERATING ACTIVITIES (NOTES TO THE CASH FLOW STATEMENT) Group Company Period Ending Period Ending 30/06/06 30/06/06 £ £ Loss from operations (2,051,476) (1,218,952) Adjusted for: Depreciation of property, plant & equipment 3,095 1,647 Loss on disposal of property, plant and 949 949 equipment Share based payment expense 90,695 90,695 Operating cash flows before movements in (1,956,736) (1,125,661) working capital Increase in inventories (27,109) - Increase in receivables (102,162) (1,569,450) Increase in payables 165,227 145,117 Cash used in operations 35,956 (1,424,333) Interest (Paid)/Received (4,841) (17) NET CASH FROM OPERATING ACTIVITIES (1,925,622) (2,550,011) Bank balances and cash comprise cash and short-term deposits held by the group treasury function. The carrying value of these assets approximates fair value and is broken down as follows: Group Company Period Ending Period Ending 30/06/06 30/06/06 £ £ Cash and cash equivalents 1,524,255 1,372,271 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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