RNS Number:5720G
Capcon Holdings PLC
24 January 2003
CAPCON HOLDINGS PLC
24 JANUARY 2003
Preliminary announcement of the audited consolidated results of the
Group for the twelve months ended 30 September 2002
HIGHLIGHTS
- Group's first acquisition since flotation Vincent Sherman (''VSA''),
completed in April 2002 _ has been successfully integrated and rapidly turned
around from loss making to profitability by year end
- Group's second acquisition is announced today Argen, for an initial
consideration of #1.35m, increasing to a maximum #3.265m based on performance
- Argen is an ideal fit which will further strengthen the Group's
Commercial Investigations division
- Group sales for year increased by 22.5% to #4.96m including initial
contribution from VSA
- Despite economic slowdown, and liquidation of a major client, both
original core business divisions of the Group's Audit and Stocktaking and
Commercial Investigation Services, increased sales.
- Profit before tax was to #0.1m (2001 #0.04m)
- Basic Earnings increased from 0.2p to 0.7p per share
- Final dividend of 1.4p per share, making a total of 2.1p (2001 nil)
- Board expanded with appointment of Cliff Cavender as managing director
and Karine Luckraft as business development director. Additionally, Stephen
Jones has been appointed financial controller reporting to Cliff Cavender
CHAIRMAN'S STATEMENT
Strategic review
Our first full year since flotation proved to be an eventful period. We made our
first acquisition in April and negotiated the acquisition of a second company,
which we have today conditionally agreed to purchase.
Naturally the general economic slowdown had an effect on our trading performance
but we still achieved a 2.8% increase in sales from the original operations of
audit, stocktaking and commercial investigation despite a major client going
into liquidation and delays by others in implementing contracts originally
expected earlier in the year. The integration of Vincent Sherman (Creditor
Claims) Limited ('VSA'), acquired on 8 April 2002, has been highly successful
and it has been rapidly turned around from loss making to a profit on a monthly
basis by the year end.
The board has spent considerable time throughout the year reviewing and
appraising potential acquisitions in pursuit of our strategy of building and
developing a range of quality services based on the management of risk and
protection of revenue for our clients. I am pleased to report that today we have
conditionally agreed to purchase Argen Limited, a specialist investigation
company providing services to UK and overseas blue chip corporate clients.
The Directors remain confident that the relatively limited rate of sales growth
in the past year does not reflect a lasting slow down in demand for the core
services of the business. In fact the world economic and business climate
continues to create a greater awareness by business managers and professionals
for the need for our services. Furthermore, a growing momentum for greater
corporate governance in the light of recent high profile corporate fraud has
endorsed the board's strategy of building a Group providing inter-related risk
management services, developed both organically and through acquisition, to deal
with the increasing general concern of directors, institutional investors and
regulatory bodies.
Financial overview
Sales for the year to 30 September 2002 were #4.96 million (2001: #4.05 million)
including VSA which contributed sales of #0.80 million during the period since
its acquisition. This represents a 22.5% increase overall, of which 19.7% is
attributable to VSA, compared with #4.05 million last year. The increase in core
sales was achieved during a period when our traditional market in the leisure
sector was faced with the severest trading conditions for many years which had
an inevitable effect on our clients' spending as well as causing the liquidation
of a major client.
The profit for the year, before interest and amortisation of goodwill, was #0.27
million (2001: #0.52 million). Profit before tax was #0.10 million compared with
#0.04 million, which included a charge for loan stock redemption costs.
Basic earnings per share of 0.7p compares with 0.2p last year.
The board has declared a final dividend of 1.4p per ordinary share making a
total for the year of 2.1p per ordinary share (2001: nil). The dividend will be
payable to those shareholders on the register at the close of business on 31
January 2003 and will be paid on 7 March 2003.
Audit & stocktaking
Sales increased to #3.42 million from #3.39 million in 2001, despite the effect
of cut backs by some of our long standing clients due to economic conditions,
unexpected delays in implementation of contracts with new clients, and loss of
revenue from a significant client that went into liquidation.
In January 2002 we renewed the contract with our largest client for a further
two years and at the same time extended it to include another significant
division. Additionally, other business has been won which has offset the sales
lost from the client whose business failed earlier in the year. The lost profit
from the liquidated business is estimated at #90,000 including a provision for
non recovery of debt.
Delays in the implementation of specific new business, which had been identified
at the beginning of the year meant that we did not reach our anticipated profit
target, but this new business has now either commenced or has been committed to
by our clients for the coming year.
Operating margins were temporarily reduced as a result of increasing
infrastructure costs early in the year in anticipation of more business coming
on stream but these are now increasing again as the new business sales take
effect.
The outlook for this division is better for the coming year and the prevailing
harsh trading conditions in the leisure sector are not expected to prevent sales
and profit growth in this division.
Commercial investigation services
Once again, this division has increased sales and further reduced its dependency
on the largest client from 67% to approximately 43% of divisional sales.
Sales increased to #0.68 million from #0.66 million, and the operating margin
has been maintained at the same level as last year.
Much of the year has been spent raising the Company's profile in the financial
services sector and in the City in particular. The division is now able to offer
high level personnel screening and a broad range of fraud prevention and
investigation services that are particularly relevant to the financial sector.
Although this market is considered to be a high growth area for the future, the
past year has proven difficult, primarily due to a particularly inactive
corporate finance market. However, considerable enthusiasm for our services from
most financial institutions gives cause for confidence that an upturn in
corporate activity will enable the division to exploit opportunities in this
major market sector, although achievement of our short term forecasts does not
assume that this upturn is imminent.
The division has been active on a number of major new projects, which have run
into the new year, including an international soft drinks company, a listed food
processing group and an international law firm.
VSA
VSA, a company specialising in investigating insurance fraud, was acquired on 8
April 2002 for an initial consideration of #210,000 and up to a further #250,000
payable over six years depending on performance. In addition, the two vendor
shareholders of VSA, who have entered into new service agreements with VSA, have
each been granted rights entitling them to subscribe up to #175,000 each for new
ordinary shares in the Company at the prevailing mid-market share price on the
date of vesting. Vesting of these rights will occur in tranches of #25,000
annually if the performance of VSA matches or exceeds pre-determined profit
targets.
Sales for the 25 weeks to 30 September 2002 were #0.80 million. After a period
of incurring substantial losses prior to acquisition, this company has moved
into profit under Capcon ownership before the financial year end although a
small loss was made for the period overall. Future growth for any service
provider operating in this market is largely determined by appointment to the
panels of various major insurers and, since acquisition, VSA has been successful
in this respect. Sales have steadily increased during the year, reflecting the
successful marketing activities of recent months, and new appointments to major
insurance company panels have given the board confidence that these trends will
continue. The board expects a good contribution to profit in the coming year.
Argen
The board has issued a circular to shareholders today detailing the proposed
acquisition of Argen Limited for an initial consideration of #1.35 million
increasing to a potential maximum consideration of #3.265 million depending on
profit performance over a two year period.
Argen is a well established investigations business, based in London, providing
services to major blue chip organisations world-wide. The services are delivered
to most clients at the highest level in the organisation and cover a wide range
of investigative activities including due diligence, corporate fraud
investigations, intelligence gathering and parallel trading investigations.
The board considers this acquisition to be the ideal fit for Capcon and will
further strengthen the growing investigative area of the business. The benefits
of integrating Argen are expected to add value for shareholders with immediate
effect from the completion date.
Board changes
On 1 January 2002 we welcomed Karine Luckraft to the board of the company as a
non-executive director. Richard Wevill, a non-executive director, left the board
on 7 January 2002.
With the imminent acquisition of Argen Limited, and in acknowledgement of the
demands of managing a growing company during difficult economic circumstances,
the board has been strengthened during the year to improve the day to day
running of the company, whilst recognising a specific need to focus on business
development.
With effect from 1 November 2002, Cliff Cavender, formerly the finance director,
was appointed managing director, whilst Karine Luckraft has taken on the full
time executive role of business development director. Also on 1 November 2002,
Stephen Jones, formerly finance director of Capitol Security Services Limited,
was appointed financial controller reporting to Cliff Cavender.
Current trading and prospects
The company's bank facilities have been increased to assist the acquisition of
Argen whilst providing additional working capital for the enlarged Group.
Trading since the commencement of the current year has been in line with
expectations. The integration of Argen will create greater opportunities to
market our services to a wider client base whilst introducing new services to
existing Capcon clients.
The board will continue with its strategy of acquiring businesses that provide
services that are compatible with those of Capcon and, therefore, can be
integrated with minimal disruption to the core business and enhance the Group's
overall prospects.
K P Dulieu
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2002
Year ended Year ended
30 September 2002 30 September 2001
Before Amortisation Before Amortisation
Amortisation of Amortisation of
Notes of goodwill goodwill Total of goodwill goodwill Total
# # # # # #
TURNOVER
Continuing
operations 1 4,160,851 -- 4,160,851 4,045,819 -- 4,045,819
Acquisitions 795,345 795,345 -- --
------------- ------------- ------------- ------------- ------------- -------------
Group turnover 4,956,196 4,956,196 4,045,819 4,045,819
Cost of sales (3,290,345) -- (3,290,345) (2,673,350) -- (2,673,350)
------------- ------------- ------------- ------------- ------------- -------------
GROSS PROFIT 1,665,851 1,665,851 1,372,469 -- 1,372,469
Administrative
expenses 2 (1,395,624) (127,000) (1,522,624) (850,409) (101,806) (952,215)
TOTAL OPERATING
PROFIT/(LOSS)
Continuing
operations 311,026 (101,806) 209,220 522,060 (101,806) 420,254
Acquisitions (40,799) (25,194) (65,993)
------------- ------------- ------------- ------------- ------------- -------------
Group operating
profit/(loss) 3 270,227 (127,000) 143,227 522,060 (101,806) 420,254
Interest receivable 5 2,020 3,716
Interest payable 6 (40,575) (387,212)
------------- ------------- ------------- ------------- ------------- -------------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION 4 104,672 36,758
TAXATION ON PROFIT
ON ORDINARY
ACTIVITIES 7 (55,356) (27,555)
------------- -------------
PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION 49,316 9,203
DIVIDENDS 8 (156,505) --
------------- -------------
(LOSS)/RETAINED
PROFIT FOR THE YEAR (107,189) 9,203
RETAINED PROFIT
BROUGHT FORWARD 278,074 268,871
------------- -------------
RETAINED PROFIT
CARRIED FORWARD 170,885 278,074
------------- -------------
EARNINGS PER SHARE -
Basic 9 0.7p 0.2p
BALANCE SHEETS
AS AT 30 SEPTEMBER 2002
Group Company
2002 2001 2002 2001
Notes # # # #
Fixed Assets
Investments 10 -- -- 606,142 50,000
Intangible fixed assets 11 3,128,921 1,934,302 -- --
Tangible fixed assets 12 331,040 97,890 -- --
--------------- --------------- --------------- ---------------
3,459,961 2,032,192 606,142 50,000
Current Assets
Debtors 13 1,364,207 999,596 1,295,533 1,394,951
Cash at bank and in hand 67,056 247,097 1,253 1,144
--------------- --------------- --------------- ---------------
1,431,263 1,246,693 1,296,786 1,396,095
Creditors: amounts falling due
within one Year 14 (1,828,848) (597,557) 104,336 (71,400)
Net Current (Liabilities)/Assets (397,585) 649,136 1,192,450 1,324,695
--------------- --------------- --------------- ---------------
Total Assets less Current
Liabilities 3,062,376 2,681,328 1,798,592 1,374,695
Creditors: amounts falling due
after more than one year 15 (94,875) (50,000) -- --
Provisions for Liabilities and
Charges 16 (48,024) (28,559) -- --
Net Assets 2,919,477 2,602,769 1,798,592 1,374,695
Capital and Reserves
Called up share capital 17,18 74,526 71,875 74,526 71,875
Share premium account 18 1,474,066 1,302,820 1,474,066 1,302,820
Other reserves 18 950,000 950,000 -- --
Profit and loss account 18 170,885 278,074 -- --
Shares to be issued 27 250,000 -- 250,000 --
Shareholders' Funds 2,919,477 2,602,769 1,798,592 1,374,695
========= ========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2002
2002 2001
Notes # # # #
Net cash (outflow)/inflow from
operating activities 20 (87,558) 425,955
Returns on investments and
servicing of finance
Interest received 2,020 6,732
Interest paid (40,575) (587,662)
--------------- ---------------
Net cash outflow from returns on
investments and servicing of
finance (38,555) (580,930)
Taxation
Tax paid (33,664) (68,107)
Capital expenditure and financial
investment
Payments to acquire tangible
fixed assets (63,293) (48,258)
Sale of tangible fixed assets 6,100
--------------- ---------------
Net cash outflow from investing
activities (57,193) (48,258)
Acquisitions and disposals
Acquisition of business (206,142) --
Net overdrafts acquired with
subsidiary (201,899) --
--------------- ---------------
Net cash outflow for acquisitions (408,041) --
Equity dividends paid (52,169) --
--------------- ---------------
Net cash outflow before financing (677,180) (271,340)
Issue of new ordinary shares 75,023 1,750,000
Costs of new issue (1,126) (353,905)
Repayment of loan stock -- (700,000)
Repayment of loans (137,853) (100,000)
Invoice discounting facilities 251,186 --
Principal payment under finance
lease (36,557) --
--------------- ---------------
Net cash outflow from financing 150,673 596,095
--------------- ---------------
(Decrease)/increase in cash (526,507) 324,755
--------------- ---------------
The subsidiary undertaking acquired during the year created a deficit of
#201,899 in the Group's net operating cash flows, paid #10,785 in respect of
interest and utilised #4,109 for capital expenditure.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2002
1. TURNOVER
Turnover comprises the invoiced value of services supplied exclusive of value
added tax and after deduction of trade discounts. Turnover is entirely
attributable to the Group's principal activities.
Group turnover split business segments is:
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Audit and stocktaking 3,484,355 3,388,582
Investigations and other 1,471,841 657,237
---------- ---------
4,956,196 4,045,819
========= =========
The analysis of profit and net assets has been omitted since in the opinion of
the directors disclosure of this information would be seriously prejudicial to
the Group.
2. ADMINISTRATIVE EXPENSES
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Central overhead costs 180,095 141,200
Central marketing costs 34,315 29,500
Group development costs 132,360 84,700
Amortisation of goodwill 127,000 101,806
Other administrative expenses 1,048,854 595,009
--------- ---------
1,522,624 952,215
========= =========
The information presented includes costs attributable to future development and
management of the business. These costs are highlighted on the basis that this
allows greater comparability of the underlying performance for the accounting
periods.
Central overhead costs include the remuneration for C J Cavender and
professional fees relating to potential future development of the Group.
Central marketing costs relate mainly to the salary and benefits of an employee
appointed to establish a database comprising potential new clients for existing
and future services of the Group and potential targets for acquisition.
Group development costs includes the time and expenses of K P Dulieu attributed
to the implementation of the Group strategy of seeking a flotation and then
making acquisitions.
3. PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Profit on ordinary activities is stated after charging:
Auditors' remuneration:
Audit 27,500 12,000
Depreciation of tangible fixed assets:
Owned by the company 36,909 20,356
Leased 23,473 --
Amortisation of goodwill: 127,000 101,806
Operating lease rentals:
Equipment 365,570 357,716
Land and buildings 54,084 18,168
========= =========
4. DIRECTORS AND OTHER EMPLOYEES
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Staff costs (including directors) include the following amounts:
Wages and salaries 2,529,620 1,953,682
Social security costs 189,479 183,742
Pension costs 103,697 90,916
--------- ---------
2,822,796 2,228,340
========= =========
The average monthly number of persons employed by the Group during the year was
as follows:
Year Ended Year Ended
30 September 30 September
2002 2001
No. No.
Administration and management 30 18
Operational staff 92 73
--------- ---------
122 91
========= =========
The remuneration of the directors who served during the year was as follows:
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Aggregate emoluments 133,523 86,335
Pension contributions 6,233 6,233
--------- ---------
139,756 92,568
========= =========
There are two (2001 - two) directors to whom benefits are accruing in respect of
a money purchase pension scheme.
5. INTEREST RECEIVABLE
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Bank interest receivable 2,020 3,716
========== ==========
6. INTEREST PAYABLE AND SIMILAR CHARGES
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Bank loans and overdrafts 33,241 22,480
Interest on loan stock -- 364,732
Interest on finance leases 7,334 --
---------- ----------
40,575 387,212
========== ==========
7. TAX ON PROFIT ON ORDINARY ACTIVITIES
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Analysis of tax charge in year
Current tax (see note below)
UK corporation tax on profits of the year 37,227 35,000
Adjustments in respect of prior periods (1,336) (6,702)
--------- ---------
Total current tax 35,891 28,298
========= =========
Deferred tax
Originating and reversal of timing differences 19,465 (743)
--------- ---------
Total deferred tax (see note 16) 19,465 (743)
--------- ---------
Tax on profit on ordinary activities 55,356 27,555
========= =========
Factors affecting tax charge for year
The tax assessed for the year is higher than the standard rate of corporation
tax in the UK 30% (2001 _ 20%). The differences are explained below:
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Profit on ordinary activities before tax 104,672 36,758
Profit on ordinary activities multiplied by the relevant 31,402 7,352
standard rate of corporation tax in the UK of 30% (2001 _ 20%)
Effects of:
Expenses not deductible for tax purposes (including 34,545 14,061
amortisation of goodwill)
Difference between capital allowances and depreciation 26,233 12,189
Other timing differences 35,232
Utilisation of losses (75,075) --
Marginal relief (15,110) --
Adjustments to tax charge in respect of prior periods (1,336) (6,702)
--------- ---------
Current tax charge for year (see note above) 35,891 28,298
========= =========
There were no significant factors that may affect future tax charges.
8. DIVIDENDS
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Equity shares 52,169 --
Dividends paid 104,336 --
------- -------
Dividends proposed 156,505 --
======= =======
9. EARNINGS PER SHARE
Year Ended Year Ended
30 September 30 September
2002 2001
# #
Earnings attributable to ordinary shareholders 49,316 9,203
======== ========
Weighted average number of shares issued during the year 7,344,006 5,815,068
Dilutive effect of share options -- 513,750
Adjusted weighted average number of shares in issue during 7,344,006 6,328,818
the year
======== ========
Basic earnings per share 0.7p 0.2p
======== ========
Diluted earnings per share 0.7p 0.1p
======== ========
The options outstanding at 30 September 2002 were granted at prices that at the
year end were anti-dilutive and consequently there is no difference between the
basic and fully diluted earnings per share for the year ended 30 September 2002.
10. INVESTMENTS
Group Company
2002 2001 2002 2001
# # # #
Balance at 1 October 2001 -- -- 50,000 --
Additions -- -- 556,142 50,000
--------- --------- --------- ---------
Balance at 30 September 2002 -- -- 606,142 50,000
========= ========= ========= =========
The company owns the entire issued share capital of Capcon Limited, a company
registered in England and Wales. The principal activity of Capcon Limited is the
provision of audit, stocktaking and commercial investigation services.
During the year the company acquired the entire issued share capital of Vincent
Sherman (Creditor Claims) Limited, a company registered in England and Wales.
The principal activity of Vincent Sherman (Creditor Claims) Limited is the
provision of insurance investigation services.
11. INTANGIBLE FIXED ASSETS
Group Company
# #
Cost
At 30 October 2001 2,036,108 --
Additions 1,321,619 --
--------- --------
At 30 September 2002 3,357,727 --
======== ========
Depreciation
At 1 October 2001 101,806 --
Charge for the year 127,000 --
-------- --------
At 30 September 2002 228,806 --
======== ========
Net Book Value
At 30 September 2002 3,128,921 --
======== ========
At 30 September 2001 1,934,302 --
======== ========
The goodwill addition represents the goodwill arising on the acquisition of
Vincent Sherman (Creditor Claims) Limited _ see note 27.
12. TANGIBLE FIXED ASSETS
Group Fixtures and Motor Vehicles Total
Equipment
# # #
Cost
At 1 October 2001 139,493 -- 139,493
Acquisitions 40,076 305,400 345,476
Additions 58,255 5,038 63,293
Disposals -- (9,600) (9,600)
-------- -------- --------
At 30 September 2002 237,824 300,838 538,662
======== ======== ========
Depreciation
At 1 October 2001 41,603 -- 41,603
Acquisitions 7,636 107,601 115,237
Charge for the year 36,600 23,782 60,382
On disposals -- (9,600) (9,600)
-------- -------- --------
At 30 September 2002 85,839 121,783 207,622
======== ======== ========
Net Book Value
At 30 September 2002 151,985 179,055 331,040
======== ======== ========
At 30 September 2001 97,890 -- 97,890
The net book value of assets held under finance leases, included above within
motor vehicles was #174,326 (2001-nil)
Company
The company has no separate tangible fixed assets.
13. DEBTORS
Group Company
2002 2001 2002 2001
# # # #
Trade debtors 1,099,951 847,615 -- --
Amounts due from Group undertaking -- -- 1,295,533 1,392,262
Other debtors 107,938 85,459 -- 2,689
Prepayments and accrued income 156,318 66,522 -- --
--------- --------- --------- ---------
1,364,207 999,596 1,295,533 1,394,951
======== ======== ======== ========
14. CREDITORS: amounts falling due within one year
Group Company
2002 2001 2002 2001
# # # #
Bank loans 66,630 100,000
--------- -------- -------- --------
Bank overdrafts 346,466 -- -- --
Invoice discounting facility 314,806
Trade creditors 200,413 80,071 -- --
Corporation tax 37,227 35,000 -- --
Other tax and social security 333,142 213,771 -- --
Other creditors 154,250 81,108 -- 71,400
Accruals and deferred income 194,459 87,607 -- --
Net obligations under finance leases 77,119 --
Proposed dividends 104,336 -- 104,336 --
--------- -------- -------- --------
1,828,848 597,557 104,336 71,400
======== ======== ======== ========
Included within other creditors are directors loans totalling #133,280 (nil _
2001). Repayment of these loans will occur quarterly, in tranches of #10,000, if
the performance of Vincent Sherman (Creditor Claims) Limited matches or exceeds
pre-determined profit targets.
Invoice discounting facilities, totalling #314,806, are secured on trade
debtors.
15. CREDITORS: amounts falling due after more than one year
Group Company
2002 2001 2002 2001
# # # #
Net obligations under finance leases 79,969 -- -- --
Bank loan 14,906 50,000 -- --
-------- -------- -------- --------
94,875 50,000 -- --
======== ======== ======== ========
Included in the above are amounts falling due as follows:
Group Company
2002 2001 2002 2001
# # # #
In 1-2 years:
Bank loan 14,906 50,000 -- --
Net obligations under finance leases 79,969 -- -- --
======== ======== ======== ========
In 2-5 years:
Bank loan -- -- -- --
Net obligations under finance leases -- -- -- --
======== ======== ======== ========
A bank loan, totalling #50,000 (2001 _ #150,000), is secured by way of a fixed
and floating charge over the assets of Capcon Limited. A bank loan, totalling
#31,536, is secured by way of a fixed and floating charge over the assets of
Vincent Sherman (Creditor Claims) Limited. Obligations under finance leases
totalling #157,088 are secured on the assets they finance.
16. PROVISIONS FOR LIABILITIES AND CHARGES
Group Company
2002 2001 2002 2001
# # # #
At 1 October 2001 28,559 29,302 -- --
Movements 19,465 (743) -- --
-------- -------- -------- --------
At 30 September 2002 48,024 28,559 -- --
======== ======== ======== ========
Deferred tax arises as a result of accelerated capital allowances. Taxable
losses have been incurred from the trading activities of Vincent Sherman
(Creditor Claims) Limited which are available for offset against future taxable
profits of the same trade.
A deferred tax asset has not been recognised in respect of these losses. The
estimated value of the deferred tax asset not recognised, measured at a standard
rate of 30%, is #152,965.
17. SHARE CAPITAL
Company and Group
2002 2001
# #
Authorised
20,000,000 1p ordinary shares 200,000 200,000
======== ========
Allotted, called up and fully paid
7,452,664 1p ordinary shares (2001 : 7,187,500) 74,526 71,875
======== ========
Shares issued in the year were:
Ordinary 1p shares Date of Nominal
Issue Number Value Consideration
# #
On acquisition of Vincent Sherman
(Creditor Claims) Limited 09/04/02 160,000 1,600 100,000
K Luckraft 18/04/02 38,500 385 25,025
JN Sweet 05/01/01 33,332 333 24,999
RBSTB Nominee Ltd 06/11/01 33,332 333 24,999
======== ======== ========
265,164 2,651 175,023
======== ======== ========
Shares to K Luckraft and RBSTB Nominee Limited were issued to increase the
company's working capital resources.
Share options
At 30 September 2002, options exist which provide the holders the opportunity to
acquire up to 375,000 ordinary shares of 1p each at a price of #0.80 per share.
The options were granted on 17 May 2001 and may be exercised at any time between
17 May 2004 and 16 May 2011.
An option also exists to provide the holders with the opportunity to acquire up
to 62,500 ordinary shares of 1p each at an exercise price of #0.80 per share.
The option was granted on 17 May 2001 and may be exercised at any time up to 16
May 2004.
An option also exists to provide the holder with the opportunity to acquire up
to one per cent of the issued ordinary share capital of the company at the date
of exercise of the option at an exercise price of #0.80 per share. The option
was granted on 17 May 2001 and may be exercised at any time up to 16 May 2004.
18. RESERVES AND RECONCILIATION OF MOVEMENTS IN SHAREHOLDER'S FUNDS
Share Premium Profit and Shares
Share Account Merger Loss to be Total
Capital Reserve Account Issued 2002
# # # # #
Opening shareholders'
funds 71,875 1,302,820 950,000 278,074 -- 2,602,769
Shares issued 2,651 171,246 -- -- -- 173,897
Profit/(loss) for the
year after taxation -- -- -- (107,189) -- (107,189)
Contingent consideration
for the purchase of
Vincent Sherman
(Creditors Claims)
Limited 250,000 250,000
------- --------- ------- ------- ------- ---------
Closing shareholders'
funds 74,526 1,474,066 950,000 170,885 250,000 2,919,477
======= ========= ======= ======= ======= =========
19. OTHER FINANCIAL COMMITMENTS
At the year end the Group had annual commitments under non-cancellable operating
leases as set out below:
Land & Buildings Other
2002 2001 2002 2001
# # # #
Leases which expire:
Within 1 year 24,340 4,750 108,589 41,358
Between 1 and 5 years 43,000 13,336 174,121 199,533
======== ======== ======== ========
20. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2002 2001
# #
Group operating profit before interest 143,227 420,254
Depreciation 60,382 20,356
Loss on disposal of fixed assets (6,100) --
Amortisation 127,000 101,806
(Increase) in debtors (203,068) (159,396)
(Decrease)/increase in creditors (208,999) 42,935
--------------------- ---------------------
Net cash (outflow)/inflow from operating activities (87,558) 425,955
============ ============
21. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/FUNDS
2002 2001
# #
(Decrease)/increase in cash in year (526,507) 324,755
Outflow/(inflow) from change in debt financing (76,776) 800,000
------------ ------------
Movements in net debt resulting from cash flows (603,283) 1,124,755
Loans and finance leases acquired with subsidiary (460,474) --
Net funds/(debt) at 1 October 2001 97,097 (1,027,658)
------------ ------------
Net (debt)/funds at 30 September 2002 (966,660) 97,097
============ ============
22. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Acquisition
At Cash (excluding Non Cash At
1/10/2001 Flow cash) Movements 30/09/2002
# # # # #
Cash at bank and in hand 247,097 (180,041) -- -- 67,056
Overdraft (346,466) (346,466)
------------- ------------- ------------- ------------- -------------
247,097 (526,507) -- -- (279,410)
Debt due within one year (100,000) 130,938 (30,938) (66,630) (66,630)
Debt due after one year (50,000) 6,915 (38,451) 66,630 (14,906)
Invoice discounting facilities -- (251,186) (63,620) -- (314,806)
Finance leases -- 36,557 (193,645) -- (157,088)
Directors loan account -- -- (133,820) -- (133,820)
------------- ------------- ------------- ------------- -------------
Total 97,097 (603,283) (460,474) -- (966,660)
============= ============= ============= ============= =============
23. ULTIMATE CONTROLLING PARTY
There is no single ultimate controlling party.
24. RELATED PARTY TRANSACTIONS
During the year fees were paid to Vantis plc (formerly known as Morgan Brown &
Spofforth) totalling #64,071 (2001 _ #79,235). In addition, fees for services
totalling #36,520 (2001 _ #46,953) were charged by Capcon Limited to Vantis plc.
At the year end, a balance of #24,790 (2001 _ #30,405) was owed by Vantis plc in
respect of services provided by Capcon Limited. P F Jackson is a director of
Vantis plc.
25. FINANCIAL INSTRUMENTS
The Group's financial instruments comprise cash, trade debtors and trade
creditors that arise directly from its operations.
The Group's circumstances and operations do not require the use of complex
financial instruments. Nevertheless, the directors recognise that the Group
faces certain interest rate and currency risks, which are discussed below.
Short term debtors and creditors
Short-term debtors and creditors, including the invoice discounting creditor,
have been excluded from the following disclosures.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank
borrowings. The Groups exposure to interest rate fluctuations on its borrowings
is managed by the use of both fixed and floating facilities. The interest rate
applying to all the Group's borrowings is currently 2.0% over bank base rate.
Currency risk
The Group operates in overseas markets and is subject to currency exposures on
transactions undertaken during the year. The Group does not hedge any
transactions and foreign exchange differences on retranslation of foreign assets
and liabilities are taken to the profit and loss account of the Group companies
and the Group.
26. POST BALANCE SHEET EVENTS
On 23 January 2003, the Group conditionally agreed to purchase the entire issued
share capital of Argen Limited, a specialist investigations company providing
services to UK and overseas corporate clients. The initial consideration is
#1.35 million increasing to a potential maximum consideration of #3.265 million
depending on profit performance over a two year period.
27. ACQUISITIONS
Vincent Sherman (Creditor Claims) Limited was acquired on 8 April 2002. The
assets acquired are set out below. The fair value of the consideration was
#556,142 giving rise to goodwill of #1,321,619.
Fair value
Net book value Adjustments Fair value
# # #
Intangible fixed assets 74,438 (74,438) --
Tangible fixed assets 280,485 (50,246) 230,239
Current assets 161,395 -- 161,395
Net cash and overdraft (201,899) -- (201,899)
Liabilities (955,212) -- (955,212)
--------------- --------------- ---------------
Net liabilities (640,793) (124,684) (765,477)
=============== =============== ===============
Goodwill 1,321,619
---------------
556,142
===============
Satisfied by:
Shares issued 100,000
Cash 110,000
Contingent consideration (shares to be issued) 250,000
Costs 96,142
---------------
556,142
===============
Contingent consideration is dependent upon the future profits of Vincent
Sherman (Creditor Claims) Ltd.
The management accounts of Vincent Sherman (Creditor Claims) Limited for the 10
months ended March 2002 and the statutory accounts for the year ended 31 May
2001 showed a loss after tax of #769,764 and #7,557 respectively.
Enquiries:
Cliff Cavender 01372 869 706
Managing Director, Capcon Holdings plc
Russell Cook 020 7739 8200
Charles Stanley & Company Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
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