Flintstone Technologies Plc
AIM : FLT

Flintstone Technologies Plc

July 26, 2005 02:05 ET

Flintstone Technologies Plc Final Results

LONDON, UNITED KINGDOM--(CCNMatthews - July 26, 2005) - Flintstone Technologies Plc ("Flintstone" or "the Company")(AIM:FLT) , the AIM-listed technology commercialisation company which sources the majority of its investments from Russia, announces its Final Results for the year ended 31 March 2005.

Highlights

- All investee companies continue to make progress; Biocote has moved into profit

- Hardide completed successful AIM listing in April 2005

- Firestop Chemicals is to complete a fundraising of Pounds Sterling 750,000 by a further issue of loan notes; production issues have been resolved; Noflan is available for resale while development of Bizon continues

- Keronite is preparing itself for an AIM listing before the end of the year

- Ultra Motor company received further funding; Flintstone now retains a 44.6% holding

- Write down of investment in Intellikraft is consistent with the next round of funding

- Acquisition of OspreyDeepClean and InnoCleaning Magma Holdings announced today, subject to shareholder agreement

David Chestnutt, Chief Executive of Flintstone Technologies Plc, commented: "We are extremely pleased with the progress made by our investment companies during the course of the year, including the successful flotation of Hardide. The proposed acquisition of OspreyDeepClean and InnoCleaning Magma Holdings will fit very well with the existing group portfolio and will provide revenue streams which will supplement the capital growth of our investments."



Flintstone Technologies Plc
David Chestnutt, Chief Executive Tel: +44 (0) 20 7398 7700
dchestnutt@flintstoneplc.com www.flintstoneplc.com

Media enquiries:
Abchurch
Henry Harrison-Topham / Tania Wild Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com


Chairman's Statement

The accounts for the year ended 31 March 2005 reflect your Company's performance over the last twelve months.

We are particularly pleased that Hardide plc was admitted to the AIM market on 4 April 2005.

As announced today, Flintstone has conditionally agreed to acquire OspreyDeepClean Limited, a company which markets and sells specialist cleaning systems in the UK, and InnoCleaning Magma Holdings B.V., the owner of two businesses being InnoCleaning, which markets and sells specialist cleaning systems in Holland and worldwide under licence, and Magma, which develops and markets flame retardant products, for a total consideration of Pounds Sterling 30.986 million to be satisfied by the issue of the Consideration Securities. The acquisition of these companies constitutes a reverse takeover under the AIM Rules and, as such, requires the approval of Shareholders at the Extraordinary General Meeting of the Company to be held on 24 August 2005.

The nature of the Group will substantially alter as a result of the Acquisition and your Board proposes that the name of the Company be changed to Proventec Plc. It is intended that the Enlarged Group will focus on providing innovative hygienic solutions, environmentally friendly flame retardant products and a variety of industrial coatings that are designed to enable customers to save costs and improve hygiene and safety conditions.

The Enlarged Group will from Admission offer innovative hygienic solutions and environmentally friendly flame retardant chemicals and products and a variety of industrial coatings which will have synergies with some of the products and services offered by existing investee companies.

We believe this Acquisition to be fair and reasonable and in the best interests of the Company and its Shareholders as a whole and the Board is unanimous in its recommendation to you to accept the enlargement of the Group.

Glyn Hirsch

Chairman

25 July 2005

Chief Executive's Report

Business Review

In the year under review, we have continued to look for opportunities to enhance shareholder value and release the value of our investments to the benefit to all shareholders. In December 2004 the Board of Hardide Limited commenced the process to take that company to the AIM market. That was achieved on 4 April and resulted in a highly successful listing of the stock on AIM raising Pounds Sterling 1.75 million (before expenses), and attributing a value of Pounds Sterling 4 million to our investment of 31.45 per cent. in the newly listed company.

Over the same period your Board has been in discussions with the owners of two complementary trading businesses based in Holland and the UK with a view to an acquisition. The businesses, both Dutch owned, focus on low pressure steam cleaning and flame retardant coatings and treatments. Your Board sees this as a perfect opportunity to provide more focus to Flintstone's activities and also to provide the Company with revenue streams to supplement the capital growth.

Complementary Businesses

The InnoCleaning and Osprey businesses provide innovative hygienic solutions for maintenance and cleaning in the food and health industries. The business comprises three companies, one, OspreyDeepClean Limited, UK based and two Dutch companies, InnoCleaning Concepts Nederland B.V. and InnoManufacturing Services B.V. The prevalence of bacteria and the spread of infections in both industries is of major concern and the publicity surrounding MRSA is only a small part of the problems surrounding hygiene issues in the health sector. We see considerable synergy between this business and Biocote Limited in which we have a 31 per cent. holding.

The acquisition of the Magma flame retardant businesses will sit well within our portfolio. Magma comprises two Dutch companies based in Rotterdam, Magma Applications B.V. and Magma Industries B.V. The essential chemistry behind the Magma businesses is phosphorus based which is the fundamental chemistry behind the product range being developed and manufactured by Firestop Chemicals Limited. These two businesses are compatible and complementary and would provide a range of environmentally friendly flame retardant solutions to the fabric, plastics and timber industries.

The acquisition of these two main trading entities will provide your Company with positive cashflow and a focus in the hygiene, flame retardant and coating sectors.

In addition to the development of these businesses the Company will continue to seek appropriate exits from its other investments, which maybe seen as non-core to the more focused approach that the Group will now adopt.

The Proposed Acquisition

The Company will be issuing shares and loan notes amounting to Pounds Sterling 23.086 million in value to acquire the Innocleaning and Osprey businesses comprising of three companies. The combined proceeds amount to 89,902,428 shares and Pounds Sterling 10,500,000 loan notes repayable over a seven year period with certain warrants attaching.

The acquisition cost of the Magma flame retardant businesses is Pounds Sterling 7.9 million to be satisfied by the issue of 56,428,571 shares.

The value of these transactions will be at 14p per share which in turn values your existing Company at just under Pounds Sterling 10 million.

Both the cleaning businesses and the flame retardant businesses are in profit.

The details of the transaction and the Agenda for the Extraordinary General Meeting are set out in the Circular sent under separate cover to Shareholders today.

Management

As a result of the acquisitions it is proposed that the Board will be strengthened by the appointment of Thomas Stuecken who is based in the UK and is the Chief Executive of OspreyDeepClean Limited. Peter Teerlink who is the Managing Director of Novem International B.V., is also proposed to join the Board as a Non-executive Director.

During the year ended 31 March 2005 your Board has spent a considerable amount of time reviewing the Company's options following the expression of interest by the Dutch target companies. That work has now resulted in the propositions that are being put to you as Shareholders and the Board is unanimous in its recommendation to you to accept the enlargement of the Group.

Current Portfolio

During the year all the investee companies have made progress and Biocote, in particular, has moved into profit and continues to expand and market its hygienic solutions to companies working in the healthcare industry.

Firestop Chemicals is shortly to complete a funding round to raise Pounds Sterling 750,000 by a further issue of loan notes to the financial investors. Flintstone has agreed to take up its full entitlement. The company has moved its premises from Oxfordshire to the North West which is nearer its customer base. The production issues, arising in Russia, have now mostly been resolved and Noflan is now available for resale. The company is continuing with the development of Bizon, which is a product which will be applicable to the plastics industry.

In April 2005 the Shareholders of Keronite Limited agreed to convert the loan notes and to support a rights issue that raised Pounds Sterling 1.55 million. The company has new management and is preparing itself for a listing on the AIM market before the end of the year.

You will note in the accounts that there has been a write down of our investment value in Intellikraft Limited which was previously carried at cost. The development team is seeking to raise further development funds and while the project continues to run smoothly and produce exciting test results, your directors felt it was prudent to write down their investment, consistent with the likely value of the company at the next funding round.

Ultra Motor Company Limited has also received further funding during the year; Flintstone supported Ultra Motor by converting part of its outstanding debt owed by the company into additional equity in March 2005. The balance of the debt has now been converted into equity. At the date of this report the Company retains a 44.6 per cent. holding in Ultra Motor. The company has recently appointed a new Chief Executive who has previous experience of preparing a company for a successful market listing and already the company is benefiting from his approach to the management and engineering issues facing the company. The company remains on target to have its first hub motor in production and on sale before the end of this year.

David Chestnutt

Chief Executive

25 July 2005



Table of Investment Values (unaudited)

---------------------------------------------------------------------
Investee Last third Valuation Flintstone Value of
Company party investment of investee equity Flintstone
in investee company shareholding shareholding
company (%) (Pounds
Sterling
(preference 000)
shareholding
(%))
---------------------------------------------------------------------
Biocote
Limited May 2003 Pounds 31.5 835
Sterling
2.65m
---------------------------------------------------------------------
Firestop
Chemicals
Limited March 2004 (a)Pounds 42.2 3,325
Sterling
7.9m
---------------------------------------------------------------------
Hardide plc April 2005 (b)Pounds 31.4 4,005
Sterling
12.7m
---------------------------------------------------------------------
Intellikraft
Limited November 2001 Pounds 9.7 (c)100
Sterling
24.6m
---------------------------------------------------------------------
Keronite
Limited April 2005 Pounds 12.6 604
Sterling
4.8m
---------------------------------------------------------------------
Ultra Motor
Company
Limited July 2005 Pounds 44.6 1,070
Sterling
2.4m
---------------------------------------------------------------------
Total Pounds
Sterling
9,939
---------------------------------------------------------------------

Valuations based on last price paid for equity, in line with BVCA
valuation methodology.

(a) valuation based on March 2004 fundraising by a Pounds Sterling
700,000 debenture convertible at 50p per share.

(b) valuation based on market value at 12 July 2005, 10p.

(c) valuation written down by the Directors.


GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2005

2005 2004
Pounds Pounds
Sterling Sterling
Notes '000 '000

Turnover 2 154 140

Administration expenses 895 1,701
---------- ----------

Operating loss 3 (741) (1,561)

Amounts written off investments (175) -
Discontinued operations:
Profit on disposal of operations - 1,006
---------- ----------

Loss on ordinary activities
before interest and taxation (916) (555)
Other interest receivable 100 98
Interest payable and similar charges 6 - (1)
---------- ----------

Loss on ordinary activities before
taxation (816) (458)
Taxation on loss on ordinary activities 7 - -
---------- ----------

Loss on ordinary activities after
taxation (816) (458)
Minority interest: equity - 306
Dividends received (7) 7
---------- ----------

Loss for the financial year
attributable to members of the
parent company 16 (823) (145)
---------- ----------

Loss per share: basic and diluted
(pence per share) 8 (1.26) (0.3)
---------- ----------


There are no recognised gains or losses other than the loss for the
year ended 31 March 2005 of Pounds Sterling 823,000.


GROUP BALANCE SHEET
AS AT 31 MARCH 2005

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
Notes '000 '000

Fixed assets
Tangible assets 9 7 6
Investments 11 4,758 4,452
---------- ----------
4,765 4,458
---------- ----------

Current assets
Debtors 12 840 1,470
Cash at bank and in hand 937 287
---------- ----------
1,777 1,757

Creditors: amounts falling due
within one year 13 (98) (206)
---------- ----------

Net current assets 1,679 1,551
---------- ----------
6,444 6,009
---------- ----------

Capital and reserves
Called up share capital 15 3,567 2,378
Share premium reserve 16 6,600 6,531
Merger reserve 16 147 147
Profit and loss account 16 (3,870) (3,047)
---------- ----------

Total shareholders' funds 18 6,444 6,009
---------- ----------


The financial statements were approved by the board on 25 July 2005
and signed on behalf of the board of directors.

D M A Chestnutt

Director


GROUP CASH FLOW STATEMENT
AT 31 MARCH 2005

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
Notes '000 '000

Cash outflow from operating
activities 19 (583) (1,292)
---------- ----------

Returns on investment and
servicing of finance
Interest element of finance lease
rental payments - (1)
Interest received 100 98
Dividends received (7) 7
---------- ----------
93 104
---------- ----------

Taxation
Taxation paid - -
---------- ----------

Capital expenditure and financial
investment
Payments to acquire tangible fixed
assets (4) (79)
Payments to acquire investments (114) -
---------- ----------
(118) (79)
---------- ----------

Acquisitions and disposals
Net cash acquired with subsidiary
undertakings -
Net cash transferred with subsidiary
undertakings - (134)
Payments to acquire intangible fixed
assets -
---------- ----------
- (134)
---------- ----------

Net cash outflow before financing (608) (1,401)
---------- ----------

Financing
Issue of shares 1,427 -
New loans - -
Capital element of finance lease
rental payments - -
Cost of issue (169) -
---------- ----------
1,258 -
---------- ----------

Increase / (decrease) in cash 650 (1,401)
---------- ----------


NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2005


1. ACCOUNTING POLICIES

(i) Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards.

(ii) Basis of consolidation

The group financial statements consolidate the financial information of the company and of its subsidiaries to 31 March 2005. No profit and loss account is presented for Flintstone Technologies Plc as permitted by Section 230 of the Companies Acts 1985. The loss of Flintstone Technologies plc for the year ended 31 March 2005 is Pounds Sterling 355,000 (31 March 2004: loss Pounds Sterling 458,000).

(iii) Tangible fixed assets

Fixed assets are depreciated at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life in instalments as follows:-



Fixtures, fittings and equipment - 25% per annum
Plant and Machinery - 25% per annum
Computer equipment - 25% per annum


The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate that the carrying value may not be recoverable.

(iv) Investments

Investments are held as part of an investment portfolio in the companies in which the group renders advice on sourcing and development of new technologies. These are stated at cost less provision for permanent diminution in value.

Certain investments within the group's investment fund fall within the definition of associated undertakings contained in the Companies Act 1985. In accordance with FRS9, "Associates and Joint Ventures", such investments are treated consistently with other investments in the fund, and consequently are not equity accounted for.

The directors consider that this accounting policy results in the accounts giving a true and fair view. It is not practicable to determine the effect of this departure from the Companies Act 1985 on the financial statements.

(v) Government grants

Government grants of a revenue nature are credited to income so as to match them with the expenditure to which they relate.

(vi) Deferred taxation

In accordance with FRS19 deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more, or a right to pay less tax in the future have occurred at the balance sheet date. Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profit from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantially enacted at the balance sheet date.

(vii) Financial instruments

The group does not enter into hedging or speculative derivative contracts.

Financial assets included within fixed assets are recognised in the balance sheet at cost less permanent diminution in value. Financial assets included within current assets are stated at the lower of cost and net realisable value.

2. TURNOVER AND SEGMENTAL ANALYSIS

Turnover, which arises from continuing activities, is stated net of value added tax and comprises management and consultancy fees for services rendered and is recognised on an accruals basis.

The group operates in one principal area of activity, technology commercialisation. It operates within one geographical market, the British Isles. Turnover and profit arise in this area of activity and this region.



3. OPERATING LOSS

The operating loss is stated after charging:-

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Auditors' remuneration: audit
(parent company Pounds Sterling 17,000) 20 22
Auditors' remuneration: other 28 5
Depreciation on owned assets 3 10
Depreciation on assets held under finance leases - 11
Amortisation of goodwill - 32
Operating lease rentals - land and buildings 12 12
Operating lease rentals - plant and machinery - 5
Research & Development - 16
---------- ----------


4. STAFF COSTS

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Wages and salaries 481 510
Social security costs 44 59
---------- ----------
525 569
---------- ----------

The average number of employees including directors for the group
during the year was made up as follows:-

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Sourcing and development of technology 5 4
Management and administration 6 6
---------- ----------
11 10
---------- ----------


The average numbers of staff for the year ended 31 March 2005
includes the employees of the subsidiary undertakings.


5. DIRECTORS' REMUNERATION

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Executive directors 324 245
---------- ----------

Payments to directors consists of basic salaries or fees. No
benefits, bonuses, compensation for loss of office or pension
contributions have been paid.

The amounts in respect of the highest paid director are as follows:

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Emoluments 134 121
---------- ----------


6. INTEREST PAYABLE AND SIMILAR CHARGES

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Finance charges payable under finance leases - 1
---------- ----------
- 1
---------- ----------


7. TAXATION ON PROFIT ON ORDINARY ACTIVITIES

There is no taxation charge due to the availability of taxation
losses.

Factors affecting the tax charge/(credit) for the period

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Group loss on ordinary activities
before taxation (816) (458)
---------- ----------

Corporation tax at 19% (2004 - 19%) (155) (87)
Current tax losses not utilised 133 268
Tax depreciation in excess of
accounting depreciation - 3
Permanent differences 22 7
Elimination of group profit on deemed
disposal of subsidiaries - (191)
---------- ----------

Total current tax charge/(credit) - -
---------- ----------


8. LOSS PER SHARE

The calculation of basic and diluted loss per share is based on loss of Pounds Sterling 823,000 for the year ended 31 March 2005 (31 March 2004: loss of Pounds Sterling 145,000), and on the weighted average number of ordinary shares in the year of 65,533,321 (31 March 2004: 47,554,000).



9. TANGIBLE FIXED ASSETS


Group Computer Total
Equipment
Pounds Pounds
Sterling Sterling
'000 '000

At 1 April 2004 7 7
Additions 4 4

At 31 March 2005 11 11

Depreciation
At 1 April 2004 1 1
Charge for the year 3 3
---------- ----------
At 31 March 2005 4 4
---------- ----------
Net book value
At 31 March 2005 7 7
---------- ----------

At 31 March 2004 6 6


10. INVESTMENT IN SUBSIDIARIES - COMPANY

31 March
2005
Pounds
Sterling
'000

Cost at 1 April 2004 and at 31 March 2005 1,130
----------

Impairment at 1 April 2004 and at 31 March 2005 534
----------

Net book value at 1 April 2004 and at 31 March 2005 596
----------


Directly held No. of Cost Nature of business
ordinary % Pounds
shares Held Sterling

CFB (Isle of Man) Sourcing and development
Limited(a) 1,130,500 100 1,130,500 of new technologies for
commercial purposes

Flintstone
Management
Services
Limited 1 100 1 Sourcing and development
of new technologies for
commercial purposes

(a)incorporated in the Isle of Man.


11. INVESTMENTS - GROUP

(a) Subsidiary Undertakings

The following subsidiary undertakings, held by Flintstone Management
Services Limited, have been consolidated into the group financial
statements using the acquisition method.

No. of Type of Share Nominal
Shares Shares Capital Value Nature of Business

Oxis
Energy
Limited 1 Ordinary 100% 1 Dormant
Hydrodynamic
Solutions
Ltd 1 Ordinary 100% 1 Water Desalination
Controlled
Cavitation
Ltd 1 Ordinary 100% 1 Dormant

(b) Other Investments

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Cost - Shares
At 1 April 2004 4,030 2,019
Additions 331 2,011
Impairment (175) -
----------------------------
At 31 March 2005 4,186 4,030
----------------------------

Cost - Loan notes
At 1 April 2004 422 422
Additions 150 -
----------------------------

At 31 March 2005 572 422
----------------------------

Total cost of investments 4,758 4,452
----------------------------


Other investments comprise the following:

No. of Type of Share Nominal
Shares Shares Capital Value Nature of Business

Biocote
Limited 696,693 Ordinary 31.5% 697 Powder Coating

Firestop
Chemicals
Limited 6,651,456 Ordinary 42.2% 66,515 Fire retardant
- Loan - 150,000 chemicals and
Notes processes

Hardide
plc 40,098,075 Ordinary 36.49% 40,981 Surface engineering
(heavy metal)

Intellikraft
Limited
12,061,124 Ordinary 9.7% 12,601 Piezo-ceramics based
electronic systems

Keronite
Limited 1,174,746 Ordinary 5.2% 117,474 Surface
- Loan engineering
notes - 422,462 (light alloys)

Ultra
Motor
Company
Limited 50,000 Ordinary 45.5% 50,000 Electric motor wheel
technology


Analysis of the aggregate share of the results of all investments
falling within the definition of associates is as follows:

12 months to
31 March
2005
Pounds Sterling '000

Share of associate profit and loss accounts

Turnover 358
----------------------

Operating loss (818)
----------------------
Retained loss (1,122)
----------------------

Share of associate balance sheets

Fixed assets 702
----------------------

Current assets 518
----------------------

Current liabilities (600)
----------------------

Net assets 290
----------------------


As described in the Directors' Report, the Group provides advice to businesses on the development and commercialisation of new technologies. It holds the above investments in those technology companies but its activities are independent of these entities.



12. DEBTORS

2005 2005 2004 2004
Group Company Group Company
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
'000 '000 '000 '000

Trade debtors 335 - 1,324 -
Amounts due from
group undertakings - 7,759 - 7,628
Other debtors 505 146 -
Called up share capital
not paid - -
-------------------------------------------
840 7,759 1,470 7,628
-------------------------------------------


Included in the above are the following amounts which are due after
more than one year:

2005 2005 2004 2004
Group Company Group Company
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
'000 '000 '000 '000

Trade debtors - - 722 -
--------------------

13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2005 2005 2004 2004
Group Company Group Company
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
'000 '000 '000 '000

Trade creditors
and accruals 82 16 171 57

Other tax and social
security 16 - 35 -
-------------------------------------------
98 16 206 57
-------------------------------------------


14. DEFERRED TAXATION

Group

Deferred taxation (assets)/liabilities arising on accelerated capital allowances and tax losses provided and amounts not provided in the amounts are as follows:-



2005 2004
Pounds Sterling Pounds Sterling
'000 '000

Provided: accelerated
capital allowances
tax losses - -
----------------------------------
- -
----------------------------------
Not provided: tax losses (343) (251)
----------------------------------


The potential deferred tax asset has not been recognised as the recoverability of the asset is uncertain. The group is still in the early stages of its development and it is difficult to determine when the losses to date are expected to be recovered.



15. SHARE CAPITAL

Authorised and issued 2005 2004
Pounds Pounds
Sterling Sterling
'000 '000
Authorised:
100,000,000 (2004: 80,000,000) ordinary
equity shares of Pounds Sterling 0.05
each 5,000 4,000
----------------------------

Allotted, called up and fully paid
71,331,000 (2004: 47,554,000) ordinary
equity shares of Pounds Sterling 0.05
each 3,567 2,378
----------------------------


On 28 June 2004 the company issued 23,777,000 ordinary shares for an aggregate amount of Pounds Sterling 1,426,620. The issued shares have a nominal value of 5p.



16. RESERVES

Share Profit and Merger
Group premium Loss Reserve
account
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

As at 1 April 2004 6,531 (3,047) 147
Loss for the year - (823) -
On issue of shares 69 - -
-------------------------------------
As at 31 March 2005 6,600 (3,870) 147
-------------------------------------

Company
As at 1 April 2004 6,531 (556)
Profit for the year - (355)
On issue of shares 69 -
-----------------------------
As at 31 March 2005 6,600 (911)
-----------------------------


17. DERIVATIVES AND OTHER FINANCIAL INFORMATION

Derivatives

The group's treasury activities are designed to provide suitable, flexible funding arrangements to satisfy the group's requirements. The group uses financial instruments comprising borrowings, cash, liquid resources, investments and items such as trade debtors and creditors that arise directly from its operations. The main risks arising from the group financial instruments are interest rate and liquidity risks. The board reviews policies for managing each of these risks which are summarised below. These policies remained unchanged from prior periods.

The groups approach to investments is to hold the investments until commercial viability is determined for the technologies under development by the investees at which point the group seeks to realise their investment.

The group does not have any facilities with bankers and as a result their approach to cash resources is to obtain funding from investors into the group through the issue of shares. Cash management is based on the management of requirements for funds from investee companies as well as collection of funds due from these companies. Any surplus cash is invested where the group can obtain the best return for the associated circumstances for the group. The group seeks borrowings from existing shareholders or related parties should there be a need for short term funding at rates which are determined with reference to the market rates for similar finance.

The group finances its operations through a combination of retained profits, cash resources, borrowings and finance leases.



Interest rate profile of financial assets

2005 2004
Pounds Sterling '000 Pounds Sterling '000

Financial assets on which
no interest is earned 4,186 4,452

Floating rate financial assets 937 287


The floating rate financial assets comprise cash deposits and current bank accounts bearing interest at rates limited to LIBOR.

No forward foreign currency contracts were entered into during any of the periods.

Borrowing facilities

The group has no borrowing facilities with its bankers.

Fair value of financial assets and financial liabilities

Except for group investments, there is no material difference between the fair value and book value of the group's financial instruments. Group Investments have a book value of Pounds Sterling 4,758,000 (31 March 2004: Pounds Sterling 4,452,000). It is not practicable to estimate with sufficient reliability the fair values of these investments as they consist of private companies whose valuations are dependent on the development and bringing to market of innovative technology. The directors have considered the carrying value of these investments and are confident that they will recover more than the book value at 31 March 2005.

Short term debtors and creditors

Short term debtors and creditors have been excluded from the above disclosures.



19. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS

31 March 31 March
Group 2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Loss for the year (823) (145)
On issue of shares 1,258 13
---------------------------
435 (132)
Opening shareholders' funds 6,009 6,141
---------------------------
Closing shareholders' funds 6,444 6,009
---------------------------


31 March 31 March
Company 2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Loss for the year (355) (565)
On issue of shares 1,258 13
---------------------------
903 (552)
Opening shareholders' funds 8,353 8,905
---------------------------
Closing shareholders' funds 9,256 8,353
---------------------------

19. NOTES TO THE STATEMENT OF CASH FLOWS

(a) RECONCILIATION OF OPERATING (LOSS) TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Operating loss (741) (1,561)
Depreciation of tangible fixed assets 3 21
Increase in stocks - (54)
Decrease / (increase) in operating debtors
and prepayments 265 (980)
Decrease / (increase) in operating creditors
and accruals (110) 1,250
Amortisation of goodwill - 32
---------------------------
Cash outflow from operating activities (583) (1,292)
---------------------------

(b) ANALYSIS OF NET DEBT

At Cash Other At
31 March flow non-cash 31 March
2004 movements 2005
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling
'000 '000 '000 '000

Cash 287 650 - 937

Liquid resources
Finance lease
obligations - - - -
Short term loans - - - -
---------------------------------------------------
Total 287 650 - 937
---------------------------------------------------

(c) RECONCILIATION OF MOVEMENT IN NET DEBT

31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Increase/ (Decrease) in cash in the year 650 1,401
Repayment of loans - -
Repayment of capital element of finance
lease - -
---------------------------
Change in net debt resulting from
cash flows 650 1,401

Net debt at beginning of year 287 1,688
---------------------------
Net debt at the end of the year 937 287
---------------------------


During the period ended 31 March 2005, Pounds Sterling 366,975 of short term debt receivable was converted into ordinary shares in the debtor companies.

20. OTHER RELATED PARTY TRANSACTIONS

As detailed in Note 12, the group has investments in certain companies.

Certain directors from the Company are on the board of directors of these companies. The group provided funds to Hardide Limited, Firestop Chemicals Limited, Ultra Motor Company Limited and Biocote Limited and charges them interest and advisory fees as follows:-



31 March 31 March
2005 2004
Pounds Pounds
Sterling Sterling
'000 '000

Advisory fees receivable 130 98
---------------------------

Interest receivable 71 42
---------------------------
Trade debtors 335 1,313
---------------------------


22. POST BALANCE SHEET EVENTS

On 4 April 2005 Hardide plc was listed on the Alternative Investment Market with a market capital of Pounds Sterling 12.7m, valuing the company's investment at Pounds Sterling 4,009,807. Book value included in these accounts amounts to Pounds Sterling 2,033,630. The company holds 40,098,075 shares representing 31.45%.

On 26 April 2005 Keronite Limited completed a successful rights issue, raising Pounds Sterling 1.55m. Following conversion of the Loan Notes and accumulated interest held in this company and the Rights Issue, the company holds 604 shares representing 12.57%.

On 23 June 2005 Intellikraft Limited agreed to accept an investment of Pounds Sterling 150,000 for 33,333,333 B ordinary shares from Mr Jamie Borwick who was subsequently appointed Chairman. His role is to lead Intellikraft's next fundraising round later this year. At the same meeting Intellikraft agreed to change its name to Oxis Energy Limited.

On 12 July 2005 Ultra Motor Company Limited raised Pounds Sterling 725,000. The company converted its loan outstanding balance into equity. The company holds 70,182 shares representing 44.6%.

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