Starvest Plc
Annual Report 2001

Plain-text annual report

Web Shareshop (Holdings) Plc Financial Statements for the 18 month period ended 31 July 2001 Company No. 3981468 Smith & Williamson Chartered Accountants Guildford Web Shareshop (Holdings) Plc for the period ended 31 July 2001 Contents Directors and Advisers Chairman’s Statement Board of Directors Report of the Directors Statement of directors’ responsibilities Report of the Auditors Consolidated Profit and Loss Account Consolidated Balance Sheet Company Balance Sheet Consolidated Cash Flow Statement Page 1 2-3 4 5-7 8 9 10 11 12 13 Notes to the Financial Statements 14-22 Directors Business address Secretary and registered office Registered number Nominated advisor Nominated broker Solicitors to the Company Auditors Bankers Registrars Web Shareshop (Holdings) Plc Directors and Advisers William Jackson Eirion Andrew Charles Neubauer Robert Stephen Wilkinson ACA Ulick Simon Burke FCIFA John Watkins, FCA Walkden House 3-10 Melton Street London NW1 2EB John Watkins, FCA Onslow Bridge Chambers Bridge Street Guildford Surrey GU1 4RA 3981468 Grant Thornton Enterprise House Isambard Brunel Road Portsmouth Hampshire PO1 2RZ Keith Bayley Rogers & Co Ebbark House 93/95 Borough High Street London SE1 1NL Clyde & Co Beaufort House Chertsey Street Guildford Surrey GU1 4HA Smith & Williamson Onslow Bridge Chambers Bridge Street Guildford Surrey GU1 4RA HSBC Bank plc 168 High Street Guildford Surrey GU1 3YU Connaught St Michaels Limited PO Box 30 Cresta House, Alma Street Luton Bedfordshire LU1 2PU Page 1 Web Shareshop (Holdings) Plc and Subsidiaries Chairman’s Statement I am pleased to present my first statement to shareholders. Results Results for the 18 months to 31 July 2001 record an operating loss of £1,181,547, offset by net interest of £50,233, leaving a loss before taxation for the period of £1,131,314. This reflects mainly site development costs and servicing costs, professional advice and business development costs. It also reflects the fact that, owing to market conditions, we have been unable to launch a Placings Club. At 31 July 2001, the company had £725,097 cash in the bank, net current assets of £632,477 and net assets of £673,407. Comments and background Since my appointment on 14 December 2000, I have focused on the development of the Placings Club concept since it is fundamental to Web Shareshop’s business plan. Key to its success is the willingness of private investors to pay subscriptions in order to have access to a supply of Placings. Subscription income has been seen as the main source of revenue to Web Shareshop, since ‘handling’ fees and any commissions from sponsors would be relatively modest. During the last quarter of 1999 and first quarter of 2000, we have no doubt that private investors would have been willing to pay substantial subscriptions to have access to (at least some) of the many Placings which were floated. In 2000, we counted 200 Placings on AIM and 50 on the main market. However, despite the euphoria, Placings had a mixed performance. £1,000 invested in all AIM Placings in 2000 would have produced £1,004 by year-end, dragged down by the Internet stocks debacle. On the main market, a similar investment would have yielded a more healthy £1,135 – an overall 13.5% increase in the year was significantly better than the FTSE index (but would Placings Club members have been able to resist the pure Internet plays that later performed so miserably?). We have regularly monitored Placings performance in 2001. At August 14, our analysis of 61 new issues on AIM in the year showed that £1,000 invested in each Placing would have been worth £1,004 – up 4% before brokers’ commissions. Over the same period, £1,000 invested in 10 issues on the main market would have been worth £879 – down 12%. Of course, the tragic events of September 11 created new instability in the markets. Placings performance at October 15 had degenerated with an overall decrease of 23% for main market Placings and 16% for AIM Placings - compared with a decline of 17% in the FTSE 100. In short, money invested in Placings during the year performed roughly at or below the level of the main market. In August this year, The Association of Private Client Stockbrokers (APCIMS) published research into private investor online trading activities, stating that it revealed that “the new generation of investors is facing its first bear market by slowing down activity and waiting an upturn”. Stockbrokers – particularly online stockbrokers – testify to this, as they report significantly reduced trading. We have also researched private investors’ online take-up of offers for subscription - there are now a number of sites where offers are displayed. Our information is that take-up has been universally disappointing. The board judges it unlikely that market conditions and sentiment will improve in the near term. Therefore, were the company to launch a Placings Club before an improvement, it is our view that it would fail to achieve sufficient response from private investors to make it profitable. We have recalculated the company’s cashflow on the basis of a possible launch in March/April 2002. After allowing for capital adequacy, this reveals a shortfall in funding, even after reducing overheads and staff to a minimum level from May of this year. Therefore, it is not a viable business model for the immediate future. Potential partners As I announced in my statement accompanying the Interim Report on 16 May 2001, your board has been seeking appropriate alliances in order to find a viable business model in these markets. We have had discussions with a number of potential partners in the financial services arena. I am pleased to announce that we have taken a very positive step forward. Mr Bruce Rowan, a respected entrepreneur with a highly successful business model, is joining the board and has agreed to subscribe for 6.45 million shares in the company. Page 2 Web Shareshop (Holdings) Plc and Subsidiaries Chairman’s Statement - Continued Mr Rowan brings his expertise in underwriting fundraising for listed and unlisted companies, which he has deployed successfully for a number of companies over the last 3 years. Mr Rowan is a controlling shareholder in Sunvest Corporation Ltd, a company listed on the Australian Stock Exchange (ASX), which recorded a profit before tax of circa £700,000 in the year ending June 2000. Sunvest has stakes ranging from 5% to 37% in 8 companies – 4 quoted on ASX, 2 on AIM and 2 on OFEX. He also has stakes in his own name in a number of other AIM and OFEX companies. The board proposes to use Mr Rowan’s skills, experience and contacts in the coming year to underwrite fundraising for small IPO and pre-IPO businesses. Mr Rowan believes that his activities will produce significant profits and a significantly improved share price over the next 12 months, when he expects to see many opportunities for entrepreneurial underwriting. This step enables the company and its shareholders to remain focused on new issues and pre-IPO stocks but with a proven business model which the board believes will achieve attractive results, regardless of current market volatility. William Jackson 17 October 2001 Page 3 Web Shareshop (Holdings) Plc and Subsidiaries Board of Directors William Jackson – Chairman and Chief Executive William Jackson has managed the Company’s operations from the date of his appointment, 14 December 2000. E Andrew C Neubauer – Technical Director Andrew Neubauer was managing director until William Jackson was appointed chief executive on 14 December 2000. Mr U Simon Burke, FCIFA – Compliance Director Mr John Watkins, FCA – Finance Director John Watkins, a chartered accountant in practice has had responsibility for the Company’s financial matters from 5 April 2001; prior to that date he was non-executive. Robert S Wilkinson, ACA – Non-executive Robert Wilkinson was Finance Director until 5 April 2001 when he became non-executive. Page 4 Web Shareshop (Holdings) Plc and Subsidiaries Directors’ Report The Directors present their first report on the affairs of the Company and Group, together with the accounts and auditors’ report, for the period from the date of incorporation, 20 April 2000, to 31 July 2001. Principal activities and business review The principal activity of the Group is the promotion and facilitation of private investors’ participation in new issues and the provision of information to actual and potential new issue investors. The Company was incorporated as a public limited company on 20 April 2000. On 30 May 2000 the Company acquired The Web Shareshop Limited by way of a share for share exchange. On 9 June 2000 the Company made an offer for subscription through which it raised £1,569,540 of new capital. The Company’s shares were admitted for trading to the Alternative Investment Market on 5 September 2000. A further 133,330 shares were issued and admitted to the Alternative Investment Market in October 2000. The developments during the period are given in the Chairman’s statement. Results and dividends The Company’s results are set out in the profit and loss account on page 10. The audited accounts for the period ended 31 July 2001 are set out on pages 10 to 22. The Directors do not recommend the payment of a dividend. Directors and their interests The Directors who served during the period, together with all their beneficial interests in the shares of the Company at 31 July 2001 are as follows: 31 July 2001 Ordinary shares of £0.01 each 260,000 - Note 1 Note 2 Percentage % 31 July 2001 Share options 1.31% - - 1,964,580 1,500,000 7.58% Ulick Simon Burke Appointed 20 April 2000 William Jackson John McNair Eirion Andrew Charles Neubauer Appointed 14 December 2000 Appointed 20 April 2000; resigned 14 December 2000 Appointed 20 April 2000 Note 3 2,900,000 14.66% John Watkins Appointed 23 May 2000 Robert Stephen Wilkinson John Woolgar Appointed 20 April 2000 Appointed 20 April 2000; Resigned 14 December 2000 Note 4 Note 5 500,000 200,000 2.53% 1.01% 2,600,000 13.15% - - - - - Note 1: Of these, 120,000 shares are held by ALPs FS Limited of which Simon Burke is a director and major shareholder. Note 2: On 21 May 2001, the Company established an unapproved share option plan and granted options over 1,964,580 Ordinary shares of £0.01 at an exercise price of £0.05 per share. Note 3: Held in trust for the benefit of minor children. Options over 1,220,700 Ordinary shares were surrendered during the period. Note 4: Of these, 200,000 shares are held by his wife, Nicolette Ann Wilkinson. Page 5 Web Shareshop (Holdings) Plc and Subsidiaries Directors’ Report - Continued Directors and their interests - continued Apart from the interests above, no director held any other interests in the share capital of the Company, during the year. No changes in the interests disclosed above have taken place since the year end. No directors had any interests in the share capital of the Company at incorporation. Non-executive directors John McNair was non-executive chairman of the Company until he resigned on 14 December 2000. John Watkins was appointed a non-executive director on 23 May 2000, but relinquished this role on 5 April when he became the finance director; Robert Wilkinson, previously finance director, became non-executive director on the same date. Substantial shareholdings On 7 September 2001, the following were registered as being interested in 3% or more of the Company’s ordinary share capital: John McNair Eirion Andrew Charles Neubauer Rock (Nominees) Limited John Woolgar Share capital Ordinary shares of £0.01 each Percentage of issued share capital 1,500,000 2,900,000 900,000 2,600,000 7.58% 14.66% 4.55% 13.15% Information relating to shares issued during the period is given in note 14 to the accounts. Payment of suppliers The Company’s policy is to settle terms of payment with suppliers when agreeing terms of business, to ensure that suppliers are aware of the terms of payment and to abide by them. It is usual for suppliers to be paid within 14 days of receipt of an invoice. Trade creditors of the Company at the year-end were equivalent to 30 days based on the average daily amount invoiced by suppliers during the year. Post balance sheet event The post balance sheet events are set out in note 22 to the accounts. Auditors Smith & Williamson were appointed in the period and the Directors will place a resolution before the annual general meeting to reappoint Smith & Williamson as auditors for the coming year. Remuneration The remuneration of the Directors has been fixed by the board as a whole. This has been achieved acknowledging the need to maximise the effectiveness of the Company’s limited resources during the period. In view of the Company’s inability to fully implement the planned revenue earning activities during the period, with a single exception, each of the Directors made a voluntary waiver of remuneration which, in the aggregate, amounted to £162,667. Full details of the Directors’ remuneration for the period to 31 July 2001 are set out in note 5 to the accounts. Page 6 Web Shareshop (Holdings) Plc and Subsidiaries Directors’ Report - Continued Management incentives At this time, the Company has no bonus, share purchase, share option or other management incentive scheme except that the Chairman has options under an unapproved share option scheme over Ordinary shares as noted above. In accordance with legislation, the Company has introduced a stakeholders pension plan for the benefit of employees. Corporate Governance It is the intention of the board to comply with the recommendations of the Combined Code on corporate governance. Such procedures will be established as are considered to be appropriate for the size of the business. Control procedures The board has approved financial budgets and cash forecasts; in addition, it has implemented procedures to ensure compliance with accounting standards and effective reporting. By order of the board John Watkins Director and Company Secretary 17 October 2001 Page 7 Web Shareshop (Holdings) Plc and Subsidiaries Statement of Directors’ Responsibilities Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that year. In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; - - make judgements and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. - The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Page 8 Web Shareshop (Holdings) Plc and Subsidiaries Independent Auditors’ Report We have audited the financial statements of Web Shareshop (Holdings) Plc for the period from 20 April 2000 (the date of incorporation) to 31 July 2001 on pages 10 to 22. These financial statements have been prepared under the historical cost convention and the accounting policies set out therein. Respective responsibilities of directors and auditors The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if the information specified by law regarding directors’ remuneration and transactions with the company is not disclosed. We read other information contained in the Financial Statements and consider whether it is consistent with the audited financial statements. This other information comprises only the Directors’ Report and the Chairman’s statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of the group’s and company’s affairs as at 31 July 2001 and of the group’s loss for the period from 20 April 2000 to 31 July 2001 and have been properly prepared in accordance with the Companies Act 1985. Smith & Williamson Chartered Accountants and Registered Auditors Guildford 17 October 2001 Page 9 Web Shareshop (Holdings) Plc and Subsidiaries Consolidated Profit and Loss Account for the period ended 31 July 2001 Turnover Cost of sales Gross Profit Administrative expenses Operating loss on ordinary activities Interest receivable Interest payable Loss on ordinary activities before taxation Tax on loss on ordinary activities Notes 1 2 3 3 6 Loss on ordinary activities after taxation 15 18 month period ended 31 July 2001 £ 12 month period ended 31 January 2000 £ 3,385 (824 ) _____ 2,561 (1,184,108 ) ________ (1,181,547 ) 50,456 (223 ) ________ (1,131,314 ) - ________ (1,131,314 ) ======= - - _____ - (45,245 ) _____ (45,245 ) - - _____ (45,245 ) - _____ (45,245 ) ===== Loss per share Basic and diluted 8 (6.5p) ======= (1.9p) ===== The accompanying notes form an integral part of the consolidated profit and loss account. There are no other recognised gains or losses in either period other than those included in the above profit and loss account. All of the operations are considered to be continuing. Page 10 31 July 2001 £ 31 January 2000 £ 9,000 31,930 - ______ 40,930 ______ 62,454 725,097 ______ 787,551 14,400 3,642 2 _____ 18,044 _____ 4,639 368,355 ______ 372,994 (155,074 ) ________ 632,477 ______ 673,407 ====== (18,333 ) ______ 354,661 ______ 372,705 ===== 197,791 1,227,765 (1,176,559 ) 424,410 ______ 673,407 ====== 67,050 350,900 (45,245 ) - ______ 372,705 ===== Web Shareshop (Holdings) Plc and Subsidiaries Consolidated Balance Sheet as at 31 July 2001 Notes Fixed assets Intangible assets Tangible assets Investments Current assets Debtors Cash at bank and in hand Creditors: Amounts falling due within one year Net current assets Total assets less current liabilities Capital and reserves Called-up share capital Share premium account Profit and loss account Merger reserve Shareholders’ funds - equity interest 9 10 12 13 14 15 15 15 16 The accompanying notes form an integral part of this consolidated balance sheet. Page 11 Web Shareshop (Holdings) Plc and Subsidiaries Company Balance Sheet as at 31 July 2001 Fixed assets Investments Current assets Debtors Net current assets Total assets less current liabilities Capital and reserves Called-up share capital Share premium account Profit and loss account Shareholders’ funds - equity interests Note 11 12 14 15 15 16 2001 £ 144,140 1,283,433 ________ 1,283,433 ________ 1,427,573 ======= 197,791 1,227,765 2,017 ________ 1,427,573 ====== The accounts on pages 10 to 22 were approved by the board of directors on 17 October 2001 and signed on its behalf by: William Jackson Chairman and Chief Executive John Watkins Company Director The accompanying notes form an integral part of this balance sheet. Page 12 Web Shareshop (Holdings) Plc and Subsidiaries Consolidated Cash Flow Statement for the period ended 31 July 2001 Net cash outflow from operating activities Returns on investments and servicing of finance Capital expenditure and financial investment Acquisitions and disposals Cash outflow before management of liquid resources and financing Management of liquid resources Financing (Decrease)/increase in cash in the period Notes 17 18 18 18 18 18 18 month period ended 31 July 2001 £ 12 month period ended 31 January 2000 £ (1,148,747 ) (27,859 ) 50,233 - (69,465 ) (21,734 ) - ______ (2 ) _____ (1,167,979 ) (49,595 ) (700,562 ) - 1,432,016 ________ (436,525 ) ======= 417,950 _____ 368,355 ===== The accompanying notes form an integral part of this consolidated cash flow statement. Page 13 Web Shareshop (Holdings) Plc and Subsidiaries Statement of Accounting Policies for the period ended 31 July 2001 The principal accounting policies are summarised below. They have all been applied consistently throughout the year. Basis of accounting The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards. Basis of consolidation The group accounts consolidate the accounts of Web Shareshop (Holdings) plc and its subsidiaries drawn up to 31 July 2001. On 20 April 2000, Web Shareshop (Holdings) plc acquired the entire share capital of The Web Shareshop Limited, the consideration for which was the issue of shares in Web Shareshop (Holdings) plc. This transaction meets the definition of a group reorganisation as set out in Financial Reporting Standard 6 ‘Mergers and Acquisitions’ and accordingly has been accounted for as a merger. The financial information for the current 18 month period and the year ended 31 July 2000 has been presented as if The Web Shareshop Limited had been owned by Web Shareshop (Holdings) plc throughout both accounting periods. Intangible fixed assets Acquired ideas, concepts and intellectual property are written off in equal annual instalments over their estimated useful economic life of 5 years. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: Computer equipment Fixtures and fittings 50% straight line 20% straight line The above policy was introduced on 1 February 2000, the previous policy was as follows: Computer equipment 20% straight line By introducing a new policy on computer depreciation, the accounts have been affected by an additional depreciation charge of £23,958. The directors feel that the revised rate more realistically reflects the useful working lives of the assets. Investments Fixed asset investments are stated at cost less any provision for impairment. Taxation Corporation tax payable is provided on taxable profits at the current rate. Turnover Turnover represents amounts receivable for goods and services provided in the normal course of business, net of trade discounts, VAT and other sales-related taxes. Website design and software development costs Website design and software development costs are written off to the profit and loss account as incurred. Page 14 Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts for the period ended 31 July 2001 1. Turnover The total turnover of the group for the period has been derived from its principal activity which is wholly undertaken in the United Kingdom. 2. Operating loss Operating loss is stated after charging: Auditors remuneration - audit - non-audit services Depreciation of tangible assets Amortisation of intangible assets Website design and software development costs Loss on disposal of tangible fixed assets 3. Interest Interest receivable: Bank interest Interest payable: Bank loans and overdrafts 4. Staff costs The average monthly number of employees (including executive directors) was: Management Administration Their aggregate remuneration comprised: Wages and salaries Social security costs 18 month period ended 31 July 2001 £ 15,000 12,000 40,732 5,400 250,000 445 ====== 12 month period ended 31 January 2000 £ 1,500 - 92 3,600 - - ===== 50,456 ===== 223 ===== - ===== - ===== Number Number 7 3 ___ 10 === 2001 £ 120,019 12,364 _______ 132,383 ====== 4 - ___ 4 === 2000 £ - - ______ - ===== Page 15 Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 5. Directors’ emoluments J Woolgar R S Wilkinson A Neubauer U S Burke Directors emoluments 18 month period ended 31 July 2001 £ 42,000 13,958 9,250 3,959 _______ 69,167 ====== 12 month period ended 31 January 2000 £ - - - - ______ - ===== No other directors received any emoluments in the period. Disclosure of director’s related party transactions can be found in note 20 to the accounts. Directors’ share options Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the company granted to or held by the directors. During the period W Jackson was granted options over 1,964,580 ordinary shares at £0.05 per share. The options are exercisable between 21 May 2001 up to and including 28 February 2006. 6. Tax on loss on ordinary activities There is no provision for taxation in either year because of the losses incurred. 7. Profit attributable to parent undertaking The profit for the financial year dealt with in the accounts of the parent company was £2,017. As permitted by section 230 of the Companies Act 1985, no separate profit and loss account is presented in respect of the parent company. 8. Loss per share The basic earnings per share is derived by dividing the loss for the year attributable to ordinary shareholders of £1,131,314 by the weighted average number of shares in issue, calculated as 17,410,380. There were no diluting factors in the period. Page 16 Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 9. Intangible fixed assets - goodwill Group Cost At 1 February 2000 Additions At 31 July 2001 Amortisation At 1 February 2000 Amortisation for the period At 31 July 2001 Net book value At 31 July 2001 At 1 February 2000 10. Tangible fixed assets Cost At 1 February 2000 Additions Disposals At 31 July 2001 Depreciation At 1 February 2000 Charge for the year On disposals At 31 July 2001 Net book value At 31 July 2001 At 1 February 2000 Total £ 18,000 - _____ 18,000 _____ 3,600 5,400 _____ 9,000 _____ 9,000 ===== 14,400 ===== Total £ 3,734 70,665 (2,539 ) _____ 71,860 ===== 92 40,732 (894) _____ 39,930 ===== 31,930 ===== 3,642 ===== Computer Equipment £ Fixtures & fittings £ 1,195 70,665 - _____ 71,860 ===== 40 39,890 - _____ 39,930 ===== 31,930 ===== 1,155 ===== 2,539 - (2,539 ) _____ - ===== 52 842 (894) _____ - ===== - ===== 2,487 ===== Page 17 Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 11. Fixed asset investments Company Cost At 1 February 2000 Additions At 31 July 2001 2001 £ - 144,140 _____ 144,140 ===== The parent company and the group hold more than 20% of the share capital of the following companies. Company Country of registration Class Proportion held by group Nature of business The Web Shareshop Limited England & Wales Ordinary 100% New Issues On Line Limited England & Wales Ordinary 100% Provision of information for private investors and facilitation of new issues Dormant The New Issue Investment Company Limited England & Wales Ordinary 100% Dormant 12. Debtors Amounts falling due within one year: Amounts owed by group undertakings - see note 22 Other debtors Prepayments and accrued income 13. Creditors: amounts falling due within one year Bank overdraft Trade creditors Directors current accounts Other creditors Accruals and deferred income The bank overdraft reflects uncleared cheques at the period end. Page 18 Group Company 2001 £ - 14,942 47,512 _____ 62,454 ===== 2000 £ 250 4,389 - _____ 2001 £ 1,283,433 - - ________ 4,639 ===== 1,283,433 ======= Group 2001 £ 92,705 31,440 - 1,187 29,742 ______ 155,074 ===== 2000 £ - 15,709 212 2 2,410 _____ 18,333 ===== Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 14. Called-up share capital Notes Authorised: 100,000,000 ordinary shares of £0.01 each Allotted, called up and fully paid Subscriber shares Issued 30 May 2000 as consideration for the acquisition of 100% of the share capital in The Web Shareshop Ltd Issued for cash @ £0.30 per share 19 July 2000 Issued for cash @ £0.30 per share 29 August 2000 Issued for cash @ £0.30 per share 18 October 2000 Total issued at 31 July 2001 31 July 2001 £ 31 January 2000 £ 1,000,000 ======= 150,000 ====== Number 2 £ 0 14,413,998 144,140 4,348,800 883,000 133,330 _________ 19,779,130 _________ 43,488 8,830 1,333 _______ 197,791 _______ Options have been granted under the company’s unapproved share option scheme to subscribe for ordinary shares of the company as follows: Number of shares under option Subscription price per share 1,964,580 £0.05 Exercise period 21 May 2001 to 28 February 2006 15. Reserves Group As at 1 February 2000 Issue of shares Share issue costs Loss for the period Merger reserve arising on consolidation As at 31 July 2001 Company As at 1 February 2000 Issue of shares Share issue costs Retained profit for the period As at 31 July 2001 Merger reserve £ - - - - 424,410 ________ 424,410 ======= Share premium account £ 350,900 1,204,988 (328,123 ) - - ________ 1,227,765 ======= £ 350,900 1,204,988 (328,123 ) - ________ 1,227,765 ======= Profit and loss account £ (45,245 ) - - (1,131,314 ) - ________ (1,176,559 ) ======= £ - - - 2,017 ________ 2,017 ======== Page 19 Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 16. Movement on equity shareholders’ funds Group Loss for the period Proceeds of share issues, net of costs - see note 18 Net increase in shareholders’ funds Opening shareholders’ funds Closing equity shareholders’ funds Company Profit/(loss) for the period Proceeds of share issues, net of costs Closing equity shareholders’ funds 17. Reconciliation of operating loss to operating cash flows Operating loss Depreciation charges Loss on sale of tangible fixed assets Amortisation Increase in debtors Increase in creditors Net cash outflow from operating activities 31 July 2001 £ 31 January 2000 £ (1,131,314 ) 1,432,016 ________ 300,702 372,705 ________ 673,407 ======= (45,245 ) 417,950 ______ 372,705 - ______ 372,705 ====== 2,017 1,425,556 ________ 1,427,573 ======= (45,245 ) 418,130 _______ 372,885 ====== 31 July 2001 £ 31 January 2000 £ (1,181,547 ) 40,732 445 5,400 (57,815 ) 44,038 _______ (1,148,747 ) ======= (45,245 ) 92 - 3,600 (4,639 ) 18,333 _____ (27,859 ) ===== Page 20 Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 18. Analysis of cash flows Returns on investments and servicing of finance Interest received Interest paid Net cash inflow Capital expenditure and financial investment Purchase of intangible fixed assets Purchase of tangible fixed assets Sale of tangible fixed assets Net cash outflow Management of liquid resources Cash placed on deposit Net cash outflow Financing Issue of ordinary share capital Expenses paid in connection with share issues Net cash inflow 19. Analysis and reconciliation of net debt Cash in hand and at bank Overdraft Cash placed on deposit Net debt (Decrease)\increase in cash in the period\year Movement in net debts in year Net funds at 1 February 2000 Net debt\funds at 31 July 2001 Page 21 31 July 2001 £ 31 January 2000 £ 50,456 (223 ) _______ 50,233 ====== - - _____ - ===== - (70,665 ) 1,200 _______ (69,465 ) ====== (700,562 ) _______ (700,562 ) ====== (18,000 ) (3,734 ) - _____ (21,734 ) ===== - _____ - ===== 1,760,139 (328,123 ) ________ 1,432,016 ======= 431,000 (13,050 ) _____ 417,950 ===== 1 February 2000 £ 368,355 - - ______ 368,355 ===== Cash flow £ 356,742 (92,705 ) (700,562 ) ______ (436,525 ) ===== 31 July 2001 £ 725,097 (92,705 ) (700,562 ) _____ (68,170 ) ===== 2001 £ (436,525 ) ______ (436,525 ) 368,355 ______ (68,170 ) ====== 2000 £ 368,355 ______ 368,355 - ______ 368,355 ===== Web Shareshop (Holdings) Plc and Subsidiaries Notes to the Accounts - continued for the period ended 31 July 2001 20. Related party transactions The director, Andrew Neubauer, is the managing director and a major shareholder of Airtime Interactive Marketing Limited from which the Company made purchases of £679,597 in the year (2000 : £nil). The balance outstanding at the year end was £28,742. The director, Simon Burke, is a director and a major shareholder of ALPs FS Limited. By an agreement dated 15 August 1999 The Web Shareshop Limited appointed ALPs FS Limited as its authorised representative for the purpose of compliance with the requirements of the Financial Services Act. The director, John Watkins, FCA received the sum of £4,233 (2000 : £nil) during the period through his business for normal professional services and the company purchased services to the value of £4,821 (2000 : £nil) from Guild Group Limited, formerly Insider Publishing Limited of which Mr Watkins is a director and shareholder. Balances outstanding at the year end were £nil. The resigned director, John Woolgar, is the proprietor of Capital Ideas from which the company purchased services of £nil (2000 : £17,500). The balance outstanding at the year end was £nil. The director, William Jackson, is a director and major shareholder of Panmark Limited from which the company purchased services to the value of £37,389 (2000 : £nil) in the year. The balance outstanding at the year end was £nil. 21. Financial commitments At 31 July 2001 the Company has a quarterly commitment of £51,908 to Airtime Interactive due to expire on 31 March 2002. 22. Post balance sheet events On 27 September 2001 the company converted the group loan account of £1,283,433 into 4,278,110 New ordinary shares of £0.01 each in The Web Shareshop Limited for a consideration of £1,283,433. On 16 October 2001 the Company concluded an agreement with Mr Bruce Rowan under which he will subscribe for 6,450,000 New Ordinary shares of £0.01 in the Company. Page 22 

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