RNS Number:4318D
Baltimore Technologies PLC
28 September 2004
28 SEPTEMBER 2004
BALTIMORE TECHNOLOGIES PLC
(Ticker: Reuters BLM.L or Bloomberg: BLM LN)
Interim results for the 6 months ended 30 June 2004
The Board of Baltimore Technologies Plc ("Baltimore" or "the Company") announces
its unaudited interim results for the 6 months ended 30 June 2004.
SUMMARY
*On 6 July 2004 a new board of directors was appointed under the
chairmanship of David Buchler. None of these directors held any position
with the Company during the period of these results.
*Since the period end, the Company has been served with a claim by
Earthport plc ("Earthport") of #4.5 million for breach of contract plus
damages, including loss of profits, estimated by Earthport at #9.5 million.
A provision of #750,000 has been made for legal costs to take the case to
trial.
*During the six months the Company incurred expenditure of #8.6 million
(#1.4 million per month), including #1.0 million incurred by the previous
board to defend their removal. Cash burn, whilst significantly reduced, is
still running at the unsustainable level of #350,000 per month. The new
Board is engaged in a comprehensive exercise to address and resolve all
legacy issues.
*Provisions for leasehold properties have been increased to #6.6 million
from #5.3 million as at 31 December 2003.
*In March 2004, as previously reported, the Company sold its remaining
stake in Baltimore Japan for #2.25 million cash.
*In June 2004, as previously reported, the Company sold certain tax losses
for #1.6 million after expenses. The Board is currently reviewing all the
options to maximise the value of the remaining tax losses.
*The Board is reviewing the need for a stock exchange listing given that
any meaningful acquisition will require an application for listing of the
combined entities.
*The Board has retained the law firm, Herbert Smith to advise on the
termination of its American Depositary Share programme.
--ENDS--
Enquiries:
Baltimore Technologies Plc
David Buchler, Chairman Tel : 020 7647 9903
Naomi Delaney, PR Tel : 07973 563505
Baltimore's interim results 2004 will not be posted to shareholders but will be
published in the Business section of the Independent newspaper, on Thursday 30th
September 2004.
CHAIRMAN'S STATEMENT
At the AGM on 6 July 2004 the Company's entire board of directors was removed. A
new board of directors was appointed consisting of myself as Chairman, Duncan
Soukup, Tim Lovell, George Wardale and Robin Williams.
The new Board is in the unusual position of reporting results for a period
during which none of them acted as directors, officers or in any other capacity
on behalf of the Company.
As previously reported in the 2003 Annual report, the Company sold its last
remaining operating businesses in 2003 and therefore there were no operating
activities in the period. The six months were characterised by a great deal of
activity and expense by the previous directors and their advisers both defending
their board positions and initiating a now defunct business plan in the field
of 'clean energy'.
The new Board took office clearly stating that it would not be making any
definitive statements to shareholders about specific acquisition targets until
it knew the Company's true financial position. The subsequent claim from
Earthport justifies this caution.
The Company will continue its current approach which is to:
* resolve all significant legacy issues
* maximise the realisation of the company's tax assets
* reduce the rate of cash burn to maximise cash available for future
deployment
* review appropriate business opportunities to enhance shareholder value
Ongoing investigation
Upon taking office, your board commenced an extensive investigation into the
affairs of the Company to establish the value and extent of its remaining assets
and liabilities. The main areas of uncertainty are:
*litigation
* the extent of property lease liabilities and exit options
* the value and crystallisation of remaining assets
Expenditure
The Company incurred administrative expenses of #8.6 million during the six
months period authorised by the previous board, which includes the pursuit of a
'clean energy' strategy and directors' compensation. #1.0 million related to
costs incurred by the previous board to defend their removal.
Property
The Company has a number of leasehold properties which are either vacant or
sub-let on terms that do not match the Company's head leases. The Company has
appointed a property consultant to advise on this situation. Provisions for
leasehold properties have been increased to #6.6 million from #5.3 million as at
31 December 2003 to reflect a consistent treatment of all property leases and
the current softness in property markets. The Company also owns a freehold
property against which a further provision has been made due to the continued
softness in the commercial property market.
Sale of remaining stake in Baltimore Japan
On 15 March 2004 the Company announced that it had reached agreement with
beTRUSTed to sell its remaining stake in Baltimore Japan for #2.25 million cash,
the proceeds of which would be used for general corporate purposes. The sale was
completed on 30 March 2004.
Tax losses
On 26 May 2004 the Company announced the sale of #330 million of realised (*see
note) but unrecognised capital losses through the disposal of Baltimore
Technologies Investments Limited (BTIL) for #1.6 million in cash after expenses.
The Company's capital losses are subject to numerous uncertainties and whilst
the Board believes that whilst they may have significant potential value it may
be impossible to realise any cash at all.
*Note: Realised capital losses are those that have crystallised for Capital
Gains Tax purposes because of an asset sale or other deemed disposal under the
capital gains tax legislation. Following the sale of BTIL, the Company has
further realised capital losses of #213 million and estimated unrealised
capital losses of #1.2 billion.
Taxation
No provisions for taxes were made for the year ended 31 December 2003. The
Directors have reviewed the tax position and as a result have now provided #0.8
million for foreign taxes on transactions in foreign subsidiaries undertaken
prior to 31 December 2003.
Litigation
Earthport
The Company received a claim from Earthport plc on 23 July seeking #4.5 million
for breach of contract relating to agreements entered into during 2001, plus
damages, including #9.5 million for loss of profits, plus interest and costs.
The previous board had been aware of a potential claim since late April 2004.
The new Board has appointed Herbert Smith to advise on the merits of the case. A
provision of #750,000 has been made for the unrecoverable portion of legal costs
to take the case to trial.
Alleged patent infringement
In July 2003 the Company received a letter from a Danish company claiming a
possible patent right infringement. There has been no communication with this
company since October 2003. However, the Company is closely monitoring the
progress of the Danish company's patent application with the European Patent
Office which in the first instance was unsuccessful.
Other threatened litigation
In September 2004 the Company received a letter before action from a third party
for breach of contract under a sale agreement entered into in September 2003.
The Board considers this claim to be in response to a claim for unpaid invoices
made by the Company and a settlement of all claims is expected to be reached.
The Company is aware that there are some outstanding licence fees owed to a
third party which are being reviewed. A provision of #124,000 has been made.
Directors remuneration
Directors' remuneration
The Remuneration Committee has agreed the following director's fees and
salaries, which may be augmented by specific additional Board committee or
subsidiary company responsibility:
#
David Buchler (Chairman) 40,000
Duncan Soukup (Chief Executive) 30,000
Tim Lovell (Finance Director) 130,000
Robin Williams (Non Executive Director) 30,000
George Wardale (Non Executive Director) 30,000
Stock exchange listing
The Company currently has a full listing on the London Stock Exchange with
significant associated costs. In the event that the Company finds a meaningful
acquisition it will be required to issue a Class 1 circular and make a new
application for listing whether currently listed or not. Accordingly the Board
is reviewing the need for a listing at the present time in the light of its wish
to reduce costs and maximise its assets.
American Depositary Share ("ADS") programme.
The new Board is reviewing the termination of the Company's ADS programme in an
effort to further eliminate costs. The Company's objective is to terminate this
programme and remove the requirement to file reports with the SEC and avoid the
need for the preparation and audit of US GAAP accounts, hiring of US counsel and
the very significant associated costs.
David Buchler
Chairman
Certain statements that are not historical facts including certain statements
made over the course of this document may be forward looking in nature. Such
forward looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance and achievements of
the Company to be materially different from any future results, performance or
achievements contained in or implied by such forward looking statements.
Unaudited interim condensed consolidated profit and loss account
All results are derived from discontinued activities
Six months Six months
to to
30 June 30 June
2004 2003
#'000 #'000
Revenue 902 9,660
Cost of Sales (444) (4,539)
---------- ----------
Gross profit 458 5,121
Administrative expenses (8,639) (11,088)
Exceptional items 0 (4,000)
---------- ----------
Total administrative expenses (8,639) (15,088)
---------- ----------
Operating loss (8,181) (9,967)
Profit on sale of businesses and
investments 1,834 0
Interest receivable and similar income 172 1,069
Interest payable and similar charges (35) (101)
---------- ----------
Loss on ordinary activities before tax (6,210) (8,999)
Tax on loss on ordinary activities (738) (309)
---------- ----------
Loss on ordinary activities after tax (6,948) (9,308)
---------- ----------
Loss for the period retained
for equity shareholders (6,948) (9,308)
========== ==========
Loss per share Pence Pence
Basic and diluted (13.8) (18.8)
Before exceptional
items and dividends
(basic & diluted) (13.8) (10.7)
Unaudited interim condensed consolidated balance sheet
Six months 12 months Six months
to 30 June to 31 Dec to 30 June
2004 2003 2003
#'000 #'000 #'000
Fixed assets
Intangibles 0 0 2,267
Freehold property 1,000 1,582 1,600
Other tangible fixed assets 2 15 4,573
Investments 0 2,088 2,000
--------- -------- ---------
1,002 3,685 10,440
Current assets
Debtors 1,246 2,187 6,462
Restricted cash at bank 3,351 3,476 3,460
Cash at bank 23,461 24,675 14,638
--------- -------- ---------
28,058 30,338 24,560
Creditors (including convertible debt):
amounts falling due within one year
Loan Notes (174) (174) (1,729)
Trade and other
creditors and accruals (5,745) (6,620) (24,982)
--------- -------- ---------
Net current assets (liabilities) 22,139 23,544 (2,151)
--------- -------- ---------
Total assets less current
liabilities 23,141 27,229 8,289
Creditors (including convertible debt):
amounts
falling due after more than one year 0 0 (116)
Provisions for liabilities
and charges and property
rentals (6,639) (4,679) (3,235)
--------- -------- ---------
Net assets 16,502 22,550 4,938
========= ======== =========
Capital and reserves
Called up share capital 538 538 538
Share premium account 376,054 376,054 376,486
Merger reserve 0 0 609,409
Other Reserves (360,090) (354,042) (981,495)
--------- --------- ---------
16,502 22,550 4,938
========= ========= =========
Unaudited interim condensed consolidated cash flow statement
Six Six
months to Year to months to
30 June 31 Dec 30 June
2004 2003 2003
Notes #'000 #'000 #'000
------ --------- --------- ---------
Net cash flow from operating
activities 7a (5,919) (12,357) (3,492)
Returns on investments and servicing
of finance 349 675 138
Taxation 121 (23) 19
Capital expenditure and financial
investments 2,291 4,460 (29)
Acquisitions and disposals 1,629 15,656 0
--------- --------- ---------
Net cash flow before financing (1,529) 8,411 (3,364)
Financing
Issue of ordinary shares 0 104 0
Repayment of convertible loan notes 0 (1,339) 0
Decrease in debt 0 (384) (122)
--------- --------- ---------
(Decrease)/increase in cash in the
period (1,529) 6,792 (3,486)
========= ========= =========
Unaudited interim reconciliation of net cash flow to movement in net funds/(debt)
Six Six
months to Year to months to
30 June 31 Dec June 30
2004 2003 2003
#'000 #'000 #'000
------- --------- --------- ---------
Increase/(Decrease) in cash in period (1,529) 6,792 (3,486)
Cash flow from decrease in debt and lease
repayments 0 384 122
--------- --------- ---------
Change in net funds resulting from cash
flows (1,529) 7,176 (3,364)
Exchange differences 315 (6) 241
Conversion redeemable loan notes 0 1,555 0
--------- --------- ---------
Movement of net funds in period (1,214) 8,725 (3,123)
Net funds at beginning of period 24,501 15,776 15,776
--------- --------- ---------
Net funds at period end 23,287 24,501 12,653
========= ========= =========
7a RECONCILIATION OF OPERATING LOSS TO
NET CASH FLOW FROM OPERATING ACTIVITIES
Six Six
months to months to
30 June 30 June
2004 2003
#'000 #'000
--------- ---------
Operating loss (8,181) (9,967)
Amortisation of goodwill and intangible
assets 0 2,315
Depreciation of tangible fixed assets 17 1,447
Impairment on investment 0 4,000
Impairment on freehold property 581 0
Write-down of EBT reserve 3 0
Unrealised trading losses 179 0
Charge in relation to share related awards 0 10
Decrease/(increase) in stock 0 18
Increase in provisions 2,041 0
Decrease in debtors 1,033 5,730
Decrease in creditors (1,592) (7,045)
--------- ---------
Net cash outflow from operating
activities (5,919) (3,492)
========= =========
7b ANALYSIS OF AMOUNTS NETTED ON THE CASH
FLOW STATEMENT Six Six
months to months to
30 June 30 June
2004 2003
#'000 #'000
--------- ---------
Returns on investments and servicing of
finance
Interest received 363 391
Interest paid on bank loans, overdrafts and
all other loans (14) (253)
--------- ---------
Net cash inflow from returns on
investments & servicing of finance 349 138
--------- ---------
Capital expenditure and financial
investments
Purchase of tangible fixed assets (2) (22)
Sale of tangible fixed assets 0 (7)
Sale of investments 2,293 0
--------- ---------
Net cash inflow for capital expenditure &
financial investments 2,291 (29)
--------- ---------
Disposals/(Acquisitions)
Disposal of trade and assets/subsidiary
undertakings 2,001 0
Expenses on disposal of trade and
assets/subsidiary undertakings (372) 0
--------- ---------
Net cash inflow from disposals/acquisitions 1,629 0
--------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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