Draganfly Investments Regulatory News (DRG)

15 Sep 2006 18:32

Draganfly Investments Ltd15 September 2006 15 September 2006 Draganfly Investments Limited ("the company") Directors' report and financial statements for the period ended 30 April 2006 The directors present their report and the financial statements for the periodended 30 April 2006. Incorporation The company was incorporated on 7 April 2005 as Draganfly Investments Limited.The company commenced trade on 7 April 2005. Principal activity The principal activity of the company was as an investment trading/holdingcompany. Review of the business The original investment brief is to run a small and focused portfolio ofinvestments. Net assets have risen from £3,050,000 (2.67p per share) upon AIM admission on 29April 2005, to £3,162,176 (2.77p per share) on 30 April 2006. For the periodended 30 April 2006 the company made a profit after taxation of £39,603, whichincludes an unrealised gain on the company's investments of £343,240. At the end of April, the company held twelve investments to reflect the size ofthe fund and the original investment brief. Of these twelve holdings, 4 werepre-IPO investments. Subsequent to 31 October 2005, the company secured a £400,000 credit facility toallow it to deliver continued improved returns to the shareholders. At 30 April2006, £129,267 of this credit facility was still available for use. The board is always alert to fresh investment opportunities but does notanticipate materially increasing the number of holdings at this stage. Theboard believes the current environment for small companies and pre-IPOinvestments remains very encouraging. Dividends The directors do not recommend payment of a final dividend. Risk management Risks are considered across the following broad categories: Strategic - Risks arising from the analysis, design and implementation of theCompany's business model, and key decisions on investment levels and capitalallocation. Investment - Risks in respect of specific asset investment decisions, thesubsequent performance of an investment or exposure concentrations acrossbusiness sectors. Treasury and funding - Risks arising from (i) uncertainty in market prices andrates, (ii) an inability to raise adequate funds to meet investment needs ormeet obligations as they fall due, or (iii) inappropriate capital structure. Operational - Risks arising from inadequate or failed processes, people andsystems or from external factors affecting these. Risk management is managed and monitored by the board. Given their fundamentalsignificance to the company, investment and treasury and funding risks aremanaged by specific processes which are described below. Investment risk The company invests across a range of economic sectors. The portfolio issubject to periodic reviews to ensure there is no undue exposure to any onesector. The valuation of the company's unquoted portfolio and opportunities forrealisation depend to some extent on stock market conditions and the buoyancy ofthe wider mergers and acquisitions market. Treasury and funding risk The company's funding objective is that the funding of investment assets areprimarily met from shareholders' funds. Credit risk The company's financial assets are unsecured investments, in which the boardconsiders the maximum credit risk to be the carrying value of the asset. Theportfolio is diversified and credit risk is managed on an asset specific basisby the board. Liquidity risk During the financial period the company incurred a deficit of £270,733 from itsinvesting and administration activities and had an overdrawn bank position of£270,733 at the end of the period. The company has a further overdraft facilityof £129,267 available. Price risk The valuation of unquoted investments depends upon a combination of marketfactors and the performance of the underlying asset. The company does not hedgethe market risk inherent in the portfolio but manages asset performance risk onan asset specific basis. Interest rate risk The company invests in shares. The assets are funded with a mixture of mainlyshareholders' funds and a bank overdraft. The board seeks to minimise interestrate exposure by minimising the credit funding. Directors and their interests The directors who served during the period and their interests in the companyare as stated below: Class of share 30/04/06 07/04/05 or date of appointment P C Harris Ordinary shares - -J D Melia Ordinary shares - -J F Bale Ordinary shares - -D Edmonds Ordinary shares - -M Horrocks Chairman Ordinary shares 4,666,667 - Directors' responsibilities The directors are responsible for preparing the financial statements inaccordance with applicable law and Generally Accepted Accounting Practice The directors are required to prepare financial statements for each financialperiod which give a true and fair view of the state of the affairs of thecompany and of the profit or loss of the company for that period. In preparingthese the directors are required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of thecompany and to enable them to ensure that the financial statements comply withthe Jersey Companies Law 1991. They are also responsible for safeguarding theassets of the company and hence for taking reasonable steps for the preventionand detection of fraud and other irregularities. The directors of a company must, in determining how amounts are presented withinitems in the profit and loss account and balance sheet, have regard to thesubstance of the reported transaction or arrangement, in accordance withgenerally accepted accounting principles and practice. In so far as the directors are aware: -there is no relevant audit information (information needed by the company'sauditors in connection with preparing their report) of which the company'sauditors are unaware, and -the directors have taken all the steps that they ought to have taken to makethemselves aware of any relevant audit information and to establish that thecompany's auditors are aware of that information. Auditors Baker Tilly were appointed auditors to the company and a resolution proposingtheir reappointment will be put to the Annual General Meeting. P C Harris Director 15 September 2006 Profit and loss account for the period ended 30 April 2006 Continuing operations Period ended 30/04/06 Notes £ Turnover 2 355,140 Administrative expenses (332,692) ___________Operating profit 3 22,448 Other interest receivable andsimilar income 20,412Interest payable and similarcharges 4 (3,257) ___________Profit on ordinaryactivities before taxation 39,603 Tax on profit on ordinary activities - ___________Profit on ordinaryactivities after taxation 39,603 ___________Retained profit for the period 11 39,603 ___________ There are no recognised gains orlosses other than the profit or lossfor the above financial period. Earnings per share (pence) Basic 6 0.03 ___________Diluted 6 0.03 ___________ Balance sheet as at 30 April 2006 30/04/06 Notes £ Current assetsInvestments 7 3,445,409 ___________ Creditors: amounts fallingdue within one year 8 (283,233) ___________Net current liabilities 3,162,176 ___________Total assets less currentliabilities 3,162,176 ___________Net assets 3,162,176 ___________Capital and reservesCalled up share capital 10 1,142,270Share premium account 11 1,980,303Profit and loss account 11 39,603 ___________Equity shareholders' funds 12 3,162,176 ___________ Cash flow statement for the period ended 30 April 2006 Period ended 30/04/06 Notes £ Reconciliation of operating profit to netcash outflow from operating activitiesOperating profit 22,448Unrealised profit on revaluation of investments (343,240)Increase in creditors 12,500 ___________Net cash outflow from operating activities (308,292) ___________ Cash flow statement Net cash outflow from operating activities (308,292)Returns on investments and servicing of finance 14 17,155Capital expenditure 14 (3,102,169) ___________ Financing 14 3,122,573 ___________Decrease in cash in the period (270,733) ___________ Reconciliation of net cash flow to movement in net debt(Note 15) Decrease in cash in the period (270,733) ___________Net debt at 30 April 2006 (270,733) ___________ Notes to the financial statements for the period ended 30 April 2006 1. Accounting policies 1.1. Accounting convention The financial statements are prepared under the historical cost conventionmodified to include the revaluation of certain fixed assets and financialinstruments, and in accordance with applicable accounting standards. 1.2. Investments After initial recognition, investments, which are classified as held for tradingand available-for-sale, are measured at fair value. Gains or losses oninvestments held for trading are recognised in the profit and loss account. 1.3. Taxation The company has been granted exempt company status within the meaning of Article123A of the Income Tax (Jersey) Law 1961 (as amended). The effect of suchspecial status is that the company is treated as a non-resident company for thepurposes of Jersey tax laws and is therefore exempt from Jersey income tax onits profits arising outside Jersey and, by concession, on bank deposit interestarising in Jersey (and from any obligation to withhold Jersey income tax fromany interest or dividend payments made by it). This status is renewable on anannual basis upon payment of a fee to the Controller of Income Tax in Jersey,and it is the company's intention to maintain this status. Consequently, noprovision for taxation, either current or deferred has been made in thesefinancial statements. 1.4. Financial instruments Investments All investments are initially recognised at cost, being the fair value of theconsideration given and including acquisition costs associated with theinvestment. All purchases and sales of investments are recognised using tradedate accounting. After initial recognition, investments, which areclassified as held for trading and available-for-sale, are measured at fairvalue. Gains or losses on investments held for trading are recognised in theprofit and loss account. Investments are fair valued using quoted marketprices, independent appraisals, discounted cash flow analysis or otherappropriate valuation models at the balance sheet date. Cash and cash equivalents Cash and cash equivalents are included in the balance sheet at cost. Cash andcash equivalents comprise cash at bank and in hand and short term deposits withan original maturity of three months or loss account. Interest-bearing loans and borrowings All loans and borrowings are recognised initially at cost, which is thefair value of the consideration received. 2. Turnover The total turnover of the company for the period has been derived fromits principal activity and includes dividends received from investmentsand unrealised profit on revaluation of investments. Period ended3. Operating profit 30/04/06 £Operating profit is stated after charging:Auditors' remuneration 10,000 Period ended 4. Interest payable and similar charges 30/04/06 £Included in this category is the following:On overdrafts 3,257 5. Directors' emoluments Directors' share options Director Market price at Exercise exercise Date from which price date exercisable Expiry dateDirector Number of options 7 April Granted Exercised 30 April 2005 2006 M. Horrocks - 3,000,000 - 3,000,000 3p - 7/04/2005 7/4/2008 D. Edmonds - 850,000 - 850,000 3p - 7/04/2005 7/4/2008 6. Earnings per share The basic earnings per ordinary share is calculated by dividing profit for theyear less non-equity dividends and other appropriations in respect ofnon-equity shares by the weighted average number of equity sharesoutstanding during the year. The diluted earnings per ordinary share is calculated by dividing profit for theyear less non-equity dividends and other appropriations in respect of non-equityshares by the weighted average number of equity shares outstanding duringthe year (after adjusting both figures for the effect of dilutive potentialordinary shares). The calculation of basic earnings per ordinary share is based upon the followingdata: Earnings 2006 £ Earnings for the purposes of basic earnings per share 39,603Effect of dilutive potential ordinary shares:Warrants - ___________Earnings for the purposes of diluted earnings per share 39,603 ___________ Number of shares 2006 £ Basic weighted average number of shares 114,227,000Dilutive potential ordinary shares:Warrants 8,000,000 ___________Weighted average number of sharesfor the purposes of diluted earnings per share 122,227,000 ___________ There have been no other transactions involving ordinary shares or potentialordinary shares since the reporting date and before the completion of thesefinancial statements. 7. Current asset investments 30/04/06 £Market value Available for sale investments 3,445,409 ___________ 8. Creditors: amounts falling due 30/04/06within one year £ Bank overdraft 270,733Accruals and deferred income 12,500 ___________ 283,233 9. Financial risk management objectives and policies The company's risk management objective is that the funding of investment assetsis primarily met from shareholders' funds. Interest Rate Risk The company invests in shares. The assets are funded with a mixture of mainlyshareholders' funds and a bank overdraft. The board seeks to minimise interestrate exposure by minimising the credit funding. Credit Risk The company's financial assets are unsecured investments, in which the boardconsiders the maximum credit risk to be the carrying value of the asset. Theportfolio is diversified and credit risk is managed on an asset specific basisby the board. Liquidity Risk During the financial period the company incurred a deficit of £270,733 from itsinvesting and administration activities and had an overdrawn bank position of£270,733 at the end of the period. The company has a further overdraft facilityof £129,267 available. 10. Share capital 30/04/06 £Authorised equity1,000,000,000 Ordinary shares of £0.01 each 10,000,000 ___________ Allotted, called up and fully paid equity114,227,000 Ordinary shares of £0.01 each 1,142,270 ___________ Equity Shares114,227,000 Ordinary shares of £0.01 each 1,142,270 ___________ 11. Equity Reserves Share Profit Premium and loss Account account Total £ £ £ Premium on issue of shares 1,980,303 1,980,303 Retained profit for the period 39,603 39,603 At 30 April 2006 1,980,303 39,603 2,019,906 12. Reconciliation of movements in shareholders' funds 30/04/06 £ Profit for the period 39,603Net proceeds of equity share issue 3,122,573 ___________Net addition to shareholders' funds 3,162,176 13. Related party transactions J Melia and P Harris are partners of Walkers Global who provide Jersey legalservices to Draganfly Investments Limited. They are also directors of CrillsLimited who are the parent company of Crills Secretaries Limited, the companysecretary. 14. Gross cash flows 30/04/06 £Returns on investments and servicing of financeInterest received 20,412Interest paid (3,257) ___________ 17,155 ___________Capital expenditurePayment for currrent asset investment 3,102,169 ___________FinancingIssue of ordinary share capital 3,122,573 ___________ 15. Analysis of changes in net funds Cash Closing Flows balance £ £ Overdrafts (270,733) (270,733) ______________________ ______________________Net funds (270,733) (270,733) ______________________ ______________________ 16. Basis of preparation The financial information set out in this announcement does not constitute theCompany's statutory financial statements for the years ended 30 April 2006. Thestatutory financial statements for the year ended 31 March 2006 will befinalised on the basis of the financial information presented by the directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies following approval by the Company's shareholders. Copies of theaccounts are available from the Company's registered office; 44 The Esplanade,St Helier, Jersey, Channel Islands. This information is provided by RNS The company news service from the London Stock Exchange