Draganfly Investments Regulatory News (DRG)

31 Jan 2007 10:04

Draganfly Investments Ltd31 January 2007 Interim results for the period from 1 May 2006 to 31 October 2006 Chairman's Statement During the period under review the small company market suffered a majorsetback, with the AIM index falling 20%. Unfortunately, this was reflected inthe performance of your company, with net assets falling from £3,162,176 (2.77pper share) on 30th April 2006 to £2,395,391 (2.11p per share) on 31st October2006. As at 31st December the latest NAV was £2,795,721 (2.45p per share), benefitingfrom improved conditions in the small company market. At the end of the period your company held ten investments, following thedisposal of Billing Services Group, an investment which contributed almost onethird of the NAV decline during the reporting period. Of these ten holdings, three are pre-IPO's, namely Continental Petroleum Limited("Continental"), Sino Gas and Energy Limited ("Sino Gas"), and Microsaic SystemsLimited ("Microsaic"). It is relevant to provide some background information on Continental. InDecember 2005 the company announced their agreement to be acquired by CordilleraResources PLC at a 94% premium to our original entry price. The deal was subjectto satisfactory due diligence and shareholder approval, but procedural delays inRussia meant that the conditions of this agreement could not be met within therequired timelines, and the acquisition was terminated. Despite these delays wefeel very confident about the company's future prospects, and hope to be able toupdate shareholders on progress in the near future. In March 2006 we acquired a shareholding in Sino Gas. Sino Gas is an emergingenergy company in China with a particular focus on Tight Gas Sands. Currentlythe company is engaged on a number of projects including a highly prospectiveearn-in with Chevron for various Production Sharing Contracts to the west ofBeijing. In May 2006 we acquired a shareholding in Microsaic, a company which marketspatented Ionchip(R) detector technology. The product has a wide range ofapplications but is primarily focused on process control in the Pharmaceuticaland Energy sectors. Since the period end we have taken profits in Acta and GB Group, and addedAccsys Technologies to the portfolio, leaving us with eight quoted and threeunquoted investments as at the 31st January 2007. The quoted investments are asfollows: Accsys Technologies PLCMercator Gold PLCActa SpABDI Mining CorporationBraemore Resources PLCFinance Ireland PLCGB Group PLCImmedia Broadcasting PLC *Shareholders can keep in touch with all news on quoted companies viawww.investegate.co.uk Despite the turbulence experienced during the reporting period, your Boardcontinues to view future prospects with optimism. Mark HorrocksChairman Draganfly Investments LtdUnaudited Profit and Loss Accountfor the interim period from 1 May 2006 to 31 October 2006 Notes 31/10/06 30/4/06 £ £ Turnover (640,590) 355,140 Gross (loss)/profit (640,590) 355,140 Administrative expenses (116,493) (332,692) Operating (loss)/profit (757,083) 22,448 Interest receivable - 20,412Interest payable (9,702) (3,257) (Loss)/profit on ordinary activities before taxation (766,785) 39,603 None of thecompany'sactivitieswereacquired ordiscontinuedduring theabove twoperiods.The companyhas norecognisedgains orlosses otherthan theprofit forthe abovetwo periods.Earnings (Loss) per share - basic 4 (£0.0066) £0.003 The operating loss for the period arises from thecompany's continuing operations.There were no other gains orlosses in the period other than those stated above. Draganfly Investments LtdBalance Sheetas at 31 October 2006 Notes 31/10/06 30/4/06 £ £ Current assetsDebtors 12,510 -Investments held as current 2 2,774,052 3,445,409assetsCash at bank and in hand (354,636) (270,733) 2,431,926 3,174,676 Creditors: amounts falling due (36,535) (12,500)within one year Net current assets 2,395,391 3,162,176 Total assets less current 2,395,391 3,162,176liabilities Net assets 2,395,391 3,162,176 Capital and reservesCalled up share capital 1,142,270 1,142,270Share premium 1,980,303 1,980,303Profit and loss account (727,182) 39,603 Shareholders' funds 3 2,395,391 3,162,176 Draganfly Investments LtdCash Flow Statementfor the period from 1 May 2006 to 31 October 2006 Notes 31/10/06 30/4/06 £ £Reconciliation of operating profit to net cashinflow from operating activities Operating (loss)/profit (757,083) 22,448Realised (profit)/loss on sale of investments 229,985 (112,673)Unrealised (profit)/loss on revaluation of investments 417,355 (230,567)Increase in debtors (12,510) -Increase in creditors 36,535 12,500 Net cash outflow from operating activities (85,718) (308,292) CASH FLOW STATEMENT Net cash outflow from operating activities (85,718) (308,292) Returns on investments and servicing of finance (9,689) 17,155 Taxation - - Capital expenditure (3,111,058) (3,102,169) (3,213,101) (3,393,306) Financing 3,122,573 3,122,573 Decrease in cash (83,892) (270,733) Draganfly Investments LimitedNOTES TO THE UNAUDITED ACCOUNTSfor the period ended 31 October 2006 1 Accounting policies a) Basis of preparation The financial statements are prepared in accordance with UnitedKingdom Accounting Standards. b) Investments In accordance with FRS 26, investments are designated as at fairvalue through profit or loss. Quoted investments are stated at mid-market prices at the balancesheet date. Unlisted investments are stated at 'price of recent investment',reflecting the early stage nature of the investment. The followingconsiderations are used when calculating the 'price of recent investment': (i) Where the investment being valued was itself made recently,its cost will generally provide a good indication of fair value. (ii) Where there has been a recent investment by third parties, theprice of that investment will provide a basis of the valuation. Where a fair value cannot be estimated reliably, the investment isreported at cost or the carrying value at the previous reporting date, unlessthere is evidence that the investment has since been impaired. c) Taxation The company has been granted exempt company status within themeaning of Article 123A of the Income Tax (Jersey) Law 1961 (as amended). Theeffect of such special status is that the company is treated as a non-residentcompany for the purposes of Jersey tax laws and is therefore exempt from Jerseyincome tax on its profits arising outside Jersey and, by concession, on bankdeposit interest arising in Jersey (and from any obligation to withhold Jerseyincome tax from any interest or dividend payments made by it). This status isrenewable on an annual basis upon payment of a fee to the Comptroller of IncomeTax in Jersey, and it is the company's intention to maintain this status. Consequently, no provision for taxation, either current or deferredhas been made in these financial statements. Draganfly Investments LimitedNOTES TO THE UNAUDITED ACCOUNTS (continued)for the period ended 31 October 2006 2 Investments The carrying value of investments is stated as follows: Quoted Unquoted Total £ £ £Cost of investments 2,784,963 636,431 3,421,394Change in fair values (647,341) (647,341) As at 31 October 2006 2,137,622 636,431 2,774,053 3 Reconciliation of movement in shareholders' funds Profit and loss Called up Share premium Share-holders' Account Share capital account funds £ £ £ £ Openingshareholders' funds 39,603 1,142,270 1,980,303 3,162,176Loss for the period (766,785) 1,142,270 1,980,303 2,355,788New equity sharecapital subscribed - - - - As at 31 October (727,182) 1,142,270 1,980,303 2,395,3912006 4 Loss per share Basic loss per share is calculated on the basis of loss for the period of£766,785 and 114,227,000 shares being the weighted average number of shares inissue during the trading period. 5 Dividends No dividends have been paid or are proposed. 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