29 August 2008

Z GROUP Plc

("Z GROUP" or the "Company")

Final results for the year ended 29 February 2008

CHAIRMAN'S STATEMENT 

The Company announces its final results for the year ended 29 February 2008.

RESULTS

The loss on ordinary activities after taxation for the year amounted to £4,910,515 (2007 - loss £632,269) representing a loss per share of 20.68 pence (2007 - loss 3.12 pence).

EVENTS DURING THE YEAR

With continuing trading losses in the Company's subsidiaries which arose from the commercial failure of the OnShare product combined with the continuing decline in turnover of the principal product, ONSPEED, the Board commenced discussions to sell the operating subsidiaries of the Company to the then joint CEOs and directors of the Company, Jack Bekhor and Jamie True.

It was announced, when the interim results for the year were released on 29 November 2007, that the directors believed that shareholders interests' would be best served by securing a speedy solution to the problems of the Company and that accordingly a deal with the joint CEOs, or any other comparable solution, would be pursued by the Board as a matter of urgency. 

On 20 December 2007, the Company entered into an agreement, conditional on shareholder approval, for the sale of CallPal Limited, Net2Roam Limited, Onshare Limited and Turbodial Limited (the "Disposal Companies"), which comprised substantially all of the trading assets of the Company, to the joint CEOs.

The proposed agreement was for a cash consideration of £60,000. The CEOs would remain as part-time executive directors of the Company following Completion, but agreed to waive any remuneration due under their service agreements (other than their entitlement to receive the statutory minimum wage, which cannot legally be waived). The Board also negotiated with the CEOs further potential payments in the event of onward sale of shares and/or assets of the Disposal Companies, which has the potential to yield further sums to the Company where any of the Disposal Companies are sold, or any of the Disposal Companies sell any of their assets, within 15 months of a proposed general meeting of the Company's shareholders.

A circular dated 21 December 2007 was posted to shareholders setting out:

• the background to the sale

• why the directors of the Company considered the sale to be in the best interests of the Company and its shareholders

• the Company's proposed "Investing Strategy" following completion

• the approval of shareholders for the proposals at an extraordinary general meeting of the Company.

The general meeting took place on 7 January 2008, and the resolutions outlined in the circular to shareholders were duly passed. The results of the proxy voting on the resolutions put to shareholders were 11,755,315 of the issued shares (49.51% of the issued share capital) voting in favour of the resolutions and with no shareholders voting against the resolutions.

John Standen, Jonathan Slater and Polly Williams resigned as directors with effect from the date of the general meeting.

Also at this meeting, the shareholders approved the Company's "Investing Strategy" which is to seek high growth, profitable, cash generative businesses in the Technology, Media or Science sectors.

CHANGES IN DIRECTORS AFTER THE YEAR-END

On 18 March 2008, Ian Smith was appointed as a non-executive director of the Company and Marcus Yeoman was appointed as a part-time executive director of the Company. On the same day, Jack Bekhor and Jamie True stepped down as joint CEOs and as executive directors of the Company.

CASH POSITION

The cash position at 29 February 2008 was £1,203,118. The (unaudited) cash position at 27 August 2008, being the last practicable date prior to the publication of this document, was £1,324,682.

PROSPECTS

The directors' objective is to preserve cash resources while actively pursuing potential acquisitions, which are at various stages of discussion at this time. Under the AIM rules the Company's shares would be suspended from trading on AIM if a suitable acquisition has not been made in accordance with the stated investing strategy by 7 January 2009. The directors will keep shareholders informed of any significant developments over the coming months.

JON CLAYDON

Non-executive Chairman

29 August 2008

Further Enquiries

CONSOLIDATED INCOME STATEMENT 

for the year ended 29 February 2008

CONSOLIDATED BALANCE SHEET

as at 29 February 2008

CONSOLIDATED CASH FLOW STATEMENT 

for the year ended 29 February 2008

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 29 February 2008

NOTES TO THE FINANCIAL STATEMENTS

For year ended 29 February 2008

1.    BASIS OF PREPARATION AND PUBLICATION OF NON-STATUTORY ACCOUNTS

(a)    First time adoption of IFRSs

From 1 March 2007, the Company has adopted International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") in the preparation of the financial statements.

Prior to this accounting period, the Company prepared its audited annual financial statements under United Kingdom Generally Accepted Accounting Principles (UK GAAP). For periods commencing 1 March 2007, the Company is required to prepare its annual consolidated financial statements in accordance with IFRS as adopted by the EU and implemented in the UK. As the financial statements for the year to 29 February 2008 will include comparatives for the year ended 28 February 2007, the Company's date of transition to IFRS is 1 March 2006 and the comparatives need to be restated to IFRS. Accordingly, the financial information for the year to 28 February 2007 has been restated to present the comparative information in accordance with IFRS based on a transition date of 1 March 2006. Note 14 sets out how the Company's previous financial position is affected by the change to IFRS.

As at the date of approval of the financial statements, the following standards and interpretations were in issue but not yet effective: 

IFRS 3 (revised) Consolidated financial statements 

IFRS 8 Operating Segments 

IFRIC 12 Service concession arrangements 

IFRIC 13 Customer loyalty programmes 

IFRIC 14 IAS19 - The limit on a defined benefit asset, minimum funding requirements and their interaction 

IAS 1 (revised) Presentation of financial statements 

IAS 23 (revised) Borrowing costs 

IAS 27 (revised) Consolidated and separate financial statements

 
The Directors do not anticipate that the adoption of these standards and interpretations in future reporting periods will have a material impact on the Company's results.

(b)    Going concern

The financial statements are presented on a going concern basis. In assessing the Company's ability to continue as a going concern, the directors have taken into consideration all available information relating to the 12 month period from the date of approval of these accounts. In particular the directors have assessed expenditure, budgets and cash flow forecasts of the Company.

The budgets and forecasts have been reflected to reflect the current position of the Company as listed on AIM. The directors are actively seeking an acquisition in line with the Company's Investing Strategy which is to seek high growth, profitable, cash generative businesses in the Technology, Media or Science sectors.

The financial implications of potential transactions and the consequences of not being listed on AIM have not been included in the consideration of the going concern status of the Company at this time.

(c)    Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, Including expectations of future events that are believed to be reasonable under the circumstances.  

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of asset and liabilities within the next financial year are discussed below.

Share-based payments

The Company issues share-based payments to certain employees. The fair value and the vesting periods use management assumptions in their calculation. While management believes that the assumptions used are appropriate, a change in the assumptions used would impact the results of the Company.

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 28 February 2007 has been extracted from the Company's financial statements to that date which have received an unqualified auditors' report but have not yet been delivered to the Registrar of Companies.

The financial information for the year ended 29 February 2008 has been extracted from the Company's financial statements to that date, which have been delivered to the Registrar of Companies. The auditors opinion on those financial statements was not qualified but contained an emphasis of matter paragraph relating to the valuation of the intangible asset.

2.    OPERATING LOSS

3.    FINANCE INCOME

4.     INCOME TAX CREDIT

The Company has tax losses of approximately £419,000 (2007: £228,000) which, subject to agreement with HM Revenue & Customs, are available to carry forward against future profits of the same trade.

5.    LOSS PER SHARE

Due to the losses in the above years, there is no dilutive effect from the issue of share options.

6.    INVESTMENTS

This subsidiary undertaking is incorporated in England and Wales. 

7.    PROPERTY, PLANT AND EQUIPMENT