The key event of the first half was the finalising of the CVA which was approved by creditors and shareholders on 12 May 2010.  Until that had occurred the Directors were constrained from fully exploring any options to enhance shareholder value.  Since then the Directors have reviewed a number of opportunities however our efforts have been hampered by the Company’s weak balance sheet and the suspension of trading in the Company’s shares on AIM.

The directors have operated the Company on a low cost basis since the agreement of the CVA, however it became clear that the Company needed to raise further funds in order to implement the investing policy adopted by shareholders.  In particular the Company needed to raise sufficient capital to enable the CVA to be discharged, without which the Company would be insolvent.  The directors believe that the proposal set out in the circular to be sent to shareholders, as announced today, represents the best opportunity for the Company to create some future value for existing shareholders.

Although the CVA has been agreed, because it has not been fully discharged the interim results have not been adjusted to reflect the agreement reached under the CVA and as such will be restated once the CVA has been discharged in full.  Of the gross liabilities of £2.3m in the balance sheet, approximately £1.3m is the subject of the CVA and will be discharged by a payment of approximately £55,000.  Furthermore, Palmdale, who are due to receive approximately £20,000 under the terms of the CVA, have agreed to indemnify the Company for any liabilities due under the CVA in excess of £40,000.  Palmdale has also agreed to the settlement of its outstanding debt of approximately £840,000 through the issue of equity and loan notes.  Similarly, the Directors have agreed to waive their accrued fees for an issue of equity.  Both arrangements are as set out in the circular to shareholders today.  A further £80,000 of non-current liabilitieshave also been waived by third parties.

Following the passing of the resolutions at the general meeting which has today been convened for 12 November 2010 and the discharging in full of the CVA, which is expected to happen shortly thereafter. the Directors believe that the Company will be debt free, excluding the convertible loan notes, with a cash balance of approximately £150,000.

The Board would also like to thank Len Russell for his support and advice in recent months.

A copy of the Company’s Interim Accounts is available on the Company’s website at http://www.otiumventures.com/financial-reporting 

CONSOLIDATED INCOME STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2010

	6 months to 30 June 2010	6 months to 30 June 2009	Year ended 31 December 2009
	Unaudited	Unaudited	Audited
	£	£	£
Continuing operations
Revenue	-	820,810	840,275
Cost of sales	-	(47,361)	(358,427)
Gross profit	-	773,449	481,848
Administrative expenses	105,898	(1,474,370)	(2,738,869)
Exceptional costs	-	-	(1,211,905)
Operating profit/(loss)	105,898	(700,921)	(3,468,926)
Investment income	-	1,000	-
Finance costs	(89,365)	(62,851)	(156,294)
Profit/(loss) on ordinary activities before tax	16,533	(762,772)	(3,625,220)
Taxation	-	-	-
Profit/(loss) for the period	16,533	(762,772)	(3,625,220)
Profit/Loss per share – basic	(0.0p)	(1.8p)	(7.6)

 

CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2010

		As at 30 June 2010	As at 30 June 2009	As at 31 December 2009
		Unaudited	Unaudited	Audited
		£	£	£
Non current assets
Property, plant and equipment		-	196,359	-
Intangible assets		-	4,510,904	-
		-	4,707,263	-
Current assets
Inventories		-	56,436	-
Trade receivables			701,458	6,539
Other current assets		7,100	141,674	-
Cash and cash equivalents		1,954	431,974	9,632
		9,054	1,331,542	16,171
Current liabilities
Trade and other payables	1&2	(390,165)	(2,964,869)	(583,815)
Net current liabilities		(381,111)	(1,633,327)	(567,644)
Non-current liabilities
Non-current borrowings	3	(1,920,000)	(2,639,051)	(1,750,000)
Net Liabilities		(2,301,111)	434,885	(2,317,644)
Equity
Share capital		484,420	484,420	484,420
Share premium		2,710,230	2,550,725	2,710,230
Retained earnings		(5,495,761)	(2,600,260)	(5,512,294)
Equity attributable to equity holders of the parent		(2,301,111)	434,885	(2,317,644)

CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2010

			6 months to 30 June 2010	6 months to 30 June 2009	Year ended 31 December 2009
			Unaudited	Unaudited	Audited
			£	£	£
Cash flows from operating activities
Profit/(Loss) before taxation			16,533	(762,772)	(3,625,220)
Adjustments for :
Depreciation			-	60,491	215,312
Amortisation			-	-	1,566,189
Profit on disposal of fixed assets			-	-	(119,217)
Investment income			-	(1,000)	-
Interest expense			89,365	62,851	156,294
Share based payment			-	49,586	-
Decrease/(increase) in trade and other receivables			(561)	(401,035)	489,080
Decrease in inventories			-	2,903	59,339
Decrease/(increase) in trade and other payables			(193,650)	438,812	(19,812)
Cash used in operations			(88,313)	(550,164)	(1,278,035)
Interest paid			(89,365)	(62,851)	(156,294)
Net cash used in operating activities			(177,678)	(613,015)	(1,434,329)
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired			-	(832,000)	(642,000)
Interest received			-	1,000	-
Purchase of intangible assets			-	(25,428)	-
Purchase of property, plant and equipment			-	(1,032)	(96,942)
Proceeds from sale of property, plant and equipment			-	-	-
Net cash from investing activities			-	(857,460)	(738,942)
Cash flows from financing activities
Net new long term loans received			170,000	1,004,808	1,125,757
Issue of shares			-	705,545	865,050
Net cash used in financing activities			170,000	1,710,353	1,990,807
Net increase/(decrease) in cash and cash equivalents			(7,678)	239,878	(182,464)
Cash and cash equivalents at beginning of period			9,632	192,096	192,096
Cash and cash equivalents at end of period			1,954	431,974	9,632

NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2010

1. Accounting policies

Basis of preparation:

The interim financial information for the six months ended 30 June 2010 has been prepared in accordance with the accounting policies that will apply for the period ended 31 December 2010 which will follow International Financial Reporting Standards (IFRS) and interpretations as endorsed by the European Union.

Basis of consolidation:

The consolidated financial statements incorporate the results of the company and its subsidiary undertakings as at 30 June 2010 and exclude all intra-group transactions and balances. The results of subsidiary undertakings are included from the date of acquisition. The results of subsidiary undertakings disposed of are included up to the date of disposal.

Goodwill:

Goodwill represents any excess of the cost of acquisition over the fair value of the identifiable assets and liabilities acquired.  Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses.

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost, less an estimated residual value, of the assets over their estimated useful lives at the following rates:

Web site development 25% straight line

Office equipment 25% straight line

Motor vehicles 25% straight line

Inventories

Stocks are valued at the lower of cost and net realisable value.

Leased assets

Rentals under operating leases are charged to the income statement on a straight-line basis over the lease term. All of the group’s current leases are operating leases.

Foreign currency

Foreign currency transactions are recorded at the rate of exchange at the time of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the income statement.

Post Balance Sheet Events

1. The company entered into agreements on 14^th October 2010 that, subject to approval by shareholders at the General Meeting on 1st November 2010, means the company is able to conclude the Company Voluntary Arrangement (CVA) it entered into on 12^th May 2010.  This will result in the Trade and Other Payables figure being reduced from £390,165 to £92,285 and the non-current borrowings from £1.92m to £0.92m.

2. In the agreements entered into 14^th October 2010 the Directors have agreed to waive accrued fees for the year to date.  This will have the effect of reducing the Trade and Other Payables figure from £92,285 to  £36,161.

3. As a result of the completion of the CVA and other agreements entered into on the 14^th October 2010 the amount of Non-Current Borrowings is reduced to nil.