6247 Antonov 2004 Front - jaarverslag · 32 Pro-forma Unaudited Consolidated Profit and Loss Account 33 Pro-forma Unaudited Consolidated Balance Sheet Account 34 Pro-forma Unaudited

2004Annual Report and Accounts

Innovation,Expertise,Service

ANTONOV PLC

Antonov is now working closely with itslicensees to bring its products to volumeproduction in the automotive market.Antonov also continues to innovate andfind new applications for its technologiesboth with new automotive licensees and in other markets

Antonov plc is a business founded on the patented inventions of Roumen Antonov.It was listed on the Alternative InvestmentMarket of the London Stock Exchange in May 1995 and the Amsterdam Stock Exchange in 1997.Since then it hasinvested more than £28 million in research,productdevelopment and continuing innovation to bring its inventions to market by licensing them to customers.

Today the Group has a strong R&D facility in France which can design,prototype and develop all types of mechanicaltransmissions and a commercial team operating from the UK and the Netherlands.The intellectual property assets of thebusiness are focused on the automotive market,but will also be used in other industrial and leisure applications.

01 Operational Highlights02 Profile 04 Chairman’s Statement06 Chief Executive’s Review08 Finance Director’s Review10 Board of Directors12 Directors’ Report14 Corporate Governance15 Remuneration Committee Report16 Statement of Directors’ Responsibilities17 Independent Auditors’ Report18 Consolidated Profit and Loss Account19 Consolidated Statement of Total

Recognised Gains and Losses

20 Consolidated Balance Sheet21 Company Balance Sheet22 Consolidated Cash Flow Statement23 Notes Forming Part of the

Financial Statements32 Pro-forma Unaudited Consolidated

Profit and Loss Account33 Pro-forma Unaudited Consolidated

Balance Sheet Account34 Pro-forma Unaudited Company

Balance Sheet Account 35 Pro-forma Unaudited Consolidated

Cash Flow Statement Account

Antonov’s technologies now form a key part of our client’s product plans in therapidly expanding Chinese market for both the Antonov six-speed AutomaticTransmission and the Antonov Dual Clutch Transmission

A partnership has been established with Rotrex to bring the Antonov two-speedMechanical Module supercharger drive into low volume production for nicheperformance and US tuner markets, with sales beginning in late 2005

The technical capability in the Paris R&D Centre has been strengthened,particularly with respect to electronic transmission control software and calibration

Operational Highlights

Antonov plc Annual Report and Accounts 2004 01

Strategy

Profile

Antonov does not just sell patent licences, it is a full service transmission technology supplier.

In conjunction with technology licences we provide design,analysis and developmentsupport to our clients throughout the product development process.Technology transferis also provided to enable our clients to acquire the design knowhow in our products.We aim to ensure that our clients take full control of transferred technology and growand develop it further. This approach greatly increases the likelihood of success of thelicensee,enabling Antonov to remain involved in the development and evolution of its technology and generate early revenue from the provision of consulting services.

Antonov plans to gain entry to high volume markets through:

Alliances with Tier 1 suppliers who are threatened by competitivetechnologies and require a competitive advantage to maintain market share

Alliances with new entrants to the automotive market who require new technology to create a product avoiding the need to displace an existing technology

Seeking low volume and niche applications where there is more willingness to pioneer new technologies, resulting in a faster time to market

Exploiting alternative applications where the technology is applied to asmaller sub-system where entry barriers are lower (e.g. supercharger drive)

Exploring non-automotive markets where there are lower entry costs and faster adoption of innovations

Continuing to seek opportunities to innovate further where there are new market requirements and so maintain and build the breadth of Antonov products

02 Antonov plc Annual Report and Accounts 2004

Antonov’s strategy is founded on the breadth of its technology portfoliowith many potential applications. Toachieve our goal of exploiting theseinnovations through licensing to highvolume manufacturers, Antonov needsto establish entry points to this market.

Structure

Antonov plc


Antonov AutomotiveTechnologies B.V.

Rotterdam, NL

AAT CommercialOperations

Cambridge, UK

AAT Technical CentreParis

Sales and MarketingClient Programme Management

Licensing and Contracts

Innovation and ResearchClient Programme Execution

Internal Product Development

Market IssuesEfficiency of conventional autos poor, with CVT requiringdependence on specialist belt supplier

Efficiency can be improved by use of wet clutch launch not torqueconverter, but this requires wider ratio range from transmission

Wider ratio range requires additional speeds to retain optimalpowertrain efficiency and good shift quality leading to higher cost and weight

Problem StatementHow to achieve a compact, highly efficient transmission with six-speeds, no multi-clutch shifts and no specialist components?

Antonov SolutionAAD makes use of simple three speed planetary gear setsarranged on two countershafts

Combination of planetary and countershaft layout provides multi-speeds with simple shifting and high efficiency

Solution is light, compact and scalable to all transverse installations

StatusTransmission has reached Concept Readiness and initialproduction designs have been completed

Concept Demonstrators successfully signed off by a customer as being ready for the production design phase. Suppliernomination and production planning now under way

Top: In-vehicle calibration using industry standardDSpace rapid prototyping controller

Bottom: Spin rig used for lubrication development and initial operational checks

Six-Speed Automatic

“Antonov has now demonstrated the capability to calibrate its own transmissions giving

world-class shift quality control”


Chairman’s Statement

Breadth of Innovation

I would like to express my sincere thanks to allthe Group’s staff and our shareholders for theirsupport in our activity as the Company hasprogressed from its initial development up tothe present day.

We have overcome many challenges in an effort to answer the problems of efficiency, cost and the size of automatic transmissionsystems. Respect for the environment,preservation of the Earth’s natural resourcesand the pleasure of driving have been the main motivation in this challenge.

Our beliefs have now become reality and we will shortly see the volume application of ourproducts. To manage the transition to clientprogrammes, we have strengthened themanagement team with the appointment ofJohn Moore as CEO. He brings a wealth ofexperience in delivering product engineeringsolutions to clients. In his statement heprovides a detailed review of our achievementsthis year and strategy for the future.

There is now a growing recognition in the industrythat Antonov has both the technology and theexpertise to provide realistic and affordablesolutions to the marketplace.

Roumen AntonovChairman24 June 2005

Roumen AntonovChairman

“Antonov’s strength is the diversity of its innovation – it is not dependent on a

single invention but has a range of products for diverse applications and markets”

Market IssuesDevelopment of a new transmission requires high investment,with a similar financial outlay required for the modification of an existing supplier transmission

Customer demand requires even niche vehicles to offer bothmanual and automatic transmissions

Automatic transmissions need to offer better efficiency

Problem StatementHow to provide both manual and automatic variants with themaximum commonality of investment?

Antonov SolutionUse of an innovative gear and shaft architecture enables 80%of parts to be common between manual and automatic units

All critical development areas such as gears, shafts, bearingsand lubrication are common to both systems

Use of countershaft gearing and wet clutch launch offers hightransmission efficiency

StatusInitial concept design complete and first prototype designrelease ready

Supplier nomination and production planning under way

Top: Unique Antonov configuration allows all main gearelements and bearings to be the same betweenmanual and automatic versions of the transmission

Bottom: All design work undertaken on Pro-E 2000i,an industry standard three-dimensional computeraided design system for ease of data transfer tolicensees

Six-Speed Dual Clutch Transmission



Chief Executive’s Review

Progress to Production

“Antonov Technology has achieved Concept Readiness and is now part of our

clients’ confirmed product plans”

A detailed route map for Antonov and our industry partners hasbeen agreed and during the rest of 2005 we will work together to optimise the manufacturing route that will deliver a globallycost-competitive and uniquely featured set of products.

In any situation, it is normal that the arrival ofnew leadership brings with it renewed optimismand a focus on the future. Arriving as I did, just at the turn of the year, my report willinevitably look as much to the future as report on the achievements of the year that has passed.

It has been an interesting year for Antonov. The news that was announced through the year included partnerships with Powertrain Ltd.and Rotrex.

As was widely reported Powertrain Ltd wasplaced into administration in early April 2005.Antonov expects no long-term adverse impactfollowing these events. It is our expectation thatShanghai Automotive Industry Corporation (SAIC)will seek in some form to acquire parts ofPowertrain Ltd., including access to key staffmembers. This will enable the current productdevelopment plans to continue. If this is notachieved, we expect to reach agreement directlywith SAIC (or its affiliated transmissionmanufacturer Shanghai Automotive Gear Works)to enable their automatic transmission plans tobe maintained.

Antonov’s investment in its technologies forapplication in MG Rover and SAIC vehicles hasbeen driven by strong commercial demand forinnovative and versatile automatic transmissiontechnology, and this rational has not changed.Rotrex have brought us access into the buoyantUS tuner market. In both cases Antonov’stechnology is now central to products in theproduction schedule.

This is the major underlying message from thepast year and also the year ahead. Antonovtechnology is now in OEM production plans.Previously, Antonov have had concepts underreview by interested parties. The step from this to entering clients’ product plans is a significant one.

Over the next two years, I am confident thatthese initial applications will be followed byothers as the Antonov transmission designsbecome accepted as ready for applicationrather than as untried concepts.

2004 saw the first three client programmes well under way and this has also shown theneed to continue to strengthen the commercialand project management aspects of the Group

John MooreChief Executive

to match the very strong technical team that is already established in Paris. This strengthenables us to offer much more than a “bare”patent licence. We expect that many potentiallicensees will also want design and developmentsupport and effective technology transfer, fromwhich significant fees will be earned.

In order to ensure that we capitalise on thisimportant step forward, I have established a strong commercial team, based in Cambridge,UK. This team will be a key part of theproduct strategy outlined here and will work closely with customers executing their development programmes.

As the existing technologies mature, it is also important to seek new opportunities to innovate. Antonov is not a business founded on a single historic invention, but rather on a continuous stream of innovation that reacts to the needs of the market. This can be seenfrom a review of the patent portfolio whichdemonstrates this continuous process. My commercial team will also be activelyseeking power transmission problems in need of a solution. This will ensure the long termfuture of the business.

John MooreChief Executive24 June 2005

Top: Antonov has dedicated clean room facilities for assembly of prototype units

Bottom: Vehicle integration is an important part of the product development process and in-vehicledemonstrators enable us to prove the value of our technology


Market IssuesSuperchargers provide better drivability than turbochargers, butto obtain good boost at low engine speeds leads to inefficientoperation at high engine speeds

Variable speed drives (eg electric drive) have too high a powerloss to show significant overall gains

Problem StatementHow to achieve a compact, low cost and highly efficient multi-speed drive to a supercharger?

Antonov SolutionUse of a single mechanical module packaged into the input of the supercharger drive providing a 1.4:1 step up at lower engine speeds

No external controls are required except the provision of a simple solenoid control to allow the EMS to fine control the exact shift points for better engine control

High transmission efficiency ensures full use of the efficiencygains from better supercharger operation

StatusInitial units have demonstrated Concept Readiness

Initial order received for pre-production units

Manufacturing partner selected for low volume manufacture

Sales under way to niche vehicle makers and US aftermarketdistributors

Discussions on higher volume applications under way

Two-Speed Mechanical Rotrex Supercharger Drive

appliedtechnology

Initial Concept Demonstrators

Concept Readiness

Niche Production Applications

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production intentblue sky research

Rather than attempt a comprehensive description of all the ongoing technical and commercialactivities, I have picked out four examples of Antonov products at different stages of the conceptdevelopment cycle. For each of these I have outlined below the strategy and status.

1. Six-speed Automatic Transmission2. Dual Clutch Transmission3. Two-speed Mechanical Rotrex Supercharger Drive 4. Two-speed Mechanical Alternator Pulley Drive

Concept Development Status


Finance Director’s Review

Success for licensees means success for Antonov

“Service provision is a key part of Antonov’s strategy and this not only increases the

likelihood of success for a licensee, but will also generate direct consultancy revenue”

The Group has made significant progress in the commercialisationof its technology. Initial revenue is expected in late 2005.

FinancialGroup losses during the 12 months were £3.2 million, 47% greater than in the 2003financial year (2003: £2.2 million). In the mainthe higher losses resulted from increasedinvestment in the design and development of new prototype gearboxes for PowertrainLimited. Loss per share for the period was11.7p (2003: 8.3p). The overdraft at 31December 2004 was £138,000 (2003: cashbalance of £183,000), reflecting the Group’shigher cost base. A successful fund raisingexercise during January 2005 was completedstrengthening the Group’s financial position.

Fund RaisingThe Group, in line with its long stated policy of only raising sufficient capital to fund itscontinued working capital needs for a one yearperiod, undertook a number of fund raisingexercises during 2004. The Board has now re-evaluated the above-mentioned policy in the light of the sheer number of fund raisingexercises required, the uncertain demands onthe Group’s resources as a consequence ofcustomer development projects and finally as a result of the expectation that material, but currently unquantifiable revenue, will be generated beginning in late 2005.

As a consequence of this change in fundingpolicy, the Group completed two large fundraising exercises after year-end:

1. On 21 January 2005, the Company wasgranted a convertible term loan facility of €3 million by nine different parties.

2. On 7 June 2005, the Company was granted aconvertible term loan facility of €6.75 millionby five different parties, including Quivest B.V.,the Company’s biggest shareholder.

The two above-mentioned facilities provide the Group with a flexible form of funding as the Company can choose when and howmuch to drawdown on these facilities enabling it to manage its working capital requirements in an optimal manner and so keep shareholderdilution to a minimum. The Company is underno obligation to drawdown the full amount ofthe two facilities if this is not required.

Warrant ListingFollowing the passing of various resolutions at an Extraordinary General Meeting of theCompany, held on 26 November 2004, the Company proceeded in June 2005 withplans to issue a new class of warrants. The new warrants have been offered to existingwarrantholders in exchange for the various

David BovellFinance Director

Financial Highlights 2004Losses increase by 47% to £3.2 million as aresult of further significant investment in designand development for customer projects.

Revenue generation expected to begin in late 2005.

New sources of working capital secured in 2005.

Warrant listing expected to be completed atthe end of June 2005.

classes of warrants previously issued as part ofa well established practice in past fund raisingexercises. The new class of warrants will belisted on the Alternative Investment Market.

The Directors believe that the Company willbenefit from a much simplified warrant structureand potentially in the future it will be able tobuy in warrants in the market for cancellationand thereby reduce the inevitable dilution thatwill occur when these warrants are exercised.Dealings in the new class of warrants areexpected to commence on the AlternativeInvestment Market on 30 June 2005.

International Financial Reporting Standards (IFRS)IFRS comes into effect in 2005 when theCompany will for the first time report its half-yearresults in accordance therewith. Every effort willbe made to assist all shareholders to understandthe consequences of the new standards on theGroup accounts. The standards that will give riseto the most significant differences between theGroup’s current accounting policies and IFRS are IAS32 and IAS39, the Financial Instrumentsstandards, and IFRS2 Share-based payments. The Company does not expect to adopt IAS 32and IAS 39 for the comparative period. Theimpact of these standards and IFRS 2 is suchthat they will not impact the balance sheet ontransition. Consequently the Directors considerthat the impact of adopting IFRS for the openingbalance sheet is unlikely to be significant.

The Group is progressing with its IFRS conversionproject and has identified the following areas withthe accounts as being of significance:

• WarrantsIFRS requires that warrants in issue with a fixedpurchase price for a fixed number of shares areaccounted for as equity instruments.

• OptionsIFRS requires the fair value cost of providingshare option schemes to employees to beexpensed through the profit and loss accountover the vesting period.

• Convertible debtIFRS requires convertible debt that isconvertible into a fixed number of equityshares or a fixed amount of cash, at theoption of the holder, to be split accounted. The two component parts of the instrument(being the debt instrument redeemable in cash and the call option convertible into a fixednumber of shares) should be shown separatelyin liabilities and equity respectively. Currently,the convertible debt is shown as a liability.

• R&DResearch expenditure will as in the past beexpensed as incurred. However, developmentexpenditure meeting certain recognitioncriteria is to be capitalised on the balancesheet. It is probable that some expenditure to be incurred on customer projects in 2005and in later accounting periods will meet thiscriteria. No restatement of prior year result will be necessary.

David BovellFinance Director24 June 2005

Top: Close integration between Design, Analysis andDevelopment teams ensures a highly effective productdevelopment process

Bottom: The two-speed pully drive is a highly compactand simple design offering a cost effective solution

Market IssuesPowertrain front accessory drives have demands that areunrelated to engine speed but output that is speed dependent

Increasing current demand from alternators at low speed todrive electric power steering driving larger alternator packageand higher losses at high engine speeds

Problem StatementHow to achieve a compact, low-cost and highly efficient two-speed drive in a crank nose pulley?

Antonov SolutionUse of a single mechanical module packaged into the crankshaftnose pulley provides a 2:1 step up at lower engine speeds

No external controls are required

High transmission efficiency ensures full use of the efficiencygains from lower speed accessory operation at higher engine speeds

StatusInitial discussions with potential Tier 1 partners underway to refine product specification

Concept demonstrators planned once trial applicationsdemonstrated

Introduction time can be shortened by re-use of some elementsof supercharger drive to reduce cost and time to produce initial demonstrators

Two-Speed Mechanical Alternator Drive



Board of Directors

Front row (L-R): David Bovell, John Moore, Nigel BrownBack row (L-R): Christopher Ross, Roumen Antonov, Armand Dahi


1.Roumen AntonovChairmanRoumen Antonov, 61, the inventor of theautomatic transmission bearing his name,founded the Antonov Automotive TechnologiesGroup in 1991 to develop and market what today comprises all of the Group’stransmission technology. Mr. Antonov was born in Bulgaria, where he trained as anuclear physicist. After moving to France in1989 he has pursued a career as a scientist,engineer and inventor from his base in Paris.Besides his Chairman’s responsibilities Mr. Antonov continues to lead the Group’sR&D endeavours.

2.John MooreChief Executive OfficerJohn Moore, 40, joined the Board of Antonovin January 2005. He is a Chartered Engineer and an experienced automotive industryprofessional with a strong track record of technical and organisational innovation. Prior to joining Antonov he was the CommercialDirector of Lotus Engineering and has alsoheld senior management positions withRicardo plc and John McGavigan Ltd, a subsidiary of Pressac plc.

3.David BovellFinance DirectorDavid Bovell, 48, joined the Board of Antonov in August 2003. He is a CharteredAccountant, having spent the early part of his career as a management consultant andcorporate finance executive. He establishedGreen Corporate Finance in 1992 where heinitiated the Group’s listing on the LondonStock Exchange in 1995 and subsequentlyundertook a number of fund-raising exercisesfor Antonov plc.

4.Armand DahiNon-Executive DirectorArmand Dahi, 43, joined the Board of Antonovin March 2004. Mr. Dahi was formerly theGroup’s Commercial Director. He hassignificant experience of working within theautomotive industry and prior to joiningAntonov held senior management positionswith Peugeot and Michelin.

5.Christopher Ross FR EngNon-Executive DirectorChristopher Ross, 60, joined the Board of Antonov in March 2004. Mr. Ross is aChartered Engineer and is currently Chairmanof Dunn-Line Plc, Deputy Chairman ofManganese Bronze Holdings Plc and a Non-Executive Director of Carclo Plc, all are UK listed companies with interests in theautomotive sector. He has also recently beenappointed as Non-Executive Director of IconaSolutions Limited, an engineering softwareprovider. Previously, he was Chief Executive of Ricardo Plc. He is widely credited in theautomotive industry for having transformedRicardo into the world’s No. 1 powertraindesign and development business. He washonoured by Prince Philip in 1995 when hewas initiated as a Fellow of the Royal Academyof Engineering.

6.Nigel BrownCompany Secretary


Directors’ Report

The Directors present their Annual Report and Accounts for the year ended 31 December 2004. The accounts are for Antonov plc (“the Company”)and its subsidiary companies, including Antonov Automotive Technologies B.V. (“AAT”).

Principal ActivitiesThe Group is engaged in the development and commercialisation of a range of transmission products for both automotive and non-automotive applications.

Business Review and Future DevelopmentsThe Group’s results for the year ended 31 December 2004 are set out in the Consolidated Profit and Loss Account on page 18.

The operating results and future prospects are discussed in the Finance Director’s Review on page 8. No dividends are proposed and the loss of £3,173,000 has been carried to reserves.

Directors and their InterestsThe Directors who held office during the year were as follows: R. Antonov – D. Bovell – A. Dahi – C. Minnaar – C. Ross and M. Schinzig.

A. Dahi was appointed as a Non-Executive Director on 17 March 2004, C. Ross was appointed as a Non-Executive Director on 17 March 2004 andM. Schinzig resigned on 17 March 2004.

Following the year-end, J. Moore was appointed as Chief Executive Officer on 21 January 2005 and C. Minaar resigned as a Director of theCompany on 22 March 2005.

J. Moore and D. Bovell have rolling service contracts with AAT providing six-months notice, while R. Antonov has a rolling three-month servicecontract. D. Bovell will retire at the next Annual General Meeting in accordance with the Articles of Association and, being eligible, will offer himselffor re-election. J. Moore, who has not previously been endorsed as a Director of the Company by its shareholders will also retire at the next AnnualGeneral Meeting and being eligible, will also offer himself for re-election.

The Directors who held office at the end of the financial year had the following interests in the share capital of the Company:

At the beginning of the year At the end of the yearNumber % issued Number % issued

of ordinary ordinary of ordinary ordinary shares share capital shares share capital

R. Antonov 11,688,899 11.7 11,688,899 10.3D. Bovell 80,000 – 133,300 0.1C. Minnaar 7,452,921 7.4 7,452,921 6.6

R. Antonov’s interest in ordinary shares is derived from his interest in Antonov Holding EURL. C. Minnaar’s interest in ordinary shares is derived fromhis interest in GG Enterprises BVBA.

During the 2004 financial year no options were issued under either the Company’s Executive Share Plan or the Non-Executive Share Option Plan.


Directors’ Report continued

The Directors who held office at the end of the financial year had the following interests in options to acquire ordinary shares of the Company.

Number of optionsAt the granted

beginning during At the endof the year the year of the year

R. Antonov 586,950 – 586,950

During the year the quoted mid-market price of the Company’s shares was:

Lowest price Highest price At the endExchange per share per share of the yearLondon Stock Exchange 17p 48p 32.25pAmsterdam Stock Exchange 24c 74c 48.00c

Sub-committees of the Board

Audit RemunerationMr. C. Minnaar (resigned 22 March 2005) Mr. C. Minnaar (resigned 22 March 2005)Mr. C. Ross (appointed 15 March 2004) Mr. C. Ross (appointed 15 March 2004)

Major InterestsThe Directors are aware of the following interests that represent three percent or more of the issued share capital of the Company at 31 May 2005.

Number of% of options/warrants

Number of issued ordinary to subscribe forShareholder ordinary shares share capital ordinary sharesNetherlands Centraal Institut Voor Giraal Effectenverkeer B.V. 19,449,892 68.2 –Quivest B.V. 3,746,921 13.1 2,500,000HSBC Global Custody Nominee (UK) Limited 2,347,353 8.2 –GG Enterprises B.V.B.A. 1,826,883 6.4 10,416Green Investments B.V.B.A. 1,727,906 6.0 195,000

Number of Days Purchases in Trade CreditorsIt is the Group’s policy that payments to suppliers are made in accordance with those terms and conditions agreed between the Group and itssuppliers, provided that all trading terms and conditions have been complied with.

The number of days purchases outstanding for the Group at 31 December 2004 was 104 (2003: 39).

AuditorsA resolution to reappoint Ernst & Young LLP as the Company’s auditor will be put to the forthcoming Annual General Meeting.

Post Balance Sheet EventsPost balance sheet events are set out in note 29 to the accounts.

By order of the Board:

N.W. BrownCompany Secretary24 June 2005


Corporate Governance

Although not governed by the Listing Rules of the UK Listing Authority the Directors have given consideration to the Combined Code and applied it where appropriate for the limited size of the Company and its position.

The Board of DirectorsThe Board comprises both Executive and Non-Executive Directors. It meets regularly with the Board making all major decisions affecting the Company.The Board has in place an organisational structure with clearly defined areas of responsibility providing for the delegation of authority to executivemanagement and duly appointed committees of the Board. The Board includes Non-Executive Directors who bring strong independent judgement and valuable knowledge and experience to the Board’s deliberations.

All Directors have access to the Company Secretary and through him to such legal advice they may require.

CommitteesThe Board has constituted two main committees with clearly defined terms of reference.

Audit CommitteeThis Committee comprised Mr. C. Minnaar and Mr. C. Ross as its Chairman. The terms of reference cover matters including financial reporting,accounting policies, the Company’s internal financial control and the appointment of an external auditor. The Audit Committee meets at such times as its Chairman deems necessary.

Remuneration CommitteeThis Committee comprised Mr. C. Minnaar and Mr. C. Ross, with the Committee being chaired by Mr. Minnaar. The terms of reference cover mattersincluding the approval and alterations to the terms of appointment of the Executive Directors. Following Mr. Minnaar’s resignation Mr. Ross hasassumed the chairmanship of this Committee.

Internal ControlsThe Directors are responsible for ensuring that the Group maintains a system of internal controls to provide them with reasonable assurance regardingthe reliability of financial information used within the business and for publication and that assets are safeguarded. Internal control systems aredesigned to meet the particular needs of the Group and the risks to which it is exposed, and by their nature can provide reasonable, but not absolute,assurance against material misstatements or loss.

Given the limited size of the Group and close personal involvement of the Executive Directors, the Directors consider the system appropriate. However, the system is kept under constant review and with an increase in commercial activity anticipated it is expected certain controls will need to be strengthened.

Going ConcernThe Group has been able to obtain further significant funding from outside investors since the year-end. In addition the Group has made considerablecommercial progress since the 2003 financial year such the Directors are confident that revenue generation from the exploitation of its technology willbegin in late 2005, increasing in scale thereafter. The Directors are of the opinion that the working capital now available to the Group is sufficient forall of its foreseeable requirements. The Directors therefore consider that it is appropriate for the accounts to be prepared on a going concern basis.


Remuneration Committee Report

The Remuneration Committee determines the remuneration and emoluments of Executive Directors. The Committee operates under formal terms of reference. The Committee does not set the fees for Non-Executive Directors, these are agreed by the Chairman of the Board and the Chief Executive.

Executive Directors’ Service ContractsMr. Antonov has a rolling service contract providing three months notice, while Mr. Bovell and Mr. Moore have rolling service contracts with AATproviding six months notice.

Remuneration and bonuses paid to Directors are shown in note 5 to the accounts.

Non-Executive DirectorsAll Non-Executive Directors’ contracts run for a fixed period of 12 months from the date of appointment and thereafter may be renewed or extendedby the Board, subject to the Company’s policy on retirement by rotation under the Articles of Association. Non-Executive Directors are paid agreedannual fees and are reimbursed reasonable expenses properly incurred in the discharge of their duties. The fees paid to Non-Executive Directors are shown in note 4 to the accounts. Non-Executive Directors do not participate in any pension arrangements or in any other employee benefits.

On 18 January 1999, the Company adopted a Non-Executive Directors share option plan. Directors’ share options are as shown in the Directors’ Report, although no new options were awarded to the Non-Executive Directors during the 2004 financial year.

Share OptionsThe Company adopted an executive share option scheme for the benefit of its employees generally on 21 May 1996. No options were granted toemployees or Executive Directors in 2004 under the scheme. Of all previously awarded employee share options 157,650 remained outstanding at31 December 2004. Directors’ share options are as shown in the Directors’ Report.

Pension ArrangementsThe Company does not operate a company pension scheme.

C. RossChairman of the Remuneration Committee24 June 2005


Statement of Directors’ Responsibilities in Respect of the Accounts

Company law requires the Directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the Companyand of the Group as at the end of the year and of the profit or loss for that period. In preparing these accounts, the Directors are required to:

• select suitable accounting policies and then apply them consistently;• make judgements and estimates which are reasonable and prudent;• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the

accounts; and• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors have confirmed that they have complied with the above requirements in preparing the accounts.

The Directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financialposition of the Company and Group, and enable them to ensure that the accounts comply with the Companies Act 1985. They are also responsiblefor safeguarding the assets of the Company and of the Group and hence for taking reasonable steps for the prevention and detection of fraud andother irregularities.


Independent Auditors’ Report to the Members of Antonov plc

We have audited the Group’s accounts for the year ended 31 December 2004 which comprise the Consolidated Profit and Loss Account,Consolidated Balance Sheet, Company Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Total Recognised Gains andLosses, Reconciliation of Movements in Shareholders’ Funds and the related notes 1 to 24. These accounts have been prepared on the basis of theaccounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report andfor no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and theCompany's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of Directors and AuditorsThe directors are responsible for preparing the Annual Report, including the accounts which are required to be prepared in accordance withapplicable United Kingdom law and accounting standards as set out in the Statement of directors’ responsibilities in respect of the accounts.

Our responsibility is to audit the accounts in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards.

We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the accounts, if the company has not kept properaccounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regardingdirectors’ remuneration and transactions with the group is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited accounts. This other informationcomprises the Chairman’s Statement, Chief Executive’s Review, Finance Director’s Review, Corporate Governance Statement, Remuneration Report,Report of the Directors and the Pro-forma abbreviated financial statements in Euros. We consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencies with the accounts. Our responsibilities do not extend to any other information.

Basis of Audit OpinionWe conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination,on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimatesand judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the Group’scircumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts.

OpinionIn our opinion the accounts give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2004 and of theloss of the Group for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

Ernst & Young LLPRegistered AuditorManchester24 June 2004


Consolidated Profit and Loss Account for the year ended 31 December 2004

Total Total2004 2003

Note £’000 £’000Turnover – –Cost of sales – –Gross profit – –Development costs and administrative expenses (3,109) (2,142)Operating loss 3 (3,109) (2,142)

Interest receivable and similar income 6 – 9Interest payable and similar charges 6 (13) (1)Loss on ordinary activities before taxation (3,122) (2,134)Taxation on loss from ordinary activities 7 (51) (28)Loss on ordinary activities after taxation (3,173) (2,162)Loss per share

Basic and diluted 8 (11.7p) (8.3p)*

* Restated for the share consolidation that took place in February 2005.

The notes on pages 23 to 31 form part of these financial statements.


Consolidated Statement of Total Recognised Gains and Losses for the year ended 31 December 2004

2004 2003£’000 £’000

Consolidated statement of total recognised gains and losses

Loss for the financial year after taxation (3,173) (2,162)Exchange translation differences on consolidation (42) 195

Total recognised gains and losses for the year (3,215) (1,967)

Reconciliation of Movements in Shareholders’ Funds for the year ended 31 December 2004

2004 2003Notes £’000 £’000

Total recognised gains and losses for the year (3,215) (1,967)

Other movements:Issue of shares (net of costs) 15 2,105 1,210 Total movements in the year (1,110) (757)

Shareholders’ funds at 1 January 1,458 2,215 Shareholders’ funds at 31 December 348 1,458



Consolidated Balance Sheet at 31 December 2004

2004 2003Note £’000 £’000

Fixed assetsIntangible assets 9 1,404 1,440Tangible assets 10 113 64

1,517 1,504Current assetsStocks 12 155 51Debtors 13 437 254Cash at bank and in hand – 183

592 488Creditors: amounts falling due within one year (including convertible debt) 15 (1,761) (534)Net current liabilities (1,169) (46)Total assets less current liabilities 348 1,458Capital and reservesCalled up share capital 16 5,677 5,266Share premium account 17 18,455 16,761Capital reserve 17 2,587 2,587Profit and loss account 17 (26,371) (23,156)Shareholders’ funds 17 348 1,458

The financial statements were approved by the Board on 24 June 2005.

R. Antonov D. BovellChairman Finance Director



Company Balance Sheet at 31 December 2004

2004 2003Note £’000 £’000

Fixed assetsInvestment in subsidiaries 11 21,898 20,014

Current assetsDebtors 13 68 50Cash at bank and in hand – 31

68 81Creditors: amounts falling due within one year (including convertible debt) 15 (405) (330)Net current liabilities (337) (249)Total assets less current liabilities 21,561 19,765Capital and reservesCalled up share capital 16 5,677 5,266Share premium account 17 18,455 16,761Profit and loss account 17 (2,571) (2,262)Shareholders’ funds 17 21,561 19,765

The financial statements were approved by the Board on 24 June 2005.

R. Antonov D. BovellChairman Finance Director



Consolidated Cash Flow Statementfor the year ended 31 December 2004

2004 2003Note £’000 £’000

Net cash outflow from operating activities 22 (1,997) (2,050)

Returns on investments and servicing of finance 23 – 9

Taxation 23 (17) (32)

Capital expenditure and financial investment 23 (196) (103)Cash outflow before financing (2,210) (2,176)

Financing 23 1,889 1,416Net decrease in cash 24 (321) (760)


Notes Forming Part of the Financial Statements for the year ended 31 December 2004

1 Accounting PoliciesThe following accounting policies have been consistently applied in dealing with items which are considered material in relation to the Group’s accounts.

Basis of PreparationThe accounts have been prepared in accordance with applicable United Kingdom accounting standards under the historical cost accounting rules.

The accounts have been prepared on a going concern basis which assumes that the Company will continue in operational existence for theforeseeable future.

The Group has been able to obtain further significant funding from outside investors since the year-end. In addition the Group has madeconsiderable commercial progress since the 2003 financial year such the Directors are confident that revenue generation from the exploitation of its technology will begin in late 2005, increasing in scale thereafter. The Directors are of the opinion that the working capital now available to theGroup is sufficient for all of its foreseeable requirements. The Directors therefore consider that it is appropriate for the accounts to be prepared on a going concern basis.

Basis of ConsolidationThe consolidated financial statements incorporate the results of Antonov Plc and all of its subsidiary and associated undertakings as at 31 December 2004. No profit and loss account is presented for Antonov Plc as permitted by section 230 of the Companies Act 1985.

Intangible Assets Intangible assets represent patent and trademark application costs and are stated at historic cost, reduced by a provision for amortisation over theperiod of their expected useful lives of 20 years. The Directors review the carrying value of all of such assets on an annual basis for impairment.

Tangible Fixed AssetsTangible fixed assets are stated at cost reduced by a provision for depreciation over the period of their expected useful lives of three to sevenyears. The carrying value of tangible fixed assets are reviewed for impairment if events or changes in circumstances indicate the carrying valuemay not be recoverable.

Financial Fixed AssetsInvestment in subsidiaries in the Company balance sheet are stated at cost, less provision for impairment where necessary. The carrying value of financial fixed assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.

StockStock is stated at the lower of cost and net realisable value. Work in progress includes the cost of direct materials and labour.

Foreign CurrenciesTransactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated inforeign currencies are translated at the rate of exchange ruling at the balance sheet date. All these exchange differences are taken to the Profit andLoss Account. On consolidation, the Balance Sheets of overseas subsidiaries are translated at the rate of exchange ruling at the Balance Sheetdate. The profit and loss accounts of overseas subsidiaries are translated at the average rate of exchange during the year. The resulting exchangedifferences and those arising on the re-translation of opening net assets are taken directly to reserves.

Research and Development Research and development expenditure is written off in the period in which it is incurred.

LeasingRentals under operating leases are charged to the Profit and Loss Account on a straight line basis over the lease term.

Deferred TaxationDeferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions:

• Provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint venturesonly to the extent that, at the Balance Sheet date, dividends have been accrued as receivable.

• Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxableprofits from which the future reversal of the underlying timing differences can be deducted.


Notes Forming Part of the Financial Statementscontinuedfor the year ended 31 December 2004

2 Turnover, Other Revenue and Segmental InformationAll turnover, other revenue, losses and net assets/liabilities relate to the development and commercialisation of the Antonov Automatic Transmission.There was no turnover or other revenue generated by the Company in either this or the preceding year.

3 Operating Loss2004 2003£’000 £’000

This is arrived at after charging/(crediting):

Research and development – current year’s expenditure 2,200 1,252Depreciation of tangible fixed assets 39 49Amortisation of intangible assets 152 165Operating leases – land and buildings 200 200Auditors’ remuneration – audit services 33 27

– non-audit services 5 10

4 Employees2004 2003£’000 £’000

Staff costs for all employees, including Executive Directors, consist of:

Wages and salaries 666 406Social security costs 157 112Pension costs 82 61

905 579

The average number of employees of the Group during the year, including Executive Directors, was as follows:

2004 2003Number Number

Product development 14 12Administration 7 5

21 17

5 Directors’ RemunerationR. Antonov M. Schinzig D. Bovell

2004 2003 2004 2003 2004 2003£’000 £’000 £’000 £’000 £’000 £’000

Basic salary 98 103 20 68 39 10Bonus – – – – 61 10Benefits 13 6 9 9 – –

111 109 29 77 100 20Social charges and other insurances 26 26 6 16 – –Pension contributions to money purchase schemes 12 13 3 7 – 20

149 148 38 100 100 40

Mr. Bovell’s emoluments are paid to a third party for the provision of his services.

The remuneration of the Non-Executive Directors is as follows:A. Dahi C. Minnaar C. Ross

2004 2003 2004 2003 2004 2003£’000 £’000 £’000 £’000 £’000 £’000

Payments to third parties in respect of services 63 26 12 12 22 12

Details of Directors’ share options can be found in the Directors’ Report and note 16.



6 Interest 2004 2003£’000 £’000

Interest receivable – 9Interest payable– Bank loans and overdrafts – –– Convertible loan notes (13) (1)

(13) 8

7 Taxation a) Tax on Loss on Ordinary ActivitiesThe tax charge is made up as follows:

2004 2003£’000 £’000

Current tax:Overseas tax 51 28

b) Factors Affecting Current Tax Charge

The tax assessed for the period is higher than the standard rate of corporation tax in the UK applied to profit before tax. The differences areexplained below:

2004 2003£’000 £’000

Loss on ordinary activities before tax (3,122) (2,134)Loss on ordinary activities at the standard rate of corporation tax in the UK of 30% (2003: 30%) (987) (640)Effect of:Expenses not deductible for tax purposes 54 26Depreciation in excess of capital allowances (19) (16)Tax losses not recognisable 1,068 732Higher tax rates on overseas earnings (115) (74)Current tax charge for period 51 28

c) Factors That May Affect Future Tax ChargesThe Group expects to continue to incur overseas taxation in certain jurisdictions against which losses in other jurisdictions are not relievable. In addition, until the Group begins to receive revenues from licensing of its technology, due to the availability of accumulated tax losses, the Group does not expect to incur any significant tax charge.

No deferred tax is recognised on the unremitted earnings of overseas subsidiaries as no dividends have been declared and the Group has no liabilityto additional taxation should such amounts be remitted due to the availability of double taxation relief.

8 Earnings per ShareEarnings per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of equity shares in issue is 27,007,282 (2003: 26,004,471 (restated)) and the earnings, being loss after tax, are £3,173,000 (2003: £2,162,000).

Since the year-end a share consolidation was undertaken with one 20p share being issued for every four 5p shares. The weighted average number of equity shares in issue has been calculated after the share consolidation and the comparative figures restated accordingly.



9 Intangible AssetsPatent andtrademarkapplication

Software costs TotalGroup £’000 £’000 £’000CostAt 1 January 2004 96 2,650 2,746Exchange adjustment 4 14 18Additions 29 83 112At 31 December 2004 129 2,747 2,876AmortisationAt 1 January 2004 94 1,212 1,306Exchange adjustment 3 11 14Provision for year 11 141 152At 31 December 2004 108 1,364 1,472Net book value at 31 December 2004 21 1,383 1,404At 31 December 2003 2 1,438 1,440

10 Tangible AssetsMotor Other fixed

vehicles assets TotalGroup £’000 £’000 £’000

CostAt 1 January 2004 83 246 329Additions – 84 84Exchange adjustment – 7 7At 31 December 2004 83 337 420DepreciationAt 1 January 2004 79 186 265Provided for the year 4 35 39Exchange adjustment – 3 3At 31 December 2004 83 224 307Net book value at 31 December 2004 – 113 113At 31 December 2003 4 60 64

11 Fixed Asset InvestmentsGroup

undertakings TotalCompany £’000 £’000CostAt 1 January 2004 20,014 20,014Additions 1,884 1,884Disposals – –At 31 December 2004 21,898 21,898

Additions represent additional capital contributions to AAT.



11 Fixed Asset Investments continuedSubsidiary UndertakingsThe following were subsidiary undertakings at the end of the year and have all been included in the consolidated financial statements:

Proportion ofCountry of voting rightsincorporation and ordinary

Name or registration share capital held Nature of business ParentAntonov Automotive Technologies B.V.(“AAT”) The Netherlands 100% Licencing Antonov Plc

Antonov Automotive Europe B.V. The Netherlands 100% Licencing AAT

Antonov Automotive Far East B.V. The Netherlands 100% Licencing AAT

Antonov Automotive North America B.V. The Netherlands 100% Licencing AAT

Antonov Automotive Technologies FranceSARL France 100% Research and AAT

Development

For all undertakings listed above, the country of operation is the same as its country of incorporation or registration.

12 StocksGroup Group Company Company2004 2003 2004 2003£’000 £’000 £’000 £’000

Work in progress 155 51 – –

13 DebtorsGroup Group Company Company2004 2003 2004 2003£’000 £’000 £’000 £’000

Amounts due from related undertakings 68 13 68 –Other debtors and prepayments 367 241 – 50Amounts owed by Directors 2 – – –

437 254 68 50

14 Deferred TaxationThere is no net provision for deferred taxation. £nil (2003: £19,000) of depreciation timing differences have been offset against trading losses. The amounts of unrecognised deferred tax assets are as follows:

Group Group Company Company2004 2003 2004 2003£’000 £’000 £’000 £’000

Trading losses 8,733 7,577 653 562Depreciation timing differences – – – –

8,733 7,577 653 562

The movement in the Group’s and Company’s unrecognised deferred tax assets in the year relates to exchange differences, the loss arising in theperiod and a review of the brought forward tax loss position. If the Group or Company generates profits in the future the unrecognised deferred taxassets are potentially recoverable.



15 Creditors: Amounts Falling Due Within One YearGroup Group Company Company2004 2003 2004 2003£’000 £’000 £’000 £’000

Convertible loan note – 175 – 175Bank overdrafts (secured) 138 – 1 –Trade creditors 940 135 38 14Amounts owed to group undertakings – – 218 47Tax and social security – 39 – –Other creditors and accruals 632 168 148 94Corporation tax 51 17 – –

1,761 534 405 330

The bank overdrafts are secured by a floating charge over the assets of the Group and the Company.

The unsecured convertible loan note was converted into ordinary share capital during the year under the terms of the loan agreement. The totalamount available under the loan note was €1,250,000. The loan note was convertible, at the option of either party, into ordinary shares at a priceof €0.30 per share at any time after 30 June 2004. If not converted the loan note was repayable at par on 30 days notice by either party at anydate after 31 December 2004. The loan note also had 1.5 million share warrants attached and details of these have been included below. Accruedinterest on the loan note at 7.5% p.a. remains unpaid as at 31 December 2004 and is included within “Other creditors and accruals”.

16 Share Capital2004 2003£’000 £’000

AuthorisedEquity share capital154,189,471 ordinary shares of 5p each 7,709 7,709

Allotted, called up and fully paidEquity share capital 113,543,048 (2003: 105,319,348) ordinary shares of 5p each 5,677 5,266

During the year 8,016,667 ordinary shares with an aggregate nominal value of £400,833 were issued raising gross proceeds of £1,209,000, thebalance being given in consideration for the conversion of the loan note (£855,000). A further 207,033 ordinary shares with an aggregate nominalvalue of £10,352 were issued in satisfaction of preliminary expenses of £41,000.

At the end Exercise ExerciseContingently issuable shares of the year period priceWarrants issued pursuant to placing 19,272,444 to 31.03.08 20p to 40pR. Antonov 586,950 to 18.04.07 €1.07J. N. Dickens 40,000 to 25.04.12 40pM. Emmerson 1,067,055 to 18.04.07 41p to 84pK. E. Ludvigsen 40,000 to 25.04.12 40pC. Minnaar 40,000 to 25.04.12 40pEmployee share option 157,650 to 20.05.09 40p to 108.5pQuivest B.V. 500,000 to 31.03.05 60p

21,704,099

17 ReservesShare Profit

Called up premium Capital and lossshare capital account reserve account Total

Group £’000 £’000 £’000 £’000 £’000At 1 January 2004 5,266 16,761 2,587 (23,156) 1,458Issue of shares 411 1,694 – – 2,105Exchange adjustments arising on capital contributions to AAT – – – 70 70Exchange adjustment on re-translation of opening net assets – – – 8 8Exchange adjustment on loss for the year – – – (120) (120)Loss for the year – – – (3,173) (3,173)At 31 December 2004 5,677 18,455 2,587 (26,371) 348



17 Reserves continuedShare Profit

Called up premium and lossshare capital account account Total

Company £’000 £’000 £’000 £’000At 1 January 2004 5,266 16,761 (2,262) 19,765Issue of shares 411 1,694 – 2,105Loss for the year – – (309) (309)At 31 December 2004 5,677 18,455 (2,571) 21,561

18 Commitments Under Operating LeasesAs at 31 December 2004, the Group had annual commitments under non-cancellable operating leases as set out below:

2004 2003Land and 2004 Land and 2003buildings Other buildings Other

£’000 £’000 £’000 £’000Operating leases which expire:

Within one year 87 – 87 –In two to five years 113 – 113 –After five years – – – –

200 – 200 –

19 Related Party TransactionsAmounts due from companies in which Roumen Antonov and David Bovell (Four Stroke SARL only) are interested are as follows:

2004 2003£’000 £’000

Four Stroke SARL 8,000 8,000Antonov Holding EURL 2,500 2,500Antonov Foundation 2,500 2,500

The above transactions were undertaken on normal commercial terms and are related to the use of the Group’s premises by the above entities. The amounts outstanding at year-end were settled in full after year-end and were the equivalent to the total value of the transactions that tookplace during the year.

20 Post Balance Sheet EventsSince the year-end the following events have taken place:

On 21 January 2005 the Company was granted a convertible term loan facility of €3,000,000 by nine different parties. As at the date of thesefinancial statements the Company has drawn down €1,500,000.

During February 2005 a share consolidation was undertaken with one 20p share being issued for every four 5p shares.

As was widely reported in April 2005, Powertrain Ltd. who have a license to certain Group patents, was placed in administration. The Company doesnot expect any long-term adverse impact following these events. It is the Company’s expectation that Shanghai Automotive Industry Corporation(SAIC) will seek in some form to acquire parts of Powertrain Ltd. including access to key staff members. This will enable current productdevelopment plans, including those in which the Company is involved, to continue.

As announced to the Press on 3 May 2005, the Group is launching its AMM variable supercharger drive with Rotrex A/S through US after marketdistributors Wheel-to-Wheel Tecstar. This is strategically important for the Company as it addresses one of the world’s largest markets for tunerproducts. Trial units are being placed with selected customers in the US with series production to support initial demand beginning in late 2005.

On 7 June 2005 the Company was granted a term loan facility of €6,750,000 by five different parties. As at the date of these financial statementsthe Company has drawn down €750,000.



21 Analysis of Changes in Net DebtAt At

1 January Cash Non cash 31 December2004 flow movements 2004£’000 £’000 £’000 £’000

Cash 183 (183) – –Overdraft – (138) – (138)

– (321) – –Loans (175) (680) 855 –Total 8 (1,001) 855 (138)

The convertible loan note was converted into ordinary shares at a price of €0.30 per share in September 2004.

Financial instrumentsDuring the year the Group has continued its policy of raising the funds necessary to fund operations by way of issuing shares and convertible loannotes. Since the year-end as described in note 20 the Company has arranged to raise further finance from loan note issues. Such facilities enablethe Group to access funds as required to finance its operations whilst retaining the important option for either the Group or the note holders toconvert this funding into equity at a future date. Funds received, to the extent that they are denominated in sterling, are converted as soon as ispracticable into Euros and transferred to the Group’s main operating company, AAT B.V. in the Netherlands. To the extent that funds raised by wayof placing are not immediately required to fund operations they are placed on deposit. Where appropriate a range of banks are used in order tospread counterpart risk.

The Group has no other fixed rate financial instruments and, other than mentioned above, also has no material monetary assets/liabilitiesdenominated in currencies other than the functional currency of operation.

Excluding short-term debtors and creditors, where the fair value equates to the book value, the Group had the following financial instruments at 31 December 2004 and 2003:

2004 2003Book Fair Book Fairvalue value value value£’000 £’000 £’000 £’000

Cash/(overdraft) (138) (138) 183 183Convertible loan notes – – 175 175

In all material respects, cash balances/overdraft held at 31 December 2004 and 2003 were denominated in Euros.

There were no undrawn committed facilities at the year end. In respect of the €1,250,000 borrowing facility in place at the previous year-end, this wasfully drawn down during the year and converted into ordinary shares. At the previous year-end only €250,000 (£175,000) had been drawn down.

22 Reconciliation of Operating Loss to Net Cash Outflow from Operating Activities2004 2003£’000 £’000

Operating loss (3,109) (2,142)Amortisation of intangible fixed assets 152 165Depreciation of tangible fixed assets 39 49Decrease/(increase) in stocks (104) 33Increase in debtors (183) (53)(Decrease)/increase in creditors 1,208 (102)Net cash outflow from operating activities (1,997) (2,050)



23 Analysis of Cash Flows for Headings Netted in the Cash Flow Statement2004 2003£’000 £’000

Returns on investment and servicing of financeInterest received – 10Interest paid – (1)

– 9

TaxationCorporation tax paid – –Overseas tax (17) (32)

(17) (32)

Capital expenditure and financial investmentPayments to acquire intangible fixed assets (112) (85)Payments to acquire tangible fixed assets (84) (19)Receipts from sale of tangible fixed assets – 1

(196) (103)

FinancingIssue of shares for cash 1,209 1,241Convertible loans 680 175

1,889 1,416

24 Reconciliation of Net Cash Flow to Movement in Net Debt2004 2003£’000 £’000

Increase/(decrease) in cash (321) (760)Cash outflow/inflow from loans (680) (175)Conversion of loan notes 855 –Change in net debt during the period (146) (935)Exchange differences – 65Movement in net debt during the period (146) (870)Opening net funds at 1 January 8 878Closing net (debt)/funds at 31 December (138) 8


Pro-forma Unaudited Consolidated Profit and Loss Accountfor the year ended 31 December 2004

2004 2003€’000 €’000

Turnover and other revenue – –Cost of sales – –Gross profit – –Development costs and administrative expenses (4,583) (3,053)Operating loss (4,583) (3,053)Interest receivable and similar income – 13Interest payable and similar charges (19) (1)Loss on ordinary activities before taxation (4,602) (3,041)Taxation on loss on ordinary activities (75) (40)Loss on ordinary activities after taxation (4,677) (3,081)Loss per share (17.5 ct) (12.0 ct)*

The pro-forma statements on pages 32 to 35 have been prepared by translating the fund statements on pages 18 to 22 at the average Euro ratefor the Group Profit and Loss Account and closing Euro rate for the Balance Sheets.

* Restated for the share consolidation that took place in February 2005.


Pro-forma Unaudited Consolidated Balance Sheet Account for the year ended 31 December 2004

2004 2003€’000 €’000

Fixed assetsIntangible fixed assets 1,983 2,044Tangible fixed assets 160 91

2,143 2,135Current assetsStock 219 72Debtors 618 361Cash in hand and at bank – 260

837 693Creditors: Amounts falling due within one year (including convertible debt) (2,487) (759)

Net current liabilities (1,650) (66)Total assets less current liabilities 493 2,069Capital and reservesCalled up share capital 8,019 7,474Share premium 26,068 23,787Capital reserve 3,672 3,672Profit and loss account (37,266) (32,864)Equity shareholders’ funds 493 2,069


Pro-forma Unaudited Company Balance Sheet Account for the year ended 31 December 2004

2004 2003€’000 €’000

Fixed assetsInvestment in subsidiary 30,931 28,406Current assetsDebtors 96 71Cash in hand and at bank – 44

96 115Creditors: Amounts falling due within one year (including convertible debt) (572) (469)Net current (liabilities)/assets (476) (354)Total assets less current liabilities 30,455 28,052Capital and reservesCalled up share capital 8,019 7,474Share premium 26,068 23,788Profit and loss account 3,632 (3,210)Equity shareholders’ funds 30,455 28,052


Pro-forma Unaudited Consolidated Cash Flow Statement Account for the year ended 31 December 2004

2004 2003€’000 €’000

Net cash outflow from operating activities (2,821) (2,190)

Return on investments and servicing of financeInterest received – 14Interest paid – 1Cash inflow from returns an investments and servicing of finance – 13

Tax paid (24) (45)

Capital expenditure and financial investmentPaid for purchase of intangible fixed assets (158) (123)Paid for purchase of tangible fixed assets (119) (27)Receipts from sale of tangible fixed assets – 2Cash outflow from capital expenditure and financial investment (277) (147)

Net cash outflow before use of liquid resources and financing (3,122) (3,089)

Financing activitiesIssue of shares for cash 1,707 1,762Costs of raising capital – –Convertible loans 960 248Net cash inflow from financing 2,667 2,010Net (decrease)/increase in cash (455) (1,079)


Notes

Antonov Group Companies and Advisors

Antonov plcSt James’s CourtBrown StreetManchester M2 2JFTel +44 161 831 2706Fax +44 161 838 2706Registered Number: 3003533

SolicitorsHalliwell LandauSt James’s CourtBrown StreetManchester TI2 2JF

Nominated advisorBrewin Dolphin SecuritiesNational House36 St.Ann StreetManchester M60 2EP

Nominated brokerBrewin Dolphin SecuritiesNational House36 St.Ann StreetManchester M60 2EP

AuditorsErnst & Young LLP100 Barbirolli SquareManchester M2 3EY

RegistrarsCapita Registrars plcThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU

Public RelationsBiddicksMercury HouseTriton Court14-18 Finsbury SquareLondon EC2A 1BR

Antonov Automotive Technologies B.V.Weena 893013 CH RotterdamThe NetherlandsTel +31 10 412 60 46Fax +31 10 412 59 84

Antonov Automotive Europe B.V.Weena 893013 CH RotterdamThe NetherlandsTel +31 10 412 60 46Fax +31 10 412 59 84

Antonov Automotive North America B.V.Weena 893013 CH RotterdamThe NetherlandsTel +31 10 412 60 46Fax +31 10 412 59 84

Antonov Automotive Far East B.V.Weena 893013 CH RotterdamThe NetherlandsTel +31 10 412 60 46Fax +31 10 412 59 84

Antonov Automotive Technologies France SARL13, rue de la Grande Borne77990 Le Mesnil-AmelotFranceTel +33 1 60 03 89 60Fax +33 1 60 03 42 16

Antonov Automotive Technologies B.V.(UK Branch)St John’s Innovation CentreCowley RoadCambridge CB4 0WSTel +44 1223 421 740Fax +44 1223 420 844

www.antonov-transmission.com

Antonov plcSt James’s CourtBrown StreetManchesterM2 2JF

T. +44 161 831 2706F. +44 161 838 2706

www.antonov-transmission.com

Weena 393013 CH RotterdamThe Netherlands

T. +31 10 412 60 46F. +31 10 412 59 84

13, rue de la Grande Borne77990 Le Mesnil-AmelotFrance

T. +33 1 60 03 89 60F. +33 1 60 03 42 16

St John’s Innovation CentreCowley RoadCambridgeCB4 0WS

T. +44 1223 421 740F. +44 1223 420 844

Documents

6247 Antonov 2004 Front - jaarverslag · 32 Pro-forma Unaudited Consolidated Profit and Loss Account 33 Pro-forma Unaudited Consolidated Balance Sheet Account 34 Pro-forma Unaudited