Lo-Q PLC - Final Results

RNS Number:0328S
Lo-Q PLC
10 April 2008

LO-Q PLC ("Lo-Q" or the "Company")

10 April 2008

Preliminary Results for the year ended 31 December 2008

Chairman's Report
For The Year Ended 31 December 2007

I am pleased to report that the company made progress on all fronts in 2007 with
a second year of operating profit. Our profit before tax for 2007 was £551,235.

As our staff are responsible for collecting the Q-bot rental from park guests in
all of the major customer's parks in which we operate, the profit and loss
statement this year includes the total income that is derived from these daily
rentals. The value of our sales, at over £7 million, illustrates the advances
that the Company has made in recent years with annual growth running in the
region of 40% for each of the last three years.

Based on our in depth experience over six years of operation, we have
established a minimum useable life of all the major components of the system,
including software, of five years. We have therefore agreed with our auditors to
write down the capital and research and development cost of upgrades over a
matching five-year basis. As previously required by the accounting standard we
were writing off the costs as they occurred.

The introduction of the new VQ2020 system into our major customer's parks in
Chicago and Montreal, Canada was well received by the parks' guests. The ability
to book rides using the Q-bot, from any where in the park, rather than from a
booking station, has proved very popular.

We have also enhanced the Q-bot's operating system so that the guest can reserve
shows as well as rides, and we installed this upgraded software into Dollywood.

All credit is due to our development and installation teams for getting the
systems up and running in all these parks, in time for the start of the 2007
season.

In 2008 our systems are now in an eighth major customer's park, in San Antonio,
Texas, as well as Legoland Windsor. With the introduction of the Text-Q system
in Drayton Manor on a trial basis, we have increased the number of parks in
which we operate by 40%.

As well as selling more of the upgraded VQ2020 systems we hope to be selling
more Text-Q systems this year. Our ability to offer potential customers a choice
of line management solutions is proving to be quite beneficial.

We are currently talking to a number of different companies in terms of product
cross-integration and we expect these discussions will be of medium and
long-term benefit.

We look forward to a successful summer season in 2008.

Jeff McManus

For further information please contact:

Jeff McManus
Lo-Q plc 01491 577 210

John Prior
Arbuthnot Securities Limited 0207 012 2000

Consolidated Income Statement
For The Year Ended 31 December 2007
2007 2006

Notes £ £

CONTINUING OPERATIONS

Revenue 2 7,805,545 1,978,554
Cost of sales (6,160,589) (432,336)

------------ -----------

GROSS PROFIT 1,644,956 1,546,218
Administrative expenses (1,078,803) (1,208,753)
------------ -----------

OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS 566,153 337,465
Exceptional items 4 - (663,337)
------------ -----------

OPERATING PROFIT/(LOSS) 566,153 (325,872)
Finance costs 5 (19,749) (354)
Finance income 5 4,831 4,618
----------- ----------

PROFIT/(LOSS) BEFORE TAX 6 551,235 (321,608)
Tax 7 (4,885) 52,400
----------- ---------

PROFIT/(LOSS) FOR THE YEAR 8 546,350 (269,208)
=========== =========

Attributable to:
Equity holders of the parent 546,350 (269,208)
=========== =========

Earnings per share expressed
in pence per share: 9
Basic 3.69 (1.83)
Diluted 3.46 (1.73)
=== ====
All disclosures relate only to continuing operations.

Statement of Recognised Income and Expense
For The Year Ended 31 December 2007
2007 2006
£ £

PROFIT/(LOSS) FOR THE FINANCIAL YEAR 546,350 (269,208)
------------ ----------
TOTAL RECOGNISED INCOME AND EXPENSE RELATING
TO THE YEAR 546,350 (269,208)
Prior year adjustment - (5,812)
Foreign exchange movement on 42,981 (42,917)
consolidation
------------ ----------
TOTAL RECOGNISED INCOME AND EXPENSE 589,331 (317,937)
SINCE LAST ANNUAL REPORT =========== =========

Attributable to:
Equity holders of the parent 589,331 (317,937)
========== =========

Consolidated Balance Sheet
31 December 2007
2007 2006
Notes £ £
ASSETS
NON-CURRENT ASSETS
Intangible assets 10 479,390 -
Property, plant and equipment 11 22,341 15,008
------------ ----------
501,731 15,008
------------ ----------
CURRENT ASSETS
Inventories 13 171,657 195,226
Trade and other receivables 14 87,376 89,199
Tax receivable 475 55,952
Prepayments 33,016 20,375
Cash and cash equivalents 15 630,854 643,968
----------- -----------
923,378 1,004,720
----------- -----------
CURRENT LIABILITIES
Trade and other payables 16 226,017 506,326
----------- -----------
226,017 506,326
----------- -----------

NET CURRENT ASSETS 697,361 498,394
----------- -----------
NET ASSETS 1,199,092 513,402
=========== ==========

SHAREHOLDERS' EQUITY
Called up share capital 17 149,292 147,658
Share premium 18 4,991,266 4,982,067
Shares to be issued reserve 18 66,250 -
Capital redemption reserve 18 12,473 12,473
Other reserves 18 27,381 8,105
Retained earnings 18 (4,047,570) (4,636,901)
----------- ------------
Total equity 1,199,092 513,402
----------- ------------

TOTAL EQUITY 1,199,092 513,402
========== ===========

Consolidated Cash Flow Statement
For The Year Ended 31 December 2007
2007 2006
Notes £ £
Cash flows from operating activities
Cash generated from operations 24 378,956 (44,831)
Interest paid (19,749) (354)
Tax received 55,477 46,608
----------- -----------
Net cash from operating activities 414,684 1,423
----------- -----------
Cash flows from investing activities
Purchase of intangible fixed assets (427,666) -
Purchase of tangible fixed assets (15,796) (14,132)
Interest received 4,831 4,618
------------ -----------
Net cash from investing activities (438,631) (9,514)
------------ -----------
Cash flows from financing activities
Share issue 10,833 14,630
------------ -----------
Net cash from financing activities 10,833 14,630
------------ -----------
------------ -----------
(Decrease)/Increase in cash and cash (13,114) 6,539
equivalents
Cash and cash equivalents at beginning
of year 25 643,968 637,429
---------- -----------

Cash and cash equivalents at end of year 25 630,854 643,968
========= ==========

Notes to the Financial Statements
For The Year Ended 31 December 2007

1. ACCOUNTING POLICIES

STATEMENT OF COMPLIANCE WITH IFRS'S

The group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and as applied in accordance with the provisions of the Companies Act
1985. The principal accounting policies adopted by the group are set out below.

New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not
effective for 2007 and therefore have not been applied in preparing these
accounts:

IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January
2009)
IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
IAS 27 Consolidated and Separate Financial Statements (revised 2008) (effective
1 July 2009)
Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
(effective 1 January 2009)
IFRS 3 Business Combinations (revised 2008) (effective 1 July 2009)
IFRS 8 Operating Segments (effective 1 January 2009)
IFRIC 11 IFRS 2 Group and Treasury Share Transactions (effective 1 March 2007)
IFRIC 12 Service Concessions Arrangements (effective 1 January 2008)
IFRIC 13 Customer Loyalty Programmes (effective 1 July 2008)
IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction (effective 1 January 2008)

The group has considered the above new standards, interpretations and amendments
to published standards that are not yet effective and concluded that they are
either not relevant to the Group or that they would not have a significant
impact on the Group's Financial Statements, apart from additional disclosures.

Basis of Consolidation
The consolidated financial statements incorporate the results of Lo-Q plc and
all of its subsidiary undertakings as at 31 December 2007 using the acquisition
method of accounting. The results of subsidiary undertakings are included from
the date of acquisition.

Revenue Recognition
All turnover arises from the development and application of virtual queue
technologies and represents sales to external customers less value added tax or
local taxes on sales.

As distinct from prior accounting periods Lo-Q staff are now responsible for
renting Q-bots directly to the public and hence the total income derived from
these daily rentals is recognised on the income statement. The costs directly
attributable to these rentals are recognised separately as cost of sales.

Turnover also includes revenue from the sale of certain installation costs of
the Q-bot system upon its introduction to a new theme park. The system is then
leased back to the company with the lease costs being recognised within cost of
sales during the year as they fall due.

Interest expense recognition
Expense is recognised as interest accrues, using the effective interest method,
to the net carrying amount of the financial liability.

Employee expenses
The Group has applied the requirements of IFRS 2 Share-Based Payment. In
accordance with the transitional provisions, IFRS2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested as of 1
January 2006.

The Group issues equity-settled share-based payments to full time employees.
Equity settled share-based payments are measured at the fair value at the date
of grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. Fair
value is measured by use of a Black-Scholes model for all share options in
issue. The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.

Exceptional items
Exceptional items are presented in the financial statements where there are
material items of income and expense which, because of their nature and the
expected rarity of the circumstances, which generate them, they should be
presented separately to shareholders so as to enhance their judgement of the
current year's financial performance and its comparability with prior years.

Commitments under operating leases
Operating leases payments are recognised as an expense in the consolidated
income statement on a straight-line basis over the lease term.

Property, plant and equipment
Items of property, plant and equipment are stated at cost of acquisition or
production cost less accumulated depreciation and impairment losses.

Depreciation is charged so as to write off the cost of assets over their
estimated useful lives, using the straight-line method, on the following bases:

Plant and machinery 33.3%
Office equipment 33.3%
Furniture and fixtures 20.0%

Financial instruments
Group Company
2007 2006 2007 2006
£ £ £ £

Financial assets
Cash and cash equivalents 630,854 643,968 79,249 179,016
Trade and other receivables 87,376 89,199 1,065,708 401,718

Financial liabilities
Trade and other payables (226,017) (506,326) (206,316) (121,116)

Other than short-term debtors and creditors that arise directly from operations,
the group's financial instruments comprise cash and bank balances. The fair
values of these instruments are not materially different to their book values.
The objective of holding financial instruments is to raise finance for the
group's operations and manage related risks. The main risk arising from holding
these instruments is currency risk.

Currency Risk
The group's overseas operations are in the USA and Canada. The main operating
currencies of its operations are therefore in sterling, US and Canadian Dollars.
The group's currency exposure comprises the monetary assets and liabilities of
the group that are not denominated in the operating or 'functional' currency of
the operating unit involved. At the period end Lo-Q plc, which operates in
sterling had bank balances of £395,778 (2006 - £568,608) denominated in US
dollars and £155,468 (2006 - £0) denominated in Canadian dollars.

Inventories
Stocks are valued at the lower of cost and net realisable value, after making
due allowance for obsolete and slow moving items.

Raw materials costs are calculated on a weighted average basis.

Work in progress is valued on the basis of the cost of raw materials and labour
plus attributable overheads.

Net realisable value is based on estimated selling price less additional costs
to completion and disposal.

Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profits ("temporary differences") and is accounted for using the balance sheet
liability method.

Deferred tax liabilities are generally recognised for all taxable temporary
differences. Where there are taxable temporary differences arising on
subsidiaries, deferred tax liabilities are recognised.

Deferred tax assets are generally recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary
differences can be utilised. Where there are deductible temporary differences
arising on subsidiaries, deferred tax assets are recognised only where it is
probable that they will reverse in the foreseeable future and taxable profits
will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient tax
profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.

Research and development
In accordance with IAS 38 'Intangible Assets', expenditure incurred on research
and development is distinguished as relating either to a research phase or to a
development phase.

All advanced research phase expenditure is charged to the income statement. For
development expenditure, this is capitalised as an internally generated
intangible asset, only if it meets strict criteria, relating in particular to
technical feasibility and generation of future economic benefits.

Development expenditure capitalised is amortised over its useful economic life,
which is considered to be up to a maximum of 5 years from the point at which it
is incurred.

Intellectual property rights
Intellectual property rights comprise assets acquired relating know how, to
patents and licences and have been capitalised at the fair value of the assets
acquired and are amortised through the income statement in equal annual
instalments over their estimated useful economic life of 5 years.

Foreign currency exchange
Transactions in currencies other than the functional currency of the group are
recorded at the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on the balance
sheet date. Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the
date when the fair value was determined.

Gains and losses arising on retranslation are included in net profit or loss for
the period, except for exchange differences arising on non-monetary assets and
liabilities where the changes in fair value are recognised directly in equity.

On consolidation, the assets and liabilities of the group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at the average exchange rates for the period
unless exchange rates fluctuate significantly. Exchange differences arising, if
any, are classified as equity and movement shown in reserves.

Pension Costs
Contributions to the group's defined contribution pension scheme are charged to
the profit and loss account in the year in which they become due.

Trade and other receivables
Trade and other receivables are recognised by the group and carried at original
invoice amount less an allowance for any uncollectible or impaired amounts.

An estimate for doubtful debts is made when collection of the full amount is no
longer probable. Bad debts are written off when they are identified as being
bad.

Other receivables are recognised at fair value.

Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term
deposits. Short-term deposits are defined as deposits with an initial maturity
of three months or less.

Bank overdrafts that are repayable on demand and form an integral part of the
group's cash management are included as a component of cash and cash equivalents
for the purposes of the consolidated cash flow statement.

2. SEGMENTAL REPORTING

Segment information is presented in respect of the Group's geographical and
business segments. The primary format, geographical segments, is based on the
geographical location of customers.

Inter-segment pricing is determined on an arm's length basis.

Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to
acquire property, plant and equipment, and intangible assets.

Geographical segments
In presenting information on the basis of geographical segments, segment revenue
is based on the geographical location of customers. Segment assets and
liabilities are based on the geographical location of the assets.

The Group comprises the following main geographical segments:

• United Kingdom
• North America

Business segments

The Group comprises two business segments:

• Rental of Q-bots
• Sale and leaseback of Q-bot technology to theme parks

Geographical segments (primary format)

i) Segment revenue based on geographical location of customers

2007 2006
£ £
North America 7,201,102 1,978,554
United Kingdom 604,443 -
-------------------------
7,805,545 1,978,554
========== =========

ii) Geographical segments based on asset location:

United Kingdom North America Consolidated
2007 2006 2007 2006 2007 2006
£ £ £ £ £ £

Results from
operating activities 783,984 (214,965) (227,601) (110,907) 566,153 (325,872)

All finance costs and income relate to the UK and the tax credit to North America
------------------------------------------------------------------------------------------
Profit/(loss) for year 769,066 (158,301) (222,716) (110,907) 546,350 (269,208)
------------------------------------------------------------------------------------------
Segment assets 1,242,709 777,774 319,331 226,946 923,378 1,004,720

Segment liabilities (206,316) (121,116) (19,701) (385,210) (226,017) (506,326)

Capital expenditure 14,525 9,776 4,496 4,356 19,021 14,132

Depreciation 7,643 7,013 4,045 7,119 11,688 7,643

Amortisation 31,078 - 29 - 31,107 -
of intangible assets
------------------------------------------------------------------------------------------

Business segments (secondary format)
Revenue for business segments:

2007 2006
£ £
Rental of Q-bots 7,201,102 1,978,554
Sale and leaseback of Q-bot technology 604,443 -
to theme parks ----------- ----------
7,805,545 1,978,554
=========== ==========

3. EMPLOYEES AND DIRECTORS

2007 2006
£ £
Wages and salaries 1,282,341 890,671
Social Security costs 136,451 94,296
Defined contribution Pension Costs 28,700 26,647
Share based payment transactions 2,694 2,293
---------- ----------

1,450,186 1,013,907
========== ==========

The average monthly number of employees during the year was made up as follows:
Staff numbers by activity
2007 2006
Research & development 6 5
Management and finance 3 3
Production and administration 12 5
Part Time Seasonal staff 127 31
--------- ---------
148 44
========= ========

The directors' aggregate emoluments in respect of qualifying services were:

2007 2006
£ £
Directors' emoluments 319,788 331,468
======== ========

Directors' contributions to money purchase schemes 13,200 11,892
========= ========

During the year the following number of directors:
Money purchase schemes 2 2
========= ========

Information regarding the highest paid director is as follows:

2007 2006
£ £
Emoluments 124,530 134,876
Amount of money and other net assets (excluding
shares and share options) receivable under long-term
incentive plans 6,400 5,307
======== =======

Share Option Scheme

The share options of the directors are set out below:

The share options of J Lillywhite, and A Bone are held under the Lo-Q plc
Unapproved Share Option Scheme and the share options of S Drake are held under
the Lo-Q plc EMI Share Option Scheme.

31 Granted/ 31
December exercised) December Date from
2006 in the 2007 Exercise which Expiry
Number period Number Price exercisable Date
Number

J Lillywhite 209,000 - 209,000 3.5p 27/9/2004 28/03/2010
A Bone 182,875 - 182,375 3.5p 27/9/2004 28/03/2010
S Drake 4,903 - 4,903 100.5p 22/10/2002 21/01/2011
6,018 - 6,018 18p 08/10/2003 07/10/2012
50,000 - 50,000 6p 06/04/2005 05/04/2014
100,000 - 100,000 3.5p 29/03/2006 28/03/2015
35,000 - 35,000 8.25p 09/05/2007 08/05/2016

4. EXCEPTIONAL ITEMS
2007 2006
£ £
Litigation costs - (459,512)
Professional fees on litigation - (203,825)
----------- ----------
- (663,337)

It was alleged that Lo-Q had been contravening a patent owned by Palmtop
Productions Inc. ('Palmtop'). The Company's lawyers and specialist patent
attorneys believe this is not to be the case. As a result, it had been the view
of the Board that this claim could be successfully defended. After weighing the
balance of risk present in any USA patent law case, the Company made the
decision to pursue an out of court agreement to settle the case expediently. The
Company recognises that this has the advantage of releasing a significant amount
of management time and avoids the potential costs if any defence case were to
become protracted.

5. NET FINANCE COSTS
2007 2006
£ £
Finance income:
Bank interest received 4,831 4,618
========= =========

Finance costs:
Bank interest 617 90
Loan interest paid 19,132 264
--------- ---------

19,749 354
========= =========

Net finance costs 14,918 (4,264)
========= =========

6. PROFIT/(LOSS) BEFORE TAX

The profit before tax (2006 - loss before tax) is stated after charging:

2007 2006
£ £
Hire of plant and machinery 3,550 4,141
Other operating leases 71,629 71,911
Depreciation - owned assets 8,463 17,428
Development costs amortisation 31,107 -
Auditors' remuneration 15,500 15,025
Auditors' remuneration for non audit work 9,463 9,060
Foreign exchange differences 28,913 42,180
========== ========

Auditor's fees

Included in the audit fee above is £15,500 (31 December 2006 £15,025), which
relates to the company.

2007 2006
£ £
Audit 15,500 15,025
Review of interim accounts 1,425 1,250
Taxation compliance 4,500 4,000
Business consultancy 3,538 3,810
-------- --------

24,963 24,085
======== =======

7. TAXATION ON ORDINARY ACTIVITIES

The tax charge comprises:
2007 2006
£ £
(a) Current tax:

Analysis of the tax charge/(credit):
Current tax (credit) 4,885 (52,400)
========= =========

(b) Reconciliation of tax charge
2007 2006
£ £
Profit/(loss) on ordinary activities
before tax 551,235 (321,608)
========= =========

Tax at the UK corporation tax rate of 30% 165,370 (96,482)
(2006 - 30%)

Effects of:
Expenses not deductible for tax 2,196 78
Capital allowances in excess of depreciation (427) (32,285)
Utilisation of tax losses (156,505) 128,839
Share scheme deduction (10,634) -
Income not chargeable for tax purposes - (150)
Research & development tax credit - (52,400)
--------- --------

Total current tax (note 7(a)) 4,885 (52,400)
========= ========

The UK deferred tax asset of £777,449 (2006 - £1,054,961) on losses carried
forward has not been recognised in the balance sheet due to the uncertainty over
the timing of its recovery. It will be recognised when sufficient trading
history has been established.

8. PROFIT OF PARENT COMPANY

As permitted by Section 230 of the Companies Act 1985, the profit and loss
account of the parent company is not presented as part of these financial
statements. The parent company's profit for the financial year was £769,066
(2006 - (£158,301) loss).

9. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary shareholders after adjustments for instruments that
dilute basic earnings per share by the weighted average of ordinary shares
outstanding during the year (adjusted for the effects of dilutive instruments).

The following reflects the income and share data used in the total operations
basic and diluted earnings per share computations.

2007
Weighted
average
number Per-share
Earnings of amount
£ shares pence
Basic EPS
Earnings attributable to ordinary
shareholders 546,350 14,793,674 3.69
Effect of dilutive securities
Options - 1,012,367 -
-------- ---------- -----
Diluted EPS
Adjusted earnings 546,350 15,806,041 3.46
========= ========== =====

2006
Weighted
average
number Per-share
Earnings of amount
£ shares pence
Basic EPS
Earnings attributable to ordinary
shareholders (269,208) 14,689,108 -1.83

Effect of dilutive securities
Options - 865,113 -
---------- ----------- --------

Diluted EPS
Adjusted earnings (269,208) 15,554,221 -1.73
========== ============ ========

10. INTANGIBLE ASSETS

Group
Intellectual Development
Property rights costs Totals
£ £ £
COST
Additions 209,199 301,298 510,497
---------- ----------- ---------

At 31 December 2007 209,199 301,298 510,497
----------- ----------- -------
AMORTISATION
Amortisation for year - 31,107 31,107
------------ ---------- ---------
At 31 December 2007 - 31,107 31,107
------------ ----------- --------
NET BOOK VALUE
At 31 December 2007 209,199 270,191 479,390
============ =========== =========

Company
Intellectual Development
Property rights costs Totals
£ £ £
COST
Additions 209,199 300,642 509,841
----------- ---------- ---------
At 31 December 2007 209,199 300,642 509,841
----------- --------- ---------
AMORTISATION
Amortisation for year - 31,078 31,078
----------- --------- ---------
At 31 December 2007 - 31,078 31,078
----------- --------- ---------
NET BOOK VALUE
At 31 December 2007 209,199 269,564 478,763
=========== ========= =========

There were no intangible assets at 31 December 2005 or 31 December 2006.

11. PROPERTY, PLANT AND EQUIPMENT

Group
Plant and Office Furniture
machinery Equipment & fixtures Totals
£ £ £ £
COST
At 1 January 2007 33,199 131,780 19,795 184,774
Additions 3,225 13,615 2,181 19,021
Disposals - (8,266) - (8,266)
-------- --------- -------- --------

At 31 December 2007 36,424 137,129 21,976 195,529
-------- --------- -------- --------

DEPRECIATION
At 1 January 2007 30,861 121,440 17,465 169,766
Charge for year 2,183 8,510 995 11,688
Eliminated on disposal - (8,266) - (8,266)
-------- ------- -------- --------

At 31 December 2007 33,044 121,684 18,460 173,188
------- --------- -------- -------

NET BOOK VALUE
At 31 December 2007 3,380 15,445 3,516 22,341
======== ======== ======== =======
At 31 December 2006 2,338 10,340 2,330 15,008
======== ======== ======== =======

Company
Plant and Office Furniture
machinery Equipment & fixtures Totals
£ £ £ £
COST
At 1 January 2007 4,495 96,142 18,891 119,528
Additions 3,225 10,720 580 14,525
Disposals - (8,266) - (8,266)
-------- -------- -------- --------
At 31 December 2007 7,720 98,596 19,471 125,787
-------- --------- --------- --------

DEPRECIATION
At 1 January 2007 4,374 88,425 16,851 109,650
Charge for year 453 6,540 650 7,643
Eliminated on disposal - (8,266) - (8,266)
------- -------- ------- --------
At 31 December 2007 4,827 86,699 17,501 109,027
------- -------- -------- --------
NET BOOK VALUE
At 31 December 2007 2,893 11,897 1,970 16,760
======== ========= ======== ========
At 31 December 2006 121 7,717 2,040 9,878
========= ========= ======== ========

Group
Plant and Office Furniture
machinery Equipment & fixtures Totals
£ £ £ £
COST
At 1 January 2006 33,199 134,691 19,795 187,685
Additions - 14,132 - 14,132
Disposals - (17,043) - (17,043)
-------- --------- --------- ---------
At 31 December 2006 33,199 131,780 19,795 184,774
-------- ---------- --------- --------
DEPRECIATION
At 1 January 2006 27,755 127,462 14,166 169,383
Charge for year 3,106 11,022 3,299 17,427
Eliminated on disposal - (17,044) - (17,044)
--------- --------- -------- --------
At 31 December 2006 30,861 121,440 17,465 169,766
-------- --------- --------- --------
NET BOOK VALUE
At 31 December 2006 2,338 10,340 2,330 15,008
======== ========= ========= =======
At 31 December 2005 5,444 7,229 5,630 18,304
======== ========= ========= =======

Company
Plant and Office Furniture
machinery Equipment & fixtures Totals
£ £ £ £
COST
At 1 January 2006 4,495 86,366 18,891 109,752
Additions - 9,776 - 9,776
Disposals - - - -
--------- --------- --------- --------
At 31 December 2006 4,495 96,142 18,891 119,528
--------- -------- --------- --------
DEPRECIATION
At 1 January 2006 3,161 84,853 14,624 102,637
Charge for year 1,213 3,572 2,228 7,013
Eliminated on disposal - - - -
--------- -------- -------- ---------
At 31 December 2006 4,374 88,425 16,851 109,650
--------- -------- -------- ---------
NET BOOK VALUE
At 31 December 2006 121 7,717 2,040 9,878
========= ========= ======== =========
At 31 December 2005 1,334 1,513 4,268 7,115
========== ========= ======== =========

12. INVESTMENTS

Company
Investment in
subsidiaries
£
COST
At 1 January 2007 691
Additions 44
------
At 31 December 2007 735
-------
NET BOOK VALUE
At 31 December 2007 735
=======
At 31 December 2006 691
=======

Name Country of % Ownership % Voting
incorporation interest rights

Lo-Q Virtual Queuing Inc United States of America 100 100
Lo-Q Service Canada Inc Canada 100 100
Lo-Q Trustees Limited United Kingdom 100 100

The trade for both Lo-Q Virtual Queuing Inc and Lo-Q Service Canada Inc is that
of the application of virtual queue technologies.

Lo-Q Trustees Limited is dormant.

13. INVENTORIES
Group Company
2007 2006 2007 2006
£ £ £ £
Stocks 143,277 171,170 56,432 112,465
Park installation 22,001 22,277 4,219 6,224
Work-in-progress 6,379 1,779 6,379 1,779
-------- -------- ------- -------

171,657 195,226 67,030 120,468
======== ======== ======= =======

There is no material difference between the replacement cost of stocks and the
amount stated above.

14. TRADE AND OTHER RECEIVABLES

Group Company
2007 2006 2007 2006
£ £ £ £
Current:
Trade debtors 78,912 39,677 - 39,677
Amounts owed by group undertakings - - 1,057,669 361,258
Other debtors - 794 - 783
Deposits 2,093 2,350 - -
VAT 6,371 - 8,039 -
Accrued Income - 46,378 - -
------- -------- -------- -------

87,376 89,199 1,065,708 401,718
======== ======== ========== ========

15. CASH AND CASH EQUIVALENTS

Group Company
2007 2006 2007 2006
£ £ £ £
Cash in hand 6,015 894 1,257 792
Bank accounts 624,839 643,074 77,992 178,224
-------- -------- ------- --------

630,854 643,968 79,249 179,016
======= ======== ======= ========

16. TRADE AND OTHER PAYABLES

Group Company
2007 2006 2007 2006
£ £ £ £
Current:
Trade creditors 95,525 62,529 101,444 35,143
Social security and other 32,650 32,494 31,649 32,494
taxes
Other creditors - 321,658 - -
Accrued expenses 92,957 89,645 73,223 53,479
Corporation tax 4,885 - - -
-------- -------- -------- ---------

226,017 506,326 206,316 121,116
========= ========= ========= =========

17. CALLED UP SHARE CAPITAL

Authorised:
Number: Class: Nominal 2007 2006
value: £ £

1,100,000,000 Ordinary Share Capital £0.01 11,000,000 11,000,000
========== ===========
(2006 - 1,100,000,000)

Allotted, issued and fully paid:
Number: Class: Nominal 2007 2006
value: £ £

14,929,226 Ordinary Share Capital £0.01 149,292 147,658
======== ========
(2006 - 14,765,837)

The following fully paid shares were allotted during the year at a premium as
shown below:

163,389 Ordinary Share Capital shares of £0.01 each at 0.0562989 per share.

Share Option Schemes

At 31 December 2007 the following share options were outstanding in respect of
the ordinary shares:
Number of Price per
Scheme shares Period of option share

EMI Scheme 61,504 22 January 2002 to 21 January 2011 100.5p
19,866 8 October 2003 to 7 October 2012 18p
102,000 6 April 2005 to 5 April 2014 6p
240,000 29 March 2006 to 28 March 2015 3.5p
86,000 9 May 2007 to 8 May 2016 8.25p

Directors un-approved share 391,875 27 September 2004 to 28 March 2010 3.5p
option scheme

US Scheme 4,755 22 October 2002 to 21 October 2011 100.5p
41,000 6 April 2005 to 5 April 2014 6p
140,000 29 March 2006 to 28 March 2015 3.5p
45,500 9 May 2007 to 8 May 2016 8.25p
Other Scheme 40,000 12 November 2008 to 12 November 2010 40.0p

18. EQUITY RESERVES

Group

Capital Share based
Share Retained Share redemption payment Shares to
capital earnings premium reserve reserve be issued Total
£ £ £ £ £ £ £

Balance at 1 January 2007 147,658 (4,636,901) 4,982,067 12,473 8,105 - 513,402
Profit for year 546,350 - - - - 546,350
Foreign exchange 42,981 42,981
Issue of share capital 1,634 - 9,199 - - - 10,833
Recognition of share-based
payments - - - 19,276 - 19,276
Recognition of shares
yet to be issued - - - - 66,250 66,250
-------- -------- --------- -------- --------- -------- -----------

Balance at 31 December 2007 149,292 (4,047,570) 4,991,266 12,473 27,381 66,250 1,199,092
======== ========== ========= ======= ========= ======== =========

Capital Share based
Share Retained Share redemption payment Shares to
capital earnings premium reserve reserve be issued Total
£ £ £ £ £ £ £

Balance at 1 January 2006 143,478 (4,324,776) 4,971,617 12,473 5,812 - 808,604
Loss for year (269,208) - - - - (269,208)
Foreign exchange (42,917) (42,917)
Issue of share capital 4,180 - 10,450 - - - 14,630
Recognition of share-based
payments - - - 2,293 - 2,293
-------- ---------- ---------- --------- --------- --------- ---------
Balance at 31 December 2006 147,658 (4,636,901) 4,982,067 12,473 8,105 - 513,402
======== =========== =========== ========= ========= ========= ==========

Company

Capital Share based
Share Retained Share redemption payment Shares to
capital earnings premium reserve reserve be issued Total
£ £ £ £ £ £ £

Balance at 1 January 2007 147,658 (4,483,077) 4,982,067 12,473 8,105 - 667,226
Profit for year 769,066 - - - - 769,066
Issue of share capital 1,634 - 9,199 - - - 10,833
Recognition of share-based
payments - - - 19,276 - 19,276
Recognition of
shares yet to be
issued - - - - 66,250 66,250
--------- ---------- ---------- --------- ----------- -------- ---------
Balance at 31 December 2007 149,292 (3,714,011) 4,991,266 12,473 27,381 66,250 1,532,651
========= ========== ========== ========= =========== ========= =========

Capital Share based
Share Retained Share redemption payment Shares to
capital earnings premium reserve reserve be issued Total
£ £ £ £ £ £ £

Balance at 1 January 2006 143,478 (4,324,776) 4,971,617 12,473 5,812 - 808,604
Loss for year (158,301) - - - - (158,301)
Issue of share capital 4,180 - 10,450 - - - 14,630
Recognition of share-based
payments - - - 2,293 - 2,293
---------- --------- --------- -------- --------- --------- ---------

Balance at 31 December 2006 147,658 (4,483,077) 4,982,067 12,473 8,105 - 667,226

========== ========== ========== ========= ======== ========= ==========

19. RETIREMENT BENEFITS

The group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the group in an independently
administered fund. The pension charge represents contributions payable by the
group to the fund and amounted to £28,700 (2006 - £26,647). Contributions
amounting to £nil (2006 - £nil) were payable to the fund and are included in
creditors.

20. OTHER FINANCIAL COMMITMENTS

As part of the sale agreement of the park installations during 2003 the Group
guaranteed the lease payments to be made by the theme park group. In the event
that the theme park group is unable to meet the instalments due, the Group would
be liable for meeting the payments, up to a maximum of $459,876 per annum until
October 2008.

As part of the sale agreement of the park installations during 2007 the Group
guaranteed the lease payments to be made by the theme park group. In the event
that the theme park group is unable to meet the instalments due, the Group would
be liable for meeting the payments, up to a maximum of $437,020 per annum until
October 2009.

In a similar situation as part of the sale agreement of the park installations
during 2004 the Group would be liable for meeting the payments, up to a maximum
of $83,612 per annum until November 2008.

At the year end the company had committed to expenditure in the ordinary course
of business amounting to £338,245 during the following year.

21. RELATED PARTY DISCLOSURES

Ultimate controlling party

There is no ultimate controlling party.

Subsidiaries

Management charges of £1,431,434 (2006 - £1,263,990) were received from Lo-Q
Virtual Queuing Inc and £408,000 (2006 - Nil) from Lo-Q Service Canada Inc
during the year, both 100% subsidiaries of Lo-Q plc.

Other related parties

IXXI Limited, a company in which A Bone, a Lo-Q plc director, is a director
invoiced the company in respect of directors fees £12,667 (2006 - £12,860) of
which £1,734 (2006 - £2,512) was outstanding at the year end.

Jeff McManus Limited, a company in which J McManus, a Lo-Q plc director, is a
director invoiced the company in respect of directors fees £70,950 (2006 -
£47,673) of which £9,085 (2006 - £5,644) was outstanding at the year end.

Barnwell Limited, a company in which J Lillywhite, a Lo-Q plc director, is a
director invoiced the company in respect of directors fees £12,667 (2006 -
£13,000) of which £1,062 (2006 - £2,399) was outstanding at the year end.

All of the above outstanding amounts are included within trade creditors.

Key management compensation

The key management staff are considered to be the directors and their
remuneration is disclosed in note 3 to the accounts.

22. CONSOLIDATED STATEMENTOF CHANGES IN SHAREHOLDERS' EQUITY
Group
2007 2006
£ £
Profit/(Loss) for the financial year 546,350 (269,208)
Issued Share Capital 1,634 4,180
Share Premium 9,199 10,450
Shares to be issued 66,250 -
Share based payment 19,276 2,293
Foreign Exchange 42,981 (42,917)
--------- ---------

Net addition/(reduction) to shareholders' funds 685,690 (295,202)
Opening shareholders' funds 513,402 808,604
--------- --------
Closing shareholders' funds 1,199,092 513,402
========== ========

Company
2007 2006
£ £
Profit/(Loss) for the financial year 769,066 (158,301)
Issued Share Capital 1,634 4,180
Shares to be issued 66,250 -
Share Premium 9,199 10,450
Share based payment 19,276 2,293
-------- --------

Net addition/(reduction) to shareholders' funds 865,425 (141,378)
Opening shareholders' funds 667,226 808,604
--------- --------

Closing shareholders' funds 1,532,651 667,226
========== ========

23. SHARE-BASED PAYMENT TRANSACTIONS

Equity settled share option schemes

For details of share option schemes in place during the year see note 17.

Details of the number of share options and the weighted average exercise price
(WAEP) outstanding during the year are as follows:

2007 2006
WAEP WAEP
No (pence) No (pence)
Outstanding at the beginning
of the year 1,383,185 10.26 1,626,185 8.74
Granted during the year 40,000 40.00 175,000 8.25
Leavers (87,296) 16.62 - -
Exercised during the year (163,389) 6.45 (418,000) 3.50
----------- ------- ---------- ------
Outstanding at the end of
the year 1,172,500 11.31 1,383,185 10.26
========== ======== ========== =======

Exercisable at the end of the
year 1,132,500 9.95 1,208,185 10.55
========== ======= =========== ======

The weighted average share price at the date of exercise for share options
exercised during the year was £0.281 (2006 - £0.054).

The fair values were calculated using the Black-Scholes valuation method. The
inputs to the model were as follows:
2007 2006
Weighted average share price (pence) 18.18 17.901
Expected volatility 75.00 75.00
Expected life 2.00 2.00
Risk free rate (%) 4.60 4.60
Dividend yield (%) 0 0

Expected volatility was determined by calculating the historic volatility of the
Groups share price over the period since flotation.

24. RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS

Group
2007 2006
£ £
Profit before tax 551,235 (321,608)
Depreciation charges 39,570 17,427
Share based payment 2,692 2,293
Foreign Exchange 42,981 (42,917)
Finance costs 19,749 354
Finance income (4,831) (4,618)
---------- ---------

651,396 (349,069)
Decrease in inventories 23,569 12,898
Increase in trade and other receivables (10,818) (66,089)
(Decrease)/Increase in trade and other payables (285,191) 357,429
---------- --------

Cash generated from operations 378,956 (44,831)
========== ==========

Company
2007 2006
£ £
Profit before tax 767,087 (210,731)
Depreciation charges 35,496 7,013
Share based payment 2,692 2,293
--------- --------

805,275 (201,425)
Decrease in inventories 53,438 32,369
Increase in trade and other receivables (674,381) (51,320)
(Decrease)/Increase in trade and other payables 85,858 (6,029)
----------- ---------

Cash generated from operations 270,190 (226,405)
=========== =========

25. CASH AND CASH EQUIVALENTS

The amounts disclosed on the cash flow statement in respect of cash and cash
equivalents are in respect of these balance sheet amounts:

Group

Year ended 31 December 2007
2007 2006
£ £
Cash and cash equivalents 630,854 643,968
======== =======

Year ended 31 December 2006
2007 2006
£ £
Cash and cash equivalents 643,968 637,429
========= =======

Company

Year ended 31 December 2007
2007 2006
£ £
Cash and cash equivalents 79,249 179,016
======== ========

Year ended 31 December 2006
2007 2006
£ £
Cash and cash equivalents 79,249 179,016
======== ========

26. ACQUISITION OF BUSINESS

TEXT-Q RESERVATIONS SYSTEM

The company purchased all the intellectual property rights to a system, which
allows mobile phone users to reserve a place in line for participating
attractions, from Avius Experience Limited. Known as Text-Q, this system expands
the range of reservation solutions the Company can offer to the leisure
industry.

The consideration to Avius, a proportion of which is deferred subject to certain
conditions being satisfied, is to be satisfied through cash, the issue of Lo-Q
shares and options in Lo-Q shares. As part of this, 125,000 new ordinary shares
in the Company have been issued. The investment in this intellectual property
has been capitalised as an intangible fixed asset. A breakdown of the
consideration paid is shown below:

2007
£
Cash 105,000
Shares in Lo-Q plc 66,250
Share options in Lo-Q plc 16,582
Legal fees capitalised 21,368
--------

209,200
=======

27. COMMITMENTS UNDER OPERATING LEASES

At 31 December 2007 the group had annual commitments under non-cancellable
operating leases as set out below

Group

2007 2006
Land and buildings £ £
Less than one year 58,425 46,876
Within 2 to 5 years 21,633 37,020
-------- -------

80,058 83,896
======== ========

Company

2007 2006
Land and buildings £ £
Less than one year 40,735 45,454
Within 2 to 5 years - 37,020
-------- -------

40,735 87,424
======== ========

This preliminary statement does not constitute statutory accounts as defined in
section 240 of the Companies Act 1985. The figures for the year ended 31
December 2006 have been extracted from the statutory financial statements, which
have been filed with the Registrar of Companies. The auditors' report on those
financial statements was unmodified.

The audited financial statements will be posted to shareholders shortly and will
be available from the registered office of the Company, 42 Portman Road, Reading
Berkshire RG30 1EA and on the Company's website, www.lo-q.com.

This information is provided by RNS
The company news service from the London Stock Exchange

END
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