RNS Number:4210S
Charteris PLC
16 April 2008
Charteris plc Interim Report 2008
Charteris plc, the business and IT consultancy, announces its interim results
for the six months ended 31 January 2008.
GROUP HIGHLIGHTS
* Strong trading performance ahead of management expectations with total
revenues of �11.4m (2007: �8.9m)
* Growth driven by the combination of well positioned market propositions
and major account relationships, with strong growth in the Retail
sector, good progress in the Public Sector and key account growth in the
Financial Services Sector
* Profit before taxation and share-based payment charge �664K (2007: loss
�137K)
* Diluted EPS before share-based payments 1.15p (2007: loss 0.26p)
* Cash balance �1.7m (FY07: �1.6m)
Commenting on the results Cliff Preddy, Chairman, said:
"The six months ended 31 January 2008 was a strong trading period for Charteris.
This performance builds on the considerable progress that was made in the second
half of FY07, with the benefits of the strategic changes implemented in
preceding periods flowing through.
With reasonable allowance for the uncertainty that currently exists in the
economy, the directors believe that the company remains on track to meet their
expectations for the year."
Enquiries:
David Pickering/Patrick Carter, Charteris plc Tel: 020 7600 9199
Zoe Biddick, Biddicks Tel: 020 7448 1000
Michael Shaw, Oriel Securities Limited Tel: 020 7710 7600
Charteris plc Interim Report 2008
The six months ended 31 January 2008 was a strong trading period for Charteris.
This performance builds on the considerable progress that was made in the second
half of FY07, with the benefits of the strategic changes implemented in
preceding periods flowing through.
The Company performed ahead of management expectations with strong growth in the
Retail sector enhanced by seasonal demand, good progress in the Public Sector
and key account relationship growth in the Financial Services Sector.
FINANCIAL HIGHLIGHTS
We achieved strong results in the first half of the current financial year, with
revenue increasing by 28% to �11.4m (2007: �8.9m). Profit before tax and
share-based payment charges was �664K (2007: (�137K)) with fully diluted EPS of
1.09p (2007: (0.32p)). The cash balance remained strong at �1.7m (FY07: �1.6m)
These results are reported under International Financial Reporting Standards as
endorsed by the EU ("IFRS") for the first time. Accordingly, comparative results
for the prior year, ended 31 July 2007, have been restated as set out in note 5.
OPERATING HIGHLIGHTS
The strong performance of Charteris in this period was driven by the combined
impact of new client sales generated by our core market propositions,
particularly Customer Centricity and Intelligent Enterprise, and expanded
business activity in key account relationships.
The core propositions are designed to enhance the agility of our clients'
businesses in their fast-changing markets. They are increasingly generating
parallel opportunities across the set of vertical market sectors that we serve.
This has enabled greater focus in our services and more repeatable solutions,
thereby driving synergies within our operations.
BUSINESS HIGHLIGHTS
Retail
We made excellent progress in the half, with strong demand in the on-line Retail
market from key accounts. We also secured new business from our Customer
Centricity proposition in multi-channel retailing, where on-line sales continue
to represent a major growth opportunity, as highlighted by retailers' Christmas
trading results. Charteris' multi-channel, integrated business solutions are
positioned at the forefront of this revolution.
Working as eCommerce development partner and programme managers for GAME, the
specialist European retailer of video games and consoles, our work focused on
the redevelopment of GAME's primary eCommerce channels in the UK. The new
integrated eCommerce business solution, which went live in good time for the key
pre-Christmas trading window, rapidly demonstrated its capability to outstrip
the competition and drive levels of growth for GAME not previously thought
achievable.
Our relationship with a leading high street retailer, working at the heart of
one of the industry's largest eCommerce initiatives, continued to grow.
Important new business was won as a result of our expertise in Customer
Centricity and multi-channel retailing. This included several new relationships
with high profile organisations where we have been engaged to provide 'Voice of
the Customer' consultancy and the business case for a new multi-channel venture.
For Microsoft, we continue to work as one of its leading partners on a number of
flagship projects, including the Government Gateway, the NHS Common User
Interface development and a major programme within the MSTV business. These
projects continue to involve the practical application of the latest range of
leading-edge Microsoft products.
Financial Services
Our northern Financial Services business built on key account relationships
during the period while new leadership in our southern Financial Services
practice has been focused on repositioning the business for future growth.
Despite current cost and budgetary pressures in the Financial Services market,
our client relationships and propositions give us confidence in the medium to
long term potential of the sector.
We are now recognised as preferred suppliers to three of the UK's Top five high
street banks. Our core propositions are targeted on areas of greatest need
within the sector, primarily to support the next stage of retail banking
development.
Recent events have placed even greater focus on Risk and Compliance. Building on
our deep experience, we are extending our Intelligent Enterprise proposition to
provide innovative approaches to Credit, Financial and Operational Risk
Modelling, based on Microsoft technologies.
Cost reduction and operational efficiency remain high on the agenda for
Financial Services clients. Our Infrastructure Optimisation team are delighted
to have been selected to work on an early adopter programme for the latest
release of Microsoft's Virtualisation platform.
Looking to the future, in our Customer Centricity proposition we are
collaborating with Cranfield University on the emerging evolution in retail
banking towards a fully service-oriented culture - 'Type III Banking'. This is
based on well positioned financial products and services, targeted on the basis
of a complete understanding of the client relationship, and delivering
consistency across all relevant channels.
Public Sector
Our Public Sector business continues to develop solidly, based on development in
our two primary markets: Secure Government and Local Government.
In Secure Government, our experience of enabling business change and delivery of
large, complex IT programmes continues to be in strong demand. With increasing
Government expenditure in this market, the potential for Charteris remains
considerable. Charteris has entered into a multi-year supply framework with a
core client in this sector, underpinning near-term business while providing a
platform for growth over the next 2-3 years.
Our 'citizen-centric' approach to organisational transformation in Local
Government is gaining traction in a market that is experiencing major strategic
change, driven by new structures and legislation - including the increasingly
common move to unitary authorities in England and Wales, and the National
Outcome Framework in Scotland. Significant new work has been won as a result of
this initiative. This includes a key engagement at Wiltshire County Council
where Charteris is working closely with the client to deliver improved community
services to the public over the next year.
Performance management in Local Authorities has also been an important focus.
Central government demands that local authorities provide better services using
fewer resources at lower cost to the taxpayer. This has placed much greater
emphasis on operational performance. Charteris has helped Local Authorities
create a bridge between the business understanding of government performance
metrics, including Comprehensive Performance Assessment (CPA) and the
Comprehensive Area Assessment (CAA), and effective IT solutions required to
support these initiatives.
In the Legal Sector our experts continue to be in demand for some of the most
challenging legal disputes in the information technology domain. They have acted
for leading system integrators and outsourcers, government departments, banks
and commercial companies.
Dynamics
Our Microsoft Enterprise Resource Planning (ERP) business continues to grow and
an increasing proportion of our Integrated Enterprise capability is now related
to Microsoft Dynamics business solutions.
During the period we won a new contract with APCOA Parking, Europe's longest
established full service parking management company. We were engaged as
programme managers for a new Dynamics ERP system within their finance function,
as well as the implementation of a new purchase ordering system.
For existing customer, multinational security services provider, ArmorGroup
International, we successfully completed the ERP implementation for their UK
business, based upon the Microsoft Dynamics product.
With the Microsoft Dynamics market growing at over 25% per annum, and the
Dynamics Ax ERP product growing at twice this rate, Charteris is positioned to
take advantage of this significant opportunity.
OUTLOOK
The strong performance of Charteris in the first half demonstrates the
effectiveness of the strategic changes implemented over a year ago. These
changes have created a robust platform for profitable growth, both organically
and through selective acquisition. In view of this, the directors believe that
the business is well positioned to make further good progress in the coming
years, generating resilient growth. This will continue to be based on providing
well differentiated, high quality and increasingly repeatable services to
clients across the set of vertical market sectors that we serve.
With reasonable allowance for the uncertainty that currently exists in the
economy, the directors believe that the company remains on track to meet their
expectations for the year.
Cliff Preddy
Chairman
16 April 2008
CONSOLIDATED INCOME STATEMENT
6 mths 6 mths
ended ended Year ended
31 Jan 2008 31 Jan 2007 31 Jul 2007
(Unaudited) (Unaudited) (Unaudited)
�000 �000 �000
Notes
Continuing operations
Revenue 11,385 8,874 19,336
______ ______ ______
Other external charges (1,740) (1,493) (3,309)
Staff costs (7,713) (6,514) (13,082)
Administrative expenses (1,292) (1,025) (2,533)
______ ______ ______
(10,745) (9,032) (18,924)
Operating profit/(loss) before
share-based payment charge (135) 457 666
Share-based payment charge (26) (23) (45)
______ ______ ______
Operating profit/(loss) 640 (158) 412
Finance income 18 18 28
Finance costs (20) (20) (39)
Profit/(loss) before taxation and
share-based payment charge (137) 446 664
Share-based payment charge (26) (23) (45)
______ ______ ______
Profit/(loss) before taxation 638 (160) 401
Income tax (187) 31 (142)
______ ______ ______
Profit/(loss) for the financial
period 451 (129) 259
______ ______ ______
Earnings/(loss) per share
Basic 3 1.10p (0.32p) 0.63p
Diluted 3 1.09p (0.32p) 0.63p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
6 mths ended 6 mths ended 12 mths ended
31 Jan 2008 31 Jan 2007 31 Jul 2007
(Unaudited) (Unaudited) (Unaudited)
�000 �000 �000
Profit/(loss) for the financial period 451 (129) 259
Deferred tax recognised in equity 8 - 21
______ ______ ______
Total recognised income and
expense for the period 459 (129) 280
______ ______ ______
CONSOLIDATED BALANCE SHEET
31 Jan 2008 31 Jan 2007 31 July 2007
(Unaudited) (Unaudited) (Unaudited)
�000 �000 �000
Non-current assets
Goodwill 5,020 5,020 5,020
Other intangible assets 56 63 50
Property, plant and equipment 3,395 3,406 3,397
Available-for-sale investments 1 1 1
Deferred tax asset 71 74 59
______ ______ ______
8,543 8,564 8,527
______ ______ ______
Current assets
Trade and other receivables 5,238 3,795 4,248
Cash and cash equivalents 1,744 1,083 1,644
______ ______ ______
6,982 4,878 5,892
______ ______ ______
Total assets 15,525 13,442 14,419
Current liabilities
Trade and other payables (4,842) (3,420) (4,132)
Current tax liability (323) (168) (123)
Borrowings (196) (186) (191)
Provisions (11) - (7)
______ ______ ______
(5,372) (3,774) (4,453)
______ ______ ______
Total assets less current
liabilities 10,153 9,668 9,966
______ ______ ______
Non-current liabilities
Borrowings (306) (497) (401)
Deferred tax liability (300) (330) (300)
Provisions (23) (30) (23)
______ ______ ______
(629) (857) (724)
______ ______ ______
Net assets 9,524 8,811 9,242
______ ______ ______
Equity
Called up share capital 430 430 430
Share premium account 2,544 2,544 2,544
Merger reserve 3,573 3,573 3,573
ESOP reserve (194) (194) (194)
Other reserve 26 26 26
Retained earnings 3,145 2,432 2,863
______ ______ ______
Total equity 9,524 8,811 9,242
______ ______ ______
CONSOLIDATED CASH FLOW STATEMENT
6 mths ended 6 mths ended Year ended
31 Jan 2008 31 Jan 2007 31 Jul 2007
(Unaudited) (Unaudited) (Unaudited)
�000 �000 �000
Profit/(loss) before taxation 638 (160) 401
Adjustments for:
Depreciation of property, plant
and equipment 77 100 169
Amortisation of intangible assets 22 29 57
Share-based payments 26 23 45
Net interest expense 2 2 11
______ ______ ______
Operating cash flows before
movements in working capital 765 (6) 683
(Increase)/decrease in receivables (990) 160 (322)
Increase/(decrease) in payables 709 6 718
Increase in provisions 4 7 7
______ ______ ______
Cash generated by operations 488 167 1,086
Income taxes paid 9 - (182)
Interest paid (20) (20) (39)
______ ______ ______
Net cash from operating activities 477 147 865
______ ______ ______
Investing activities
Interest received 18 18 28
Purchase of property, plant and
equipment (101) (70) (146)
______ ______ ______
Cash used in investing activities (83) (52) (118)
______ ______ ______
Financing activities
Dividends paid (203) (203) (203)
Repayment of mortgage loan (91) (89) (180)
______ ______ ______
Net cash used in financing activities (294) (292) (383)
______ ______ ______
Net cash increase/(decrease) in
cash and cash equivalents 100 (197) 364
______ ______ ______
Cash and cash equivalents at the
beginning of the period 1,644 1,280 1,280
______ ______ ______
Cash and cash equivalents at the
end of the period 1,744 1,083 1,644
______ ______ ______
Notes
1. ACCOUNTING POLICIES
The consolidated financial information contained in this interim report does not
constitute statutory financial statements. The interim results, which have not
been audited, have been prepared using accounting policies which are consistent
with International Financial Reporting Standards as adopted by the European
Union ("IFRS"). The UK GAAP financial statements for the year ended 31 July 2007
have been filed with the Registrar of Companies and received an unqualified
audit report which did not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.
Transition to IFRSs
The consolidated financial information has been prepared in accordance with
accounting policies which are consistent with IFRS for the first time and
consequently IFRS1, First-time Adoption of International Financial Reporting
Standards, has been applied. An explanation of how the transition to IFRSs has
affected the reported financial position, financial performance and cash flows
of the group is provided in note 5.
IFRS 1 grants certain exemptions from the full requirements of IFRS in the
transition period. The following exemptions have been taken in this financial
information:
* Business combinations - Business combinations that took place prior to 1
August 2006 have not been restated.
* Property, Plant and Equipment - At the date of transition, property
assets have been valued at deemed cost, based on a prior revaluation, rather
than historic cost.
Measurement convention
The financial information is prepared on the historical cost basis except that
the following assets and liabilities are stated at their fair value: financial
assets classified as fair value through profit or loss or as available-for-sale.
Non-current assets and disposal groups held for sale are stated at the lower of
previous carrying amount and fair value less costs to sell.
Basis of consolidation
The purchase method of accounting has been used to account for the acquisition
of subsidiaries by the group. The costs of an acquisition is measured as the
fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to
the acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at fair
value at the acquisition date irrespective of the extent of any minority
interest.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the group.
All intra-group transactions, balances and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
Principal activity
The principal activity of the group is to provide consultancy services which
help clients improve business performance and create new business opportunities
through the effective application of information technology. The directors
consider the Group only operates one primary segment reporting and all revenue
and profit is attributable to that segment.
Revenue
Revenue is measured at the fair value of the fees received or receivable and
represents amounts receivable for services provided to third parties in the
normal course of business, net of discounts, VAT and other sales related taxes.
Revenue from consultancy services, installation and other services is recognised
when services have been provided and the right to consideration has been earned.
Revenue from support and other periodically contracted services or products are
recognised on a pro-rata basis over the contracted period. Amounts invoiced but
not recognised are accounted for within deferred income. Profits on fixed price
contracts are taken in proportion to the cost of work performed on each contract
relative to the estimated total cost of completing the contract. Provision is
made for all anticipated contract losses as soon as they are identified. Profits
on time and material contracts are recognised in line with the effort expended.
Revenue from sales of software licences to end-users is recognised when the
product is delivered providing there are no outstanding performance obligations.
Share-based payments
The group has applied the exemption available under IFRS 1 and elects to apply
IFRS 2, Share-based payments, only to awards of equity instruments made after 7
November 2002 that had not vested by 1 August 2006.
The Group issues share options to certain employees which are measured at fair
value at the date of grant. Fair value is measured by use of the Black-Scholes
option pricing model. The expected life used in the model has been adjusted,
based on management's best estimate, for the effect of non-transferability,
exercise restrictions, and behavioural considerations. The difference between
the fair value and the exercise price is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of shares that will eventually
vest.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the group's interest in the fair value of the identifiable
assets, liabilities and contingent liabilities of a subsidiary at the date of
acquisition.
Goodwill on acquisition of subsidiaries is separately disclosed. Goodwill on
acquisition of associates and jointly controlled entities is included in
investment in associates and jointly controlled entities.
Goodwill is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement and
is not subsequently reversed. Goodwill is allocated to cash generating units for
the purpose of impairment testing.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the amount previously calculated under UK GAAP subject to being
tested for impairment at that date. Goodwill written off to reserves under UK
GAAP prior to 1998 has not been reinstated and is not included in determining
any subsequent profit or loss on disposal.
Employee Benefit Trust
The Group operates an employee benefit trust (the 'Trust') which holds shares in
the Company. The Group records the assets and liabilities of the trust as its
own. The Charteris Plc shares owned by the Trust are presented as a reduction in
equity shareholders' funds and included in a separate negative reserve described
as an "ESOP reserve".
Financial instruments
The group classifies financial instruments, or their component parts, on initial
recognition as a financial asset, a financial liability or an equity instrument
in accordance with the substance of the contractual arrangement. Financial
instruments are recognised on the balance sheet at fair value when the group
becomes a party to the contractual provisions of the instrument.
Available-for-sale investments
Subsequent to initial recognition movements in the fair value of
available-for-sale financial assets are taken directly to equity. Fair values
are based on prices quoted in an active market if such a market is available. If
an active market is not available, the group establishes the financial
instrument's fair value by using a valuation technique, mainly discounted cash
flow analysis. Other valuation techniques used include recent arm's length
market transactions between knowledgeable, willing parties; reference to the
current fair value of another instrument that is substantially the same; and
option pricing models.
Trade receivables
Trade receivables are initially recognised at fair value and subsequently stated
at their amortised cost, using the effective interest method, as reduced by
appropriate allowances for estimated irrecoverable amounts. They are recognised
on the trade date of the related transactions.
Trade payables
Trade payables are initially recognised at fair value and subsequently stated at
their amortised cost. They are recognised on the trade date of the related
transactions.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs.
Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption value being
recognised in the income statement over the period of the borrowings on an
effective interest rate basis.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and other short-term
deposits held by the Group with maturities of less than three months.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income and expense that are taxable or deductible in other
years or are never taxable or deductible. The Group's liability for current tax
is calculated using tax rates that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is provided in full using the balance sheet liability method.
Deferred tax is the future tax consequences of temporary differences between the
carrying amounts and tax bases of assets and liabilities shown on the balance
sheet. Deferred tax assets and liabilities are not recognised if they arise in
the following situations: the initial recognition of goodwill; or the initial
recognition of assets and liabilities that
affect neither accounting nor taxable profit. The amount of deferred tax
provided is based on the expected manner of recovery or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or
substantially enacted at the balance sheet date.
The group does not recognise deferred tax liabilities, or deferred tax assets,
on temporary differences associated with investments in subsidiaries, joint
ventures and associates as it is not considered probable that the temporary
differences will reverse in the foreseeable future. It is the group's policy to
reinvest undistributed profits arising in group companies.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. The carrying amount of the deferred tax assets are reviewed at each
balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the asset to
be recovered.
2. RECONCILIATION OF CHANGES IN EQUITY
Share Share Merger Other Retained ESOP Total
capital premium reserve reserve earnings Reserve equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000 �'000 �'000 �'000 �'000
1 August 2006 430 2,544 3,573 26 2,741 (194) 9,120
Loss for
the period - - - - (129) - (129)
Share-based
payment charge - - - - 23 - 23
Dividends - - - - (203) - (203)
_____ _____ _____ _____ _____ _____ _____
31 January 2007 430 2,544 3,573 26 2,432 (194) 8,811
Profit for
the period - - - - 388 - 388
Share-based
payment charge - - - - 22 - 22
Dividends - - - - - - -
Deferred tax - - - - 21 - 21
_____ _____ _____ _____ _____ _____ _____
31 July 2007 430 2,544 3,573 26 2,863 (194) 9,242
Profit for
the period - - - - 451 - 451
Share-based
payment charge - - - - 26 - 26
Dividends - - - - (203) - (203)
Deferred tax - - - - 8 - 8
_____ _____ _____ _____ _____ _____ _____
31 January 2008 430 2,544 3,573 26 3,145 (194) 9,524
_____ _____ _____ _____ _____ _____ _____
3. EARNINGS PER SHARE
The calculations of earnings per share are based on the following profits and
numbers of shares.
6 mths ended 6 mths ended Year ended
31 Jan 2008 31 Jan 2007 31 Jul 2007
(Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000
Profit/(loss) after tax for the
financial year before share-based
payment charges 477 (106) 304
Share-based payment charges (26) (23) (45)
_____ _____ _____
Profit/(loss) after tax for the
financial year 451 (129) 259
_____ _____ _____
The weighted average number of shares for the purposes of basic earnings per
share excludes those owned by the Group's employee benefit trust are:
No. of No. of No. of
Weighted average number of shares shares shares shares
'000 '000 '000
For basic earnings per share 40,697 40,697 40,697
Dilutive effect of share options 566 29 508
_____ _____ _____
For diluted earnings per share 41,263 40,726 41,205
_____ _____ _____
6 mths ended 6 mths ended 12 mths ended
31 Jan 2008 31 Jan 2007 31 Jul 2007
(Unaudited) (Unaudited) (Unaudited)
Basic before share options
charge 1.17p (0.26p) 0.74p
Diluted before share options
charge 1.15p (0.26p) 0.73p
4. INTERIM FINANCIAL INFORMATION
The interim financial information was approved by the directors on 15 April
2008. The Interim Report will be sent to shareholders by the end of April and
will be available free of charge from the Company's registered office and the
website www.charteris.com. We expect to announce our full year results in
November 2008.
5. RECONCILIATION OF UK GAAP TO IFRS
As stated in note 1, this is the Group's first set of consolidated half year
financial information prepared using accounting policies consistent with IFRSs
as adopted by the European Union. The accounting policies are those which are
expected to apply for the year ending 31 July 2008.
The accounting policies set out in note 1 have been applied in preparing the
financial information for the period ended 31 January 2008, the comparative
information presented in this financial information for the year ended 31 July
2007 and in the preparation of an opening IFRS balance sheet at 1 August 2006
(the Group's date of transition).
In preparing its opening IFRS balance sheet, the Group has adjusted amounts
reported previously in financial statements prepared in accordance with its old
basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP
to Adopted IFRSs has affected the Group's financial position, financial
performance and cash flows is set out in the following tables and the notes that
accompany the tables.
Main changes in the basis of preparation between IFRS and UK GAAP
In accordance with the requirements of IFRS 1, goodwill has been frozen at its
brought forward net book value at the date of transition, and amortisation
charged under UK GAAP for the periods ended 31 July 2007 and 31 January 2007 has
been reversed.
The adoption of IFRS has not had an impact on the amount of cash previously
disclosed under UK GAAP in any of the periods of account in the financial
statements.
Consolidated balance sheet reconciliation at 1 August 2006 (date of transition
to IFRS)
Note 2006 under Adj 2006
UK GAAP in under
IFRS format IFRS
(Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000
Assets
Non-current assets
Property, plant and
equipment b,c 2,525 948 3,473
Goodwill a 5,020 - 5,020
Other intangible
assets b - 55 55
Deferred tax asset d 74 - 74
Available-for-sale
investments 1 - 1
Current assets
Trade receivables 3,599 - 3,599
Other current assets 325 - 325
Cash and cash
equivalents 1,280 - 1,280
_____ _____ _____
Total assets 12,824 1,003 13,827
Equity and liabilities
Equity attributable to
equity holders of the
parent
Ordinary shares 430 - 430
Share premium 2,544 - 2,544
Merger reserve 3,573 - 3,573
Other reserve 26 - 26
Retained earnings 2,039 702 2,741
ESOP Reserve (194) - (194)
_____ _____ _____
Total equity 8,418 702 9,120
Non-current liabilities
Non-current borrowings 591 - 591
Deferred tax d 29 301 330
Non-current provisions 23 - 23
Current Liabilities
Trade and other payables 3,415 - 3,415
Current portion of
non-current borrowings 180 - 180
Current tax payable 168 - 168
Current provisions - - -
_____ _____ _____
Total Liabilities 4,406 301 4,707
_____ _____ _____
Total equity and
liabilities 12,824 1,003 13,827
_____ _____ _____
Consolidated balance sheet reconciliation at 31 January 2007
Note 2007 under Adj 2007
UK GAAP in under
IFRS format IFRS
(Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000
Assets
Non-current assets
Property, plant and
equipment b,c 2,475 931 3,406
Goodwill a 4,866 154 5,020
Other intangible
assets b - 63 63
Deferred tax asset 74 - 74
Available-for-sale
investments 1 - 1
Current assets
Trade receivables 3,497 - 3,497
Other current assets d 298 - 298
Cash and cash
equivalents 1,083 - 1,083
_____ _____ _____
Total assets 12,294 1,148 13,442
Equity and liabilities
Equity attributable to
equity holders of the
parent
Ordinary shares 430 - 430
Share premium 2,544 - 2,544
Merger reserve 3,573 - 3,573
Other reserve 26 - 26
Retained earnings 1,585 847 2,432
ESOP Reserve (194) - (194)
_____ _____ _____
Total equity 7,964 847 8,811
Non-current liabilities
Non-current borrowings 497 - 497
Deferred tax d 29 301 330
Non-current provisions 30 - 30
Current Liabilities
Trade and other
payables 3,420 - 3,420
Current portion of
non-current borrowings 186 - 186
Current tax payable 168 - 168
Current provisions - - -
_____ _____ _____
Total Liabilities 4,330 301 4,631
_____ _____ _____
Total equity and liabilities 12,294 1,148 13,442
_____ _____ _____
Consolidated balance sheet reconciliation at 31 July 2007
Note 2007 under Adj 2007
UK GAAP in under
IFRS format IFRS
(Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000
Assets
Non-current assets
Property, plant and
equipment b,c 2,461 936 3,397
Goodwill a 4,709 311 5,020
Other intangible
assets b - 50 50
Deferred tax asset d 54 5 59
Available-for-sale
investments 1 - 1
Current assets
Trade receivables 3,906 - 3,906
Other current assets 342 - 342
Cash and cash
equivalents 1,644 - 1,644
_____ _____ _____
Total assets 13,117 1,302 14,419
Equity and liabilities
Equity attributable to
equity holders of the
parent
Ordinary shares 430 - 430
Share premium 2,544 - 2,544
Merger reserve 3,573 - 3,573
Other reserve 26 - 26
Retained earnings 1,843 1,020 2,863
ESOP Reserve (194) - (194)
_____ _____ _____
Total equity 8,222 1,020 9,242
Non-current liabilities
Non-current borrowings 401 - 401
Deferred tax d 18 282 300
Non-current provisions 30 (7) 23
Current Liabilities
Trade and other
payables 4,132 - 4,132
Current portion of
non-current borrowings 191 - 191
Current tax payable 123 - 123
Current provisions - 7 7
_____ _____ _____
Total Liabilities 4,895 282 5,177
_____ _____ _____
Total equity and
liabilities 13,117 1,302 14,419
_____ _____ _____
Reconciliation of the consolidated income statement for the six month period
ended 31 January 2007
Note Under Adjs Under IFRS
UK GAAP
(Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000
Continuing operations
Revenue 8,874 - 8,874
Other external charges (1,493) - (1,493)
Staff costs (6,514) - (6,514)
Administrative expenses a,c (1,170) 145 (1,025)
______ _____ ______
Operating loss (303) 145 (158)
Finance income 18 - 18
Finance costs (20) - (20)
______ _____ ______
Loss before tax (305) 145 (160)
Income taxation 31 - 31
______ _____ ______
Loss for the financial
period (274) 145 (129)
______ _____ ______
Reconciliation of the consolidated income statement for the year ended 31 July
2007
Note Under Adjs Under IFRS
UK GAAP
(Unaudited) (Unaudited) (Unaudited)
�'000 �'000 �'000
Continuing operations
Revenue 19,336 - 19,336
Other external charges (3,309) - (3,309)
Staff costs (13,082) - (13,082)
Administrative expenses a,c (2,827) 294 (2,533)
______ _____ ______
Operating profit 118 294 412
Finance income 28 - 28
Finance costs (39) - (39)
______ _____ ______
Profit before tax 107 294 401
Income taxation d (145) 3 (142)
______ _____ ______
(Loss)/profit for the
financial year (38) 297 259
Material adjustments to the cash flow statement for 2007
Income taxes paid of �nil in the period to 31 January 2007 and �182,000 in the
period to 31 July 2007 are classified as operating cash flows under IFRS, but
were included in a separate category of tax cash flows under UK GAAP. There are
no other material differences between the cash flow statement presented under
IFRS and the cash flow statement presented under UK GAAP.
Notes to the reconciliation of equity and income
IFRS 3, Goodwill and other intangible assets
a The group has elected not to apply IFRS 3 to business combinations prior to
1 August 2006. Accordingly, goodwill has been frozen at its brought forward
net book value at the date of transition, and amortisation charged under
UK GAAP for the periods ended 31 January 2007 and 31 July 2007 have been
reversed (�154,000 and �311,000 respectively). Goodwill was assessed for
impairment in accordance with IAS36, Impairment of assets, at the date of
transition to IFRS and at 31 July 2007. No impairment losses were
recognised.
b Software related assets with a net book value of �55,000 at 31 July 2006,
�63,000 at 31 January 2007 and �50,000 at 31 July 2007 have been
reclassified from Property, plant and equipment to Other intangible assets.
c IAS 16, Property, plant and equipment
In accordance with IFRS 1, property assets have been valued at their fair
value at the date of transition. The cumulative adjustment increased the
carrying amount of property, plant and equipment as at 31 July 2006 by
�1,003,000. The depreciation charge in the periods ending 31 January 2007
and 31 July 2007 have risen accordingly by �9,000 and �17,000. Deferred tax
expense has also been adjusted to take into account the change in the
carrying value of property, plant and equipment as set out in note d)
below.
d IAS 12, Deferred tax
In accordance with IAS 12, deferred tax has been split between assets and
liabilities and reclassified as non-current.
Deferred tax assets have been increased due to the impact of IFRS 2,
Share-based payments, by �1,000 and �5,000 at 31 January 2007 and 31 July
2007 respectively. Corresponding adjustments have been made to the taxation
charge in those periods of �nil and �3,000 respectively.
Deferred tax liabilities have increased by �301,000 at 31 July 2006 and
�281,000 at 31 January 2007 and 31 July 2007, reflecting the revaluation of
property assets as described in note 5c) above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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