RNS Number : 6064E
Handmade PLC
30 September 2008
Embargoed 7.30am 30 September
2008
HandMade plc
("HandMade" or ""the Group")
Final Results
For the year ended 31 December 2007
HandMade plc (AIM: HMF), the UK and US based film entertainment company that acquires, owns, produces and exploits intellectual property
rights, announces its Final Results for the year ended 31 December 2007.
SUMMARY OF FINANCIAL RESULTS
2007 2006
�m �m
Revenue 1.93 1.87
Loss before interest, tax, depreciation & amortisation 2.98 1.75
Retained loss for the year 6.48 2.87
Loss per share (p) 5.5p 3.7p
OPERATING HIGHLIGHTS
* $50million of future sales revenue generated at Cannes film festival 2007 which will deliver in excess of $5million profit to the
Group, when it is accounted for in future years
* Successful integration of HandMade Films International ("HFI") (formerly Sequence Film Limited) into the Group following
acquisition in November 2006. �0.25m generated from first major library deal negotiated by HFI
* Development of film production division with ten films currently at various stages of development, production and completion
* Strategic partnership developed with Scott Free Films and the Future Film Group with first feature film to be produced under this
arrangement - 'Cracks' starring Eva Green - already in production
* Strategic partnership developed with Jersey based Horizon Media film fund resulting in investment in five of our film projects to
date
POST PERIOD HIGHLIGHTS
* Actress Uma Thurman signed as lead role for feature film 'Eloise in Paris' - principal photography scheduled to commence shortly
* Dwayne 'The Rock' Johnson and Jessica Biel signed for the computer generated imagery ("CGI") animation film 'Planet 51' -
currently in production
* Distribution deals for 'Planet 51' completed in almost all territories - including with Sony Pictures in US
* 'Fifty Dead Men Walking' starring Jim Sturgess and Sir Ben Kingsley, completed and premiered at Toronto Film Festival in September
2008 to excellent reviews
* HandMade film library has generated �1.75m of rights fee revenue in first six months of 2008
David Ravden, CEO of HandMade plc, commented: "2007 was a year of building our brands, successfully integrating HandMade Films
International into the Group and developing our film production activities. Our first co-produced film - 'Fifty Dead Men Walking' has
recently premiered at the Toronto Film Festival and received some excellent reviews. We have a further nine films currently in various
stages of development and production including our first 'Eloise' feature film starring Uma Thurman and our first CGI animation feature
'Planet 51'. I am pleased to report the Group is now in a position from which it can continue to develop its slate of films towards
production, and can look forward to income and profit generation in 2009 and beyond."
For further information please contact:
HandMade plc 020 7518 8230
David Ravden, CEO
Conduit PR 020 7429 6603
Jos Simson, Charlie Geller
Canaccord Adams 020 7050 6500
Mark Williams, Andrew Chubb
About HandMade
HandMade Plc, which encompasses HandMade Films International and HandMade Film
Productions, is an international rights and film production company with one of the UK's largest independent film libraries. The
HandMade Group acquires, owns and exploits intellectual property rights, comprising film, TV and theatrical productions, book and music
rights, and merchandising. They are the sole owners of all ancillary and merchandising rights to the iconic children's book character
'Eloise' and specialise in the marketing and branding of all 'Eloise' merchandise plus production and marketing of remakes of all films in
their library. HandMade plc was re-admitted to trading on AIM in May 2006 and has offices in both London and Los Angeles.
Under the original ownership of George Harrison, HandMade was responsible for producing some of the great British films of the 70's and
80's: The Long Good Friday, Mona Lisa and Time Bandits to name but a few. More detail, together with the Company's AIM Rule 26 information
is available on the Company's website www.handmadeplc.com
Chairman's statement
Having joined AIM in June 2006, we have spent the past two years concentrating on putting in place the foundations for future growth.
Our four core divisions - Library Rights and Content; Eloise Rights Exploitation; Film Production; and Film Sales, Marketing and Structured
Financing - are now all in a position to generate significant future revenues.
In the year ended 31 December 2007, the Group produced a financial loss before interest, tax, depreciation and amortisation of �2.98m
(2006 - loss of �1.75m). These losses are in line with expectations and are discussed in more detail in the Financial Review below.
The acquisition of HandMade Films International ("HFI") in November 2006 (formerly Sequence Film Limited) has added value to the Group
through their negotiation of excellent licensing arrangements for our films and their assistance with film finance. HFI has become an
integral part of our film-making process.
Our film libraries have always generated regular revenue streams, with �0.6m being achieved in the year ended 31 December 2007. As
explained in more detail in the operating review below we expect this figure to increase significantly in the coming years as re-make rights
are exploited to their full potential.
We enjoyed great success at last year's film markets, including Cannes and the American Film Market. As previously announced, our films
were well received by foreign buyers, resulting in licensing deals with US Studios as well as some of the most highly respected companies in
the industry.
During 2007 the HandMade Group forged a strategic partnership with Scott Free Films (the film production company of film directors Tony
and Ridley Scott) and the Future Film Group (who operate out of London and Los Angeles providing a range of film production services
including specialist production financing and post production facilities). The first film to be produced under this arrangement is Cracks
starring Eva Green which is currently in production, and which is forecast to deliver revenue to the Group in 2009.
Our relationship with The Horizon Media Fund ("Horizon") - a Jersey-based investment fund - has resulted in investment to date in five
of our film projects. In addition to Horizon, we are also in discussions with two other funds to provide further external film funding.
Our plans for the Eloise franchise are progressing and our first feature film, "Eloise in Paris", is in pre-production. As announced in
February this year, we are delighted that Uma Thurman is to play the lead role as the Nanny, and we have found the perfect Eloise in Jordana
Beatty. We remain focused on exploiting the Eloise brand where we see considerable growth for the future and are currently working on a
Broadway show, an animated film and a TV series.
Recently we have developed a relationship with El-Ad Properties, the new owners of the recently refurbished Plaza Hotel in New York -
home to Eloise and Nanny - and hope to work together with them on a number of film and Eloise related projects in the future.
2007 has been a year of building our brands, successfully integrating HFI into the Group and developing our film production activities.
The latter has certainly been achieved with ten films currently in various stages of development, production and completion. I am pleased
with the progress that we have made to date, and look forward to enjoying the fruits of our labours over the coming years.
Patrick Meehan
Chairman
25 September 2008
Operational Review
Library Rights and Content
HandMade's library contains over 100 feature films that are exploited through the licensing of theatrical, television, DVD and other
home entertainment rights in various territories around the world. The Group also generates revenue from licensing the rights to produce
re-makes, prequels and sequels of certain films in its library.
In the year to 31 December 2007 library revenue was �0.6m. This figure includes �0.25m generated by the first major library deal
negotiated by HFI since the exploitation of the existing HandMade library was brought in house in the final quarter of 2007. This strategy
ensures that none of the revenue is lost to the Group through having to pay sales commission to a third party, and is one that is expected
to yield improved results in the coming years, through HFI's innovative packaging of titles within the library.
It is the full exploitation of the library's re-make rights, however, that is expected to drive library revenue in the next few years.
Indeed, �1.75m of rights fees has already been negotiated and received in 2008 - this is 100% profit for the Group.
Eloise Rights Exploitation
HandMade owns the sole and exclusive rights to the Eloise character in all media, with the exception of publishing rights to the
original Eloise books. Thus, although royalty income from the original books does not accrue to HandMade, income from books based on Eloise
films and any other ancillary books does accrue to the Group. We believe this is a hugely under exploited asset and franchise.
As previously mentioned, we are currently working on our first feature film, Eloise in Paris. The film has a $40million budget and we
have already cast Uma Thurman as the Nanny and Jordana Beatty as Eloise. The Eloise in Paris screenplay has been written by, and is to be
directed by, Charles Shyer whose previous film successes include 'Father of the Bride', 'Private Benjamin' and 'Parent Trap'. We are
currently concluding the casting process and have scheduled production to commence shortly with a target delivery date during the final
quarter of 2009.
The film has already generated �0.49m revenue for the Group in 2007, through the receipt of a single picture license fee. Additional
revenue will be earned when the film commences principal photography, and also when delivered to distributors in 2009 and 2010.
Plans are already in place to produce a second Eloise feature film, Eloise goes to Hollywood, with development due to commence in 2009
and production anticipated in 2010.
It is expected that a successful Eloise feature film will be the catalyst for significant revenues to be earned from a wide range of
Eloise related merchandise in 2010 and beyond.
In addition to the films, a Broadway musical and an animated feature film are other Eloise projects that are currently being explored.
We hope to be able to make further announcements regarding these income streams in due course.
The New York Plaza Hotel, home to Eloise and Nanny, re-opened in 2008 having been fully refurbished by its new owners El-Ad Properties -
a substantial privately owned Israeli property group with whom HandMade has already developed a working relationship.
Film production
This division, which is involved in the production and co-production of externally funded films, has perhaps developed the most in 2007,
having only been formed when the Company was admitted to trading on AIM in June 2006.
As has already been discussed, important strategic relationships have been developed during the year with Scott Free Films, the Future
Film Group, and the Horizon Media Fund. These relationships coupled with the significant contribution made by HFI through pre-selling the
films to distributors and the relationships they have brought to the Group, have contributed to the nine film projects, in addition to
Eloise in Paris, which are currently in various stages of development, production and completion, and which are outlined below.
No production revenue has been generated by these films in the year to 31 December 2007 - as per management's expectations. We are
confident that we will see the rewards of our 2007 efforts, in the form of production fees, overhead contribution, sales commissions and
ultimate share of producer profits, when the films begin principal photography and are delivered in 2009 and beyond.
We are particularly excited about Planet 51, the $60 million computer generated imagery ("CGI") animation film we are co-producing with
Madrid based Ilion Animation studios which is scheduled to be released in the US over the Thanksgiving holiday weekend in November 2009
through Sony Pictures. Ongoing efforts during 2007 and 2008 have resulted in this major US distribution deal, with deals also secured in
almost all remaining territories around the world. In addition to the sales commission revenue these deals will generate in 2009 and 2010,
Planet 51 merchandise deals have also been concluded from which the Group are forecast to receive royalties of at least �0.3m in 2009 and
beyond.
Films:
Completed
Fifty Dead Men Walking - Director: Kari Skogland. A fast paced action thriller starring Jim Sturgess and Sir Ben Kingsley. The film has
recently premiered at the Toronto Film Festival and received some excellent reviews.
In Production
Planet 51- Director: Jorge Blanco. An animated adventure film written by Joe Stillman with the voices of Dwayne "The Rock" Johnson,
Justin Long, Jessica Biel, John Cleese, Seann William Scott and Gary Oldman.
Cracks - Director: Jordan Scott. A drama set in an all-girls boarding school starring Eva Green.
In Pre-production
Eloise in Paris Director: Charles Shyer. A classic children's story starring Uma Thurman, and Jordana Beatty.
The Adventures of Charlotte Doyle - Director: Danny DeVito. An action adventure film with Morgan Freeman, Pierce Brosnan and Saoirse
Ronan.
Welcome to the Rileys - Director: Jake Scott. A drama starring James Gandolfini and Marcia Gay Harden.
In Development
Long Good Friday - Written and directed by Paul WS Anderson. A US remake of the classic British film.
Hadrian - Director: John Bormann. An epic story of the Roman emperor Hadrian.
Mona Lisa - Director: Larry Clark. A US remake of the classic British film.
Dali - Director: Andrew Niccol. The story of the Spanish painter, Salvador Dali.
Film Sales, Marketing and Structured Financing - HandMade Films International (HFI)
HFI is a wholly owned subsidiary of the Group, having been acquired by HandMade in November 2006. HFI have extensive experience, through
the involvement of its senior management in the worldwide sales, marketing and production financing of over 250 feature films.
Pre-selling territorial distribution rights forms a cornerstone to the production financing of many independent film productions adding
both collateral security for production financing and evidence of commercial viability of each project.
Typically, HFI introduces new film projects to a worldwide group of experienced theatrical, TV and DVD distributors once the film
script, director and some lead cast are attached, and use traditional and innovative marketing support to create buyer awareness. Generally
pre-sale levels as a percentage of a film's budget vary from 20-50%, but in exceptional cases, such as the Long Good Friday, can be
significantly higher - thus making the task of financing a film a lot easier.
During 2007 the majority of HFI's revenue was generated by projects already on their slate when acquired by the Group in 2006. In
particular Highlander V, The Stone Angel and Tales of the Riverbank generated sales commissions and executive producer fees for the Group.
Details of the major projects acquired with HFI, which have all now been completed, are outlined below:
Manolete - recently premiered at the Toronto Film Festival - Director: Menno Meyjes. A classic tale of the bullfighter and his love
affair with Lupe Sino starring Penelope Cruz and Adrien Brody.
Tales of the Riverbank - Director: John Henderson. An animated film of the classic BBC television series with the voices of Steve
Coogan, Jim Broadbent, Stephen Fry and Ardal O'Hanlon.
The Stone Angel - Director: Kari Skogland. Starring Ellen Burstyn and Ellen Page. Based on Margaret Laurence's bestselling Canadian
novel.
The Heart of the Earth - Director: Antonio Cuadri. A gripping epic saga set in Spain starring Sienna Guillroy and Joaquim de Almeida
Highlander V - Director Brett Leonard's 5th instalment of this highly successful franchise
Manolete and Tales of the Riverbank are expected to generate sales commission on their delivery in 2008.
It should be re-emphasised that the financial benefits arising from the significant role that HFI has played during 2007 and 2008 on the
various projects of the film production division will only be seen in later years when the films are delivered, and the sales commissions
generated by the deals that are already concluded, are accounted for.
Finance
As recently announced, the Board of HandMade plc has reached agreement with its largest shareholder Cartier Investments Inc, regarding
the re-negotiation of the terms of the acquisition of HandMade Holdings Limited from Cartier by the Company which took place in June 2006.
Full details of the revised terms are contained in the public announcement made on 26 September (which can be viewed on the Company's
website www.handmadeplc.com), but essentially the cash elements of the outstanding consideration due to Cartier have been deferred until 31
July 2009. This allows the Company to preserve its cash for use in developing its commercial opportunities until a time when it expects to
have increased revenues from its existing slate of projects.
Outlook
Whilst our primary focus is on the exploitation of the assets we already own, the Group explores all opportunities to grow the business,
including acquisitions that would enlarge and/or complement our existing intellectual property.
During the initial transition period following the creation of, effectively, a new business entity in June 2006, the level of activity
was steady - in line with management's expectations. In contrast, 2007 has seen a much increased level of activity with the development of a
number of film and other income generating projects together with the integration of HFI into the Group. The Group is now in a position from
which it can continue to develop its slate of film and other projects, towards income and profit generation, in 2009 and beyond.
D Ravden
Chief Executive Officer
25 September 2008
Financial review of the year ended 31 December 2007
These results are the first set of full financial statements prepared in accordance with International Financial Reporting Standards
('IFRS'). The overall impact of conversion on our previous financial results was set out and fully explained in the IFRS Conversion
statement issued in September 2007. It should be re-iterated that these are changes in accounting policy only, and that there is no impact
whatsoever on the operating fundamentals or the underlying cash flows within the business.
The results for 2007 reflect the first full year's trading for the HandMade group following the acquisition of HandMade Holdings Limited
by Equator Group plc (and subsequent name change to HandMade plc) in June 2006, and following the acquisition of Sequence Film Limited
(subsequently re-named HandMade Films International "HFI") by HandMade plc in November 2006. The year, due to its transitional nature, was
always forecast to be challenging from a trading point of view, as such the results outlined below are in line with the expectations of the
Board.
Income statement
Revenue in 2007 was �60,000 higher than in 2006 at �1.93m (2006 - �1.87m), however gross profit more than doubled from �0.42m in 2006 to
�0.86m in 2007. The reason for the improved gross profit is twofold.
Firstly, in October 2007, the Group received a $1.0m (�0.49m) rights fee for granting a one-picture licence of the Eloise intellectual
property it owns, to allow the feature film Eloise in Paris to be made - this licence fee generates 100% gross profit for the group. It is
worth noting that in 2008 a further $3.5m (�1.75m) worth of rights fees have been negotiated in relation to Eloise and the HandMade
library.
Secondly, the turnover and gross profit generated by the Eloise rights fee was offset by a decrease in that generated by HFI. During
2007 much of HFI's efforts have been focussed on promoting and selling Planet 51 and other film projects currently included in the HandMade
portfolio, and as has previously been publicly announced have achieved some notable successes during the year. The financial benefits of
these efforts however, will not be seen until 2009 and beyond when the relevant films are delivered and released.
The Group's cash administrative expenses (before impairments, amortisation, depreciation and non cash items) increased from �1.80m in
2006 to �3.55m in 2007. This was as expected because it was the first full year of trading for the enlarged group. Cash administrative costs
are forecast to continue at this level in 2008.
Administrative expenses disclosed in the consolidated income statement include a charge of �0.29m (2006 - �0.37m) relating to the
granting of share options during the year and in 2006. This is a non-cash expense which arises because the Group has adopted IFRS 2 "Share
based payment" which ascribes a value to the granting of share options.
Adjusted EBITDA is calculated by adjusting the operating loss for all of the items described above, and essentially reflects gross
profit less cash administrative expenses. It is one of the measures the Board uses to monitor financial performance. As the table below
shows, adjusted EBITDA showed a loss of �2.69m for the year (2006 - �1.38m loss).
ADJUSTED EBITDA 2007 2006
�m �m
Operating loss per income statement (6.63) (3.18)
Amortisation 3.05 1.42
Impairment of intangible assets 0.57 `-
Depreciation 0.03 0.01
Adjustment - share based payment 0.29 0.37
Adjusted (loss) BITDA (2.69) (1.38)
Gross profit 0.86 0.42
Cash administrative expenses (3.55) (1.80)
Adjusted (loss) BITDA (2.69) (1.38)
Amortisation of intangible assets increased from �1.42m in 2006 to �3.05m this year. This increase of �1.63m is again due to a full
years worth of expense being incurred for the first time on both the Eloise and HandMade assets acquired with HandMade Holdings Limited in
June 2006, and on the sales agency agreements acquired with Sequence Film Limited in November 2006 - the latter asset only being recognised
under IFRS.
As described below, impairment tests were performed on the Group's intangible assets with the result that an impairment charge of �0.57m
was required against the sales agency agreements acquired with Sequence. No impairment charge arose in 2006.
Net finance costs in the income statement have increased, from �0.20m in 2006 to �1.59m in 2007. �0.89m of the 2007 total relates to the
unwinding of discount on the deferred consideration relating to the two acquisitions in 2006. The remainder of the increase is a result of
financial liabilities rising during the year from �2.92m to �6.34m.
The retained loss for the year of �6.48m (2006 - �2.87m) will be transferred to reserves.
Balance sheet
The Group's main assets are the Equator and HandMade film libraries and the Eloise intellectual property which have a combined value in
the balance sheet of �32.71m. In accordance with IAS 36 impairment tests have been performed, via the use of discounted future cash flows,
to support the values attributed to these assets, with the result that no impairment of these assets was required.
The sales agency agreements acquired with Sequence Film Limited in November 2006, recognised under IFRS, are being amortised over their
specific useful economic life to December 2009. An impairment test was also necessary to support their value in the balance sheet. This test
resulted in a value of �0.54m being attributed to these assets at 31 December 2007, which in turn led to an impairment charge of �0.57m
being required to write the assets down to the correct value.
Goodwill of �11.75m (2006 - �12.16m) is held as an asset in the Balance Sheet at the year end. �10.32m of this balance arose to reflect
the deferred tax liability that was recognised in respect of the intangible assets acquired with HandMade and Sequence in 2006, as explained
in the opening section of this review which discusses the impact of IFRS on the financial statements.
Goodwill arising from the acquisition of Sequence Film Limited makes up the remainder of the asset. This figure reduced from �1.84m in
2006 to �1.43m in 2007 because some contingent consideration relating to the acquisition did not crystallise as expected during the year.
Under IFRS, goodwill is not amortised, but is subject to an annual impairment test. Following analysis of the goodwill balance, no
impairment was required.
Current assets (excluding cash) have increased from �2.75m to �5.62m largely due to the level of development costs that the Group has
expended on current film projects, all of which are expected to be recouped once the projects get underway in the future.
At the balance sheet date, the Group had an overdraft of �260,000 included within financial liabilities of �6.34m (2006 - �30,000 of
'free' cash and financial liabilities of �2.92m). Financial liabilities have increased as a short term measure to meet the working capital
and development cost requirements of the Group whilst the different income generating streams are being developed. It should be noted that
�1.58m of these financial liabilities have been repaid during the first six months of 2008.
Share capital and share premium increased by an aggregate of �0.54m as a result of an issue of 3,000,000 ordinary shares during the
year.
Consolidated Income Statement for the year ended 31 December 2007
Notes 2007 2006
�'000 �'000
Continuing operations
Revenue 1,936 1,872
Cost of sales (1,072) (1,453)
Gross profit 864 419
Administrative expenses (7,489) (3,604)
Operating loss (6,625) (3,185)
Finance income 3 12
Finance costs (1,596) (215)
Loss before tax (8,218) (3,388)
Income tax 2 1,738 522
Loss for the year attributable to equity (6,480) (2,866)
holders
Loss per share - basic and diluted 3 5.5p 3.7p
All the Group's activities are derived from continuing operations.
Consolidated Statement of Recognised Income and Expenditure for the year ended 31 December 2007
Notes 2007 2006
�'000 �'000
Loss for the year (6,480) (2,866)
Total recognised income and (6,480) (2,866)
expense
Attributable to equity holders (6,480) (2,866)
Consolidated Balance Sheet as at 31 December 2007
Notes 2007 2006
�'000 �'000
ASSETS
Non-current assets
Goodwill 11,748 12,157
Intangible assets 33,310 36,982
Property, plant and equipment 111 80
Investment in associate - -
45,169 49,219
Current assets
Development costs 2,926 128
Trade and other receivables 2,699 2,626
Cash and cash equivalents - 2,937
5,625 5,691
Total assets 50,794 54,910
LIABILITIES
Current liabilities
Financial liabilities 5,758 1,914
Trade and other payables 14,274 7,773
Current tax liabilities - -
20,032 9,687
Non-current liabilities
Financial liabilities 585 1,007
Trade and other payables 2,065 8,417
Deferred tax liabilities 9,327 11,065
11,977 20,489
Total liabilities 32,009 30,176
EQUITY
Capital and reserves
Share capital 4 5,943 5,793
Share premium 4 9,176 8,786
Merger reserve 4 21,832 21,832
Shares to be issued 4 519 819
Retained earnings 4 (18,685) (12,496)
Equity attributable equity holders of the parent 18,785 24,734
Total equity and liabilities 50,794 54,910
The consolidated financial statements were approved by the board of directors and authorised for issue on 25 September 2008 and signed
on their behalf by:
D Ravden
Director
Consolidated Cash Flow Statement for the year ended 31 December 2007
Notes 2007 2006
�'000 �'000
Cash flows from operating
activities
Loss before tax for the year (8,218) (3,388)
Adjustment to reconcile loss before tax to net cash
flows:
- finance income (3) (12)
- finance costs 1,596 215
- depreciation of property, 28 11
plant and equipment
- amortisation of intangible 3,055 1,422
assets
- impairment of intangible 567 -
assets
- share based payment expense 291 374
- currency translation differences 25 2
Operating cash flows before movements in working (2,659) (1,376)
capital
Changes in working capital:
- increase in development costs (2,748) (128)
- (increase) / decrease in trade and other (73) 1,709
receivables
- decrease in trade and other (925) (1,696)
payables
Income tax paid - (53)
Net cash used in operating (6,405) (1,544)
activities
Cash flows from investing
activities
Acquisition of subsidiaries - (911)
Purchases of property, plant (59) (88)
and equipment
Purchase of intangible assets - (100)
Interest received 3 12
Net cash used in investing (56) (1,087)
activities
Cash flows from financing
activities
Proceeds on issue of ordinary 540 9,148
shares
Proceeds from new loans raised 3,175 700
Repayment of loans - (7,125)
Interest paid on convertible (120) -
loan note
Other interest paid (331) (105)
Net cash generated from 3,264 2,618
financing activities
Net decrease in cash and cash equivalents (3,197) (13)
Cash and cash equivalents at the beginning of the 2,937 2,950
year
Cash and cash equivalents at (260) 2,937
the end of the year
Notes to the Accounts for the year ended 31 December 2007
1. The financial information set out on the attached pages does not constitute statutory accounts, as defined in s240 of the
Companies Act 1985, for the years ended 31 December 2007 or 31 December 2006 but is derived from those accounts. Statutory Accounts for the
year ended 31 December 2006 have been delivered to the Registrar of Companies and those for the year ended 31 December 2007 will be
delivered following this announcement. The auditors reported on those accounts; their reports were unqualified and did not contain a
statement under s237 (2) or (3) Companies Act 1985.
2. Taxation
2007 2006
�'000 �'000
Current tax - (97)
Deferred tax (1,738) (425)
Income tax credit (1,738) (522)
The tax rate used for the reconciliations is the corporate tax rate of 30% (2006: 30%) payable by the corporate entities in the UK on
taxable profits under tax law in that jurisdiction. Taxation for other jurisdictions is calculated at the rates prevailing in the respective
jurisdictions.
The credit for the year can be reconciled to the loss per the income statement as follows:
2007 2006
�'000 �'000
Loss before taxation (8,218) (3,388)
Income tax calculated at 30% (2006: 30%) (2,465) (1,016)
Effect of expenses that are not deductible 1,476 562
Effect of unused tax losses not recognised as deferred
tax assets 966 454
Adjustments in relation to the current tax of prior years 23 (97)
Effect of non deductible expenses on deferred tax (1,072) (425)
Effect of change in rate at which deferred tax is (666) -
recognised
Income tax credit (1,738) (522)
A deferred taxation asset of approximately �1,763,000 (2006: �797,000) has not been recognised on losses available to carry forward as
the recoverability of any asset is dependent on sufficient profits being achieved in certain subsidiaries. The timings of any such profits
are uncertain.
3. Loss per share
The calculation of the basic and diluted loss per share is based on the following data:
2007 2006
Loss �'000 �'000
Loss for the year attributable to equity holders 6,480 2,866
Weighted average number of shares Number Number
Weighted average number of shares in issue 117,891,125 78,164,669
Basic and diluted loss per share 5.5p 3.7p
As the Group has made a loss for the year the loss per share has not been diluted.
The number of potentially dilutive shares and share options in issue at the balance sheet date was 6,925,000 (2006 - 7,625,000).
4. Retained earnings and other reserves
Share capital & Shares to be issued
premium
Merger reserve Retained earnings Total equity
�'000 �'000 �'000 �'000 �'000
Balance at 1 January 2006 2,773 7,959 - (10,004) 728
Placement of new shares on AIM 10,000 - - - 10,000
Subscription to new shares 135 - - - 135
Cost of acquisitions during 2,598 13,873 819 - 17,290
the year
Cost of share placement and (927) - - - (927)
fundraising
Loss for the year - - - (2,866) (2,866)
Recognition of share based - - - 374 374
payments
Balance at 31 December 2006 14,579 21,832 819 (12,496) 24,734
Subscription to new shares 540 - - - 540
Reversal - contingent
consideration not crystallised - - (300) - (300)
Loss for the year - - - (6,480) (6,480)
Recognition of share based - - - 291 291
payments
Balance at 31 December 2007 15,119 21,832 519 (18,685) 18,785
5. This financial information was approved for release by the board of HandMade plc on 25 September 2008.
The 2007 accounts were posted to all shareholders on 29 September 2008. Further copies can be obtained from the registered office of the
Company at 1 Westferry Circus, Canary Wharf, London E14 4HD. They may also be accessed via the investor relations section of the Company's
website www.handmadeplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EKLFLVKBZBBE
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