RNS Number:4150O
Innovation Group PLC
07 August 2003
7 August 2003
THE INNOVATION GROUP PLC
REPORT FOR THE NINE MONTHS ENDED 30 JUNE 2003
The Innovation Group plc ("TiG" or "the Group"), the provider of
innovative insurance solutions to the global financial
services industry, today announces its unaudited results for
the nine months to 30 June 2003.
Highlights for the nine months ended 30 June 2003:
> BPO revenue of #18.0m (2002: #15.8m) continues to
grow quarter on quarter: Q1 2003: #5.7m, Q2 2003: #5.8m,
Q3 2003: #6.4m. Technology Solutions revenue of #27.0m
(ongoing (see note two) 2002: #58.9m). Total revenue of
#45.0m (ongoing 2002: #74.7m)
> EBITDA* of #4.5m (2002: #17.9m)
> FRS 3 loss before tax of #8.8m inclusive of a goodwill
amortisation charge of #12.3m and profit on disposal of
#1.6m (2002:loss of #375.3m)
> Adjusted profit before tax* of #1.9m (2002: #14.5m); third
quarter in succession that the Group has delivered
profits before goodwill amortisation (Q3 2003: #0.5m)
> Adjusted EPS* of 0.52p (2002: 4.97p); basic EPS loss
of 3.12p (30 June 2002: loss per share of 168.18p)
> Cash is at #10.5m as at 30 June 2003; operating cash flow
has continued to show encouraging improvements for
the last three quarters
> Major blue chip company signs off on delivery of claims system
> Delivery of evaluation licence to top tier US insurance company
> Board strengthened with the appointment of two fully independent
non executive directors
* Definitions are provided under financial highlights and note 2
Enquiries:
The Innovation Group plc 01489 898300
Hassan Sadiq, Chief Executive Officer
Paul Smolinski, Group Finance Director
KBC Peel Hunt 020 7418 8900
Simon Hayes / Jonathan Marren
Weber Shandwick Square Mile 020 7067 0700
Sara Musgrave / Katie Hunt
Chairman's Statement
The global business environment for insurance companies continues
to be difficult. The shortfall in investment income resulting
from the general economic environment has intensified the
focus on generating profits from premium income. Technology
will be a major contributor to this focus and, while a mood
of caution still exists, insurers are prepared to invest in
proven technology solutions that deliver improved
profitability whilst also endeavouring to minimise project
risk through contracting with major market players. The
Innovation Group continues to be well placed to take
advantage of this trend with our technology solutions for
policy, claims and data conversion. Our global partnership
with IBM, our satisfied top tier clients and our domain
expertise are viewed as the important elements that will
enable us to seize future opportunities.
The insurance industry is also still wrestling with integration
issues following a period of consolidation. The breadth of
our technology solutions gives us a tremendous opportunity as
these insurers turn their attention to the integration of
their disparate legacy business processes and systems.
During the quarter we have continued to progress in line with our
plan and we have passed some major milestones. Our continued
strategy of focusing on core revenue lines whilst maintaining
costs at an appropriate level means that the Group has been
able to deliver another profitable quarter before goodwill
amortisation - our third in succession.
First Half Highlights
In January 2003, the Group sold its BPO business in France to
Groupama for a total consideration of 4 million euros which
represented a multiple of more than 80 times the historic
earnings of the French BPO business or 25 times the net asset
value. Also in January, Zurich Insurance paid a #1.8m license
fee following the successful delivery of a claims system for
UK general insurance.
In March 2003, the Group concluded a rights issue which raised
approximately #9m net of expenses, and this has given us the
opportunity to extend several of our current customer
relationships. Hassan Sadiq was appointed Chief Executive of
the company replacing Robert Terry (who moved to a non-
executive role). John Birkmire, Gordon Crawford and Clive
Vlotman left the Board and we immediately commenced the
process of appointing fully independent non-executive
directors. The full first quarter and half year reports are
available on our website.
Financial and Operating Review
Revenue for the nine months to 30 June 2003 was #45.0m (ongoing,
as explained further in note 2, nine months to June 2002 (the
"prior period"): #74.7m); Business Process Outsourcing
("BPO") revenue for nine months to 30 June 2003 was #18.0m
(prior period: #15.8m); Technology Solutions revenue for nine
months to 30 June 2003 was #27.0m (prior period: #58.9m).
EBITDA for the same period was #4.5m (prior period: #17.9m).
FRS 3 loss before tax was #8.8m inclusive of a goodwill
amortisation charge of #12.3m and profit on French BPO
disposal of #1.6m (prior period: loss of #375.3m); adjusted
profit before tax, goodwill amortisation, and gains on
disposal was #1.9m representing #0.3m, #1.1m and #0.5m for
Q1, Q2 and Q3 respectively (prior period: #14.5m); adjusted
EPS was 0.52p (prior period: 4.97p), basic EPS loss of 3.12p
(prior period: loss per share of 168.18p). Cash is at #10.5m
as at 30 June 2003. Operating cash before exceptional costs
has continued to improve with an outflow in Q3 of only #0.8m
(Q1 2003:#2.8m, Q2 2003:#1.5m) and the trend is expected to
continue.
BPO revenue for the quarter ended 30 June 2003 was #6.4m (Q1 2003:
#5.7m, Q2 2003: #5.8m). Revenue from Technology Solutions
for the quarter ended 30 June 2003 was #7.4m (Q1 2003:
#10.1m, Q2 2003: #9.6m), comprising #2.0m initial licence fee
and implementation and #5.4m recurring revenue.
Technology Solutions Division
In my last statement to shareholders, I indicated that one of
the keys to new licence and implementation revenues would be
success in the North American market. I am pleased to report
that we have recorded a number of such successes in this
region during the last three months. These include the
successful final delivery of our claims product to a major
blue chip company; the delivery of an evaluation licence and
the commencement of billing work at one of America's top tier
insurers; and confirmation of TiG as 'chosen vendor' for
another leading US insurer. Our global relationship with IBM
continues to strengthen with this addition of two major US
clients.
BPO Division
Revenues and profitability from "TiG eQuals" (the brand name of
our BPO division) have continued to increase overall. We continue
to capitalise on the market positions we occupy in the UK,
Germany, South Africa and Australia. We continue to explore
other geographical opportunities for this model as well as
leveraging our broader product offerings from our South
African operation into existing and new territories. It is
pleasing to report that the growth trends experienced in
Australia, Germany and South Africa prevail and will outweigh
the experience in the UK where a reduction in volumes is
forecast, as a result of one customer taking its business in
house in an effort to consolidate its different brands.
Despite this one customer experience, our overall UK business
pipeline is very active as insurers see the benefits of
outsourcing their claims process.
Board Changes
During the quarter we made progress in our desire to appoint
additional, fully independent non-executive directors to the
Board. On 29 May 2003, we announced the appointment of Chris
Banks as an independent non-executive director, and chairman
of the audit committee. On 9 July 2003 we announced the
appointment of David Thorpe as an independent non-executive
director and chairman of the remuneration committee. Both
Chris and David bring highly relevant skills and experience
to The Innovation Group, gained at CMG and EDS respectively,
and we look forward to the valuable contribution they both
will make to the Group.
On 9 July 2003, we also announced that Rob Terry was to step
down as a director on 30 September 2003, the end of TiG's
financial year. Rob is continuing to make his services
available to the Company, although an agreement to conclude
his existing two year consultancy agreement has been reached
under which he will receive payment for his services during
the interim period and a further payment following the end of
the current financial year to a maximum amount of #437,500
(representing the balance of his contractual entitlement at
that date). This will be treated as an exceptional charge in
our final quarter of this financial year.
Outlook
The Directors believe they have taken the steps necessary to put
the business on a sound financial footing for the future and,
with the appointments of Chris Banks and David Thorpe, have
strengthened the management experience and the governance of
The Innovation Group.
The Group remains committed to delivering profit and process
improvement solutions for the insurance industry with proven
products. Our BPO division has grown well over recent
quarters and, despite the short term UK revenue
consolidation, we expect to continue to see significant
growth in Germany, South Africa and Australia. There has
been a very encouraging increase in our Technology solutions
activity level over the last quarter but it remains difficult
to predict the precise timing of licence sales.
Finally, I would like to commend our staff for their continued hard
work and commitment, as well as thanking our shareholders for
their invaluable support over the last nine months.
Geoff Squire, OBE
Chairman
7 August 2003
The Innovation Group plc
Financial Highlights
For the nine months ended 30 June 2003
Note 9 months ended 30 June Year to
30 September
2003 2002 2002
#'000 #'000 #'000
Turnover 45,008 83,931 100,071
Adjusted profit before tax 1 1,924 14,477 10,028
Loss before tax (8,761) (375,290) (391,114)
Adjusted earnings per share (pence) 0.52 4.97 2.46
Basic loss per share (pence) (3.12) (168.18) (173.78)
Dividend per share (pence) - 0.6 0.6
Note:
1. Adjusted profit before tax for the nine months ended
30 June 2003 is FRS 3 loss before tax of #8,761,000 (nine
months ended 30 June 2002: loss of #375,290,000; year
ended 30 September 2002: loss of #391,114,000) after
excluding profit on disposal of operations of #1,645,000
(nine months ended 30 June 2002 and year ended 30
September 2002: #nil), exceptional costs of #nil (nine
months ended 30 June 2002: #367,010,000; year ended 30
September 2002: #374,498,000) and the amortisation charge
of #12,330,000 (nine months ended 30 June 2002:
#22,757,000; year ended 30 September 2002: #26,644,000).
References to adjusted profit and earnings per share
reflect the Directors' view that this is an important
measure for their own, and shareholders', assessment of
the Group's underlying performance.
The Innovation Group plc
Unaudited Profit and Loss Account
For the nine months ended 30 June 2003
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
Note #'000 #'000 #'000
TURNOVER 2 45,008 83,931 100,071
Cost of sales (8,092) (11,870) (14,687)
-----------------------------------------------------
Gross profit 36,916 72,061 85,384
Administrative expenses
- exceptional items 3 - (367,010) (374,498)
- other (47,097) (80,771) (102,411)
-----------------------------------------------------
(47,097) (447,781) (476,909)
-----------------------------------------------------
OPERATING LOSS (10,181) (375,720) (391,525)
Profit on disposal of operations 4 1,645 - -
Net interest (225) 430 411
-----------------------------------------------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (8,761) (375,290) (391,114)
Adjusted profit before tax 1,924 14,477 10,028
Amortisation (12,330) (22,757) (26,644)
Exceptional items - (367,010) (374,498)
Profit on disposal of operations 1,645 - -
-----------------------------------------------------
Loss before tax (8,761) (375,290) (391,114)
=====================================================
Tax on loss on ordinary activities 5 (385) (78) -
-----------------------------------------------------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (9,146) (375,368) (391,114)
Equity minority interests (12) - (85)
-----------------------------------------------------
LOSS FOR THE PERIOD (9,158) (375,368) (391,199)
Dividends paid/ proposed - (1,150) (1,255)
-----------------------------------------------------
RETAINED LOSS FOR THE PERIOD (9,158) (376,518) (392,454)
=====================================================
Adjusted earnings per ordinary share (pence) 6 0.52 4.97 2.46
Basic loss per ordinary share (pence) 6 (3.12) (168.18) (173.78)
Diluted loss per ordinary share (pence) 6 (3.12) (168.18) (173.78)
All amounts relate to continuing operations.
The Innovation Group plc
Unaudited Balance Sheet
As at 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 30 September
2003 2002 2002
Note #'000 #'000 #'000
FIXED ASSETS
Intangible assets 41,423 57,748 53,987
Tangible assets 20,623 25,125 22,441
Investments 6,442 5,430 5,034
-----------------------------------------------------
68,488 88,303 81,462
CURRENT ASSETS
Stocks 183 122 131
Debtors 7 15,377 32,009 15,492
Investments 1,275 23,827 11,060
Cash at bank and in hand 10,469 12,177 9,149
-----------------------------------------------------
27,304 68,135 35,832
CREDITORS: amounts falling due within one year (14,683) (45,059) (25,823)
-----------------------------------------------------
NET CURRENT ASSETS 12,621 23,076 10,009
-----------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 81,109 111,379 91,471
CREDITORS: amounts falling
due after more than one year
Convertible loan notes (2,122) - (2,040)
Other creditors (9,663) (15,974) (13,021)
-----------------------------------------------------
(11,785) (15,974) (15,061)
PROVISIONS FOR LIABILITIES AND CHARGES (1,922) (3,546) (3,673)
ACCRUALS AND DEFERRED INCOME (11,366) (22,750) (15,132)
EQUITY MINORITY INTERESTS (187) - (206)
-----------------------------------------------------
NET ASSETS 55,849 69,109 57,399
=====================================================
CAPITAL AND RESERVES
Called up share capital 8,281 3,861 3,952
Shares to be issued 566 12,000 14,000
Share premium account 476,048 456,096 458,973
Profit and loss account (429,046) (402,848) (419,526)
-----------------------------------------------------
EQUITY SHAREHOLDERS' FUNDS 55,849 69,109 57,399
=====================================================
The interim results were approved by the Board of Directors on 7 August 2003.
The Innovation Group plc
Statement of total recognised gains and losses
As at 30 June 2003
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
Loss for the financial period (9,158) (375,368) (391,199)
Currency translation differences (362) (1,838) (2,580)
-----------------------------------------------------
Total recognised gains and losses
relating to the period (9,520) (377,206) (393,779)
=====================================================
Reconciliation of Movement in Shareholders' Funds
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
Loss for the financial period (9,158) (375,368) (391,199)
Dividends - (1,150) (1,255)
-----------------------------------------------------
(9,158) (376,518) (392,454)
Currency translation differences (362) (1,838) (2,580)
Issue of shares 21,404 41,413 44,381
Shares to be issued (13,434) - 2,000
-----------------------------------------------------
Net reduction to shareholders' funds (1,550) (336,943) (348,653)
Opening shareholders' funds as
previously reported 57,399 406,052 406,052
-----------------------------------------------------
Closing shareholders' funds 55,849 69,109 57,399
=====================================================
The Innovation Group plc
Unaudited Cash Flow Statement
For the nine months ended 30 June 2003
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
RECONCILIATION OF OPERATING LOSS TO NET CASH
OUTFLOW FROM OPERATING ACTIVITIES
Operating (loss) before exceptional items (10,181) (8,710) (17,027)
Depreciation and amortisation charges 14,668 26,601 32,121
Loss/(profit) on disposal of fixed assets 149 - (131)
(Increase)/decrease in stocks (52) 64 55
(Increase)/decrease in debtors (75) 3,064 15,935
(Decrease) in creditors (9,605) (12,614) (23,138)
-----------------------------------------------------
(5,096) 8,405 7,815
Cash outflow arising from exceptional costs (3,011) (7,485) (13,140)
Acquisition related outflows* - (1,651) (2,761)
-----------------------------------------------------
Net cash (outflow) from operating activities (8,107) (731) (8,086)
=====================================================
Net cash (outflow) from operating activities (8,107) (731) (8,086)
Returns on investments and servicing of finance (47) 207 697
Taxation (192) (4,478) (2,014)
Capital expenditure (947) (5,061) (7,328)
Acquisitions and disposals 528 (16,775) (14,958)
Equity dividends paid - (4,370) (5,625)
-----------------------------------------------------
Cash outflow before management of liquid
resources and financing (8,765) (31,208) (37,314)
Management of liquid resources 9,785 39,193 51,960
Financing 293 (10,027) (19,811)
-----------------------------------------------------
Increase/(decrease) in cash less bank overdraft 1,313 (2,042) (5,165)
=====================================================
* Acquisition related outflows during the nine months ended 30 June
2002 and year ended 30 September 2002 relate to payments made by
the Company in respect of liabilities which crystallised as a
consequence of the acquisitions of MTW and Huon and creditor
payments associated with the pre-acquisition activities of the
Cosy Group.
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Increase/(decrease) in cash in the period 1,313 (2,042) (5,165)
Cash outflow from decrease in debt and lease financing 8,865 10,027 19,811
Cash inflow from decrease in liquid resources (9,785) (39,193) (51,960)
-----------------------------------------------------
Change in net funds resulting from cash flows 393 (31,208) (37,314)
Loans, loan notes and finance leases acquired with subsidiaries - (1,754) (1,508)
Foreign exchange 96 161 (484)
Accrued interest on loan notes (178) - -
-----------------------------------------------------
Movement in net funds in the period 311 (32,801) (39,306)
Net (debt)/funds at start of period (1,255) 38,051 38,051
-----------------------------------------------------
Net (debt)/funds at end of period (944) 5,250 (1,255)
=====================================================
The Innovation Group plc
Notes to the Unaudited Results
For the nine months ended 30 June 2003
1. BASIS OF PREPARATION
The interim financial information of The Innovation Group Plc is for
the nine month period to 30 June 2003, and has been prepared in
accordance with the accounting policies set out in, and is
consistent with, the audited financial statements for the year
ended 30 September 2002. The results for the year ended 30
September 2002 have been extracted from the audited financial
statements for that year. The audited financial statements have
been filed with the Registrar of Companies and the auditors'
report on those accounts was unqualified. The unaudited profit
and loss account for the nine month period to, and the unaudited
balance sheet as at 30 June 2003, do not amount to full accounts
within the meaning of section 240 of the Companies Act 1985 and
have not been delivered to the Registrar of Companies.
2. ANALYSIS OF TURNOVER, LOSS BEFORE TAX AND NET ASSETS
Turnover can be analysed into the following categories:
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
Initial licence fees 3,332 16,968 17,520
Implementation 5,632 25,700 29,408
Recurring 36,044 41,263 53,143
-----------------------------------------------------
45,008 83,931 100,071
-----------------------------------------------------
Following the restructuring of the group at the end of 2002, the
Directors now consider that the Group has two principal
activities. These are technology solutions and business process
outsourcing. The results for the nine months ended 30 June 2003
can be analysed as follows. In practice it is not feasible to
provide comparative data with sufficient accuracy and so, as
permitted by SSAP 25, no comparative information is provided. In
order to assist the reader when comparing results of the
divisions, the comparatives provided in the Chairman's statement
have been given with reference to ongoing revenues which exclude
the revenues transferred to partners as described in the
financial statements for the year ended 30 September 2002.
Unaudited
9 months to 30 June 2003
Technology
Solutions BPO Total
#'000 #'000 #'000
Turnover 27,047 17,961 45,008
----------------------------------------------------
EBITDA before R&D and central costs 9,142 2,027 11,169 *1
Amortisation and depreciation (8,344) (6,144) (14,488)
----------------------------------------------------
798 (4,117) (3,319)
=================================
R&D (4,880) *2
Central costs (1,982)
Profit on disposal - BPO 1,645
Net interest (225)
--------------
Loss before tax (8,761)
==============
*1 EBITDA OF #4,487,000 comprises #11,169,000 as above less
#4,700,000 R&D and #1,982,000 Central costs.
*2 Research and development costs include approximately #180,000 of
depreciation.
BPO activities include certain territories and activities where
operations are still in initial development or are operating in
markets where they are yet to achieve critical mass. The result
above consequently includes turnover of #799,000 and an adjusted
operating loss of approximately #508,000 in relation to these
businesses. Excluding these and businesses disposed of in the
period, BPO operations are achieving an adjusted operating margin
of 16% for the nine months ended 30 June 2003.
The geographical analysis by location is as set out below:
Turnover Loss before interest and tax
Unaudited Unaudited Audited Unaudited Unaudited Audited
9 months to 9 months to Year to 9 months to 9 months to Year to
30 June 30 June 30 Sept 30 June 30 June 30 Sept
2003 2002 2002 2003 2002 2002
#'000 #'000 #'000 #'000 #'000 #'000
Europe, Middle
East and Africa 29,140 49,867 59,227 6,327 16,177 (262,381)
Americas 13,212 28,398 35,143 2,408 (2,047) (66,340)
Asia Pacific 2,656 5,126 5,701 276 2,167 (1,412)
Central and R&D - - - (6,862) (2,250) (10,250)
Exceptional charge - - - - (367,010) (24,498)
Profit on disposal - - - 1,645 - -
Amortisation - - - (12,330) (22,757) (26,644)
---------------------------------------------------------------------------------
45,008 83,391 100,071 (8,536) (375,720) (391,525)
=================================================================================
Due to the geographical spread of certain acquisitions and the
centralisation of certain functions, it is not possible to
allocate the related central costs over the geographical areas
for the above periods.
Net assets
Unaudited Unaudited Audited
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
Europe, Middle East and Africa 31,001 3,870 18,156
Americas (17,839) (3,010) (21,191)
Asia Pacific (8,839) (4,702) (7,792)
Central 51,526 72,951 68,226
--------------------------------------------------
55,849 69,109 57,399
==================================================
Central net assets include goodwill, other investments and net funds.
3. EXCEPTIONAL ADMINISTRATIVE EXPENSES
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
Fixed asset impairment - 4,538 4,616
Goodwill impairment - 350,000 350,000
Office closure costs - 2,703 3,050
Termination payments - 2,764 5,804
Redundancy period costs - 7,005 9,255
Contractual settlements - - 1,773
----------------------------------------------
- 367,010 374,498
==============================================
4. PROFIT ON DISPOSAL OF BUSINESS
#'000
Net assets disposed of:
Tangible fixed assets 647
Debtors 194
Cash at bank and in hand 88
Creditors (367)
---------------
562
Profit on disposal 1,645
---------------
2,207
Satisfied by: ===============
Cash 2,207
===============
The disposal of the Group's French BPO business was completed on 29
January 2003. The profit on disposal, which was determined
including attributable goodwill of #nil was #1,645,000.
5. TAXATION
The effective tax rate for the group based on projected results
before amortisation and profit on disposal for the year ended 30
September 2003 is 20% (June 2002: 34%; September 2002: nil). The
charge for the period is based on the pre amortisation and profit
on disposal effective tax rate of 20%.
6. EARNINGS PER SHARE
Unaudited Unaudited Audited
9 months to 9 months to Year to
30 June 30 June 30 September
2003 2002 2002
#'000 #'000 #'000
Diluted loss per share (3.12) (168.18) (173.78)
Adjustments for share options and shares to be issued - - -
-------------------------------------------------------
Basic loss per share (3.12) (168.18) (173.78)
Adjustments for exceptional items, profit on disposal
and amortisation 3.64 173.15 176.24
-------------------------------------------------------
Adjusted earnings per share 0.52 4.97 2.46
=======================================================
Earnings per share is calculated as follows:
Basic earnings per share
Average number of shares 293,318,730 223,190,865 225,104,606
Loss for the financial period (#'s) (9,158,000) (375,368,000) (391,199,000)
=======================================================
Diluted earnings per share
Average number of shares 293,318,730 223,190,865 225,104,606
Loss for the financial period (#'s) (9,158,000) (375,368,000) (391,199,000)
=======================================================
Adjusted earnings per share
Average number of shares 293,318,730 223,190,865 225,104,606
Loss for the financial period (#'s) (9,158,000) (375,368,000) (391,199,000)
Add amortisation (#'s) 12,330,000 22,757,000 26,644,000
(Less)/add exceptional items (#'s) (1,645,000) 367,010,000 374,498,000
Less tax credit arising on exceptional items (#'s) - (3,301,000) (4,400,000)
-------------------------------------------------------
Adjusted earnings (#'s) 1,527,000 11,098,000 5,543,000
=======================================================
FRS 14 requires presentation of diluted EPS when a company could be
called upon to issue shares that would decrease net profit or
increase net loss per share. For a loss making company with
outstanding share options, net loss per share would only be
increased by the exercise of out-of-the-money options. Since it
seems inappropriate to assume that option holders would act
irrationally, no adjustment has been made to diluted EPS for out-
of-the-money share options.
7. WORKING CAPITAL
Debtors as at 30 June 2003 comprise trade debtors of #11.7m (30
September 2002: #11.8m), accrued income of #nil (30 September
2002: #0.3m), prepayments, deposits and other debtors of #3.7m
(30 September 2002: #3.4m).
8. ADDITIONAL COPIES OF THE STATEMENT
Copies of this statement are available from The Innovation Group
plc, Yarmouth House, 1300 Parkway, Solent Business Park, Whiteley
PO15 7AE.
INDEPENDENT REVIEW REPORT TO THE INNOVATION GROUP PLC
Introduction
We have been instructed by the company to review the
financial information for the nine months ended 30 June
2003, which comprises the profit and loss account, the
balance sheet, the cash flow statement and related notes
1 to 8 together with the reconciliation of operating loss
to net cash outflow from operating activities and the
reconciliation of net cash flow to movement in net funds.
We have read the other information contained in the third
quarter report and considered whether it contains any
apparent misstatements or material inconsistencies with
the financial information.
This report is made solely to the company in accordance
with Bulletin 1999/4 issued by the Auditing Practices
Board. Our work has been undertaken so that we might
state to the company those matters we are required to
state to them in an independent review report and for no
other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other
than the company, for our review work, for this report,
or for the conclusions we have formed.
Directors' responsibilities
The third quarter report, including the financial
information contained therein, is the responsibility of,
and has been approved by, the directors. The directors
are responsible for preparing the third quarter report in
accordance with the Listing Rules of the Financial
Services Authority which require that the accounting
polices and presentation applied to the third quarter
report figures are consistent with those applied in
preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance
contained in Bulletin 1999/4 issued by the Auditing
Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group
management and applying analytical procedures to the
financial information and underlying financial data and,
based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures
such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less
in scope than an audit performed in accordance with
United Kingdom auditing standards and therefore provides
a lower level of assurance than an audit. Accordingly,
we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any
material modifications that should be made to the
financial information as presented for the nine months
ended 30 June 2003.
Deloitte and Touche LLP
Chartered Accountants
London
7 August 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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