Prologic plc
03 December 2007
3 December 2007
Prologic plc
('Prologic', the 'Company' or the 'Group')
Interim Results for the six months ended 30 September 2007
Prologic plc, a leading provider of IT business solutions to fashion and
lifestyle retailers and distributors, announces its interim results for the six
months ended 30 September 2007.
Basis of Reporting
Results reported under IFRS for the first time; comparatives have been restated.
Highlights
• Results ahead of expectations.
• Revenue up 8% to £5.3m (2006: £4.9m).
• Recurring revenues 51% of total revenue.
• Operating profit, before exceptional expenses, up 31% to £0.61m
(2006: £0.47m).
• Adjusted basic EPS* up 46% to 5.1p per share (2006: 3.5p).
• Continuing strong cash flows resulting in period end cash balance of
£2.0m (30 September 2006: £0.8m) and a period end net cash position of
£1.4m (30 September 2006: £0.1m net debt).
*Based on earnings before exceptional expenses (net of tax).
Sam Jackson, Managing Director, commented:
'I am delighted to report another set of strong results that highlight the
excellent progress the Group is making.
We are benefiting from the significant investment we continue to make in
developing our range of products and services. For example, the gross profit
generated by Unify (our managed network service), which we introduced in 2004,
more than doubled in the first half of this year when compared to the same
period last year. There are further exciting growth prospects for other new
products and services to be released shortly, including a fully integrated
consumer e-commerce solution and a low-cost 'Software as a Service' model.
During the first half of this financial year, the Company has implemented a
number of organisational changes to allow us to operate more efficiently and to
support our customers more effectively. The one-off costs associated with this
have been reported as exceptional expenses, which we anticipate will be offset
by cost savings in the second half.
Our sales opportunities for both new and existing customers are strong and we
are therefore encouraged by our prospects'.
Further information:
Prologic plc 01442 876 277
Sam Jackson, Managing Director
David Parry, Finance Director
WH Ireland Limited 0161 832 6644
David Youngman
Biddicks 020 7448 1000
Shane Dolan
Prologic plc
Interim Results 2007
Chairman's Statement
These results show another excellent performance by the Group, as we continue to
build our position as one of the leading IT solutions providers to the fashion
and lifestyle industry.
Our strategy of recruiting highly experienced fashion industry consultants and
of making significant investments in developing our products and services is
proving very successful, as we are able to define and implement competitive
solutions that meet the specific business requirements of the fashion and
lifestyle industry.
During the half year, we implemented new systems for TM Lewin, Go Outdoors and
Graham Tiso. Prologic's software is now supporting TM Lewin's ambitious
expansion plans over the next three years, which include opening stores
overseas.
We are also pleased to announce today that, following a formal tendering and
evaluation process, Fat Face has extended its contract with the Company. This
will involve a programme of substantial upgrades and further investment in our
CIMS software suite.
The internet is now a vital component of fashion and lifestyle retailers' growth
strategies. To take advantage of increased investment in this area, Prologic
will shortly be launching a fully integrated consumer e-commerce solution. This
will allow our customers to have control of web store design whilst benefiting
from an enterprise scale content management, order processing and fulfilment
solution that is fully integrated with, and embedded within, the CIMS
multi-channel application. Additionally, we will shortly be launching a '
Software as a Service' ASP model that will offer customers lower cost delivery.
This will allow us to deliver our technology via UK and overseas resellers,
opening up a potential new and exciting client base.
Trading results
These results are the first the Group has reported under International Financial
Reporting Standards (IFRS) and, consequently, the comparative figures in respect
of the six months ended 30 September 2006 have been restated.
Revenue for the six-month period was £5.3m, up 8% on 2006, with recurring
revenues representing a robust 51% of total sales. Operating profit, before
exceptional expenses, rose 31% to £0.61m and adjusted basic earnings per share*
increased by 46% to 5.1p.
*Based on earnings before exceptional items (net of tax)
Unaudited Unaudited
Six months to six months to
30 September 30 September
2007 2006
£'000 £'000
Revenue 5,267 4,865
Cost of sales (3,009) (2,868)
Gross profit 2,258 1,997
Gross margin 42.9% 41.0%
Development costs amortisation (306) (245)
Overheads (1,342) (1,287)
Operating profit before exceptional expenses 610 465
Return (before exceptional expenses) on sales 11.6% 9.6%
Exceptional expenses (205) -
Operating profit 405 465
Return on sales 7.7% 9.6%
During the first half we integrated our new and existing sales forces and
restructured our operations teams. This will allow us to operate more
efficiently and improve customer support. We expect the exceptional severance
expenses that arose as a result to be offset by cost savings in the second half.
IFRS
The principle areas of impact arising from the adoption of IFRS have been the
capitalisation and subsequent amortisation of qualifying development
expenditure, and the treatment of goodwill. The impacts of the IFRS adjustments
are shown in note 2.
Taxation
The effective tax rate for the period of 8% was below the UK standard rate of
tax of 30% due to the impact of capitalising and amortising development
expenditure, and the availability of development tax credits.
Cash Flow
The Group continues to be strongly cash generative with cash generated by
operations of £0.94m (2006: £0.18m), representing 232% of operating profit. This
strong cash flow resulted in a period end net cash position of £1.4m (2006: net
debt £0.1m).
Dividends
In line with previous practice, the directors have not proposed an interim
dividend but, dependent on the full year's results, expect to propose a final
dividend in accordance with the Group's progressive dividend policy.
Outlook
Prologic's business is built on strong foundations with robust recurring
revenues and cash flows. In general, our customers continue to prosper and to
outperform their peers, and we are therefore confident of continued growth. As
ever, our level of growth is dependent upon new business wins, however we
strongly believe that our consultancy lead approach gives us significant
competitive advantage in this area.
Derek Lewis
Chairman
Prologic plc
30 November 2007
Registered Office:
Redwood House
Berkhamsted
Herts. HP4 2DH
Registered Number: 05031466
Independent Review Report to Prologic plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the Interim Results report for the six months ended 30 September
2007 which comprise the consolidated income statement, consolidated balance
sheet, consolidated cash flow statement and the related notes. We have read the
other information contained in the Interim Results report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in APB Statements of Standards for Reporting Accountants 'International Standard
on Review Engagements (UK and Ireland) 2410'. Our review work has been
undertaken so that we might state to the Company those matters we are required
to state to them in a 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
conclusion we have formed.
Directors' responsibilities
The Interim Results report is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the Interim Results
report in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Interim Results report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the Interim Results report for
the six months ended 30 September 2007 is not prepared, in all material
respects, in accordance with IFRSs as adopted by the European Union.
Grant Thornton UK LLP
Chartered accountants
London Thames Valley Office
Slough
30 November 2007
Prologic plc
Interim Results 2007
Consolidated income statement
Unaudited Unaudited
six months to six months to
30 September 30 September
2007 2006
£'000 £'000
Revenue 5,267 4,865
Cost of sales (3,009) (2,868)
Gross profit 2,258 1,997
Administrative expenses (1,648) (1,532)
Operating profit before exceptional expenses 610 465
Exceptional expenses (205) -
Operating profit 405 465
Financial income 20 8
Financial expenses (28) (37)
Profit before tax 397 436
Taxation (33) (89)
Profit for the period 364 347
Pence Pence
Earnings per share - basic 3.64 3.47
Earnings per share - diluted 3.60 3.47
Prologic plc
Interim Results 2007
Consolidated balance sheet
Unaudited Unaudited
30 September 30 September
2007 2006
£'000 £'000
Non-current assets
Goodwill 7,572 7,572
Development costs 2,876 2,565
Other intangible assets 189 243
Property, plant and equipment 268 223
10,905 10,603
Current assets
Inventories 135 118
Trade and other receivables 3,465 3,774
Cash and cash equivalents 1,996 802
5,596 4,694
Total assets 16,501 15,297
Current liabilities
Trade and other payables (2,242) (1,864)
Current tax payable (296) (219)
Bank loan (336) (269)
Current provisions - (20)
(2,874) (2,372)
Net current assets 2,722 2,322
Non-current liabilities
Bank loan (270) (608)
Deferred tax liabilities (814) (763)
(1,084) (1,371)
Deferred income (2,262) (2,184)
Total liabilities (6,220) (5,927)
Net assets 10,281 9,370
Equity
Share capital 50 50
Share premium account 2,734 2,734
Merger reserve 3,924 3,924
Other reserve 55 64
Retained earnings 3,518 2,598
Total equity 10,281 9,370
Prologic plc
Interim Results 2007
Consolidated cash flow statement
Unaudited Unaudited
six months to six months to
30 September 30 September
2007 2006
£'000 £'000
Cash flows from operating activities
Operating profit 405 465
Adjustments for:
Amortisation of development costs 306 246
Amortisation of other intangible assets 68 59
Depreciation of property, plant and equipment 65 52
Share option charges 11 34
(Increase)/decrease in inventories (41) 44
Decrease/(increase) in receivables 576 (49)
(Decrease) in payables (219) (443)
(Decrease) in deferred income (231) (228)
Cash generated by operations 940 180
Interest received 20 9
Interest paid (24) (32)
Net cash from operating activities 936 157
Cash flows from investing activities
Development expenditure (498) (415)
Purchase of other intangible assets (29) (88)
Purchase of property, plant and equipment (31) (116)
Net cash used in investing activities (558) (619)
Cash flows from financing activities
Repayment of bank loan (139) (70)
Dividends paid to shareholders (150) (100)
Net cash used in financing activities (289) (170)
Net increase/(decrease) in cash and cash equivalents 89 (632)
Cash and cash equivalents at 1 April 1,907 1,434
Cash and cash equivalents 1,996 802
Prologic plc
Interim Results 2007
Statement of changes in equity
Share
Share premium Merger Other Retained Total
capital account reserve reserve profit equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2006 50 2,734 3,924 30 2,351 9,089
Share option charges - - - 34 - 34
Retained profit and total recognised
income and expense for the period - - - - 347 347
Dividends - - - - (100) (100)
At 30 September 2006 50 2,734 3,924 64 2,598 9,370
At 1 April 2007 50 2,734 3,924 44 3,304 10,056
Share option charges - - - 11 - 11
Retained profit and total recognised - - - - 364 364
income and expense for the period
Dividends - - - - (150) (150)
At 30 September 2007 50 2,734 3,924 55 3,518 10,281
Notes to the Financial Statements
1. Group Accounting Policies
Basis of preparation
The consolidated financial statements have been prepared in accordance with the
recognition and measurement principles of applicable International Financial
Reporting Standards as adopted by the EU and International Financial Reporting
Standards as issued by the International Accounting Standards Board (IFRS) and
the AIM Rules for Companies These are the Group's first IFRS consolidated
interim financial statements and the recognition and measurement provisions of
IFRS1 'First time adoption of International Financial Reporting Standards' have
been applied. The interim financial statements are unaudited and do not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985.
The policies have changed from the previous year when the financial statements
were prepared under applicable United Kingdom Generally Accepted Accounting
Principles (UK GAAP). The date of transition to IFRS was 31 March 2006 and all
comparative information included in these financial statements has been restated
in accordance with IFRS.
The changes to accounting policies are explained in note 2, together with a
reconciliation of the balance sheets at 30 September 2006 and 31 March 2007, and
of the profit and loss account for the period to 30 September 2006, as reported
under UK GAAP to the balance sheet and income statement under IFRS, as reported
in these financial statements. The note also includes a reconciliation of net
assets at the date of transition.
The Group has taken advantage of an exemption available under IFRS 1 First-time
adoption of International Financial Reporting Standards. and has elected not to
apply IFRS 3 to the business combination that took place before the date of
transition. As a result, the carrying value of goodwill at 31 March 2006 is
frozen, subject to impairment reviews after then in accordance with IFRS 3.
The financial statements have been prepared under the historical cost
convention.
Basis of consolidation
The Group financial statements consolidate those of the Company and its
subsidiary undertakings drawn up to 30 September 2007. Subsidiaries are entities
over which the Group has the power to control the financial and operating
policies so as to obtain benefits from its activities. The Group obtains and
exercises control through voting rights.
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase
method involves the recognition at fair value of all identifiable assets and
liabilities, including contingent liabilities of the subsidiary, at the
acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group accounting
policies. Goodwill is stated after separating out identifiable intangible
assets. Goodwill represents the excess of acquisition cost over the fair value
of the Group's share of the identifiable net assets of the acquired subsidiary
at the date of acquisition.
Revenue recognition
Revenue is measured by reference to the fair value of consideration received or
receivable by the Group for goods supplied and services provided, excluding VAT
and trade discounts. Revenue is recognised upon the performance of services or
transfer of risk to the customer, and when the following conditions have been
satisfied:
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction
will flow to the Group; and
• the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
Specific revenue streams are recognised as follows:
• hardware and software - recognised either when the equipment is shipped to
the customer, or when it has been stored at the customer's request;
• Installation and commissioning services - recognised when the installation
is complete;
• consultancy and training services - recognised in accordance with
consultant time spent;
• funded specific development - 75% of the revenue is recognised when the
coding is complete. The remaining 25% is recognised when the development is
released to the customer;
• support and maintenance - recognised in equal instalments over the life of
the contract; and
• telecommunication line installation - recognised from the date of
installation over the life of the supporting contract.
Exceptional expenses
Exceptional expenses are material items which individually, or if of a similar
type, in aggregate, need to be disclosed by virtue of their size or incidence
because of their relevance to understanding the Group's financial performance.
Dividends
Dividends are recognised when the shareholders right to receive payment has been
established by approval at a General Meeting.
Goodwill
Goodwill representing the excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired, is capitalised and
reviewed annually for impairment. Goodwill is carried at cost less accumulated
impairment losses. Negative goodwill is recognised immediately after
acquisition in the income statement.
Goodwill written off to reserves prior to date of transition to IFRS remains in
reserves. There is no re-instatement of goodwill that was amortised prior to
the transition to IFRS. Goodwill previously written off to reserves is not
written back to profit or loss on subsequent disposal.
Intangible assets
Research and development
Expenditure on research (or the research phase of an internal project) is
recognised as an expense in the period in which it is incurred.
Development costs incurred are capitalised when all the following conditions are
satisfied:
• completion of the intangible asset is technically feasible so that
it will be available for use or sale;
• the group intends to complete the intangible asset and use or sell it;
• the group has the ability to use or sell the intangible asset;
• the intangible asset will generate probable future economic benefits.
Among other things, this requires that there is a market for the output
from the intangible asset or for the intangible asset itself, or, if it
is to be used internally, the asset will be used in generating such
benefits;
• there are adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset, and
• the expenditure attributable to the intangible asset during its
development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as
incurred.
The cost of an internally generated intangible asset comprises all directly
attributable costs necessary to create, produce, and prepare the asset to be
capable of operating in the manner intended by management.
Directly attributable costs include employee (other than directors) costs
incurred on software development, together with associated overheads
Amortisation commences in the month costs are incurred and the amortisation
period is 7 years, which is the estimated useful life of the assets.
Amortisation of development costs is included within administrative expenses in
the income statement.
Software
Purchased software assets are stated at cost less accumulated amortisation. The
amortisation period is 4 years, which is the estimated useful life of the
assets. Amortisation of purchased software is included in administrative
expenses in the income statement.
Unify line installation costs
The installation costs of telecommunication lines associated with the
implementation of Unify projects are stated at cost less accumulated
amortisation. The amortisation period is 3 years, which is the estimated useful
life of the assets. Amortisation of Unify line installation costs is included in
cost of sales in the income statement.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses if applicable.
Depreciation rates have been calculated to write down the cost of the assets to
their estimated residual value over their estimated useful economic lives as
follows:
Computer and office equipment 3 to 4 years
Office fixtures and fittings 4 years
Material residual value estimates are updated at least annually.
Impairment of assets
Goodwill, other intangible assets with an indefinite useful life, and those
intangible assets not yet available for use are tested for impairment at least
annually. All other individual assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
fair value, reflecting market conditions less costs to sell, and value in use
based on an internal discounted cash flow evaluation.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
calculated using the First In - First Out method.
Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and joint ventures
is not provided if reversal of these temporary differences can be controlled by
the group and it is probable that reversal will not occur in the foreseeable
future. In addition, tax losses available to be carried forward as well as
other income tax credits to the group are assessed for recognition as deferred
tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity, in which case the related deferred tax
is also charged or credited directly to equity.
Financial assets
Financial assets are recognised when the Group becomes a party to the
contractual provisions of the instrument.
Available for sale financial assets
Available for sale financial assets are recorded at their fair value plus
transaction costs on initial recognition. Any subsequent changes in fair value
are recognised in equity through the statement of changes in equity. Gains or
losses are recognised in the income statement when they are sold or when the
investment is impaired. An assessment for impairment is undertaken at least at
each balance sheet date.
Trade receivables
Trade receivables do not carry any interest and are recorded at their fair value
on initial recognition, less provision for impairment. A provision for
impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the
original terms of the receivables. The amount of the provision is the difference
between the asset's carrying amount and the present value of estimated future
cash flows. Any change in the value of trade receivables through impairment or
reversal of impairment is recognised in administrative expenses in the income
statement.
Financial Liabilities
Financial liabilities are obligations to pay cash or other financial assets and
are recognised when the Group becomes a party to the contractual provisions of
the instrument.
Trade payables
Trade payables are not interest bearing and are recorded at their fair value on
initial recognition. Any subsequent changes in fair value are recognised in the
income statement.
Bank borrowings
Bank borrowings are recorded at their fair value, net of direct issue costs on
initial recognition and are subsequently recorded at amortised cost using the
effective interest method, with interest-related charges recognised in finance
expenses in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included in
cash and cash equivalents
Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction. Monetary assets and liabilities are translated at
the exchange rate ruling at the balance sheet date. All exchange differences are
charged through the income statement.
Leased assets
All our leases are regarded as operating leases and the payments made under them
are charged to the income statement on a straight-line basis over the lease
term. Lease incentives are spread over the term of the lease.
Share-based payments
The Group issues equity-settled share-based payments to certain employees and
directors. For all share-based payment arrangements granted after 7 November
2002 and vesting on or after 1 January 2006 an expense is recognised on the
income statement with a corresponding credit to equity. The fair value of share
options is expensed over the vesting period of the options, based on an estimate
of the number of shares that will eventually vest and adjusted for the effect of
non-market-based vesting conditions. The fair value is calculated using the
Black Scholes Merton pricing model.
2. Transition to IFRS
As stated in note 1, these are the Group's first IFRS interim financial
statements for part of the period covered by the first IFRS annual consolidated
financial statements prepared in accordance with IFRS
The following reconciliations explain how the transition from UK GAAP to IFRS
has affected the Group's financial performance and state of affairs:
Consolidated balance sheet UK GAAP to IFRS reconciliation 31 March 2006
IAS 38 IAS 38
UK GAAP IFRS 3 IAS 12 IAS 19 Intangible Intangible
- (IFRS Business Income Employee Assets - Assets -
Format) Combinations Taxes Benefits Development Re-classify IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 7,572 - - - - - 7,572
Development costs - - - - 2,396 - 2,396
Other intangible assets - - - - - 214 214
Property, plant and equipment 222 - - - - (63) 159
Deferred tax assets 7 - (7) - - - -
7,801 - (7) - 2,396 151 10,341
Current assets
Inventories 162 - - - - - 162
Trade and other receivables 3,876 - - - (151) 3,725
Cash and cash equivalents 1,434 - - - - - 1,434
5,472 - - - - (151) 5,321
Total assets 13,273 - (7) - 2,396 - 15,662
Current liabilities
Trade and other payables (2,229) - - (51) - - (2,280)
Current tax liabilities (181) - - - - - (181)
Bank loan (269) - - - - - (269)
Current provisions (47) - - - - - (47)
(2,726) - - (51) - - (2,777)
Net current assets 2,746 - - (51) - (151) 2,544
Non-current liabilities
Bank loan (672) - - - - - (672)
Deferred tax liabilities - - 712) - - - (712)
(672) - (712) - - - (1,384)
Deferred income (2,412) - - - - - (2,412)
Total liabilities (5,810) - (712) (51) - - (6,573)
Net assets 7,463 - (719) (51) 2,396 - 9,089
Equity
Share capital 50 - - - - - 50
Share premium account 2,734 - - - - - 2,734
Merger reserve 3,924 - - - - - 3,924
Other reserve 30 - - - - - 30
Retained earnings 725 - (719) (51) 2,396 - 2,351
Total equity 7,463 - (719) (51) 2,396 - 9,089
Consolidated balance sheet UK GAAP to IFRS reconciliation 30 September 2006
IAS 38 IAS 38
UK GAAP IFRS IAS 12 IAS 19 Intangible Intangible
- (IFRS Business Income Employee Assets - Assets -
Format) Combinations Taxes Benefits Development Re-classify IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 7,365 207 - - - - 7,572
Development costs - - - - 2,565 - 2,565
Other intangible assets - - - - - 243 243
Property, plant and equipment 281 - - - - (58) 223
Deferred tax assets 7 - (7) - - - -
7,653 207 (7) - 2,565 185 10,603
Current assets
Inventories 118 - - - - - 118
Trade and other receivables 3,959 - - - - (185) 3,774
Cash and cash equivalents 802 - - - - 802
4,879 - - - - (185) 4,694
Total assets 12,532 207 (7) - 2,565 - 15,297
Current liabilities
Trade and other payables (1,821) - - (43) - - (1,864)
Current tax liabilities (219) - - - - - (219)
Bank loan (269) - - - - - (269)
Current provisions (20) - - - - - (20)
(2,329) - - (43) - - (2,372)
Net current assets 2,550 - - (43) - (185) 2,322
Non-current liabilities
Bank loan (608) - - - - - (608)
Deferred tax liabilities - (763) - - - (763)
(608) - (763) - - - (1,371)
Deferred income (2,184) - - - - - (2,184)
Total liabilities (5,121) - (763) (43) - - (5,927)
Net assets 7,411 207 (770) (43) 2,565 - 9,370
Equity
Share capital 50 - - - - - 50
Share premium account 2,734 - - - - - 2,734
Merger reserve 3,924 - - - - - 3,924
Other reserve 64 - - - - - 64
Retained earnings 639 207 (770) (43) 2,565 - 2,598
Total equity 7,411 207 (770) (43) 2,565 - 9,370
Consolidated balance sheet UK GAAP to IFRS reconciliation 31 March 2007
IAS 38 IAS 38
UK GAAP IFRS 3 IAS 12 IAS 19 Intangible Intangible
- (IFRS Business Income Employee Assets - Assets -
Format) Combinations Taxes Benefits Development Re-classify IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 7,157 415 - - - - 7,572
Development costs - - - - 2,684 - 2,684
Other intangible assets - - - - - 228 228
Property, plant and equipment 358 - - - - (56) 302
7,515 415 - - 2,684 172 10,786
Current assets
Inventories 94 - - - - - 94
Trade and other receivables 4,213 - - - - (172) 4,041
Cash and cash equivalents 1,907 - - - - - 1,907
6,214 - - - - (172) 6,042
Total assets 13,729 415 - - 2,684 - 16,828
Current liabilities
Trade and other payables (2,382) - - (60) - - (2,442)
Current tax liabilities (270) - - - - - (270)
Bank loan (338) - - - - - (338)
Provisions (19) - - - - - (19)
(3,009) - - (60) - - (3,069)
Net current assets 3,205 - - (60) - (172) 2,973
Non-current liabilities
Bank loan (403) - - - - - (403)
Deferred tax liabilities (2) - (805) - - - (807)
(405) - (805) - - - (1,210)
Deferred income (2,493) - - - - - (2,493)
Total liabilities (5,907) - (805) (60) - - (6,772)
Net assets 7,822 415 (805) (60) 2,684 - 10,056
Equity
Share capital 50 - - - - - 50
Share premium account 2,734 - - - - - 2,734
Merger reserve 3,924 - - - - - 3,924
Other reserve 44 - - - - - 44
Retained earnings 1,070 415 (805) (60) 2,684 - 3,304
Total equity 7,822 415 (805) (60) 2,684 - 10,056
Consolidated income statement UK GAAP to IFRS reconciliation 6 months to 30
September 2006
IAS 38
UK GAAP IFRS 3 IAS 12 IAS 19 Intangible
- (IFRS Business Income Employee Assets -
Format) Combinations Taxes Benefits Development IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 4,865 - - - - 4,865
Cost of sales (2,868) - - - - (2,868)
Gross profit 1,997 - - - - 1,997
Administrative expenses (1,916) 207 - 8 169 (1,532)
Operating profit 81 207 - 8 169 465
Financial income 8 - - - - 8
Financial expenses (37) - - - - (37)
Profit before tax 52 207 - 8 169 436
Taxation (38) - (51) - - (89)
Profit for the period 14 207 (51) 8 169 347
Consolidated income statement UK GAAP to IFRS reconciliation year ended 31 March 2007
IAS 38
UK GAAP IFRS 3 IAS 12 IAS 19 Intangible
- (IFRS Business Income Employee Assets -
Format) Combinations Taxes Benefits Development IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 10,562 - - - - 10,562
Cost of sales (5,784) - - - - (5,784)
Gross profit 4,778 - - - - 4,778
Administrative expenses (3,973) 415 - (9) 289 (3,278)
Operating profit 805 415 - (9) 289 1,500
Financial income 13 - - - - 13
Financial expenses (68) - - - - (68)
Profit before tax 750 415 - (9) 289 1,445
Taxation (305) - (87) - - (392)
Profit for the period 445 415 (87) (9) 289 1,053
Notes to the reconciliations:
IFRS 3 Business Combinations: Under UK GAAP, goodwill arising on a business
combination was amortised over its estimated economic life. Under IFRS, goodwill
is not amortised but is tested for impairment at least annually. The adjustments
therefore relate to the write back of goodwill amortisation charged from the
date of transition to IFRS.
IAS 12 Income Taxes: The adjustments represent deferred tax provided as a result
of the impact of conversion to IFRS. They principally result from the difference
in treatment of development costs under IFRS in the financial statements with
the treatment of development costs in the computation of taxable profits.
IAS 19 Employee Benefits: Under IFRS, an accrual is recognised for employees'
annual holiday entitlement accrued, but not taken, at the balance sheet date.
IAS 38 Intangible Assets - Development: Under UK GAAP, all development
expenditure was expensed as incurred. Under IFRS, development costs are
capitalised (provided certain conditions have been met) and subsequently
amortised over their useful lives. The adjustments therefore relate to the
capitalisation of development expenditure previously expensed and to the
amortisation of development costs
IAS 38 Intangible Assets - Re-classify: Under IFRS, Unify line installation
costs are reclassified from prepayments to intangible assets and software is
reclassified from tangible to intangible assets.
3. Segmental Analysis
In the opinion of the directors the Group's activities constitute one class of
business.
4. Earnings per share
Earnings per share is calculated by dividing the earnings attributable to
shareholders by the number of shares in issue during the period.
The weighted average number of shares in issue during the period was 10,000,000
(basic) and 10,114,259 (diluted).
5. Status and approval
The interim results for the 6 month periods to 30 September 2007 and 2006 are
unaudited and do not constitute statutory accounts within the meaning of Section
240 of the Companies Act.
The interim results were approved by the Board on 30 November 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
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