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For immediate release

30 June 2008

Independent Media Support Group

('IMS' or the 'Company')

Audited results for the year ended 31 December 2007

The Company announces that it has posted to shareholders its audited report and accounts for the year ended 31 December 2007. A copy of the report and accounts is available from the Company's website, www.ims-media.com.

Chairman's Statement

Introduction

Independent Media Support Group ('IMS') is the only quoted business in the UK offering media access services to broadcasters, film and DVD distributors, advertisers and their agencies. The Group offers a wide range of services incorporating pre-recorded and real-time subtitling, translation, audio description, signing and voice-overs.

Business Review

The Group's principal activities consist of the following:

Deaf and Hearing Impaired Subtitling

IMS has contracts to deliver live and pre-recorded subtitling for programming including news and sport. The provision of subtitles is skilled and requires significant training. IMS has sought to reduce the cost of providing its subtitling, primarily through the use of new technology, such as speech recognition.

The Group produces over 460 hours of live subtitling, up from 400 hours in 2006 and some 100 hours of pre-recorded television subtitling, up from 90 hours the previous year, for its customers every week. The Group also subtitles for cinema releases and has subtitled films together with their audio description. The Group supplies subtitled television commercials to major national advertisers as well as to the major advertising agencies.

Translation Subtitling

The rapid proliferation of satellite and cable broadcasting that transcends national and regional borders, together with the growth of DVDs and other formats has expanded the need for translation subtitling. The Group has provided translation subtitling services for broadcasters, theatrical and home entertainment film release as well as corporate producers.

Signing

Signing is the use of hands and facial expressions to convey meaning and is best understood as a language in itself. The Broadcasting Act 1996 introduced a statutory obligation upon certain UK broadcasters to provide signing services, an obligation which was extended by the Communications Act 2003. IMS has supplied signing services to both broadcasters and major disability charities.

Audio Description

Audio description is a recorded or 'live' verbal information service for the blind or sight impaired, which describes, in between the dialogue, the action and events taking place in a film, television program, video or theatre performance. Again, the Communications Act 2003 increased the number of broadcasters upon which the obligation to provide audio description services is imposed. IMS' audio description unit has worked on many major Hollywood productions.

Document Translation

This is mainly translation of public policy and administrative documents from English to Welsh carried out by our subsidiary Trosol based in Cardiff. 

Key Business Developments 

During 2007 business continued steadily under these core offerings and the company won a number of important additional contracts, helping to further increase the company's client base, both within the UK and internationally . A contract was agreed with MTV in September 2007 to provide subtitling and audio description services. Also in September IMS, together with a dubbing partner, won a contract to supply Hallmark Movies 24 with subtitling and dubbing services for the launch of their channel in Romania, Poland, Hungary and Turkey. November 2007 saw further contracts to supply subtitling and audio description services to Paramount Comedy Channel and RTE the Irish state broadcaster. In December IMS was awarded a contract to supply Jetix with translation subtitling for the Scandinavian market and to provide subtitling, signing and audio description for its UK channel.

In addition to its broadcast work IMS continued to work on high profile Hollywood movie releases such as Spiderman 3, The Simpsons Movie and Pirates of the Caribbean 3.

IMS's Welsh subsidiary Trosol continued to win contracts from governmental and corporate clients with the vast majority running for two years or more. In addition, several large scale one-off projects were completed. The most significant of which was the Welsh Health Encyclopaedia, an on-line compendium of over 650 articles and advice on medical conditions.

IMS has continued to enhance its capabilities developing complementary services for mobile and web-based content, with commissions from a leading international children's channel during 2007. The company has also created market offerings for encoding and transcoding, non-linear editing, DVD authoring and high definition material, providing our first subtitles for high definition broadcast in 2007. The drive to improve productivity through technological improvements continued, with potential opportunities to reduce our cost base and improve margins identified.

Financial results

It is pleasing to note that the Group increased its turnover by 3.5% from £5.403m in 2006 to £5.593m in 2007. This increase was achieved despite the previously announced reduction in prices charged to a major client from July 2006. As a demonstration of the progress made in mitigating against this contract change, turnover in the second half of 2007 of £2.799m was an increase of 17% on the comparable figure in 2006.

It is disappointing that the Group made an operating loss of £0.135m in the year compared with a profit in 2006 (before impairment of goodwill) of £0.006m. These figures should, however, be seen in the context of the remuneration, other payments and provisions made in relation to former directors increasing from £0.208m in 2006 to £0.451m in 2007. 

Current Trading and the Future

In the current year the Group has achieved a number of successes. The Group has contracted to supply services to the Swiss state broadcaster and, working remotely, IMS is providing deaf and hard of hearing subtitling in German and Italian with French due to come online later this year. It launched IMS Scandinavia in January to exploit both the local translation subtitling market and the increasing demand for deaf and hard of hearing subtitling, with work already commissioned for four projects. It has delivered its first projects in the Blue-ray format and is increasing its work for web-based services with commissions from three separate organisations to date.

Trosol has continued to win contracts for document translation and has increased its work in Welsh subtitling with projects from the BBC and independent production companies.

In the first four months of this year, the unaudited management accounts of the Group showed turnover approximately 3% higher than to the same date in 2007, at £1.94m. However, the loss before tax during this period was £0.157m. During the same period, however, the payroll costs of former directors were £0.2m, indicating the underlying trading profitability of the company. Additionally, during this period, the Group incurred start-up costs of IMS Scandinavia, which, from May onwards, has started to generate revenues. 

In the same period, cash outflows were £0.165m. Given the underlying profitability, the Board is optimistic that, with time, the Group's balance sheet can eventually be replenished. Nevertheless, although operating with overdraft headroom, the Group currently has limited ability make any significant investment in the opportunities that the current executive directors have identified as key revenue generators for the future.  

Recent Board Changes

Following a board meeting on 5 June it was announced that the employment contracts and in consequence the directorships of Sylvia Sheridan and Melvyn Angell were terminated. I was appointed as Non-executive Chairman and Jock Rumgay, currently Financial Controller, would be appointed as Finance Director in addition to his continuing role as Company Secretary as soon as all necessary formalities had been completed in compliance with the AIM Rules. On 26 June 2008 this appointment was formally completed. Mark Robinson continues as Managing Director. 

The current Board has consulted its major public shareholders and other stakeholders including bankers, clients and most importantly employees and received strong indications of support. The Board's strategy is to ensure that the Company is run for the benefit of its shareholders as a whole. We aim to provide stability for the company and if possible over time to try to recover to the extent possible the erosion in value since flotation in 2004. IMS has a fine portfolio of service offerings and a dedicated work-force in Cardiff, Newcastle, London and Stockholm. We aim to broaden the portfolio of products and the geographical spread of trading. There remains much to be done which requires focus without the recent distractions, and also further investment and strengthening of the balance sheet.

John L Reiss

Non-executive Chairman

Enquiries:

IMS John Reiss, Chairman	Tel: 0207 440 5400
Nominated Adviser Michael Cornish Beaumont Cornish Limited	Tel: 0207 628 3396

  

Consolidated Income Statement
For The Year Ended 31 December 2007
	Notes		2007		2006
			£000s		£000s
Revenue			5,593		5,403
Cost of sales			(3,555)		(3,336)
Gross profit			2,038		2,067
Administrative expenses			(2,173)		(3,319)
Operating loss	3		(135)		(1,252)
Investment revenue	6		17		24
Finance costs	7		(11)		(39)
Loss on ordinary activities before taxation			(129)		(1,267)
Tax credit	8		8		9
Loss for the year attributable to equity holders of the Parent Company			(121)		(1,258)
Loss per 2.5p ordinary share (pence per share)
Basic and diluted	10		(0.46)p		(4.82)p

All of the activities of the Group are classed as continuing. The notes below form an integral part of these financial statements.

  

Consolidated Balance Sheet
As At 31 December 2007
				Notes		2007		2006
						£000s		£000s
ASSETS Non-current assets
	Intangible assets			11		3,000		3,000
	Property, plant and equipment			12		386		449
	Total non-current assets					3,386		3,449
Current assets
	Trade and other receivables			14		1,330		1,525
	Cash and cash equivalents			22		181		275
	Total current assets					1,511		1,800
Total Assets						4,897		5,249
EQUITY
Capital and reserves
	Called up share capital			20		652		652
	Share premium account					4,741		4,741
	Share option reserve					34		66
	Retained earnings					(1,460)		(1,339)
Total equity						3,967		4,120
LIABILITIES
Non-current liabilities
		Finance lease obligations		17		4		-
		Deferred tax liability		18		-		4
		Total non-current liabilities				4		4
Current liabilities
		Trade and other payables		15		804		875
		Borrowings		16		114		250
		Finance lease obligations		17		8		-
		Total current liabilities				926		1,125
Total liabilities						930		1,129
Total equity and liabilities						4,897		5,249
The notes below form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 27 June 2008 and signed on its behalf by: J A H Rumgay M H Robinson Finance Director Managing Director

  

Parent Company Balance Sheet
As At 31 December 2007
				Notes		2007		2006
						£000s		£000s
ASSETS Non-current assets
	Investments in subsidiary undertakings			13		3,619		3,619
	Total non-current assets					3,619		3,619
Current assets
	Trade and other receivables			14		746		867
	Cash and cash equivalents			22		-		4
	Total current assets					746		871
Total Assets						4,365		4,490
EQUITY
Capital and reserves
	Called up share capital			20		652		652
	Share premium account					4,741		4,741
	Share option reserve					34		66
	Retained earnings					(1,291)		(1,339)
Total equity						4,136		4,120
LIABILITIES
Current liabilities
		Trade and other payables		15		115		120
		Borrowings		16		114		250
Total liabilities						229		370
Total equity and liabilities						4,365		4,490
In accordance with the exemptions permitted by section 230 of the Companies Act 1985 the income statement of the Parent Company has not been presented. In the accounts of the Parent Company, the profit for the financial year amounted to £48,000 (2006: loss of £1,376,000). The notes below form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 27 June 2008 and signed on its behalf by: J A H Rumgay M H Robinson Finance Director Managing Director

  

Consolidated statement of changes in equity for the year ended 31 December 2007

	Share capital	Share premium account	Share option reserve	Retained earnings	Total
	£000s	£000s	£000s	£000s	£000s
Balance at 1 January 2006	652	4,741	109	(81)	5,421
Provision for share option valuation	-	-	(43)	-	(43)
Loss for the year	-	-	-	(1,258)	(1,258)
Balance at 1 January 2007	652	4,741	66	(1,339)	4,120
Provision for share option valuation	-	-	(32)	-	(32)
Loss for the year	-	-	-	(121)	(121)
Balance at 31 December 2007	652	4,741	34	(1,460)	3,967

Parent Company statement of changes in equity for the year ended 31 December 2007

	Share capital	Share premium account	Share option reserve	Retained earnings	Total
	£000s	£000s	£000s	£000s	£000s
Balance at 1 January 2006	652	4,741	109	37	5,539
Provision for share option valuation	-	-	(43)	-	(43)
Loss for the year	-	-	-	(1,376)	(1,376)
Balance at 1 January 2007	652	4,741	66	(1,339)	4,120
Provision for share option valuation	-	-	(32)	-	(32)
Profit for the year	-	-	-	48	48
Balance at 31 December 2007	652	4,741	34	(1,291)	4,136

  

Consolidated Cash Flow Statement
For The Year Ended 31 December 2007
	Notes		2007		2006
			£000s		£000s
Cash flows from operating activities
Loss for the year			(121)		(1,258)
Adjustments for:
Tax credit			(8)		(9)
Interest income			(17)		(24)
Finance cost			11		39
Depreciation and amortisation			142		1,435
Provisions			-		(165)
Share option credit			(32)		(43)
			(25)		(25)
Movements in working capital
Decrease/(increase) in trade and other receivables			209		(45)
Decrease in trade and other payables			(59)		(6)
Cash generated from/(used in) operations			125		(76)
Interest paid			(11)		(39)
Tax paid			(22)		(53)
Net cash from/(used in) operating activities			92		(168)
Cash flows from investing activities
Payments for property, plant and equipment			(56)		(51)
Interest received			17		24
Net cash used in investing activities			(39)		(27)
Cash flows from financing activities
Repayment of capital element of finance leases			(11)		-
Repayment of borrowings			(250)		(250)
Net cash from financing activities			(261)		(250)
Net decrease in cash and cash equivalents			(208)		(445)
Cash and cash equivalents at the beginning of the year			275		720
Cash and cash equivalents at the end of the year	22		67		275

        

  

Parent Company Cash Flow Statement
For The Year Ended 31 December 2007
	Notes		2007		2006
			£000s		£000s
Cash flows from operating activities
Profit/(loss) for the year			48		(1,376)
Adjustments for:
Finance costs			9		49
Depreciation and amortisation			-		1,551
Share option credit			(32)		(43)
			25		181
Movements in working capital
Decrease in trade and other receivables			121		231
Decrease in trade and other payables			(5)		(59)
Cash generated from operations			141		353
Interest paid			(9)		(49)
Tax paid			-		(38)
Net cash from operating activities			132		266
Cash flows from financing activities
Repayment of borrowings			(250)		(250)
Net cash used in financing activities			(250)		(250)
Net (decrease)/increase in cash and cash equivalents			(118)		16
Cash and cash equivalents at the beginning of the year			4		(12)
Cash and cash equivalents at the end of the year	22		(114)		4

  

Notes To The Financial Statements

For The Year Ended 31 December 2007

1.    Accounting Policies

1.1 Basis of accounting

    

    The Group and Parent Company financial statements have been prepared in accordance with EU endorsed International Accounting Standards and International Financial Reporting Standards (collectively 'IFRS') for the first time. They have also been prepared in accordance with the provisions of the Companies Act 1985 applicable to companies preparing their accounts under IFRS.  

On publishing the parent Company financial statements the Company is taking advantage of the exemption in section 230 of the Companies Act 1985 not to present its individual income statement and related notes that form a part of these approved financial statements. 

The financial statements are presented in sterling and have been prepared on the historical cost basis, except where IFRS requires an alternative treatment.  

Judgements made by the Directors in the application of these accounting policies that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 1.17.

1.2 Transition to adopted IFRSs

The Group is preparing its financial statements in accordance with adopted IFRSs for the first time and consequently has applied IFRS 1 'First-time adoption of International Financial Reporting Standards'. An explanation of how the transition from UK GAAP to adopted IFRSs has affected the reported financial position, financial performance and cash flows of the Group is provided in note 26. 

IFRS 1 grants certain exemptions from the full requirements of IFRSs in the transition period. The following exemptions have been taken in these financial statements:

• Business combinations - Business combinations that took place prior to 1 January 2006, the date of transition to IFRS, have not been restated in accordance with IFRS 3, 'Business Combinations'.

1.3 Early adoption of Standards and Interpretations

The Group has elected not to adopt any Standards and Interpretations in advance of their effective dates.

1.4 Standards and Interpretations in issue not yet adopted

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

• IFRS 3 (Revised) - Business Combinations (effective 1 July 2009);

• IFRS 8    - Operating Segments (effective 1 January 2009);

• IAS 1 (Revised) - Presentation of Financial Statements (effective 1 January 2009);

• IAS 23 (Revised) - Borrowing Costs (effective 1 January 2009);

• IAS 27 (Amended) - Consolidated and Separate Financial Statements (effective 1 July 2009);

• IFRIC 11- IFRS2:Group and Treasury Share Transactions (effective 1 March 2007)

• Accounting Policies (continued)

• IFRIC 12 - Service Concession Arrangements (effective 1 January 2008); 

• IFRIC 13 - Customer Loyalty Programmes (effective 1 July 2008); and

• IFRIC 14 - IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective 1 January 2008).

The Group plans to adopt the above Standards and Interpretations to the extent they are relevant to its activities in the period in which they become applicable. The Directors do not anticipate that the adoption of these Standards and Interpretations will have a material impact on the consolidated financial statements in the period of initial application.

Upon adopting the amendment to IAS 1, the Group will disclose additional information about its objectives, policies and process for managing capital.

       1.5 Basis of consolidation

The consolidated financial statements have been prepared using the purchase method and incorporate the results of Independent Media Support Group Plc and entities controlled by Independent Media Support Group Plc (its subsidiaries). Control is achieved where Independent Media Support Group Plc has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries sold or acquired are included in the income statement up to or from the date control passes. Intra-Group sales, profits and balances are eliminated fully on consolidation.

1.6 Going concern

The financial statements are prepared on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future. At 31 December 2007 the Group had a deficit on retained earnings of £1.5million. 

The Directors' assessment of the Group's ability to continue as a going concern beyond the date of approval of the financial statements has concluded that it is appropriate to apply the going concern basis, and that the Group will continue to be able to realise its assets and discharge its liabilities in the normal course of business on the basis of its current cash resources.

1.7 Goodwill

Goodwill arising on acquisition of a subsidiary represents the excess of the cost of the acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary at the date of acquisition. 

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. At the date of acquisition, the goodwill is allocated to cash generating units for the purpose of impairment testing and is tested at least annually for impairment.

The classification and accounting treatment of business combinations that occurred prior to 1 January 2006 has not been reconsidered in preparing the Group's opening IFRS balance sheet at 1 January 2006. The written down value of goodwill recognised under UK GAAP at 1 January 2006 is the carrying value at the date of transition to IFRS.

  

• Accounting Policies (continued)

1.8 Property, plant, equipment and depreciation

Property, plant and equipment are stated at historical cost less accumulated depreciation. Depreciation is provided to write off the cost of all fixed assets, less estimated residual values, evenly over their expected useful lives. Depreciation is calculated at the following annual rates:

Leasehold property and improvements	Over the life of the lease
Computer equipment	25% straight line
Other equipment	10 - 15% straight line
Furniture and fixtures	10 - 20% straight line

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where there is no reasonable certainty that the Group will obtain ownership of the asset by the end of the lease term, the shorter of the term of the relevant lease and the asset's useful life.

1.9 Revenue recognition

Revenue comprises the fair value of the sale of goods and services delivered by the Group to third parties, net of value-added tax, rebates and discounts.

1.10 Leasing

Assets obtained under the hire purchase contracts and finance leases, which transfer to the Group substantially all the risks and rewards of ownership of the asset, are capitalised as tangible fixed assets and depreciated over the shorter of their estimated useful life and the length of the finance lease. Obligations under such contracts are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the income statement so as to produce a constant periodic rate of charge on the net obligations outstanding in each period. 

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

1.11 Deferred taxation

Taxation expense represents the sum of the current tax payable and deferred tax.

Current tax expense is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. 

Deferred tax is provided in full, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheet. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable income or cost. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. 

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 

    

1.    Accounting Policies (continued)

1.12 Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the income statement.

1.13 Pensions

The Group, via its subsidiaries, operates defined contribution personal pension schemes for staff. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension charge represents contributions payable by the Group during the year.

1.14 Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Cash and cash equivalents:

Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short term deposits with maturities of three months or less. Bank overdrafts also form part of net cash and cash equivalents for the purposes of the cash flow statement.

Trade and other receivables:

Trade receivables are recognised at fair value, 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. Significant financial difficulties of the trade receivable, probability that the trade receivable will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The carrying amount of the asset is reduced through the use of a doubtful debt provision, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade receivable is uncollectible, it is written off against the doubtful debt provision. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the income statement.

Trade payables:

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised by applying the effective interest rate, except for short-term payables when the recognition of interest would be immaterial.

Borrowings:

Borrowings are recognised initially at fair value, net of transaction costs. Subsequent measurement is based on amortised cost and any difference between the proceeds (net of transaction of costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Investments in subsidiaries:

Investments in subsidiaries are included in these financial statements at the cost of the ordinary share capital acquired. Adjustments to this value are only made when, in the opinion of the Directors, a permanent diminution in value has taken place and where there is no prospect of an improvement in the foreseeable future.

1.    Accounting Policies (continued)

1.15 Share-based payments

The Group has applied the requirements of IFRS 2 Share-based payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005. The Group issues equity settled share-based payments to certain employees. A fair value for the equity settled share awards is measured at the date of grant. The fair value is measured using the Binomial model of valuation, which is considered to be the most appropriate valuation technique. The valuation takes into account factors such as non-transferability, exercise restrictions and behavioural considerations. An expense is recognised to spread the fair value of each award over the vesting period on a straight-line basis, based on an estimate of the share awards that will actually vest. The estimate of vesting is reviewed annually, with any impact on the cumulative charge being recognised immediately.

1.16 Segment reporting

A business segment is a Group of assets and operations that provide a product or service and which is subject to risks and returns that are different from other business segments. A geographic segment is a Group of assets and operations that provide a product or service within a particular economic environment and which is subject to risks and returns that are different from segments operating in different economic environments.

1.17 Critical accounting judgements and key sources of estimation and uncertainty

In the process of applying the Group's accounting policies, the Directors have made the following estimates and judgements which have the most significant effect on the amounts recognised in the financial statements.

Goodwill

The Directors use their judgement to determine the extent to which goodwill has a value that will benefit the performance of the Group over future periods. To assist in making this judgement, the Directors undertake an assessment, at least annually, of the carrying value of the Group's capitalised goodwill. In the assessment undertaken in 2007, value in use was derived from discounted three year cash flow projections using a growth rate of 3.5% to extrapolate the cash flow projections beyond the budget period and a discount rate of 12% relevant to the cost of capital adjusted for risks associated with the cash-generating unit. The projection period is, in the opinion of the Directors, an appropriate period over which to view the future results of the Group's businesses for this purpose. Changes to the assumptions of discount rates, growth rates, expected changes to costs and selling prices used in making these forecasts could significantly alter the Directors' assessment of the carrying value of goodwill.

Deferred taxation

The Group has unutilised tax losses for which no value has been recognised for deferred tax purposes in these financial statements. These can arise in loss making companies in the Group where the future economic benefit of these timing differences is not probable. If profits are earned in future in these companies, the timing differences may yield benefit to the Group in the form of a reduced tax charge.

Share-Based payments

The Group uses the Binomial model to estimate fair value of shares granted. Changes in the Directors' estimates about the expected life of the options and the number of options that will eventually be exercised could impact the Group results through an increase or decrease in the share-based payments charge.

  

  

2.	Segmental Reporting
	For management purposes, the Group is currently organised into two main business segments: Media access services and Translation services. The principal products and services of each of these divisions are as follows:
	Media access includes subtitling, audio description, signing, voice-over and dubbing.
	Translation services includes document translation and simultaneous interpreting.
	Primary reporting format - business segments
	2007
		Media access services	Translation services	Unallocated	Total Group
		£000s	£000s	£000s	£000s
	Revenue	4,784	809	-	5,593
	Segment operating profit	1,726	312	-	2,038
	Unallocated expenses				(2,173)
	Operating loss				(135)
	Investment revenue				17
	Finance costs				(11)
	Loss before taxation				(129)
	Taxation				8
	Loss for the year from continuing operations				(121)
	Segment assets	1,581	261	3,055	4,897
	Segment liabilities	643	52	235	930
	Other segment items:
	Capital expenditure	78	1	-	79
	Depreciation	139	3	-	142

  

2.	Segmental Reporting (continued) Primary reporting format - business segments
	2006
		Media access services	Translation services	Unallocated		Total Group
		£000s	£000s	£000s		£000s
	Revenue	4,624	779	-		5,403
	Segment operating profit	1,756	311	-		2,067
	Unallocated expenses					(3,319)
	Operating loss					(1,252)
	Investment revenue					24
	Finance costs					(39)
	Loss before taxation					(1,267)
	Taxation					9
	Loss for the year from continuing operations					(1,258)
	Segment assets	1,929	258	3,062		5,249
	Segment liabilities	688	72	369		1,129
	Other segment items:
	Capital expenditure	48	3	-		51
	Depreciation	10	167	-		177
	Revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the year (2006: Nil) Capital expenditure comprises additions to property, plant and equipment.
	Secondary reporting format - geographic segments
	The Group manages its geographic segments on a global basis. The United Kingdom is the home of the parent Company. The Group's revenue from external customers by geographical location is detailed below:
					2007		2006
					£000s		£000s
	United Kingdom				5,506		5,302
	Rest of Europe				36		36
	Rest of the World				51		65
					__________		__________
					5,593		5,403
					__________		__________
	The Group's assets are all located in the United Kingdom.

  

3.	Operating Loss
		2007	2006
	Operating loss on ordinary activities is stated after charging:	£000s	£000s
	Amortisation and impairment of goodwill	-	1,258
	Depreciation of owned assets	138	177
	Depreciation of leased assets	4	-
	Auditors' remuneration - audit fee	23	23
	Auditors' remuneration - tax compliance work	4	4
	Auditors' remuneration - advice on accounting matters	2	6
	Auditors' remuneration - advice on potential acquisition	-	61
	Operating lease rentals - plant and machinery	3	2
	Operating lease rentals - land and buildings	173	178
	Exceptional items - advisory costs: BBC complaint	107	27
	Exceptional items - costs incurred relating to possible acquisition of the Group	-	27
	Exceptional items - directors' loan provisions	103	-
	Share-based payment - net provision	(32)	(43)
		__	_______
	The advisory costs were incurred in pursuing a complaint against BBC Broadcast (now Red Bee Media) over a competitive tender to provide media access services to Channel 4. The Directors' loan provisions include an amount of £89,000 owed to the Company by Melvyn Angell and an amount of £14,000 owed to the Company in respect of unauthorised remuneration paid to Sylvia Sheridan. The Directors are uncertain as to the recoverability of the debts and have, accordingly, provided against both amounts in full.

 

4.	Directors' Remuneration	2007	2006
		£000s	£000s
	Emoluments for qualifying services	367	292
	Pension contributions to money purchase schemes	4	4
		__________	__________
		371	296
		_	__________
	The emoluments of the highest paid Director was £223,000 (2006 - £133,000). During the year none of the Directors received any share options and none were exercised. The number of Directors for whom retirement benefits were accruing under money purchase pension schemes amounted to 1 (2006 - 1).
	The remuneration of the Directors, excluding payments under consultancy agreements, is further analysed as follows:
		2007	2006
		£000s	£000s
	Sylvia Sheridan (excludes unauthorised remuneration - see below)	223	133
	Melvyn Angell (excludes consultancy fees - see below)	35	25
	Mark Robinson	89	89
	Kiren Shah	-	25
	John Reiss	24	24
		__________	__________
		371	296
		_	__________

  

4.	Directors' Remuneration (continued) In respect of Sylvia Sheridan, the stated emoluments for 2007 do not include gross salary in the amount of £14,000 paid to her in the year which was not authorised by the board of Directors. As explained further in note 27, the Company has commenced pursuing the recovery of this debt against Sylvia Sheridan to reclaim the net element of this unauthorised remuneration. The gross amount has been provided against in full (see note 3). In March 2006, Melvyn Angell resigned as a Director of the Company and left its employment. Subsequently, he was engaged under a consultancy contract and, between 2006 and early 2007, provided a range of assistance to the Group in relation to new business development initiatives and other strategic developments. Pursuant to the consultancy contract, the Company agreed to pay a day rate of £1,000, which amounted in total to an agreed total consultancy payment, after adjustments, of £50,000 in respect of the year ended 31 December 2006. Melvyn Angell agreed to waive and remit consultancy payments otherwise invoiced in excess of this total agreed amount and at 31 December 2006 the amount owed was £69,000. In April 2007, Melvyn Angell was re-engaged as a consultant by the Company. Until his re-appointment as a Director in August 2007, he was paid £90,000 for consultancy services. At 31 December 2007, the Company was owed £89,000 by Melvyn Angell. As explained further in note 27, the Company has commenced pursuing the recovery of this debt. The debt has been provided against in full (see note 3).

5.	Employees	2007	2006
	Group	Number	Number
	Number of employees
	The average number of employees (including Directors) during the year were:
	Management and administration	13	11
	Production	100	95
		__________	__________
		113	106
		__________	__________
	Employment costs, including salaries and fees paid to Directors, were as follows:	£000s	£000s
	Wages and salaries	3,182	2,938
	Social security costs	334	313
	Other pension costs	66	68
		__________	__________
		3,582	3,319
		__________	__________

6.	Investment revenue	2007	2006
		£000s	£000s
	Bank interest	17	24
		________	________

  

7.	Finance costs	2007	2006
		£000s	£000s
	Interest on bank loans and overdrafts	10	39
	Interest on obligations under finance leases	1	-
		________	________
		11	39
		________	________

8.	Tax on loss on ordinary activities
		2007	2006
		£000s	£000s
a)	Analysis of charge in year
	Current tax
	UK corporation tax charge on profits for the year	-	3
	Adjustments in respect of prior periods	(4)	2
		____________	____________
	Total current tax	(4)	5
		____________	____________
	Deferred tax
	Origination and reversal of timing differences	(4)	(14)
		____________	____________
	Total deferred tax	(4)	(14)
		_________	_________
	Tax on loss on ordinary activities	(8)	(9)
		_________	_________

b)	Factors affecting the tax charge for the year
	The tax assessed for the year differs from the standard rate of corporation tax in the UK of 28% (2006: 30%). The differences are explained below.
	Loss on ordinary activities before tax	(129)	(1,267)
		______	______
	Loss on ordinary activities multiplied by the relevant standard rate of corporation tax in the UK of 28% (2006: 30%)	(36)	(380)
	Effects of:
	Expenses not deductible for tax	8	6
	Share-based payments	(9)	(13)
	Capital allowances less than depreciation	4	(1)
	Goodwill amortisation and impairment	-	377
	Adjustment in respect of prior periods	(4)	2
	Tax losses available to carry forward	29	-
		_________	_________
	Total tax charge for year	(8)	(9)
		_________	_________
c)	Factors that may affect future tax charges
	The future tax charge will depend on whether any deferred tax assets can be recognised for tax losses as a result of profits in the future. There are tax losses of approximately £105,000 (2006 - £nil) that are available to be carried forward against future profits by members of the Group.

 

  

9.	Dividends
	The Directors do not recommend the payment of a dividend.

 

10.	Earnings Per Share
	The calculation of loss per share is based on the loss for the financial year of £121,000 (2006 - £1,258,000) and the weighted average number of shares in issue of 26,087,000 (2006 - 26,087,000). The losses attributable to ordinary shareholders and the weighted average number of shares for the purposes of calculating the diluted loss per share are identical to those used for the basic loss per share. This is because the exercise of the share options would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33.

11.	Intangible assets
	Group	Goodwill
		£000s
	Carrying value on transition from UK GAAP at 1 January 2006	4,258
	Impairment charge at 31 December 2006	(1,258)
		____________
	Carrying value as 31 December 2006 and 31 December 2007	3,000
		____________
	The Company did not hold any goodwill.

  

12.	Property, plant and equipment
	Group		Short Leasehold Property Improvements	Computer & Other Equipment	Total
			£000s	£000s	£000s
	Cost
	At 1 January 2006		56	1,479	1,535
	Additions		-	51	51
			___________	____________	____________
	At 31 December 2006		56	1,530	1,586
	Disposed in the year		-	(30)	(30)
	Additions		-	79	79
			___________	____________	____________
	At 31 December 2007		56	1,579	1,635
			___________	____________	____________
	Depreciation
	At 1 January 2006		1	959	960
	Charge for the year		10	167	177
			___________	____________	___________
	At 31 December 2006		11	1,126	1,137
	Disposed in the year		-	(30)	(30)
	Charge for the year		9	133	142
			___________	____________	___________
	At 31 December 2007		20	1,229	1,249
			___________	____________	___________
	Net Book Value
	At 31 December 2007		36	350	386
			___________	__________	___________
	At 31 December 2006		45	404	449
			___________	__	___________
	The Company did not hold any property, plant and equipment.
	The net book value of assets held under finance leases is £19,000 (2006: £nil).

13.	Investments in subsidiary undertakings
	Company
	Cost	£000s
	At 31 December 2006 and 31 December 2007	5,170
		____________
	Impairment
	At 1 January 2006	-
	Charge for the year	1,551
		____________
	At 31 December 2006 and 31 December 2007	1,551
		____________
	Net Carrying Value
	At 31 December 2006 and 31 December 2007	3,619
		____________

  

13.	Investments in subsidiary undertakings (continued) The Directors believe that the carrying value of the investment in subsidiary undertakings is not less than its realisable value. The Parent Company and the Group have investments in the ordinary shares of the following wholly-owned subsidiary undertakings that principally affected the profits or net assets of the Group:
	Name	Country of incorporation	Principal activity
	Independent Media Support Limited *	England and Wales	Media access services
	Trosol Cyfyngedig **	England and Wales	Translation and subtitling
	IMS (Teilifis) Teoranta **	Republic of Ireland	Non-trading
	Independent Media Productions Limited *	England and Wales	Non-trading
	IMS Subtitling Limited *	England and Wales	Dormant
	* Directly owned by Independent Media Support Group Plc
	** Owned by Independent Media Support Limited
	All subsidiaries are included in the consolidated financial statements and have accounting reference dates of 31 December. Furthermore, the principal activity of each of the subsidiaries is consistent with the parent, which is the provision of pre-recorded and real time subtitling, translation, audio description, signing and voice-over services.

14.	Trade and other receivables	Group	Company	Group	Company
		2007	2007	2006	2006
		£000s	£000s	£000s	£000s
	Trade receivables	1,077	-	1,217	-
	Corporation tax	13	-	-	-
	Other receivables	65	49	133	49
	Amounts due from subsidiary undertakings	-	693	-	812
	Prepayments and accrued income	175	4	175	6
		_____________	__________	_____________	__________
		1,330	746	1,525	867
		_____________	__________	_____________	__________
	The average credit period taken on sales is 65 days (2006: 70 days). No interest is charged on the receivables. An allowance has been made for estimated irrecoverable amounts from trade receivables made by reference to past default experience. Included in other receivables is a rent deposit of £49,000 (2006: £49,000) which, in the Directors' opinion, is due after more than one year. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

15.	Trade and other payables	Group	Company	Group	Company
		2007	2007	2006	2006
		£000s	£000s	£000s	£000s
	Trade payables	202	5	323	6
	Social security and other taxes	321	107	279	92
	Accruals and deferred income	261	3	261	22
	Other payables	20	-	-	-
	Corporation tax	-	-	12	-
		_____________	_____________	_____________	_____________
		804	115	875	120
		_____________	_____________	_____________	_____________
	The average credit period taken for trade purchases is 28 days (2006: 25 days). The Directors consider that the carrying amount of trade payables approximates to their fair value.

16.	Borrowings	Group	Company	Group	Company
		2007	2007	2006	2006
		£000s	£000s	£000s	£000s
	Bank overdraft - secured	114	114	-	-
	Bank loans - secured	-	-	250	250
		_____________	_____________	_____________	_____________
		114	114	250	250
		_____________	_____________	_____________	_____________
	The Company's bank overdraft and loans are secured by a fixed and floating charge over the assets and undertaking of the Company and its subsidiary, Independent Media Support Limited, and by a cross guarantee between the two companies in respect of these borrowings. All borrowings are denominated in UK pounds. The bank overdraft is subject to annual review. At 31 December 2007, the Company had undrawn committed borrowing facilities in the form of bank overdrafts of £186,000.

17.	Finance lease obligations	Group		Company		Group		Company
		2007		2007		2006		2006
		£000s		£000s		£000s		£000s
Minimum lease payments due
- within 1 year			9		-		-		-
- later than 1 year not later than 5 years			5		-		-		-
			________		________		________		________
			14		-		-		-
Less: future finance charges			( 2)		-		-		-
			________		________		________		________
Present value of minimum lease payments			12		-		-		-
			_________		_________		_________		_________
Present value of minimum lease payments
- within 1 year			8		-		-		-
- later than 1 year not later than 5 years			4		-		-		-
			________		________		________		________
			12		-		-		-
			_________		_________		_________		_________
			Group		Company		Group		Company
			2007		2007		2006		2006
			£000s		£000s		£000s		£000s
Included in the financial statements as:
- Current liabilities			8		-		-		-
- Non current liabilities			4		-				-
			________		________		________		________
			12		-		-		-
			_________		_________		_________		_________

The Group's obligations under finance leases are secured by the lessors' charge over the leased assets. Refer to note 12.

18.	Provisions For Liabilities And Charges

Recognised deferred tax assets and liabilities

Group

Deferred tax assets and liabilities are attributable to the following:

	Assets		Liabilities		Net
	2007	2006	2007	2006	2007	2006
	£000s	£000s	£000s	£000s	£000s	£000s
Temporary differences:
Accelerated capital allowances	-	-	-	(4)	-	(4)
	_________	_________	_________	_________	_________	_________

Company

The Company has no recognised deferred tax assets or liabilities.

Unrecognised deferred tax assets

Group

	2007	2006
	£000s	£000s
The Group had unprovided deferred tax assets arising from losses carried forward as follows:	31	-
	_________	_________

These assets will only be recovered on the earning of sufficient taxable profits in the future.

Company

The Company had no unprovided deferred tax assets arising from losses carried forward.

    

19.	Pension Costs
	The Group makes contributions to defined contribution pension schemes, via its subsidiaries. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the funds' and for the year amounted to £66,000 (2006 - £68,000). Contributions totalling £7,000 (2006 - £7,000) were payable to the funds' at the balance sheet date and are included in trade and other payables.

20.	Share Capital
		2007	2006
		£000s	£000s
	Authorised
	40,000,000 Ordinary shares of 2.5p each	1,000	1,000
		________	________
	Allotted called up and fully paid
	26,087,000 Ordinary shares of 2.5p each	652	652
		________	________

    

21.	Share Options
	The Group operates an Inland Revenue approved share option scheme under which options for Ordinary shares have been granted to Directors, advisors, consultants and employees. Each share option entitles the holder to convert one share option into one Ordinary share of Independent Media Support Group plc on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither dividend nor voting rights. Options are forfeited if the employee leaves the Group before the options vest. The number of options granted is subject to approval by the Remuneration Committee.  The following share-based payment arrangements were in existence during the current or prior reporting periods: Number granted 1,995,256 Number lapsed 1,709,745 Date of grant 24 June 2004 Date from which exercisable 24 June 2007 Expiry date 23 June 2014 Exercise price 57.5p Fair value at grant date 23.2p During the year no share options were granted. Details of options included within the above and pertaining to Directors are contained within the Directors' report. The following reconciles the outstanding share options granted under the employee share option plan at the beginning and end of the financial year: Number of options 2007 weighted average exercise price Number of options 2006 weighted average exercise price Balance at beginning of the year 543,808 57.5p 1,803,600 57.5p Granted or exercised during the financial year - - - - Lapsed during the financial year (258,297) (57.5p) (1,259,792) (57.5p) Balance at the end of the financial year 285,511 57.5p 543,808 57.5p There were no share options exercised during the year.
	The fair value of options is measured using the Binomial model of valuation, which is considered to be the most appropriate valuation technique. The valuation takes into account factors such as non-transferability, exercise restrictions and behavioural considerations. An expense is recognised to spread the fair value of each award over the vesting period on a straight-line basis, based on an estimate of the share awards that will actually vest. The estimate of vesting is reviewed annually, with any impact on the cumulative charge being recognised immediately. The inputs into the Binomial option model of valuation for 2007 and 2006 are as follows: The
	Weighted average exercise price Expected volatility Year of exercise Risk free rate Expected dividend	18p 20% 2010 4.5% 0%

22.	Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents include cash on hand and cash in banks, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement can be reconciled to the related items in the balance sheet as follows:

	2007		2006
	Group	Company	Group	Company
	£000s	£000s	£000s	£000s
Cash and bank balances	181	-	275	4
Bank overdrafts	(114)	(114)	-	-
	_________	_________	_________	_________
	67	(114)	275	4
	_________	_________	_________	_________

Non-cash investing and financing transactions

During the 2007 financial year, the Group acquired computer equipment with a cost price of £23,000 under a finance lease agreement. This acquisition will be reflected in the cash flow statement over the term of the finance lease via lease payments.  

23.

Financial Instruments

Capital risk management The Group manages capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through optimisation of the debt and equity balance.  The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 16, cash and cash equivalents disclosed in note 22 and equity attributable to equity holders of the Parent Company as disclosed in the balance sheet. The disclosure of the gearing ratio has not been included on the basis that the Group was in a net funds position at both 31 December 2007 and 31 December 2006. Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements. Treasury policies and financial risk Surplus funds are intended to support short term working capital requirements. These funds are invested through the use of short term and period deposits, with a policy of maximising fixed interest returns as well as providing the flexibility required to fund on-going operations. It is not a Group policy to invest in financial derivatives. Although the financial risks are considered to be minimal at present, future interest rate, liquidity and foreign currency risks could arise and the Board will continue to review its existing policies in the future. Categories of financial instruments 2007 £000s 2006 £000s Financial assets Loans and receivables 1,510 1,800 _________ _________ Financial liabilities Other financial liabilities 609 834 _________ _________ Financial Instruments (continued) Interest rate risk management The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates. Interest rate risk arises from The fixed element of finance leases where the Group typically uses finance leases for fixed periods of up to 5 years to finance the purchase of assets where it is considered to be a more effective use of funds; and The overdraft facility, which bears a floating interest rate. Cash and short term deposits which bear floating interest rates.  Interest rate sensitivity analysis The sensitivity analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group's loss for the year ended 31 December 2007 would increase/decrease by £1,000 (2006: increase/decrease by £1,000). This is attributable to the Group's exposure to interest rates on its variable rate borrowings. At 31 December 2007, the Group's liabilities have contractual maturities which are summarised below:  Current Non-Current Within 6 months 6 to 12 months 1 to 5 years 2007 £'000 2006 £'000 2007 £'000 2006 £'000 2007 £'000 2006 £'000 Finance lease obligations 4 - 4 - 4 - Borrowings - - 114 250 - - Trade payables 202 323 - - - - Other short-term financial liabilities 281 261 - - - - Totals 487 584 118 250 4 - The above contractual maturities reflect the gross cash flows, which may differ to the carrying values of the liabilities at the balance sheet date.  Credit risk management Credit risk refers to the credit risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The principal credit risk arises from the Group's trade receivables. In order to manage credit risk, the Directors set limits for customers based on a combination of payment history and review of third party information pertaining to the customers' financial position. Ongoing credit evaluation is performed on the financial condition of accounts receivable. Liquidity risk management The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Surplus funds are invested on a short term basis on bank deposit and therefore such funds are available at short notice. Foreign currency risk management The Group has minimal foreign currency denominated trade receivables or payables and therefore is not materially subject to foreign exchange risk. Borrowing facilities  There were undrawn borrowing facilities of approximately £186,000 (2006 - £nil) Financial Instruments (continued) Interest rate risk profile of financial assets and liabilities Interest rate Total £000s Fixed £000s Floating £000s Zero £000s Financial assets At 31 December 2007 Sterling 181 - 181 - Financial liabilities At 31 December 2007 Bank overdraft 114 - 114 - Finance lease agreements 12 12 - - 116 12 114 -

24.	Related party transactions (i) Transactions and balances between the Company and its subsidiaries, which are related parties of the Company, are as follows:	2007 £000s	2006 £000s
	Amounts owed by Group undertakings	693	812
	Management fees charged to Group undertakings	715	833
	Loan repayments from Group undertakings	(321)	(664)
	Other expenses recharged from Group undertakings	(513)	(337)
	(ii) Melvyn Angell provided consultancy services to the Group before his re-appointment as a Director in August 2007. Details are set out in note 4.

 

25.	Financial Commitments
	Group
	Total commitments under non-cancellable operating leases were as follows:
		Land and	Other operating	Land and	Other operating
		buildings	lease  commitments	buildings	lease commitments
		2007	2007	2006	2006
		£000s	£000s	£000s	£000s
	Payable within one year	185	1	185	1
	Payable between two and five years	355	3	511	4
	Payable after five years	116	-	145	-
		___________	__________	___________	__________

	The Company had no commitments under non-cancellable operating leases.

    

26.	Explanation of transition to IFRS
	This is the first year that the Group has presented its financial statements under IFRS. The last financial statements under UK GAAP were the year ended 31 December 2006 and therefore the date of transition was 1 January 2006. The comparative information relating to the year ended 31 December 2006 is based on the Group's statutory accounts, which were prepared in accordance with UK GAAP, restated for IFRS.  The impact on the comparative information is as follows: Goodwill is not amortised under IFRS but is measured at cost less impairment losses. Under UK GAAP, goodwill was amortised on a straight-line basis over the time that the Group was estimated to benefit from it. The change does not affect equity at 1 January 2006 because, as permitted by IFRS 1, goodwill arising on acquisitions before 1 January 2006 (date of transition to IFRS) has been frozen at the UK GAAP amounts subject to being tested for impairment at that date, the results of which assessment indicated no such impairment. Within the Group's financial statements for the year ended 31 December 2006, goodwill was judged by the Directors to be impaired as at 31 December 2006 and, under UK GAAP, a charge was made in addition to the normal annual amortisation. The Directors consider that the value of the Group's goodwill under IFRS is identical to that under UK GAAP as at that date.  Accordingly, no reconciliation statements between IFRS and UK GAAP have been presented for the Group's Income Statement, Balance Sheet or Cash flow statement as there are no differences to disclose.

27.	Post balance sheet events
	A board meeting was held on 29 May 2008, at which the Directors examined the Group's trading performance for the year to date, the likely continued losses of the Group and its ability to meet its financial obligations. In this context, the board discussed the level of Sylvia Sheridan's remuneration, including the payment to her of unauthorised net remuneration in the amount of £58,200. It also discussed the indebtedness of Melvyn Angell to the Company in the amount of £89,000, as explained more fully in note 4, which was due to have been repaid by 31 December 2007. At that board meeting, it was resolved that a board meeting be held on 5 June 2008 to receive proposals from Melvyn Angell for the repayment of his debt and proposals from Sylvia Sheridan as to repayment of the net unauthorised remuneration. No proposals were received by the board from either Melvyn Angell or Sylvia Sheridan, either before or at the board meeting held on 5 June 2008. Accordingly, the board resolved to terminate the employment contracts of both parties with immediate effect and remove them as Directors of the Company. The board also resolved to take appropriate steps to recover amounts due to the Company and, accordingly, both parties were asked to repay the outstanding amounts by the end of 13 June 2008. No repayment was received from either party by the due date. Therefore on 17 June 2008, the Company issued Statutory Demands to Sylvia Sheridan and Melvyn Angell for the repayment of amounts owed.  As at the date of this Annual Report, the Company has received no formal communication from either party. The unauthorised remuneration paid to Sylvia Sheridan in the year to 31 December 2007 arose from instructions to be paid £20,000 of bonuses on a net basis rather than the gross amount of £20,000 which had been authorised, as well as subsequent instructions from her to be paid further unauthorised amounts of £10,000 in each month. From January 2008 to May 2008 on a net basis. In all circumstances, the correct income tax and national insurance has been correctly accounted for through the Company's payroll system and duly paid to HM Revenue and Customs. The Company will attempt to recover any overpayments of tax from HM Revenue and Customs or, if appropriate, from Sylvia Sheridan. It is unclear if any amounts will be recovered in respect of the total amount of gross remuneration paid and, accordingly, the Company has provided in full for the £14,000 of debt outstanding at the year ended 31 December 2007.

28.	Ultimate Controlling Party
	The ultimate controlling party throughout both years was Sylvia Sheridan, a majority shareholder of the Company who was also a Director until 5 June 2008.
29.	Report and Accounts
	The financial information in this announcement has been derived from the Company's statutory accounts for the year ended 31 December 2007, which were approved by the Directors on 27 June 2008 and on which the auditors have given an unqualified opinion. The financial information set out in this announcement does not constitute statutory accounts. Statutory accounts for the year ended 31 December 2007 will be delivered to the Registrar of Companies in accordance with the Companies Act. The financial information for the year ended 31 December 2006 is derived from the Company's statutory accounts, which have been delivered to the Registrar of Companies and on which the auditors gave an unqualified opinion.

ENDS 

ENDFR UKSARWWRNUUR