RNS Number:7170M
Landround Plc
29 January 2008
This announcement replaces the announcement under the heading 'Interim Results'
(RNS number 0237F released at 7.00 on 3 October 2007. Following a review of its
previously published treatment of goodwill impairment, Landround plc announces
its restated unaudited interim results for the six months to 31 July 2007. The
only difference to the interim results published on 3 October 2007 relates to
the treatment of goodwill impairment and as such the underlying performance of
the group is unaffected. No other information has been updated for events
subsequent to 2 October 2007. The full amended text appears below.
LANDROUND PLC: RESTATED INTERIM RESULTS
FOR PERIOD ENDED 31 JULY 2007
Highlights:
* Losses substantially cut to �248,000 before exceptional charges (2006:
�699,000)
* Cash balance of �734,000 (2006: Borrowings of �589,000)
* Improvement in margins to 59 per cent
* Overheads down 13 per cent
* Non-core business goodwill writedown of �1,130,000
* Citigroup signs as rewards programme client in 2 countries
* Acquisition linked to business launch in fixed fee market
Landround Chief Executive, Colin Gibson, said: "The operating loss is still
clearly not a result we are happy with but is in line with our plans and
reflects a business in recovery. Achieving a neutral cash flow despite the loss
recorded is perhaps the most significant achievement in the six month period.
"Landround, via its subsidiary White Label Rewards, has been selected as
Citigroup's partner in two European countries with the programme now
successfully launched in Portugal. The selection of Landround as their partner
for this project represents an endorsement of the company's growing reputation
for delivering excellent service and value in reward programmes.
"This and other developments reflect progress with the strategy of building a
level of recurring income from blue chip reward programmes which will ultimately
cover all of our monthly costs to leave the more volatile promotions income to
provide incremental profitability.
"In the second half of the year management expects to continue the present good
progress in developing the reward scheme business internationally. An increasing
number of market opportunities are opening up for the business and even merely
regaining a proper share of the UK promotions market will deliver a significant
improvement in results".
-ends-
For further information please contact:
Colin Gibson, Chief Executive Landround plc Telephone: 01244 220150
Mobile: 07768 701919
Simon Leathers, Daniel Stewart & Co plc 020 7776 6550
Paul Quade, City Road Communications Telephone: 020 7248 8010
Mobile: 07947 186694
Chairman's Statement
One year on from my previous interim statement and the major changes in Board
personnel and product portfolio I referred to at that time have all been
achieved and bedded in. Your Chief Executive, Colin Gibson, has taken a firm
grip on the business and his team of Tony Pope, Finance Director, and Franco
Sessini, Travel Director, has brought professional management skills to bear.
Substantially improved management information is now available to Landround and
our ability to analyse individual reward programmes and tactical promotions has
improved dramatically.
The figures, showing a loss of �248,000 for the half year before exceptional
items, while still unsatisfactory, demonstrate the steady improvement
anticipated at the time of our fund-raising in December 2006 and we have a
number of active discussions in train with major commercial organisations. The
acquisition of Fixed Fee Plus adds another potential revenue stream and the
recruitments undertaken during the last year are showing promise. Our contract
wins with Citigroup underline our status as one of the leading international
reward programme providers.
All our reward clients have continued in place and a number are anticipating an
expansion of their activity in the coming months. Reward programmes by their
very nature take time to sell and grow but the opportunities currently under
discussion augur well for our medium term future.
Our promotions division still faces a challenging environment but we expect
personnel changes undertaken over the last months to bear fruit and that we will
soon see the first signs of a return to our previous profitable performance.
I must take this opportunity to thank not only all staff for their sterling
efforts but also your non-executives, Bill Brown and Alan Williamson, who have
provided wise counsel and valuable commercial acumen.
David G Owen
Chairman, 2 October 2007
Chief Executive's Report
General
The first six months of 2007/8 have seen the business trading close to the
expectations set at the time of the December 2006 fundraising. Compared with
2006/7, revenue has been similar in total albeit with some differences in the
underlying mix of business.
In view of a number of presentational changes already resulting from the
introduction of International Financial Reporting Standards for the first time,
the Board has elected also to change the basis on which revenue is recognised to
exclude revenue from Landround Travel Limited, the Group's travel agency. This
subsidiary exists to service the delivery of travel rewards and promotions
resulting from the sales of other Group companies and does not initiate new
external sales. The Board believes that this presentation will allow a clearer
focus on the true revenue performance of the business. In addition the Board has
reviewed in detail the carrying amount of goodwill relating to the purchase of
Travel Offers and has concluded that a write-down is appropriate.
Margins have improved to 59% compared with 51% in the equivalent 2006/7 period.
The first six months of 2006/7 included some elements of reward programme
revenue taken on at lower prices than the new management team would now accept.
In addition, the results in the first six months of 2006/7 included additional
costs related to certain flight promotions sold in the prior period which
exceeded the level of provisions at 31 January 2006.
In order to launch new overseas reward programmes, the business has had to
invest in additional call centre resources but despite these additional costs,
overheads were over 13% reduced, mainly due to the headcount reductions which
took place in June 2006 and continuing tight control. The �250,000 exceptional
cost of making these reductions was reflected as a cost in last year's accounts.
The current period results are stated after exceptional charges of �1,277,000,
which primarily comprise the �1,130,000 goodwill write down referred to above,
but also reflect the �147,000 additional exceptional cost of settling a
long-running legal dispute over fees, commissions and costs with a former sales
consultant who left the business in 2004. The Board is confident that all legacy
issues inherited from the previous management team which may give rise to
exceptional charges have now been resolved.
The overall underlying result (before exceptional items) was an operating loss
substantially reduced from �699,000 to �248,000 - still clearly not a result we
are happy with but one which is in line with our plans and reflects a business
in recovery.
The business continued to demonstrate good working capital control and achieved
a neutral cash flow despite the loss recorded in the six month period. Capital
expenditure has been held to an essential minimum. The closing balance sheet
shows �732,000 of net cash balances compared with net borrowings of �589,000 at
31 July 2006 and with a net cash balance of �725,000 at 31 January 2007. Net
cash balances have declined in August and September linked to the timing of
customer billings, the dispute settlement referred to above and the timing of
other commitments but the business continues to trade within agreed bank
facilities.
Reward Programmes
Landround, via its subsidiary, White Label Rewards Limited, has been selected as
Citigroup's partner in two European countries, with the programme now launched
successfully in Portugal and a contract signed for another country, which is
expected to launch in the near future. Landround will manage the rewards
systems, the call centres and the sourcing of rewards on Citigroup's behalf for
these programmes.
The Board is delighted to be able to announce this partnership with Citigroup.
The selection of Landround as their partner for this project represents an
endorsement of Landround's growing reputation for delivering excellent service
and value in reward programmes.
The UK credit card programme with Goldfish (formerly Morgan Stanley) has
performed very strongly in the period with an increase in cardholders of over
50% in the last six months and therefore a significant acceleration of points
issued to customers. This growth has been driven by a range of attractive
introductory offers on the card.
The UK programme was recently enhanced through the launch of e-Buys on the buy
and fly! website. This offers a set of links to around 60 major retailers where
buy and fly! members can earn extra points when shopping on-line.
The Compra y Vuela programme in Spain linked to cards operated by Banesto (a top
ten Spanish bank and part of Grupo Santander, the owner of Abbey in the United
Kingdom) continues to perform well albeit that it is no longer showing the
significant growth achieved in the launch period. Ways of enhancing the offering
to develop further cardholder growth are being pursued.
The launch of the buy and fly! programme in Sweden through our partner Resurs
bank has been a significant success in the period with growth in cardholder
numbers and spend exceeding annual plans already after 8 months. Further
development of the programme is in hand to maintain and build on this strong
early momentum.
In Ireland, business with our leading partner, Tesco, has maintained a
reasonable level but we have seen significant growth coming from business
through our department store partner, Heatons, following the launch of a
temporary reward card which allows us to capture new customers' initial spending
and bring them into the programme from day one. The buy and fly! credit card
launched with MBNA is building steadily.
The developments above reflect progress with the strategy of building a level of
recurring income from blue chip reward programme customers which will ultimately
at least cover all of our monthly costs to leave the more volatile promotions
income to provide incremental profitability.
Promotions
The promotions side of the business performed poorly in general with the overall
result improved by two larger non-routine deals which accounted for around a
third of total promotions revenue.
One of these deals was a larger consumer prize deal on relatively low margins
while the other represented Landround's first real foray into non-travel based
fixed fee promotions with a large drinks manufacturer.
The mainstream promotions business, in the UK, Spain and Ireland suffered from
inconsistency in day to day sales and from an absence of any larger deals. This
represented a disappointment following the re-building of the UK promotions
sales team at the end of the previous financial year.
Management concluded that a number of changes were necessary and in late August
the sales and marketing function for UK and Ireland was restructured to ensure
that the marketing and promotion sales functions were each headed by specialists
in those disciplines. We believe that these changes can make our marketing
function more pro-active and improve our sales performance.
Linked to these changes and following the acquisition of Fixed Fee Plus Limited,
a small company in the fixed fee market, Landround has created a new
(non-travel) fixed fee promotions division from September. To head this
division, we have recruited an external manager with excellent experience in the
fixed fee market, Bob Kotecha, who is a former colleague of Alan Williamson, one
of our non-executive directors. Alan led the team that built up and sold
Fotorama, a leading business in this market, and Bob was a key member of his
management team.
Travel Offers
The Travel Offers business has continued to underperform in revenue terms,
although some cost reduction was achieved by bringing fulfillment in house and
the overall result was a profit (after attributable overheads) of �15,000. A
number of changes in the approach to pricing and how the free hotel
accommodation product is marketed have been piloted with a variety of results
and the team expects to build on these to improve results in the second half.
Looking forward
In the second half of the year, management expects to continue the present good
progress in developing the reward scheme business internationally with a number
of further contract signings and launches. Following the restructuring of the UK
and Ireland sales and marketing functions in late August / early September, it
is also expected that there will be a gradual improvement in promotion sales in
addition to the development of a new stream of business in fixed fee promotions.
An increasing number of market opportunities are opening up for the business in
the international rewards market and even merely regaining a proper share of the
UK promotions market will deliver a significant improvement in results. Tight
management of costs and cash will remain a key feature of the business as it
moves steadily to a level and mix of revenue which will deliver consistent
monthly profitability.
Colin Gibson
Chief Executive, 2 October 2007
Consolidated Income Statement
for the six months ended 31 July 2007 (unaudited)
6 months 6 months ended 31 12 months ended 31
ended July 2006 �'000 January 2007 �'000
31 July *restated *restated
Note 2007
�'000
Revenue 4 3,198 3,251 5,273
Cost of sales (1,322) (1,585) (2,382)
Gross profit 1,876 1,666 2,891
Administrative expenses (3,401) (2,616) (4,785)
Loss from operations (1,525) (950) (1,894)
Analysed as:
Loss from operations before (248) (699) (1,644)
exceptional items
Exceptional items 5 (1,277) (251) (250)
Loss from operations (1,525) (950) (1,894)
Finance expense (19) (24) (69)
Finance income 2 - -
Loss before taxation 4 (1,542) (974) (1,963)
Income tax expense - - (60)
Loss for the period (1,542) (974) (2,023)
Loss per share (basic and 6 (11.0p) (17.0p) (29.3p)
diluted)
* as restated for the first time adoption of International Financial Reporting
Standards - see Note 1
Consolidated Balance Sheet as at 31 July 2007 (unaudited)
Note 31 July 2007 31 July 2006 31 January 2007
�'000 �'000 �'000
*restated *restated
Non current assets
Goodwill 7 362 1,480 1,480
Property, plant and 356 560 449
equipment
Deferred tax asset 613 675 613
1,331 2,715 2,542
Current assets
Inventories 69 99 68
Trade and other 1,252 1,889 1,017
receivables
Cash and cash equivalents 732 463 725
Current tax asset - 41 45
2,053 2,492 1,855
Current liabilities
Borrowings - (1,052) -
Trade and other payables (1,658) (1,809) (1,525)
Provisions (1,185) (952) (950)
Current tax - (3) -
(2,843) (3,816) (2,475)
Non current liabilities
Provisions (723) (580) (580)
(723) (580) (580)
Net (liabilities) / (182) 811 1,342
assets
Equity
Called up equity share 701 286 701
capital
Share based payment 41 25 23
reserve
Share premium 4,055 2,888 4,055
Capital redemption 10 10 10
reserve
Retained earnings (4,989) (2,398) (3,447)
Total equity (182) 811 1,342
* as restated for the first time adoption of International Financial Reporting
Standards - see Note 1
Consolidated Cashflow Statement
for the six months ended 31 July 2007 (unaudited)
+---------------------------+-------+---------------+---------------+---------------+
| | | 6 months ended| 6 months ended|12 months ended|
| | | 31 July 2007| 31 July 2006| |
| | | �'000| �'000|31 January 2007|
| | | | | �'000|
| | Note| | *restated| |
| | | | | *restated|
| | | | | |
| | | | | |
| | | | | |
| | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Cash generated from | 8 | (7) | (348) | (591) |
|operations | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Income taxes received | | 45 | 290 | 285 |
+---------------------------+-------+---------------+---------------+---------------+
|Interest paid | | (21) | (24) | (65) |
+---------------------------+-------+---------------+---------------+---------------+
|Net cash from operating | | 17 | (82) | (371) |
|activities | | | | |
+---------------------------+-------+---------------+---------------+---------------+
| | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Investing activities | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Interest received | | 2 | - | - |
+---------------------------+-------+---------------+---------------+---------------+
|Purchases of property,plant| | - | (63) | (30) |
|and equipment | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Acquisition of subsidiaries| | (93) | - | - |
|anbusinesses | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Cash acquired with | | 81 | - | - |
|subsidiaries | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Net cash from investing | | (10) | (63) | (30) |
|activities | | | | |
+---------------------------+-------+---------------+---------------+---------------+
| | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Financing activities | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Hire purchase payments | | - | - | (12) |
+---------------------------+-------+---------------+---------------+---------------+
|Proceeds from issue of | | - | - | 1,582 |
|shares (net of expenses) | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Net cash from financing | | - | - | 1,570 |
|activities | | | | |
+---------------------------+-------+---------------+---------------+---------------+
| | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Net increase / (decrease) | | 7 | (145) | 1,169 |
|in cash and cash | | | | |
|equivalents | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Cash and cash equivalents | | 725 | (444) | (444) |
|at the beginning of the | | | | |
|period | | | | |
+---------------------------+-------+---------------+---------------+---------------+
|Cash and cash equivalents | | 732 | (589) | 725 |
|at the end of the period | | | | |
+---------------------------+-------+---------------+---------------+---------------+
* as restated for the first time adoption of International Financial Reporting
Standards - see Note 1
Note that the impact of IFRS on the cashflow statement is restricted to changes
in presentation and classification; the overall net cashflows in all periods are
unchanged.
Consolidated Statement of Changes in Shareholders' Equity
for the six months ended 31 July 2007 (unaudited)
+---------------------------+---------------+---------------+---------------+
| | 6 months ended| 6 months ended|12 months ended|
| | 31 July 2007| 31 July 2006| |
| | �'000| �'000|31 January 2007|
| | | | �'000|
| | | *restated| |
| | | | *restated|
| | | | |
| | | | |
| | | | |
| | | | |
+---------------------------+---------------+---------------+---------------+
|Balance at start of period | 1,342 | 1,663 | 1,663 |
+---------------------------+---------------+---------------+---------------+
| | | | |
+---------------------------+---------------+---------------+---------------+
|Adjustments for IFRS / UK | - | 97 | 97 |
|GAAP | | | |
+---------------------------+---------------+---------------+---------------+
| | | | |
+---------------------------+---------------+---------------+---------------+
|Revised balance at start of| 1,342 | 1,760 | 1,760 |
|period | | | |
+---------------------------+---------------+---------------+---------------+
| | | | |
+---------------------------+---------------+---------------+---------------+
|Loss for the period | (1,542) | (974) | (2,023) |
+---------------------------+---------------+---------------+---------------+
|Share capital issued (net | - | - | 1,582 |
|of costs) | | | |
+---------------------------+---------------+---------------+---------------+
|Share based payment charge | 18 | 25 | 23 |
+---------------------------+---------------+---------------+---------------+
|Balance at end of period | (182) | 811 | 1,342 |
+---------------------------+---------------+---------------+---------------+
* as restated for the first time adoption of International Financial Reporting
Standards - see Note 1
Notes
1. Approval of interim report
The restated interim report was approved by the directors on 28 January 2008.
2. Basis of Preparation
The group has adopted International Financial Reporting Standards ('IFRS') as
adopted by the EU for the year ending 31 January 2008, and therefore the results
for the six months ended 31 July 2007 represent the group's first interim report
prepared in accordance with its accounting policies under IFRS.
Previously the group has reported using UK Generally Accepted Accounting
Principles ('UK GAAP').
Reconciliations between UK GAAP and IFRS are presented as note 9.
Following a review of accounting policies under IFRS, the directors consider it
appropriate to amend the basis on which turnover from one of the group's
subsidiary companies is recognised - see note 3 below for further detail.
This interim report has been prepared in accordance with IFRS and International
Reporting Committee ('IFRIC') interpretations that are expected to be applicable
to the consolidated financial statements for the year ended 31 January 2008.
These standards are subject to ongoing amendment and/or interpretation and are
therefore still subject to change. Accordingly information contained in this
interim report may need to be updated for subsequent amendments to IFRS required
for first time adoption or for new standards issued post the balance sheet date.
The financial information herein does not constitute full statutory accounts
within the meaning of Section 240 of the Companies Act 1985 (as amended).
Comparative figures are based on the IFRS restatements as detailed in note 9.
The UK GAAP figures used as the basis for the IFRS restatements are extracted
from the group's interim report for the six months ended 31 July 2006 and the
full year Annual Report and Accounts for the year ended 31 January 2007. The
latter have been filed with the Registrar of Companies and contain an
unqualified audit report.
Although the group has net liabilities and has recorded further losses in the
period, this report has been prepared on the basis that the group will continue
to be a going concern. The balance sheet was significantly strengthened by the
equity fundraising in December 2006, the level of underlying losses is much
reduced, the group maintains a positive cash balance, and the business has the
continued support of its major shareholders and its bank.
3. Revenue recognition policy
Revenues derived from Landround Travel (the group's UK and Irish travel agency)
are no longer recognised as revenue on consolidation.
Landround Travel is now very much viewed as an "after-sale" service segment for
Landround Marketing, the subsidiary company which is primarily responsible for
generating the group's core reward programme and promotions income. The revenues
disclosed in Landround Travel's own statutory accounts are wholly dependent on
revenues generated from the group's marketing division (Landround Marketing);
Landround Travel in isolation does not have the capacity to generate external
revenues.
The revised presentation provides a more meaningful insight into overall group
performance, both in terms of revenues and gross profitability.
The impact has been to reduce turnover and cost of sales by �1,441,000 in the
six months to 31 July 2007 (six months to 31 July 2006: �2,560,000; year to
31 January 2007: �4,457,000). There is no impact whatsoever on profit / loss or
equity.
This change has been included within the IFRS reconciliations in note 9, and has
been analysed as an amendment to previously reported UK GAAP figures.
4. Segmental Reporting
.
+------------------+--------------------+--------------------+---------------------+
| | 6 months ended| 6 months ended| 12 months ended|
| | | | |
| | 31 July 2007| 31 July 2006| 31 January 2007|
| | | | |
| | �'000| �'000| �'000|
| | | | |
| | | | |
+------------------+---------+----------+---------+----------+---------+-----------+
| | Revenue |Profits / | Revenue |Profits / | Revenue | Profits / |
| | | (losses) | | (losses) | | (losses) |
| | | | | | | |
| | | | | | | |
+------------------+---------+----------+---------+----------+---------+-----------+
|Rewards | 2,025 | 1,247 | 1,995 | 819 | 3,281 | 1,507 |
+------------------+---------+----------+---------+----------+---------+-----------+
|Promotions | 960 | 439 | 976 | 587 | 1,513 | 938 |
+------------------+---------+----------+---------+----------+---------+-----------+
|Hotel Catalogues | 213 | 190 | 280 | 260 | 479 | 446 |
+------------------+---------+----------+---------+----------+---------+-----------+
|Central | - | (2,124) | - | (2,365) | - | (4,535) |
+------------------+---------+----------+---------+----------+---------+-----------+
|Exceptional | - | (1,277) | - | (251) | - | (250) |
+------------------+---------+----------+---------+----------+---------+-----------+
|Total | 3,198 | (1,525) | 3,251 | (950) | 5,273 | (1,894) |
+------------------+---------+----------+---------+----------+---------+-----------+
| | | | | | | |
+------------------+---------+----------+---------+----------+---------+-----------+
|Net financial | | (17) | | (24) | | (69) |
|expense | | | | | | |
+------------------+---------+----------+---------+----------+---------+-----------+
| | | | | | | |
+------------------+---------+----------+---------+----------+---------+-----------+
|Loss before | | (1,542) | | (974) | | (1,963) |
|taxation | | | | | | |
+------------------+---------+----------+---------+----------+---------+-----------+
5. Exceptional items
Exceptional items are those significant items which are separately disclosed by
virtue of their size or incidence to facilitate a better understanding of the
group's financial performance.
The exceptional items disclosed in the six months ended 31 July 2007 comprise a
write down of goodwill (�1,130,000) and a litigation settlement (�147,000).
The goodwill write down represents the impairment value resulting from a
significant re-evaluation of forward cashflows associated with the group's
non-core subsidiary, Travel Offers Limited.
The litigation settlement, which is now concluded, represents additional costs
in excess of previous provisions in respect of a dispute with a former sales
consultant. There is no further ongoing litigation within the group.
The exceptional item in the prior year related to restructuring costs, primarily
redundancy expenses.
6. Loss per share
The calculation of loss per share is based on the weighted average number of
shares in issue during the period of 14,024,136 (31 July 2006: 5,726,636;
31 January 2007: 6,911,993) and on the loss for the period of �1,542,000
(31 July 2006 restated: �974,000; 31 January 2007 restated: �2,023,000).
7. Goodwill
The goodwill movement in the period relates to the impairment of �1,130,000
referred to in note 5 and to the acquisition of Fixed Fee Plus Limited for
�12,000. This business offers "fixed fee" promotions which are non travel-based.
8. Reconciliation of loss from operations to cash generated
from operations
+---------------------------+---------------+---------------+---------------+
| | 6 months ended| 6 months ended|12 months ended|
| | 31 July 2007| 31 July 2006|31 January 2007|
| | �'000| �'000| �'000|
| | | | |
| | | *restated| *restated|
+---------------------------+---------------+---------------+---------------+
|Loss from operations | (1,525) | (950) | (1,894) |
+---------------------------+---------------+---------------+---------------+
|Depreciation | 93 | 123 | 201 |
+---------------------------+---------------+---------------+---------------+
|Goodwill impairment | 1,130 | - | - |
+---------------------------+---------------+---------------+---------------+
|(Increase) / decrease in | (1) | (9) | 22 |
|inventories | | | |
+---------------------------+---------------+---------------+---------------+
|(Increase) / decrease in | (235) | 101 | 973 |
|receivables | | | |
+---------------------------+---------------+---------------+---------------+
|Increase in payables | 513 | 362 | 84 |
+---------------------------+---------------+---------------+---------------+
|Share based payments | 18 | 25 | 23 |
+---------------------------+---------------+---------------+---------------+
|Cash generated from | (7) | (348) | (591) |
|operations | | | |
+---------------------------+---------------+---------------+---------------+
9. IFRS transition / UK GAAP Amendments
Reconciliations of the impact of the adoption of IFRS and amendments made to UK
GAAP are set out below, together with explanatory comments.
Income statement reconciliation for the six months ended 31 July 2006
+-------------------+---------+-----------+---------+----------+----------+
| | UK GAAP| Revenue| UK GAAP| Goodwill| IFRS|
| | |Recognition| | | |
| | as| | restated| | |
| | reported| �'000| | | |
| | | | �'000| �'000| �'000|
| | �'000| | | | |
| | | | | | |
+-------------------+---------+-----------+---------+----------+----------+
|Revenue | 5,811 | (2,560) | 3,251 | - | 3,251 |
+-------------------+---------+-----------+---------+----------+----------+
|Cost of sales | (4,145) | 2,560 | (1,585) | - | (1,585) |
+-------------------+---------+-----------+---------+----------+----------+
|Gross Profit | 1,666 | -| 1,666| -| 1,666 |
+-------------------+---------+-----------+---------+----------+----------+
|Administration | (2,670) | - | (2,670) | 54 | (2,616) |
|expenses | | | | | |
+-------------------+---------+-----------+---------+----------+----------+
|Loss from | (1,004) | - | (1,004) | 54 | (950) |
|operations | | | | | |
+-------------------+---------+-----------+---------+----------+----------+
|Finance expense | (24) | - | (24) | - | (24) |
+-------------------+---------+-----------+---------+----------+----------+
|Loss before | (1,028)| - | (1,028) | 54 | (974) |
|taxation | | | | | |
+-------------------+---------+-----------+---------+----------+----------+
|Income tax expense | - | - | - | - | - |
+-------------------+---------+-----------+---------+----------+----------+
|Loss for the period| (1,028) | - | (1,028) | 54 | (974) |
+-------------------+---------+-----------+---------+----------+----------+
Income statement reconciliation for the year ended 31 January 2007
+-------------------+----------+------------+---------+--------+----------+----------+
| | UK GAAP| Revenue| UK GAAP|Goodwill| Deferred| IFRS|
| | | Recognition| | | Tax| |
| | as| | restated| | | |
| | reported| �'000| | | �'000| |
| | | | �'000| �'000| | �'000|
| | �'000| | | | | |
| | | | | | | |
+-------------------+----------+------------+---------+--------+----------+----------+
|Revenue | 9,730 | (4,457) | 5,273 | - | - | 5,273 |
+-------------------+----------+------------+---------+--------+----------+----------+
|Cost of sales | (6,839) | 4,457 | (2,382) | - | - | (2,382) |
+-------------------+----------+------------+---------+--------+----------+----------+
|Gross Profit | 2,891 | -| 2,891| -| - | 2,891 |
+-------------------+----------+------------+---------+--------+----------+----------+
|Administration | (4,893) | - | (4,893) | 108 | - | (4,785) |
|expenses | | | | | | |
+-------------------+----------+------------+---------+--------+----------+----------+
|Loss from | (2,002) | - | (2,002) | 108 | - | (1,894) |
|operations | | | | | | |
+-------------------+----------+------------+---------+--------+----------+----------+
|Finance expense | (69) | - | (69) | - | - | (69) |
| | | | | | | |
| | | | | | | |
+-------------------+----------+------------+---------+--------+----------+----------+
|Loss before | (2,071) | - | (2,071) | 108 | - | (1,963) |
|taxation | | | | | | |
+-------------------+----------+------------+---------+--------+----------+----------+
|Income tax expense | (75) | - | (75) | - | 15 | (60) |
+-------------------+----------+------------+---------+--------+----------+----------+
|Loss for the period| (2,146) | - | (2,146) | 108 | 15 | (2,023) |
+-------------------+----------+------------+---------+--------+----------+----------+
Balance sheet reconciliation as at 1 February 2006 (IFRS transition date)
UK GAAP Deferred Reclassifications IFRS
Tax
as reported
�'000 �'000 �'000 �'000
Non current assets
Goodwill 1,480 - - 1,480
Property, plant and 620 - - 620
equipment
Deferred tax asset 437 97 141 675
2,537 97 141 2,775
Current assets
Inventories 90 - - 90
Trade and other 1,990 - - 1,990
receivables
Cash and cash equivalents 617 - - 617
Current tax asset 472 - (141) 331
3,169 - (141) 3,028
Current liabilities
Borrowings (1,073) - - (1,073)
Trade and other payables (1,799) - - (1,799)
Current tax (3) - - (3)
Provisions - - (726) (726)
(2,875) - (726) (3,601)
Non current liabilities
Provisions (1,168) - 726 (442)
(1,168) - 726 (442)
Net assets 1,663 97 - 1,760
Equity
Called up equity share 286 - - 286
capital
Share premium 2,888 - - 2,888
Capital redemption reserve 10 - - 10
Retained earnings (1,521) 97 - (1,424)
Total equity 1,663 97 - 1,760
Balance sheet reconciliation as at 31 July 2006
UK GAAP Goodwill Deferred Reclassifications IFRS
Tax
�'000 �'000 �'000 �'000 �'000
Non current assets
Goodwill 1,426 54 - - 1,480
Property, plant and 560 - - - 560
equipment
Deferred tax asset 437 - 97 141 675
2,423 54 97 141 2,715
Current assets
Inventories 99 - - - 99
Trade and other 1,889 - - - 1,889
receivables
Cash and cash 463 - - - 463
equivalents
Current tax asset 182 - - (141) 41
2,633 - - (141) 2,492
Current liabilities
Borrowings (1,052) - - - (1,052)
Trade and other (1,809) - - - (1,809)
payables
Current tax (3) - - - (3)
Provisions - - - (952) (952)
(2,864) - - (952) (3,816)
Non current
liabilities
Provisions (1,532) - - 952 (580)
(1,532) - - 952 (580)
Net assets 660 54 97 - 811
Equity
Called up equity 286 - - - 286
share capital
Share based payment 25 - - - 25
reserve
Share premium 2,888 - - - 2,888
Capital redemption 10 - - - 10
reserve
Retained earnings (2,549) 54 97 - (2,398)
Total equity 660 54 97 - 811
Balance sheet reconciliation as at 31 January 2007
UK GAAP Goodwill Deferred Reclassifications IFRS
Tax
�'000 �'000 �'000 �'000 �'000
Non current assets
Goodwill 1,372 108 - - 1,480
Property, plant 449 - - - 449
and equipment
Deferred tax asset 496 - 112 5 613
2,317 108 112 5 2,542
Current assets
Inventories 68 - - - 68
Trade and other 1,017 - - - 1,017
receivables
Cash and cash 725 - - - 725
equivalents
Current tax asset 50 - - (5) 45
1,860 - - (5) 1,855
Current
liabilities
Trade and other (1,525) - - - (1,525)
payables
Provisions - - - (950) (950)
(1,525) - - (950) (2,475)
Non current
liabilities
Provisions (1,530) - - 950 (580)
(1,530) - - 950 (580)
Net assets 1,122 108 112 - 1,342
Equity
Called up equity 701 - - - 701
share capital
Share based 23 - - - 23
payment reserve
Share premium 4,055 - - - 4,055
Capital redemption 10 - - - 10
reserve
Retained earnings (3,667) 108 112 - (3,447)
Total equity 1,122 108 112 - 1,342
Explanatory Comments
In preparing this interim report, the group has elected to apply the following
transitional arrangements permitted by IFRS1 'First time adoption of
International Financial Reporting Standards':
* Business combinations effected before 1 February 2006 have not been
restated.
* The carrying amount of capitalised goodwill at 31 January 2006 that
arose on business combinations accounted for using the acquisition method
under UK GAAP was frozen at this amount and tested for impairment at 1
February 2006.
The reconciling items - both those arising as a result of implementing IFRS as
well as those arising as a result of adjustments made under UK GAAP - are
explained below:
Goodwill
* Amortisation charged from 1 February 2006 has been removed, reducing the
level of administration expenses in both restated periods.
Deferred taxation
* Deferred taxation is now recognised in accordance with IAS 12 'Income
taxes'. The only material difference to UK GAAP is that deferred tax assets
are no longer discounted, hence the discount element of the asset under UK
GAAP has been reversed.
Revenue Recognition
* In order to facilitate better understanding of the restatements, the
impact of the revenue recognition policy referred to in note 3 has been
included within the reconciliations, disclosed as an amendment to revenues
reported under UK GAAP.
Reclassifications
* Under UK GAAP the provision for estimated future redemption costs was
classified within provisions for liabilities and charges. Under IFRS
provisions are required to be split between current and non current
liabilities. This change has been presented within the IFRS balance sheet
reconciliations, again for the sake of clarity.
* Under UK GAAP deferred tax assets were split between debtors falling due
within one year and debtors falling due after more than one year. Under
IFRS deferred tax assets are presented in non current assets in their
entirety.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UWVBRWSRAUAR
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