RNS Number:0366T
NetServices PLC
24 April 2008
24 April 2008
NetServices plc
("NetServices", the "Company" or the "Group")
Restatement of financial information under International Financial Reporting
Standards
NetServices will be reporting its financial results in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the European
Union with effect from 1 September 2007.
The financial information in the interim Group financial statements for the six
month period ended 29 February 2008 has been prepared in accordance with IFRS
for the first time, and the first annual report to be prepared in accordance
with IFRS will be for the year ending 31 August 2008.
The last set of Group financial statements presented by the Group under United
Kingdom Generally Accepted Accounting Practice ('UK GAAP') were for the year
ended 31 August 2007. The date of the transition to IFRS was therefore 1
September 2006.
The Company will be releasing its interim results for the 6 months ended 29
February 2008 on Tuesday, 13 May 2008.
For further information, please contact:
NetServices plc 0870 753 0900
Mark Vickers, Chief Executive
Ian Winn, Finance Director
Arbuthnot Securities 020 7012 2000
Tom Griffiths/Alasdair Younie
PRINCIPAL EFFCTS ON ADOPTION OF IFRS
BASIS OF CONSOLIDATION
The consolidated accounts incorporate the accounts of the company and all Group
undertakings. These are adjusted, where appropriate, to conform to Group
accounting policies. Acquisitions are accounted for under the purchase method
and goodwill on consolidation is capitalised and written off over its useful
economic life from the year of acquisition. The results of companies acquired or
disposed of are included in the income statement after or up to the date that
control passes, respectively.
The Group share of the profits of Datascape Online Ltd, an associate company,
has not been included in the consolidation on the grounds that the Group has no
significant influence over the company.
All intra-Group transactions, balances and unrealised gains on transactions
between Group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment are stated at historic cost less accumulated depreciation
and any recognised impairment losses. At the date of transition to IFRS, the
Group elected to revalue its property to fair value and to consider this value
as the deemed cost at the date of transition. The valuation was based on market
value provided by an independent surveyor.
Depreciation is charged so as to write off the cost of assets, other than land,
to their estimated residual values over their estimated useful lives using the
straight-line method on the following bases:
Freehold property 2%
Long leasehold property 2%
Fixture and Fittings 20%
Plant and machinery 20%
Motor vehicles 20%
Computer equipment 20%
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets or, where shorter, the term of the
relevant lease.
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in income.
GOODWILL
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets, liabilities and contingent liabilities of a subsidiary, associate or
jointly controlled entity at the date of acquisition.
Upon the acquisition of subsidiaries, goodwill is separately disclosed. Goodwill
on acquisition of associates and jointly controlled entities is included in
investment in associates and jointly controlled entities.
Goodwill is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement and
is not subsequently reversed.
On disposal of a subsidiary, associate or jointly controlled entity, the
attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the amount previously calculated under UK GAAP subject to being
tested for impairment at that date. In prior periods, goodwill amortisation will
have been charged leading to lower net income, the amortisation charged post 1
September 2006 has been reversed.
INTANGIBLE ASSETS
Amortisation is calculated to write off the cost of an asset, less its estimated
residual value, over the useful economic life of that asset as follows:
Research and Development - over the life of the associated product
Software - over five years
Research and Development is capitalised as an intangible asset at the point a
commercial value is quantifiable as the result of developing a new product or
service.
Software is capitalised upon purchase.
Internally generated goodwill is not capitalised as an intangible asset.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). An intangible asset with an indefinite
useful life is tested for impairment annually and also whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset in prior
years. A reversal of an impairment loss is recognised as income immediately,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand, deposits repayable on demand
less overdrafts repayable on demand, short-term deposits and restricted
deposits.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group has become a party to the contractual provisions of the
instrument.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated irrecoverable amounts.
Financial liability and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. Interest associated with financial assets and
liabilities is recognised in the income statement on an accruals basis.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received,
net of direct issue costs.
PROVISIONS
Provisions are recognised when the Group has a present obligation as a result of
a past event which it is probable will result in an outflow of economic benefits
that can be reliably estimated.
Provision is held against an onerous contract entered into by a subsidiary
company. The provision was based upon the expected expenditure under the
contract against the contractual commitment across the remaining life of the
onerous contract. The provision held is reviewed on a regular basis and adjusted
to reflect current expected expenditure.
LEASING
Assets held under finance leases, which are leases where substantially all the
risks and rewards of ownership of the asset have passed to the Group, and hire
purchase contracts, are capitalised in the balance sheet and are depreciated
over their useful lives. The capital elements of future obligations under the
leases and hire purchase contracts are included as liabilities in the balance
sheet.
The interest elements of the rental obligations are charged in the profit and
loss account over the periods of the leases and hire purchase contracts and
represent a constant proportion of the balance of capital repayments
outstanding.
Assets held under finance leases are recognised as assets of the Group at their
fair value or, if lower, at the present value of the minimum lease payments,
each determined at the inception of the lease. The corresponding liability to
the lessor is included in the balance sheet as a finance lease obligation. Lease
payments are apportioned between finance charges and reduction of lease
obligation so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged directly against income, unless
they are directly attributable to qualifying assets, in which case they are
capitalised in accordance with the Group's general policy on borrowing costs.
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant 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.
REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, Value Added Tax and other sales
related taxes. Sales of goods are recognised when goods are delivered to the
customer, and installation revenue is recognised when the customer is connected
to the network.
Other contracted income, including customer rental, is recognised over the
contract period in proportion to the value of the service provided.
Deferred income represents that portion of rental fees paid by customers
relating to a future period.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
SHARE-BASED PAYMENTS
The Group has applied the requirements of IFRS 2: Share-based Payments.
The Group issues equity-settled share-based payments to its employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest. Fair value is measured
by use of the Black-Scholes model. The expected life used in the model is based
upon exercise restrictions and expected volatility is based upon historical
volatility over the expected life of the scheme.
TAXATION
The tax expense represents the sum of the current tax and the deferred tax
elements.
The current tax is based on 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. The Group's liability for
current tax is calculated by using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Temporary
differences are differences between the Group's taxable profits and its results
as stated in the financial statements that arise from the inclusion of gains and
losses in tax assessments in periods different from those in which they are
recognised in the financial statements.
Deferred tax is calculated at the tax rates (and tax laws) that have been
enacted or substantively enacted by the balance sheet date. Deferred tax is
charged or credited in the income statement, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting
accounting judgements will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below:
* Goodwill has been tested for impairment by comparing the amount of goodwill
against expected forecast results including cash flows expected to be
generated in the future by the appropriate business unit.
* The fair value of share-based payments is measured using the Black-Scholes
model which inherently makes use of significant estimates and assumptions
concerning the future applied by the directors.
* Deferred tax assets and liabilities are assessed on the basis of assumptions
regarding the future, the likelihood that assets will be realised and
liabilities will be settled, and estimates as to the timing of those future
events and as to the future tax rates that will be applicable.
* Provisions are held to the extent that directors feel contractual
commitments against onerous contracts will not be met.
Restated Consolidated Balance Sheet (Unaudited) as at 31 August 2007, 28
February 2007 and 1 September 2006.
31-Aug-07 1-Sept-06 28-Feb-07
� � �
ASSETS
Non Current Assets
Property, plant & equipment 1,700,958 2,242,646 2,046,791
Goodwill 333,983 333,983 333,983
Intangibles 129,918 186,490 159,865
Other Investments 58,667 59,357 59,357
---------------------------------
2,223,526 2,822,476 2,599,996
Current Assets
Trade and other receivables 843,066 3,604,183 2,196,336
Cash and cash equivalents 1,883,120 1,350,649 980,228
---------------------------------
2,726,186 4,954,832 3,176,564
---------------------------------
TOTAL ASSETS 4,949,712 7,777,308 5,776,560
=================================
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the parent
Share Capital 73,962 72,573 72,692
Share Premium reserve 4,293,126 4,287,725 4,288,203
Share Based Payment Reserve 8,284 - -
Revaluation Reserve 216,643 216,643 216,643
Retained Earnings (3,768,914) (3,238,799) (3,983,529)
----------------------------------
823,101 1,338,142 594,009
Non Current Liabilities
Trade and other payables 1,343 43,456 43,456
Financial liabilities 485,275 523,220 470,732
Provisions 1,599,844 2,148,219 2,148,219
Deferred Tax 66,827 64,993 64,993
---------------------------------
2,153,289 2,779,888 2,727,400
Current Liabilities
Financial liabilities 99,381 198,030 182,793
Trade and other payables 1,873,941 3,461,248 2,272,358
---------------------------------
1,973,322 3,659,278 2,455,151
---------------------------------
TOTAL EQUITY AND LIABILITIES 4,949,712 7,777,308 5,776,560
=================================
Restated Consolidated Income Statement (Unaudited) for
the year ended 31 August 2007 and the period ended 28 February 2007
Aug-07 Feb-07
� �
REVENUE 12,592,606 7,774,661
Cost of Sales 9,186,568 5,919,291
-----------------------
GROSS PROFIT 3,406,038 1,855,370
Other Operating expenses 3,202,158 2,273,731
-----------------------
PROFIT/(LOSS) FROM OPERATIONS
BEFORE DEPRECIATION,
AMORTISATION AND SHARE BASED
PAYMENT COSTS 203,880 (418,361)
Amortisation of intangibles 56,571 26,624
Depreciation 649,602 270,408
Share based payment costs 8,284 -
-----------------------
OPERATING (LOSS) (510,577) (715,393)
Finance income (18,319) (5,805)
Finance costs 79,969 35,142
-----------------------
LOSS BEFORE TAX (572,227) (744,730)
Income tax expense (42,112) -
-----------------------
LOSS FOR THE PERIOD (530,115) (744,730)
-----------------------
Loss per share basic and diluted (pence) -1.82 -2.56
Consolidated Statement of Changes in equity (unaudited)
Share Re-
Share Share Based valuation Retained
Capital Premium Payment Reserve Earnings Total
Reserve
� � � � � �
Balance at 1
September 2006 72,573 4,287,725 - - (3,173,806) 1,186,492
Adjustments to
reserves on
transition to IFRS - - - 216,643 (64,993) 151,650
Total Recognised
income and expense
for the period - - - - (530,115) (530,115)
Exercise of options 1,389 5,401 - - - 6,790
IFRS 2 charge - - 8,284 - - 8,284
-----------------------------------------------------------
Balance at 31
August 2007 73,962 4,293,126 8,284 216,643 (3,768,914) 823,101
-----------------------------------------------------------
Balance at 1
September 2006 72,573 4,287,725 - - (3,173,806) 1,186,492
Adjustments to
reserves on
transition to IFRS - - - 216,643 (64,993) 151,650
Total Recognised
income and expense
for the period - - - - (744,730) (744,730)
Exercise of options 119 478 - - - 597
-----------------------------------------------------------
Balance at 28
February 2007 72,692 4,288,203 - 216,643 (3,983,529) 594,009
-----------------------------------------------------------
Restated Consolidated Cash Flow Statement(Unaudited) for the year ended
31 August 2007 and the period ended 28 February 2007
Aug-07 Feb-07
� �
OPERATING ACTIVITIES
Cash generated from/(used in) operations 305,644 (199,407)
Interest paid (79,969) (35,142)
---------------------
NET CASH GENERATED FROM/(USED IN)
OPERATING ACTIVITIES 225,675 (234,549)
INVESTING ACTIVITIES
Purchase of property, plant
and equipment (147,889) (74,550)
Proceeds from sale of equipment 34,500 -
Sale of Business Unit 531,671 -
Interest received 18,319 5,805
---------------------
NET CASH GENERATED FROM/(USED IN)
INVESTING ACTIVITIES 436,601 (68,745)
FINANCING ACTIVITIES
Proceeds from the exercise of share options 6,790 598
Repayment of borrowings (37,041) (19,270)
Payment of finance lease liabilities (99,554) (48,455)
---------------------
NET CASH (USED IN) FINANCING ACTIVITIES (129,805) (67,127)
---------------------
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 532,471 (370,421)
---------------------
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE PERIOD 1,350,649 1,350,649
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD 1,883,120 980,228
Cash Generated from/(Used in) Operations
Operating Profit/(Loss) before
depreciation, amortisation and
share based payment costs 203,880 (418,361)
Adjustments for:
Loss on disposal of equipment 5,474 -
Profit on disposal of business unit (409,175) -
Decrease in provisions (548,375) -
Decrease in receivables 2,638,623 1,407,846
(Decrease) in payables (1,584,783) (1,188,892)
-----------------------
Cash generated from/(Used in) operations 305,644 (199,407)
-----------------------
EXPLANATION OF TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
The primary reporting statements adopted by the Group under IFRS have resulted
in reclassifications of certain assets and liabilities which have therefore
given rise to representation of information. In addition, for the reasons set
out below, some of the figures have been restated upon adoption of the Group's
new set of IFRS compliant accounting policies.
Exemptions applied by the Group in the year of transition
The main changes in the basis of preparation between IFRS and UK GAAP are
summarised below;
In accordance with the requirements of IFRS 3, goodwill has been frozen at its
brought forward net book value at the date of transition, and amortisation
charged under UK GAAP for the periods ended 31 August 2007 and 28 February 2007
has been reversed.
At the date of adoption the freehold properties of the Group have been revalued,
based on market value provided by an independent surveyor. A deferred tax
liability has been recognised on the revaluation, and in the periods after 1
September 2006 there has been an increase in the depreciation charged against
freehold properties based on the revalued amount.
Adoption of IFRS has also resulted in the reclassification of certain non
current assets between property, plant & equipment and Intangibles.
The adoption of IFRS has not however had an impact on the amount of cash
previously disclosed under UK GAAP in any of the periods of account in the
financial statements.
Consolidated balance sheet reconciliation at 1 September 2006 (Transition date)
UK GAAP Reported
in IFRS Property Goodwill Intangibles under
format Note 1 Note 2 Note 3 IFRS
� � � � �
ASSETS
Non Current Assets
Property, plant
& equipment 2,092,853 216,643 - (66,850) 2,242,646
Goodwill 333,983 - - - 333,983
Intangibles 119,640 - - 66,850 186,490
Other Investments 59,357 - - - 59,357
---------------------------------------------------
2,605,833 216,643 - - 2,822,476
Current Assets
Trade and other
receivables 3,604,183 - - - 3,604,183
Cash and cash
equivalents 1,350,649 - - - 1,350,649
---------------------------------------------------
4,954,832 - - - 4,954,832
---------------------------------------------------
TOTAL ASSETS 7,560,665 216,643 - - 7,777,308
===================================================
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the
parent
Share Capital 72,573 - - - 72,573
Share Premium reserve 4,287,725 - - - 4,287,725
Share Based Payment
Reserve - - - - -
Revaluation Reserve - 216,643 - - 216,643
Retained Earnings (3,173,806) (64,993) - - (3,238,799)
----------------------------------------------------
1,186,492 151,650 - - 1,338,142
Non Current Liabilities
Trade and other payables 43,456 - - - 43,456
Financial liabilities 523,220 - - - 523,220
Provisions 2,148,219 - - - 2,148,219
Deferred Tax - 64,993 - - 64,993
----------------------------------------------------
2,714,895 64,993 - - 2,779,888
Current Liabilities
Financial liabilities 198,030 - - - 198,030
Trade and other payables 3,461,248 - - - 3,461,248
----------------------------------------------------
3,659,278 - - - 3,659,278
---------------------------------------------------
TOTAL EQUITY AND
LIABILITIES 7,560,665 216,643 - - 7,777,308
====================================================
Consolidated balance sheet reconciliation at 28 February 2007
UK GAAP Reported
in IFRS Property Goodwill Intangibles under
format Note 1 Note 2 Note 3 IFRS
� � � � �
ASSETS
Non Current Assets
Property, plant &
equipment 1,892,105 214,851 - (60,165) 2,046,791
Goodwill 314,714 - 19,269 - 333,983
Intangibles 99,700 - - 60,165 159,865
Other Investments 59,357 - - - 59,357
----------------------------------------------------
2,365,876 214,851 19,269 - 2,599,996
Current Assets
Trade and other
receivables 2,196,336 - - - 2,196,336
Cash and cash
equivalents 980,228 - - - 980,228
----------------------------------------------------
3,176,564 - - - 3,176,564
----------------------------------------------------
TOTAL ASSETS 5,542,440 214,851 19,269 - 5,776,560
====================================================
EQUITY AND LIABILITIES
Equity attributable
to the equity holders
of the parent
Share Capital 72,692 - - - 72,692
Share Premium reserve 4,288,203 - - - 4,288,203
Share Based Payment
Reserve - - - - -
Revaluation Reserve - 216,643 - - 216,643
Retained Earnings (3,936,013) (66,785) 19,269 - (3,983,529)
----------------------------------------------------
424,882 149,858 19,269 - 594,009
Non Current Liabilities
Trade and other payables 43,456 - - - 43,456
Financial liabilities 470,732 - - - 470,732
Provisions 2,148,219 - - - 2,148,219
Deferred Tax - 64,993 - - 64,993
----------------------------------------------------
2,662,407 64,993 - - 2,727,400
Current Liabilities
Financial liabilities 182,793 - - - 182,793
Trade and other
payables 2,272,358 - - - 2,272,358
----------------------------------------------------
2,455,151 - - - 2,455,151
----------------------------------------------------
TOTAL EQUITY AND
LIABILITIES 5,542,440 214,851 19,269 - 5,776,560
====================================================
Consolidated balance sheet reconciliation at 31 August 2007
UK GAAP Reported
in IFRS Property Goodwill Intangibles under
format Note 1 Note 2 Note 3 IFRS
� � � � �
ASSETS
Non Current Assets
Property, plant & 1,541,379 213,059 - (53,480) 1,700,958
equipment
Goodwill 295,447 - 38,536 - 333,983
Intangibles 76,438 - - 53,480 129,918
Other Investments 58,667 - - - 58,667
-----------------------------------------------------
1,971,931 213,059 38,536 - 2,223,526
Current Assets
Trade and other
receivables 843,066 - - - 843,066
Cash and cash
equivalents 1,883,120 - - - 1,883,120
------------------------------------------------------
2,726,186 - - - 2,726,186
------------------------------------------------------
TOTAL ASSETS 4,698,117 213,059 38,536 - 4,949,712
======================================================
EQUITY AND LIABILITIES
Equity attributable
to the equity holders
of the parent
Share Capital 73,962 - - - 73,962
Share Premium reserve 4,293,126 - - - 4,293,126
Share Based Payment
Reserve 8,284 - - - 8,284
Revaluation Reserve - 216,643 - - 216,643
Retained Earnings (3,738,873) (68,577) 38,536 - (3,768,914)
------------------------------------------------------
636,499 148,066 38,536 - 823,101
Non Current Liabilities
Trade and other
payables 1,343 - - - 1,343
Financial liabilities 485,275 - - - 485,275
Provisions 1,599,844 - - - 1,599,844
Deferred Tax 1,834 64,993 - - 66,827
------------------------------------------------------
2,088,296 64,993 - - 2,153,289
Current Liabilities
Financial liabilities 99,381 - - - 99,381
Trade and other
payables 1,873,941 - - - 1,873,941
------------------------------------------------------
1,973,322 - - - 1,973,322
------------------------------------------------------
TOTAL EQUITY AND
LIABILITIES 4,698,117 213,059 38,536 - 4,949,712
======================================================
Reconciliation of Income Statement for period ended 28 February 2007
UK GAAP Reported
in IFRS Property Goodwill Intangibles under
format Note 1 Note 2 Note 3 IFRS
� � � � �
REVENUE 7,774,661 - - - 7,774,661
Cost of Sales 5,919,291 - - - 5,919,291
-------------------------------------------------------
GROSS PROFIT 1,855,370 - - - 1,855,370
Other Operating
expenses 2,273,731 - - - 2,273,731
-------------------------------------------------------
(LOSS) FROM
OPERATIONS BEFORE
DEPRECIATION,
AMORTISATION AND
SHARE BASED PAYMENT
COSTS
(418,361) - - - (418,361)
Amortisation of
intangibles 39,208 - (19,269) 6,685 26,624
Depreciation 275,300 1,793 - (6,685) 270,408
Share based payment
costs - - - - -
---------------------------------------------------------
OPERATING (LOSS) (732,869) (1,793) 19,269 - (715,393)
Finance income (5,805) - - - (5,805)
Finance costs 35,142 - - - 35,142
---------------------------------------------------------
(LOSS) BEFORE TAX (762,206) (1,793) 19,269 - (744,730)
Income tax expense - - - - -
---------------------------------------------------------
(LOSS) FOR THE PERIOD (762,206) (1,793) 19,269 - (744,730)
---------------------------------------------------------
(Loss) per share
basic and
diluted (pence) (2.62) - 0.06 - (2.56)
Reconciliation of Income Statement for period ended 31 August 2007
UK GAAP Reported
in IFRS Property Goodwill Intangibles under
format Note 1 Note 2 Note 3 IFRS
� � � � �
REVENUE 12,592,606 - - - 12,592,606
Cost of Sales 9,186,568 - - - 9,186,568
---------------------------------------------------------
GROSS PROFIT 3,406,038 - - - 3,406,038
Other Operating
expenses 3,202,158 - - - 3,202,158
--------------------------------------------------------
PROFIT FROM
OPERATIONS BEFORE
DEPRECIATION,
AMORTISATION AND
SHARE BASED PAYMENT
COSTS 203,880 - - - 203,880
Amortisation of
intangibles 81,737 - (38,536) 13,370 56,571
Depreciation 659,388 3,584 - (13,370) 649,602
Share based payment
costs 8,284 - - - 8,284
-------------------------------------------------------
OPERATING (LOSS) (545,529) (3,584) 38,536 - (510,577)
Finance income (18,319) - - - (18,319)
Finance costs 79,969 - - - 79,969
-------------------------------------------------------
(LOSS) BEFORE TAX (607,179) (3,584) 38,536 - (572,227)
Income tax expense (42,112) - - - (42,112)
-------------------------------------------------------
(LOSS) FOR THE PERIOD (565,067) (3,584) 38,536 - (530,115)
-------------------------------------------------------
(Loss) per share
basic and diluted
(pence) (1.94) - 0.12 - (1.82)
=======================================================
Note 1 Property (IFRS 1)
At the date of transition to IFRS, the Group elected to revalue its property to
fair value and to consider this value as the deemed cost at the date of
transition. The valuation was based on market value provided by an independent
surveyor. This also resulted in the creation of a deferred tax liability which
has been recognised, and an increase in the depreciation charge after 1
September 2006.
Note 2 Goodwill (IFRS1, IAS36 & IAS38)
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the amount previously calculated under UK GAAP subject to being
tested for impairment at that date. In prior periods, goodwill amortisation
will have been charged leading to lower net income, the amortisation charged
post 1 September 2006 has been reversed.
Note 3 Intangibles (IAS 38)
Software assets included under "Tangible Assets", in accordance with UK GAAP,
have been reclassified from the date of transition to "Intangible Assets". This
has also resulted in the reclassification of depreciation on these assets from
"Depreciation" to "Amortisation of Intangibles".
Note 4 Cash Flow Statement
The transition adjustments referred to above have no impact on the cash flow
statement, and therefore there is no requirement for a reconciliation between
UK GAAP and IFRS.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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