Active Energy Regulatory News (AEG)

27 Sep 2007 14:23

Cinpart PLC27 September 2007 CINPART PLC INTERIM RESULTS For Immediate Release: 27 September 2007 CINPART PLC Interim Report for the six months ended 30 June 2007 Chairman's commentary on the six months ended 30 June 2007 I present the interim results for Cinpart for the six months ended 30 June 2007. These show a loss for the period of £11,486 compared to the loss of £130,523 forthe same period in 2006 on sales of £1,492,836 compared with £1,576,338. Due to the adoption by the company of IFRS for the 2007 accounting year we arerequired to take into account the value of share options of £84,000 granted tothe Directors and therefore before accounting for the options the profit for theperiod is £72,514. This is a significant improvement and reflects the initialeffects of the changes implemented by the new management team since thebeginning of the year. No interim dividend is proposed. The fund raising in June 2007 has resulted in a healthier balance sheet and hasenabled the company to embark on investment in new plant and machinery toincrease the efficiency of the manufacturing operation, which are expected toresult in yearly savings in excess of £150,000 in 2008 and in excess of £200,000annually in subsequent years, based on current levels of turnover. Some expenditure on airfreight is still continuing in the second half of theyear but the majority of product is now being shipped by sea resulting insignificant savings. Further reorganisation costs will be incurred in the secondhalf but we are confident that we will continue to achieve a pre-option chargenet pre-tax profit. A new sales and marketing initiative has been implemented to increase our salesin the gas ignition market and to take us into new markets, which is alreadyyielding new business and a significantly higher level of enquires. Again, thefull effects of the new initiative will not be felt until 2008. The integrationof Derlite and the newly acquired Gasignition business, which is expected to add£300,000 in additional sales in 2008, is continuing and a much simplifiedcompany structure is being implemented. We have yet to experience any down turn in orders as a result of the currenteconomic climate, particularly in the US, but the company currently only has onemajor customer in the US and the market there for our products is largelyuntapped. We are confident, under the new management team, we can increase ourtotal business in the US and in the rest of the world. The company is planningand working towards a major increase in turnover over the next few years. The Board is currently seeking to accelerate the growth of Cinpart byacquisitions. These would be in the areas of component sourcing and distributionand sub-contract manufacture where part of the operation could be relocated toour operation in Thailand. A number of opportunities have been identified andnegotiations have commenced in several cases. Eliminating the high cost of airfreight and reducing manufacturing coststogether with increased efficiency and cost savings implemented by the newmanagement team and the drive for new business means that the prospects forCinpart have never been better. . Philip E Palmer Chairman 27 September 2007 Unaudited consolidated income statement for the six months ended 30 June 2007 Notes Six months ended 30 Six months ended 30 Year ended June 2007 June 2006 31 December 2006 Unaudited Unaudited Unaudited £ £ £ 1,492,836 1,576,338 2,752,230 Revenue Cost of sales (1,047,350) (1,209,819) (2,048,045) Gross profit 445,486 704,185 366,519 Administrative expenses (430,950) (846,588) (1,148,649)Exceptional items - 370,106 188,138Operating profit/(loss) 14,536 (256,326) (109,963)Finance income 28 54 33 Finance costs (26,050) (20,615) (39,598) Loss before taxation (11,486) (130,524) (295,891) Taxation - - - Loss for the period (11,486) (130,524) (295,891) Loss per share: Basic 3 (0.13)p (1.64)p (3.65)p Diluted 3 (0.08)p (1.33)p (2.23)p Unaudited Consolidated statement of recognised income and expense Loss for the period (11,486) (130,524) (295,891)Exchange translation gains/ 12,233 - (35,701)(loss) on foreign currencynet investments in subsidiaryundertakingsTotal recognised income/ 747 (130,524) (331,592)(expense) for the period Unaudited consolidated balance sheet at 30 June 2007 Notes 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Unaudited £ £ £Non-current assets Goodwill 105,028 243,386 -Plant and equipment 113,606 111,355 116,405Total non-current assets 218,634 354,741 116,405 Current assets Inventories 198,778 180,512 259,571Trade and other receivables 806,662 357,779 534,490Cash and cash equivalents 482,450 11,865 7,245Total current assets 1,487,890 550,156 801,306 Current liabilities Financial liabilities - borrowings (170,331) (360,290) (771,580)Trade and other payables (768,487) (1,212,761) (852,474)Total current liabilities (938,818) (1,573,051) (1,624,054) Net current assets/(liabilities) 549,072 (1,022,895) (822,748) Non-current liabilities Financial liabilities - borrowings (13,000) (3,121) (116,000)Total current liabilities (13,000) (3,121) (116,000) Net assets/(liabilities) 754,706 (671,275) (822,343) Equity Share capital 6 3,756,907 3,526,492 3,533,397Share premium account 2,353,419 1,041,532 1,084,627Retained earnings/(losses) (5,355,620) (5,239,299) (5,440,367) 754,706 (671,275) (822,343) Unaudited consolidated cashflow statement for the six months ended 30 June 2007 Six months ended Six months ended 30 Year ended 30 June 2007 June 2006 31 December 2006 Unaudited Unaudited Unaudited £ £ £ Net cash used in operating activities (58,187) (173,960) (702,293) Investing activities Interest received 28 13 33Purchases of property plant and equipment (22,798) 9,302 (14,509)Acquisition of subsidiary, net of cash acquired (205,840) - -Liquidation of subsidiary - (20,799) 90,105Net cash generated from/(used in) investing (228,610) (11,484) 75,629activities Financing activities Drawn down/(repayment) of borrowings (704,250) 188,166 593,790Proceeds on issue of shares 1,492,302 - 50,000Interest paid (26,050) (20,574) (39,598) Net cash generated from financing activities 762,002 167,592 619,619 Cash and cash equivalents at beginning of period 7,245 29,717 29,717 Cash and cash equivalents at end of period 482,450 11,865 7,245 Notes to the interim statement for the six months ended 30 June 2007 1 Accounting policies Basis of preparation The next annual financial statements of the Cinpart Group plc ("the Group") willbe prepared in accordance with International Financial Reporting Standards(IFRS) as adopted for use in the EU and applied in accordance with theprovisions of the Companies Act 1985. Accordingly, the interim financial information in this report has been preparedusing accounting policies consistent with IFRS. IFRS is subject to amendment andinterpretation by the International Accounting Standards Board (IASB) and theInternational Financial Reporting Interpretations Committee (IFRIC) and there isan ongoing process of review and endorsement by the European Commission. Thefinancial information has been prepared on the basis of IFRS that the Directorsexpect to be applicable as at 31 December 2007. The principal accounting policies set out below have been consistently appliedto all periods presented. IFRS transition IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theinterim financial information has been prepared on the basis of the followingexemptions: • Business combinations prior to 1 January 2006 have not been restated to comply with IFRS 3 "Business Combinations" • IFRS 2 "Share-based Payments" has been applied retrospectively to those options that were issued after 7 November 2002 and had not vested by 1st January 2006. The disclosures required by IFRS 1 concerning the transition from UK GAAP toIFRS are given in note 8. Non-statutory accounts The financial information for the year end 31 December 2006 set out in thisinterim report does not comprise the Group's statutory accounts as defined insection 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2006, which were preparedunder UK Generally Accepted Accounting Practice (UK GAAP), have been deliveredto the Registrar of Companies. The auditors reported on those accounts; theirreport was unqualified, did not include references to any matters to which theauditors drew attention by way of emphasis without qualifying their report anddid not contain a statement under either Section 237 (2) or Section 237 (3) ofthe Companies Act 1985. The financial information for the 6 months ended 30 June 2007 and 30 June 2006is unaudited. Basis of consolidation The financial information incorporates the results of the Company and entitiescontrolled by the Company (its subsidiaries). Control is achieved where theCompany has the power to govern the financial and operating policies of aninvestee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the period areincluded in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of subsidiaries to bringthe accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Notes to the interim statement for the six months ended 30 June 2007 continued 1 Accounting policies continued Business combinations and goodwill On acquisition, the assets and liabilities and contingent liabilities ofsubsidiaries are measured at their fair values at the date of acquisition. Anyexcess of cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired (i.e.discount on acquisition) is credited to profit and loss in the period ofacquisition. Goodwill arising on consolidation is recognised as an asset andreviewed for impairment at least annually by comparing the carrying value of theasset to the recoverable amount. Any impairment is recognised immediately inprofit or loss and is not subsequently reversed. Revenue recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts, VAT and other sales relatedtaxes. Sales of goods are recognised when goods are delivered and title has passed. Foreign currency Transactions in foreign currency are recorded at the rates of exchangeprevailing on the dates of the transactions. At each balance sheet date,monetary assets and liabilities that are denominated in foreign currencies areretranslated at the rates prevailing on the balance sheet date. Exchange gainsand losses on short-term foreign currency borrowings and deposits are includedwith net interest payable. Exchange differences on all other transactions,except relevant foreign currency loans, are taken to operating profit. The results of overseas operations are translated at the average rates ofexchange during the year and their balance sheers translated into sterling atthe rates of exchange ruling on the balance sheet date. Exchange differenceswhich arise from translation of the opening net assets are and results offoreign subsidiary undertakings and from translating the income statement at anaverage rate are taken to reserves. All other differences are taken to the income statement and tax charges orcredits that are directly and solely attributable to such exchange differencesare taken to reserves. Taxation The tax expense represents the sum of the tax currently payable and any deferredtax. The tax currently payable is based on the estimated taxable profit for the year.Taxable profit differs from net profit as reported in the income statementbecause it excludes items of income or expense that are taxable or deductible inother years and it further excludes items that are never taxable or deductible.The Group's liability for current tax is calculated using tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries, except where the Group is able tocontrol the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset realised. Deferred tax ischarged or credited to profit and loss, except when it relates to items chargedor credited directly to equity, in which case the deferred tax is also dealtwith in equity. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority andthe Group intends to settle its current assets and liabilities on a net basis. Share based payments The cost of share-based employee compensation arrangements, whereby employeesreceive remuneration in the form of shares or share options, is recognised as anemployee benefit expense in the income statement. The total expense to be apportioned over the vesting period of the benefit isdetermined by reference to the fair value (excluding the effect of nonmarket-based vesting conditions) at the date of the grant. The assumptionsunderlying the number of awards expected to vest are subsequently adjusted forthe effects of non market-based vesting to reflect the conditions prevailing atthe balance sheet date. Fair value is measured by the use of a binomial model.The expected life used in the model has been adjusted, based on management'sbest estimate, for the effects of the non-transferability, exercise restrictionsand behavioural considerations. • The exemption permitted under IFRS 1 to apply IFRS 2 "Share-based Payments" retrospectively to those options that were issued after 7 November 2002 and had not vested by 1st January 2006 has been taken. Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and anyrecognised impairment loss. Depreciation is charged so as to write off the cost of assets, over theirestimated useful lives, using the straight-line method, on the following bases: Leasehold improvements - 5 years Fixtures, fittings and equipment - between 3 and 10 years Plant, machinery and motor vehicles - between 3 and 5 years Inventories Inventories are stated at the lower of cost and net realisable value. Costcomprises direct materials and, where applicable, direct labour costs and thoseoverheads that have been incurred in bringing the inventories to their presentlocation and condition. Cost is calculated using the weighted average method.Net realisable value represents the estimated selling price less all estimatedcosts of completion and costs to be incurred in marketing, selling anddistribution. Financial instruments Financial assets and financial liabilities are recognised on the balance sheetwhen the Group becomes a party to the contractual provisions of the instrument. Investments are classified as either held-for trading or available for sale atinitial recognition and this designation is re-evaluated at each balance sheetdate. At the balance sheet date all such investments are classified asavailable-for-sale. Investments are initially measured at cost, includingtransaction costs. At subsequent reporting dates available-for-sale investmentsare measured at fair value or at a cost where fair value is not readilyascertainable. Gains and losses arising from changes in fair value arerecognised directly in equity until the investment is disposed of or isdetermined to be impaired, at which time the cumulative gain or loss recognisedpreviously in equity is included in the net profit or loss for the period. Trade and other receivables are measured at initial recognition at fair value,and are subsequently measured at amortised cost using the effective interestmethod. A provision is established when there is objective evidence that theGroup will not be able to collect all amounts due. The amount of any provisionis recognised in the income statement. Cash and cash equivalents comprise cash held by the Group and short-term bankdeposits with an original maturity of three months or less. Trade and other payables are initially measured at fair value, and aresubsequently measured at amortised cost, using the effective interest ratemethod. Financial liabilities and equity instruments issued by the Group are classifiedin accordance with the substance of the contractual arrangements entered intoand the definitions of a financial liability and an equity instrument. An equityinstrument is any contract that evidences a residual interest in the assets ofthe Group after deducting all of its liabilities. Equity instruments issued bythe company are recorded at the proceeds received, net of direct issue costs. Interest bearing bank loan, overdrafts and other loans are recorded at theproceeds received, net of direct issue costs. Finance costs are accounted for onan accruals basis in the income statement using the effective interest method. 2. Critical accounting judgements and key sources of estimation uncertainty The preparation of financial information in conformity with generally acceptedaccounting practice requires management to make estimates and judgements thataffect the reported amounts of assets and liabilities as well as the disclosureof contingent assets and liabilities at the balance sheet date and the reportedamounts of revenues and expenses during the reporting period. Estimates and judgements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances. The significant judgementsmade by management in applying the Group's accounting policies and the keysources of estimation uncertainty were: Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value inuse of the cash generating units to which goodwill has been allocated. The valuein use calculation requires the Group to estimate the future cash flows expectedto arise from the cash-generating unit and a suitable discount rate in order tocalculate the present value. No provision for impairment was made in the periodand the carrying value of goodwill at the balance sheet date was £105,028. Share based payments In determining the fair value of equity settled share based payments and therelated charge to the income statement, the Group makes assumptions about futureevents and market conditions. In particular, judgement must be made as to thelikely number of shares that will vest, and the fair value of each awardgranted. The fair value is determined using a valuation model which is dependenton further estimates, including the Group's future dividend policy, employeeturnover, the timing with which options will be exercised and the futurevolatility in the price of the Group' shares. Such assumptions are based onpublicly available information and reflect market expectations and advice takenfrom qualified personnel. Different assumptions about these factors to thosemade by the Group could materially affect the reported value of share basedpayments. 3. Earnings per share The calculation of basic and diluted loss per share is based on the loss for theyear attributable to ordinary shareholders of £11,486 (31 December 2006: loss£295,891) and the weighted average number of shares in issue during the periodof 8,859,226 (31 December 2006: 8,098,629 - restated following the share capitalreorganisation). The weighted average number of shares used in the diluted lossper share is 14,022,270 (31 December 2006: 13,261,673). The difference in theweighted average number of shares used in diluted EPS compared to basic EPSrelates to the issue of employee share options in the period. 4. Acquisition of subsidiary On 30 June 2007 the Group acquired the entire issued share capital of GasIgnition Limited, a supplier of gas ignition products to the boiler andindustrial markets. The consideration of £150,000 was satisfied by the issue of2,142,857 new ordinary shares, at 7p each. Book value Fair value Fair value adjustments £ £ £Inventories 1,525 - 1,525Cash 10,886 - 10,886Trade and other payables 99,287 - 99,287Borrowings (66,726) - (66,726) 44,972 - 44,972Goodwill 36,720 68,308 105,028 70,815 68,308 150,000Satisfied by:Issue of Cinpart plc shares 150,000 - 150,000Net cash inflow arising on acquisition:Cash and cash equivalents acquired 10,886 - 10,886 The fair values on acquisition of Gas Ignition Limited are provisional due tothe timing of the transaction and will be finalised during the 2007 financialyear. Goodwill arising on the acquisition of Gas Ignition Limited is the differencebetween the fair value of the assets and liabilities acquired and theconsideration paid. The fair value of the consideration is based on the expectedfuture revenues generated from the products and customer list. Since theacquisition date, Gas Ignition Limited has contributed £0 to group profit. Ifthe acquisition had occurred on 1 January 2007, group turnover for the periodwould have been £1,698,891 and group loss for the period would have been£13,257. 5. Cash used in operating activities Six months ended 30 Six months ended Year ended June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Unaudited £ £ £ Operating profit/(loss) 14,536 (109,963) (256,326)Depreciation charge 26,755 75,023 95,658Impairment of goodwill - - 243,387Utilisation of provision for restructuring costs - (99,410) (99,410)Closure of subsidiaries - (370,106) (431,524)Loss on sale of fixed assets - 10,438 9,721Share based payments 84,000 - -Decrease in stocks 62,318 201,434 122,374Increase in debtors (141,473) (141,329) (318,041)Decrease in creditors (115,399) 259,954 (31,275)Other non cash operating adjustment 11,076 (1) (36,857)Net cash outflow from operating activities (58,187) (173,960) (702,293) 6. Movement in called up share capital Six months ended Six months ended 30 Year ended 30 June 2007 June 2006 31 December 2006 Unaudited Unaudited Unaudited £ £ £ NumbersOrdinary shares 0.01p each - 792,178,629 861,226,247New Ordinary shares 1p each 30,963,297 - -Deferred shares 9.5p each 15,409,000 15,409,000 15,409,000 New Deferred shares of 0.49p each 404,779,408 404,779,408 404,779,408 451,151,705 1,212,367,037 1,281,414,655 Allotted, called up and fully paidNew Ordinary shares of 0.01p each 309,633 79,218 86,123Deferred shares 9.5p each 1,463,855 1,463,855 1,463,855 New Deferred shares of 0.49p each 1,983,419 1,983,419 1,983,419 3,756,907 3,526,492 3,533,397 On the 6 June 2007 the Directors announced their plans to restructure the sharecapital by the consolidation of every 100 0.01p ordinary share into one newordinary share of 1p. The reorganisation took place on the 29 June 2007. On the 29 June 2007 12,857,142 new ordinary shares were placed, raising £900,000to replay high cost borrowings and finance extra working capital to remove theneed for expensive worldwide air-freight costs. At the same time the Directors swapped debt amounting to £463,240 for equity bythe issue of 6,617,712 new ordinary shares. A further 2,142,857 new ordinary shares were issued in respect of the businessacquisition of Gas Ignition Ltd. The issue of 733,333 shares announced on 13 December 2006 were allotted in June2007. 7. Statement of changes in Equity Six months ended Six months ended 30 Year ended 30 June 2007 June 2006 31 December 2006 Unaudited Unaudited Unaudited £ £ £ Total recognised income and expenditure 747 (130,524) (331,592)Share based payments 84,000 - -Issue of new ordinary shares net of expenses 1,492,302 - 50,000Capital and reserves attributable to equity (822,343) (540,751) (540,751)holders at the beginning of the periodCapital and reserves attributable to equity 754,706 (671,275) (822,343)holders at the end of the period 8. Transition to IFRS Cinpart plc reported under UK GAAP in its previously published financialstatements for the year ended 31 December 2006. The analysis below shows areconciliation of the net assets and profit as reported under UK GAAP as at 1January 2006 and 30 June 2006. There is no reconciliation as at 31 December 2006as there was no effect of the transition on net assets at that date. Reconciliation of net assets as at 1 January 2006 UK GAAP Effect of IFRS transition £ £ £Non-current assetsGoodwill 243,387 243,387Plant and equipment 256,791 - 256,791Total non-current assets 500,178 500,178 Current assetsInventories 425,052 - 425,052Trade and other receivables 937,668 - 937,668Cash and cash equivalents 29,717 - 29,717Total current assets 1,392,437 - 1,392,437 Current LiabilitiesFinancial liabilities - borrowings (850,873) - (850,873)Trade and other payables (1,473,712) - (1,473,712)Total current liabilities (2,324,585) - (2,324,585) Net current assets/(liabilities) (932,148) - (932,148) Non-current liabilitiesFinancial liabilities - borrowings (9,371) - (9,371)Provision for liabilities and charges (99,410) - (99,410)Total current liabilities (108,781) - (108,781) Net assets (540,751) - (540,751) EquityShare capital 3,526,492 - 3,526,492Share premium account 1,041,532 - 1,041,532Retained earnings (5,108,775) - (5,108,775) (540,751) - (540,751) Reconciliation of net assets as at 30 June 2006 UK GAAP Effect of IFRS transition £ £ £Non-current assetsGoodwill 1 225,513 17,873 243,386Plant and equipment 111,355 - 111,355Total non-current assets 336,868 17,873 354,741 Current assetsInventories 180,512 - 180,512Trade and other receivables 357,779 - 357,779Cash and cash equivalents 11,865 - 11,865Total current assets 550,156 - 550,156 Current LiabilitiesFinancial liabilities - borrowings (360,290) - (360,290)Trade and other payables (1,212,761) - (1,212,761)Total current liabilities (1,573,051) - (1,573,051) Net current assets/(liabilities) (1,022,895) - (1,022,895) Non-current liabilitiesFinancial liabilities - borrowings (3,121) - (3,121)Total current liabilities (3,121) - (3,121) Net assets (689,148) 17,873 (671,275) EquityShare capital 3,526,492 - 3,526,492Share premium account 1,041,532 - 1,041,532Retained earnings (5,257,172) 17,873 (5,239,299) (689,148) 17,873 (671,275) The transition adjustment relates to the add back of goodwill amortised under UKGAAP. Cashflow statement The Group's consolidated cashflow statements are presented in accordance withIAS7. The statements present substantially the same information as that requiredunder UK GAAP, with the following principle exceptions: 1. Under UK GAAP, cash flows are presented under nine standard headings, whereas IFRS requires the classification of cash flows resulting from operating, investing and financing activities. 2. The cash flows reported under IAS7 relate to movements in cash and cash equivalents, which include cash and short term liquid investments. Under UK GAAP, cash comprises cash in hand and deposits repayable upon demand. Reconciliation of loss for the year ended 31 December 2006 UK GAAP Effect of transition IFRS £ £ £Revenue 2,752,230 2,752,230Cost of sales (2,048,045) - (2,048,045)Loss before taxation 704,185 - 704,185 Administrative expenses 2 (1,184,396) 35,747 (1,148,649)Exceptional items 223,885 (35,747) 188,138Operating loss (256,326) (256,326) -Finance income 33 - 33Finance costs (39,598) - (39,598) Loss before taxation (295,891) - (295,891) Reconciliation of loss for the period ended 30 June 2006 UK GAAP Effect of transition IFRS £ £ £Revenue 1,576,338 - 1,576,338Cost of sales (1,209,819) - (1,209,819)Loss before taxation 366,519 - 366,519 Administrative expenses 1 (864,461) 17,873 (846,588)Exceptional items 370,106 - 370,106Operating loss (127,836) 17,873 (109,963)Finance income 54 - 54Finance costs (20,615) - (20,615) Loss before taxation (148,397) 17,873 (130,524) 1. Under IAS 38, goodwill is not amortised. Instead it is subject to an annual impairment review. Any impairment is recognised immediately. An adjustment has been made to reverse the amortisation charged in the 6 months to 30 June 2006. 2. Under IAS 38, goodwill is not amortised. Instead it is subject to an annual impairment review. Any impairment is recognised immediately. An adjustment has been made to reverse the amortisation charged in the year to 31 December 2006 and to increase the impairment charge recognised in the year. This information is provided by RNS The company news service from the London Stock Exchange