Last checked at 26 Mar 2010 07:00
26 March 2010 Corero plc ("Corero" or "the Group") Preliminary Results for the period ended 31 December 2009
Corero PLC, the specialist provider of software solutions to the banking and securities and education markets, announces its preliminary results for the period ended 31 December 2009.
2009 showed an improvement over 2008 and the trading result is in line with thestatement issued on 26 January 2010 and the Board's expectations. The Board ispleased with the result which demonstrates the strength of our products, thequality and commitment of our staff and the success of the restructuring in
thepast eighteen months.Highlights:
* Trading profit of £311,000 (2008: £272,000), an increase of 14 per cent.
* Both Business Systems division (£544,000) and Financial Markets division (£
350,000) made significant profit contributions.
* Net loss after interest and other charges but before taxation was reduced
to £180,000 (2008: loss before taxation of £658,000). * Cash at 31 December 2009 of £686,000.
* The £4 million of CULS (Convertible unsecured loan stock) was deferred for
repayment from 2011 until 2015.
* Administrative cost base of £4.4 million further reduced and forecast to be
£3.8 million in 2010 * Contracted recurring revenues cover 71 per cent of the 2010 budgeted administrative overheads.
Peter Waller, Executive Chairman, said:
"The actions taken have delivered an increased trading profit year on year withFinancial Markets returning to profitability and Business Systems as everdelivering a significant contribution. The business is lean and being tightlymanaged, as is appropriate in this uncertain economic climate, and we are wellset to profit from any improvement in our markets. Business Systems remainssolid and well run and Financial Markets is beginning to see increasing marketactivity. We approach this year with a degree of optimism as there are signs ofrenewed opportunity and momentum across our business."
Enquiries:
Corero plcPeter Waller, Executive Chairman Tel: 07785
228080
Duncan Swallow, Financial Controller Tel: 01923
695136
Merchant John East Securities LimitedJohn East/Virginia Bull Tel: 020 7628 2200College HillJamie Ramsey Tel: 020 7457 2047About Corero
Corero designs, develops and delivers market leading software products for financial institutions through its Financial Markets Division, and business and education markets through its Business Systems Division.
Blue Curve software allows organisations to vastly improve the production anddistribution of their financial research. It collates and presents complexfinancial data efficiently and quickly for analysts to make informed opinionson market conditions and trends. It speeds up the process of content creation,content approval and publishing. And it also makes sure that each piece ofcontent conforms to the correct regulatory requirements, and that it gets sentto the right people, using the right method and at the right time.Radica CAPS is the European leading software system that addresses the needs ofasset servicing operations for the global banking & securities sector. By fullyautomating the life cycle of corporate actions and dividends, includingtaxation and new issues and placings, Radica reduces the serious operationalrisk of missing or miscalculating corporate events. This area of operations hastraditionally been very manual with all the risk and cost associated with suchprocesses. Radica is designed for a global market and can address the needs offinancial institutions from Europe, North America or Asia Pacific.Resource Financials, which is ICAEW accredited, is at the core of our suite ofbusiness applications. Solutions also exist for eProcurement, Project Costing,HR, Payroll and Continuing Professional Development. Together with a range ofworkflow controlled Web Applications, covering Reporting, Timesheets, Expenses,Requisitions and Employee Self Service, there are over 20 highly integratedmodules offering large and small enterprises dynamic process driven businesssolutions.Resource EMS is a modern and powerful Management Information System, designedspecifically to meet the challenges of the post 16 Education sector. It managesthe complete Learner life-cycle, from initial enquiry through to completion.Resource EMS is designed to empower both Staff and Learners replacing disparateand costly add on systems to become the complete college-wide managementinformation solution.
Chairman's Statement
for the year ended 31 December 2009
Introduction
The results for the year ended 31 December 2009 showed an improvement overthose of 2008 and are in line with my statement issued on 26 January 2010. Theboard is pleased with the performance and see it as another positive step inthe development of the business.
Results
For the year ended 31 December 2009, the Group reported a trading profit of £311,000 (2008: £272,000), an increase of 14 per cent, on revenues of £4.92million (2008: £5.25 million). After interest and other charges the loss beforetaxation was £180,000 compared to a loss during 2008 of £658,000. The directorsare not recommending the payment of a dividend.The cash position of the Group at the end of 2009 was £686,000 which issufficient to support the trading of the Group for the foreseeable future. Theadministrative cost base was £4.4 million, a further reduction when compared to2008. Contracted licence, support and services revenue was £2.7 million at 31December 2009, which covers 71 per cent of the 2010 budgeted administrativeexpense, the highest percentage ever.
Business Systems Division
2008 was a record year and although 2009 represented more of a challenge the division responded with a solid performance, posting a trading profit of £ 544,000.
Without doubt the highlight of the year was winning twenty six additional CityAcademy customers out of the eighty new Academies opened by September 2009.This success demonstrates more clearly than ever why our reputation for highlevels of customer service aligned to a proven product offering at acompetitive price is a winning combination. Maintaining our market share ataround 30 per cent has been an excellent achievement. The other area that occupied a considerable amount of time was the continuingimplementation of the Resource Education Management System ("REMS"). With overforty live projects to complete, we inevitably encountered a degree ofdifficulty in moving all them forward as quickly as we would have liked.Therefore, during the year we have restructured the REMS team to meet thechallenge and I am pleased to say that this has is having a positive effect onthe customer projects still underway.
During 2009 we were not able to make as significant an investment in the Resource Financials product as originally planned but I am pleased to say that we are in the process of a significant modernisation of the product, the initial results of which will be launched in May 2010.
Financial Markets Division
The division improved both its revenue and trading profit over 2008, with the2nd half being particularly strong. Revenue increased by 8.9 per cent, whiletrading profit increased to £350,000 (2008: £10,000). This represents asignificant turnaround in profitability since the reported trading loss of £468,000 in 2007.The division took advantage of a number of opportunities to increase revenuethrough extending licences with current customers. Significant amongst thesewas our agreement with a major European investment bank to extend its use ofour Radica CAPS product. While producing significant revenue in 2009, thisagreement also changed the terms of the relationship and will reduce our futuresupport and consulting revenues.
We also took the opportunity to further cut costs in areas where we do not expect to make significant future revenues and to focus our efforts on the Blue Curve product line. This resulted in administrative costs being 8 per cent lower than those for 2008.
The key event of 2009 has been the launch of Blue Curve version 5 which hastaken us a step further on the transition from distributed software to the SaaSmodel. The introduction of a wide range of configuration tools allows us toinstall the system very quickly, and then allows the customer to manage theconfiguration of the system themselves. As this reduces both the setup time andthe need for the customer to purchase consultancy to make software changes, ithas widened the appeal of the system and resulted in a much larger salespipeline when compared to the start of 2009.Our move towards the SaaS model with Blue Curve over the past two years hasalso changed the way we contract with our customers. The majority of Blue Curverevenue now comes from recurring licence, support and hosting contracts. Weexpect this to grow significantly in 2010 as we seek to sign multi-yearagreements with new customers. We are confident that this can be achievedwithout increasing costs which will help to maintain profits. However we expectto see lower divisional revenues in 2010 as we do not anticipate repeating thelarge Radica CAPS licence agreement signed in October 2009.
Business Strategy
It has been our strategy in the period since 2007 to reposition Corero forfuture profit growth. There is a new board of directors, a reduction in centraloverhead costs from £1.1 million to £400,000 and a reduction in overall costsfrom £5.8 million to £3.8 million in 2010. A result of this was that inprobably the most difficult economic period in living memory for the financialsector, our largest single market segment, the company made operating profitsin 2008 and 2009, has a sound cash position and has rescheduled £4.0 million ofdebt (convertible loan stock) from 2011 to 2015. In addition, both businessdivisions are structured to be successful, have launched new product versions,brought expense into line with realistic revenue expectations and in total havea backlog of business that covers 71 per cent of our administrative cost base.We will continue to run Corero as two separate divisions during 2010, BusinessSystems and Financial Markets, with a minimum of central overhead. The plan isto make each division increasingly valuable and to focus our investment onthose product lines that have the greatest market potential.
Staff
There have been times in the year when our staff have been under considerablepressure and it is a testimony to their quality and commitment that theycontinue to work with great good humour. On behalf of the board I would like tothank everyone for their efforts and at the same time recognise thecontribution that Roy Mitchell, who left the board at the end of January 2010,made to the business.Outlook2008 and 2009 have been challenging years and we expect 2010 to be nodifferent. However, the Group has made considerable progress during this timeand the directors expect the Group to maintain that progress. The BusinessSystems division is a solid, well run business and we expect it to continue toproduce a good profit contribution although with public sector budgets underpressure we expect it to have the most difficult year for some time. TheFinancial Market division, on the other hand, is seeing increasing marketactivity and if we can win our share of these opportunities we will seemomentum return to this division and growth returning to the Company.Peter WallerChairman25 March 2010Finance Officer's Report
for the year ended 31 December 2009
Financial Performance
The directors and managers of the Group use revenue growth, trading profit and cash generation as their Key Performance Indicators. Details of these indicators are disclosed throughout the financial statements.
For the year ended 31 December 2009, the Group reported an improved trading profit of £311,000 (2008: £272,000) and a loss before taxation of £180,000 (2008: loss £658,000).
Group revenues were £4,922,000 (2008: £5,249,000). The Financial Markets division increased revenue by £181,000, whilst there was a decrease of £508,000 in revenue in the Business Systems division.
The Financial Markets division revenue increased to £2,222,000 (2008: £2,041,000). There was a decrease in Blue Curve revenues to £769,000 (2008: £909,000) due to a reduction in the professional services revenue offset bylicence extensions to existing customers. Radica revenues were £1,453,000(2008: £1,132,000) the increase being due to the licence deal made during theyear.
The Business Systems division revenues reduced to £2,700,000 (2008: £ 3,208,000). Total Resource revenues were constant over the two year period. REMS revenues were lower in 2009 as the 2008 revenues benefited from the one off upgrade licence sales.
Contracted annual licence and support revenues reduced to £2,700,000 (2008: £ 2,900,000) due to the net effect of price rises, new customers and cancellations of existing support contracts.
The Financial Markets division recorded a trading profit of £350,000 (2008: £ 10,000). The
improvement resulting from the Radica licence deal and a reduction in headcount costs.
The Business Systems division trading profit reduced to £544,000 (2008: £ 873,000) due to the loss of margin on the REMS licence upgrades compared to 2008.
Central costs reduced by 5 per cent to £583,000 (2008: £611,000). Central costsrelate to the costs of the central services employees covering the areas offinance, HR, marketing, IT, the executive chairman and non executive directors,together with the regulatory costs of being an Aim listed plc. Central costshave been reduced by 47 per cent since 2007.Non trading expenses - holiday pay accrual, amortisation of customer contractsand the related customer relationships, capitalisation of research anddevelopment, amortisation of research and development were £111,000 (2008:credit £80,000). The turnaround relates to increased amortisation of previouslycapitalised research and development and a reduction in the capitalisedresearch and development in 2009 over 2008.
Restructuring costs of £63,000 (2008 credit £14,000) related to the legal and professional costs of the new Memorandum and Articles of Association and renegotiation of the Convertible Unsecured Loan Stock agreement.
Based on the impairment review there was no need to impair goodwill during the year (2008: £683,000
Net interest on the 8 per cent Convertible Unsecured Loan Stock less intereston bank deposits was £317,000 (2008: £341,000). This includes notional interestpayments as required by International Accounting Standard 32. The actualinterest paid during 2009 was £241,000 (2008: £323,000).Tax credits of £4,000 were received in the year which related to a refund ofAmerican corporation tax payments. In 2008 tax credits of £80,000 were receivedwhich related to previous years research and development tax credits reclaimed.Total tax losses carried forward are approximately £7,035,000.
The loss for the year was £176,000 (2008: £578,000).
Loss per share was 11.6 pence (2008: loss 38.1 pence). The restated average number of shares in issue during 2009 was 1,518,990 (2008: 1,518,990).
Financial Position
Trade and other receivables were £885,000 (2008: £975,000). Trade receivables days sales outstanding were 37 (2008: 25).
The closing cash balance was £686,000 (2008: £1,145,000). The reduction in cashwas the result of the reduction in deferred revenue, lower accruals linked totrading conditions, coupled with the investment in intangible assets andpayment of the interest charges.Deferred income, which represents future revenues for the Group, reduced to £1,458,000 (2008: £1,861,000) because of the completion and recognition of REMSprofessional services and the non renewal of support relating to the Radicalicence sale.
The Group's net liabilities at the year end were £1,789,000 (2008: £1,615,000).
Duncan SwallowGroup Financial Controller25 March 2010
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2009
2009 2008 Note £'000 £'000 Revenue 4,922 5,249 Cost of sales (202) (363) Gross profit 4,720 4,886 Trading expenses (4,409) (4,614) Trading profit 311 272
Non trading (expense)/income (111)
80
Restructuring (charge)/credit 2 (63)
14 Impairment charge 3 - (683) Profit/(loss) before financing 137 (317) Finance income 4 - 13 Finance costs 5 (317) (354) Loss before taxation (180) (658) Taxation 6 4 80 Loss attributable to equity (176) (578)shareholders Total comprehensive loss for (176) (578)the period Basic and diluted loss per 7 (11.6p) (38.1p)share
All of the above operations are continuing.
Non trading expenses are the holiday pay accrual, amortisation of customer contracts and the related customer relationships, capitalisation of research and development, amortisation of research and development.
Statement of Financial Position
as at 31 December 2009 Group 2009 2008 2007 (restated) (restated) Note £'000 £'000 £'000 Assets Non-current assets Goodwill 1,677 1,677 2,361 Other intangible assets 1,119 1,241 1,187 Property, plant and 78 122 148equipment Investments in - - -subsidiaries 2,874 3,040 3,696 Current assets Trade and other 885 975 1,639receivables Cash and cash 686 1,145 825equivalents 1,571 2,120 2,464 Liabilities Current Liabilities Trade and other (630) (834) (1,093)payables Provisions (12) (14) (90) Deferred income (1,458) (1,861) (1,931) (2,100) (2,709) (3,114) Net current (529) (589) (650)(liabilities)/assets Non-current liabilities Convertible 8% (4,134) (4,058) (4,027)unsecured loan stock Provisions - (8) (53) (4,134) (4,066) (4,080) Net (liabilities)/ (1,789) (1,615) (1,034)assets Shareholders' equity Ordinary share capital 8 15 4,557 4,557 Deferred share capital 8 4,542 - - Share premium 6,369 6,369 6,369 Merger reserve 1,023 1,023 1,023 Convertible unsecured 146 146 146loan stock equity reserve Share options reserve 14 12 15 Retained earnings (13,898) (13,722) (13,144) Total deficit (1,789) (1,615) (1,034)attributable to equity holders of the parent
The 2007 and 2008 Group positions have been restated as a result of the change in accounting policy as per the note within the Statement of changes in shareholder's equity.
Consolidated Cash Flow Statements
for the year ended 31 December 2009
2009 2008 £'000 £'000 Net cash from operating activities 85
1,098
Cash flows from investing activities
Purchase of intangible assets (292) (419)
Purchase of property, plant and equipment (11)
(49)
Net cash used in investing activities (303)
(468)
Cash flows from financing activities
Interest paid (241) (323) Interest received - 13 Net cash used in financing activities (241)
(310)
Net (decrease)/increase in cash and cash equivalents (459)
320
Cash and cash equivalents at 1 January 1,145
825
Cash and cash equivalents at 31 December 686
1,145
Cash flows from operating activities
2009 2008 £'000 £'000 Continuing operations Loss before taxation (180) (658) Adjustments for: Depreciation 54 75 Amortisation of intangibles 414 365 Impairment of goodwill - 683 Finance income - (13) Finance expense 317 354 Decrease in provisions (10) (121)
Share based payment charge/(credit) 2
(3) Changes in working capital Decrease in trade and other 90 664receivables Decrease in payables (606) (328) Cash generated from continuing 81 1,018operations Corporation tax credit 4 80 Net cash from operating activities 85
1,098
Statement of changes in shareholder's equity
for the year ended 31 December 2009
Share Share CULS Merger Share Profit and Total capital options equity reserve premium loss reserve reserve account reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 31 December 4,557 15 146 1,023 6,369 (13,175) (1,065) 2007 as previously reported Change in 31 31 accounting policy for revenue recognition 31 December 4,557 15 146 1,023 6,369 (13,144) (1,034)2007 as restated Share based - (3) - - - - (3)payments Total - - - - - (578) (578) comprehensive loss for year ended 31 December 2008 31 December 4,557 12 146 1,023 6,369 (13,722) (1,615) 2008 Share based - 2 - - - - 2payments Total - - - - - (176) (176)comprehensive loss for year ended 31 December 2009 31 December 4,557 14 146 1,023 6,369 (13,898) (1,789)2009 Change in Accounting PolicyDuring 2009 Corero changed its accounting policy for revenue recognition ofsoftware licences in the Financial Markets division. Revenue relating to new orrenewal licences for 12 months or less was previously recognised over theperiod of the licence. Revenue is now recognised at the inception of thelicence as the management believe this better reflects the costs involved insecuring that licence. This change in accounting policy has been accounted forretrospectively, and the comparative statements for 2007 and 2008 have beenrestated. The change affects earnings prior to 2008 as below. There was nochange required to the reported loss in 2008. £'000 Increase in retained earnings 31 Decrease in deferred income (31)Share options reserveA credit of £2,000 was made during the period ended 31 December 2009representing the reduction in estimated cost of any share options. The estimatewas calculated using the Black Scholes option pricing model. No employee shareoptions were exercised during the period.
Convertible unsecured loan stock equity reserve
Convertible loan stock is a compound instrument consisting of a liability component and an equity component. The fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, was transferred to reserves at the inception of the original instrument in August 2006 and remains after the issue of the new instrument.
Merger reserve
The premium on the issue of 5,606,060 10 pence ordinary shares in relation tothe acquisition of Blue Curve Limited was transferred to the merger reserveduring the year ended 31 December 2006. The premium on the issue of 8,720,95210 pence ordinary shares in relation to the deferred consideration for BlueCurve Limited was transferred to the merger reserve during the year ended 31December 2008.1. Accounting Policies1.1 Basis of preparation
The Group and parent company financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS), International Financial Reporting Interpretations Committee (IFRIC) interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The Group and parent company financial statements have been prepared under the historical cost convention. A summary of the significant Group accounting policies adopted in the preparation of the financial statements is set out below.
The financial statements have been prepared on a going concern basis. The Group was profitable at the trading level and generated cash from operating activities during the year.
The Directors have prepared detailed profit and cash flow projections for theperiod to 30 June 2011. The profit projections are prepared on a current costplus inflation basis with any additional headcount linked to incrementalrevenue. The projected receipts included in the cash flow projection have beenreduced by 15 per cent to represent uncertainty within the sales forecasts. Thecash flow projections show that the Group will maintain a positive cashbalance.As a result, the Directors are of the opinion that the Group has adequateworking capital to continue as a going concern for the foreseeable future and,in particular, for a period of at least 12 months from the date of approval
ofthese financial statements.1.2 Basis of consolidation
The consolidated financial statements incorporate the results, assets, liabilities and cash flows of the Company and each of its subsidiaries for the financial year ended 31 December 2009.
Subsidiaries are entities controlled by the Group. Control is deemed to existwhen the Group has the power, directly or indirectly to govern the financialand operating policies of an entity so as to obtain benefits from itsactivities. The results, assets, liabilities and cash flows of subsidiaries areincluded in the consolidated financial statements from the date controlcommences until the date that control ceases.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
Intra-Group balances and transactions are eliminated on consolidation.
1.3 Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for services provided in the normal course of business, net of all related discounts and sales tax.
Corero has adopted the following in respect of software revenue recognition
1. Software Products
Revenue results mainly from licences, which provide customers with the right to use these products. Such revenue is recognised on the following basis:
i. If an arrangement to deliver software or a software system, either alone ortogether with other products or services, requires significant production,modification, or customisation, the revenue for both services and software isrecognised under the percentage of completion method.
ii. If services are essential to the functionality of the software and the payment terms are linked, the revenue for both software and services is recognised when the following conditions are met:
- A signed contract exists;
- Delivery has occurred;
- The sales price is fixed and determinable;
- Collection of the debt is probable;
- No significant obligations remain.
iii. If services are incidental to the functionality and/or the payment termsare linked to simple installations, revenue from the grant of perpetual orfixed term licences to use Corero's software is recognised when the aboveconditions are met and services revenue is recognised separately as theservices are provided. Where services are not incidental to the functionalitylicence revenues are recorded as agreed project milestones are achieved.
Software rentals or licences invoiced on a periodic basis are recognised at the start of the term of the agreement.
2. Consulting and Professional Services
Revenue from the provision of consultancy and professional services is recognised as the work is performed.
3. Support income is recognised over the life of the agreement.
1.3 Cost of Sales
Cost of sales represents amounts charged by external third parties for servicesand goods directly related to revenue. Examples of such costs would include,but not be limited to, external consultants and third party hardware andsoftware.
1.4 Intangible assets
Separately acquired intangible assets
Purchased computer software is carried at cost less accumulated amortisation and any impairment losses.
Internally generated intangible assets
The Group's internally generated intangible assets include development costs.
Development costs are capitalised only when it is probable that future economic benefit will result from the project and the following criteria are met:
* The technical feasibility of the product has been ascertained; * Adequate, technical, financial and other resources are available to complete and sell or use the intangible asset; * The Group can demonstrate how the intangible asset will generate future
economic benefits and the ability to use or sell the intangible asset can
be demonstrated;
* It is the intention of management to complete the intangible asset and use
it or sell it; and
* The development costs can be measured reliably.
After initial recognition, internally generated intangible assets are carried at cost less accumulated amortisation and any impairment losses.
1.5 Impairment
At each balance sheet date, the Group assesses whether there is any indicationthat its assets have been impaired. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extentof any impairment. If it is not possible to estimate the recoverable amount ofthe individual asset, the recoverable amount of the cash-generating unit towhich the asset belongs is determined.The recoverable amount of an asset or a cash-generating unit is the higher ofits fair value less costs to sell and its value in use. The value in use is thepresent value of the future cash flows expected to be derived from an asset orcash-generating unit. This present value is discounted using a pre-tax ratethat reflects current market assessments of the time value of money and of therisks specific to the asset for which future cash flow estimates have not beenadjusted. If the recoverable amount of an asset is less than its carryingamount, the
carrying amount of the asset is reduced to its recoverable amount. That reduction is recognised as an impairment loss.
An impairment loss relating to assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in the income statement.
Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units or Groups of cash-generating units that are expected to benefit from the synergies of the combination.
Goodwill is tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
An impairment loss is recognised for cash-generating units if the recoverableamount of the unit is less than the carrying amount of the unit. The impairmentloss is allocated to reduce the carrying amount of the assets of the unit byfirst reducing the carrying amount of any goodwill allocated to thecash-generating unit, and then reducing the other assets of the unit pro rataon the basis of the carrying amount of each asset in the unit.If an impairment loss subsequently reverses, the carrying amount of the assetis increased to the revised estimate of its recoverable amount but limited tothe carrying amount that would have been determined had no impairment loss beenrecognised in prior years. A reversal of an impairment loss is recognised inthe income statement. Impairment losses on goodwill are not subsequentlyreversed.
1.6Adoption of IAS1 Presentation of Financial Statements (revised)
The Group has adopted IAS 1 (revised) in the current year. The principal consequences have been presentational changes to the financial statements. Where necessary prior period comparatives have been restated.
2. Administrative expenses - restructuring costs
2009 2008 £'000 £'000
Legal and professional fees relating to CULS amendments (54)
-
and new Memorandum and Articles of Association Staff restructuring including professional fees (9)
5
Release of the provision against surplus premises -
30
arising on Blue Curve acquisition Dilapidation costs of West Byfleet office -
(21) (63) 143. Impairment Charge
Goodwill is tested at least annually for impairment and whenever there are indications that goodwill might be impaired.
Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to business segment.
As at 31 December 2009, the goodwill was allocated at the segment level as follows: £1,168,000 (2008: £1,168,000) relates to the Financial Markets division, and £509,000 (2008: £509,000) relates to the Business Systems division.
The recoverable amounts for the cash-generating units given above weredetermined based on value-in-use calculations using cash flow projections overa four year period. The key assumptions for the value-in-use calculations arethose regarding growth and discount rates. The growth rates are based on themanagement's estimates of growth in those specific markets based on pastexperience and expected future developments. Management estimates discountrates using pre-tax rates that reflect current market assessments of the timevalue of money and the risks specific to the CGU's.The cash flows for the projections are derived from the most recent financialforecasts approved by the management. Future cash flows are discounted in linewith the weighted average cost of capital of 10% pre-tax.An impairment charge of £nil (2008: £683,000) arose as a result of theimpairment test.4. Finance income 2009 2008 £'000 £'000 Interest on bank deposits - 135. Finance costs 2009 2008 £'000 £'000 Interest payable on CULS (240) (320) Bank interest payable (1) (3) Amortisation of notional CULS interest charges under (76) (31)IAS 32 (317) (354)6. Taxation
Amounts received in 2009 related to a refund of American corporation tax payments. In 2008 amounts received were in respect of research and development tax credits.
7. Loss per Share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average of ordinary shares outstanding during the period.
The CULS and share options were non-dilutive for both periods and thus the diluted loss per share is the same as the basic amount.
2009
2008
Loss £'000 after taxation (176) (578) Basic loss per share (11.6p) (38.1p) Weighted average number of 1,518,990
1,518,990
ordinary shares
The weighted average number of shares has been adjusted in the prior period to reflect the capital reorganisation on 29 June 2009.
8. Ordinary shares 2009 2008 £'000 £'000 Authorised
745,821,970 new ordinary shares of 1p 7,458
-each
1,518,990 new deferred shares of £ 4,542
-2.99 each 120,000,000 ordinary shares of 10p - 12,000each 12,000 12,000 Issued and fully paid
1,518,990 new ordinary shares of 1p 15
-each
1,518,990 new deferred shares of £ 4,542
-2.99 each 45,569,702 ordinary shares of 10p - 4,557each 4,557 4,557
At 6.00pm 29 June 2009 the company carried out a capital reorganisation.
Each holding of 30 existing ordinary shares of 10p each was consolidated into and re-classified as one ordinary share of £3.00.
Each ordinary share of £3.00 arising as a result of the above was subdividedand re-classified as one new ordinary share of 1p and one deferred share of £2.99.Each of the authorised but un-issued existing ordinary shares was sub-dividedinto ten ordinary shares of 1p each and formed one class of shares with the newordinary shares created above.
9. Dividend
The Directors do not recommend paying a dividend (2008: £nil).
10. Sundry Information
This preliminary statement, which has been agreed with the auditors, was approved by the Board on 25 March 2009. It is not the Company's statutory accounts for the year ended 31 December 2009 but has been extracted from them. Copies of the report and accounts for the year to 31 December 2009 will be posted to shareholders shortly and may be obtained from the company's registered offices or www.corero.com.
The statutory accounts for the year ended 31 December 2009 received an auditreport which was unqualified. The statutory accounts for the year ended 31December 2008 have been delivered to the Registrar of Companies but the audited31 December 2009 accounts have not yet been filed.
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