Corero Network Regulatory News (CNS)

27 Sep 2007 07:01

Corero PLC27 September 2007 Corero plc ("Corero" or "the Group") Interim Results for the six months ended 30 June 2007 Corero PLC, the specialist provider of software solutions to the banking &securities and education markets, announces its interim results for the sixmonths ended 30 June 2007. The Results are the first reported under IFRS. • Business better balanced despite pre tax loss of £0.6 million in H1 (2006:break-even) • Revenues £2.6 million (2006: £2.7million) • Business Systems Division profits increased by 22% to £391,000 (2006: £320,000) • Group Loss after taxation £0.55m (2006: profit £0.03m) • Group loss per share 1.34p (2006: earnings 0.08p) • Delayed CAPS contracts now received and being implemented in the Financial Markets Division - US office set up and £400,000 invested to support Blue Curve - Hosted solutions deployed for Blue Curve with strong customer interest shown • Strong performance by Business Systems with approaching 25% market share in growing City Academies marketplace • Following review cost savings to deliver £0.5m per annum and H2 to be operating profitably. Peter Waller, Executive Chairman, said: "Despite a disappointing result for the first half substantial progress has beenmade. We are a more streamlined and effective business following the merging ofour two financial businesses and we have additional opportunities in theeducation markets. Order flow since July gives us confidence that the Business Systems Divisionwill continue its momentum in H2 and with the receipt of the delayed CAPScontract, which is now being implemented, the Financial Markets Division willhave a considerably improved performance. The action we have taken gives us confidence of reporting further progress forthe year as a whole." 27 September 2007 The interim accounts for the six months ended 30 June 2007 are available on theCompany's website www.corero.com Enquiries: Corero PLCPeter Waller, Executive Chairman Tel: 07785228080 Ian Selby, Finance Director Tel: 01923 695191 John East & Partners Limited Tel: 020 7628 2200 College Hill Tel: 020 7457 2020 Matthew Smallwood Tel: 07831 379122 About Corero Corero designs, develops and delivers market leading software products forfinancial institutions through its Financial Markets Division, and business andeducation 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 opinions onmarket 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 a 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, dividends, including taxationand new issues and placings, Radica reduces the serious operational risk ofmissing 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. ICAEW accredited, Resource Financials, is at the core of the Corero suite ofbusiness applications. Also featured are solutions for eProcurement, ProjectCosting, HR & Payroll, Continuing Professional Development and LearningManagement. Together with Workflow and Web Applications, covering Reporting,Timesheets, Expenses and Requisitions, there are over 60 highly integratedmodules offering large and small enterprises modern and dynamic businesssolutions. Eclipse Learner Management system manages the students, tutors andprocesses within Further and Higher Education environments by electronicallycapturing the information required throughout the "learning lifecycle" and tosatisfy Government reporting requirements and, most importantly, secure thefunding upon which Colleges depend. Chairman's StatementFor the six months ended 30 June 2007 Results Corero's performance in the first half of 2007 has been mixed. Our BusinessSystems division traded strongly but, as announced in July, our FinancialMarkets division was adversely impacted by the delay in a large customerproject. As a result the period under review has been disappointing. Group revenues at £2.6 million were similar to those recorded for the first halfof last year. However, our underlying costs increased by £0.5 million, whichincluded £400,000 of investment to support growth in Blue Curve. As a result theGroup recorded a loss before taxation of £0.6 million (2006: break-even). Theslower than expected revenue increase led to a restructuring of the Company, asannounced on 26 July, with further changes announced today. Financial Markets Division Customer activity in the Blue Curve business has remained high. The significantnumber of new customer contracts secured in 2006 contributed to high activitylevels in our project delivery teams and thus to our professional servicesrevenues. Several new orders were received, amongst them a licence extension forBlue Curve from a Russian customer. The last six months has seen two new customers go live on our Blue Curve hostedservice. This allows the customer to outsource the system operation to Coreroand to access the system over the Internet. Indications are that a highproportion of new customers will choose this option, providing a new andsustainable revenue stream. As already referred to, Radica CAPS revenues were adversely impacted by thedelayed contract for one major project. However, we were pleased to report asignificant order for a CAPS licence extension from a major client during theperiod, which indicates their ongoing commitment to both the product and thecompany. The period has been one of substantial change, with the merger of the RadicaCAPS and Blue Curve businesses into one division. This further integration hasbrought opportunities to merge the customer facing parts of our business and tointroduce improved processes. The end result will be to provide improvedcustomer service and support whilst increasing sales efficiency. The fullbenefits of this integration should be evident by the end of the year. There was a significant reduction in headcount towards the end of the period andthis has been managed in line with the new structure and strategic focus. Partof our strategy has been to staff our New York office which started in May withthe relocation of key personnel from London. Our presence in New York allows usto support more easily our North American customers and will increase ourability to gain more customers in that market. Business Systems Division This division has had a strong first half, especially in its key Educationmarket, with ten new contract wins including eight city academies. Thisparticular market is proving to be very fruitful with a high degree ofacceptance for our financial and web based applications. These new wins meanthat at the end of this reporting period the division had achieved approaching25 per cent. market share of the 83 academies to be opened since the initiativebegan. Current government plans are to increase this figure to 400 by the year2010 which represents an exciting opportunity for the division. Other wins of note during the period were Haringey Sixth Form Centre, part ofHaringey Council, which bought our integrated finance and learner administrationsolution and Sir George Monoux Sixth Form College, which invested in ourfinancial and web solutions. The division also continues to develop strategic web applications for keycustomers and during the period won contracts to deliver On-Line Enrolmentsolutions to streamline the process of enrolling students via the Internetwhilst also optimising and securing cash flows by automating the collection offees paid via credit cards. This is carried out in real time in partnership withthe global payment provider, Cybersource. Again, with an increasing focus on theInternet to effect enrolment, these recent implementations provide the divisionwith a platform for further growth. Investment into new product offerings continues and activity is well underway tocapitalise on potential additional revenue by offering new andinnovative products to both existing and future customers. We are already seeingpositive results from this investment. Financial Review This has been the first period under which Corero has reported under IFRS. Thesehave favourably impacted Administrative Costs by approximately £94,000 in thefirst half. Our full interim accounts are available on the Company's websitewww.corero.com. Revenues were £2.6 million (2006: £2.7 million). The decrease arose within theFinancial Markets Division and stemmed from the Radica CAPS product line. Thiswas partially offset by a small increase in Blue Curve revenues. FinancialMarkets licence revenues were lower than 2006, which included a significantlicence renewal and the addition of several new clients. Professional servicesrevenues increased because of a high level of customer project work in the firstquarter on projects from Blue Curve customers closed in the second half of 2006.Radica CAPS services revenues fell due to the previously announced large projectdelay. Support revenues in the Financial Markets division increased due to theenlarged user base. Business Systems Division revenues rose slightly compared to last yearunderpinned by the success in winning business from city academies and anincrease in the support base which offset slightly lower licence and servicesrevenues. Operating costs prior to adjustments required under IFRS increased by £500,000to £2.9 million largely due to increases in headcount at Blue Curve andcentrally to support growth, and the re-branding exercise that was completed in2007. Our cost of sales (which arose from the resale of third party software orservices) increased by approximately £75,000 due to a greater use of externalconsultants on Blue Curve projects and a higher level of third party softwarebeing included in Business Systems Division projects. The Business Systems Division increased its profits by 22% to £391,000 (2006:£320,000) due to a higher level of new name sales and the increased supportbase. The Financial Markets Division recorded a loss of £177,000 (2006: profit£289,000) as a result of the decreased level of new sales wins and professionalservices slippage combined with investment in delivery capability. When combinedwith central costs, as defined in note 5 below, the group recorded an operatingloss before financing costs of £435,000 (2006: profit £161,000). Interest costs (excluding 'notional' interest required under IAS 32) were £0.15m(2006: £0.13m). The increase was due to an enlarged principal following theAugust 2006 renegotiation of our Convertible Unsecured Loan Stock ("CULS") whichwas partially offset by a reduction in the coupon rate from 8.75 per cent. to8.00 per cent. Financial Position Goodwill increased to £2,361,000 (2006: £1,204,000) due to the additionalconsideration paid on the earnout for the Blue Curve acquisition. Intangibleassets, as required by IFRS, comprise of three categories - the Blue Curvecustomer list, computer software and research and development. During the period£190,000 (2006: £165,000) of research and development costs were capitalised. Our cash balances were £807,000 (2006: £534,000). Cash balances decreased fromthe start of the year due to trading losses, which were partially offset by afavourable movement in working capital. Net cash flow from operations was£304,000 (2006:£189,000). Trade debtors were £1,364,000 (2006: £1,107,000). Theincrease in relative aging was due to some extended payment terms being grantedin Financial Markets and a higher proportion of billings made at the end of theperiod. Deferred income at 30 June 2007 rose to £1,398,000 (2006:£1,295,000) due to theenlarged customer base. In April 2007 the Group issued the final element of deferred consideration underthe Blue Curve acquisition. This had been previously accrued as a deferredequity reserve. The deferred consideration was settled by the issue of 8,720,952new ordinary shares. The net debt, since the beginning of the year, increased due to a reduction incash balances of £100,000 and the application of IAS 32 which required anincrease in the CULS balance by £67,000. Excluding the impact of IAS 32 the long term debt of the Company stood at £4million (2006: £3 million) following the issue of £1 million new 8 per cent.CULS in August 2006. Management Changes Ian Selby, our Finance Director for more than eight years, has informed theboard that he would be resigning to join a larger listed company in a similarrole. I would like to thank Ian for his excellent contribution to the Companyand the board wishes him well for the future. We have a strong team and ratherthan immediately appointing a new Finance Director, Duncan Swallow FCCA,currently Financial Controller, will be appointed Group Financial Controller andCompany Secretary. Colin Peters FCA, our senior non executive director will takeboard responsibility for finance. Ian will remain with the Company for the nextfew weeks to work on this transition and will resign as a director on 31 October2007. Re-structuring and Cost Reduction Your Board is committed to bringing costs into line with the revised marketopportunity and to further reduce the cost base. A cost reduction exercise isunder way although we will continue to invest in the skills and resourcesrequired to grow the successful parts of our business. A streamlined managementteam and reductions in marketing, human resources, finance and in underperforming parts of the business will augment those savings already announced inJuly. Integration will enable us to improve productivity in the FinancialMarkets sales team. We expect these changes to make a contribution to the secondhalf of 2007 and to be fully reflected in 2008 at an annualised rate of £0.5million. As outlined above some of these savings will be reinvested inidentified growth opportunities. Business Strategy Following a review of our operations it remains our intention to seek strongorganic growth across both divisions and all four product lines - Blue Curve,Radica Caps, Resource Financial Management and Learning Management Systems. Webelieve there is the management capability and financial resource to supportthis approach. Whilst we do not currently envisage further acquisitions theBoard will remain open to any event that can deliver a substantial increase inshareholder value. Outlook Since July a number of orders have been announced which give confidence thatBusiness Systems will maintain its first half momentum and Financial Marketswill have a much improved second half of 2007. In conjunction with the cost reductions that have or will be implemented we areconfident of being operationally profitable for the remainder of 2007. Ourability to meet market expectations for the year as ever depends on two mainfactors. Firstly, the speed at which we can implement a major project alreadycontracted in the Financial Markets Division, which will dictate when we canrecognise revenue. Secondly, we remain highly dependent upon the sale ofadditional licences in the fourth quarter and could be vulnerable to anysignificant downturn in confidence in financial markets. However, as a company Corero is in a much stronger and in a more balancedposition since the acquisition of Blue Curve and this makes us confident offuture growth and success. Consolidated Income Statement (unaudited)For the six months ending 30 June 2007 June 2007 June 2006 December 2006 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 Revenue 2,587 2,690 6,294Cost of sales (144) (69) (217) ---------- ---------- -----------Gross profit 2,443 2,621 6,077 Administration costs (2,859) (2,393) (5,314)Restructuring charge (19) (67) (170) ---------- ---------- -----------Operating (loss)/profit (435) 161 593 Finance income 9 3 10Finance costs (note 8) (175) (173) (672) ---------- ---------- -----------Loss before taxation (601) (9) (69)Taxation (note 7) 48 38 38 ---------- ---------- -----------(Loss)/profit for the period (553) 29 (31) ---------- ---------- -----------Basic and diluted (loss) /earnings (1.34) 0.08p (0.09p)per share ---------- ---------- ----------- Consolidated Balance Sheet (unaudited)At 30 June 2007 June 2007 June 2006 December 2006 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000AssetsNon-current assetsGoodwill 2,361 1,204 2,361Other intangible assets 1,232 1,080 1,116Property, plant and equipment 67 77 78 ---------- ---------- --------- 3,660 2,361 3,555Current assetsTrade and other receivables 1,598 1,308 2,463Cash and cash equivalents 807 534 907 ---------- ---------- --------- 2,405 1,842 3,370 LiabilitiesCurrent liabilitiesTrade and other payables (767) (957) (1,067)Provisions (20) - (19) ---------- ---------- --------- (787) (957) (1,086)Net current assets 1,618 885 2,284 Deferred income (1,398) (1,295) (1,466) Non-current liabilitiesConvertible 8 per cent. Unsecuredloan stock 2011 (4,014) (2,865) (3,947)Provisions (35) - (48) ---------- ---------- --------- (4,049) (2,865) (3,995) ---------- ---------- ---------Net (liabilities)/assets (169) (914) 378 ---------- ---------- --------- Shareholders' equityShares to be issued - 388 1,531Ordinary share capital 4,557 3,644 3,685Share premium 6,369 6,353 6,369Merger reserve 1,023 364 364Convertible unsecured loan stockequity reserve 146 146 146Share options reserve 21 9 15Retained earnings (12,285) (11,818) (11,732) ---------- ---------- ---------Total (deficit)/equity attributableto equity holders of the parent (169) (914) 378 ---------- ---------- --------- Interim Consolidated Cash Flow Statement (unaudited)For the six months ended 30 June 2007 June 2007 June 2006 December 2006 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Net cash from operating activities 304 189 (108) Cash flows from investing activitiesAcquisition of subsidiaries (net ofcash) - 74 64Purchase of intangible assets (242) (165) (305)Purchase of property, plant andequipment (19) (23) (53)Interest received 9 3 10 ---------- ---------- -----------Net cash used in investingactivities (252) (111) (284) Cash flows from financing activitiesNet proceeds from issue of ordinaryshares - 186 243Interest paid (152) (127) (257)Borrowings raised - - 916 ---------- ---------- -----------Net cash used in financingactivities (152) 59 902 Net (decrease)/increase in cash andcash equivalents (100) 137 510Cash and cash equivalents at 1January 907 397 397 ---------- ---------- -----------Cash and cash equivalents at balancesheet date 807 534 907 ---------- ---------- ----------- Notes to the interim financial statements (unaudited) 1. General information and basis of preparation The consolidated interim financial statements have been prepared in accordancewith the AIM Rules for Companies and on a basis consistent with applicableaccounting policies, which will be applied when the Group prepares its first setof annual financial statements in accordance with International FinancialReporting Standards (IFRS) as adopted by the EU for the financial year ending 31December 2007. Applicable accounting policies can be found in the full interimstatement available from the company's website at www.corero.com. These are the Group's first interim financial statements prepared under IFRS andtherefore IFRS 1 'First-time Adoption of International Financial ReportingStandards' has been applied. Corero's consolidated interim financial statements are presented in PoundsSterling (£), which is also the functional currency of the parent company. The interim financial statements are unaudited and do not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. They donot include all of the information required for full annual financial statementsand should be read in conjunction with the consolidated financial statements ofthe Group for the year ended 31 December 2006. The financial information for the year ended 31 December 2006 has been derivedfrom the published statutory accounts as restated by the IFRS adjustments setout in note 9. A copy of the full accounts for that period, on which theauditors issued an unqualified report that did not contain statements undersection 237 (2) of the Companies Act 1985, has been delivered to the Registrarof Companies. These consolidated condensed interim financial statements have been approved forissue by the Board of Corero plc on 26th September 2007. The full interimaccounts are available on the Company's website www.corero.com. 2. Significant accounting policies Basis of preparation The Group and parent company financial statements have been prepared inaccordance with EU endorsed International Financial Reporting Standards (IFRS),International Financial Reporting Interpretations Committee (IFRIC)interpretations and those parts of the Companies Act 1985 applicable tocompanies reporting under IFRS. The Group and parent company financial statements have been prepared under thehistorical cost convention except for the valuation of financial instruments. The accounts have been prepared on a going concern basis, although the Groupincurred significant trading losses and cash outflows during the 6 month periodended 30 June 2007, the directors believe that the effects of internalrestructuring combined with the current sales pipeline should bring aboutimproved operating results. The sales pipeline includes large individual items,the timing of which can be uncertain when selling to large financialinstitutions. The directors have made this assessment based on internalforecasts and cash-flow projections. Notes to the interim financial statements (unaudited) continued The preparation of financial statements which comply with IFRS requires the useof estimates and assumptions, and for management to exercise its judgement inthe process of applying the Group's accounting policies. 3. Segment reporting Business segments The Group is managed according to two operating divisions: Financial Markets andBusiness Systems. These divisions are the basis on which the Group reports itsprimary segment information. The principal activities of each division are asfollows: The Business Systems Division supplies accounting and associated managementinformation systems primarily to the education sector. The Financial Markets Division sells application software to the globalfinancial markets including stockbrokers, asset managers and investment banks.The two main products improve the processes involved in producing anddistributing complex financial documents such as analyst research and help firmsto automate the areas of corporate actions processing and new issues andplacings. There are no inter-segment sales. Segment results, assets and liabilitiesinclude items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated assets and liabilities compriseitems such as cash and cash equivalents, taxation, accruals, prepayments andborrowings. Within central costs are central overheads which include functionssuch as finance, board, professional advice which cannot due to their nature, bereasonably split between the divisions. Furthermore certain business supportcosts such as marketing which can be applied across both divisions are heldcentrally as they are not wholly under the control of a single division. Details of segmental financial performance can be found in the full interimstatement available from the company's website at www.corero.com. Notes to the interim financial statements (unaudited)continued 4. Loss per share Basic loss per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average of ordinary shares outstandingduring the period. The CULS and share options were non-dilutive for both periods and thus thediluted loss per share is the same as the basic amount. June 2007 June 2006 December 2006 (unaudited) (unaudited) (unaudited)Earnings /(Loss) £'000 (553) 29 (31)after taxation Basic earnings per share (1.34p) 0.08p (0.09p)Weighted average number 41,208,601 35,757,937 36,251,573of ordinary shares 5. Tax on loss on ordinary activities The amount represents a tax refund regarding Research and Development taxcredits received during the period. 6. Finance costs June 2007 June 2006 December 2006 (unaudited) (unaudited) (unaudited)Interest payable onother loans (160) (130) (283)Bank interest paid (1) (1) (2) ---------- ----------- ----------- (161) (131) (285) Notional charges fromvariation of CULS under IAS 32 arising from a change in fair valueassumptions (14) - (262) Amortisation of notionalCULS interest charges andrenegotiation costs underIAS 32 - (42) (62) Renegotiation of CULS - - (63) ---------- ----------- ----------- (14) (42) (387) ---------- ----------- -----------Financing Costs (175) (173) (672) ---------- ----------- ----------- Notes to the interim financial statements (unaudited)continued 7. Cash flows from operating activities a. Cash generated from operations June 2007 June 2006 December 2006 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Loss before taxation (601) (9) (69)Adjustments for:Depreciation 31 40 78Amortisation 125 75 170Finance income (9) (3) (10)Finance expense 175 173 672(Decrease)/increase in provisions (13) - -Share based payment charge 6 6 13Changes in working capitalDecrease/(increase) in trade andother receivables 866 (286) (1,441)(Decrease)/increase in payables (324) 155 441 ----------- ----------- -----------Cash generated from continuingoperations 256 151 (146)Corporation tax received 48 38 38 ----------- ----------- -----------Net cash flows from operatingactivities 304 189 (108) ----------- ----------- ----------- b. Analysis of changes in net debt Notional CULS Interest At Jan to 1 January June Interest As at 30 2007 2007 Paid Cash Flow June 2007 £'000 £'000 £'000 £'000 £'000Cash and cash 907 - - (100) 807equivalentsCULS (3,947) (175) 108 - (4,014) --------- -------- -------- --------- ----------Net debt (3,040) (175) 108 (100) (3,207) --------- -------- -------- --------- ---------- Notes to the interim financial statements (unaudited)continued 8. Statement of changes in shareholder's equity For six months ended 30 June 2007 Shares Share CULS Share ProfitGroup to be options equity Merger premium and loss issued Capital reserve reserve reserve account reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'0001 January 2007 1,531 3,685 15 146 364 6,369 (11,732) 378 Retained lossfor periodended 30 June 2007 - - - - - (553) (553) Share basedpayments - 6 - - - - 6 Deferredconsiderationfor theacquisition ofBlue Curve Limited (1,531) 872 - - 659 - - - ------ ------ ------ ------ ------ ------- ------- ------30 June 2007 - 4,557 21 146 1,023 6,369 (12,285) (169) ------ ------ ------ ------ ------ ------- ------- ------ Shares issued In April 2007, Corero issued 8,720,952 ordinary 10 pence shares to satisfy thedeferred consideration due to Blue Curve Limited under the acquisition agreemententered into at the time of the acquisition. Share options reserve A charge of £6,000 was made during the six months ended 30th June 2007representing the estimated cost of any share options. The estimate wascalculated using the Black Scholes option pricing model. No employee shareoptions were exercised during the period. 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 8,720,952 10pence ordinary shares in relation to the deferred consideration for Blue CurveLimited was transferred to the merger reserve during the six month period ended30 June 2007. Notes to the interim financial statements (unaudited)continued 9. Reconciliation of equity and profit under UK GAAP to IFRS (Unaudited) Corero plc reported under UK GAAP in its previously published financialstatements for the year ended 31 December 2006. The analysis below shows areconciliation of equity and profit as reported under UK GAAP as at 31 December2006 to the revised equity and profit under IFRS. Reconciliation of consolidated profit for year ended 31 December 2006 UK GAAP (a) (b) (c) Audited IAS 19 IAS 38 IFRS 2 IFRS £'000 £'000 £'000 £'000 £'000Revenue 6,294 - - - 6,294Cost of sales (217) - - - (217) -------- -------- -------- --------- ---------Gross profit 6,077 - - - 6,077 Administrative expenses (5,702) (39) 427 - (5,314)Restructure expense (170) - - - (170) -------- -------- -------- --------- ---------Operating profit 205 (39) 427 - 593Finance income 10 - - - 10Finance costs (672) (672) -------- -------- -------- --------- ---------Loss before taxation (457) (39) 427 - (69)Taxation 38 - - - 38 -------- -------- -------- --------- ---------Loss for the yearattributable to (419) (39) 427 - (31)shareholders -------- -------- -------- --------- --------- Notes to the interim financial statements (unaudited)continued 10. Reconciliation of equity and profit under UK GAAP to IFRS (unaudited)(continued) Reconciliation of consolidated equity at 31 December 2006 UK GAAP (a) (b) (c) IFRS Audited IAS 19 IAS 38 IAS 1 £'000 £'000 £'000 £'000 £'000AssetsNon-current assetsGoodwill 2,734 - (373) - 2,361Other intangible assets - - 1116 - 1116Property, plant and 92 - (14) - 78equipment ------- ------- -------- ---------- --------- 2,826 - 729 - 3,555Current assetsTrade and other 2,463 - - - 2,463receivablesCash and cash equivalents 907 - - - 907 ------- ------- -------- ---------- --------- 3,370 - - - 3,370LiabilitiesCurrent liabilitiesTrade and other payables (1,095) (39) - 67 (1,067)Provisions - - (19) (19) ------- ------- -------- ---------- ---------Net current assets/ 2,275 (39) - 48 2,284(liabilities) Deferred income (1,466) - - - (1,466) Non-current liabilitiesConvertible 8.00 percent. (3,947) - - - (3,947)Unsecured loan stock 2011Provisions - - - (48) (48) ------- ------- -------- ---------- --------- (3,947) - - (48) (3,995) ------- ------- -------- ---------- ---------Net (liabilities)/assets (312) (39) 729 - 378 ------- ------- -------- ---------- --------- Shareholders' equityShares to be issued 1,531 - - - 1,531Ordinary share capital 3,685 - - - 3,685Share premium 6,369 - - - 6,369Merger reserve 364 - - - 364Convertible unsecuredloan stock 146 - - - 146equity reserveShare options reserve 15 - - - 15Retained earnings (12,422) (39) 729 - (11,732) ------- ------- -------- ---------- ---------Total equity attributableto equity (312) (39) 729 - 378holders of the parent ------- ------- -------- ---------- --------- Notes to the interim financial statements (unaudited)continued 10. Reconciliation of consolidated equity and profit under UK GAAP to IFRS(unaudited) (continued) Explanation of reconciling items between UK GAAP and IFRS The standards and interpretations giving rise to the most significant changes tothe previously reported profit and equity of the Group are: (a) IAS 19 Employee benefits In accordance with IAS 19 an accrual has been made for annual leave which can becarried forward in to the next year. (b) IAS 38 Intangible Assets Under UK GAAP all capitalised software was included within tangible fixedassets. IAS 38 "Intangible Assets" requires software that is not an integralpart of an item of computer hardware to be classified within intangible assets.Under UK GAAP goodwill was amortised over its estimated useful life. IAS 38requires that goodwill is subject to annual impairment reviews and notamortisation. IAS 38 requires that Research and development costs be capitalisedproviding they meet certain criteria. (c) IAS 1 Reclassifications The portion of provisions for onerous leases expected to be settled withintwelve months of the balance sheet date has been reclassified to currentliabilities in accordance with IAS 1. 11. Sundry Information This press release was approved by the Board on 26th September 2007. Copies ofthe full interim report which was approved on the same day by the Board areavailable on the company's website at www.corero.com. This information is provided by RNS The company news service from the London Stock Exchange