Empresaria Group Regulatory News (EMR)

13 Sep 2007 07:01

Empresaria Group PLC13 September 2007 Empresaria Group plcConsolidated Interim Financial Statements for the period ended 30 June 2007 Chairman's Statement Empresaria Group plc ("Empresaria" or "the Group") is pleased to announce itsunaudited interim results for the six months ended 30 June 2007. Empresaria is a leading example of a new generation of international staffing company seeking to develop a multi-specialist sector, multi-geographical presence without the burden of a significant trading presence in the traditionalclerical and industrial staffing markets. Commenting on the results, Chairman Tony Martin said: "The Group continued to perform strongly over the first six months of 2007 andas Empresaria has historically traded better in the second half of the year it is anticipated that this trend will continue in 2007, particularly whenaugmented by a full six months' contribution from Headway. Considerable reinvestment has been made during the period for future organic growth which will benefit the long term growth prospects of the Group." Operating highlights •Strong organic growth in the UK •Continued growth of overseas contribution - now 33% of Group net fee income •Successful €14.6 million acquisition of Headway in Germany - 25 new offices opened in 2007 •Successful acquisitions in Holland and Indonesia •New companies established in Singapore, Philippines, Malaysia and Japan •Encouraging start to the second half of the year Financial highlights •Turnover up 64% to £55.7m (2006: £33.9m), •Net fee income up 52% to £15.0m (2006: £9.9m), •Profit before tax up 32% to £1.25m (2006: £0.95m), •Adjusted like for like earnings per share up 18% to 2.7p (2006: 2.3p).* * Figures based on underlying profits, before IFRS transition adjustmentsand exceptional items, and exclude the effect of acquisitions and start ups after 1 July 2006. There were no exceptional items in the period to 30 June2007. The directors of the issuer accept responsibility for this announcement. For further enquiries, please contact: Empresaria Group Plc 01293 649900Tony Martin (Chairman)Miles Hunt (Chief Executive)Nick Hall-Palmer (Finance Director) Smith & Williamson Corporate Finance Limited 020 7131 4000Nominated AdviserAzhic Basirov Kaupthing Singer & Friedlander Capital Markets Limited 020 3205 7500Financial Adviser and BrokerNicholas How Notes for editors: Empresaria Group plc (AIM: EMR; sector: Support Services, staffing) providesspecialist recruitment services across 18 countries through 42 tradingsubsidiaries. Empresaria was formed in 1996 by Miles Hunt and its business modelis based on the philosophy of management equity which allows founder managersand key staff within Empresaria's subsidiaries to acquire or retain a meaningfulstake in the businesses they run or work in. Results In the six month period to 30 June 2007 the Group once again produced anexcellent set of results with EPS growth, on a like for like basis, of 18%,adjusted to exclude IFRS transition adjustments. Total EPS, before IFRS transition adjustments, was down 9%, as expected,following the issue of 9.2m shares in May to enable the acquisition of Headwayin Germany. Planned expansion of the branch network in Germany meant that noprofit contribution was anticipated in the two months from acquisition to 30June 2007 with the consequent short term effect on EPS. In the event, thefinancial performance of Headway in the period has been stronger than expectedand the consequent EPS dilution less than anticipated. The acquisition isexpected to be modestly earnings enhancing in the full year and to make asignificant positive contribution in 2008. In strategic terms, the investment inHeadway represents a sizeable step forward in Empresaria's objective of creatinga balanced international specialist staffing group. The underlying earnings growth in the Group has been driven by turnover up 64%to £55.7m (2006: £33.9m), an increase in gross profit, or net fee income, of 52%to £15.0m (2006: £9.9m) and an increase in pre-tax profit of 32% to £1.25m(2006: £0.95m). The organic turnover growth rate in the period was 19% and adjusted profitbefore tax on the same basis grew by 19%. Diluted earnings per share before IFRS transition adjustments were 2.1p (2006:2.3p). Diluted earnings per share after IFRS transition adjustments were 2.0p.There were no exceptional costs in the period. Dividend In line with previous years, the Board is not recommending the payment of aninterim dividend for the six months to 30 June 2007 (2006: nil). Strategy Empresaria's strategy is to develop an international specialist staffing group,balanced in terms of sector, geographic and operational coverage, as well asorganic and acquisitive growth. Strategic focus is concentrated on developing sustainable high growth at thesame time as managing business risk. The Group's approach is to apply acombination of a management equity philosophy, a decentralised managementstructure, a balanced business mix (between temporary and permanent staffingoperations as well as between industry sectors) and an international expansionprogramme. Each of the companies in the Group is run by experienced managers holdingsignificant equity stakes in their own businesses or alternatively in Empresariaitself. The central group functions are focused on financial management andgroup development. A combination of this equity philosophy and freedom ofoperation attracts, motivates and retains good managers. The diversification of investment across different operations, industry sectorsand geographies manages risks relating to individual people, clients, companiesand markets. Empresaria has made significant progress in the development of its internationalnetwork of companies. In the six months to 30 June 2007, the internationalsubsidiaries contributed 33% to the Group's net fee income, compared to 19% forthe year ended 31 December 2006. With the acquisition of Headway in Germany andwith a continued focus on international expansion, it is expected that theproportion of net fee income contributed by the Group's international businesseswill continue to increase significantly. The Group has stated that its aim is to increase the proportion of net feeincome generated by temporary staffing. In line with this strategy, the Groupderived 62% of its net fee income for the six months to June from its temporaryoperations, compared to 52% for the same period in 2006. Operations UK and Other In total, turnover in the UK increased by 39% to £39.3m (2006: £28.3m) and netfee income increased by 32% to £10.0m (2006: £7.6m). The UK operations sawstrong organic growth and improvement in earnings were recorded by all sectors.In particular, the Property and Construction, Specialist Brands and theFinancial Services sectors performed well. Within the Property and Construction sector, the FastTrack brand invested inadditional headcount and offices within the South East during 2006. As a result,it has enjoyed a significant increase in its profitability and market share inthe first half of 2007. Within Specialist Brands, Greycoat Placements, The Recruitment Business andMcCall enjoyed significant growth in comparison to the same period in 2006. TheRecruitment Business launched an office in Sydney in early 2007 which is alreadybeginning to contribute profits on a monthly basis. The Financial Services brands continue to build on the improved trading enjoyedduring 2006. In particular, the investment banking and asset management brand,LMa Recruitment, performed well. There has been no evidence to date of aslowdown in demand for staff in the financial services sector following therecent market turbulence. Europe In May 2007, Empresaria acquired Headway, a staffing business based in Munich,Germany. Headway is a substantial operation and had 47 established branchesacross southern Germany and the region at the beginning of 2007. Since thenHeadway has opened a further 25 offices. The German staffing market remains oneof the most exciting in Europe with continuing strong growth in demand forstaffing services resulting from recent structural changes to the labourmarkets. Following the acquisition of Headway, the Group is well placed to takeadvantage of these market opportunities. The ITC brand in Poland continues to perform in line with our expectations.During 2007, management has made significant strides in developing the localPolish market and also developed a customer base for Polish workers in France. Asia As in the case of Germany, Japan represents one of the highest growing staffingmarkets in recent years with growth driven by liberalisation of the labourmarkets. Our existing businesses in Japan continue to perform strongly and Japanremains a strong focus of development. This is demonstrated by the decision toinvest in a new company in Japan in July of this year. The new start upoperation, Fines KK, is a temporary staffing company focussing on the retailsector. Outside of Japan, the main regional area of strong organic growth is South EastAsia. Further investment was made in the period in start up operations inMalaysia, Singapore and the Philippines, all operating under the Monroe brand.In addition, Advanced Career Indonesia, an HR outsourcing operation, hasestablished three new regional branch offices in the country. In March the Groupacquired a 51% stake in PT Learning Resources Indonesia, a training companyspecialising in the provision of training to call centre and customer servicestaff and with a complementary client base to the Group's existing operations. US The US is the largest individual international staffing market. Empresariainvested in a small start up business in 2005, Gerard Stewart, holding a 40%stake with an option to increase this to 60%. In the light of underlyingconcerns about the economic outlook in the US combined with sellers' valuationexpectations, the Group is content to maintain but not presently to increase itsinvestment in the US. Although the dividend distribution from Gerard Stewart hasmore than covered the initial investment, the relatively low growth expectationsfor this business has led to the decision not to increase the existing equitystake from the current 40% holding. Empresaria's businesses outside the UK contributed in total £16.4m of turnover(2006: £4.5m) and £5.0m of net fee income (2006: £2.1m). IFRS Transition In compliance with AIM requirements, Empresaria has adopted InternationalFinancial Reporting Standards (IFRS) for the first time in these interimfinancial statements. The IFRS accounting policies adopted are consistent withthose to be used for the Group's financial statements as at 31 December 2007. The key impact on the Group's results is that goodwill is no longer amortisedbut subject to an annual impairment review. The Board has adjusted the trading results to remove the effect of the amortisedgoodwill charge. For the 6 month period to 30 June 2006 this amounted to£342,000 and for the 12 month period to 31 December 2006 £762,000. Please refer to note 5 of the accounts to understand the key adjustmentsimplemented to ensure compliance with and transition to IFRS for the Group'sreporting purposes. Prospects The Group continued to perform strongly over the first six months of 2007 and,as Empresaria has historically traded better in the second half of the year, it is anticipated that this trend will continue in 2007, particularly whenaugmented by a full six months' contribution from Headway. Organic growth continues to be driven by established operations supplemented increasingly byrecent start-ups and complementary acquisitions. The acquisition of Headway is a transformational investment that is expected tohave a material positive impact on the financial performance of the Group. Considerable reinvestment has been made during the period for future organicgrowth which will benefit the long term growth prospects of the Group. Tony MartinChairman13 September 2007 Consolidated interim income statement 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 Note £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Revenue 55,677 33,900 75,459Cost of sales (40,686) (23,986) (53,619) --------- -------- --------Gross profit 14,991 9,914 21,840 Administrative costs (13,345) (8,760) (18,335) --------- ------- --------Operating profit 1,646 1,154 3,505 Finance income - - -Finance costs (308) (168) (408)Movements in fair - - -value of financial assets --------- -------- ---------Net finance (308) (168) (408)income/ (cost) Share of operatingloss from associates (91) (38) (203) --------- -------- ---------Profit before tax 1,247 948 2,894Income tax expense (437) (282) (828) --------- -------- ---------Profit for the period 810 666 2,066 ========= ======== ========= Attributable to:Equity holders of the parent 529 503 1,558Minority interest 281 163 508 --------- -------- --------- 810 666 2,066 ========= ======== ========= Earnings per share:Basic and diluted 3 2.0 2.2 6.7 ========= ======== ========= All results for the Group are derived from continuing operations in both thecurrent and preceding periods. Consolidated interim balance sheet 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) ASSETS Non-current assetsProperty, plant and equipment 1,662 648 790Goodwill 20,068 9,014 10,346Other intangible assets 3,379 - -Investments in associates 941 590 582Deferred tax assets 493 95 334 ------ -------- -------- 26,543 10,347 12,052 ------- -------- --------Current assetsTrade and othereceivables 23,691 13,777 11,229Cash and cash 4,678 2,135 3,342equivalents ------- -------- -------- 28,369 15,912 14,571 ------- -------- --------Total assets 54,912 26,259 26,623 ======= ======== ======== LIABILITIES Current liabilitiesTrade and other payables 20,833 9,130 9,388payablesShort-term borrowings 3,981 4,051 2,569Current portion of long-term borrowings 1,962 245 989Current tax payable 774 924 798 ------- ------- ------ 27,550 14,350 13,744 ------- ------- ------Non-current liabilitiesLong-term borrowings - 1,200 1,038 Deferred tax liabilities 1,085 65 125Other non-currentliabilities 1,863 123 163 ------- -------- -------Total non-currentliabilities 2,948 1,388 1,326 ------- -------- -------Total liabilities 30,498 15,738 15,070 ------- -------- -------Net assets 24,414 10,521 11,553 ======= ======== ======= EQUITY Equity attributable to equity holders of the parent Share capital 1,667 1,175 1,193Share premium account 16,694 4,980 5,185Merger reserve 1,539 1,539 1,539Profit and loss account 3,448 1,970 2,922Translation reserve (179) (22) (28)Fair value movements infinancial instruments (65) (74) (78) ------ ------- ------- 23,104 9,568 10,733Minority interest 1,310 953 820 ------ ------- -------Total equity 24,414 10,521 11,553 ======= ======= ======= Consolidated interim statement of recognised income and expense 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 Note £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Available-for-sale investments: Valuation gains/(losses) taken to equity 13 (74) (78) Exchange differences on Goodwill for foreign operations (124) - -Exchange differences on translation of foreign operations (27) (22) (28)Exchange differences on translation of foreign operationsattributed to Minority (18) - -Tax on items taken directly to or transferred from equity (3) 20 23 ----- ------ -------Net income recogniseddirectly in equity (159) (76) (83)Profit for the period 810 666 2,066Dividend paid - - (106) ----- ------ -------Total recognised income andexpense for the period 651 590 1,877 ===== ====== ======= Attributable to:Equity holders of the parent 388 427 1,369Minority interest 263 163 508 ------ ------ ------ 651 590 1,877 ====== ====== ====== Minority Interest statement 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 Note £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Income / (Expense) recognisedfor the period as above 263 163 508Changes due to acquisitionduring the period 386 84 (122)Dividend paid to Minority (159) (61) (333) ------ ------ ------Movement recognised in 490 186 53Minority ------ ------- ------ Consolidated interim cash flow statement 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Cash flows from operating activitiesProfit after taxation 810 666 2,066Adjustments for:Depreciation 200 167 337Tax recognised in profit & loss 437 282 828Share of losses in associates 91 38 203Interest expense 308 168 408Increase in trade receivables (529) (3,424) (940)(Decrease) / increase in trade payables (150) 2,390 2,253 ------- ------- -------Cash generated from operations 1,167 287 5,155Interest paid (308) (168) (408)Income taxes paid (333) (245) (739) ------- ------- -------Net cash from / (used in) 526 (126) 4,008operating activities ------- -------- --------Cash flows from investing activitiesAcquisition of subsidiaries net of cash acquired (10,660) (740) (2,060)Investment in associates (401) (593) (694)Purchase of property, plant and equipment (286) (298) (528) ------- -------- --------Net cash from (11,347) (1,631) (3,282)investing activities ------- -------- ------- Cash flows from financing activitiesProceeds from issue of share capital 11,615 905 905Proceeds from long-term borrowings - - 725Proceeds from short-term borrowings 1,710 - -Payment of long term loan (108) (105) (247)(Decrease) / Increase in factoring borrowings (901) 748 (733)Dividends paid - - (106)Dividends paid to minority shareholders in subsidiaryundertakings (159) (61) (333) ------ ------- ------Net cast from financing 12,157 1,487 211activities ------- ------- ------ Net increase/(decrease) in cash and cash equivalents 1,336 (270) 937Cash and cash equivalents at beginning of period 3,342 2,405 2,405 ------- ------- ------Cash and cash equivalents 4,678 2,135 3,342at end of period ======= ======== ======= Notes to the consolidated interim financial statements 1 General information Empresaria Group plc is the Group's ultimate parent company. It is incorporatedand domiciled in Great Britain. The address of Empresaria Group plc's registeredaddress is Peveril Court, 6-8 London Road, Crawley, West Sussex RH10 8JE. Itsshares are listed on AIM, a market of London Stock Exchange plc. These consolidated interim financial statements have been approved for issue bythe Board of Directors on 13 September 2007. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 December 2006,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. 2 Basis of preparation These consolidated interim financial statements are for the six months ended30 June 2007. They have been prepared in accordance with the requirements ofIFRS 1 "First-time Adoption of International Financial Reporting Standards"relevant to interim reports, because they are part of the period covered by theGroup's first IFRS financial statements for the year ended 31 December 2007.They do not include all of the information required for full annual financialstatements, and should be read in conjunction with the consolidated financialstatements of the Group for the year ended 31 December 2006. These financial statements have been prepared under the historical costconvention, except for revaluation of certain financial instruments. These consolidated interim financial statements are presented in Pounds Sterling(£), which is also the functional currency of the parent company. These consolidated interim financial statements have been prepared in accordancewith the accounting policies which are based on the recognition and measurementprinciples of IFRS in issue as adopted by the European Union (EU) and areeffective at 31 December 2007 or are expected to be adopted and effective at31 December 2007, the Group's first annual reporting date at which it isrequired to use IFRS accounting standards adopted by the EU. Empresaria Group plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 December 2006. The date of transition toIFRS was 1 January 2006. The comparative figures in respect of 2006 have beenrestated to reflect changes in accounting policies as a result of adoption ofIFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAPto IFRS are given in the reconciliation schedules, presented and explained innote 5. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these consolidated interim financial statements. 3 Earnings per share Basic and diluted earnings per share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the average number of shares inissue during the year. Based on current trading conditions, the Directors are of the opinion that therewould be no dilution to the earnings per share figure resulting from subsidiaryminority shareholders trading up. Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below. 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (unaudited) Profit after tax attributableto Equity share holders of the 529 503 1,558parent (£'000)Weighted average number 26,572,580 22,478,049 23,102,238of shares Basic and dilutedearnings per share (pence) 2.0 2.2 6.7 ========== =========== =========== Adjusted earnings per share 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Profit before tax 1,247 948 2,894Income tax expense (437) (282) (828)Add back:Recognition of pre-acquisition deferred tax asset against - - 100goodwill under IFRSRecognition of deferred taxliability on amortisationon purchased goodwill under IFRS 28 32 65Minority interests (*) (289) (170) (562) ------ ----- -----Adjusted profit after tax andminority interests 549 528 1,669 ======= ====== ====== Adjusted earnings per share (pence) 2.1 2.3 7.2 ======== ======= ======= (*) Adjusted as necessary for minority interest impact from add backs underIFRS. 4 Dividends The directors do not propose the payment of a dividend for the period. 5 Explanation of transition to IFRS As stated in the Basis of Preparation, these are the Group's first consolidatedinterim financial statements for part of the period covered by the first IFRSannual consolidated financial statements which will be prepared in accordancewith IFRS. An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows is set outbelow. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theseinterim financial statements have been prepared on the basis of taking thefollowing exemptions: • Business combinations prior to 1 January 2006, the Group's date oftransition to IFRS, have not been restated to comply with IFRS 3 "BusinessCombinations". Goodwill arising from these business combinations of £7,981,000has not been restated; • Cumulative translation differences on foreign operations are deemedto be nil at 1 January 2006. Any gains and losses recognised in the consolidatedincome statement on subsequent disposal of foreign operations will excludetranslation differences arising prior to the transition date; and • The entity has elected not to apply IAS 21 "The Effects of Changesin Foreign Exchange Rates" retrospectively to goodwill and fair valueadjustments arising on business combinations before the Group's date oftransition to IFRS. Such goodwill and fair value adjustments are not treated asforeign currency assets and so are not retranslated at each reporting date. Reconciliation of equity at 1 January 2006 - unaudited UK GAAP a b c d e IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000Non-current assetsProperty, plant andequipment 535 - - - - - 535Goodwill 7,981 - - - - - 7,981Other intangible assets - - - - - - -Investments in associated 39 - - - - - 39Other financial assets - - - - - - -Deferred tax assets - - - 169 - - 169Current assetsTrade and other receivables 10,169 - - (164) - - 10,005Cash and cash 2,405 - - - - - 2,405equivalentsCurrent liabilitiesTrade and other payables (6,754) - - - - - (6,754)Short-term borrowings (3,302) - - - - - (3,302)Current portion of long-term borrowings (225) - - - - - (225)Current tax payable (711) - - - - - (711)Non-current liabilitiesLong-term borrowings (1,326) - - - - - (1,326)Deferred tax liabilities - - - (5) - - (5)Other non-current liabilities (123) - - - - - (123) ------ ---- ---- ---- ---- ---- ----- Net assets 8,688 - - - - - 8,688 ===== ==== ==== ==== ==== ==== ====== Equity Share capital 1,113 - - - - - 1,113Share premium account 3,822 - - - - - 3,822Merger reserve 1,539 - - - - - 1,539Profit and loss account 1,447 - - - - - 1,447Translation reserve - - - - - - -Fair value movements in - - - - - - -financial instrumentsMinority interest 767 - - - - - 767 ------ ---- ---- ---- ---- ---- -----Total equity 8,688 - - - - - 8,688 ====== ==== ==== ==== ==== ==== ===== Reconciliation of equity at 30 June 2006 - unaudited UK GAAP a b c d e IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-current assetsProperty, plant andequipment 648 - - - - - 648Goodwill 8,672 342 - - - - 9,014Other intangible assets - - - - - - -Investments in 664 - - - - (74) 590associatesOther financial assets - - - - - - -Deferred tax assets - - - 73 - 22 95Current assetsTrade and other receivables 13,817 - - (40) - - 13,777Cash and cash 2,135 - - - - - 2,135equivalentsCurrent liabilitiesTrade and other payables (9,130) - - - - - (9,130)Short-term borrowings (4,051) - - - - - (4,051)Current portion of long-term borrowings (245) - - - - - (245)Current tax payable (924) - - - - - (924)Non-current liabilitiesLong-term borrowings (1,200) - - - - - (1,200)Deferred tax liabilities - - - (33) (32) - (65)Other non-currentliabilities (123) - - - - - (123) ------ ---- ---- ---- ---- ---- ------Net assets 10,263 342 - - (32) (52) 10,521 ====== ==== ==== ==== ==== ==== ====== EquityShare capital 1,175 - - - - - 1,175Share premium account 4,980 - - - - - 4,980Merger reserve 1,539 - - - - - 1,539Profit and loss account 1,664 309 - - (25) 22 1,970Translation reserve (22) - - - - - (22)Fair value movementsin financial instruments - - - - - (74) (74)Minority interest 927 33 - - (7) - 953 ------ ---- ----- ---- ---- ---- ------ Total equity 10,263 342 - - (32) (52) 10,521 ====== ===== ===== ==== ==== ==== ====== Reconciliation of equity at 31 December 2006 - unaudited UK GAAP a b c d e IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000Non-current assetsProperty, plant andequipment 790 - - - - - 790Goodwill 9,684 762 (100) - - - 10,346Other intangible assets - - - - - - -Investments in associates 660 - - - - (78) 582Other financial assets - - - - - - -Deferred tax assets - - - 311 - 23 334Current assetsTrade and otherreceivables 11,480 - - (251) - - 11,229Cash and cash 3,342 - - - - - 3,342equivalentsCurrent liabilitiesTrade and other payables (9,388) - - - - - (9,388)Short-term borrowings (2,569) - - - - - (2,569)Current portion of long-term borrowings (989) - - - - - (989)Current tax payable (798) - - - - - (798)Non-current liabilitiesLong-term borrowings (1,038) - - - - - (1,038)Deferred tax liabilites - - - (60) (65) - (125)Other non-current liabilities (163) - - - - - (163) ------ ---- ---- ---- ---- ---- ------Net assets 11,011 762 (100) - (65) (55) 11,553 ====== ==== ===== ==== ===== ==== ====== EquityShare capital 1,193 - - - - - 1,193Share premium account 5,185 - - - - - 5,185Merger reserve 1,539 - - - - - 1,539Profit and loss account 2,313 696 (60) - (50) 23 2,922Translation reserve (28) - - - - - (28)Fair value movements infinancial instruments - - - - - (78) (78)Minority interest 809 66 (40) - (15) - 820 ------ ----- ----- ---- ----- ---- ------ Total equity 11,011 762 (100) - (65) (55) 11,553 ====== ===== ===== ==== ===== ==== ====== Reconciliation of profit for the 6 months ended 30 June 2006 - unaudited UK GAAP a b c d e IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 33,900 - - - - - 33,900Cost of sales (23,986) - - - - -(23,986) ------- ------ ----- ----- ----- ----- ------- Gross profit 9,914 - - - - - 9,914 Administrative costs (9,102) 342 - - - - (8,760) ------- ------ ----- ----- ----- ----- ------- Operating profit 812 342 - - - - 1,154Finance income - - - - - - -Finance costs (168) - - - - - (168)Movements in fair value - - - - - - -financial instruments -------- ------ ----- ----- ----- ----- ------- Net financeincome/(cost) (168) - - - - - (168)Share of profit ofassociates (38) - - - - - (38) ------- ------ ----- ----- ----- ----- ------ Profit before tax 606 342 - - - - 948 Income tax expense (250) - - - (32) - (282) ------- ------ ----- ----- ----- ----- ------Profit for the period 356 342 - - (32) - 666 ======= ====== ===== ===== ====== ===== ====== Attributable to:Equity holders of the parent 219 309 - - (25) - 503Minority interest 137 33 - - (7) - 163 ------- ------ ----- ----- ------ ----- ------- 356 342 - - (32) - 666 ======= ====== ===== ===== ====== ===== ======= Reconciliation of profit for the year to 31 December 2006 - unaudited UK GAAP a b c d e IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 75,459 - - - - - 75,459Cost of sales (53,619) - - - - -(53,619) ------- ----- ----- ----- ----- ---- ------- Gross profit 21,840 - - - - - 21,840 Administrative costs (19,097) 762 - - - -(18,335) ------- ----- ----- ----- ----- ---- ------- Operating profit 2,743 762 - - - - 3,505Finance income - - - - - - -Finance costs (408) - - - - - (408)Movements in fair - - - - - - -value of financial instruments ------- ------ ----- ------ ----- ---- ------ Net financeincome/(cost) (408) - - - - - (408)Share of profit ofassociates (203) - - - - - (203) ------- ------ ----- ------ ----- ---- ------Profit before tax 2,132 762 - - - - 2,894 Income tax expense (663) - (100) - (65) - (828) ------- ------ ----- ------ ----- ---- ------ Profit for the period 1,469 762 (100) - (65) - 2,066 ======= ====== ===== ====== ===== ==== ====== Attributable to:Equity holders of the parent 972 696 (60) - (50) - 1,558Minority interest 497 66 (40) - (15) - 508 ----- ---- ----- ---- ----- ---- ------ 1,469 762 (100) - (65) - 2,066 ===== ==== ===== ==== ===== ==== ====== Notes to the reconciliations a) Non-amortisation of goodwill b) Reduction in goodwill for subsequently recognise deferred tax assets c) Grossing up if deferred tax - £nil profit/(loss) impact d) Impact on deferred tax of non amortisation of purchased goodwill e) Initial and/or fair market valuation of financial instruments Application of IFRS has resulted in reclassification of certain items in thecash flow statement as follows: (i) under UK GAAP, payments to acquire property, plant and equipment wereclassified as part of 'Capital expenditure and financial investment'. UnderIFRS, payments to acquire property, plant and equipment have been classified aspart of 'Investing activities'. (ii) income taxes of £245,000 and £739,000 paid through June 2006 and December2006 are classified as operating cash flows under IFRS, but were included in aseparate category of tax cash flows under previous GAAP. There are no other material differences between the cash flow statementpresented under IFRS and the cash flow statement presented under UK GAAP. This information is provided by RNS The company news service from the London Stock Exchange