Flowtech Fluid. Regulatory News (FLO)

19 Sep 2007 07:02

Flomerics Group PLC19 September 2007 Flomerics Group plc ("Flomerics" or "the Company") (AIM: FLO) Half Year Highlights Flomerics Group plc, the global supplier of simulation software to theengineering and electronics industries, today announces its results for the sixmonths ended 30 June 2007 • Turnover grew 23% to £7.0 million (2006: £5.7 million) • Turnover grew by 11% at constant exchange rates excluding the contribution from NIKA products • Adjusted loss before tax of £545,000 (2006: profit of £240,000)* • European turnover grew by 26% and turnover in Asia grew by 35% (without NIKA contribution and at constant rates) • Good progress with the Engineering Fluid Dynamics (EFD) product range in markets where it is was introduced earlier; 85% increase in number of new seats installed • New EFD customers include ZF, Mitsubishi, Panasonic and Schlumberger • Cash balance of £1.6 million (2006: £4.0 million) with £1.7 million expended on acquisitions since June 2006 and positive operating cash flow in the period. Commenting on the results, David Mann, Chairman of Flomerics plc, said: "We areconfident that the acquisition of NIKA will prove to be a very good strategicdevelopment for Flomerics, as it has broadened and enhanced our range ofworld-leading products. Forecasting for the EFD product line in new territoriesremains difficult and we have scaled back our expectations for the short term.However we are confident that investments in the EFD sales channels will bringsignificant benefits in 2008." * Adjusted loss / profit is before amortisation of intangibles, capitalisationof development costs and share based payments. www.flomerics.comFlomerics Group +44 20 8487 3000Gary Carter, Chief ExecutiveChris Ogle, Finance Director & Company Secretary Conduit PR +44 20 7429 6604Christian Taylor-Wilkinson, Charlie Geller +44 7970 067320 Oriel Securities Limited +44 20 7710 7600Andrew Edwards Chairman's Statement Overview In the first six months of the year, the Company has continued to grow thebusiness from its established products (i.e. those products that predated theacquisition of NIKA). Good progress has been made following the integration ofNIKA and we have seen strong sales in the regions where the acquired EFD productlines were introduced some time ago. The number of new seats of EFD softwareinstalled has increased by 85% compared with the same period last year.Significant investments were made in the period to introduce the EFD productsinto other markets, especially the US. The associated revenues are takinglonger than expected to build up and as a result the Company has made a loss inthe first half of the year. For the first time, the results have been stated under International FinancialReporting Standards (IFRS) and the comparative numbers for the prior year periodand for the year ended 31 December 2006 have been restated accordingly. Results Turnover was £7.0 million (2006: £5.7 million) representing growth of 23%. Thisincludes the contribution from the NIKA business. Turnover growth excluding thecontribution from NIKA and at constant rates of exchange was 11%. The Company made a loss before taxation of £805,000 compared to a profit in thehalf year to 30 June 2006 of £138,000. These figures include adjustments made tocomply with IFRS and FRS 20 on the amortisation of intangibles, thecapitalisation of Development costs and charges for share-based payments.Without these adjustments, the result for the period was a loss of £545,000(compared to an adjusted profit for the half year to 30 June 2006 of £240,000). The cash balance at 30 June 2007 was £1.6 million, compared with £4.0 million ayear earlier. Since June 2006 £1.7 million of cash has been used to financeacquisitions (£1.3 million on NIKA and £0.4 million on the earnout relating tothe 2005 acquisition of MicReD). There was a positive cash flow from operationsin the period. In order to compare like-with-like, the comparisons made below with the sameperiod last year are all at constant rates of exchange and are without thecontribution from NIKA. We outlined our intention a year ago to increase sales productivity in Europeand this is on track. Asia-Pacific meanwhile continues to be a good source ofgrowth and during this period revenues from China were particularly strong.European turnover grew by 26% and turnover in Asia-Pacific grew by 35%. Revenues from the US were down by 7%. As we stated in the Pre-Close TradingUpdate release on 13 July 2007, we have found the market in the US to be weakerthis year and there has been a noticeable holding back by our customers onmaking investment decisions. By product, revenue from our electronics thermal line of business grew by 7%(2006: 10%), FLOVENT by 19% (2006: 6%) and the electromagnetics line of businessby 13% (2005: 4%). MicReD contributed £240,000 to first half turnover (2005:£128,000). NIKA and EFD The number of new seats of EFD software installed in the first half of 2007increased by 85% compared to the same period last year. The majority of thesewere in Germany and Japan, where the product was introduced some time ago. Thenumber of new seats in Germany grew by 75% and there was a 50% increase in thenumber of new seats in Japan. In these regions, we saw orders from new customersincluding ZF, Rowenta, Mitsubishi and Panasonic and growth from existingcustomer including Toyota and Siemens. Sales elsewhere included Schlumberger,Taylor Made Marine, Bonas and Swegon in Europe and Harman Becker and AlphaTechnologies Inc. in the USA. We have made a significant investment in marketing and sales for our EFD productrange within new markets, especially the US. However it will take time topenetrate these markets, in part because of the slow-down in the US, and as aresult, sales are below our ambitious plans. We now have sales resources inplace to sell the EFD product line in the UK, US and Germany as well as throughdistributors, for example in Japan. The scope for the product is considerableand we plan to invest additional resources in these and other territories assales build up. In October we will make the first release of a module of the EFD productfocussing on electronics. This is a significant step forward and will allow someof our FLOTHERM customer base to benefit from the EFD features. The consideration for NIKA included an earnout element that was dependent on thetotal group after tax profit for 2007. As we have said above, the associatedrevenues from the acquisition are taking longer than expected to build up, andtherefore it is not expected that any of the earnout will be paid. Outlook Experience over the first year since the acquisition of NIKA has confirmed theBoard's view that it was a very good strategic development for Flomerics. TheCompany's range of world-leading products has been broadened and enhanced by themerger. As a result, the Board sees great potential for the Company to growstrongly from this foundation. We are confident that in due course this willbring returns to shareholders that will justify the dilution arising from theacquisition. Forecasting for the EFD product line in new territories remains difficult and wehad to scale back our short term expectations earlier this year. However theDirectors believe that there are good prospects for the Company to achievegrowth in revenue and adjusted profit in this year's results and for investmentsin the EFD sales channels to bring significant benefits next year. Consolidated Income Statement (Unaudited)For the six months ended 30 June 2007 Six month Six month period ended period ended Year ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Unaudited Note £'000 £'000 £'000 Continuing operations: Revenue 2 6,952 5,677 14,221Cost of sales (188) (159) (550) Gross profit 6,764 5,518 13,671 Administrative expenses (7,607) (5,418) (12,815)Other operating income 30 30 61 Operating (loss)/profit (813) 130 917 Investment revenues 24 54 101Finance costs (16) (46) (164) (Loss)/profit before taxation (805) 138 854Tax credit 3 42 79 78 (Loss)/profit for the period attributable (763) 217 932to equity holders of the parent (Loss)/earnings per share (pence): 5Basic (3.57) 1.45 5.16 Diluted (3.31) 1.38 4.06 The comparatives for the periods ended 30 June 2006 and 31 December 2006 havebeen restated as described in the transition to IFRS section. Consolidated Balance Sheet (Unaudited)At 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Unaudited £'000 £'000 £'000 Non-current assets Investment property 1,185 1,195 1,189 Property, plant and equipment 555 424 520 Other intangible assets 3,941 214 4,141 Goodwill 7,259 1,353 7,266 Deferred tax asset 531 517 573 13,471 3,703 13,689Current assets Inventories 33 51 33 Trade and other receivables 4,715 3,671 5,467 Cash and cash equivalents 1,640 3,976 2,339 6,388 7,698 7,839 Total assets 19,859 11,401 21,528 Current liabilities Trade and other payables (4,515) (3,876) (5,217) Current tax liabilities - - (14) Bank overdrafts and loans (71) (60) (71) Derivative financial instruments - (12) - (4,586) (3,948) (5,302)Non-current liabilities Bank loans (270) (350) (305) Deferred tax liability (865) - (950) (1,135) (350) (1,255) Total liabilities (5,721) (4,298) (6,557) Net assets 14,138 7,103 14,971 EquityShare capital 216 150 213Shares to be issued 1,112 108 1,112Share premium reserve 1,920 1,727 1,735Merger reserve 7,185 892 7,185Retained earnings 4,037 4,250 5,028Currency translations (332) (24) (302) Total equity 14,138 7,103 14,971 The comparatives for the periods ended 30 June 2006 and 31 December 2006 havebeen restated as described in the transition to IFRS section. Consolidated Cash Flow Statement (Unaudited)For the six months ended 30 June 2007 Six month Six month period ended period ended Year ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Unaudited £'000 £'000 £'000Cash flows from existing operating activities:(Loss)/profit for the period (763) 217 932Depreciation of property, plant and equipment 207 166 252Amortisation of other intangible assets 363 53 579Loss on disposal of property, plant and equipment - - 2Investment revenues (24) (54) (101)Finance costs 16 46 164Income tax (42) (79) (78)Share-based payment expense 75 49 97 Operating cash (outflows)/inflows before movements in working (168) 398 1,847capital Changes in operating assets and liabilities: Receivables 753 282 (1,081) Inventory - 8 30 Payables (292) (325) 89 Cash generated by operations 293 363 885 Income taxes paid (14) (30) (176)Finance costs (16) (46) (164) Net cash from operating activities 263 287 545 Cash flows from investing activities:Interest received 24 54 101Proceeds on disposal of property, plant and equipment - - 5Purchases of property, plant and equipment (227) (194) (512)Purchase of intangibles (179) - (77)Acquisition of subsidiary (net of cash acquired) (259) - (1,418) Net cash used in investing activities (641) (140) (1,901) Cash flows from financing activities:Proceeds from issue of shares (net of issue costs) 38 - -Dividends paid (295) (195) (195)Repayment of loans (35) (34) (68) Net cash used in financing activities (292) (229) (263) Net decrease in cash and cash equivalents (670) (82) (1,619) Cash and cash equivalents at the start of the year 2,339 4,081 4,081 Effect of foreign exchange rate changes (29) (23) (123) Cash and cash equivalents at end of year 1,640 3,976 2,339 Notes to the Unaudited Interim Report - 2007 1. Basis of presentation The accompanying unaudited interim consolidated financial statements ofFlomerics Group plc ("the Group") have been prepared in conformity withrecognition and measurement principles required by International FinancialReporting Standards ("IFRS"). From the year ending 31 December 2007 the Groupwill prepare its consolidated financial statements in accordance with IFRS asadopted by the European Union in order that the Group financial statementscomply with the AIM rules. Previously, the group reported under UK GenerallyAccepted Accounting Practice ("UK GAAP"). The Group's date of transition toIFRS is 1 January 2006, which is the beginning of the comparative period for the2006 financial year. Reconciliations have been produced to show the changes made to the statementspreviously reported under UK GAAP in arriving at the equivalent statements underIFRS. These reconciliations and the resulting restated comparatives have notbeen audited. UK GAAP accounts for the year ended 31 December 2006 have beenfiled with the Registrar of Companies and received an unqualified audit reportthat did not include references to any matters to which the auditors drewattention by way of emphasis without qualifying their report and did not containstatements under Section 237(2) or (3) of the Companies Act 1985. 2. Segmental information All of the Group's results and revenues are derived from its sole activity, thatof providing virtual prototyping solutions to engineers and designers.Accordingly, the Group maintains only one reportable business segment, as isreflected in the reporting in these interim financial statements. Geographical segments The Group's operations are located in United States of America, Europe and AsiaPacific. The following table provides an analysis of the Group's sales bygeographical market, irrespective of the origins of the service. Six month Six month Year ended period ended period ended 31 December 30 June 30 June 2006 2007 2006 £'000 £'000 £'000 United States of America 2,446 2,796 5,563Europe 3,014 1,730 5,946Asia Pacific 1,492 1,151 2,712 6,952 5,677 14,221 3. Income taxes As the Group made a loss in the period a current tax charge of £nil has beenassumed. The credit in the period arises from movements in deferred tax. 4. Dividends Six month Six month Year ended period ended period ended 31 December 30 June 30 June 2006 2007 2006 £'000 £'000 £'000 Final dividend for the prior year recognised in the period 295 195 195 of 1.4p per share (2006 - 1.3p) 5. (Loss)/earnings per share (pence) Six month Six month Year ended period ended period ended 31 December 30 June 30 June 2007 2007 2007(Loss)/earnings per share (pence) Basic (3.57) 1.45 5.16 Diluted (3.31) 1.38 4.06 The calculation of the basic and diluted (loss)/earnings per share is based on the following data: £'000 £'000 £'000(Loss)/earnings(Loss)/earnings for the purposes of basic and diluted (763) 217 932 (loss)/earnings per share being net loss/(profit) attributable to equity holders of the parent Number Number NumberNumber of sharesWeighted average number of ordinary shares for the 21,388 14,932 18,063 purposes of basic (loss)/earnings per share Effect of dilutive potential ordinary sharesShare options 1,662 782 4,905Weighted average number of ordinary shares for the 23,050 15,714 22,968 purposes of diluted (loss)/earnings per share The earnings per share calculation assumes that there are no further sharesissued to the former shareholders of NIKA under the earnout arrangement. 6. Adjusted (loss)/profit The adjusted ( loss)/profit for the period and the prior year period is arrivedat as follows: Six month Six month period ended period ended 30 June 30 June 2007 2006 £'000 £'000 (Loss)/profit before tax (805) 138Share based payment 75 49Amortisation of intangibles 337 -Capitalisation of reseach and development, net of (152) 53amortisationAdjusted (loss) / profit (545) 240 Accounting policies Basis of preparation The preliminary balance sheets and income statements shown in the Transition toIFRS section have been prepared on the basis of IFRS expected to be in issue at31 December 2007. The preliminary IFRS financial statements will form the basisof the comparative information in the first IFRS accounts and have been preparedon the basis of IFRS expected to be in issue at 31 December 2007 but are stillsubject to change. We will update the restated information for any such changein the 31 December 2007 financial statements. Whilst the financial information included in the transition to IFRS section hasbeen prepared in accordance with IFRS's as adopted for use by the EuropeanUnion, it does not constitute full IFRS compliant financial statements. Inparticular, the information contained in the transition to IFRS sectionindicates the quantitative adjustments that are expected to arise as a result ofthe transition to IFRS, but does not include all the primary statements thatwould be required under IFRS, nor does it include the disclosures that arerequired for IFRS compliant financial statements. The Group will comply with all these requirements when it prepares its firstannual IFRS statements covering the year ending 31 December 2007. The preliminary IFRS financial statements have been prepared on an historicalcost basis, except for the measurement of balances at fair value as disclosed inthe accounting policies below. Interim financial statements As permitted, the Group has not adopted IAS 34 "Interim Financial Reporting".Therefore the disclosures presented do not comply in full with the requirementsof that standard. First time adoption The Group has adopted IFRS from 1 January 2006 ('the date of transition').Please refer to the transition to IFRS section for details on exemption balanceson the transition. Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and entities controlled by the Company (its subsidiaries) made up to31 December each year. Control is achieved where the Company has the power togovern the financial and operating policies of an investee entity so as toobtain benefits from its activities. The Group income statement includes theresults of subsidiaries acquired or disposed of during the year from theeffective date of acquisition or up to the effective date of disposal, asappropriate. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies used into line with those used bythe group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Business combinations The acquisition of subsidiaries, or trade and assets, is accounted for using thepurchase method. The cost of the acquisition is measured at the aggregate of thefair values, at the date of exchange, of assets given, liabilities incurred orassumed, and equity instruments issued, or to be issued, by the Group inexchange for control of the acquiree, plus any costs directly attributable tothe business combination. The acquiree's identifiable assets, liabilities andcontingent liabilities that meet the conditions for recognition under IFRS 3 arerecognised at their fair value at the acquisition date, except for non-currentassets (or disposal groups) that are classified as held for sale in accordancewith IFRS 5 "Non Current Assets Held for Sale and Discontinued Operations",which are recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measuredat cost, being the excess of the cost of the business combination over theGroup's interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities recognised. If, after reassessment, the Group'sinterest in the net fair value of the acquiree's identifiable assets,liabilities and contingent liabilities exceeds the cost of the businesscombination, the excess is recognised immediately in profit or loss. The Group has taken the exemption conferred in IFRS 1, "First-time Adoption ofInternational Financial Reporting Standards", not to restate businesscombinations prior to the transition date of 1 January 2006 under IFRS 3. Property, plant and equipment Property, plant and equipment is stated at cost or deemed cost less accumulateddepreciation and any impairment in value. Depreciation Depreciation is provided on all property, plant and equipment, other thanfreehold land, at rates calculated to write off the cost, less estimatedresidual value based on prices prevailing at the date of acquisition, of eachasset evenly over its expected useful life, as follows: Computer hardware 20-33% per annumFixtures and fittings 20-33% per annum The carrying values of property, plant and equipment are reviewed for impairmentif events or changes in circumstances indicate the carrying value may not berecoverable. The asset's residual values, useful lives and methods are reviewed, and adjustedif appropriate, at each financial year end. Investment property Investment property, which is properly held to earn rentals is stated at itshistoric cost as the Group elected, under the transitional arrangementsavailable under IFRS 1, to use the previous carrying value under UK GAAP asdeemed cost in transition. The investment property is depreciated on astraightline basis of 2% per annum, however the land on which it is situated isnot depreciated. Goodwill Goodwill represents the excess of the cost of acquisition over the Group'sinterest in the fair value of the identifiable assets and liabilities of asubsidiary, or acquired sole trade business at the date of acquisition. Goodwillis initially recognised as an asset at cost and is subsequently measured at costless any accumulated impairment losses. Goodwill which is recognised as an assetis reviewed for impairment at least annually. Any impairment is recognisedimmediately in the Group income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of theGroup's cash-generating units expected to benefit from the synergies of thecombination. Cash-generating units to which goodwill has been allocated aretested for impairment annually, or more frequently when there is an indicationthat the unit may be impaired. If the recoverable amount of the cash-generatingunit is less than the carrying amount of the unit, the impairment loss isallocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of thecarrying amount of each asset in the unit. An impairment loss recognised forgoodwill is not reversed in a subsequent period. On disposal of a subsidiary the attributable amount of goodwill is included inthe determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has beenretained at the previous UK GAAP amounts subject to being tested for impairmentat that date and subsequently as required by the provisions of IAS 36 "impairment of assets". Intangible assets Intangible assets with a finite useful life are carried at cost lessamortisation and any impairment losses. Intangible assets represent items whichhave been separately identified under IFRS 3 arising in business combinations,or meet the recognition criteria of IAS 38, "Intangible Assets". Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine theextent of the impairment loss (if any). Where the asset does not generate cashflows that are independent from other assets, the Group estimates therecoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised in the income statement as an expense immediately, unless therelevant asset is carried at a revalued amount, in which case the impairmentloss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset is carriedat a revalued amount, in which case the reversal of the impairment loss istreated as a revaluation increase. Amortisation of intangible assets acquired in a business combination iscalculated over the following periods on a straight line basis: Customer relationships - 10% per annumContract based assets - 50% per annumCompleted technology - over a useful life of 7 yearsNon-competition agreement - 25% per annum Amortisation of other intangible assets (computer software) is calculated usingthe straight-line method to allocate the cost of the asset less its assessedrealisable value over its estimated useful life, which equates to 33% to 50% perannum. Internally-generated intangible assets - research and development expenditure Expenditure on research activities is recognised as an expense in the period inwhich it is incurred. Any internally-generated intangible asset arising from the Group's developmentprojects are recognised only if all of the following conditions are met: • an asset is created that can be identified; • it is possible that the asset created will generate future economicbenefits; and • the development cost of the asset can be measured reliably. Internally-generated intangible assets are amortised on a straight-line basisover their useful lives of three years. Where no internally-generatedintangible asset can be recognised, development expenditure is recognised as anexpense in the period in which it is incurred. Financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet at fair value when the Group becomes a party to the contractual provisionsof the instrument. Trade receivables Trade receivables represent amounts due from customers in the normal course ofbusiness. All other amounts which are not interest bearing are stated at theirnominal value as reduced by appropriate allowances for estimated irrecoverableamounts, which are charged to the income statement. Cash and cash equivalents Cash and cash equivalents include cash at hand and deposits held at call withbanks with original maturities of three months or less. Financial liabilities and equity instruments Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the Group afterdeducting all of its liabilities. Bank Borrowings Interest-bearing bank loans and overdrafts are recorded at fair value, net ofdirect issue costs. Such bank borrowings are subsequently measured at amortisedcost using the effective interest rate method, which ensures that any interestexpense over the period to repayment is at a constant rate on the balance of theliability carried in the balance sheet. Finance charges are accounted for on anaccruals basis in the income statement using the effective interest rate methodand are added to the carrying amount of the instrument to the extent that theyare not settled in the period in which they arise. Trade payables Trade payables are initially measured at fair value, and are subsequentlymeasured at amortised cost, using the effective interest rate method. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. Derivative financial instruments The Group's activities expose it primarily to the financial risks of changes inforeign exchange rates. The Group occasionally uses forward exchange contractsto hedge these exposures. The Group does not use derivative financialinstruments for speculative purposes. The Group has elected not to adopt the hedge accounting provisions of IAS 39.Derivative financial instruments are initially measured at fair value on thedate that the contract is entered into and subsequently remeasured to fair valueat each reporting date. The gains and losses on remeasurement are taken to theincome statement and reported in administrative expenses. Dividends Dividends are provided for in the period in which they become a bindingliability on the Group. Inventories Inventories are stated at the lower of cost and net realisable value. Forinventories acquired for retail sale the cost represents the purchase price plusoverheads directly related to bringing inventory to its present location andcondition and is measured on a first in first out basis. Net realisable valuerepresents the estimated selling price less all estimated costs of completionand costs to be incurred in marketing, selling and distribution. Where necessary allowance is made for obsolete, slow moving and damagedinventory. Employee share incentive plans The Group issues equity-settled share-based payments to certain employees(including directors). These payments are measured at fair value at the date ofgrant by use of the Black-Scholes pricing model. This fair value cost ofequity-settled awards is recognised on a straight-line basis over the vestingperiod, based on the Group's estimate of shares that will eventually vest andadjusted for the effect of any non market-based vesting conditions. The expectedlife used in the model has been adjusted, based on management's best estimate,for the effects of non-transferability, exercise restrictions, and behaviouralconsiderations. A corresponding credit is recorded in equity in the share optionaccount. No cost is recognised for awards that do not ultimately vest. Leases Leases taken by the Group are assessed individually as to whether they arefinance leases or operating leases. Leases are classified as finance leaseswhenever the terms of the lease transfer substantially all the risks and rewardsof ownership to the lessee. All other leases are classified as operating leases. Leases where the lessor retains substantially all the risks and benefits ofownership of the asset are classified as operating leases. Operating leaserental payments are recognised as an expense in the income statement on astraight-line basis over the lease term. The benefit of lease incentives isspread over the term of the lease. The Group currently has no material finance leases. Taxation The tax expense represents the sum of the current tax and deferred tax charges. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from the initial recognition of goodwill or from the initialrecognition (other than in a business combination) of other assets andliabilities in a transaction that affects neither the tax profit nor theaccounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Share capital and share premium There is one class of shares. When new shares are issued, they are recorded inshare capital at their par value. The excess of the issue price over the parvalue is recorded in the share premium reserve. Incremental external costs directly attributable to the issue of new shares(other than in connection with a business combination) are recorded in equity asa deduction, net of tax, to the share premium reserve. Revenue recognition Revenue represents the amounts receivable, net of sales taxes, on the provisionof the Group's software, maintenance, consultancy, and other services such astraining and hardware. When a sale is made to a customer of the Group'ssoftware, the price normally includes the provision of maintenance (for aperpetual licence this is only for the first year). The maintenance element isdeferred and is recognised over the period that the maintenance is provided.Appropriate amounts attributable to maintenance are deferred for each type oflicence. The licence element of the sale is recognised as income when the followingconditions have been satisfied: 1) The software has been provided to the customer in a form thatenables the customer to utilise it; 2) There is evidence of a contractual relationship between thecustomer and the Group relating to the revenue in question; 3) The ongoing obligations of the Group to the customer, aside fromthe maintenance, are minimal; and 4) The amount payable by the customer is determinable and there isa reasonable expectation of payment. Revenue on the sale of hardware products is recognised when the risks andrewards of ownership have passed to the customer and the Group's work issubstantially complete, which is usually upon delivery to the customer or hisagent. Retirement benefit costs The Group operates a defined contribution pension scheme. The amount charged tothe income statement in respect of pension costs and other post-retirementbenefits is the contributions payable in the year. Differences between contributions payable in the year and contributions actuallypaid are shown as either accruals or prepayments in the balance sheet. Operating profit Operating profit is stated before investment income and finance costs. Foreign exchange The individual financial statements of each group company are presented in thecurrency of the primary economic environment in which it operates (itsfunctional currency). For the purpose of the consolidated financial statements,the result and the financial position of each group company are expressed inpounds sterling, which is the functional currency of the parent Company, and thepresentation currency for the consolidated financial statements. Exchange differences arising on the settlement of monetary items, and on theretranslation of monetary items, are included in profit or loss for the period.Exchange differences arising on the retranslation of non-monetary items carriedat fair value are included in profit or loss for the period except fordifferences arising on the retranslation of non-monetary items in respect ofwhich gains and losses are recognised directly in equity. For such non-monetaryitems, any exchange component of that gain or loss is also recognised directlyin equity. For the purpose of presenting consolidated financial statements, the assets andliabilities of the group's foreign operations are translated at exchange ratesprevailing on the balance sheet date. Income and expense items are translatedat the average exchange rates for the period, unless exchange rates fluctuatesignificantly during that period, in which case the exchange rates at the dateof transactions are used. Exchange differences arising, if any, are classifiedas equity and transferred to the group's translation reserve. Such translationdifferences are recognised as income or an expenses in the period in which theoperations is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreignentity are treated as assets and liabilities of the foreign entity andtranslated at the closing rate. The group has elected to treat goodwill andfair value adjustments arising on acquisitions before the date of transition toIFRS as sterling denominated assets and liabilities. Transition to IFRS The following pages set out reconciliations of the UK GAAP balance sheet at 1January 2006, 30 June 2006 and 31 December 2006 and the income statements forthe periods 30 June 2006 and 31 December 2006. The principal accounting policy changes from UK GAAP that have had an impact onthe balance sheet or income statement are set out as follows: IFRS 1 First time adoption of IFRS IFRS 1 permits a number of first time adoption exemptions and the Group haselected to take those relating to business combinations, fair value orrevaluation as deemed cost and cumulative translation differences. These are explained in more detail below: Business combinations: The Group has elected not to apply IFRS 3, BusinessCombinations, retrospectively to combinations that took place prior to thetransition date. Accordingly, the carrying value of goodwill recorded under UKGAAP has been fixed at the date of transition as deemed cost and will no longerbe amortised. Fair value or revaluations as deemed cost: The Group has elected to adopt thecost model available under IAS 40, Investment Property. Accordingly, the netbook value of the property at the date of transition will be deemed as costunder IFRS. Cumulative translation differences: Under IAS 21, some translation differencesare required to be initially recognised as a separate component of equity thatis only recognised in the income statement on the disposal of that foreignoperation. The Group has elected not to comply with this requirement forcumulative translation differences that existed at the date of transition andaccordingly, the cumulative translation differences for all foreign operationsare deemed to be zero at the date of transition. The group has also elected totreat goodwill and fair value adjustments arising on acqusitions prior to 1January 2006 as sterling denominated assets and liabilities. IAS 12 Income Taxes General IAS 12 takes a balance sheet approach to deferred tax whereby deferred tax isrecognised in the balance sheet by applying the appropriate tax rate to thetemporary differences arising between the carrying value of the assets andliabilities and their tax base. This contrasts with UK GAAP (FRS 19) whichconsidered timing differences arising in the profit and loss account. Where the IFRS adjustments discussed in this document create a differencebetween the carrying amount of an asset or liability and the related tax base,and there are no initial recognition exemptions available under IAS 12, theGroup has recorded a deferred tax liability or asset as required. The followingtable demonstrates how the asset and liabilities have arisen: Deferred tax asset/(liability) £'000 At date of transition: IAS 38 - capitalisation of research and development (40)Asset arising on fixed asset timing differences 428Asset arising on short term timing differences 18Asset arising on share based payment 14 Net deferred tax asset at 1 January 2006 420 At 30 June 2006:IAS 38 - capitalisation of research and development (24)Asset arising on fixed asset timing differences 501Asset arising on share based payment 20Asset arising on short term timing differences 20Net deferred tax asset at 30 June 2006 517 At 31 December 2006:IAS 38 - capitalisation of research and development (31)Asset arising on fixed asset timing differences 574Asset arising on short term timing differences 23Asset arising on share based payment 7 Net deferred tax asset at 31 December 2006 573Liability arising on NIKA intangibles at acquisition at 31 (950)December 2006 Deferred tax on business combinations IAS 12 requires that deferred tax is provided in full on differences between thecarrying value of assets and liabilities acquired in a business combination andthe related tax base, regardless of whether the business combination isaccounted for under IFRS 3. In the specific case of business combinations, theinitial recognition exemption available under IAS 12 not to recognise deferredtax on transactions which at the time of the transaction do not affectaccounting profit or taxable profit is not available. The Group acquired NIKA GmbH (NIKA), in July 2006 in a transaction which was abusiness combination as defined by IFRS 3, "Business combinations". NIKA had atthat date certain assets which did not qualify for tax deduction (non qualifyingassets). Under UK GAAP these non qualifying assets do not result in a timingdifference on which deferred tax is provided. Additionally, under IAS 12, in thenormal course of events, the initial recognition exemption referred to above isavailable on these non qualifying assets. Accordingly, the Group has provided for deferred tax on the full differencebetween the carrying amount of these assets acquired by the Group in July 2006and their tax base of £nil. The impact of this change for the Group was anincrease to goodwill on acqusition of £1,051,000 and a corresponding deferredtax provision of £1,051,000. There was no impact on the income statement as aresult of this change. This deferred tax provision will reduce as the carryingamount of the assets is amortised and as at 30 June 2007 the deferred taxliability was £865,000. IAS 19 Employee Benefits Holiday pay accrual IAS 19 requires an accrual to be made for earned but unpaid holiday pay. TheGroup's holiday year runs from January to December and holiday carryover ispermitted. Accordingly, the requirement to record a holiday pay accrual hasimpacted negatively, the opening balance sheet as at 1 January 2006 by £79,000,the 30 June 2006 balance sheet by £94,000 and the 31 December 2006 balance sheetby £97,000, with the income statements for each period incurring a charge by thecorresponding movement. Furthermore, an additional fair value adjustment of £68,000 in respect ofholiday pay accruals was made as part of the NIKA acquisition and this hasincreased goodwill by an equal amount. IAS 21 The effect of changes in foreign exchange Under IAS 21, it is necessary to present foreign exchange differences arisingfrom the retranslation of overseas subsidiaries into the presentation currencyof the group from the transition date as a separate reserve in equity.Accordingly, such movements have been reclassified for the periods ended 30 June2006 and 31 December 2006. Also, goodwill and fair value adjustments arising on acqusitions of a foreignentity are treated as assets and liabilities of that foreign entity andtranslated at the closing rate. As a result of this change, net assets at 31December 2006 have been reduced by £162,000. IAS 38 Intangible Assets Capitalised software Under UK GAAP, all capitalised software development costs are included withintangible fixed assets. IAS 38 requires that where such costs are not an integralpart of the associated hardware, they should be classified as intangible assets.Accordingly, certain items of property, plant and equipment have beenreclassified to intangible assets at each reference date where they are items ofsoftware that meet the recognition criteria of IAS 38. There is no net impact on the income statement as a result of thisreclassification, however, there has been a reclassification of the amountsrecorded as depreciation on these assets to amortisation charges. The impact onthe balance sheets at 1 January 2006 and 30 June 2006 has been an increase inIntangible Assets and a matching decrease in Property, plant and equipment of£135,000 and £135,000 respectively. Software had already been reclassified as anintangible asset in the 31 December 2006 financial statements and hence noadjustment has arisen. Intangible assets amortisation The Group has recognised additional intangible assets under IFRS 3 "BusinessCombinations", as discussed below. IAS 38 requires that amortisation isprovided where an intangible asset has a finite life. The adjustment arisingfrom this is discussed below in IFRS 3 "Business Combinations". Research and development expenditure Under UK GAAP, the Group took the option available under SSAP 13 to write offall expenditure as incurred. Under IAS 38 it is obligatory to capitalise whenall of the criteria specified by the standard are met. Following a review of thedevelopment projects being conducted by the Group, the capitalisation of thequalifying expenditure has resulted in an increase in intangible assets at 1January 2006 of £132,000, £79,000 at 30 June 2006 and £103,000 at 31 December2006 with a corresponding reduction of administrative expenses in the incomestatement. As these development costs are now being capitalised a reduction inprofits has been caused by the associated amortisation charge. IAS 39 Financial Instruments: Recognition and Measurement Forward exchange contract fair value IAS 39 requires all derivatives, including forward exchange contracts, to beinitially recognised and subsequently re-measured at fair value. The Group hadopen forward foreign exchange contracts in place at 1 January 2006 and 30 June2006. The Group had not adopted the hedging provisions of IAS 39 at this timeand accordingly, changes in fair value are taken to the income statement in theperiod in which they arise. The impact of this change for the Group has been an increase in administrativecosts of £12,000 in the six months to 30 June 2006 together with a correspondingcreditor on the balance sheet, and a reduction in net assets of £29,000 in theopening balance sheet at 1 January 2006. IAS 40 Investment Property On reviewing the Group's UK GAAP accounting policies against IFRS, it was notedthat the characteristics of a building owned by the Group meant it would moreappropriately be classified as an investment property. The Group have chosen toadopt the cost measurement accounting policy as allowed by IAS 40 as a result.This new policy has had no impact in the income statement but does cause areclassification in the balance sheet of £1,201,000 within non-current assets;the amounts for subsequent periods is reduced by the depreciation charge forthat period. IFRS 3 Business Combinations Business combinations: Reversal of goodwill amortisation Under UK GAAP, the Company recognised goodwill as the difference between thefair value of assets and liabilities acquired and the fair value ofconsideration paid on all acquisitions of trade and assets and subsidiarycompanies. Goodwill was amortised over its useful economic life, generally being20 years. IFRS 3 prohibits the amortisation of goodwill. The standard requires goodwillto be carried at cost with impairment reviews both annually and when there areindications that the carrying value may not be recoverable. Accordingly, amortisation charged in the financial year ended 31 December 2006has been reversed, increasing operating profit by £644,000 for the year to 31December 2006 and by £98,000 for the six months to 30 June 2006. Additionally,the accumulated amortisation at the transition date has been eliminated againstthe cost of goodwill. Further adjustments have been made to the goodwill balanceresulting from the application of IFRS 3 to business combinations after thetransition date as detailed below. Goodwill which is recognised as an asset is reviewed for impairment at leastannually. Any impairment is recognised immediately in the Group income statementand is not subsequently reversed. In accordance with IFRS 1 and IAS 36, animpairment review on all assets was duly carried out at the transition date andsubsequently in December 2006 and no impairment loss was identified. Business combinations: Intangible assets As accorded by the transitional arrangements of IFRS 1, the Group has chosen toapply IFRS 3 prospectively from the date of transition (1 January 2006) and notto restate previous business combinations. For qualifying business combinations, goodwill under IFRS 3 represents theexcess of consideration over the fair values of acquired assets (including anyseparately identifiable and measurable intangible assets), liabilities andcontingent liabilities. As noted above, the Group has not applied IFRS 3 tobusiness combinations prior to the transition date of 1 January 2006. In theperiod subsequent to 1 January 2006, the Group acquired NIKA in July 2006. TheGroup has assessed this business combination under IFRS 3 and identifiedintangible assets relating to recurring customer relationships, anon-competition agreement, a contract based asset and completed technology whichhave been reclassified from goodwill to intangible assets. As required under IAS 38, these intangible assets are amortised over theirfinite lives (considered to be between 4 and 10 years) and subject to impairmentreviews annually and before the end of the accounting period in which they wereacquired. The impact of this change for the Group has been a reduction to goodwill of£4,205,000 and a corresponding increase in other intangible assets in the yearto December 2006. The resulting amortisation charge arising on thisreclassification is £338,000 with a corresponding reduction in intangibleassets. Unaudited Reconciliations on transition from UK GAAP to IFRS The balance sheet reconciliations at 1 January 2006 (date of transition to IFRS)and at 31 December 2006 (date of last UK GAAP financial statements) and thereconciliation of profit for 2006, as required by IFRS 1 are shown below: 1. Unaudited balance sheet reconciliation at 1 January 2006 UK GAAP IAS 12 IAS 19 IAS 38 IAS 38 IAS 39 IAS40 IFRS (IFRS Income Holiday Reclassi- Capitali- Loss on Reclassi- format) taxes pay fication of sation of forward fication of accrual software development exchange investment costs contract properties £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non-current assetsGoodwill 1,353 - - - - - - 1,353Other intangible assets - - - 135 132 - - 267Property, plant and equipment 1,726 - - (135) - - (1,201) 390Investment property - - - - - - 1,201 1,201Deferred tax asset - 420 - - - - - 420 3,079 420 - - 132 - - 3,631Current assetsInventories 59 - - - - - - 59Trade and other receivables 3,953 - - - - - - 3,953Cash and cash equivalents 4,081 - - - - - - 4,081 8,093 - - - - - - 8,093 Total assets 11,172 420 - - 132 - - 11,724 Current liabilitiesTrade and other payables (4,289) - (79) - - - - (4,368)Current tax liability (30) - - - - - - (30)Bank overdraft and loan (67) - - - - - - (67)Derivative financial liability - - - - - (29) - (29) (4,386) - (79) - - (29) - (4,494)Non-current liabilitiesBank loans (377) - - - - - - (377) Total liabilities (4,763) - (79) - - (29) - (4,871) Net assets 6,409 420 (79) - 132 (29) - 6,853 UK GAAP IAS 12 IAS 19 IAS 38 IAS 38 IAS 39 IAS40 IFRS (IFRS Income Holiday Reclassi- Capitali- Loss on Reclassi- format) taxes pay fication of sation of forward fication of accrual software development exchange investment costs contract properties £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Equity Share capital 148 - - - - - - 148 Shares to be issued 33 - - - - - - 33Share premium reserve 1,602 - - - - - - 1,602Merger reserve 892 - - - - - - 892Retained earnings 3,734 420 (79) - 132 (29) - 4,178Currency translation - - - - - - - - 6,409 420 (79) - 132 (29) - 6,853 2. Unaudited balance sheet reconciliation at 30 June 2006 IAS 12 IAS 19 IAS 21 IAS 38 IAS 38 IAS 39 IAS 40 IFRS 3 IFRS UK GAAP Income Holiday Currency Reclassi- Capitali- Loss on Reconcili- Add (IFRS taxes pay trans- fication sation forward ation back format) accrual lation of of exchange of of differ- software develop- contract invest- goodwill ences ment ment amorti- expendi- property sation ture net of amorti- sation £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-currentassetsGoodwill 1,255 - - - - - - - 98 1,353Otherintangible assets - - - - 135 79 - - - 214Property, plantand equipment 1,754 - - - (135) - - (1,195) - 424Investment property - - - - - - - 1,195 - 1,195Deferred tax asset - 517 - - - - - - - 517 3,009 517 - - - 79 - - 98 3,703Current assetsInventories 51 - - - - - - - - 51Trade and otherreceivables 3,671 - - - - - - - - 3,671Cash and cashequivalents 3,976 - - - - - - - - 3,976 7,698 - - - - - - - - 7,698 Total assets 10,707 517 - - - 79 - - 98 11,401 CurrentliabilitiesTrade and otherpayables (3,782) - (94) - - - - - - (3,876)Current tax liability - - - - - - - - - -Bank overdraftand loan (60) - - - - - - - - (60)Derivativefinancial liability - - - - - - (12) - - (12) (3,842) - (94) - - - (12) - - (3,948)Non-currentliabilitiesBank loans (350) - - - - - - - - (350) Total liabilities (4,192) - (94) - - - (12) - - (4,298) Net assets 6,515 517 (94) - - 79 (12) - 98 7,103 IAS 12 IAS 19 IAS 21 IAS 38 IAS 38 IAS 39 IAS 40 IFRS 3 IFRS UK GAAP Income Holiday Currency Reclassi- Capitali- Loss on Reconcili- Add (IFRS taxes pay trans- fication sation forward ation back format) accrual lation of of exchange of of differ- software develop- contract invest- goodwill ence ment ment amorti- expendi- property sation ture net of amorti- sation £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 EquityShare capital 150 - - - - - - - - 150Shares to be issued on account 108 - - - - - - - - 108Share premium reserve 1,727 - - - - - - - - 1,727Merger reserve 892 - - - - - - - - 892Retained earnings 3,638 517 (94) 24 - 79 (12) - 98 4,250Currency translation - - - (24) - - - - - (24) 6,515 517 (94) - - 79 (12) - 98 7,103 3. Unaudited balance sheet reconciliation at 31 December 2006 IAS 12 IAS 19 IAS 21 IAS 38 IAS 38 IAS 40 IFRS3 IFRS3 IFRS UK GAAP Income Holiday Currency Capitali- Amorti- Reclassi- Reclassi- Add (IFRS Taxes pay trans- of sation fication fication back format) accrual lation develop- of other of of of differ- ment intan- invest- intan- good- ence costs, net gibles ment gibles will of identi- property identi- amorti- amorti- fied fied sation sation in NIKA in NIKA acquisi- acquisi- tion tion £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-currentassetsGoodwill 9,807 1,051 68 (99) - - - (4,205) 644 7,266 Otherintangibleassets 234 - - (63) 103 (338) - 4,205 - 4,141Property,plant andequipment 1,709 - - - - - (1,189) - - 520Investmentproperty - - - - - - 1,189 - - 1,189Deferred taxasset - 573 - - - - - - - 573 11,750 1,624 68 (162) 103 (338) - - 644 13,689CurrentassetsInventories 33 - - - - - - 33Trade andotherreceivables 5,467 - - - - - - - - 5,467Cash and cashequivalents 2,339 - - - - - - - - 2,339 7,839 - - - - - - - - 7,839 Total assets 19,589 1,624 68 (162) 103 (338) - - 644 21,528 CurrentliabilitiesTrade andother payables (5,120) - (97) - - - - - - (5,217)Current tax liability (14) - - - - - - - - (14)Bankoverdraft and loan (71) - - - - - - - - (71) (5,205) - (97) - - - - - - (5,302) Non-current liabilitiesBank loans (305) - - - - - - - - (305)Deferred taxliability - (950) - - - - - - - (950) (305) (950) - - - - - - - (1,255) Total liabilities (5,510) (950) (97) - - - - - - (6,557) Net assets 14,079 674 (29) (162) 103 (338) - - 644 14,971 IAS 12 IAS 19 IAS 21 IAS 38 IAS 38 IAS 40 IFRS3 IFRS3 IFRS UK GAAP Income Holiday Currency Capitali- Amorti- Reclassi- Reclassi- Add (IFRS Taxes pay trans- of sation fication fication back format) accrual lation develop- of other of of of differ- ment intan- invest- intan- good- ence costs, net gibles ment gibles will of identi- property identi- amorti- amorti- fied fied sation sation in NIKA in NIKA acquisi- acquisi- tion tion £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 EquityShare capital 213 - - - - - - - - 213Shares to be issued 1,112 - - - - - - - - 1,112Share premium reserve 1,735 - - - - - - - - 1,735Merger reserve 7,185 - - - - - - - - 7,185Retained earnings 3,834 674 (29) 140 103 (338) - - 644 5,028Currency translation - - - (302) - - - - - (302) 14,079 674 (29) (162) 103 (338) - - 644 14,971 4. Unaudited income statement reconciliation for the six month period to30 June 2006 UK GAAP IAS 12 IAS 19 IFRS 38 IAS 39 IFRS 3 IFRS Income Holiday pay Amortisation Write back Write back taxes accrual of of loss on of goodwill development exchange amortisation expenditure already recognised £'000 £'000 £'000 £'000 £'000 £'000 £'000Continuing operationsRevenue 5,677 - - - - - 5,677Cost of sales (159) - - - - - (159) Gross profit 5,518 - - - - - 5,518 Administrative expenses (5,465) - (15) (53) 17 98 (5,418)Other operating income 30 - - - - - 30 Operating profit 83 - (15) (53) 17 98 130 Investment revenues 54 - - - - - 54Finance costs (46) - - - - - (46) Profit before tax 91 - (15) (53) 17 98 138 Tax (18) 97 - - - - 79 Profit for the period 73 97 (15) (53) 17 98 217 5. Unaudited income statement reconciliation for the year to 31 December 2006 UK GAAP IAS 12 IAS 19 IFRS 38 IAS 38 IAS 39 IFRS 3 Write IFRS Add back back of Income Holiday Capitalisation Amortisation of loss goodwill taxes pay of development of on amortisation accrual expenditure intangible exchange net of fixed assets contract amortisation £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Continuing operationsRevenue 14,221 - - - - - - 14,221Cost of sales (550) - - - - - - (550) Gross profit 13,671 - - - - - - 13,671 Administrative expenses (13,171) - 50 (29) (338) 29 644 (12,815)Other operating income 61 - - - - - 61 Operating profit 561 - 50 (29) (338) 29 644 917 Investment revenues 101 - - - - - - 101Finance costs (164) - - - - - - (164) Profit before tax 498 - 50 (29) (338) 29 644 854 Tax (160) 238 - - - - - 78 Profit for the period 338 238 50 (29) (338) 29 644 932 This information is provided by RNS The company news service from the London Stock Exchange