Foresightgr Regulatory News (FSG)

7 Dec 2007 07:00

Focus Solutions Group PLC07 December 2007 Embargoed until 7am 7th December 2007 Focus Solutions Group Plc "Focus" or the "Group" Interim Results Focus Solutions Group plc (AIM: FSG), a leading supplier of adaptive softwaresolutions to the financial services industry, today announces unaudited interimresults for the six months to 30th September 2007 reported under IFRS. Financial Highlights: • Total revenues up 43% to £4.0 million (2006: £2.8 million) • Operating profit before exceptional items £0.5 million (2006: operating loss before exceptional items £0.1 million) • Operating profit £0.3 million (2006: operating loss £0.3 million) • Profit before tax and interest £0.4 million (2006: loss before tax and interest £0.3 million), trading profitably for the first time in the first half of the year • Basic earnings per share 1.21 pence (2006: loss per share 0.71 pence) • Net cash balances £2.0 million (2006: £0.4 million) Operating Highlights: • New contract wins in the period included: • HSBC Bank plc - Consultancy services to assist in the scoping and analysis of requirements for the second half of a major new project being undertaken by the bank • Openwork Limited - Restructured enterprise licence agreement for the Openwork Trading Platform and for multiple sales processes covering the Conduct of Business Rules (COBs) • Further new contract wins since the period end: • AEGON Scottish Equitable - contract for IT services including the development of an intermediary extranet solution to support the sale of investment bonds and retirement products Commenting on the results, Richard Stevenson, Chief Executive said:"I am delighted to announce another period of strong growth for the Group whenwe achieved profitability in the first half of the year for the first time.Customers are still actively investing in new front office technology solutionsto meet competitive pressures and required regulatory changes.New business enquiries at present are higher than the corresponding period lastyear and we remain confident in meeting expectations for the year as a whole."For further information, please contact: Focus Solutions Group plc www.focus-solutions.co.ukRichard Stevenson, Chief Executive Tel: 01926 468 300Martin Clements, Finance Director Smithfield Tel: 0207 360 4900Tania Wild / Reg Hoare Daniel Stewart Tel: 020 7776 6550Graham Webster / Chloe Ponsonby CHAIRMAN'S STATEMENT Business and Operating Review IntroductionI am delighted to announce another period of strong growth for the Group. Focus'financial performance for the first half of the year has been particularlysatisfying, generating a profit for the first half for the first time and withsales revenues up 43% on the same period last year. Our technology has enabled us to develop long term client relationshipssupporting delivery across multiple channels, responding to changing needs andour customer base now includes leading financial institutions from retailbanking, life, pensions and mortgage sectors in the UK and Ireland. Focus isdeveloping into a successful, consistently growing, profitable and cashgenerative business. Contract momentumDuring the six months to 30 September 2007, Focus has continued to make goodprogress in leveraging business from its customer base and has restructured anenterprise licence agreement with existing client Openwork Limited, (Openwork isa directly authorised financial services distribution network with more than2,600 advisers operating across the UK). The contract is worth between £650,000and £900,000 over five years, includes licence, support and maintenance fees forseveral aspects of the Focus technology product suite and a number of solutions.The enterprise licence agreement is for the Openwork Trading Platform and formultiple sales processes covering the Conduct of Business rules for Mortgagesand General Insurance business streams. Focus has extended its relationship with HSBC with a contract extension of£322,000 for consultancy services which will be carried out in the currentfinancial year. The contract was awarded to assist in the scoping and analysisof requirements for the second half of a major new project being undertaken bythe Bank. This scoping exercise will extend the Point of Sale (POS) solutionthat Focus is currently developing, to include the IFA sales process, commercialplanning and offline working. During the period we have continued to generate further business from existingcustomers including Lincoln Financial Group, Irish Life, Home of Choice and BT. Since the period end, Focus signed a contract with AEGON Scottish Equitable plcto provide IT services including the development of an extended intermediaryextranet service to support the sale of investment bonds and retirementproducts, and software licence, support and maintenance and consultancyservices. focus:360For some time, Focus has realised the potential for "productising" its keyofferings, providing customers with a 'packaged' solution. We have invested inextending our Point of Sale capabilities to develop "focus:360"- the wholeoffice solution for financial advisers. The combined assets will provide asingle end-to-end solution encompassing areas such as Training and Competency (T&C), Sales Performance Management Information (MI), Compliance Monitoring andPipeline Tracking within a refreshed POS offering. focus:360 is aimed at bancassurers, large intermediary firms, pure mortgagenetworks and providers with controlled distribution and encompasses a Point ofSale solution, sales support capability and back office functionality through asingle technology platform that can support the financial advice sales processacross the full suite of financial products. focus:360 enables Focus todifferentiate itself in the market compared to traditional package softwaresuppliers, enabling a move towards higher margin and more predictable revenuesand away from higher cost, less scalable bespoke development. The UK intermediary market has previously had to integrate a number of disparatesolutions to meet all their business requirements; the new proposition willoffer clients significant cost benefits. focus:360 has been designed to createopportunities both in the front and back office with small and large sizedintermediary firms, a potential market size of some 90 organisations. focus:technology 2007At the end of the period, we launched a new innovative next generationtechnology suite - "focus:technology 2007", a refreshed and redeveloped toolkitbased upon goal:technology. focus:technology enables the rapid creation offunctionally rich user interfaces that can apply business intelligence in thecapture, validation and presentation of data. During the period, we also announced the development of a new intermediarysolution for the sale of SIPP products and opened an office in Edinburgh. The Group's intention is to be recognised as the leading provider of frontoffice solutions to the UK financial services market and the Board has a clearstrategy for both organic and non-organic growth to achieve this. To date, Focushas concentrated on developing business from our established customer base andhas a strong new business pipeline. The financial services industry is stillheavily regulated and organisations require intelligent technology solutionsthat can adapt to changing business or environmental issues. Focus' e-tradingsolutions and unrivalled reputation for delivering high quality, successfulimplementations has put the Company in a strong position to support this,particularly in reference to the mortgage market where industry wide standardsare becoming a reality. One of our key objectives is to increase the proportionof turnover that is represented by annually recurring revenues. The Group has a clearly defined merger and acquisitions strategy to develop theorganisation further and is looking at organisations that have a complementaryclient base and technology to develop a truly integrated solution for thefinancial services industry. Financial Review Group revenues in the first half of the year were up 43% over the same periodlast year at over £4.0 million (2006:£2.8 million). This reflected the progressmade by the Group over the past two years in winning a series of significant neworders. Operating Profit before Exceptional items was £0.5 million compared to aloss of £0.1 million in the same period last year. Gross margins fell from 60% to 57% from the corresponding period last year.However, while revenues grew by 43%, total costs in the first half increased byonly 20%, at £3.7 million, £0.6 million up on the same period last year. Thisreflected the increased proportion of professional services revenue andcontinued tight control over overhead expenditure, despite the increasingactivity levels. At the operating level, we generated a profit before exceptional costs of £0.5million, as compared to a loss of £0.1 million last year. This reflects theconsiderable improvements we have made to the business over the last two years. Net cash balances at the end of September 2007 were £2.0 million (September2006: £0.4 million; 31 March 2007: £3.0 million). Overdraft facilities totalling£0.5 million are available to us from our bankers, HSBC plc. Cash outflow fromoperating activities in the first half was £0.8 million (2006: £0.3 millioninflow). The Directors continually review the funding requirements for the Group and willensure that the continued development of the business is properly funded. The earnings per share of 1.21 pence per share compares to 0.71 pence loss pershare in the same period last year. As in previous periods, the Directors arenot recommending the payment of an interim dividend. IFRS These results are the first to be prepared on the basis of InternationalFinancial Reporting Standards (IFRS). The adoption of IFRS has not had asignificant impact on the underlying financial performance of the Group, otherthan the capitalisation of R&D costs totalling £148,000 in the period. Theresults for the six months ended 30 September 2006 and for the year ended 31March 2007 have been restated in accordance with IFRS. The principal change hasbeen the recognition of an intangible asset relating to some of the Group'sResearch and Development expenditure as required under IAS 38 Intangible Assets.Reconciliations of prior periods' results, balance sheets and cash flows underIFRS are presented in note 5. Outlook Demand in our main markets of Banking and Life and Pensions remains robust. Thecurrent conditions in the mortgage market have had a limited impact on tradingin the year to date. Customers are still actively investing in new front officetechnology solutions to meet competitive pressures and required regulatorychanges. New business enquiries at present are higher than the correspondingperiod last year and we remain confident of meeting expectations for the year asa whole. Focus' reputation in the market and the development of new market propositions,including focus:360, will enable the Group to differentiate itself from othervendors and become the benchmark by which other companies are judged. The Group will continue to develop new business within the financial servicesmarket, increasing our market coverage in the UK and Ireland and extending thedepth of our solution capabilities within this market. Our focus for the year isto concentrate on improving profitability within the Group and we feel that weare in a good position moving forward. We have a strong pipeline in place andthe right people, skills and technology to enable Focus to continue its growth. Alastair M TaylorChairman Consolidated income statementFor the six months ended 30 September 2007 Unaudited Six Unaudited Six Unaudited months to months to Year ended 30 September 30 September 31 March 2007 2006 2007 As restated As restated £000 £000 £000 Revenue 4,011 2,806 7,908Cost of sales 1,722 1,129 2,441Gross profit 2,289 1,677 5,467Operating expenses 578 582 1,407Distribution costs 1,406 1,391 3,070Administrative expenses(including exceptional costs of £212k, 2006:£181k, FY2007: £209k)Operating profit/(loss) 305 (296) 990Operating profit/(loss)before exceptional costs 517 (115) 1,199Exceptional costs (212) (181) (209)Profit/(loss) on ordinaryactivities before interest 305 (296) 990Finance income 52 11 45Profit/(loss) on ordinary activities 357 (285) 1,035Taxation - 83 532Profit/(loss) for the periodattributable to equity shareholders 357 (202) 1,567Earnings per share Pence per Pence per Pence per share share shareBasic earnings per share 1.21 (0.71) 5.46Diluted earnings per share 1.27 (0.71) 5.22 All the above figures relate to the Group's continuing operations, restated toreflect the adoption of IFRS. Consolidated balance sheetFor the six months ended 30 September 2007 Unaudited Unaudited Unaudited Six months to Six months to Year ended 30 September 2007 30 September 2006 31 March 2007 As restated As restated £000 £000 £000 AssetsNon current assetsProperty, plant and equipment 197 110 160Intangible assets 280 47 58Trade and other receivables 294 468 221Deferred income tax assets 450 - 450Current assets 1,221 625 889Trade and other receivables 3,153 2,174 3,625Cash and cash equivalents 2,006 418 3,005Total assets 5,159 2,592 6,630 6,380 3,217 7,519 Current liabilitiesTrade and other payables 1,479 799 2,615Current tax liabilities 333 271 860Total liabilities 1,812 1,070 3,475Net assets 4,568 2,147 4,044 Capital and reserves attributable to equity holders of the Company Called up share capital 2,946 2,864 2,930Share premium 9,898 9,832 9,881Merger reserve 220 220 220Share option reserve 197 55 62Profit and loss reserve (8,693) (10,824) (9,049) 4,568 2,147 4,044 Restated to reflect adoption of IFRS. Consolidated cash flow statementFor the six months ended 30 September 2007 Unaudited Unaudited Unaudited Six months to Six months to Year ended 30 September 30 September 31 March 2007 2006 2007 As restated As restated £000 £000 £000 Cash (outflow)/inflowfrom operations (766) 261 2,799Finance income 52 11 45Income tax received - 83 82Net cash(outflow)/inflow fromoperating activities (714) 355 2,926Investing activitiesPurchases of property,plant and equipment (74) (53) (127) Purchases of intangibleassets (243) (7) (32)Net cash used ininvesting activities (317) (60) (159)Financing activitiesIssue of ordinaryshares 32 - 115Net cash from financingactivities 32 - 115Net (decrease)/increasein cash and cashequivalents (999) 295 2,882Reconciliation of netcashflow to movement innet funds (999) 295 2,882(Decrease)/ increase incash and cashequivalents in theperiod (999) 295 2,882Movement in net funds in theyearNet funds at start ofthe period 3,005 123 123Net funds at end of theperiod 2,006 418 3,005 1. Accounting Policies Basis of preparation The interim financial statements for the six months ended 30 September 2007 havenot been audited and do not constitute statutory accounts within the meaning ofSection 240 of the Companies Act 1985. The Company's statutory accounts for theyear ended 31 March 2007, prepared under UK Generally Accepted AccountingPrinciples (UK GAAP) have been delivered to the Registrar of Companies. Thereport of the Auditors included in those statutory accounts was not qualifiedand did not contain a statement under Section 237 (2) or (3) of the CompaniesAct 1985. Prior to 1 January 2007, the Group was required to prepare its consolidatedfinancial statements under UK GAAP. For the year ending 31 March 2008, the Groupis required to prepare its annual consolidated financial statements inaccordance with accounting standards adopted for use in the European Union(International Financial Reporting Standards (IFRS)). The financial statements for the year to March 2007 were audited. Therestatement of these figures to reflect the introduction of IFRS has not yetbeen subjected to audit and as such comparative figures for that period aredisclosed as unaudited. The interim financial statements for the six months to 30 September 2007 havebeen prepared in accordance with the accounting policies set out below, takinginto account the requirements and options set out in IFRS 1 "First time adoptionof International Financial Reporting Standards". In preparing these interimfinancial statements the Board has not sought to implement the early adoption ofIAS 34 "Interim Financial Reporting". The transition date for the Group'sapplication of IFRS is 1 April 2006 and comparative figures for 30 September2006 and 31 March 2007 have been restated to reflect IFRS. Reconciliations ofthe income statement and balance sheet from those previously reported under UKGAAP to the restated IFRS figures are given later in this report. The interim financial statements have been prepared on the historic cost basis. Accounting policies The principal accounting policies applied by the Group resulting from theadoption of IFRS are set out below. In all other respects, they are the same asthose applied by the Group in its consolidated financial statements for the yearended 31 March 2007. Basis of consolidation The consolidated financial statements of Focus Solutions Group plc include theresults of the Company and its subsidiaries. Intra Group transactions are eliminated on consolidation. Exceptional costs Items of income and expenditure that are considered material, either by the sizeand/or their nature are classified as exceptional. Such items are shownseparately on the face of the profit and loss account within the relevantconsolidated income statement category to which they relate. Intangible assets Intangible assets are shown at cost net of depreciation. Depreciation iscalculated so as to write off the cost, less any provision for impairment, ofintangible assets less their estimated residual values over the expected usefuleconomic lives, as follows: Computer software between 2 and 4 years Research and development Development expenditure is capitalised as an intangible asset only ifdevelopment costs can be measured reliably, the product or process istechnically and commercially feasible, future economic benefits are probable andthe Group intends to complete the development and to use and sell the assetdeveloped. The expenditure capitalised includes the cost of materials, directlabour and overhead costs directly attributable to preparing the asset for itsintended use. Other development expenditure, as well as expenditure on research,is recognised in the profit and loss account when incurred. Capitalised development expenditure is measured at cost less accumulatedamortisation and accumulated impairment losses. Amortisation is recognised in the profit and loss account on a straight linebasis over the estimated useful lives of the relevant product. Taxation Current tax is based on the taxable profit for the period. The Group's liabilityfor current tax is calculated using tax rates that have been enacted orsubstantively enacted by the balance sheet date. Deferred income tax is provided for in full using the liability method, ontemporary differences arising between the tax bases of assets and liabilitiesand their carrying amounts in the consolidated financial statements. Deferredincome tax is determined using tax rates (and laws) that have been enacted orsubstantially enacted by the balance sheet date and are expected to apply whenthe deferred income tax asset is realised. Deferred income tax assets arerecognised to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax assets andliabilities may be set off against each other provided there is a legal right todo so and it is managements' intention to do so. Property, plant and equipment Property, plant and equipment is shown at cost, net of depreciation. Depreciation is calculated so as to write off the cost, less any provision forimpairment, of plant, property and equipment, less their estimated residualvalues over the expected useful economic lives of the assets concerned. Theprincipal annual rates used for this purpose are: Fixtures and fittings Between 3 and 4 yearsComputer Equipment Between 2 and 4 years 2. Exceptional Items As stated in the Group's accounting policies the Directors regard certainmaterial items as exceptional.The analysis of exceptional items is as follows. Unaudited Unaudited Unaudited Six months to Six months to Year ended 30 September 2007 30 September 2006 31 March 2007 £000 As restated As restated £000 £000Restructuring costs 34 181 196FRS 20 Share BasedPayment Charge 135 - 13Aborted acquisitioncosts 43 - - ---------- ------------ ----------- 212 181 209 ---------- ------------ ----------- Restructuring costs relate to the reorganisation of the Group's tradingoperations and include the costs of compensation for loss of office. FRS 20 share based payment charge is shown as exceptional because of themateriality of the amount charged in the period. Aborted acquisition costs relate to the costs incurred by the Group in relationto a possible acquisition that was not completed. 3. Income tax expense Unaudited Unaudited Unaudited Six months to Six months to Year ended 30 September 2007 30 September 2006 31 March 2007 £000 As restated As restated £000 £000Current taxation - 83 82Deferred taxation - - 450 Total - 83 532 4. Earnings per ordinary share Basic earnings per ordinary share is based on the profit for the period and on29,268,963 (September 2006: 28,642,358, March 2007: 28,717,745) ordinary shares,being the weighted average number of ordinary shares in issue during the period. Diluted basic earnings per ordinary share is based on the profit for the periodand on 31,135,691 (September 2006: 28,682,482; March 2007: 30,022,619) ordinaryshares, being the weighted average number of ordinary shares which would havebeen issued if the outstanding options to acquire shares in the Group had beenexercised at the average price during the period. 5. Transition Statements Focus Solutions Group plcIFRS transition statementsIncome statements Consolidated income statement for the six months ended 30th September 2007 As reported under UK IAS 38 Restated under GAAP IFRS Intangible Assets £000 £000 £000Revenue 4,011 - 4,011Cost of sales 1,838 116 1,722 -------- --------- -------- Gross profit 2,173 116 2,289 Operating expensesDistribution costs 578 - 578Administrative expenses 1,226 32 1,194 -------- --------- -------- Operating profitbefore exceptional costs 369 148 517 Exceptional costs 212 - 212 -------- --------- -------- Operating profit 157 148 305 Finance income 52 - 52 -------- --------- -------- Profit on ordinaryactivities before taxation 209 148 357 Income tax expense 0 - 0 -------- --------- -------- Profit for theperiod attributableto equityshareholders 209 148 357 ======== ========= ======== Earnings per ordinaryshare Basic 0.71 0.50 1.21 Diluted 0.67 0.48 1.14 All the above figures relate to the Group's continuing operations, restated toreflect the adoption of IFRS. Consolidated income statement for the six months ended 30th September 2006 As reported under UK IAS 38 Restated under GAAP IFRS Intangible Assets £000 £000 £000 Revenue 2,806 - 2,806Cost of sales 1,129 - 1,129 -------- --------- -------- Gross profit 1,677 - 1,677 Operating expensesDistribution costs 582 - 582Administrativeexpenses 1,391 - 1,391 -------- --------- -------- Operating loss (296) (296) Operating lossbefore exceptionalcosts (115) - (115) Exceptional costs (181) - (181) -------- --------- -------- Operating loss (296) - (296) Finance income 11 - 11 -------- --------- -------- Loss on ordinaryactivities beforetaxation (285) - (285) Income tax expense 83 - 83 -------- --------- -------- Loss for the periodattributable toequity shareholders (202) - (202) ======== ========= ======== Loss per ordinaryshare Basic 0.71 - 0.71 Diluted 0.71 - 0.71 All the above figures relate to the Group's continuing operations, restated toreflect the adoption of IFRS. Consolidated income statement for the year ended 31st March 2007 As reported under UK IAS 38 Restated under GAAP IFRS Intangible Assets £000 £000 £000 Revenue 7,908 - 7,908Cost of sales 2,441 - 2,441 -------- --------- -------- Gross profit 5,467 - 5,467 Operating expensesDistribution costs 1,407 - 1,407Administrativeexpenses 3,070 - 3,070 -------- --------- -------- Operating profit 990 990 Operating profitbefore exceptionalcosts 1,199 - 1,199 Exceptional costs 209 - 209 -------- --------- -------- Operating profit 990 - 990 Finance income 45 - 45 -------- --------- -------- Profit on ordinaryactivities beforetaxation 1,035 - 1,035 Income tax 532 - 532 -------- --------- -------- Profit for theperiod attributableto equityshareholders 1,567 - 1,567 ======== ========= ======== Earnings per ordinaryshare Basic 5.46 - 5.46 Diluted 5.22 - 5.22 All the above figures relate to the Group's continuing operations, restated toreflect the adoption of IFRS. Consolidated balance sheet as at 30th September 2006 As reported under UK IAS 38 Restated under GAAP IFRS Intangible Assets £000 £000 £000 Fixed assetsNon current assetsProperty, plant andequipment 110 - 110Intangible assets 47 - 47Trade and otherreceivables 468 - 468Deferred income tax - - -assets -------- --------- -------- 625 - 625 Current assetsTrade and otherreceivables 2,174 - 2,174Cash and otherequivalents 418 - 418 -------- --------- -------- 2,592 - 2,592 -------- --------- -------- Total assets 3,217 - 3,217 -------- --------- -------- LiabilitiesNon-currentliabilitiesProvisions - - -Trade and other - - -payables -------- --------- -------- - - - Current liabilitiesTrade and otherpayables 799 - 799Current taxliabilities 271 - 271 -------- --------- -------- Total currentliabilities 1,070 - 1,070 -------- --------- -------- Net assets 2,147 - 2,147 ======== ========= ======== Capital and reserves attributable to equity holders of the Company Called up share capital 2,864 - 2,864Share premium 9,832 - 9,832Merger reserve 220 - 220Share option reserve 55 - 55Profit and loss account reserve (10,824) - (10,824) -------- -------- -------- Total equity 2,147 - 2,147 ======== ======== ======== Restated to reflect the adoption of IFRS. Consolidated balance sheet as at 31st March 2007 As reported under UK IAS 38 Restated under GAAP IFRS Intangible Assets £000 £000 £000 Fixed assetsNon current assetsProperty, plant andequipment 160 - 160Intangible assets 58 - 58Trade and otherreceivables 221 - 221Deferred income taxassets 450 - 450 -------- --------- -------- 889 - 889 Current assetsTrade and otherreceivables 3,625 - 3,625Cash and otherequivalents 3,005 - 3,005 -------- --------- -------- 6,630 - 6,630 -------- --------- -------- Total assets 7,519 - 7,519 -------- --------- -------- LiabilitiesNon-currentliabilitiesProvisions - - -Trade and other - - -payables -------- --------- -------- - - - Current liabilitiesTrade and otherpayables 2,615 - 2,615Current taxliabilities 860 - 860 -------- --------- -------- Total currentliabilities 3,475 - 3,475 -------- --------- -------- Net assets 4,044 - 4,044 ======== ========= ======== Capital and reserves attributable to equity holders of the Company Called up share capital 2,930 - 2,930Share premium 9,881 - 9,881Merger reserve 220 - 220Share option reserve 62 - 62Profit and loss reserve (9,049) - (9,049) -------- -------- ------- Total equity 4,044 - 4,044 ======== ======== ======== Restated to reflect the adoption of IFRS. Focus Solutions Group plcIFRS transition statementsBalance sheets Consolidated balance sheet as at 31st March 2006 As reported under UK IAS 38 Restated under GAAP IFRS Intangible Assets £000 £000 £000 Fixed assetsNon current assetsProperty, plant andequipment 81 - 81Intangible assets 54 - 54Trade and otherreceivables 490 - 490Deferred income tax - - -assets -------- --------- -------- 625 - 625 Current assetsTrade and otherreceivables 3,657 - 3,657Cash and otherequivalents 123 - 123 -------- --------- -------- 3,780 - 3,780 -------- --------- -------- Total assets 4,405 - 4,405 -------- --------- -------- LiabilitiesNon-currentliabilitiesProvisions - - -Trade and other - - -payables -------- --------- -------- - - - Current liabilitiesTrade and otherpayables 1,393 - 1,393Current taxliabilities 663 - 663 -------- --------- -------- Total currentliabilities 2,056 - 2,056 -------- --------- -------- Net assets 2,349 - 2,349 ======== ========= ======== Capital and reserves attributable to equity holders of the Company Called up share capital 2,864 - 2,864Share premium 9,832 - 9,832Merger reserve 220 - 220Share option reserve 49 - 49Profit and loss reserve (10,616) - (10,616) -------- -------- -------- Total equity 2,349 - 2,349 ======== ======== ======== Restated to reflect the adoption of IFRS. Independent review report to Focus Solutions Group plc Introduction We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007, which comprises the income statement, balance sheet, cash flowstatement and related notes. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the AIM Rules for Companies which requirethat the financial information must be presented and prepared in a formconsistent with that which will be adopted in the Company's annual financialstatements. This interim report has been prepared in accordance with the basis set out inNote 1. As disclosed in Note 1, the next annual financial statements of theCompany will be prepared in accordance with IFRS as adopted by the EuropeanUnion. The accounting policies are consistent with those that the directorsintend to use in the next annual financial statements. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. This report, including the conclusion, has been prepared for and onlyfor the Company for the purpose of the AIM Rules for Companies and for no otherpurpose. We do not, in producing this report, accept or assume responsibilityfor any other purpose or to any other person to whom this report is shown orinto whose hands it may come, save where expressly agreed by our prior consentin writing. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 September 2007 is not prepared, in allmaterial respects, in accordance with the basis set out in Note 1 and the AIMRules for Companies. PricewaterhouseCoopers LLPChartered Accountants7 December 2007Birmingham This information is provided by RNS The company news service from the London Stock Exchange