HYDG.L Regulatory News (HYDG)

11 Sep 2007 07:01

Hydrogen Group PLC11 September 2007 11th September 2007 HYDROGEN GROUP PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 The Board of Hydrogen Group Plc ("Hydrogen" or "the Group") one of the UK'sfastest growing specialist recruitment consultancies, is pleased to announce itsunaudited interim results for the six months ended 30 June 2007. Financial Highlights • Strong first-half results in line with Board expectations • Continued rapid organic growth in revenue up 30.5% to £51.0m (2006: £39.1m) • Conversion of Net Fee Income to profit before tax of 23.1% (2006: 20.5%) • Profit before tax up 37.8% to £3.9m (2006: £2.8m) • Basic earnings per share increased by 25% to 12.0p (2006: 9.6p) • Strong cash conversion with net debt reducing by £2.6m to £9.8m • Interim dividend per share of 2.0p • On line to meet full year expectations Operating Highlights • Successful first half with improvement across all key metrics • Continued to strengthen position in high growth sectors • Net Fee Income well balanced across market sectors • Continued to leverage cross selling opportunities - 76% of top 50 clients now work with more than one brand • Increase in staff numbers by 22% to 309 (2006: 253) • Successfully launched ninth specialist brand, Eurisko • Opening of Sydney office in Australia Commenting on the results, Ian Temple, Executive Chairman said: "The first half of 2007 has been a period of strong organic growth for ourbusiness. Our leading market positions in the mid to senior level professional segments ofour target markets have enabled us to capitalise on the increasing demand forspecialist staff in these areas. This demand continues to be underpinned bydemographic trends and increased legislative and regulatory change. Trading in the second half of the year has started well and our brands continueto show strong growth." Enquiries: Hydrogen Group Plc 020 7796 4133 on the morning ofIan Temple, Executive Chairman the 11th September and on 020 7845 4120 thereafter Hudson Sandler 020 7796 4133Kate Hough Oriel Securities 020 7710 7600Andrew Edwards / Luke Webster An analyst meeting will be held at the offices of Hudson Sandler, 29 Cloth FairEC1A 7NN, on the morning of the results at 10.30am. Please contact RebeccaGhent on 020 7796 4133 for more details. CHAIRMAN'S STATEMENT On behalf of the Board of Hydrogen I am delighted to report another record setof results. The first half of 2007 has been a period of strong organic growth for ourbusiness. Through our proven strategy we continue to focus on higher growthmarket sectors, to leverage the selling opportunities across our existingbrands and to evaluate further growth areas in related markets. Our leading market positions in the mid to senior level professional segments ofour target markets have enabled us to capitalise on the increasing demand forspecialist staff in these areas, as demographic trends and increased legislativeand regulatory change continue to drive a shortage of high calibreprofessionals. Financial Highlights The Group has seen continued strong organic growth across our divisions withrevenue up 30.5% to £51.0m (2006: £39.1m) in the first half, producing a 22.3%increase in Net Fee Income (NFI) (Gross Profit) to £16.9m (2006: £13.9m). Profit before tax was up 37.8% to £3.9m (2006: £2.8m) generating a rise in basicearnings per share of 25.4% to 12.0p (2006: 9.6p) reflecting the increasednumber of shares in issue after the IPO. Increased conversion of NFI (gross profit) to profit before tax of 23.1% (2006:20.5%) reflected strong cost control for the period combined with our consistentfocus on productivity. Good working capital management has resulted in strong cash conversion with netdebt reducing by £2.6m to £9.8m. Debtor days were reduced from 67 days at 31December 2006 to 47 days at 30 June 2007 reflecting the focus on cash collectionsince debtors spiked around the year end. Dividend The board is pleased to announce that an interim dividend of 2.0p will be paidon the 9th November 2007 to shareholders on the register on the 12th October2007. The Market Independent research conducted for Hydrogen Group found that over 80% ofemployers are now making recruitment and retention of employees their number onepriority, with over half stating that it is hard to find good qualitycandidates. Aggressive cut backs made to the graduate intakes of major legal and accountancypractice firms between 2001 and 2004 have resulted in a shortage of qualifiedcandidates in these sectors. Increased regulatory change within the financialinstitutions coupled with a decline in the number of people entering the ITprofession between 2001 and 2003 has also lead to a shortage of skilled businesstechnologists. As a result, employers across these professional functions arebeing forced to make recruitment a priority. Through our strong market positions across our specialist brands we are ideallypositioned to benefit from these trends. Our new office in Australia will alsoprovide us with the opportunity to access new sources of suitable candidates. Divisions Our specialist brands have shown good growth for the period with the strongestgrowth generated from Target Partners, Commerce Partners and Law Professionals.Target Partners generated strong growth in NFI of 80% to £1.0m (2006: £0.6m)with Commerce Partners generating NFI growth of 74% to £2.4m (2006: £1.4m) andLaw Professionals generating NFI growth of 32% to £2.4m (2006: £1.8m). Thesebrands have now reached critical mass as established brands, benefiting fromleading positions in specialist markets where there is high demand for goodcandidates. Our 'Brand Journey' methodology is applied across all our businesses, monitoringthe key performance indicators ensuring profitable growth at each stage of thebrands' development. This approach provides the Group with a degree of resilience against thedifferent market cycles in the areas in which we operate. The Group maintains a broad balance between financial services (includinginsurance, investment banking, retail banking, credit cards and fund management)and commerce, with financial services contributing 54% of our NFI (2006: 49%). During the period the market has been stronger for the permanent business but byinvesting heavily in the contract business the mix of contract and permanent hasremained steady. This has resulted in 64% of NFI coming from permanentrecruitment, 31% from contract and the balance from Reflect our HR Outsourcingdivision. Across all our brands we continue to identify niche market opportunities wherethere is an underlying demographic shortage of suitable candidates which shouldunderpin future growth. In 2006 we recognised that the introduction of MiFiD inNovember 2007 would drive increasing demand across the financial services forhighly qualified business technologists and established a team to meet thisdemand. Our proven incubator model enables us to 'start up' in new markets costeffectively and at low risk. In the first half of 2007 our derivatives incubatorhit all its key metrics and in June 2007, Eurisko a specialist derivativesrecruitment brand was launched as a brand in its own right and is now fullyestablished and performing to management's expectations. Our ability to identify these niche market opportunities is a key differentiatorin our business model and Board Director Chris Cole now focuses full time on newbrand development, increasing our capacity to start and grow carefully selectednew businesses. Clients Our Group customer base remains very broad approximately 700 clients. Wecontinue to grow our major accounts with total NFI for our top 50 clients risingto £9.7m for the period. However, our broad client base ensures that no oneclient represents more than 8% of NFI. We continue to build on the cross selling opportunities across our brands and asa result 76% of our top 50 clients now work with more than one brand in theGroup. Staff We have continued to grow our headcount, increasing staff numbers by 22% to 309(2006: 253) whilst maintaining average annual NFI productivity per head at£109k. Current Trading Trading in the second half of the year has started well and in line with theBoard's expectations and our brands continue to show strong growth. We wereparticularly pleased with the performance of our Sydney office, launched earlierthis year. Representing Commerce Partners the office focuses on local market andcandidate flow, to and from Australia. Whilst the current uncertainty in the debt market has resulted in lower job flowfor some of our teams in this sector, overall activity across the businessremains high underlining the importance of our diversified business model. Themajority of the niche markets on which we focus continue to experience highdemand for specialist candidates, underpinned by demographics and increasedlegislative and regulatory change. The Group is on line to meet the full year's expectations and we look forward tothe future with confidence. UNAUDITED CONSOLIDATED INCOME STATEMENTFor the six months ended 30 June 2007 Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 Note £'000 £'000 £'000 REVENUE 51,011 39,089 82,927 Cost of sales (34,070) (25,233) (54,862) GROSS PROFIT 16,941 13,856 28,065 Administration expenses (12,522) (10,679) (21,289) OPERATING PROFIT 4,346 3,177 6,776 Interest payable and similar charges (447) (342) (688)Interest receivable 7 - 11 PROFIT BEFORE TAXATION 3,906 2,835 6,099 Income tax expense 1 (1,196) (894) (1,832) PROFIT FOR THE PERIOD 2,710 1,941 4,267 Attributable to: Equity shareholders of the parent 2,710 1,941 4,267 Earnings per share Basic earnings per share (pence) 3 12.01p 9.57p 20.37p Diluted earnings per share (pence) 3 11.64p 9.17p 19.59p The above results relate to continuing operations. UNAUDITED CONSOLIDATED BALANCE SHEETAs at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Note £'000 £'000 £'000NON-CURRENT ASSETSGoodwill 19,010 19,010 19,010Other intangible assets 205 209 218Property, plant and equipment 657 607 687Deferred income tax assets 664 218 706Other financial assets 83 80 80 20,619 20,124 20,701CURRENT ASSETSTrade and other receivables 17,759 10,642 18,702Prepayments and accrued income 13,096 8,626 8,212Cash and cash equivalents 354 454 161 31,209 19,722 27,075 TOTAL ASSETS 51,828 39,846 47,776 CURRENT LIABILITIESTrade and other payables 12,806 10,115 9,475Borrowings 7,594 3,723 9,523Current tax payable 1,160 1,827 801 21,560 15,665 19,799 NON-CURRENT LIABILITIESBorrowings 2,516 5,506 2,986 TOTAL LIABILITIES 24,076 21,171 22,785 NET ASSETS 27,752 18,675 24,991 CAPITAL AND RESERVESCalled-up share capital 227 - 225Share premium account 3,211 - 3,190Merger reserve 16,100 16,100 16,100Share option reserve 151 240 100Other reserve 273 - 273Retained earnings 7,790 2,335 5,103 TOTAL EQUITY 27,752 18,675 24,991 UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYAs at 30 June 2007 Share Share Share Merger Option Other Retained Total capital premium reserve reserve reserve earnings Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2006 - - 16,100 - - 469 16,569 Profit for six months ended 30 June 2006 - - - - - 1,941 1,941 Deferred tax on share options - - - - - 125 125 Total recognised income and expense for the - - - - - 2,066 2,066six months to 30 June 2006 Dividends - - - - - (200) (200) Share option charge - - - - 240 - 240 - - - - 240 (200) 40 Balance at 30 June 2006 - - 16,100 - 240 2,335 18,675 Profit for six months ended 31 Dec 2006 - - - - - 2,326 2,326 Deferred tax on share options - - - - - 634 634 Total recognised income and expense for thesix months to 31 December 2006 - - - - - 2,960 2,960 Share option charge - - - 33 33 14 80 Increase in share capital 19 3,190 - - - - 3,209 Options issued on flotation - - - 67 - - 67 Bonus issue of shares 206 - - - - (206) - 225 3,190 - 100 33 (192) 3.356 Balance at 31 December 2006 225 3,190 16,100 100 273 5,103 24,991 Profit for six months ended 30 June 2007 - - - - - 2,710 2,710 Tax on share-based charges - - - - - (21) (21) Total recognised income and expense for thesix months to 30 June 2007 - - - - - 2,689 2,689 Share option charge - - - 51 - - 51 Increase in share capital 2 21 - - - (2) 21 2 21 - 51 - (2) 72 Balance at 30 June 2007 227 3,211 16,100 151 273 7,790 27,752 UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 June 2007 Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 Note £'000 £'000 £'000 Net cash inflow/(outflow) from operations 4a 2,747 897 (5,636) Investing activitiesInterest received 7 - 11Proceeds from disposal of property, plant and equipment 53 42 65Purchase of property, plant and equipment (193) (143) (360)Purchase of software assets (44) (133) (205) Net cash used in investing activities (177) (234) (489) Financing activitiesProceeds on issue of shares 21 - 3,277Repayment of bank loans and loan notes (500) (313) (2,500)(Repayment)/increase in borrowings (1,986) - 5,754Increase/(repayment) of obligations under finance leases 8 (12) (141)Equity dividends paid - (200) (200) Net cash (used in)/from financing activities (2,457) (525) 6,190 Net increase in cash and cash equivalents 113 138 65 Cash and cash equivalents at beginning of period/year 161 96 96 Cash and cash equivalents at end of period/year 4b 274 234 161 UNAUDITED RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBTFor the six months ended 30 June 2007 Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 Note £'000 £'000 £'000 Increase in cash and cash equivalents in the period/year 113 138 65Change in net debt resulting from cash flows 2,478 325 (3,113)Other non-cash changes 1 (34) (96) Movement in net debt in the period/year 2,592 429 (3,144) Net debt at the start of the period/year (12,348) (9,204) (9,204) Net debt at the end of the period/year 4b (9,756) (8,775) (12,348) Accounting policiesFor the six months ended 30 June 2007 BASIS OF ACCOUNTING The financial information has been prepared under the historical cost conventionas modified by the revaluation of financial assets and liabilities at fair valuethrough profit or loss, and in accordance with the accounting policies that willbe adopted in the Group's financial statements for the year ended 31 December2007. Those financial statements will be prepared in accordance with EUEndorsed International Financial Reporting Standards (IFRSs). The financialinformation is covered by IFRS 1, 'First-time Adoption of InternationalFinancial Reporting Standards' because they are part of the period covered bythe Group's first IFRS financial statements for the year ended 31 December 2007. The Group's unaudited consolidated financial statements were prepared inaccordance with United Kingdom Generally Accepted Accounting Principles (UKGAAP) until December 2006. UK GAAP differs in some areas from IFRS. In preparingthe 2007 unaudited consolidated interim financial statements management hasamended certain accounting and valuation methods applied in the UK GAAPfinancial statements to comply with IFRS. The comparative figures for 2006 wererestated to reflect these adjustments as disclosed in the reconciliations, anddescriptions of the effect of the transition from UK GAAP to IFRS on the Group'sequity and its net income and cash flows are shown in note 6. The group'stransition date is 1 January 2006. The adoption of IFRS did not result in substantial changes to the Group'saccounting policies under UK GAAP and as set out in the Group's financialstatements for the year ended 31 December 2006. In summary the impact is asfollows: IAS 1 "Presentation of Financial Statements" and IAS 7 "Cash Flow Statements"have affected the overall presentation and disclosures. The adoption of IFRS 3 "Business Combinations", IAS 36 "Impairment of Assets"and IAS 38 "Intangible Assets" have resulted in a change in the accountingpolicy for goodwill. Under UK GAAP, goodwill was amortised on a straight linebasis over a period of 20 years and assessed for an indication of impairment ateach balance sheet date. In accordance with the provisions of IFRS 3, the Groupceased amortisation of goodwill from 1 January 2006. Accumulated amortisation asat 1 January 2006 has been eliminated with a corresponding decrease in the costof goodwill. From the year ended 31 December 2006 onwards, goodwill is testedannually for impairment. The effect of adopting IAS 38 "Intangible Assets" is to reclassify certainsoftware costs from computer equipment to intangible assets, and to reclassifythe related depreciation expense in the income statement as amortisation ofintangibles. The adoption of IAS 12 "Income Taxes" has resulted in a change in the accountingfor the deferred tax arising on share-based payments. Deferred tax is calculatedon temporary differences between the tax bases of assets and liabilities andtheir carrying amounts in the financial statements. Where the amount of the taxdeduction for share-based payments exceeds the amount of the cumulativeremuneration expense then the excess current tax has been recognised directly inequity and not through profit and loss. The Group elected to apply the exemptions granted in IFRS 1 in respect ofbusiness combinations that occurred prior to the transition date of 1 January2006. Notes to the unaudited financial informationFor the six months ended 30 June 2007 1. Taxation The charge to taxation is based on the expected annual tax rate of 30.6% onprofit before taxation (30 June 2006: 31.5% and 31 December: 30.0%). 2. Dividends Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Interim dividend for the periods ended 30 June 2006 and 31December 2006 of 194p per share - 200 200 The Directors did not propose a final dividend for 2006. The proposed interimdividend for 2007 had not been approved by the board at 30 June 2007 and istherefore not included as a liability. 3. Earnings per share Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000EarningsProfit attributable to equity holders of the parent 2,710 1,941 4,267 Number of sharesWeighted average number of shares used for earnings per share 22,569,088 20,280,323 20,945,975Dilutive effect of share plans 711,656 889,993 835,538 Diluted weighted average number of shares used to calculate 23,280,744 21,170,316 21,781,513fully diluted earnings per share Basic earnings per share (pence) 12.01p 9.57p 20.37pFully diluted earnings per share (pence) 11.64p 9.17p 19.59p Earnings per share is calculated by dividing the profit attributable to equityholders of the Group by the weighted average number of ordinary shares in issue. Fully diluted earnings per share is calculated by adjusting the weighted averagenumber of ordinary shares by existing share options and share incentive plans,assuming dilution through conversion of all existing options and shares held inshare plans. 4. Notes to the consolidated cash flow statement a. Reconciliation of operating profit to net cash inflow/(outflow) fromoperating activities Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit before taxation 3,906 2,835 6,099Depreciation and amortisation 236 215 446(Profit)/loss on sale of property, plant and equipment (9) 6 22Share based payments 51 240 220Net finance costs 440 342 677Operating cash flows before movements in working capital 4,624 3,638 7,464 Increase in receivables (3,944) (5,146) (12,790)Increase in payables 3,330 3,292 2,752 Cash generated by operations 4,010 1,784 (2,574) Income taxes paid (816) (571) (2,389)Interest paid (447) (316) (673) Net cash inflow/(outflow) from operations 2,747 897 (5,636) b. Analysis of net debt Six months ended Year ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Cash at bank and in hand 354 454 161Bank overdrafts (80) (220) - Cash and cash equivalents 274 234 161Debt due within one year (7,457) (3,410) (9,443)Debt due after one year (2,436) (5,427) (2,936)Hire purchase contracts (137) (172) (130) (10,030) (9,009) (12,509) Total (9,756) (8,775) (12,348) 5. Nature of financial information This interim report does not constitute statutory accounts of the group withinthe meaning of section 240 of the Companies Act 1985. Statutory accounts forthe year ended 31 December 2006 as extracted and shown in note 6, which wereprepared under UK Generally Accepted Accounting Principles (UK GAAP), have beenfiled with the Registrar of Companies. The auditor's report on those accountswas unqualified and did not contain a statement under section 237 of theCompanies Act 1985. The interim unaudited financial statements were approved by the Board ofDirectors on 11th September 2007. Copies of interim results are available at the Company's registered office -26-28 Bedford Row, London WC1R 4HE, and on the Company's website -www.hydrogengroup.com. 6. Adoption of IFRS in 2007 The accounting policies were changed on 1 January 2007 to comply with IFRS. Thetransition to IFRS is accounted for in accordance with IFRS 1 "First-TimeAdoption of International Financial Reporting Standards" with 1 January 2006 asthe date of transition. The changes in accounting policies as a consequence ofthe transition to IFRS are described below, and the reconciliations of theeffects of the transition to IFRS are presented in the notes to the first IFRSfinancial statements. The transition to IFRS resulted in the following changes in accounting policies: a Goodwill is not amortised but measured at cost less impairment losses. Under UK GAAP, goodwill was amortised on a straight line basis through profitand loss over its estimated useful economic life of 20 years. The effect of thechange is an increase in equity and profit before tax of £478,000 and £958,000at 30 June 2006 and 31 December 2006 respectively. The change does not affectequity or profit before tax at 1 January 2006. The change has no tax effect asdeferred taxes are not recognised for temporary differences arising fromgoodwill for which amortisation is not deductible for tax purposes. b Computer software has been reclassified from tangible fixed assets tointangible fixed assets and the related depreciation expense reclassified toamortisation in the income statement. c Deferred tax has been calculated on temporary differences between thetax bases of assets and liabilities and their carrying amounts in the financialstatements. Where the amount of the tax deduction for share-based paymentsexceeds the amount of the cumulative remuneration expense then the excesscurrent tax has been recognised directly in equity and not through profit andloss. As at 30 June 2006 As at 31 December 2006 Effect of Effect of Under UK Transition Under Under UK Transition Under GAAP to IFRS IFRS GAAP to IFRS IFRS Note £'000 £'000 £'000 £'000 £'000 £'000 REVENUE 39,089 - 39,089 82,927 - 82,927 Cost of sales (25,233) - (25,233) (54,862) - (54,862) GROSS PROFIT 13,856 - 13,856 28,065 - 28,065 Administration expenses a (11,157) 478 (10,679) (22,247) 958 (21,289) OPERATING PROFIT 2,699 - 3,177 5,818 - 6,776 Net finance expense (342) - (342) (677) - (677) PROFIT BEFORE TAXATION 2,357 478 2,835 5,141 958 6,099 Income tax expense c (896) 2 (894) (1,735) (97) (1,832) PROFIT FOR THE PERIOD 1,461 480 1,941 3,406 861 4,267 Attributable to: Equity holders of the 1,461 480 1,941 3,406 861 4,267parent Basic earnings per share 7.20p 2.37p 9.57p 16.26p 4.11p 20.37p(pence) Diluted earnings per share 6.90p 2.27p 9.17p 15.64p 3.95p 19.59p(pence) PROFIT UK GAAP 1,461 3,406 Goodwill not amortised a 478 958after date of transition Deferred tax c 2 (97) PROFIT IFRS 1,941 4,267 Reconciliation of Equity At 1 January 2006 At 30 June 2006 At 31 December 2006 Opening Opening Opening IFRS Under Effect of IFRS Effect of Effect of IFRS transition transition Balance UK Balance Under UK Under Transition Balance to IFRS to IFRS Sheet GAAP Sheet GAAP UK GAAP to IFRS Sheet £'000 £'000 £'000 Note £'000 £'000 £'000 £'000 £'000 £'000 NON-CURRENT ASSETSGoodwill a 19,010 - 19,010 18,532 478 19,010 18,052 958 19,010Computer software b 20 110 130 - 209 209 - 218 218Property, plant and b 773 (110) 663 816 (209) 607 905 (218) 687equipmentOther financial 80 - 80 80 - 80 80 - 80assetsDeferred income tax c 47 - 47 98 120 218 66 640 706assets 19,930 - 19,930 19,526 598 20,124 19,103 1,598 20,701 CURRENT ASSETSTrade and other 14,123 - 14,123 19,268 - 19,268 26,914 - 26,914receivablesCash and cash 110 - 110 454 - 454 161 - 161equivalents 14,233 - 14,233 19,722 - 19,722 27,075 - 27,075 TOTAL ASSETS 34,163 - 34,163 39,248 598 39,846 46,178 1,598 47,776 CURRENT LIABILITIESTrade and other 6,822 - 6,822 10,115 - 10,115 9,475 - 9,475payablesBorrowings 3,321 - 3,321 3,723 - 3,723 9,523 - 9,523Current tax payable 1,458 - 1,458 1,827 - 1,827 801 - 801 11,601 - 11,601 15,665 - 15,665 19,799 - 19,799 NON-CURRENTLIABILITIES Borrowings 5,993 - 5,993 5,506 - 5,506 2,986 - 2,986Deferred tax c - - - 7 (7) - 22 (22) -liabilities 5,993 - 5,993 5,513 (7) 5,506 3,008 (22) 2,986 TOTAL LIABILITIES 17,594 - 17,594 21,178 (7) 21,171 22,807 (22) 22,785 NET ASSETS 16,569 - 16,569 18,070 605 18,675 23,371 1,620 24,991 CAPITAL ANDRESERVES Called-up share - - - - - - 225 - 225capitalShare premium - - - - - - 3,190 - 3,190accountMerger reserve 16,100 - 16,100 16,100 - 16,100 16,100 - 16,100Share option - - - 240 - 240 100 - 100reserveOther reserve - - - - - - 273 - 273Retained earnings 469 - 469 1,730 605 2,335 3,483 1,620 5,103 TOTAL EQUITY 16,569 - 16,569 18,070 605 18,675 23,371 1,620 24,991 Reconciliation of Equity At 31 At 1 January At 30 June December 2006 2006 2006 Effect of Effect of Effect of transition to transition to transition to IFRS IFRS IFRS Note £'000 £'000 £'000 Total equity UK GAAP 16,569 18,070 23,371 Goodwill not amortised after date of transition a - 478 958 Deferred tax on share schemes c - 127 662 TOTAL ADJUSTMENTS TO EQUITY - 605 1,620 TOTAL EQUITY IFRS 16,569 18,675 24,991 There are no material adjustments to the cash flow statement in either period. 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