Pci-pal Regulatory News (PCIP)

21 Feb 2008 07:00

County Contact Centres PLC21 February 2008 21 February 2008 County Contact Centres PLCInterim results for the six months ended 31 December 2007 Highlights 6 months 6 months 12 months ended ended ended 31-Dec 31-Dec 30-Jun 2007 2006 2007 (unaudited) (unaudited) (unaudited) £ £ £ Revenue 1,805,123 1,726,652 3,572,059Profit before 138,019 210,240 353,918taxation • First set of statements prepared under the International Financial Reporting Standards • Share Premium Account cancelled • Sales increased by £78,471 compared with the corresponding prior year period • Profit of £138,019 reflecting the difficult trading conditions • Investment in new telephone switch • Additional non-executive Director appointed For further enquiries: William Catchpole - Managing Director (01473 321 800)Stuart Gordon - Financial DirectorRichard Evans - Brewin Dolphin Ltd, Nominated Adviser (0845 270 8600) CHAIRMAN'S STATEMENT Financial Summary The board is pleased to report continued progress although increased costs andslower revenue generation have impacted profitability during the last sixmonths. The Group profit before taxation for the six months to December 2007 is£138,019, (December 2006: £210,240), achieved on turnover of £1,805,123(December 2006: £1,726,652) In preparing the figures for the 6 months to 31 December 2007 we have made thetransition from UK GAAP to International Financial Reporting Standards ("IFRS").There are many changes in the way we report our results and, in particular, areview of the capitalisation of development costs was undertaken. Thishighlighted that the capitalisation of development costs is not discretionaryunder International Accounting Standard 38, if certain criteria are met, andtherefore the capitalisation and amortisation of these costs is now mandatory.As such, the Group has capitalised and amortised the development work undertakenwithin the CallScripter division. This created an Intangible asset carried forward in the Balance Sheet at June2007 of £182,770, which increased profits in the years ending June 2007, 2006and prior by £54,957, £70,179, and £57,634 respectively (Note 4). In addition, under IFRS a holiday pay provision must be accrued. As our holidayyear runs from January to December, a provision is required each June, which isthen released each December. A brought forward provision of £32,100 was createdat June 2006, which was then released in December 2006. A new accrual of £38,000was created in June 2007, and this was then released in December 2007 (Note 4). During the year to 30 June 2007, the Company decided to reorganise its capitaland convened an Extraordinary General Meeting to obtain shareholder approval.Following subsequent court proceedings, the capital re-organisation becameeffective on the 6 August 2007. This reorganisation has had a positive effect onthe Balance Sheet. The effect of the capital reorganisation appears in theCondensed Consolidated Statement of Changes in Equity and in Note 8 and itshould be noted that while Total equity remains unchanged, the Profit and LossAccount reflects a positive balance. Business Summary County Contact Centres PLC operates through two principal subsidiaries, CountyContact Centres (UK) Limited and CallScripter Limited. The Group trades under two main trading styles namely Ansaback and CallScripter. Ansaback is a 24 hours a day, 7 days a week bureau telephony service providingoverflow and out of hours call handling, emergency cover, dedicated phoneresources, non-geographic, low call and Freephone telephone facilities as wellas disaster recovery lines and other ancillary telecommunication services. CallScripter is an enhanced customer interaction software suite specificallydeveloped for contact centres, telesales and telemarketing operations. Ourclients gain major benefits by introducing CallScripter's dynamic scriptingenvironment into their organisation. The software facilitates the rapid set-up,handling and reporting of sophisticated inbound, outbound and e-mail campaigns. Review of Operations Ansaback The call volumes in July, August and September were 11% up compared to the sameperiod last year, while client numbers remained consistent with no key accountdesertions. As we have a significant number of TV shopping and mail orderclients, we eagerly awaited the upturn in calls relating to the Christmasseason. Unfortunately, one major TV client was quieter than in the previous yearand we saw a 4% fall in October calls. However, as has been customary, Novemberbecame a new record high for billable minutes and this momentum carried on intoDecember resulting in a satisfactory outcome for the division. Overall howeverthe sales increase was not as hoped. The Ansaback Sales Director returned from maternity leave in August andsubsequently left the Group in October. The existing team, led by the SalesManager, covered the interim position and will be joined by a new manager, witha wide ranging brief, who will commence work during the first half of 2008. Significant investment in new infrastructure has occurred during the period. Thenetwork has been upgraded and a new telephony switch was ordered to replace thesystem that has been serving us since 2000. This new switch will enablesignificant tuning of the call distribution into Ansaback thus allowing us toimprove further our service to clients. It is planned to commission the newswitch during the first few months of 2008. The outlook for new contracts remains good enabling us to continue building thebusiness. These contracts, along with the retention of our client base, are keyto the continued profitable progress of this division. CallScripter We are pleased to announce that we have strengthened the sales department. Thisenlarged sales team will allow CallScripter to capitalise on our market positionand enable us to unlock its potential. The division has already achieved a goodstart to the New Year by winning a £45,000 contract. Whilst the OEM collaboration with Interactive Intelligence has resulted inadditional business, these sales unfortunately remain lower than originallyanticipated. In September, we launched a hosted version of CallScripter running within aweb-farm based in London. This new service is ideally placed for thehome-worker market and has attracted significant interest with 2 new clientsalready using the application. Risks A key risk within Ansaback is the technology utilised in the call centre and assuch we have contracted to invest in a 'state of the art' modern telephoneswitch. This new switch will include fail-over systems to further increase ourbusiness continuity / disaster recovery readiness whilst also enabling us tooffer additional services to clients. Looking at other risks, to lower oursusceptibility to power outages, we have a standby generator in case of powercuts, while our main computer systems have been upgraded to improve theirresilience and minimise any down-time should a problem arise. The risks to the CallScripter division continue to be in the ability of ourinternal sales team and the partner resellers to achieve market penetration. Weare confident that the sales targets can be achieved. Dividend The Company will not be declaring a dividend. Outlook There are difficult trading times ahead, but with the addition of the newCallScripter Sales Executives and the new Ansaback General Manager we hope tofurther increase sales, which will drive through to improved profitability. In addition, we are pleased to welcome Stephen Allen as a non-executive Directorof the Group. Stephen has experience of selling software products on a globalbasis, being previously Chairman of Atlantic Global PLC, and will addsignificantly to the resources available to our software division. Whilst the outlook for the remainder of the year is challenging, the Directorsremain confident about the future prospects for the Group. Philip DayerChairman 21 February 2008 CONDENSED CONSOLIDATED INCOME STATEMENT 6 months 6 months 12 months ended ended ended 31-Dec 31-Dec 30-Jun 2007 2006 2007 Note (unaudited) (unaudited) (unaudited) £ £ £ Revenue 1,805,123 1,726,652 3,572,059 Cost of sales -950,655 -926,688 -2,020,331 --------- --------- ----------Gross profit 854,468 799,964 1,551,728 Net operating expenses -727,320 -588,203 -1,199,736 --------- --------- ----------Operating profit 127,148 211,761 351,992 Finance income 15,490 3,007 10,962Finance expenditure -4,619 -4,528 -9,036 --------- --------- ----------Profit before taxation 138,019 210,240 353,918 Tax 7 - 23,000 61,000 --------- --------- ----------Profit for the period 138,019 233,240 414,918 ========= ========= ==========Attributable to: --------- --------- ----------Equity shareholders of theparent 138,019 233,240 414,918 ========= ========= ========== Basic and diluted earningsper share 6 0.5p 0.8p 1.4p CONDENSED CONSOLIDATED BALANCE SHEET 31-Dec 31-Dec 30-Jun 2007 2006 2007 Note (unaudited) (unaudited) (unaudited) £ £ £ AssetsNon current assetsIntangible assets 4.5 203,735 155,313 182,770Plant and equipment 198,564 63,331 79,727Deferred taxation 7 76,000 38,000 76,000 ---------- ---------- ----------Non-current assets 478,299 256,644 338,497 Current assetsTrade and other receivables 654,443 597,121 660,243Cash and cash equivalents 324,637 334,614 413,890 ---------- ---------- ----------Current assets 979,080 931,735 1,074,133 ---------- ---------- ----------Total assets 1,457,379 1,188,379 1,412,630 ========== ========== ==========LiabilitiesNon current liabilitiesLong term borrowings - -65,155 -34,564 ---------- ---------- ----------Non current liabilities - -65,155 -34,564 Current liabilitiesTrade and other payables -494,451 -467,659 -544,156Current portion of long termborrowings -55,161 -67,495 -64,162 ---------- ---------- ----------Current liabilities -549,612 -535,154 -608,318 ---------- ---------- ----------Total liabilities -549,612 -600,309 -642,882 ---------- ---------- ----------Net assets 907,767 588,070 769,748 ========== ========== ==========EquityEquity attributable to shareholdersof County Contact Centres PLC Share capital 4 297,908 297,908 297,908Share premium account 4 - 6,045,563 6,045,563Other reserves 4 18,396 18,396 18,396Profit and Loss Account 4 591,463 -5,773,797 -5,592,119 ---------- ---------- ----------Total equity 907,767 588,070 769,748 ========== ========== ========== CONDENSED CONSOLIDATED CASH FLOW STATEMENT 6 months 6 months 12 months ended ended ended 31-Dec 31-Dec 30-Jun 2007 2006 2007 (unaudited) (unaudited) (unaudited) £ £ £ Cash flows from operating activitiesProfit for the period 138,019 233,240 414,918 adjustments for:Interest received -15,490 -3,007 -10,962Interest paid 3,245 3,438 6,233Interest element of finance leases 1,374 1,090 2,803Deferred tax provision - -38,000 -61,000Depreciation 18,229 16,598 36,252Amortisation 32,789 23,000 45,991(Increase)/decrease in trade andother receivables 5,800 -91,677 -169,799(Decrease)/increase in trade andother payables -124,557 21,673 78,058 ---------- ---------- ----------Cash generated from operations 59,409 166,355 342,494Interest paid -3,245 -3,438 -6,233Interest element of finance leases -1,374 -1,090 -2,803Tax paid - -15,000 -15,000 ---------- ---------- ----------Net cash generated from operatingactivities 54,790 146,827 318,458 ---------- ---------- ---------- Cash flows from investing activitiesInterest received 15,490 3,007 10,962Capitalisation of development costs -53,754 -50,500 -100,948Purchase of property, plant andequipment -72,206 -15,200 -51,250 ---------- ---------- ----------Net cash used in investingactivities -110,470 -62,693 -141,236 ---------- ---------- ---------- Cash flows from financing activitiesRepayments of borrowings -25,001 -25,000 -50,000Capital element of finance leases -8,572 -24,412 -13,224 ---------- ---------- ----------Net cash used in financingactivities -33,573 -49,412 -63,224 ---------- ---------- ----------Net (decrease)/increase in cash -89,253 34,722 113,998 ========== ========== ========== Cash at beginning of the period 413,890 299,892 299,892Net (decrease)/increase in cash -89,253 34,722 113,998 ---------- ---------- ----------Cash at the end of the period 324,637 334,614 413,890 ========== ========== ========== CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Profit And Share Share Other Loss Total Capital Premium Reserves Account Equity £ £ £ £ £ Balance at 1st July 2006 297,908 6,045,563 18,396 -6,102,750 259,117Intangible assets - - - 127,813 127,813Accruals - holiday pay provision - - - -32,100 -32,100 ---------- ---------- ---------- ---------- ---------- Balance at 1st July 2006 (revised) 297,908 6,045,563 18,396 -6,007,037 354,830 Profit for the period - - - 173,640 173,640Intangible assets - - - 27,500 27,500Accruals - holiday pay provision - - - 32,100 32,100 ---------- ---------- ---------- ---------- ---------- Total recognised income and expense for the period - - - 233,240 233,240 ---------- ---------- ---------- ---------- ---------- Balance at 31st December 2006 297,908 6,045,563 18,396 -5,773,797 588,070 Profit for the period - - - 192,221 192,221Intangible assets - - - 27,457 27,457Accruals - holiday pay provision - - - -38,000 -38,000 ---------- ---------- ---------- ---------- ---------- Total recognised income and expense for the period - - - 181,678 181,678 ---------- ---------- ---------- ---------- ---------- Balance at 30th June 2007 297,908 6,045,563 18,396 -5,592,119 769,748 Profit for the period - - - 138,019 138,019Capital reorganisation - -6,045,563 - 6,045,563 - ---------- ---------- ---------- ---------- ---------- Total recognised income and expense for the period - -6,045,563 - 6,183,582 138,019 ---------- ---------- ---------- ---------- ---------- Balance at 31st December 2007 297,908 - 18,396 591,463 907,767 ========== ========== ========== ========== ========== NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Nature of operations and general information The Company operates principally as a holding company. The main subsidiaries areengaged in the provision of a 24 hours a day, 7 days a week out of hours andoverflow telephony service and the development and sale of call centre contactrelationship management software. County Contact Centres PLC is the Group's ultimate parent company. It isincorporated and domiciled in the United Kingdom. The address of County ContactCentres PLC's registered office is also its principal place of business. CountyContact Centres PLC's shares are listed on the Alternative Investment Market ofthe London Stock Exchange. The Group's condensed consolidated interim financial statements (the "interimfinancial statements") are presented in pounds sterling (£), which is also thefunctional currency of the parent company. These interim financial statements do not constitute statutory accounts asdefined in Section 240 of the Companies Act 1985. The Group's statutoryfinancial statements for the year ended 30th June 2007, prepared under UK GAAP(Generally Accepted Accounting Practice), have been filed with the Registrar ofCompanies. The auditor's report on those financial statements was unqualifiedand did not contain a statement under Section 237 (2) of the Companies Act 1985. 2. Basis of preparation of financial information These interim financial statements are for the six months ended 31st December2007. They have been prepared in accordance with IAS34 "International FinancialReporting" and the requirements of IFRS 1 "First-time Adoption of InternationalFinancial Reporting Standards" relevant to interim reports, because they arepart of the period covered by the Group's first IFRS financial statements forthe year ended 30th June 2008. They do not include all of the informationrequired for full annual financial statements and should be read in conjunctionwith the consolidated financial statements of the Group for the year ended 30thJune 2007. These interim financial statements have been prepared in accordance with theaccounting policies set out below which are based on the recognition andmeasurement principles of IFRS in issue as adopted by the European Union (EU)and are effective, or expected to be effective, at 30th June 2008, our firstannual reporting date at which we are required to use IFRS accounting standardsadopted by the EU. These interim financial statements have been prepared under the historical costconvention. County Contact Centres PLC's consolidated financial statements were prepared inaccordance with UK GAAP until 30th June 2007. The date of transition to IFRS was1st July 2006. The comparative figures in respect of 30th June 2007 have beenrestated to reflect changes in accounting policies as a result of the adoptionof IFRS. The disclosures required by IFRS 1 concerning the transition from UKGAAP are given in the reconciliation schedules and explained in Note 4. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these interim financial statements. 3. Summary of significant accounting policies 3.1 Basis of consolidation The interim financial statements incorporate the financial statements of CountyContact Centres PLC ("the Company") and its subsidiary undertakings (together "the Group"). A subsidiary is a company controlled directly by the Group and allof the subsidiaries are 100% owned by the Group. Control is achieved where theGroup has the power to govern the financial and operating policies of theinvestee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. 3.2 Revenue Revenue is measured by reference to the fair value of consideration received orreceivable by the Group for goods supplied and services provided, excluding VATand trade discounts. Revenue is recognised upon the performance of services orthe transfer of risk to the customer. Call centre turnover is recognised on the basis of billable minutes in themonth, along with standing monthly charges and any specific supplementaryservice charges. Software license turnover is recognised at the point of sale, as it is at thispoint that the Group has performed all of its obligations. Turnover from annualmaintenance and support contracts may be received in a single amount or inmonthly instalments. Such turnover is recognised over the period to which itrelates, reflecting the fact that customers could cancel the maintenancecontract if there were any disputes. 3.3 Intangible assets The capitalisation of development costs is not discretionary under InternationalAccounting Standard 38, if certain criteria are met, and therefore thecapitalisation and amortisation of these costs is now mandatory. Expenditure on research (or the research phase of an internal project) isrecognised as an expense in the period in which it is incurred. Development costs incurred are capitalised when all of the following conditionsare satisfied: • completion of the intangible asset is technically feasible so thatit will be available for use or sale • the Group intends to complete the intangible assets and use or sellit • the intangible asset will generate probable future economicbenefits. Among other things, this requires that there is a market for theoutput from the intangible asset itself, or, if it is to be used internally, theasset will be used in generating such benefits • there are adequate technical, financial and other resources tocomplete the development and to use or sell the intangible asset • the expenditure attributable to the intangible asset during thedevelopment can be measured reliably The costs of an internally generated intangible asset comprises all directlyattributable costs necessary to create, produce and prepare the asset to becapable of operating in the manner intended by management. Directly attributablecosts include development engineer's salary and on-costs incurred on softwaredevelopment. The cost of internally generated software developments arerecognised as intangible assets and are subsequently measured in the same way asexternally acquired software. However, until completion of the developmentproject, the assets are subject to impairment testing only. Amortisation commences upon completion of the asset, and is shown within NetOperating Expenses on the Income Statement. Amortisation is calculated to writedown the cost less estimated residual value of all intangible fixed assets byequal annual instalments over their expected useful lives. The rates generallyapplicable are: • Research and Development 33% Careful judgement by the Directors is applied when deciding whether therecognition requirements for development costs have been met. This is necessaryas the economic success of any product development is uncertain and may besubject to future technical problems at the time of recognition. Judgements arebased on the information available at each Balance sheet date. In addition, allinternal activities related to the research and development of new softwareproducts are continuously monitored by the Directors. 3.4 Plant and equipment Plant and equipment is stated at cost less accumulated depreciation and anyrecognised impairment losses. Leased plant is included in plant and equipmentonly where it is held under a finance lease. 3.4.1 Disposal of assets The gain or loss arising on disposal of an asset is determined as the differencebetween the disposal proceeds and the residual value of the asset and isrecognised in the Income Statement. 3.4.2 Depreciation Depreciation is calculated to write down the cost less estimated residual valueof all plant and equipment assets by equal annual instalments over theirexpected useful lives. The rates generally applicable are: • Motor vehicles 33%• Plant and fittings 20% to 50%• Computer equipment 33% Material residual value estimates are updated as required, but at leastannually, whether or not the asset is revalued. 3.4.3 Impairment testing of other intangible assets, plant andequipment For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individually for impairment and someare tested at cash-generating unit level. Goodwill is allocated to thosecash-generating units that are expected to benefit from synergies of the relatedbusiness combination and represent the lowest level within the Group at whichmanagement monitors the related cash flows. 3.4.4 Leased assets In accordance with IAS17, the economic ownership of a leased asset istransferred to the lessee if the lessee bears substantially all the risks andrewards related to the ownership of the leased asset. The related asset isrecognised at the time of inception of the lease at the fair value of the leasedasset or, if lower, the present value of the minimum lease payments plusincidental payments, if any, to be borne by the lessee. A corresponding amountis recognised as a finance leasing liability. The interest element of leasing payments represents a constant proportion of thecapital balance outstanding and is charged to the Income Statement over theperiod of the lease. All other leases are regarded as operating leases and the payments made underthem are charged to the Income Statement on a straight-line basis over the leaseterm. Lease incentives are spread over the term of the lease. 3.5 Financial instruments The Group uses various financial instruments including loans, cash, receivables,payables, and leasing that arise directly from its operations. The main purposeof these financial instruments is to maintain adequate finance for the Group'soperations. The existence of these financial instruments exposes the Group to anumber of financial risks, which are described in detail below. The Directorsreview and agree policies for managing each of these risks, as summarised below,and these remain unchanged from previous years. Short term payables andreceivables have been excluded from disclosures (except currency disclosures). 3.5.1 Financial risk management and objectives The Group seeks to manage financial risk to ensure sufficient liquidity isavailable to meet foreseeable needs and to invest cash assets safely andprofitably. The Directors achieve this by regularly preparing and reviewingforecasts based on the trends shown in the monthly management accounts. 3.5.2 Credit risk The Group's principal financial assets are cash and receivables, with theprincipal credit risk arising from receivables. In order to manage credit risksthe Group conducts third party credit reviews on all new clients, takes depositswhere this is deemed necessary and collects payment by direct debit on all newAnsaback accounts, limiting the exposure to a build up of a large outstandingdebt. The Group also conducts third party credit reviews on CallScripteraccounts, which also have an agreed payment plan tailored to the risk of theindividual client. 3.5.3 Interest rate risk The Group finances its operations through a mixture of cash and loans and hassome risk to interest rate movements on the outstanding loans which are notdeemed significant in the short to medium term. 3.5.4 Liquidity risk The Group aims to mitigate liquidity risk by closely monitoring cash generationand expenditure. Cash is monitored daily and forecasts are regularly prepared toensure that the movements are in line with the Directors' strategy. 3.5.5 Foreign currencies The Group does not sell or buy any currency forward or enter into any hedgingcontracts and does not hold any significant balances in foreign currencies. 3.6 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, togetherwith other short-term highly liquid investments that are readily convertibleinto known amounts of cash and which are subject to an insignificant risk ofchanges in value. 3.7 Dividends Dividend distributions payable to equity shareholders are included in "othershort term financial liabilities" when the dividends are approved in generalmeeting prior to the Balance sheet date. 3.8 Equity Equity comprises the following: • "Share capital" represents the nominal value of equity shares • "Share premium" represents the excess over nominal value of thefair value of consideration received for equity shares, net of expenses of theshare issue • "Other reserves" represents the merger reserve created at theinitial demerger of the company • "Profit and loss reserve" represents retained profits 3.9 Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the Balance sheetdate. Non-monetary items that are measured at fair value in a foreign currencyare translated using the exchange rates at the date when the fair value wasdetermined. Any exchange differences arising on the settlement of monetary items or ontranslating monetary items at rates different from those at which they wereinitially recorded are recognised in the Profit and Loss Account in the periodin which they arise. Exchange differences of non-monetary items are recognisedin the statement of recognised income and expenses to the extent that theyrelate to a gain or loss on that non-monetary item taken to the statement ofrecognised income and expenses, otherwise such gains and losses are recognisedin the Income Statement. 3.10 Deferred taxation Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. However,deferred tax is not provided on the initial recognition of goodwill, nor theinitial recognition of an asset or liability unless the related transaction is abusiness combination or affects tax or accounting policy. Temporary differencesinclude those associated with shares in subsidiaries and joint ventures ifreversal of these temporary differences can be controlled by the Group and it isprobable that reversal will not occur in the foreseeable future. In addition,tax losses available to be carried forward as well as other income tax creditsto the Group are assessed for recognition as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred taxassets are recognised to the extent that it is probable that the underlyingdeductible temporary differences will be able to be offset against futuretaxable income. Current and deferred tax assets and liabilities are calculatedat tax rates that are expected to apply to their respective period ofrealisation, provided they are enacted or substantively enacted at the Balancesheet date. Changes in deferred tax assets or liabilities are recognised as a component oftax expense in the income statement, except where they relate to items that arecharged directly to equity, in which case the deferred tax is also charged orcredited directly to equity. 3.11 Contribution to defined contribution pension schemes The pension costs charged against profits represent the amount of thecontributions payable to the schemes in respect of the accounting period. 3.12 Share options All material share-based payment arrangements granted after 7th November 2002that had not vested prior to 1st July 2006 are recognised in the financialstatements. All equity-settled share-based payments are ultimately recognised as an expensein the Profit and Loss Account with a corresponding credit to "other reserve". If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of thenumber of share options expected to vest. Estimates are revised subsequently ifthere is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expenserecognised in prior periods if share options that have vested are not exercised. Upon exercise of share options, the proceeds received net of attributabletransactions are credited to share capital, and where appropriate share premium. 3.12 Share options (continued) The fair value of the share options granted after 7th November 2002 and notvested at 1st July 2006 has been assessed in accordance with IFRS 2 -Share-based Payments. The Directors do not consider that the amounts involvedare material and therefore no charge has been recognised. 4. Transition to IFRS 4.1 Basis of transition to IFRS These interim financial statements have been prepared in accordance with therecognition and measurement principles of International Financial ReportingStandards (IFRS's) for the first time. The disclosures required by IFRS 1 "First-time Adoption of International Financial Reporting Standards" are given inNotes 4.2 to 4.5. The Group's transition date is 1st July 2006. Comparative data for the yearending 30th June 2007 has been translated to conform to the new accountingpolicies set out above. These new policies reflect exemptions from restating certain financialinformation as permitted by IFRS 1. The Group has taken exemptions under IFRS 2(Share based payments). In accordance with the transitional provisions, IFRS 2has been applied to all grants of equity instruments after 7th November 2002that were unvested at the date of the adoption. 4.2 Reconciliation of equity at 1st July 2006 Effect of UK transition GAAP to IFRS IFRS £ £ £ Share capital 297,908 - 297,908Share premium account 6,045,563 - 6,045,563Other reserves 18,396 - 18,396Profit and Loss Account -6,102,750 95,713 -6,007,037 ---------- ---------- ---------- Balance at 1st July 2006 259,117 95,713 354,830 ========== ========== ========== The Profit and Loss Account has been increased by £127,813 at 1st July 2006 dueto the capitalisation and amortisation of the development work undertaken withinthe CallScripter division. The Intangible fixed assets have also increased bythe same as analysed in Note 4.5. The Group holiday year runs from January to December and as a holiday payprovision is mandatory under IFRS the Profit and Loss Account has been decreasedby £32,100 at 1st July 2006 to cover the cost of holidays accrued but not yettaken at 30th June 2006. 4.3 Reconciliation of profit before taxation and equity at 31st December2006 Effect of UK transition GAAP to IFRS IFRS £ £ £ Revenue 1,726,652 - 1,726,652Cost of Sales -942,788 16,100 -926,688Net operating expenses -631,703 43,500 -588,203Other expenses -1,521 - -1,521 ---------- ---------- ---------- Profit before taxation 150,640 59,600 210,240 ========== ========== ==========Share capital 297,908 - 297,908Share premium account 6,045,563 - 6,045,563Other reserves 18,396 - 18,396Profit and Loss Account -5,929,110 155,313 -5,773,797 ---------- ---------- ---------- Balance at 31st December 2006 432,757 155,313 588,070 ========== ========== ========== The Profit and Loss Account has been increased by £155,313 at 31st December 2006due to the capitalisation and amortisation of the development work undertakenwithin the CallScripter division and the adjustment for the holiday payprovision. The capitalisation and amortisation is made up of a prior year element of£127,813 and an adjustment in the period of £27,500. The Intangible fixed assetshave also increased by the same as analysed in Note 4.5. The holiday payprovision of £32,100, accrued in the prior year, was released in December 2006,as it was no longer required. 4.4 Reconciliation of profit before taxation and equity at 30th June 2007 Effect of UK transition GAAP to IFRS IFRS £ £ £ Revenue 3,572,059 - 3,572,059Cost of Sales -2,014,931 -5,400 -2,020,331Net operating expenses -1,254,193 54,457 -1,199,736Other income 1,926 - 1,926 ---------- ---------- ---------- Profit before taxation 304,861 49,057 353,918 ========== ========== ========== Share capital 297,908 - 297,908Share premium account 6,045,563 - 6,045,563Other reserves 18,396 - 18,396Profit and Loss Account -5,736,889 144,770 -5,592,119 ---------- ---------- ---------- Balance at 30th June 2007 624,978 144,770 769,748 ========== ========== ========== The Profit and Loss Account has been increased by £144,770 at 30th June 2007 dueto the treatment of the capitalisation and amortisation of the development workundertaken within the CallScripter division and the adjustment for the holidaypay provision. The capitalisation and amortisation is made up of a prior year element of£127,813 and an adjustment in the period of £54,457. The Intangible fixed assetshave also increased by the same as analysed in Note 4.5. The holiday payprovision of £32,100, accrued in the prior year, was released in December 2006,as it was no longer required, while a new accrual of £38,000 was made at June2007. 4.5 Reconciliation of intangible assets at 30th June 2007 In preparing the figures for the 6 months to 31st December 2007, we have madethe transition from UK GAAP to IFRS and a review of the capitalisation ofdevelopment costs was undertaken. This highlighted that the capitalisation ofdevelopment costs is not discretionary under International Accounting Standard38, if certain criteria are met, and therefore the capitalisation andamortisation of these costs is now mandatory. As such, the Group has capitalisedand amortised the development work undertaken within the CallScripter division. The following table highlights the effects of the transition to IFRS on thecapitalisation and amortisation of intangible assets. Development Costs £ Carrying amount at 30th June 2006 under UK GAAP -Additions - prior years 147,613Amortisation - prior years -19,800 ---------- Carrying amount at 1st July 2006 under IFRS 127,813 Additions 50,500Amortisation -23,000 ----------Carrying amount at 30th December 2006 155,313 Additions 50,448Amortisation -22,991 ----------Carrying amount at 1st July 2007 182,770 Additions 53,754Amortisation -32,789 ----------Carrying amount at 30th December 2007 203,735 ========== 5. Segmental information County Contact Centres PLC operates two business sectors, Ansaback andCallScripter. The Revenues and Profit after taxation of each business sector aresummarised below: Business segments Ansaback CallScripter Group £ £ £6 months to December 2007Revenue 1,578,389 226,734 1,805,123 Profit after taxation 187,023 -49,004 138,019 ---------- ---------- ---------- 12 months to June 2007Revenue 3,071,980 500,079 3,572,059 Profit after taxation 421,482 -6,564 414,918 ---------- ---------- ----------6 months to December 2006Revenue 1,479,437 247,215 1,726,652 Profit after taxation 229,986 3,254 233,240 ---------- ---------- ---------- 6. Earnings per share The calculation of the earnings per share is based on the profit after taxationadded to reserves divided by the weighted average number of ordinary shares inissue during the relevant period. No diluted profit per share is shown becauseall options are non-dilutive. 6 months 6 months 12 months ended ended ended 31-Dec 31-Dec 30-Jun 2007 2006 2007 (unaudited) (unaudited) (unaudited) Profit after taxation added toreserves £138,019 £233,240 £414,918 Weighted average number of ordinaryshares in issue during the period 29,790,743 29,790,743 29,790,743 Basic and diluted earnings pershare 0.5p 0.8p 1.4p 7. Taxation Due to the Group's profitable position, a deferred tax asset of £38,000 wasrecognised at December 2006, £76,000 at June 2007 and £76,000 at December 2007.This asset relates to losses brought forward which are expected to be recoveredagainst future profits. 8. Capital Reorganisation During the year to 30th June 2007 the Company decided to reorganise its capitaland held an Extraordinary General Meeting to obtain shareholder approval.Following subsequent court proceedings, the capital re-organisation becameeffective on the 6th August 2007. The reorganisation cancelled the share premiumaccount and transferred the balance to the Profit and Loss Account. Profit And Share Share Other Loss Total Capital Premium Reserves Account Equity £ £ £ £ £ Balance at 30th June2007 297,908 6,045,563 18,396 -5,592,119 769,748 Profit for the period - - - 138,019 138,019Capital reorganisation - -6,045,563 - 6,045,563 - --------- ---------- --------- ---------- ---------Balance at 31st December2007 297,908 - 18,396 591,463 907,767 ========= ========== ========= ========== ========= 9. Availability of interim statement Copies of this interim statement are being sent to the Company's shareholdersand will also be available from the Company's head office at Melford Court, TheHavens, Ransomes Europark, Ipswich, Suffolk IP3 9SJ. A copy is also available todownload on the corporate page of the Group website atwww.countycontactcentres.com. This information is provided by RNS The company news service from the London Stock Exchange