Progility Regulatory News (PGY)

20 Nov 2006 07:01

ILX Group PLC20 November 2006 ILX GROUP PLC 2006 INTERIM RESULTS ILX Group plc ('ILX'), the AIM quoted vocational education and training company,announces Interim Results for the six months ended 30th September 2006. Financial Highlights: 6 months 6 months to % Change To Sept '06 Sept '05 £'000 £'000 Turnover 4,470 2,941 +52.0%- Acquisitions contributed £1,221,048EBITDA 611 369 +65.6%Operating Profit 578 346 +66.8%Profit before tax 506 313 +61.6%Maiden dividend 0.75p - -Adjusted earnings per share 3.58p 3.46p +3.6% Corporate Highlights: • Acquisition of Corporate Training Group (CTG), the provider of in-house financially focused classroom training courses to major global organisations. ILX acquired CTG for a total consideration of £12.3 million. The acquisition was immediately earnings enhancing and effectively doubles the size of the group in profit terms. • Best Practice Group: Consolidation of two offices to one new location. Best Practice ceased to provide desktop application training in order to focus on ILX Group's core area of accreditation led training. Operational Highlights: • Successful Integration of The Corporate Training Group• Continued expansion of PRINCE2 and ITIL (Best Practice) training markets• Major customers during the period include: Citigroup, NM Rothschild, Home Office, HSBC, Credit Suisse, Pension Protection Fund and British American Tobacco In summary Ken Scott, Chief Executive of ILX Group commented: "I am very pleased to announce these results which reflect the maidencontribution from Corporate Training Group where trading has been excellent. The company has made considerable progress during the period, firstly inconsolidating its activities in best practice training and consultancy andsecondly in the acquisition in July of The Corporate Training Group, a highlyrespected financial training company showing rapid growth and highprofitability. This acquisition effectively doubles the size of the group inprofit terms and was immediately earnings enhancing for the current year. CTGhas a very long and strong forward order book. Its investment banking graduatetraining programmes reached record levels in 2006 and graduate intakes for nextyear look set to exceed this year's level. We are confident in the outlook for the full year for the Group and our capacityto meet market expectations." ILX Group plc Parkgreen Communications Ltd Charles Stanley SecuritiesKen Scott Paul McManus Philip DaviesTel: 020 7371 4444 Tel: 020 7493 3716 Tel: 020 7953 2457www.ilxgroup.com Mob: 07900 346 978 Chairman's Statement For the six months ended 30 September 2006 I am pleased to present the results for the six months ended 30 September 2006. The company has made considerable progress during the period, firstly inconsolidating its activities in best practice training and consultancy andsecondly in the acquisition in late July of The Corporate Training Group, ahighly respected financial training company showing rapid growth and highprofitability. The company is now broadly organised into two divisions. The Best PracticeGroup, which incorporates all of the company's trading and acquisitions up to,but not including, The Corporate Training Group, provides training andconsultancy in and around accredited standards in project and servicemanagement, with a particular focus on the use of software products andsolutions to customers' needs. The Corporate Training Group provides in-house financial training to majorinternational organisations, with a particular focus on graduate training formajor investment banks. Acquisition of The Corporate Training Group The Corporate Training Group was acquired on 26 July 2006 for a totalconsideration of £12.3 million, of which £5.7 million is contingent on futureperformance. The initial consideration comprised £2.0 million in shares and £4.6million in cash, the cash elements being financed by additional bank debt and aplacing of 3,275,468 new ordinary shares. This acquisition effectively doubles the size of the group in profit terms andwe expect it to be immediately earnings enhancing in the current financial year.I would like to take this opportunity to formally welcome the staff of TheCorporate Training Group to the company. Financial Results Turnover for the period was £4.47 million (6 months to September 2005: £2.94million), including a first time contribution of £1.22 million from TheCorporate Training Group. Profit from operations was £577,996 (6 months toSeptember 2005: £346,441) and net profit attributable to equity holders was£354,324 (6 months to September 2005: £312,997). The recognition of a deferredtax asset in the company's 2005/6 results requires that the company show a taxcharge in the interim results, even though no tax is payable as the companycontinues to utilise its tax losses which currently stand at approximately £2.0million. Accordingly, in order to provide a proper comparison, an adjustedearnings per share for the 6 months ended 30 September 2006 is 3.58p (6 monthsto September 2005: 3.46p). Details are to be found in note 4 to these interimstatements. Seasonality There are a number of seasonal variations underpinning the results which shouldbe explained. Firstly, the Best Practice Group business has always been weightedheavily towards the second half, primarily due to sales of the company's highermargin e-learning products which peak in the latter months of the Group'sfinancial year, particularly in March. This trend is expected to continue in thecurrent year. The Corporate Training Group business experiences seasonalfluctuations but by contrast to the Best Practice Group the busy period is Julyto November, when the Group's revenues are dominated by large graduate trainingprogrammes. This seasonality contributes to the contrast between the results from continuingoperations and acquisitions on the face of the income statement, as well as thehigh level of debtors on the balance sheet as compared to turnover for theperiod, with 50% of these debtors relating to the Corporate Training Group fromwhich we have had only two months of turnover. Business Review - Best Practice Group The Best Practice Group has undergone some consolidation during the period; wehave reduced our number of office premises, closing down the offices in Nottonand Shenley and relocating the majority of these operations to a new location atTheale Business Park. As part of this process, we have ceased to provide desktopapplications training in order to allow us to focus on our core area ofaccreditation-led training. Turnover, on a like-for-like basis excluding Mount Lane and Customer Projects,has been flat compared to last year. This reflects the Group's greater focus onits core products and services, as illustrated by the key areas ofaccreditation-led e-learning and blended training, now comprising 48% of thisGroup's turnover, which have shown continued significant growth of 45% over lastyear. The areas showing reducing turnover are primarily those of applicationstraining and finance for non-financial managers. In addition the Group hasexperienced some price pressure on its pure classroom training offerings. Trading at Mount Lane in the first half of the year has been very disappointing,primarily due to the loss of that division's Commercial Director. Additionalsales staff have been hired to fill the gap and the initial signs areencouraging. The outlook for the future growth of the self-help and desktopmigration areas remains promising, particularly with the forthcoming launch ofMicrosoft Vista. Trading at Customer Projects, the Group's consultancy and solutions division,has been steady; the division has hired its first dedicated sales person, andconsiderable work has been undertaken in the first half to prepare to take theproposition to the wider marketplace. Business Review - Corporate Training Group Trading at The Corporate Training Group has been excellent; the division expectsto see annual sales growth this year in excess of 30%, which will maintain its 4year compound annual growth rate of over 25%. The division has experiencedincreases on both market size and in market share. The Corporate Training Groupoffers very good visibility to the Group with significant revenues for both thisand next financial year already booked. The graduate training programmes that form a key element of The CorporateTraining Group's business have reached record levels in 2005 and 2006 andgraduate intakes for next year already look to exceed this. This in turn has ledto much higher demand for follow on continuous professional development courses.Mobility of staff between banks is also at record levels and this in turn feedsthrough with an increase in contact referrals from bankers who have moved andnow want high quality training in their new companies. New expanding areas include wealth management, and private banking, with anumber of our clients investing in this area. We are also seeing private equityfirms starting to seriously invest in skills training, in particular financialmodelling, as well as accountants and lawyers being recruited as lateral hireswho need immediate training to get them up to speed. Dividend The Company paid its maiden dividend of 0.75p per share on 15 August 2006; inaccordance with International Financial Reporting Standards this dividend, whichwas payable to shareholders on the register at the end of June 2006, is shown inthese financial statements as an appropriation of retained earnings. The Company does not intend payment of an interim dividend but expects tomaintain an annual dividend going forward. Summary and Future Opportunities We are confident in the outlook for the full year and our capacity to meetmarket expectations. The Best Practice Group is now better focused and wellpositioned to capitalise on the opportunities available in its traditionallystronger second half. We remain confident that this will be boosted by therecovery of Mount Lane sales. The Corporate Training Group is going fromstrength to strength and we are most encouraged by both the performance to dateand the enthusiasm of the staff. Paul LeverChairman 20 November 2006 Independent Review Report to ILX Group plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 September 2006 which comprises the consolidated andcompany income statement, consolidated statement of changes in equity,consolidated balance sheet, consolidated cash flow statement and the relatednotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the United Kingdom Listing Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with Auditing Standards in the United Kingdom andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. Saffery ChampnessChartered Accountants Beaufort House2 Beaufort RoadCliftonBristolBS8 2AE 20 November 2006 Consolidated and Company Income StatementFor the six months ended 30 September 2006 Six months Six months Six months Six months Year ended ended ended ended ended 30.9.2006 30.9.2006 30.9.2006 30.9.2005 31.3.2006 Unaudited Unaudited Unaudited Unaudited and Audited Restated Notes Continuing Acquisitions TOTAL TOTAL TOTAL £ £ £ £ £ Revenue 3,249,206 1,221,048 4,470,254 2,940,638 6,913,255 Cost of sales (1,400,262) (333,894) (1,734,156) (955,172) (2,335,574) Gross profit 1,848,944 887,154 2,736,098 1,985,466 4,577,681 Distribution costs (116,698) (2,841) (119,539) (125,225) (227,548)Administrative expenses excluding (1,861,412) (144,175) (2,005,587) (1,491,354) (3,302,092)depreciation and amortisation (Loss) / earnings before (129,166) 740,138 610,972 368,887 1,048,041interest, tax and depreciationand amortisation Depreciation (31,759) (1,217) (32,976) (22,446) (47,316) (Loss) / profit from operations (160,925) 738,921 577,996 346,441 1,000,725 Interest receivable and similar 9,317 5,920 12,073incomeInterest payable and similar (81,396) (39,364) (71,123)charges Profit before tax 505,917 312,997 941,675 Tax (151,593) - 757,755Profit for the period 354,324 312,997 1,699,430attributable to equity holders Earnings per share - fromcontinuing operations andacquisitionsBasic 4 2.37p 3.46p 16.39p Consolidated Statement of Changes in EquityFor the six months ended 30 September 2006 Six months Six months Year ended ended ended 31.3.2006 30.9.2006 30.9.2005 £ £ £ Balance at start of period 12,919,708 6,460,731 6,460,731Profit for the year 354,324 312,997 1,699,430Dividends Paid (96,250) - -Capital reorganisation - (18,267) (18,267)Issue of shares to trust (742,500) - (781,420)Issue of shares 653,547 - 385,937Options granted 67,424 44,400 108,750Contingent consideration 3,000,000 - 1,655,000Premium on issue of shares 4,718,328 - 3,495,483Costs relating to share (161,459) - (85,936)issueBalance at end of period 20,713,122 6,799,861 12,919,708 Consolidated Balance Sheet as at 30 September 2006 Notes As at 30.9.2006 As at 30.9.2005 As at 31.3.2006 Unaudited Unaudited and Audited RestatedAssets £ £ £Non-current assetsProperty, plant and equipment 178,099 91,423 132,872Intangible assets 24,995,563 7,053,211 12,386,146Total non-current assets 25,173,662 7,144,634 12,519,018 Current assetsDeferred tax asset 637,405 - 789,000Trade and other receivables 3,463,195 1,288,464 2,031,070Cash and cash equivalents 261,435 251,115 646,126Total current assets 4,362,035 1,539,579 3,466,196 Total assets 29,535,697 8,684,213 15,985,214 Current liabilitiesTrade and other payables (1,516,770) (642,693) (1,317,742)Deferred consideration - (67,642) (236,869)Provision for contingent consideration 8 (1,270,000) - -Tax liabilities (777,911) (282,365) (417,086)Bank loans (1,653,743) (146,429) (146,429)Total current liabilities (5,218,424) (1,139,129) (2,118,126) Net current (liabilities) / assets (856,389) 400,450 1,348,070 Non-current liabilitiesProvision for contingent consideration 8 (1,000,000) - (270,000)Hire purchase creditor (2,438) - (3,048)Bank loans (2,601,713) (745,224) (674,332)Total non-current liabilities (3,604,151) (745,224) (947,380) Total liabilities (8,822,575) (1,884,353) (3,065,506) Net assets 20,713,122 6,799,860 12,919,708 EquityIssued share capital 1,936,876 933,694 1,283,329Share premium 11,804,906 4,177,188 7,248,037Shares to be issued - contingent 8 5,030,000 - 2,030,000considerationOwn shares in trust 7 (1,824,692) (300,772) (1,082,192)Share option reserve 267,040 135,266 199,616Buyback reserve 1,177,819 1,177,819 1,177,819Retained earnings 2,321,173 676,665 2,063,099Total equity 20,713,122 6,799,860 12,919,708 The financial statements were approved by the board of directors and authorisedfor issue on 20 November 2006. They were signed on its behalf by J A Pickles,Director and K P Scott, Director Consolidated Cash Flow StatementFor the six months ended 30 September 2006 Six months Six months Year ended ended ended 30.9.2006 30.9.2005 31.3.2006 Unaudited Unaudited and Audited Restated £ £ £Profit from operations 577,996 346,441 1,000,725Adjustments for:Profit on disposal of non-current assets - (9,861) (9,861)Depreciation and amortisation 32,976 22,446 47,316Share option charge 67,424 44,400 108,750Movement in trade and other receivables (472,507) (229,298) (821,795)Movement in trade and other payables (528,754) (31,688) 628,057Cash (used by) / generated from operating activities (322,865) 142,440 953,192 Interest paid (45,648) (40,670) (71,030)Tax paid (905) (28,140) (187,307)Net cash (used by) / generated from operating activities (369,418) 73,630 694,855 Investing activitiesInterest received 9,317 5,920 12,073Proceeds on disposal of property, plant and equipment - 206,430 206,431Purchases of property, plant and equipment (55,113) (48,085) (90,402)Expenditure on product development (118,163) (236,524) (474,305)Acquisition of subsidiaries (net of cash acquired) (5,648,065) (237,738) (839,914)Net cash used by investing activities (5,812,024) (309,997) (1,186,117) Financing activitiesIncrease in / (repayment of) borrowings 3,434,695 (184,356) (255,247)Repayment of finance lease obligations (610) - -Net proceeds of share issue 2,458,916 - 720,796Dividend paid (96,250) - -Net cash from / (used by) financing activities 5,796,751 (184,356) 465,549Net change in cash and cash equivalents (384,691) (420,724) (25,713) Cash and cash equivalents at start of period 646,126 671,839 671,839Cash and cash equivalents at end of period 261,435 251,115 646,126 Notes to the Consolidated Cash Flow StatementFor the six months ended 30 September 2006 1 Purchase of subsidiary undertaking - The Corporate Training Group Ltd On 26 July 2006 the company acquired 100% of the ordinary share capital of TheCorporate Training Group Ltd. ("CTG"). This was acquired for a maximum £12.3million in cash and shares. The trade, assets and liabilities of CTG wereimmediately hived up to the parent company. The fair values of the identifiable assets and liabilities of the new subsidiaryat the date of acquisition were as follows: Net assets acquired Book value Revaluation Fair value £ £ £Tangible fixed assets 23,090 - 23,090Trade and other receivables 1,032,956 - 1,032,956Cash at bank and in hand 213,021 - 213,021Trade and other payables (409,425) - (409,425)Tax liabilities (598,165) - (598,165)Net assets 261,477 - 261,477Acquisition costs (452,731)Goodwill 12,491,254 12,300,000Satisfied byShares allotted 2,000,000Cash paid 5,300,000Contingent consideration 5,000,000 12,300,000 Of the cash paid the sum of £700,000 is ring fenced within an escrow account tobe released on or before 30 June 2008 provided that the average annual pre-taxprofit of CTG over the two-year period ended 31 March 2008 exceeds £1.149million. The contingent consideration is payable in two instalments on or before 30 June2007 and on or before 30 June 2008. The first instalment is calculated as 9 times the excess of CTGs pre-tax profitsfor the year ended 21 March 2007 over £1.149 million. This payment is capped at£2.5 million and the first £1.0 million is to be made in cash with the remainderin cash or ordinary shares at the company's option. The second instalment, which is capped at £5.0 million less the amount of thefirst instalment, is calculated as a total of 9 times the amount by which CTGspre-tax profits for the 2 year period ended 31 March 2008 exceed the sum of£2.576 million, less the amount of the first instalment. A mechanism exists whereby if CTGs pre-tax profits for the year ended 31 March2007 exceed the level at which the maximum first instalment is payable, theseexcess profits can be transferred to the second year. The summarised profit and loss account of the acquired entity for the periodfrom the beginning of its financial year on 1 January 2005 to the effective dateof acquisition, and for its previous financial year, is set out below: 30 weeks to Year ended 26.7.2006 31.12.2005 £ £Turnover 1,816,102 3,318,538Cost of sales (1,204,665) (2,178,023)Gross profit 611,437 1,140,515Distribution costs (3,840) (15,210)Administrative expenses (145,923) (818,098)Operating profit 461,674 307,207Interest receivable 8,225 7,944Profit on ordinary 469,899 315,151activities beforetaxationTaxation (130,338) (67,435)Profit on ordinary 339,561 247,716activities after taxation In order to fund the cash elements of the consideration the company issued3,275,468 new ordinary shares which raised £2,458,916 net of expenses. In addition the company took out a £3,000,000 a term loan repayable in 12quarterly instalments and also obtained a £1,000,000 revolving credit facility.At 30 September 2006 £500,000 had been drawn down on the revolving creditfacility leaving a further £500,000 available. Notes to the Interim Report For the six months ended 30 September 2006 1. The financial information contained in the Interim Report does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The Interim Report is in compliance with International AccountingStandard 34 (Interim Financial Reporting). The comparative financial informationfor the six months ended 30 September 2005, which has been restated under IFRS,and the year ended 31 March 2006 is an abridged version of the group's publishedfinancial statements for these periods. The financial statements for the yearended 31 March 2006 contained an unqualified audit report and have been filedwith the Registrar of Companies. 2. The interim financial statements have been prepared on the basis of theaccounting policies set out in the March 2006 financial statements of ILX GroupPlc. 3. During the period the company incurred exceptional costs of £30,185relating to a reorganisation of the company's continuing operations. 4. The basic earnings per share calculation is based on a weighted averagenumber of ordinary shares of 10 pence each in issue during the period of14,960,662 (6 months to 30 September 2005: 9,049,715). Adjusted earnings pershare which exclude reorganisation costs of £30,185 and the non-cash tax chargeof £151,593 are shown below. The comparative adjusted earnings per share for the12 month period to 31 March 2006 excludes the non-cash tax credit of £757,755arising out of the recognition of a deferred tax asset. Six months Six months Year ended ended ended 31.3.2006 30.9.2006 30.9.2005Earnings / (Loss) per share 2.37p 3.46p 16.39pAdjusted earnings per share - excluding non-cash tax 3.58p 3.46p 9.08pcharges and credits and reorganisation costs The calculation of fully diluted earnings per share has not been disclosed asthe effect of the company's outstanding share options is not dilutive. 5. The group operates in one business segment; that of supply of trainingand consultancy solutions. The operations are monitored by the geographicregions of UK, Mainland Europe, North America, and Other (Asia, Middle and FarEast, Africa, and South America). 6. The amount of operating profit or loss since the acquisition date ofacquired companies included in the company's profit and loss account, excludingapportioned central costs, is as follows: Six months Six months ended ended 30.9.2006 30.9.2005 Year ended 31.3.2006 £ £ £Mount Lane Training & Implementation Solutions Ltd - - 292,096Customer Projects Ltd - - (10,485)Corporate Training Group Ltd 843,810 - - The revenues and profits of the group for the year, had the acquisitions madeduring the year been made at the beginning of the year, would have been asfollows: Consolidated Income Pre-acquisition Total for the six Statement for the Six trading of Corporate months ended 30.9.2006 months ended Training Group for as though the 30.9.2006 the period 1.4.2006 acquisition date was to 26.7.2006 1.4.2006 £ £ £Turnover 4,470,254 1,340,288 5,810,542Operating profit 577,996 598,271 1,176,267 7. The company holds 1,850,000 of its own ordinary shares in trust in aMedium Term Incentive Plan, administered by Investec Trust Guernsey Ltd. Theseshares become payable to directors and senior management, on the achievement ofcertain performance criteria. The shares are shown at cost as a debit againstreserves and relate to the investment. The shares are held in trust under thePlan and represent 9.9% of the total called up share capital. 8. The company has the following contingent liabilities, contingent oncertain future performance criteria, arising out of earn-out provisions in theagreements relating to recent acquisitions. These contingent liabilities andtheir potential timing are as follows: Mount Lane Customer Projects Corporate TOTAL Training & Ltd Training Group Ltd Implementation Solutions Ltd £ £ £ £ Provision for cash contingent 270,000 1,000,000 1,270,000consideration - within one -yearProvision for cash contingent 1,000,000 1,000,000consideration - after one year - -Contingent consideration to be 1,530,000 500,000 3,000,000 5,030,000issued in shares 1,800,000 500,000 5,000,000 7,300,000 9. These are the company's first interim financial statements prepared inaccordance with IFRS. In preparing its opening IFRS balance sheet andcomparative information for the six months ended 30 September 2006, the companyhas adjusted amounts reported previously in financial statements prepared inaccordance with UK GAAP. An explanation of how the transition from UK GAAP to IFRS has affected thecompany's financial position and financial performance is set out in thefollowing tables and notes accompanying them. There have been no changes to thegroup's or company's cash flows as a result of the transition. Shareholders' equity UK GAAP Effects of transition IFRS Six months Development Share options Goodwill Six months ended expenditure expensed amortisation ended 30.9.2005 capitalised eliminated 30.9.2005 £ £ £ £ £Called up share capital 933,694 933,694Share premium account 4,177,188 4,177,188Own shares in trust (300,772) (300,772)Share option reserve - 135,266 135,266Other reserves 1,177,819 1,177,819Retained earnings (54,119) 400,345 (135,266) 465,705 676,666Total stockholders' equity 5,933,810 400,345 - 465,705 6,799,860 Consolidated Income Statement UK GAAP Effect of IFRSFor the six months ended 30 September 2005 transition Six months ended Six months ended 30.9.2005 30.9.2005 £ £ £Revenue 2,940,638 - 2,940,638Cost of sales (955,172) - (955,172)Gross profit 1,985,466 - 1,985,466Distribution costs (125,225) - (125,225)Administrative expenses excluding depreciation and (1,683,479) 192,125 (1,491,354)amortisationEarnings before interest, tax, depreciation and 176,762 192,125 368,887amortisationDepreciation (22,446) - (22,446)Amortisation (174,991) 174,991 -(Loss) / Profit from operations (20,675) 367,116 346,441Interest receivable and similar income 5,920 - 5,920Interest payable and similar charges (39,364) - (39,364)Profit before tax (54,119) 367,116 312,997Tax - - -Profit for the period attributable to equity holders (54,119) 367,116 312,997 Consolidated Balance Sheet as at 30 September 2005 UK GAAP Effect of IFRS 30.9.2005 transition 30.9.2005Assets £ £ £Non-current assetsProperty, plant and equipment 91,423 - 91,423Intangible assets 6,187,161 866,050 7,053,211Total non-current assets 6,278,584 866,050 7,144,634Current assetsTrade and other receivables 1,288,464 - 1,288,464Cash and cash equivalents 251,115 - 251,115Total current assets 1,539,579 - 1,539,579Total assets 7,818,163 866,050 8,684,213Current liabilitiesTrade and other payables (642,693) - (642,693)Deferred and contingent consideration (67,642) - (67,642)Tax liabilities (282,365) - (282,365)Bank loans (146,429) - (146,429)Total current liabilities (1,139,129) - (1,139,129)Net current assets 400,450 - 400,450Non-current liabilitiesBank loans (745,224) - (745,224)Total non-current liabilities (745,224) - (745,224)Total liabilities (1,884,353) - (1,884,353)Net assets 5,933,810 866,050 6,799,860 EquityIssued capital 933,694 - 933,694Share premium 4,177,188 - 4,177,188Own shares in trust (300,772) - (300,772)Share option reserve - 135,266 135,266Buyback reserve 1,177,819 - 1,177,819Retained earnings (54,119) 730,785 676,666Total equity 5,933,810 866,050 6,799,860 Summary of changes resulting from the adoption of IFRS: a) Under UK GAAP all expenditure on research and development was expensedas incurred. Under IFRS, research expenditure is recognised as an expense asincurred but costs incurred on product development are capitalised as intangibleassets when it is probable that the development will provide economic benefit,considering its commercial and technical feasibility, where resources areavailable for the completion of the development, and costs can be measuredreliably. Other development expenditures are recognised as an expense asincurred. Capitalised product development expenditure is reviewed regularly forimpairment. b) IFRS requires that the fair value of share options provided toemployees be estimated and charged to the income statement over the vestingperiod of the options. c) Under UK GAAP goodwill was amortised over 20 years. Under IFRS goodwillis now subject to annual impairment reviews. Goodwill balances have been writtenback to their net book value, under UK GAAP, at 31 March 2004. d) Under IFRS dividends are charged to the income statement when paid orapproved and not in the period to which they relate as required previously by UKGAAP. This information is provided by RNS The company news service from the London Stock Exchange