Provexis Regulatory News (PXS)

19 Nov 2007 07:01

Provexis PLC19 November 2007 PROVEXIS plc ("Provexis" or the "Company") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007 Provexis plc (PXS.L), the life-science business that discovers, develops andlicenses scientifically-proven functional food, medical food and dietarysupplement technologies, announces its unaudited interim results for the sixmonths ended 30 September 2007. Key highlights •Strategy refocused on discovery, development and licensing of functional food, medical food and dietary supplement technologies. •Collaboration Agreement with Unilever to develop advanced format of Fruitflow(R) heart-health technology extended for a further 12 months. •Exclusive technology assessment agreement signed with The Coca-Cola Company to assess the feasibility of the launch of a beverage product containing Fruitflow(R). •Sirco(R) juice brand exited and asset transferred to a third-party. •Cash burn significantly reduced as part of this restructuring. •Research and development team strengthened further, in addition to capital investment in key analytical technology. Key financial results •Adjusted loss before interest, share compensation expense and tax of £753,000 (2006: loss of £1,374,000). •Cash balance £1.085m (2006: £1.007m). •Loss per share from continuing operations 0.17p (2006: 0.30p). Stephen Moon, Chief Executive Officer of Provexis plc, commented: "Since announcing our intention to focus the business on discovery, developmentand licensing in May 2007, we have made strong progress by exiting the Sirco(R)juice brand and significantly reducing cash burn. Our new assessment agreementwith The Coca-Cola Company and extended exclusivity agreement with Unileverendorse the strong credentials of our Fruitflow(R) heart-health technology. Wecontinue to develop further potential partners for the technology in dietarysupplements and certain food formats, in addition to developing new claims inthe areas of deep vein thrombosis and metabolic syndrome. Our patented Crohn'sDisease technology is now entering human trials, with a full clinical trialcommencing in January. We have invested significant effort into identifyingpotential technology acquisitions for our pipeline and expect to report furtherprogress in the coming weeks." -ends- For further information please contact: Stephen Moon, Chief ExecutiveProvexis plc Tel: 020 8392 6631 Tom Griffiths/Alasdair Younie Tel: 020 7012 2000Arbuthnot Securities Chris Steele / Tarquin EdwardsAdventis Financial PR Tel: 020 7034 4759 / 58 Chairman's statement At our Annual General Meeting on 24 July 2007 I announced the Company wouldfocus its strategy on the discovery, development and licensing ofscientifically-proven functional food, medical food and dietary supplementtechnologies. The management team has made very good progress in implementing this strategy,exiting the Sirco(R) juice brand in July, with a resultant significant reductionin cash burn. In pursuit of our licensing strategy, focusing on four key areas we have madegreat strides in identifying potential major partners. Our first step forwardcame in May with an agreement with Unilever. Subsequently we have entered intoan exclusivity agreement for our Fruitflow(R) heart-health technology with TheCoca-Cola Company for beverages. This has underpinned our progress towardslicensing revenues and given considerable validation to the potential for ourresearch. Several other initiatives to secure Fruitflow(R) partners in the areasof deep vein thrombosis, dietary supplements and certain food and dairy formatsare also progressing well. Our patented technology for the treatment of Crohn's Disease patients is now inhealthy human trial and a two-centre clinical trial will commence in January. The research team continues to seek opportunities to extend the claims areas forour Fruitflow(R), with deep vein thrombosis and metabolic syndrome being keyscientific investigation areas. The team have carried out an extensive screening exercise to identify potentialnew technologies to add to our pipeline, as we believe an acquisition willsignificantly enhance shareholder value in the medium term. The business has made good progress in the last six months and I believe thispositive trend will continue during the remainder of the year, as the managementteam continue to implement our focused discovery, development and licensingstrategy. Dawson BuckChairman Chief Executive's statement Strategy and management structure Since a thorough business review in May of this year, the management team hasimplemented a strategy of focusing on the discovery, development and licensingof scientifically-proven functional food, medical food and dietary supplementtechnologies. A key step was to exit the Sirco(R) juice brand in July and we have subsequentlytransferred the brand to a third-party, together with a non-exclusive licencefor Fruitflow(R). The research and development team has been strengthened withthe addition of two highly-qualified new members, while capital investment inanalytical equipment has extended our research capability. Overall, cash burnhas been significantly reduced. We have conducted a thorough global screening exercise in order to identify newtechnologies for our development pipeline and are pleased to have developed ashort-list of candidates which we expect to progress over coming weeks. Discussions are currently underway with international potential strategicpartners in the ingredients industry in order to provide us with large-scalemanufacturing capability, access to extended sales and marketing capability andpotential acceleration of our research activities through joint ventures. I was pleased to welcome Ian Ford as Finance Director in July and his broadfinancial and commercial experience has resulted in a strengthening of themanagement team. Fruitflow licensing Our collaboration with Unilever has made good progress on the development of anadvanced, concentrated format of Fruitflow(R) and a successful human trial onthe new format in May was an important milestone. We have now extended theexclusivity agreement with Unilever for the global spreads market for a further12 months. Over the next months, our development team will incorporate theconcentrated format into an application for spreads. We entered into a 12 month period of exclusivity for the beverages market withThe Coca-Cola Company recently, as part of a technology assessment agreement.During the period of the agreement the parties will carry out a programme ofwork including consumer testing, commercial assessment and finalising regulatoryapproval in a range of territories. Subject to positive results in these areas,the parties intend to proceed to a licensing agreement during the period ofexclusivity. We have transferred the rights to the Sirco(R) brand, together with anon-exclusive license of Fruitflow(R) for the UK market, to Multiple MarketingLimited, which is part of the group of companies that owns the Eat Naturalcereal bar brand and Sunmagic fruit juices. Multiple Marketing expect torelaunch the brand in major retailers early in 2008. The granting of thisnon-exclusive license has been agreed with The Coca-Cola Company as part oftheir broader international rights to exclusivity. The research team are implementing a development plan to further our patenteddeep vein thrombosis claim for Fruitflow(R) and human trials will commence in2008 to underpin this. Work will also commence on developing claims in the areaof metabolic syndrome during 2008. Metabolic syndrome is estimated to affect 50million US citizens and as such the area represents a significant opportunity. Pipeline A healthy human trial on our patented technology for the treatment of Crohn'sDisease has commenced and will conclude in January 2008. A full clinical trialon Crohn's Disease patients will commence at two centres in Liverpool in January2008 and will run for approximately 12 months. We are carrying out further due diligence on promising technologies identifiedat various universities and research institutes in recent months. Subject to thedue diligence and being able to agree appropriate commercial terms, we expect toadd at least one technology to our pipeline in this financial year. Outlook The outlook for the business is promising, given the quality of our currentFruitflow(R) partners and potential strategic partners in manufacturing, sellingand marketing the technology. Moving a second technology into clinical trialwill represent another important step in developing shareholder value, while thepotential addition of further technologies will further enhance the longer termprospects. Stephen MoonChief Executive Finance Director's statement From 1 April 2007 Provexis plc and its subsidiary companies (the "Group") haveadopted International Financial Reporting Standards (IFRS) accounting policies,the date of IFRS transition being 1 April 2006. This is the first set of results announced under IFRS and prior periodcomparatives have been restated. The most significant IFRS adjustments for the Group are: • Under IFRS 3 Business Combinations, goodwill is subject to impairment reviews and is not amortised This reduced the reported loss before taxation for the year ended 31 March 2007 by £484,000 (£242,000 reduction in loss for the six months ended 30 September 2006). • Under IAS 38 Intangible Assets, development expenditure which meets the recognition criteria of the standard is capitalised and amortised on a straight-line basis over the useful economic lives of intangible assets from product launch. Previously under UK GAAP all development expenditure was expensed. Development expenditure of £18,000 was capitalised over the six months ended 30 September 2007 (£NIL for the six months ended 30 September 2006 and £NIL for the year ended 31 March 2007). • Under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the exit of the Sirco(R) juice brand has been treated as a discontinued operation in the Income Statement for the current and prior periods. Further details of the Group's transition to IFRS are shown in notes 2, 6 and 7to the interim results. The operating loss from continuing operations for the six months ended 30September 2007 was £686,000 (2006: restated operating loss from continuingoperations £691,000) and the loss per share from continuing operations was 0.17p(2006, restated: 0.30p). The overall loss from continuing and discontinued operations for the six monthsended 30 September 2007 was £791,000, a significant reduction relative to theprior period comparative (six months ended 30 September 2006, restated:£1,503,000). The loss per share for the six month period from continuing anddiscontinued operations fell to 0.20p per share in 2007, from 0.60p per share in2006. On 12 April 2007 the Company raised £2,150,000 gross from a new share placing tonew shareholders, existing substantial shareholders and non-executive directors.The net proceeds were £1,861,000 after the repayment of the short term bridgingloan and share issue costs. The restructuring in April 2007 and the Company's exit from the Sirco(R) juicebrand in July 2007 have led to a considerable reduction in the Group's costbase, and monthly trading losses have been reduced accordingly. The Group'strading results continue to be monitored very closely and the Group's resourcesand discretionary expenditure are tightly managed. The Directors are of the opinion that at 19 November 2007, the Company'sliquidity and capital resources are adequate to deliver the current strategicobjectives and 2008 business plan and that the Company meets Going Concerncriteria. Cash at bank at 30 September 2007 was £1.085m (30 September 2006: £1.007m). Ian FordFinance Director Group income statement Restated RestatedSix months ended 30 September 2007 Unaudited Unaudited Audited 6 months 6 months Year Ended ended ended 30-Sep-07 30-Sep-06 31-Mar-07 Notes £ £ £ Continuing operations Revenue 60,936 66,653 66,653Cost of sales (19,170) - - ------------ ------------ ------------Gross profit 41,766 66,653 66,653 Research and development (181,987) (205,981) (295,234)Other administrative costs (483,075) (489,944) (1,141,912)Share option costs (62,959) (62,099) (118,619) ------------ ------------ ------------Administrative costs (728,021) (758,024) (1,555,765) ------------ ------------ ------------Operating loss (686,255) (691,371) (1,489,112) Finance income 26,284 23,223 28,435Finance costs (1,250) (90,000) (90,000) ------------ ------------ ------------Loss before taxation from (661,221) (758,148) (1,550,677)continuing operations Taxation - - - ------------ ------------ ------------Loss for the period from continuing (661,221) (758,148) (1,550,677)operations Discontinued operationLoss from discontinued operation (129,348) (744,984) (898,979) ------------ ------------ ------------Loss for the period (790,569) (1,503,132) (2,449,656) ======= ======= ======= Attributable to:Equity holders of the parent (768,549) (1,503,132) (2,437,855)Minority interests (22,020) - (11,801) ------------ ------------ ------------ (790,569) (1,503,132) (2,449,656) ======= ======= ======= Loss per share from continuing anddiscontinued operationsBasic and diluted - pence 5 0.20 0.60 0.97 ======= ======= ======= Loss per share from continuingoperationsBasic and diluted - pence 5 0.17 0.30 0.61 ======= ======= ======= Restated RestatedGroup balance sheet30 September 2007 Unaudited Unaudited Audited 30-Sep-07 30-Sep-06 31-Mar-07 £ £ £ Non-current assetsGoodwill 6,902,013 6,902,013 6,902,013Other intangible assets - development 18,002 - -costsPlant and equipment 34,244 15,846 12,607 ------------ ------------ ------------ 6,954,259 6,917,859 6,914,620 Current assetsInventories 19,345 50,870 38,466Trade and other receivables 307,331 347,758 378,626Cash and cash equivalents 1,084,910 1,007,483 115,824 ------------ ------------ ------------ 1,411,586 1,406,111 532,916 Current liabilitiesTrade and other payables (377,691) (825,405) (738,975)Borrowings - short term bridging loan - - (100,000) ------------ ------------ ------------ (377,691) (825,405) (838,975) ------------ ------------ ------------Net assets 7,988,154 7,498,565 6,608,561 ======= ======= ======= EquityCalled up share capital 4,017,244 2,510,386 2,510,386Share premium account 5,992,212 5,391,867 5,391,867Other reserves 6,273,909 6,273,909 6,273,909Retained earnings - share option 1,053,522 934,043 990,563reserveRetained earnings - other (9,300,280) (7,597,008) (8,531,731) ------------ ------------ ------------Equity attributable to equity holders 8,036,607 7,513,197 6,634,994of the parent Minority interests (48,453) (14,632) (26,433) ------------ ------------ ------------Total equity 7,988,154 7,498,565 6,608,561 ======= ======= ======= Restated Restated Group cash flow statementSix months ended 30 September 2007 Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30-Sep-07 30-Sep-06 31-Mar-07 £ £ £ Loss for the financial period (790,569) (1,503,132) (2,449,656) Net finance costs (25,034) 66,777 61,565Depreciation of property, plant and 5,617 796 4,035equipmentShare option charge 62,959 62,099 118,619 Operating cash flows before movements in ------------ ------------ ------------working capital and provisions (747,027) (1,373,460) (2,265,437) Changes in inventories 19,121 (32,907) (20,503)Changes in receivables 172,156 206,344 175,476Changes in payables (361,284) 18,165 (68,265) ------------ ------------ ------------Net cash outflow from operating (917,034) (1,181,858) (2,178,729)activities ------------ ------------ ------------ Cash flows from investing activitiesPurchase of property, plant and equipment (27,254) (125) (125)Purchase of intangible assets (18,002) - -Interest received 26,284 23,223 28,435 ------------ ------------ ------------Net cash used in investing activities (18,972) 23,098 28,310 ------------ ------------ ------------ Cash flows from financing activitiesProceeds from issue of share capital 2,149,750 - -Expenses paid on share issue (188,283) - -Proceeds from exercise of share options 44,875 - -Gross (repayment of) / increase in (100,000) - 100,000borrowingsInterest paid (1,250) - - ------------ ------------ ------------Net cash from financing activities 1,905,092 - 100,000 ------------ ------------ ------------ ------------ ------------ ------------Net increase / (decrease) in cash and 969,086 (1,158,760) (2,050,419)cash equivalents Opening cash and cash equivalents 115,824 2,166,243 2,166,243 ------------ ------------ ------------Closing cash and cash equivalents 1,084,910 1,007,483 115,824 ======= ======= ======= Group statement Other Total equityof changes inequity30 September reserves Retained earnings attributable2007 to equity Share Share Merger Share option Retained holders of Minority Total capital premium reserve reserve earnings the parent interests £ £ £ £ £ £ £ £ At 1 April 2006 2,500,010 5,312,243 6,273,909 871,944 (6,093,876) 8,864,230 (14,632) 8,849,598 Share based - - - 62,099 - 62,099 - 62,099charges Issue of shares 10,376 79,624 - - - 90,000 - 90,000- SEDAimplementationfee Loss for the - - - - (1,503,132) (1,503,132) - (1,503,132)period ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Net increase / 10,376 79,624 - 62,099 (1,503,132) (1,351,033) - (1,351,033)(decrease) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------At 30 September 2,510,386 5,391,867 6,273,909 934,043 (7,597,008) 7,513,197 (14,632) 7,498,5652006 - restated Share based - - - 56,520 - 56,520 - 56,520charges Loss for the - - - - (934,723) (934,723) (11,801) (946,524)period ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Net increase / - - - 56,520 (934,723) (878,203) (11,801) (890,004)(decrease) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------At 31 March 2,510,386 5,391,867 6,273,909 990,563 (8,531,731) 6,634,994 (26,433) 6,608,5612007 - restated Share based - - - 62,959 - 62,959 - 62,959charges Issue of shares 1,433,166 528,301 - - - 1,961,467 - 1,961,467- placing 12April 2007 Issue of shares 73,692 72,044 - - - 145,736 - 145,736- exercise ofshare options Loss for the - - - - (768,549) (768,549) (22,020) (790,569)period ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Net increase / 1,506,858 600,345 - 62,959 (768,549) 1,401,613 (22,020) 1,379,593(decrease) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------At 30 September 4,017,244 5,992,212 6,273,909 1,053,522 (9,300,280) 8,036,607 (48,453) 7,988,1542007 ======= ======= ======= ======= ======= ======= ======= ======= 1. Basis of preparation Provexis plc has previously prepared Group financial statements in accordancewith UK Generally Accepted Accounting Practice ('UK GAAP'). From 1 April 2007the Group is required to prepare its consolidated financial statements underInternational Accounting Standards and International Financial ReportingStandards (collectively 'IFRS') as adopted by the European Union ('EU'). TheGroup's date of transition to IFRS is 1 April 2006 being the start of theprevious period that has been presented as comparative information. The financial information presented in this document has been prepared on thebasis of the IFRS in issue that are either endorsed by the EU and effective at31 March 2008 or are expected to be endorsed before the financial statements areapproved and authorised for issue. Based on these adopted and unadopted IFRS,the directors have made assumptions about the accounting policies expected to beapplied when the first annual IFRS statements are prepared for the year ended 31March 2008. In addition, the adopted IFRS that will be effective in the annualfinancial statements for the year ending 31 March 2008 are still subject tochange and to additional interpretations and therefore can not be determinedwith certainty. Accordingly, the accounting policies for that annual period willbe determined finally only when the annual financial statements for the Groupare prepared for the year ending 31 March 2008. The Interim Statement does not constitute statutory accounts as defined insection 240 of the Companies Act 1985 and has neither been audited nor reviewedby the Company's auditors BDO Stoy Hayward LLP pursuant to guidance issued bythe Auditing Practices Board. The comparatives for the full year ended 31 March2007 are not the Company's full statutory accounts for that year. A copy of thestatutory accounts for that year, which were prepared under UK GAAP, has beendelivered to the Registrar of Companies. The auditors' report on those accountswas unqualified and did not contain a statement under Section 237(2)-(3) of theCompanies Act 1985. 2. Implementation of IFRS In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1 First Time Adoption of International Financial Reporting Standards,which in general requires IFRS accounting policies to be applied fullyretrospectively in deriving the opening balance sheet at the date of transition.IFRS 1 contains certain mandatory exceptions and some optional exemptions tothis principal of retrospective application. Where the Group has taken advantageof the exemptions they are noted below. The adoption of IFRS represents anaccounting change only and does not affect the operations or cash flow of theGroup. The principal areas of impact are described below. Goodwill and Business Combinations The Group has elected to take the exemption not to apply IFRS 3 retrospectivelyto business combinations occurring prior to the date of transition to IFRS. Under IFRS 3 Business Combinations and IAS 38 Intangible Assets goodwill is notamortised, but it is subject to an annual impairment review. As the Group haselected not to apply IFRS 3 retrospectively to business combinations prior to 1April 2006 the original UK GAAP goodwill balance at 1 April 2006 (£6.902m) hasbeen included in the opening IFRS consolidated balance sheet and is no longeramortised, but continues to be subject to impairment reviews. The goodwillamortisation charge previously calculated under UK GAAP has been credited to theprofit and loss account. Under IAS 38 the Group is required to amortiseintangible fixed assets over their estimated useful lives. IFRS 1 First-time Adoption of International Financial Reporting Standardsrequires that an annual impairment review of goodwill is conducted in accordancewith IAS 36 Impairment of Assets at the date of transition, irrespective ofwhether there is an indication of impairment. The directors conducted impairmentreviews at the date of transition and at 31 March 2007 and concluded that noimpairments were necessary. Research and development (IAS 38) Research expenditure is recognised in the income statement in the year in whichit is incurred. Development expenditure is recognised in the income statement in the year inwhich it is incurred unless it meets the recognition criteria of IAS 38Intangible Assets. Regulatory and other uncertainties generally mean that suchcriteria are not met. Where, however the recognition criteria are met,intangible assets are capitalised and amortised on a straight-line basis overtheir useful economic lives from product launch. This policy is in line withindustry practice. Previously under UK GAAP all development expenditure wasexpensed. Employee benefits (IAS 19) The Group has complied with the provisions of IAS 19 and has accrued holiday payfor all staff from the date of transition. Reconciliations to previously presented financial statements are set out in note6 and 7. The IFRS conversion statements have neither been audited nor reviewed by theCompany's auditors BDO Stoy Hayward LLP. 3. Taxation Based on the results of the Group there is no tax charge / (credit) for theperiod. 4. Going concern The Directors are of the opinion that at 19 November 2007, the Company'sliquidity and capital resources are adequate to deliver the current strategicobjectives and 2008 business plan and that the Company meets Going Concerncriteria, as further detailed in the Finance Director's statement. The Group accounts have been prepared on the basis of going concern as it isconsidered the Group will continue in business for the foreseeable future. Note 5 Restated RestatedLoss per share Unaudited Unaudited Audited 6 months 6 months Year Ended ended ended 30-Sep-07 30-Sep-06 31-Mar-07 Basic and diluted loss per share amountsare calculated bydividing the loss attributable to equityholders of the parent bythe weighted average number of ordinaryshares in issue duringthe period. There are 34,903,715 share options inissue that are currentlyanti-dilutive. Loss for the period - £Continuing operations 639,201 758,148 1,538,876Discontinued operation 129,348 744,984 898,979 ------------ ------------ ------------ 768,549 1,503,132 2,437,855 ======= ======= ======= Weighted average number of shares 389,044,958 250,561,393 250,765,567 ========= ========= ========= Basic and diluted loss per share - penceContinuing operations 0.17 0.30 0.61Discontinued operation 0.03 0.30 0.36 ------------ ------------ ------------Total 0.20 0.60 0.97 ======= ======= ======= Note 6 (i) ReportedYear ended 31 March 2007 under Reclassification Effect ofReconciliation of loss from UK of discontinued transitionUK GAAP to IFRS IFRS GAAP activities to IFRS IFRS notes £ £ £ £ Continuing operations Revenue 804,884 (738,231) - 66,653Cost of sales (403,837) 403,837 - - ------------ ------------ ------------ ------------Gross profit 401,047 (334,394) - 66,653 Distribution costs (63,994) 63,994 - - Research and development (295,234) - - (295,234)Other administrative costs a (2,795,691) 1,169,379 484,400 (1,141,912)Share option costs (118,619) - - (118,619) ------------ ------------ ------------ ------------Administrative costs (3,273,538) 1,233,373 484,400 (1,555,765) ------------ ------------ ------------ ------------Operating loss (2,872,491) 898,979 484,400 (1,489,112) Finance income 28,435 - - 28,435Finance costs (90,000) - - (90,000) ------------ ------------ ------------ ------------Loss before taxation from (2,934,056) 898,979 484,400 (1,550,677)continuing operations Taxation - - - - ------------ ------------ ------------ ------------Loss for the period from (2,934,056) 898,979 484,400 (1,550,677)continuing operations Discontinued operationLoss from discontinued - (898,979) - (898,979)operation ------------ ------------ ------------ ------------Loss for the period (2,934,056) - 484,400 (2,449,656) ======= ======= ======= ======= Loss reported under previous (2,934,056)UK GAAPGoodwill amortisation 484,400 ------------Total loss reported under (2,449,656)IFRS ======= Note 6 (ii) ReportedSix months ended 30 September under Reclassification Effect of2006Reconciliation of loss from UK of discontinued transitionUK GAAP to IFRS IFRS GAAP activities to IFRS IFRS notes £ £ £ £ Continuing operations Revenue 428,277 (361,624) - 66,653Cost of sales (194,746) 194,746 - - ------------ ------------ ------------ ------------Gross profit 233,531 (166,878) - 66,653 Distribution costs (33,513) 33,513 - - Research and development (205,981) - - (205,981)Other administrative costs a (1,610,469) 878,349 242,176 (489,944)Share option costs (62,099) - - (62,099) ------------ ------------ ------------ ------------Administrative costs (1,912,062) 911,862 242,176 (758,024) ------------ ------------ ------------ ------------Operating loss (1,678,531) 744,984 242,176 (691,371) Finance income 23,223 - - 23,223Finance costs (90,000) - - (90,000) ------------ ------------ ------------ ------------Loss before taxation from (1,745,308) 744,984 242,176 (758,148)continuing operations Taxation - - - - ------------ ------------ ------------ ------------Loss for the period from (1,745,308) 744,984 242,176 (758,148)continuing operations Discontinued operationLoss from discontinued - (744,984) - (744,984)operation ------------ ------------ ------------ ------------Loss for the period (1,745,308) - 242,176 (1,503,132) ======= ======= ======= ======= Loss reported under previous (1,745,308)UK GAAPGoodwill amortisation 242,176 ------------Total loss reported under (1,503,132)IFRS ======= Note 7 (i) Effect of1 April 2006 UK transitionReconciliation of equity from UK GAAP to GAAP to IFRS IFRSIFRS £ £ £ Non-current assetsGoodwill 6,902,013 - 6,902,013Other intangible assets - development costs - - -Plant and equipment 16,517 - 16,517 ------------ ------------ ------------ 6,918,530 - 6,918,530 Current assetsInventories 17,963 - 17,963Trade and other receivables 554,102 - 554,102Cash and cash equivalents 2,166,243 - 2,166,243 ------------ ------------ ------------ 2,738,308 - 2,738,308 Current liabilitiesTrade and other payables (807,240) - (807,240) ------------ ------------ ------------ (807,240) - (807,240) ------------ ------------ ------------Net assets 8,849,598 - 8,849,598 ======= ======= ======= EquityCalled up share capital 2,500,010 - 2,500,010Share premium account 5,312,243 - 5,312,243Other reserves 6,273,909 - 6,273,909Retained earnings - share option reserve 871,944 - 871,944Retained earnings - other (6,093,876) - (6,093,876) ------------ ------------ ------------Equity attributable to equity holders of 8,864,230 - 8,864,230the parent Minority interests (14,632) - (14,632) ------------ ------------ ------------Total equity 8,849,598 - 8,849,598 ======= ======= ======= Note 7 (ii) Effect of30 September 2006 UK transitionReconciliation of equity from UK GAAP IFRS GAAP to IFRS IFRSto IFRS notes £ £ £ Non-current assetsGoodwill a 6,659,837 242,176 6,902,013Other intangible assets - development - - -costsPlant and equipment 15,846 - 15,846 ------------ ------------ ------------ 6,675,683 242,176 6,917,859 Current assetsInventories 50,870 - 50,870Trade and other receivables 347,758 - 347,758Cash and cash equivalents 1,007,483 - 1,007,483 ------------ ------------ ------------ 1,406,111 - 1,406,111 Current liabilitiesTrade and other payables (825,405) - (825,405) ------------ ------------ ------------ (825,405) - (825,405) ------------ ------------ ------------Net assets 7,256,389 242,176 7,498,565 ======= ======= ======= EquityCalled up share capital 2,510,386 - 2,510,386Share premium account 5,391,867 - 5,391,867Other reserves 6,273,909 - 6,273,909Retained earnings - share option 934,043 - 934,043reserveRetained earnings - other (7,839,184) 242,176 (7,597,008) ------------ ------------ ------------Equity attributable to equity holders 7,271,021 242,176 7,513,197of the parent Minority interests (14,632) - (14,632) ------------ ------------ ------------Total equity 7,256,389 242,176 7,498,565 ======= ======= ======= Note 7 (iii) Effect of31 March 2007 UK transitionReconciliation of equity from UK GAAP IFRS GAAP To IFRS IFRSto IFRS notes £ £ £ Non-current assetsGoodwill a 6,417,613 484,400 6,902,013Other intangible assets - development - - -costsPlant and equipment 12,607 - 12,607 ------------ ------------ ------------ 6,430,220 484,400 6,914,620 Current assetsInventories 38,466 - 38,466Trade and other receivables 378,626 - 378,626Cash and cash equivalents 115,824 - 115,824 ------------ ------------ ------------ 532,916 - 532,916 Current liabilitiesTrade and other payables (738,975) - (738,975)Borrowings - short term bridging loan (100,000) - (100,000) ------------ ------------ ------------ (838,975) - (838,975) ------------ ------------ ------------Net assets 6,124,161 484,400 6,608,561 ======= ======= ======= EquityCalled up share capital 2,510,386 - 2,510,386Share premium account 5,391,867 - 5,391,867Other reserves 6,273,909 - 6,273,909Retained earnings - share option 990,563 - 990,563reserveRetained earnings - other (9,016,131) 484,400 (8,531,731) ------------ ------------ ------------Equity attributable to equity holders 6,150,594 484,400 6,634,994of the parent Minority interests (26,433) - (26,433) ------------ ------------ ------------Total equity 6,124,161 484,400 6,608,561 ======= ======= ======= IFRS notes Note a Under IAS 38 goodwill is not amortised and so goodwillpreviously amortised under UK GAAP is reversed. Instead,impairment must be considered. This information is provided by RNS The company news service from the London Stock Exchange