Reabold Resources Regulatory News (RBD)

29 Mar 2006 07:02

Adventis Group PLC29 March 2006 Adventis Group Plc ("Adventis") Final Results 2005 Adventis Group Plc ("ATG/L"), the marketing services, media buyer andadvertising agency, announces record results for the year ended 31 December2005. The results represent the first full trading year since admission to AIMand are ahead of market expectations. Growth was organic across most of thecompany's businesses and through acquisitions. Financial Highlights• Group billings (Turnover): £21.9m, up 81% (2004: £12.1m)• Pre-tax profit: £1.03m, up 34% (2004: £0.77m)• Earnings per share: 2.66p (2004: 2.18p) 2005 benefited from exceptional tax credit• Earnings per share last six months: up 26% to 1.08p (2004: 0.86p)• Final dividend of 0.436p (2004: 0.412p), year's total of 0.646p (2004: 0.615p), payable on 23 June to shareholders registered on 2 June• Net cash of £2.59m at year end, now exceeds £3m. Operational Highlights• Newly acquired and start-up business contributed 38% to billings• Affiniti (UK) Ltd, a healthcare advertising agency acquired January 2005 and two start-up ventures made first time profit contributions• Client wins in healthcare, residential and commercial property and financial services sectors. Prospects Said Charles Phillpot, Chief Executive, Adventis: "The first quarter has started well and we are confident about prospects for thecurrent year. We continue to raise our profile in our three chosen marketsectors and remain selective about opportunities in these areas." Said Peter Mitchell, Chairman, Adventis: "The outlook for 2006 is encouraging and each company within the group isforecasting both income and profit growth. We look forward to announcingfurther corporate activity in the near future." - ENDS - Enquiries: Adventis Group Plc Tel: 020 7034 4750Charles Phillpot, CEOwww.adventis.co.uk Binns & Co PR Ltd Tel: 020 7786 9600 www.binnspr.co.ukPeter Binns Mob: 07768 392 582 peter.binns@binnspr.co.ukBen Knowles Mob: 07900 346 978 ben.knowles@binnspr.co.ukAnnabel Loveluck Mob: 07817 729 778 annabel.loveluck@binnspr.co.uk Editor's Note Adventis Group's strategy is to focus its marketing and media buying services onthree main sectors, in which it has the opportunity to build significant marketpositions. There are three main strands to Adventis' strategy to develop the business: • Consolidation of its position in the residential and commercial property markets, which, as noted above, are predominantly serviced by a large number of small operators; • Diversification into other specific sectors, notably healthcare and financial services, for which marketing is governed by regulatory disclosure and which therefore, like the property sector, have a requirement for expertise; • Increase profit margins by providing services that are currently sub-contracted to third parties. Management intends to achieve these objectives through a mix of organicdevelopment, acquisitions and by creating structures to attract new key seniorstaff, who have proved revenue earning potential and appropriate sectorexpertise. Ends Chairman's statement for the year ended 31 December 2005 This is my second statement as Chairman of Adventis Group plc. 2005, our firstfull trading year as a publicly quoted company, has been extremely encouragingwith not only a significant rise in both turnover and profit, but also with theachievement of the early part of our long-term growth strategy. Existing businesses continue to perform well while new subsidiaries such asAffiniti (UK) Ltd and Adgenda Media Ltd, made significant contributions to groupperformance. This is encouraging for our future business plans and reflects ourability to select quality businesses. Today, the group consists of six operating companies in three locationsemploying 80 people, providing a broad range of marketing services to a largerange of clients. The acquisition of Affiniti (UK) Ltd, a specialised UK healthcare advertisingagency builds on the foothold the group had already built in this profitablemarket and gives us a solid platform from which to expand our healthcareactivity. Adgenda Media Ltd delivered tremendous results in its first 9 monthsof trading and we are delighted with the quality of clients this company nowretains. The group comprises a talented and commercial team and has significantlystreamlined its acquisition processes as a result of experience since flotationin July 2004. The outlook for 2006 is encouraging and each company within thegroup is forecasting both income and profit growth. We look forward toannouncing further corporate activity in the near future. Peter MitchellChairman Chief Executive Officer's statement for the year ended 31 December 2005 Trading Update I am pleased to report a strong set of results for the year ended 31 December2005, with record levels of billings and profits, both organically across mostof our businesses and through acquisitions. Group billings of £21.9m were up81.0% (2004: £12.1m) and pre-tax profit of £1.03m was up 33.7% (2004: £0.77m),both ahead of market expectations. This represents the second successive year ofsignificantly increased billings and profits and the Company has continued tobenefit from healthy margins and maintained a strong cash position. The earnings per share for 2005 of 2.66p compared with 2.18p for the previousyear but the comparison is not particularly meaningful as the Company was onlyquoted for half of 2004, and in addition 2005 has benefited from an exceptionalcredit of £181,000 relating to the recognition of historic tax losses that weare likely to be able to utilise in future in one of our subsidiaries. Dividend The Board is recommending a final dividend of 0.436p per share, making a totalfor the year of 0.646p. This increase underlines our stated intention to pursuea progressive dividend policy and reflects our confidence in this business goingforward, together with the strength of the balance sheet. Financial Position Net cash balance on 31 December 2005 was £2.59m and has increased since the yearend to £3.1m today. Additionally since the year end we acquired 325,000 of ourown shares which are being held as treasury stock. Market Overview The group operates in a competitive market place in media buying and planningand marketing services comprising corporate identity programmes, advertisingcampaigns, interiors, signage and digital media. The diversified marketingservices industry is dependent on the creative skills and knowledge of itspeople and the Group is fortunate in having a talented team of directors andstaff. Our revenues are generated predominantly in the form of fees for projectspecific and retained work. It is against this background that I am pleased toreport results that reflect the hard work of all the team at Adventis. Business Strategy The group enjoyed a more buoyant market in 2005. Since our admission to AIM on1 July 2004 we have pursued our stated business strategy of increasing themarket share for our media services in our largest industry sector, theresidential and commercial property sectors. We also continued to expand theservices we provide in our other target markets, currently comprising thefinancial services and healthcare sectors, where our revenue by sector grew overthat achieved in the previous year. Acquisitions and Joint Ventures In early January 2005, we completed the acquisition of Affiniti (UK) Ltd, aspecialised UK healthcare advertising agency with clients such as Allergan,Aventis Pasteur MSD, Chiron Vaccines, Eden Biopharm, Leo Pharma and Serono.This acquisition performed very well in 2005 with a pre tax profit of £247,000and builds on the foothold Adventis Group already had in this profitable market.I am confident of further developments in this market shortly. Adgenda Media Ltd is the second media planning and buying company owned by thegroup and traded very successfully in its first 9 months of operation with aturnover in excess of £5.8m (38% of Group billings) and a pre-tax profit of£188,000. The media market continues to be a very consistent source of income. Chief Executive Officer's statement for the year ended 31 December 2005 Operational Review The following is a summary of activity by business sector for the year ended 31December 2005. Residential Property Marketing Sector Our residential property marketing sector has a broad base of clients frominternational names such as Savills to many UK developers such as Capital &Provident, Galliard Homes and Grove Manor Homes. We provide a broad range ofconsultancy and creative services across the industry and continue to grow thiscreative business with encouraging margins. Commercial Property Marketing Sector Our commercial property marketing sector won several major long-term projects in2005 such as Howard Holdings, St Martins Property Corporation Ltd., AbstractLand, Slough Estates, South West Regional Development Agency, Morley FundManagement, Farnborough Business Park, Exemplar. These project successescontinue to give the business a positive order book for the current year. Media Planning and Buying Sector Our two media planning and buying companies, Premium Media and Adgenda MediaLtd, are a significant force in the property sector. They have full NPA(Newspapers Publishing Association) recognition and enjoy very favourablecommercial terms with media owners. Media broking works very much in tandemwith our creative business. Business volumes continue to grow at good marginsfor this industry. Financial Services Sector The new venture, Adventis NMG Ltd, which specialises in financial services,commenced trading in September 2004 and traded profitably for the period ended31 December 2005. A series of projects were concluded in 2005 for clients suchas Savills Private Finance, Lincoln Financial Group, Moneywise, and ABM Amro andthe outlook for larger projects from such clients in 2006 is positive. Outlook The first quarter has started well and we are confident about prospects for thecurrent year. We continue to raise our profile in our chosen market sectors of property,healthcare and financial services. More opportunities are offering themselvesto us in these areas and we are able to be very selective in making furtheracquisitions and focus hard on agreeing the best possible terms for the group. Our strong cash position, profit performance and balance sheet will enablefurther strategic developments and we continue to explore ways of growing thegroup while ensuring our profit record is maintained. Charles PhillpotChief Executive Officer Consolidated income statement for the year ended 31 December 2005 Notes 2005 2004 £'000 £'000 Turnover 21,901 12,087 Operating profit 929 626 Investment revenues 102 150Finance costs (4) (2) ------- -------- Profit on ordinary activities before taxation 1,027 774 Taxation 3 (105) (210) ------- -------- Profit for the financial year 922 564 ------- -------- Attributable to:Equity holders of the parent 876 563Minority interests 46 1 ------- -------- 922 564 ------- -------- Earnings per share 5 Basic 2.66p 2.18p ------- --------Diluted 2.63p 2.17p ------- -------- All activities derive from continuing activities Consolidated balance sheet as at 31 December 2005 Notes 2005 2004 £'000 £'000 Assets Non-current assets Goodwill 6 1,827 259Other intangible assets 7 416 -Property, fixtures and equipment 8 194 184Deferred tax assets 181 - ------- -------- 2,618 443 ------- -------- Current assets Work in progress 151 5Trade and other receivables 3,488 2,218Bank balances and cash 2,585 3,174 ------- -------- 6,224 5,397 ------- --------Total assets 8,842 5,840 ------- -------- Equity and liabilitiesShareholders' equity Share capital 81 79Share premium account 2,862 2,563Capital redemption reserve 200 200Other reserves 20 20Retained earnings 1,915 1,223 ------- -------- 5,078 4,085Equity minority interests 47 1 ------- --------Total equity 5,125 4,086 ------- -------- Non-current liabilities Obligations under finance leases - 10Deferred tax liabilities 6 5Deferred consideration 964 - ------- -------- 970 15 ------- -------- Current liabilities Trade and other payables 2,267 1,575Current tax liabilities 149 153Obligations under finance leases 12 11Deferred consideration 319 - ------- -------- 2,747 1,739 ------- --------Total liabilities 3,717 1,754 ------- --------Total equity and liabilities 8,842 5,840 ------- -------- Consolidated statement of changes in equity for the year ended 31 December 2005 Share Share Capital Retained Minority capital premium reserves earnings interest Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 December 2003 - as originally stated 50 - 220 754 - 1,024 - changes in relation to adoption of IFRS (note 28) - - - 45 - 45 ------- ------- ------- ------- ------- -------- 50 - 220 799 - 1,069 Changes in equity for 2004Profit for the year - - - 564 - 565Dividends paid - - - (148) - (148)Minority interest - - - (1) 1 - ------- ------- ------- ------- ------- --------Total recognised earnings for the year - - - 415 1 416 Issue of share capital 29 2,563 - - - 2,592Share based transactions - - - 9 - 9 ------- ------- ------- ------- ------- --------Balance at 31 December 2004 79 2,563 220 1,223 1 4,086 Changes in equity for 2005Profit for the year - - - 922 - 922Dividends paid - - - (198) - (198) Minority interest - - - (46) 46 - ------- ------- ------- ------- ------- -------- Total recognised earnings for the year - - - 678 46 724 Issue of share capital 2 299 - - - 301Share based transactions - - - 14 - 14 ------- ------- ------- ------- ------- -------- 81 2,862 220 1,915 47 5,125 ------- ------- ------- ------- ------- -------- Consolidated cash flow statement for the year ended 31 December 2005 2005 2004 £'000 £'000 £'000 £'000 Operating activities Profit from operations 929 626 Adjustments for: Amortisation of intangible assets 45 -Share based transactions 14 9Depreciation on fixtures and equipment 76 61Loss on disposal of fixed assets 1 - ------- --------Operating cash flows before movement in working capital 1,065 696 Decrease in work in progress (50) (5)Increase in receivables (1,096) (257)Increase in payables 558 233 ------- -------- Cash generated by operations 477 667 Corporation tax paid (317) (46) ------- -------- Net cash from operating activities 160 621 Investing activities Interest received 102 65Interest element of finance leases (1) (2)Bank overdraft interest paid (3) -Acquisition of subsidiary (581) -Purchase of fixtures and equipment (59) (72) ------- -------- Net cash used in investment activities (542) (9) Financing activities Equity dividends paid to shareholders (198) (64)Share capital issued (net of costs) - 2,592Capital element of finance lease rental payments (9) (8) ------- -------- Net cash (used)/from financing activities (207) 2,520 ------- -------- Net (decrease)/increase in cash and cash equivalents (589) 3,132 Cash and cash equivalents at beginning of period 3,174 42 ------- -------- Cash and cash equivalents at end of period 2,585 3,174 ------- -------- Notes to the financial statementsFor the year ended 31 December 2005 1. Principal accounting policies Basis of accounting The 2005 financial statements are the group's first consolidated financialstatements prepared under International Financial Reporting and AccountingStandards, with a transition date of 1 January 2004. The disclosure required byIFRS 1 concerning the transition from UK GAAP to International FinancialReporting and Accounting Standards is given in note 28. The financial statementshave also been prepared in accordance with International Financial Reporting andAccounting Standards adopted for use by the European Union and therefore complywith Article 4 of the EU IAS Regulation. The financial statements have been prepared on the historical cost basis. Theprincipal accounting policies adopted are set out below. Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe company and enterprises controlled by the company (its subsidiaries) made upto 31 December each year. Control is achieved where the company has the power togovern the financial and operating policies of a subsidiary. Minority interests in the net assets of consolidated subsidiaries are identifiedseparately from the group's equity therein. Minority interests consist of theamount of those interests at the date of the original business combination andthe minority's share of changes in equity since the date of the combination.Losses applicable to the minority in excess of the minority's interest in thesubsidiary's equity are allocated against the interests of the group except tothe extent that the minority has a binding obligation and is able to makeadditional investment to cover the losses. The results of subsidiaries acquired or disposed of during the period areincluded in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate. All intra-group transactions and balances between group enterprises areeliminated on consolidation. Notes to the financial statementsFor the year ended 31 December 2005 2. Summary of significant accounting policies Taxation The tax charge represents the sum of current and deferred tax. Current tax payable is based on taxable profits for the year. Taxable profits differ from net profits as reported in the income statement because it excludes items that are taxable or deductible in other years and items that are not taxable or deductible. The group's liability for current taxis calculated using tax rates that have been enacted or substantively enacted atthe balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the liability method. Deferred taxliabilities are recognised for all temporary differences and deferred tax assetsare recognised to the extent that it is probable that taxable profits will beavailable against which temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability or the asset is realised. 3. Tax on profit on ordinary activities Analysis of credit in period 2005 2004 £'000 £'000 Current tax: UK corporation tax on profits of the period 290 215Adjustments in respect of previous periods (3) (5) ------- --------Total current tax 287 210 ------- -------- Deferred tax: Origination and reversal of timing differences (2) -Effect of increased tax rate on opening liability 1 -Realisation of deferred tax asset (181) - ------- --------Total deferred tax (182) - ------- -------- Tax on profits on ordinary activities 105 210 4. Dividends 2005 2004 £'000 £'000 Amounts recognised as distributions to equity holders in the period: Final dividend of 0.412p (2003: Nil) per share 130 - Interim dividend of 0.21p (2004: 0.266p) per share 68 84 Further interim dividend of Nil (2004: 0.203p) per share - 64 ------- -------- 198 148 ------- --------Proposed final dividend of 0.436p (2004: 0.412p) per share 142 130 ------- -------- The proposed final dividend is subject to approval by shareholders at the annualgeneral meeting and has not been included as a liability in these financialstatements. The estimate of the proposed dividend is based on shares in issueas at 29 March 2006 and excludes the treasury stock bought back by the companyin January 2006. Notes to the financial statementsFor the year ended 31 December 2005 5. Earnings per share The calculations of the basic and diluted earnings per share are based on the following data: 2005 2004 £'000 £'000 Profit for the purpose of basic earnings per share 876 563 ------- --------Number of shares Weighted average number of ordinary shares inissue during the year 32,977,826 25,789,474 Effect of dilutive options 166,766 95,466 Effect of dilutive warrants 98,312 56,280 ------- --------Diluted weighted average number of ordinary shares in issue during the year 33,242,904 25,941,220 ------- -------- The weighted average number of ordinary shares in issue during the yearincludes 483,871 Ordinary shares, which represent the deferred consideration dueon the acquisition of Affiniti (UK) Limited at the market on 31 December 2005. The dilutive shares basis for 2004 has been restated in accordance with IFRS. 6. Goodwill £'000 Carrying amount At 1 January 2004 and 31 December 2004 259 Addition 1,568 ------- At 31 December 2005 1,827 ------- The addition relates to the acquisition of Affiniti (UK) Limited, which isdescribed in note 25. 7. Other intangible assets £'000 Cost At 1 January 2004 and 31 December 2004 - On acquisition of subsidiary 461 ------- At 31 December 2005 461 ------- Accumulated amortisation At 1 January 2004 and 31 December 2004 - Amortisation charge 45 ------- At 31 December 2005 45 ------- Carrying amount At 31 December 2005 416 ------- At 31 December 2004 - ------- Notes to the financial statementsFor the year ended 31 December 2005 8. Property, fixtures and equipment Group 2005 Leasehold Fixtures, Total Improvements fittings and equipment £'000 £'000 £'000CostAt 1 January 2005 21 469 490Addition 5 54 59On acquisition of subsidiary - 65 65Disposals - (22) (22) -------- -------- --------At 31 December 2005 26 566 592 -------- -------- -------- Accumulated depreciationAt 1 January 2005 8 298 306Charge for the year 4 72 76On acquisition of subsidiary - 37 37Disposals - (21) (21) -------- -------- --------At 31 December 2005 12 386 398 -------- -------- -------- Carrying amountAt 31 December 2005 14 180 194 -------- -------- -------- The carrying amount of the group's fixtures and equipment includes an amount of£16,000 (2004: £21,000) in respect of assets held under finance leases Group2004 Leasehold Fixtures, fittings Total Improvements and equipment £'000 £'000 £'000 CostAt 1 January 2004 21 381 402Addition - 88 88 -------- -------- --------At 31 December 2004 21 469 490 -------- -------- -------- Accumulated depreciationAt 1 January 2004 4 241 245Charge for the year 4 57 61 -------- -------- --------At 31 December 2004 8 298 306 -------- -------- -------- Carrying amountAt 31 December 2004 13 171 184 -------- -------- -------- Notes to the financial statementsFor the year ended 31 December 2005 9. First time adoption of International Financial Reporting Standards This is the first year that the group has presented its financial statementsunder International Financial Reporting Standards. The following disclosures arerequired in the year of transition. The last financial statements under UK GAAPwere for the year ended 31 December 2004 and the date of transition toInternational Financial Reporting Standards was therefore 1 January 2004. Group Reconciliation of equity at 1 January 2004 (date of transition to InternationalFinancial Reporting Standards) Note UK GAAP Transition IFRSs £'000 £'000 £'000 Assets Non-current assets1 Goodwill 214 45 259 Property, plant and equipment 157 - 157 -------- -------- -------- 371 45 416 -------- -------- -------- Current assets Trade and other receivables 1,972 - 1,972 Bank balances and cash 42 - 42 -------- -------- -------- 2,014 - 2,014 -------- -------- -------- Total assets 2,385 45 2,430 -------- -------- -------- Equity and liabilities Shareholders' equity Share capital 50 - 50 Capital redemption reserve 200 - 200 Other reserves 20 - 20 Accumulated profits 754 45 799 -------- -------- -------- Total equity 1,024 45 1,069 -------- -------- -------- Non-current liabilities Obligations under finance lease 7 - 7 Deferred tax liabilities 5 - 5 -------- -------- -------- 12 - 12 -------- -------- -------- Current liabilities Trade and other payables 1,343 - 1,343 Obligations under finance leases 6 - 6 -------- -------- -------- 1,349 - 1,349 -------- -------- -------- Total liabilities 1,361 - 1,361 -------- -------- -------- Total equity and liabilities 2,385 45 2,430 -------- -------- -------- Notes to the reconciliation of equity at 1 January 2004 1 Under UK GAAP negative goodwill is recognised as a negative asset in the consolidated balance sheet, whereas under IFRS negative goodwill is taken to the profit and loss account after adjustments for fair values. Notes to the financial statementsFor the year ended 31 December 2005 9. First time adoption of International Financial Reporting Standards Reconciliation of equity at 31 December 2004 Note UK GAAP Transition IFRSs £'000 £'000 £'000 Assets Non-current assets 1 Goodwill 200 59 259 Property, plant and equipment 184 - 184 -------- -------- -------- 384 59 443 -------- -------- -------- Current assets Work in progress 5 - 5 Trade and other receivables 2,218 - 2,218 Bank balances and cash 3,183 - 3,183 -------- -------- -------- 5,406 - 5,406 -------- -------- -------- Total assets 5,790 59 5,849 -------- -------- -------- Equity and liabilities Shareholders' equity Share capital 79 - 79 Share premium account 2,563 - 2,563 Capital redemption reserve 200 - 200 Other reserves 20 - 203. Accumulated profits 1,034 189 1,223 -------- -------- -------- 3,896 189 4,085 Minority interests 1 - 1 -------- -------- -------- Total equity 3,897 189 4,086 -------- -------- -------- Non-current liabilities Obligations under finance lease 10 - 10 Deferred tax liabilities 5 - 5 -------- -------- -------- 15 - 15 -------- -------- -------- Current liabilities Trade and other payables 1,580 - 1,580 Obligations under finance leases 11 - 11 Current tax liabilities 157 - 157 2. Proposed dividend 130 (130) - -------- -------- -------- 1,878 (130) 1,748 -------- -------- -------- Total liabilities 1,893 (130) 1,763 -------- -------- -------- Total equity and liabilities 5,790 59 5,849 -------- -------- -------- Notes to the financial statementsFor the year ended 31 December 2005 9. First time adoption of International Financial Reporting Standards Notes to the reconciliation of equity at 31 January 2004 1 Under UK GAAP negative goodwill is recognised as a negative asset in the consolidated balance sheet, whereas under IFRS negative goodwill is taken to the profit and loss account after adjustments for fair values. The value of £45,000 was taken to reserves as at 1 January 2004. A further £14,000 was written back to goodwill, which represents the amortisation charge/(credit) that occurred each year on the original cost value of goodwill as required under UK GAAP. Under IFRS goodwill is not amortised, but is reviewed for impairment at least annually. 2 Dividends are now recognised only when they are declared and approved, rather than accrued for in the period to which they relate. This has the effect of deferring the recognition of dividends to the following half-year. In addition dividends will be shown as a movement directly in equity instead of though the income statement. 3 The adjustments to retained earnings are as follows: £'000 Negative goodwill carrying value 43 Positive goodwill amortisation 2 Negative amortisation credit (3) Positive goodwill charge 17 Accrued dividend 130 ------- 189 ------- Reconciliation of profit for the year ended 31 December 2004 Note UK GAAP Transition IFRSs £'000 £'000 £'000 Revenue 12,087 - 12,087 -------- -------- --------1 Operating profit 625 1 626 Investment revenues 150 - 150 Finance costs (2) - (2) -------- -------- -------- Profit on ordinary activities before taxation 773 1 774 2 Tax on profit on ordinary activities (214) 4 (210) -------- -------- -------- Profit for the financial year 559 5 564 -------- -------- -------- Notes to the reconciliation of profit for the year ended 31 December 2004 1 The adjustments to operating profit were are as follows: £'000a) Negative amortisation credit (3)b) Positive goodwill charge 17c) Share based payments (13) -------- 1 -------- a) The reason for the adjustment is described aboveb) The reason for the adjustment is described abovec) Under IFRS 2, the charge recognised in the income statement for share options, long term incentive plans and other share based payments will be based on the 'fair value' of the awards, calculated using an option pricing model. This contrasts to UK GAAP, where the charge recognised was based on the intrinsic value' of awards, being the difference between the market value of the shares at the date of the award and the option exercise price. 2 The adjustment represents the tax relief available on the share based payment charge. Notes to the financial statementsFor the year ended 31 December 2005 9. First time adoption of International Financial Reporting Standards This is the first year that the company has presented its financialstatements under International Financial Reporting and Accounting Standards. Thefollowing disclosures are required in the year of transition. The last financialstatements under UK GAAP were for the year ended 31 December 2004 and the dateof transition to International Financial Reporting and Accounting Standards wastherefore 1 January 2004. Company At the date of transition, the balance sheet of the company was prepared underInternational Financial Reporting and Accounting Standards. There were noadjustments to equity on transition Reconciliation of equity at 31 December 2004 Note UK GAAP Transition IFRSs £'000 £'000 £'000 Assets Non-current assets Investments 57 - 57 Property, plant and equipment 175 - 175 -------- -------- -------- 232 - 232 -------- -------- -------- Current assets Trade and other receivables 1,235 - 1,235 Bank balances and cash 2,766 - 2,766 -------- -------- -------- 4,001 - 4,001 -------- -------- -------- Total assets 4,233 - 4,233 -------- -------- -------- Equity and liabilities Shareholders' equity Share capital 79 - 79 Share premium account 2,563 - 2,563 Capital redemption reserve 200 - 200 Other reserves 20 - 2 Accumulated profits 472 130 602 -------- -------- -------- 3,334 130 3,464 -------- -------- -------- Non-current liabilities Obligations under finance lease 10 - 10 Deferred tax liabilities 5 - 5 -------- -------- -------- 15 - 15 -------- -------- -------- Current liabilities Trade and other payables 729 - 729 Obligations under finance leases 11 - 11 Bank overdrafts 6 - 6 Current tax liabilities 8 - 8 1. Proposed dividend 130 (130) - -------- -------- -------- 884 (130) 754 -------- -------- --------Total liabilities 899 (130) 769 -------- -------- -------- Total equity and liabilities 4,233 - 4,233 -------- -------- -------- Notes to the financial statementsFor the year ended 31 December 2005 9. First time adoption of International Financial Reporting Standards Notes to the reconciliation of equity at 1 January 2004 1 Dividends are now recognised only when they are declared and approved, rather than accrued for in the period to which they relate. This has the effect of deferring the recognition of dividends to the following half-year.In addition dividends will be shown as a movement directly in equity instead ofthough the income statement. Reconciliation of profit for the year ended 31 December 2004 Note UK GAAP Transition IFRSs £'000 £'000 £'000 Revenue - - - -------- -------- --------1 Operating loss (110) (9) (119) Investment revenues 138 - 138 Finance costs (2) - (2) Dividends receivable from subsidiaries 700 - 700 -------- -------- -------- Profit on ordinary activities before taxation 726 (9) 717 Tax on profit on ordinary activities - - - -------- -------- -------- Profit for the financial year 726 (9) 717 -------- -------- -------- Notes to the reconciliation of profit for the year ended 31 December 2004 1. Under IFRS 2, the charge recognised in the income statement for share options, long term incentive plans and other share based payments will be based on the 'fair value' of the awards, calculated using an option pricing model. This contrasts to UK GAAP, where the charge recognised was based on the intrinsic value' of awards, being the difference between the marketvalue of the shares at the date of the award and the option exercise price. This information is provided by RNS The company news service from the London Stock Exchange