Final Results
26 March 2010
Corero plc
("Corero" or "the Group")
Preliminary Results for the period ended 31 December 2009
Corero PLC, the specialist provider of software solutions to the banking and
securities and education markets, announces its preliminary results for the
period ended 31 December 2009.
2009 showed an improvement over 2008 and the trading result is in line with the
statement issued on 26 January 2010 and the Board's expectations. The Board is
pleased with the result which demonstrates the strength of our products, the
quality and commitment of our staff and the success of the restructuring in the
past eighteen months.
Highlights:
* Trading profit of £311,000 (2008: £272,000), an increase of 14 per cent.
* Both Business Systems division (£544,000) and Financial Markets division (£
350,000) made significant profit contributions.
* Net loss after interest and other charges but before taxation was reduced
to £180,000 (2008: loss before taxation of £658,000).
* Cash at 31 December 2009 of £686,000.
* The £4 million of CULS (Convertible unsecured loan stock) was deferred for
repayment from 2011 until 2015.
* Administrative cost base of £4.4 million further reduced and forecast to be
£3.8 million in 2010
* Contracted recurring revenues cover 71 per cent of the 2010 budgeted
administrative overheads.
Peter Waller, Executive Chairman, said:
"The actions taken have delivered an increased trading profit year on year with
Financial Markets returning to profitability and Business Systems as ever
delivering a significant contribution. The business is lean and being tightly
managed, as is appropriate in this uncertain economic climate, and we are well
set to profit from any improvement in our markets. Business Systems remains
solid and well run and Financial Markets is beginning to see increasing market
activity. We approach this year with a degree of optimism as there are signs of
renewed opportunity and momentum across our business."
Enquiries:
Corero plc
Peter Waller, Executive Chairman Tel: 07785 228080
Duncan Swallow, Financial Controller Tel: 01923 695136
Merchant John East Securities Limited
John East/Virginia Bull Tel: 020 7628 2200
College Hill
Jamie Ramsey Tel: 020 7457 2047
About Corero
Corero designs, develops and delivers market leading software products for
financial institutions through its Financial Markets Division, and business and
education markets through its Business Systems Division.
Blue Curve software allows organisations to vastly improve the production and
distribution of their financial research. It collates and presents complex
financial data efficiently and quickly for analysts to make informed opinions
on market conditions and trends. It speeds up the process of content creation,
content approval and publishing. And it also makes sure that each piece of
content conforms to the correct regulatory requirements, and that it gets sent
to the right people, using the right method and at the right time.
Radica CAPS is the European leading software system that addresses the needs of
asset servicing operations for the global banking & securities sector. By fully
automating the life cycle of corporate actions and dividends, including
taxation and new issues and placings, Radica reduces the serious operational
risk of missing or miscalculating corporate events. This area of operations has
traditionally been very manual with all the risk and cost associated with such
processes. Radica is designed for a global market and can address the needs of
financial institutions from Europe, North America or Asia Pacific.
Resource Financials, which is ICAEW accredited, is at the core of our suite of
business applications. Solutions also exist for eProcurement, Project Costing,
HR, Payroll and Continuing Professional Development. Together with a range of
workflow controlled Web Applications, covering Reporting, Timesheets, Expenses,
Requisitions and Employee Self Service, there are over 20 highly integrated
modules offering large and small enterprises dynamic process driven business
solutions.
Resource EMS is a modern and powerful Management Information System, designed
specifically to meet the challenges of the post 16 Education sector. It manages
the complete Learner life-cycle, from initial enquiry through to completion.
Resource EMS is designed to empower both Staff and Learners replacing disparate
and costly add on systems to become the complete college-wide management
information solution.
Chairman's Statement
for the year ended 31 December 2009
Introduction
The results for the year ended 31 December 2009 showed an improvement over
those of 2008 and are in line with my statement issued on 26 January 2010. The
board is pleased with the performance and see it as another positive step in
the development of the business.
Results
For the year ended 31 December 2009, the Group reported a trading profit of £
311,000 (2008: £272,000), an increase of 14 per cent, on revenues of £4.92
million (2008: £5.25 million). After interest and other charges the loss before
taxation was £180,000 compared to a loss during 2008 of £658,000. The directors
are not recommending the payment of a dividend.
The cash position of the Group at the end of 2009 was £686,000 which is
sufficient to support the trading of the Group for the foreseeable future. The
administrative cost base was £4.4 million, a further reduction when compared to
2008. Contracted licence, support and services revenue was £2.7 million at 31
December 2009, which covers 71 per cent of the 2010 budgeted administrative
expense, the highest percentage ever.
Business Systems Division
2008 was a record year and although 2009 represented more of a challenge the
division responded with a solid performance, posting a trading profit of £
544,000.
Without doubt the highlight of the year was winning twenty six additional City
Academy customers out of the eighty new Academies opened by September 2009.
This success demonstrates more clearly than ever why our reputation for high
levels of customer service aligned to a proven product offering at a
competitive price is a winning combination. Maintaining our market share at
around 30 per cent has been an excellent achievement.
The other area that occupied a considerable amount of time was the continuing
implementation of the Resource Education Management System ("REMS"). With over
forty live projects to complete, we inevitably encountered a degree of
difficulty in moving all them forward as quickly as we would have liked.
Therefore, during the year we have restructured the REMS team to meet the
challenge and I am pleased to say that this has is having a positive effect on
the customer projects still underway.
During 2009 we were not able to make as significant an investment in the
Resource Financials product as originally planned but I am pleased to say that
we are in the process of a significant modernisation of the product, the
initial results of which will be launched in May 2010.
Financial Markets Division
The division improved both its revenue and trading profit over 2008, with the
2nd half being particularly strong. Revenue increased by 8.9 per cent, while
trading profit increased to £350,000 (2008: £10,000). This represents a
significant turnaround in profitability since the reported trading loss of £
468,000 in 2007.
The division took advantage of a number of opportunities to increase revenue
through extending licences with current customers. Significant amongst these
was our agreement with a major European investment bank to extend its use of
our Radica CAPS product. While producing significant revenue in 2009, this
agreement also changed the terms of the relationship and will reduce our future
support and consulting revenues.
We also took the opportunity to further cut costs in areas where we do not
expect to make significant future revenues and to focus our efforts on the Blue
Curve product line. This resulted in administrative costs being 8 per cent
lower than those for 2008.
The key event of 2009 has been the launch of Blue Curve version 5 which has
taken us a step further on the transition from distributed software to the SaaS
model. The introduction of a wide range of configuration tools allows us to
install the system very quickly, and then allows the customer to manage the
configuration of the system themselves. As this reduces both the setup time and
the need for the customer to purchase consultancy to make software changes, it
has widened the appeal of the system and resulted in a much larger sales
pipeline when compared to the start of 2009.
Our move towards the SaaS model with Blue Curve over the past two years has
also changed the way we contract with our customers. The majority of Blue Curve
revenue now comes from recurring licence, support and hosting contracts. We
expect this to grow significantly in 2010 as we seek to sign multi-year
agreements with new customers. We are confident that this can be achieved
without increasing costs which will help to maintain profits. However we expect
to see lower divisional revenues in 2010 as we do not anticipate repeating the
large Radica CAPS licence agreement signed in October 2009.
Business Strategy
It has been our strategy in the period since 2007 to reposition Corero for
future profit growth. There is a new board of directors, a reduction in central
overhead costs from £1.1 million to £400,000 and a reduction in overall costs
from £5.8 million to £3.8 million in 2010. A result of this was that in
probably the most difficult economic period in living memory for the financial
sector, our largest single market segment, the company made operating profits
in 2008 and 2009, has a sound cash position and has rescheduled £4.0 million of
debt (convertible loan stock) from 2011 to 2015. In addition, both business
divisions are structured to be successful, have launched new product versions,
brought expense into line with realistic revenue expectations and in total have
a backlog of business that covers 71 per cent of our administrative cost base.
We will continue to run Corero as two separate divisions during 2010, Business
Systems and Financial Markets, with a minimum of central overhead. The plan is
to make each division increasingly valuable and to focus our investment on
those product lines that have the greatest market potential.
Staff
There have been times in the year when our staff have been under considerable
pressure and it is a testimony to their quality and commitment that they
continue to work with great good humour. On behalf of the board I would like to
thank everyone for their efforts and at the same time recognise the
contribution that Roy Mitchell, who left the board at the end of January 2010,
made to the business.
Outlook
2008 and 2009 have been challenging years and we expect 2010 to be no
different. However, the Group has made considerable progress during this time
and the directors expect the Group to maintain that progress. The Business
Systems division is a solid, well run business and we expect it to continue to
produce a good profit contribution although with public sector budgets under
pressure we expect it to have the most difficult year for some time. The
Financial Market division, on the other hand, is seeing increasing market
activity and if we can win our share of these opportunities we will see
momentum return to this division and growth returning to the Company.
Peter Waller
Chairman
25 March 2010
Finance Officer's Report
for the year ended 31 December 2009
Financial Performance
The directors and managers of the Group use revenue growth, trading profit and
cash generation as their Key Performance Indicators. Details of these
indicators are disclosed throughout the financial statements.
For the year ended 31 December 2009, the Group reported an improved trading
profit of £311,000 (2008: £272,000) and a loss before taxation of £180,000
(2008: loss £658,000).
Group revenues were £4,922,000 (2008: £5,249,000). The Financial Markets
division increased revenue by £181,000, whilst there was a decrease of £508,000
in revenue in the Business Systems division.
The Financial Markets division revenue increased to £2,222,000 (2008: £
2,041,000). There was a decrease in Blue Curve revenues to £769,000 (2008: £
909,000) due to a reduction in the professional services revenue offset by
licence extensions to existing customers. Radica revenues were £1,453,000
(2008: £1,132,000) the increase being due to the licence deal made during the
year.
The Business Systems division revenues reduced to £2,700,000 (2008: £
3,208,000). Total Resource revenues were constant over the two year period.
REMS revenues were lower in 2009 as the 2008 revenues benefited from the one
off upgrade licence sales.
Contracted annual licence and support revenues reduced to £2,700,000 (2008: £
2,900,000) due to the net effect of price rises, new customers and
cancellations of existing support contracts.
The Financial Markets division recorded a trading profit of £350,000 (2008: £
10,000). The
improvement resulting from the Radica licence deal and a reduction in headcount
costs.
The Business Systems division trading profit reduced to £544,000 (2008: £
873,000) due to the loss of margin on the REMS licence upgrades compared to
2008.
Central costs reduced by 5 per cent to £583,000 (2008: £611,000). Central costs
relate to the costs of the central services employees covering the areas of
finance, HR, marketing, IT, the executive chairman and non executive directors,
together with the regulatory costs of being an Aim listed plc. Central costs
have been reduced by 47 per cent since 2007.
Non trading expenses - holiday pay accrual, amortisation of customer contracts
and the related customer relationships, capitalisation of research and
development, amortisation of research and development were £111,000 (2008:
credit £80,000). The turnaround relates to increased amortisation of previously
capitalised research and development and a reduction in the capitalised
research and development in 2009 over 2008.
Restructuring costs of £63,000 (2008 credit £14,000) related to the legal and
professional costs of the new Memorandum and Articles of Association and
renegotiation of the Convertible Unsecured Loan Stock agreement.
Based on the impairment review there was no need to impair goodwill during the
year (2008: £683,000
Net interest on the 8 per cent Convertible Unsecured Loan Stock less interest
on bank deposits was £317,000 (2008: £341,000). This includes notional interest
payments as required by International Accounting Standard 32. The actual
interest paid during 2009 was £241,000 (2008: £323,000).
Tax credits of £4,000 were received in the year which related to a refund of
American corporation tax payments. In 2008 tax credits of £80,000 were received
which related to previous years research and development tax credits reclaimed.
Total tax losses carried forward are approximately £7,035,000.
The loss for the year was £176,000 (2008: £578,000).
Loss per share was 11.6 pence (2008: loss 38.1 pence). The restated average
number of shares in issue during 2009 was 1,518,990 (2008: 1,518,990).
Financial Position
Trade and other receivables were £885,000 (2008: £975,000). Trade receivables
days sales outstanding were 37 (2008: 25).
The closing cash balance was £686,000 (2008: £1,145,000). The reduction in cash
was the result of the reduction in deferred revenue, lower accruals linked to
trading conditions, coupled with the investment in intangible assets and
payment of the interest charges.
Deferred income, which represents future revenues for the Group, reduced to £
1,458,000 (2008: £1,861,000) because of the completion and recognition of REMS
professional services and the non renewal of support relating to the Radica
licence sale.
The Group's net liabilities at the year end were £1,789,000 (2008: £1,615,000).
Duncan Swallow
Group Financial Controller
25 March 2010
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2009
2009 2008
Note £'000 £'000
Revenue 4,922 5,249
Cost of sales (202) (363)
Gross profit 4,720 4,886
Trading expenses (4,409) (4,614)
Trading profit 311 272
Non trading (expense)/income (111) 80
Restructuring (charge)/credit 2 (63) 14
Impairment charge 3 - (683)
Profit/(loss) before financing 137 (317)
Finance income 4 - 13
Finance costs 5 (317) (354)
Loss before taxation (180) (658)
Taxation 6 4 80
Loss attributable to equity (176) (578)
shareholders
Total comprehensive loss for (176) (578)
the period
Basic and diluted loss per 7 (11.6p) (38.1p)
share
All of the above operations are continuing.
Non trading expenses are the holiday pay accrual, amortisation of customer
contracts and the related customer relationships, capitalisation of research
and development, amortisation of research and development.
Statement of Financial Position
as at 31 December 2009
Group
2009 2008 2007
(restated) (restated)
Note £'000 £'000 £'000
Assets
Non-current assets
Goodwill 1,677 1,677 2,361
Other intangible assets 1,119 1,241 1,187
Property, plant and 78 122 148
equipment
Investments in - - -
subsidiaries
2,874 3,040 3,696
Current assets
Trade and other 885 975 1,639
receivables
Cash and cash 686 1,145 825
equivalents
1,571 2,120 2,464
Liabilities
Current Liabilities
Trade and other (630) (834) (1,093)
payables
Provisions (12) (14) (90)
Deferred income (1,458) (1,861) (1,931)
(2,100) (2,709) (3,114)
Net current (529) (589) (650)
(liabilities)/assets
Non-current liabilities
Convertible 8% (4,134) (4,058) (4,027)
unsecured loan stock
Provisions - (8) (53)
(4,134) (4,066) (4,080)
Net (liabilities)/ (1,789) (1,615) (1,034)
assets
Shareholders' equity
Ordinary share capital 8 15 4,557 4,557
Deferred share capital 8 4,542 - -
Share premium 6,369 6,369 6,369
Merger reserve 1,023 1,023 1,023
Convertible unsecured 146 146 146
loan stock equity
reserve
Share options reserve 14 12 15
Retained earnings (13,898) (13,722) (13,144)
Total deficit (1,789) (1,615) (1,034)
attributable to equity
holders of the parent
The 2007 and 2008 Group positions have been restated as a result of the change
in accounting policy as per the note within the Statement of changes in
shareholder's equity.
Consolidated Cash Flow Statements
for the year ended 31 December 2009
2009 2008
£'000 £'000
Net cash from operating activities 85 1,098
Cash flows from investing activities
Purchase of intangible assets (292) (419)
Purchase of property, plant and equipment (11) (49)
Net cash used in investing activities (303) (468)
Cash flows from financing activities
Interest paid (241) (323)
Interest received - 13
Net cash used in financing activities (241) (310)
Net (decrease)/increase in cash and cash equivalents (459) 320
Cash and cash equivalents at 1 January 1,145 825
Cash and cash equivalents at 31 December 686 1,145
Cash flows from operating activities
2009 2008
£'000 £'000
Continuing operations
Loss before taxation (180) (658)
Adjustments for:
Depreciation 54 75
Amortisation of intangibles 414 365
Impairment of goodwill - 683
Finance income - (13)
Finance expense 317 354
Decrease in provisions (10) (121)
Share based payment charge/(credit) 2 (3)
Changes in working capital
Decrease in trade and other 90 664
receivables
Decrease in payables (606) (328)
Cash generated from continuing 81 1,018
operations
Corporation tax credit 4 80
Net cash from operating activities 85 1,098
Statement of changes in shareholder's equity
for the year ended 31 December 2009
Share Share CULS Merger Share Profit and Total
capital options equity reserve premium loss
reserve reserve account reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
31 December 4,557 15 146 1,023 6,369 (13,175) (1,065)
2007 as
previously
reported
Change in 31 31
accounting
policy for
revenue
recognition
31 December 4,557 15 146 1,023 6,369 (13,144) (1,034)
2007 as
restated
Share based - (3) - - - - (3)
payments
Total - - - - - (578) (578)
comprehensive
loss for year
ended 31
December 2008
31 December 4,557 12 146 1,023 6,369 (13,722) (1,615)
2008
Share based - 2 - - - - 2
payments
Total - - - - - (176) (176)
comprehensive
loss for year
ended 31
December 2009
31 December 4,557 14 146 1,023 6,369 (13,898) (1,789)
2009
Change in Accounting Policy
During 2009 Corero changed its accounting policy for revenue recognition of
software licences in the Financial Markets division. Revenue relating to new or
renewal licences for 12 months or less was previously recognised over the
period of the licence. Revenue is now recognised at the inception of the
licence as the management believe this better reflects the costs involved in
securing that licence. This change in accounting policy has been accounted for
retrospectively, and the comparative statements for 2007 and 2008 have been
restated. The change affects earnings prior to 2008 as below. There was no
change required to the reported loss in 2008.
£'000
Increase in retained earnings 31
Decrease in deferred income (31)
Share options reserve
A credit of £2,000 was made during the period ended 31 December 2009
representing the reduction in estimated cost of any share options. The estimate
was calculated using the Black Scholes option pricing model. No employee share
options were exercised during the period.
Convertible unsecured loan stock equity reserve
Convertible loan stock is a compound instrument consisting of a liability
component and an equity component. The fair value assigned to the liability
component, representing the embedded option to convert the liability into
equity of the Group, was transferred to reserves at the inception of the
original instrument in August 2006 and remains after the issue of the new
instrument.
Merger reserve
The premium on the issue of 5,606,060 10 pence ordinary shares in relation to
the acquisition of Blue Curve Limited was transferred to the merger reserve
during the year ended 31 December 2006. The premium on the issue of 8,720,952
10 pence ordinary shares in relation to the deferred consideration for Blue
Curve Limited was transferred to the merger reserve during the year ended 31
December 2008.
1. Accounting Policies
1.1 Basis of preparation
The Group and parent company financial statements have been prepared in
accordance with EU endorsed International Financial Reporting Standards (IFRS),
International Financial Reporting Interpretations Committee (IFRIC)
interpretations and those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
The Group and parent company financial statements have been prepared under the
historical cost convention. A summary of the significant Group accounting
policies adopted in the preparation of the financial statements is set out
below.
The financial statements have been prepared on a going concern basis. The Group
was profitable at the trading level and generated cash from operating
activities during the year.
The Directors have prepared detailed profit and cash flow projections for the
period to 30 June 2011. The profit projections are prepared on a current cost
plus inflation basis with any additional headcount linked to incremental
revenue. The projected receipts included in the cash flow projection have been
reduced by 15 per cent to represent uncertainty within the sales forecasts. The
cash flow projections show that the Group will maintain a positive cash
balance.
As a result, the Directors are of the opinion that the Group has adequate
working capital to continue as a going concern for the foreseeable future and,
in particular, for a period of at least 12 months from the date of approval of
these financial statements.
1.2 Basis of consolidation
The consolidated financial statements incorporate the results, assets,
liabilities and cash flows of the Company and each of its subsidiaries for the
financial year ended 31 December 2009.
Subsidiaries are entities controlled by the Group. Control is deemed to exist
when the Group has the power, directly or indirectly to govern the financial
and operating policies of an entity so as to obtain benefits from its
activities. The results, assets, liabilities and cash flows of subsidiaries are
included in the consolidated financial statements from the date control
commences until the date that control ceases.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
Intra-Group balances and transactions are eliminated on consolidation.
1.3 Revenue
Revenue is measured at the fair value of the consideration received or
receivable and represents the amounts receivable for services provided in the
normal course of business, net of all related discounts and sales tax.
Corero has adopted the following in respect of software revenue recognition
1. Software Products
Revenue results mainly from licences, which provide customers with the right to
use these products. Such revenue is recognised on the following basis:
i. If an arrangement to deliver software or a software system, either alone or
together with other products or services, requires significant production,
modification, or customisation, the revenue for both services and software is
recognised under the percentage of completion method.
ii. If services are essential to the functionality of the software and the
payment terms are linked, the revenue for both software and services is
recognised when the following conditions are met:
- A signed contract exists;
- Delivery has occurred;
- The sales price is fixed and determinable;
- Collection of the debt is probable;
- No significant obligations remain.
iii. If services are incidental to the functionality and/or the payment terms
are linked to simple installations, revenue from the grant of perpetual or
fixed term licences to use Corero's software is recognised when the above
conditions are met and services revenue is recognised separately as the
services are provided. Where services are not incidental to the functionality
licence revenues are recorded as agreed project milestones are achieved.
Software rentals or licences invoiced on a periodic basis are recognised at the
start of the term of the agreement.
2. Consulting and Professional Services
Revenue from the provision of consultancy and professional services is
recognised as the work is performed.
3. Support income is recognised over the life of the agreement.
1.3 Cost of Sales
Cost of sales represents amounts charged by external third parties for services
and goods directly related to revenue. Examples of such costs would include,
but not be limited to, external consultants and third party hardware and
software.
1.4 Intangible assets
Separately acquired intangible assets
Purchased computer software is carried at cost less accumulated amortisation
and any impairment losses.
Internally generated intangible assets
The Group's internally generated intangible assets include development costs.
Development costs are capitalised only when it is probable that future economic
benefit will result from the project and the following criteria are met:
* The technical feasibility of the product has been ascertained;
* Adequate, technical, financial and other resources are available to
complete and sell or use the intangible asset;
* The Group can demonstrate how the intangible asset will generate future
economic benefits and the ability to use or sell the intangible asset can
be demonstrated;
* It is the intention of management to complete the intangible asset and use
it or sell it; and
* The development costs can be measured reliably.
After initial recognition, internally generated intangible assets are carried
at cost less accumulated amortisation and any impairment losses.
1.5 Impairment
At each balance sheet date, the Group assesses whether there is any indication
that its assets have been impaired. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of any impairment. If it is not possible to estimate the recoverable amount of
the individual asset, the recoverable amount of the cash-generating unit to
which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of
its fair value less costs to sell and its value in use. The value in use is the
present value of the future cash flows expected to be derived from an asset or
cash-generating unit. This present value is discounted using a pre-tax rate
that reflects current market assessments of the time value of money and of the
risks specific to the asset for which future cash flow estimates have not been
adjusted. If the recoverable amount of an asset is less than its carrying
amount, the
carrying amount of the asset is reduced to its recoverable amount. That
reduction is recognised as an impairment loss.
An impairment loss relating to assets carried at cost less any accumulated
depreciation or amortisation is recognised immediately in the income statement.
Goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the cash-generating units or Groups of cash-generating
units that are expected to benefit from the synergies of the combination.
Goodwill is tested for impairment at least annually, and whenever there is an
indication that the asset may be impaired.
An impairment loss is recognised for cash-generating units if the recoverable
amount of the unit is less than the carrying amount of the unit. The impairment
loss is allocated to reduce the carrying amount of the assets of the unit by
first reducing the carrying amount of any goodwill allocated to the
cash-generating unit, and then reducing the other assets of the unit pro rata
on the basis of the carrying amount of each asset in the unit.
If an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount but limited to
the carrying amount that would have been determined had no impairment loss been
recognised in prior years. A reversal of an impairment loss is recognised in
the income statement. Impairment losses on goodwill are not subsequently
reversed.
1.6Adoption of IAS1 Presentation of Financial Statements (revised)
The Group has adopted IAS 1 (revised) in the current year. The principal
consequences have been presentational changes to the financial statements.
Where necessary prior period comparatives have been restated.
2. Administrative expenses - restructuring costs
2009 2008
£'000 £'000
Legal and professional fees relating to CULS amendments (54) -
and new Memorandum and Articles of Association
Staff restructuring including professional fees (9) 5
Release of the provision against surplus premises - 30
arising on Blue Curve acquisition
Dilapidation costs of West Byfleet office - (21)
(63) 14
3. Impairment Charge
Goodwill is tested at least annually for impairment and whenever there are
indications that goodwill might be impaired.
Goodwill is allocated to the Group's cash-generating units (CGUs) identified
according to business segment.
As at 31 December 2009, the goodwill was allocated at the segment level as
follows: £1,168,000 (2008: £1,168,000) relates to the Financial Markets
division, and £509,000 (2008: £509,000) relates to the Business Systems
division.
The recoverable amounts for the cash-generating units given above were
determined based on value-in-use calculations using cash flow projections over
a four year period. The key assumptions for the value-in-use calculations are
those regarding growth and discount rates. The growth rates are based on the
management's estimates of growth in those specific markets based on past
experience and expected future developments. Management estimates discount
rates using pre-tax rates that reflect current market assessments of the time
value of money and the risks specific to the CGU's.
The cash flows for the projections are derived from the most recent financial
forecasts approved by the management. Future cash flows are discounted in line
with the weighted average cost of capital of 10% pre-tax.
An impairment charge of £nil (2008: £683,000) arose as a result of the
impairment test.
4. Finance income
2009 2008
£'000 £'000
Interest on bank deposits - 13
5. Finance costs
2009 2008
£'000 £'000
Interest payable on CULS (240) (320)
Bank interest payable (1) (3)
Amortisation of notional CULS interest charges under (76) (31)
IAS 32
(317) (354)
6. Taxation
Amounts received in 2009 related to a refund of American corporation tax
payments. In 2008 amounts received were in respect of research and development
tax credits.
7. Loss per Share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average of ordinary shares outstanding
during the period.
The CULS and share options were non-dilutive for both periods and thus the
diluted loss per share is the same as the basic amount.
2009 2008
Loss £'000 after taxation (176) (578)
Basic loss per share (11.6p) (38.1p)
Weighted average number of 1,518,990 1,518,990
ordinary shares
The weighted average number of shares has been adjusted in the prior period to
reflect the capital reorganisation on 29 June 2009.
8. Ordinary shares
2009 2008
£'000 £'000
Authorised
745,821,970 new ordinary shares of 1p 7,458 -
each
1,518,990 new deferred shares of £ 4,542 -
2.99 each
120,000,000 ordinary shares of 10p - 12,000
each
12,000 12,000
Issued and fully paid
1,518,990 new ordinary shares of 1p 15 -
each
1,518,990 new deferred shares of £ 4,542 -
2.99 each
45,569,702 ordinary shares of 10p - 4,557
each
4,557 4,557
At 6.00pm 29 June 2009 the company carried out a capital reorganisation.
Each holding of 30 existing ordinary shares of 10p each was consolidated into
and re-classified as one ordinary share of £3.00.
Each ordinary share of £3.00 arising as a result of the above was subdivided
and re-classified as one new ordinary share of 1p and one deferred share of £
2.99.
Each of the authorised but un-issued existing ordinary shares was sub-divided
into ten ordinary shares of 1p each and formed one class of shares with the new
ordinary shares created above.
9. Dividend
The Directors do not recommend paying a dividend (2008: £nil).
10. Sundry Information
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 25 March 2009. It is not the Company's statutory
accounts for the year ended 31 December 2009 but has been extracted from them.
Copies of the report and accounts for the year to 31 December 2009 will be
posted to shareholders shortly and may be obtained from the company's
registered offices or www.corero.com.
The statutory accounts for the year ended 31 December 2009 received an audit
report which was unqualified. The statutory accounts for the year ended 31
December 2008 have been delivered to the Registrar of Companies but the audited
31 December 2009 accounts have not yet been filed.
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