Half-yearly Report
RDF Group PLC
("RDF" or "the Group")
Interim Results
RDF Group plc (AIM: RFG), the I.T. services group, with offices in Brighton,
Bristol, Edinburgh and London, today announces its unaudited interim results
for the six months to 30 September 2007.
Key Points
* Group revenues increased 38% to £14.735 million (2006: £10.644 million)
* Operating profit before depreciation, amortisation of intangible assets and
exceptional items of £0.336 million (2006: £0.800 million)
* Operating profit of £0.136 million (2006: £0.643m)
* Profit before tax of £0.044 million (2006: £0.603 million)
* Basic earnings per share of 0.19 pence (2006: 3.94 pence)
* Following the acquisition of Aqua Resources Group Limited, the Group's
Temporary Staffing and Permanent Recruitment has performed well, increasing
income by 91% to £7.775m (2006: £4.080m)
* Profits before tax have fallen as a result of increased costs and reduced
margins required in order to build the Group's profile as a niche I.T.
services group
Commenting on the results, Chief Executive David Wood said:
"The performance of the IT Recruitment business has, as predicted, developed
strongly over the past six months. The need for investment in the Managed
Software business has, however, resulted in an overall reduction in the Group's
profitability in the period compared to last year.
Subject to the continued uncertainty in the Financial Services sector, the
Group expects to see an improvement in the results for the second half compared
to the results for the period to 30 September 2007."
For further information, please contact:
RDF Group plc David Wood 01273 200100
Smith & Williamson Corporate Azhic Basirov/Siobhan 020 7131 4000
Finance Sergeant
Editor's Notes
Founded in 1994, RDF Group plc is a company dedicated to providing high quality
managed IT services and recruitment services to their growing portfolio of both
local businesses and blue chip clients. From a standing start, the company
currently has a turnover in excess of £22 million. RDF currently has a staff of
over 300 across the UK, including 120 in Brighton.
RDF also provides IT recruitment services for high value contract and permanent
staff for clients. Clients include Northern Rock, National Australia Group, Sky
TV and a large number of other blue chip companies, many of whom have been
clients of RDF for several years and have gradually increased the value of
their contracts to substantial levels with the Group.
In 2006, RDF has opened new offices in Bristol and London, whilst investing
further in their Head Office in Brighton and regional development centre in
Livingston, near Edinburgh.
For further information on the RDF Group visit www.rdfgroup.com or telephone
01273 200100.
Chairman's Statement
The results for the six months to 30 September 2007 are mixed. The results of
the Managed Software Development division mask the achievements in the strong
results of the Temporary Agency and Permanent Recruitment division which is
able to grow and produce profits without significant additional investment and
is now a core part of the business.
These figures are the first results to be prepared on the basis of
International Financial Reporting Standards (IFRS). Reconciliations of prior
periods' results and balance sheets under IFRS are presented in note 6.
Group income for the six months ended 30 September 2007 increased by 38% to
£14.735m (2006: £10.644m) through a combination of organic growth and the
acquisition of Aqua Resources Group which took place in January 2007. However,
the Group's profit before tax has fallen to £44,000 (2006: £603,000).
Basic earnings per share fell to 0.19p (2006 restated: 3.94p) with a similar
fall in the fully diluted earnings per share to 0.18p (2006 restated: 3.88p).
At the start of the period the Group had net debt of £1.085m (2006: net funds
£246,000). As a result of the significant growth over the period the Group had
net cash outflows of £811,000 from operating activities (2006: net inflows
£680,000). Cash outflows from investing activities were £140,000 (2006:
£221,000) and cash outflows from financing activities were £134,000 (2006:
£68,000). As a result at the end of the period net debt had increased to £2.114m
(2006: net funds £581,000).
Managed Software Development division
Income from managed services software development has increased slightly to
£6.960m (2006: £6.564m) and accounts for 47% (2006: 62%) of total income.
Operating profit before depreciation and amortisation and exceptional items has
declined significantly to £31,000 (2006: £552,000) as a result of the increased
costs in staff and infrastructure needed to support the demands of existing,
new and prospective clients. Your Directors are reviewing the performance of
the division in light of both the continued investment needed to ensure that it
is adequately capitalised for growth and that it meets current and prospective
customer needs and the ongoing turmoil in the financial markets, in which its
key clients operate.
Temporary Agency Staff and Permanent Recruitment division
The division now accounts for 53% (2006: 38%) of the Group's income. Fees
generated in the six months total £7.775m (2006: £4.080m) generating an
operating profit before depreciation and amortisation and exceptional costs of
£494,000 (£426,000).
The division has secured a number of new customers in the period and is now
focussing on improving margins and reducing cost levels. Over the past twelve
months, the division has increased turnover to £12.991m and continues to grow.
This is an excellent result from a division which only two years ago had income
of less than £2m.
Current trading and future prospects
The first half of this year has seen the Group report a strong growth in
turnover, mainly from the Temporary Agency and Permanent Recruitment division.
The Board is focused on ensuring costs are kept under control and investing in
initiatives to continue to grow the businesses. It is important that these
investments continue to be directed towards the appropriate market sectors and
that the Group is offering services to fulfil the needs of these sectors. The
Board has also been pursuing the identification and appointment of additional
non executive directors and expects to make an appointment early in the new
year. The Board remains confident that the second half results will be an
improvement on those of the first half.
Jim Carr
Non Executive Chairman
5 December 2007
Independent Review Report to RDF Group plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the interim financial report for the six months ended 30
September 2007 which comprises the Consolidated Income Statement, Consolidated
Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of
Shareholders' Equity and the related explanatory notes. We have read the other
information contained in the interim financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of meeting the requirements of the AIM Rules for
Companies and for no other purpose. We do not, therefore, in producing this
report, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Directors' Responsibilities
The interim financial report, is the responsibility of, and has been approved
by the directors. The directors are responsible for preparing and presenting
the interim financial report in accordance with the AIM Rules for Companies.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards and
International Financial Reporting Interpretations Committee ("IFRIC")
pronouncements as adopted by the European Union. The condensed set of financial
statements included in this interim financial report has been prepared in
accordance with the measurement and recognition criteria of International
Financial Reporting Standards and International Financial Reporting
Interpretations Committee ("IFRIC") pronouncements, as adopted by the European
Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the interim financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim financial
report for the six months ended 30 September 2007 is not prepared, in all
material respects, in accordance with the measurement and recognition criteria
of International Financial Reporting Standards and International Financial
Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the
European Union, and the AIM Rules for Companies.
Baker Tilly UK Audit LLP
Chartered Accountants
International House
Queens Road
Brighton
BN1 3XE
5 December 2007
Consolidated Income Statement
For the six months ended 30 September 2007 (unaudited)
Six months ended 30 Year ended
September 31 March
2007 2006 2007
Note £000 £000 £000
Revenue 2 14,735 10,644 22,227
Cost of sales (12,665) (8,521) (17,967)
--------------------------------
Gross profit 2,070 2,123 4,260
Administrative expenses (1,734) (1,323) (2,755)
--------------------------------
Operating profit before 2 336 800 1,505
depreciation, amortisation of
intangible assets and exceptional
items
Depreciation (89) (44) (103)
Amortisation of intangible fixed (111) - (87)
assets
Exceptional items - (113) (122)
--------------------------------
Operating profit 136 643 1,193
Finance costs (93) (40) (89)
Finance income 1 - 4
-------------------------------
Profit before tax 44 603 1,108
Income tax expense (24) (193) (362)
-------------------------------
Profit for the period 20 410 746
attributable to equity ===============================
shareholders
Earnings per share 3 Pence Pence Pence
Basic 0.19 3.94 7.17
=============================
Diluted earnings per share 0.18 3.88 6.87
=============================
Consolidated Balance Sheet
As at 30 September 2007 (unaudited)
Six months ended 30 Year ended
September 31 March
2007 2006 2007
£000 £000 £000
ASSETS
Non-current assets
Intangible assets 838 - 949
Property, plant and equipment 491 426 440
Deferred tax asset - 12 -
-----------------------------------
1,329 438 1,389
===================================
Current assets
Trade and other receivables 6,208 3,755 5,287
Cash and cash equivalents 40 581 44
-----------------------------------
6,248 4,336 5,331
===================================
Total assets 7,577 4,774 6,720
===================================
LIABILITIES
Current liabilities
Trade and other payables 2,744 2,273 2,894
Current tax liabilities 344 292 336
Financial liabilities 2,114 - 1,034
-----------------------------------
5,202 2,565 4,264
Non-current liabilities
Financial liabilities 40 51 43
Deferred tax liabilities 14 - -
-----------------------------------
54 51 43
===================================
Total liabilities 5,256 2,616 4,307
===================================
Net assets 2,321 2,158 2,413
===================================
EQUITY
Share capital 208 208 208
Share premium account 103 103 103
Equity option reserve 71 30 53
Retained earnings 1,939 1,817 2,049
-----------------------------------
Total equity 2,321 2,158 2,413
===================================
Consolidated Cash Flow Statement
For the six months ended 30 September 2007 (unaudited)
Six months ended 30 Year
September ended
31 March
2007 2006 2007
Note £000 £000 £000
Cash flows from operating
activities
Cash generated from operations 5 (717) 852 499
Net interest (paid)/received (92) (40) (85)
Income tax paid (2) (132) (208)
------------------------------------
Net cash from operating (811) 680 206
activities
Cash flows from investing
activities
Acquisition of subsidiary
undertakings net of cash and
overdraft acquired - - (620)
Purchase of property plant, and
equipment (140) (221) (338)
Investment in intangible assets - - (299)
------------------------------------
Net cash flows from investing (140) (221) (1,257)
activities
Cash flows from financing
activities
Payment to cancel share options - (20) (20)
Finance leases advanced - 60 60
Repayment of finance leases (4) (4) (9)
Equity dividend paid (130) (104) (208)
------------------------------------
Net cash outflow from financing (134) (68) (177)
activities ------------------------------------
(Decrease)/ Increase in cash and (1,085) 391 (1,228)
cash equivalents for the period ------------------------------------
Reconciliation of net cash flow
to movement in net funds
(Decrease) / increase in cash and (1,085) 391 (1,228)
cash equivalents
Decrease/ (Increase) in finance 4 (56) (51)
leases -------------------------------------
Change in net funds (1,081) 335 (1,279)
Net (debt)/ funds at 1 April (1,033) 246 246
------------------------------------
Net (debt)/funds at 30 September (2,114) 581 (1,033)
====================================
Consolidated Statement of Shareholders Equity
For the six months ended 30 September 2007 (unaudited)
Six months ended Share Share Equity Retained Total
30 September 2007 Capital Premium Option earnings
Reserve
£000 £000 £000 £000 £000
At 1 April 2007 208 103 53 2,049 2,413
Share based payments - - 18 - 18
Profit for the period - - - 20 20
Dividend - - - (130) (130)
----------------------------------------------
At 30 September 2007 208 103 71 1,939 2,321
==============================================
Six months ended Share Share Equity Retained Total
30 September 2006 Capital Premium Option earnings
Reserve
£000 £000 £000 £000 £000
At 1 April 2006 208 103 23 1,511 1,845
Share based payments - - 27 - 27
Share options lapsed or - - (20) - (20)
exercised
Profit for the period - - - 410 410
Dividend - - - (104) (104)
------------------------------------------------
At 30 September 2006 208 103 30 1,817 2,158
===============================================
Year ended Share Share Equity Retained Total
31 March 2007 Capital Premium Option earnings
Reserve
£000 £000 £000 £000 £000
At 1 April 2006 208 103 23 1,511 1,845
Share based payments - - 50 - 50
Share options lapsed or - - (20) - (20)
exercised
Profit for the period - - - 746 746
Dividend - - - (208) (208)
---------------------------------------------
At 31 March 2007 208 103 53 2,049 2,413
=============================================
Notes to the Financial Statements
1. Basis of preparation
RDF Group plc is incorporated in England and domiciled in the United Kingdom.
Its registered office is 2 Bartholomews, Brighton, BN1 1HG and its principal
activities are the provision of software solutions to companies, the provision
of contract staff and the sourcing of permanent staff in the Information
Technology sectors. The financial statements are prepared in pounds sterling.
The Group has historically prepared its audited financial statements and
unaudited interim results on the basis of UK Generally Accepted Accounting
Practice ("UK GAAP"). In the current year the Group has adopted International
Financial Reporting Standards ("IFRS") for the first time as the Group is
required to present its annual consolidated financial statements in accordance
with accounting standards adopted for use in the European Union. As a result
these interim accounts, which are unaudited, have been prepared on the basis of
the accounting policies which will apply for the financial year to 31 March
2008. These standards remain subject to ongoing amendment and/or interpretation
and are therefore still subject to change. Accordingly, information contained
in these interim financial statements may need updating for subsequent
amendments to IFRS required for first time adoption or for new standards issued
post the balance sheet date. This document includes reconciliations of the
Group's equity to IFRS at the date of transition of 1 April 2006 and at the
comparative balance sheet dates of 30 September 2006 and 31 March 2007, and
reconciliations of the Group's results for the comparative periods ended 30
September 2006 and 31 March 2007.
The comparative information for the six months ended 30 September 2006 and the
year ended 31 March 2007 have been restated on the basis of IFRS.
Reconciliations between financial statements previously reported under UK GAAP
and on the basis of IFRS are set out in note 6 to this interim statement in
respect of the Consolidated Income Statements for the year ended 31 March 2007
and six months ended 30 September 2006 and Consolidated Balance Sheets as at 31
March 2007.
The interim financial statements do not include all of the information required
for full annual financial statements and do not comply with all the
requirements of IAS 34 `Interim Financial Reporting'. Accordingly whilst the
interim financial statements have been prepared in accordance with the
transitional rules governing the move from UK GAAP to IFRS they cannot be
construed as being in full compliance with IFRS.
The interim financial statements are unaudited and were approved by the board
of directors on 6 December 2007. The financial information contained in these
statements does not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. The financial information for the year to 31 March 2007
has been extracted from the statutory accounts for that year and adjusted for
the conversion to IFRS. The statutory accounts for the year ended 31 March
2007, which were prepared under UK GAAP, received an unqualified audit report
and did not contain a statement made under Section 237(2) and (3) of the
Companies Act 1985, and have been filed with the Registrar of Companies.
Following the implementation of IFRS, the Group's accounting policies have been
consistently applied to all the periods presented unless otherwise stated. The
principal policies are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
RDF Group plc and of its subsidiaries. Subsidiaries are all entities over which
the Group has the power to govern financial and operating policies, generally
accompanying a shareholding of more than one half of the voting rights.
Subsidiaries are fully consolidated from the date on which the Group takes
control of a subsidiary.
The Group adopts the purchase method in accounting for the acquisition of
subsidiaries. On acquisition the cost is measured at the fair value of the
assets given, plus equity instruments issued and liabilities incurred or
assumed at the date of exchange plus any costs directly attributable to the
acquisition. The assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured at their fair value at the date
of acquisition. Any excess of the fair value of the consideration over the fair
value of the identifiable net assets acquired is recorded as goodwill. Any
deficiency of the fair value of the consideration below the fair value of
identifiable net assets acquired is credited to the Income Statement in the
period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year
are included in the Consolidated Income Statement from the effective date of
acquisition or up to the effective date of disposal.
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. Inter-company transactions and balances between Group companies are
eliminated.
Segmental reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments.
Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. Whilst the
directors believe that the estimates and assumptions used in the preparation of
the interim financial statements are reasonable, the resulting accounting
estimates will, by definition, seldom equal the related actual results. The
estimates that have a significant risk of causing a material adjustment to the
carrying values of assets and liabilities within the next financial year are
discussed below.
i. Impairment of goodwill
The Group tests annually whether the goodwill has suffered any impairment. The
recoverable amounts of cash-generating units have been determined based on
value-in-use calculations which require the use of estimates.
ii. Customer contracts and relationships
Similarly the computation of the fair value of customer contracts and
relationships acquired is based on an estimate of future cash flows arising
from those existing customers.
Revenue recognition
The income shown in the Consolidated Income Statement represents the value of
services provided during the period, exclusive of Value Added Tax. Income is
recognised when the risks and rewards of the underlying services have been
substantially transferred to the customer.
Exceptional items
Items which are non-recurring and sufficiently material are presented
separately within their relevant Consolidated Income Statement category. The
separate reporting helps provide a better understanding of the Group's
underlying business performance.
Property, plant and equipment
Depreciation is calculated to write down the cost less estimated residual value
of all tangible fixed assets by equal annual instalments over their expected
useful lives. The rates generally applicable are:
Computer equipment and software 33% per annum
Office equipment 10% per annum
Motor vehicles 33% per annum
Leasehold property improvements Over the lease term
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the company's share of the net identifiable assets of the acquired
subsidiary at the date of acquisition. Goodwill is included in intangible
assets and is tested annually for impairment. Any impairment is recognised
immediately in the Income Statement and is not subsequently reversed.
Computer software
Costs associated with the production of identifiable and unique software
products, including the payroll costs of the development teams, are recognised
as intangible assets when they meet the following criteria:
i. the technical feasibility of the product can be demonstrated
ii. it is probable that the product will generate future economic benefit
iii. the costs of the product can be reliably measured
iv. the Group has the necessary resources available to complete the development
of the product
Computer software development costs capitalised as assets are amortised over
their expected useful lives of 2 years.
Customer contracts and customer relationships
Customer contracts and customer relationships acquired with subsidiaries are
recognised at their fair value at the date of acquisition. The value is
amortised over a period not exceeding ten years.
Impairment of intangible assets and property, plant and equipment
Intangible assets that have an indefinite life and are not subject to
amortisation are tested annually for impairment. Other property, plant and
equipment and intangible assets that are subject to amortisation or
depreciation are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. Any impairment losses are charged to the
Income Statement in the period in which they are identified. Where an asset
does not generate cash flows that are independent of other assets, the assets
are allocated to cash-generating units and the Group tests the recoverable
amount of the cash-generating unit to which the asset belongs.
Employee benefits
Pensions
Pension contributions are made for a number of directors and employees on a
defined contribution basis. Contributions payable for the year are charged in
the Income Statement. The Group has no further payment obligations once the
contributions have been paid.
Share based payments
The Group operates a number of share option schemes which allow employees to
acquire shares in the company. Where the company awards share options under
these schemes, the fair value of options granted is calculated at the grant
date using the Black Scholes Model and the resulting cost is charged to the
Income Statement over the vesting period during which the recipient becomes
unconditionally entitled to exercise the option and credited to the Equity
Option Reserve.
Taxation
Income tax expense represents the aggregate of the current tax and deferred tax
charges. The current tax charge is based on taxable profit for the period.
Taxable profit differs from profit before tax as reported in the Income
Statement as it excludes items of income or expense that are taxable or
deductible in other years or are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.
Deferred taxation is provided in full using the liability method on temporary
differences between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements. Deferred tax is determined
using tax rates that have been enacted at or substantively enacted by the
balance sheet date and are expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which the temporary differences
can be utilised.
Leases
Where an asset is acquired under a finance lease, the asset is capitalised and
the corresponding liability to the finance company is included in creditors.
Depreciation on assets held under finance leases is provided in accordance with
the policy noted under property, plant and equipment above. Finance lease
payments are treated as consisting of capital and interest elements and the
interest is charged to the Income Statement on a geometric basis over the
period of the agreement.
Rentals payable under operating leases are charged to the Income Statement on a
straight line basis over the period of the lease.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short term highly liquid funds with original maturities of three
months or less and bank overdrafts. Bank overdrafts are shown within borrowing
in current liabilities on the balance sheet.
Financial instruments
Financial assets and liabilities are recognised in the balance sheet when the
Group becomes party to the contractual provisions of the instrument.
Trade and other receivables
Trade and other receivables are measured at cost less any provision necessary
when there is objective evidence that the Group will not be able to collect all
amounts due. They are non interest bearing and are initially recognised at fair
value and subsequently at amortised cost using the effective interest rate
method.
Trade and other payables
Trade and other payables are not interest bearing and are measured at original
invoice amount.
2. Segmental Review
i) Primary business segment
Segmental information is presented in respect of the Group's business segments.
The primary business segments are based on the Group's reporting structure and
comprises of Managed Software Solutions and Temporary Agency Staffing and
Permanent Recruitment Fees.
Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise
mainly corporate and head office expenses.
The Group's operating units do not operate as separate business units. The
segmental reporting of revenue and operating profit before depreciation and the
amortisation of intangible assets and exceptional costs has been prepared in
order to provide a better understanding of the Group's performance and is not a
full segmental report. The assets and liabilities of the Group are centrally
managed, and therefore it is not possible to allocate them to the business
segments.
Six months ended 30 September Year ended
31 March
2007 2006 2007
£000 £000 £000
Revenue
Managed Software Developments 6,960 6,564 12,931
Temporary Agency Staffing and
Permanent Recruitment Fees 7,775 4,080 9,296
------------------------------------
14,735 10,644 22,227
====================================
Operating profit before depreciation
and the amortisation of intangible
assets and exceptional costs
Managed Software Developments 31 552 927
Temporary Agency Staffing and
Permanent Recruitment Fees 494 426 917
Software and other sales
Central departments (189) (178) (339)
-------------------------------------
336 800 1,505
=====================================
ii. Secondary business segment
All of the Group's activities take place in the United Kingdom for clients
located in the United Kingdom.
3. Earnings per share
The basic earnings per share is based on attributable profit for the period of
£20,000 (September 2006: £410,000; year ended 31 March 2007: £746,000) and on
10,400,000 ordinary shares (September 2006: 10,400,000; year ended 31 March
2007: 10,400,000) being the weighted average number of ordinary shares in issue
during the periods.
The diluted earnings per share is based on attributable profit for the period
of £20,000 (September 2006: £410,000; year ended 31 March 2007: £746,000)
and on 10,782,508 ordinary shares (September 2006: 10,553,664; year
ended 31 March 2007: 10,864,537), calculated as follows:
Six months ended Year ended
30 September 30 March
2007 2006 2007
No. No. No.
Basic weighted average number of shares 10,400,000 10,400,000 10,400,000
Dilutive potential ordinary shares:
Share options 382,508 153,664 464,537
------------------------------------
10,782,508 10,553,664 10,864,537
====================================
4. Dividend
Six months ended Year ended
30 September 30 March
2007 2006 2007
£000 £000 £000
Dividends paid to equity shareholders
Interim 1.25 per share (2006: 1.0p) 0 0 104
Final 1.25p per share (2006: 1.0p) 130 104 104
------------------------------
130 104 208
==============================
5. Reconciliation of operating profit to net cash generated from operating
activities
Six months ended Year ended
30 September 30 March
2007 2006 2007
£000 £000 £000
Operating profit 136 643 1,193
Depreciation of property, plant and 89 44 103
equipment
Amortisation of intangible assets 111 - 87
Share based payment expense 18 27 50
(Increase)/decrease in receivables (921) 530 (370)
(Decrease)/increase in payables (150) (392) (564)
-------------------------------
Cash (used)/generated by operations (717) 852 499
===============================
6. Principal impact of IFRS
The key differences between UK GAAP and IFRS that will impact the Group are set
out below.
The rules for the first time adoption of IFRS are set out in IFRS1 `First Time
Adoption of International Financial Reporting Standards'. The rules state that
a company should use the same accounting policies in its opening IFRS balance
sheet and throughout all periods presented in its first IFRS financial
statements.
Goodwill
Under UK GAAP, the Group was amortising goodwill arising on acquisitions over
periods of 10 years. Under IFRS 3 `Business combinations', goodwill is not
amortised but instead is subject to annual impairment tests or more frequently
if there is an indication of impairment.
Reconciliations
The following pages show the reconciliation of Profit under UK GAAP to Profit
under IFRS for the year ended 31 March 2007 and Equity under UK GAAP to Equity
under IFRS at 31 March 2007.
Reconciliation of Profit from UK GAAP to IFRS (unaudited)
Year ended 31 March 2007
Under UK Effect of Under IFRS
GAAP transition
to IFRS
£000 £000 £000
Revenue 22,227 - 22,227
Cost of sales (17,967) - (17,967)
----------------------------------
Gross profit 4,260 - 4,260
Administrative expenses (2,755) - (2,755)
----------------------------------
Operating profit before depreciation, 1,505 - 1,505
the amortisation of intangible assets
and exceptional items
Depreciation of fixed assets (103) (103)
Amortisation of intangible fixed assets (75) (12) (87)
Amortisation of goodwill on acquisition (12) 12 -
Exceptional items (122) - (122)
----------------------------------
Operating profit 1,193 - 1,193
Finance costs (89) - (89)
Finance income 4 - 4
----------------------------------
Profit on ordinary activities before tax 1,108 - 1,108
Tax on profit on ordinary activities (362) - (362)
----------------------------------
Profit for the financial period 746 - 746
==================================
Profit under UK GAAP 746
Amortisation of capitalised client 12
relationships
Amortisation of goodwill (12)
----------------------------------
Profit under IFRS 746
==================================
Earnings per share
Basic 7.17p
==================================
Diluted earnings per share 6.87p
==================================
There were no effects of the transition to IFRS on the income statements for
the period ended 30 September 2006
Reconciliation of Equity at 31 March 2007 (unaudited)
As at 31 March 2007
Under UK Transition to Under IFRS
GAAP IFRS
£000 £000 £000
ASSETS
Non-current assets
Intangible fixed assets 225 724 949
Goodwill 724 (724) -
Property, plant and equipment 440 - 440
Deferred tax assets
--------------------------------------
1,389 - 1,389
======================================
Current assets
Trade and other receivables 5,287 - 5,287
Cash and cash equivalents 44 - 44
---------------------------------------
5,331 - 5,331
=======================================
Total assets 6,720 - 6,720
=======================================
LIABILITIES
Current liabilities
Trade and other payables 2,894 - 2,894
Current tax liabilities 336 - 336
Financial liabilities 1,034 - 1,034
---------------------------------------
4,264 - 4,264
=======================================
Non-current liabilities
Financial liabilities 43 - 43
=======================================
Total liabilities 4,307 - 4,307
=======================================
Net assets 2,413 - 2,413
=======================================
EQUITY
Share capital 208 - 208
Share premium account 103 - 103
Equity option reserve 53 - 53
Retained earnings 2,049 2,049
---------------------------------------
Total equity 2,413 - 2,413
=======================================
There were no effects of the transition to IFRS on the balance sheet or equity
at 1 April 2006 or 30 September 2006
Reconciliation of Cash Flows from UK GAAP to IFRS (unaudited)
There are no changes to the Group's cash flows as a result of the impact of the
change from UK GAAP to IFRS
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