Half Yearly Report

RNS Number : 3546K

Eurovestech PLC

18 December 2008

 



18 December 2008

Eurovestech plc

 ('Eurovestech', the 'Group' or the 'Company')

Half-yearly results for the six months ended 30 September 2008

HIGHLIGHTS

• Net assets of Eurovestech company increase by £5.4 million to £66 million

• Attributable profit of £2.0million; group pretax profit of £3.8 million

• Toluna takes major step forward in US by acquiring Common Knowledge Inc. 

• Magenta signs first contract for its online advertising product with EMAP

• Mist completes funding at substantially higher valuation

• Record first quarter revenues for KSS Ltd

CHAIRMAN'S STATEMENT

I am pleased to report our results for the six months to 30 September 2008. I take this opportunity both to give an update on our prospects and to reassure shareholders on our plans for dealing with a very difficult period for the global economy and markets.

Economic conditions remain forbidding, with the financial sector still grappling with the effects of the credit crunch. The effects have spread around the world, with inevitable implications for economic growth and consumer confidence, to which no one is immune. We anticipate that economic conditions may deteriorate significantly further before they improve. It is reassuring that we and our investees are currently debt free and, whilst your directors are by no means complacent, the accompanying accounts show cash reserves which are expected to be adequate to see us through the foreseeable future.

Since the first signs of problems arose we have worked closely with our investee companies to help them prepare to deal with the implications of the slowdown. They have made significant progress in reviewing both their strategies and costs in order to meet this challenge.  

We are pleased to report that Toluna, our largest investment at this point, is growing and extending its presence globally, while recording continued gains in sales and profit.  

The demerger of Knowledge Support Systems Retail Limited ('KSS Retail') from Knowledge Support Systems Limited ('KSS Ltd'), completed in September 2007, has allowed these companies to concentrate on the pursuit of new opportunities.  The demerger has significantly benefited the focus and performance of both companies.

Our Group results, including our consolidated subsidiaries, Toluna, KSS Ltd and KSS Retail, for the six months to 30 September show a profit attributable to equity holders of the Company (after tax and minority interests) of £2.0 million, compared to a loss of £1.2 million in the six months to September 2007.  The profit before tax and minority interests is £3.8 million, compared to a loss of £0.1 million in the six months to September 2007.

This outcome reflects our share of profits at our subsidiaries and the operating costs of the Group. Earnings per share for the period were 0.92p against a loss per share of 0.10p in the corresponding period last year.

Our focus, as ever, is on building the asset value of our companies for shareholders. Therefore, we regard the net asset value of our investments as an important benchmark.  This report includes the balance sheet of Eurovestech itself (see note 9), which reflects the market value of our investments and shows shareholders' funds of £66.0 million, compared to £60.6 million at 31 March 2008 and £52.2 million at 30 September 2007.  The improvement since 31 March 2008 is due to a rise in Toluna's share price over the period and the increase in fair value of our shareholding in MIST Technologies SA ('Mist').

We are pleased by the progress of our investee companies, more details of which are set out below.

We are keenly aware that our investee companies will face new tests over the coming months. We cannot minimise the severity of these challenges, which all businesses face in the current economic climate.  Our experiences of the technology bear market from 2001 to 2003 stand us in good stead. Our objective is to do as we did those years ago; to emerge leaner and fitter. Rest assured that we will do our utmost to achieve that objective.

TOLUNA plc

Toluna is building a track record of growth and profitability as it extends the reach of its operations, which now cover 30 countries. Its online panels now have in excess of 2.5 million members.

In June 2008, Toluna concluded the acquisition of Common Knowledge Inc, the US digital data collection services group, for an initial $8.49 million cash plus a further $2.16 million in deferred payment. This is Toluna's largest acquisition to date and an important step forward in North America. Common Knowledge's client list includes many of the top 100 US market research firms and complements Toluna's impressive European client list.  Substantial progress has been made in integrating Common Knowledge into the Toluna group.

We are pleased that Toluna's achievements are being recognised. In July 2008, French business magazine L'Entreprise named Toluna as France's fastest growing company, with revenue growth of 970 per cent. between 2004 and 2007. In October 2008,Toluna won the Franco British Business Award as exporter of the year.

Toluna has launched new services (known as 'Pay Per Click' research service and the 'Toluna QuickSurvey') which give client researchers and market professionals direct access to Toluna's panel community. Toluna believes this is an important step toward the democratisation of market research.

For the six months to 30 June 2008, Toluna's sales rose 48 per cent to £8.2 million, pretax profits rose marginally to £1.4 million and dividends rose 35 per cent to 0.5p.  As at 30 September 2008, Toluna's shares traded at 227.5p, valuing the company at £83 million.  The shares have continued to hold their value.  Eurovestech owns 50.5 per cent of Toluna's issued share capital, giving a market value of £42 million on Eurovestech's shareholding.

KSS Ltd

As the fall in world oil prices intensifies competitive conditions in fuel retailing and prices remain extremely volatile, KSS Ltd's pricing and revenue management systems for petrol refiners and retailers are generating increased interest.

KSS Ltd continues to build on its relationship with SAP as an endorsed business solution partner and exclusive provider of fuels pricing solutions to the oil, gas and retail industries.  The company has developed and sold new analytic tools. The KSS PriceNet system won the CSP magazine's 'Best New Product' award for 2008.  The winner is chosen by retailers and the award is a sign of the growing recognition of the value of the KSS product offering by its customers.

In its trading year to 27 June 2008, KSS Ltd achieved record revenues in excess of £5.5 million and strong profitability, before taking into account the exceptional costs resulting from the demerger of KSS Retail Limited. In its current trading year, it achieved record first quarter revenues in excess of £1.3 million, more than double those of the previous year's first quarter.

Contract wins over the last year include a proportion of continuing support and maintenance work, providing a growing base of recurring revenue.  In the first quarter, several new deals were signed in each of the company's key market sectors.The order pipeline in these core markets appears strong and the company is evaluating new opportunities in Latin America, Africa and Asia.  

Eurovestech owns 100 per cent. of KSS Ltd's issued share capital.

KSS RETAIL

Over the last year KSS Retail has won a series of new orders from leading supermarket and retailing groups.

In June 2008 KSS Retail won its biggest order to date with Sonae Distribuicao, the leading Portuguese grocery retail chain. Since then it has won contracts from SuperS Foods of San Antonio, Texas, Cumberland Farms of Boston, Massachusetts, and United Supermarkets of Lubbock, Texas.

While retail sales in the US are falling due to the economic slowdown, the grocery sector on which KSS Retail is focused is benefiting as consumers switch from eating out to eating at home. This is helping the sector to demonstrate considerable resilience.

Eurovestech owns 100 per cent of KSS Retail's issued share capital.

MAGENTA CORPORATION Ltd

Magenta has developed a valuable foothold for its unique scheduling products in the area of transport fleet logistics management. During the current difficult market conditions, the cost advantages offered by Magenta's solutions are especially relevant to this sector which is particularly susceptible to the general economic decline.  Magenta is making vigorous efforts to win new business in the sector.   In the coming quarters, it will focus particularly on sales of its newly launched scheduling solution known as 'Maxoptra' which is designed to deliver low-cost, high-value dynamic scheduling systems to customers of all sizes and which has been designed to generate recurring revenues for the company.

Magenta has also applied its dynamic scheduling products to produce Maxifier, a product developed to help internet publishers to maximise their revenues from advertising inventory.  Your board is encouraged by recent contracts with DotFox, part of News Corporation, and with EMAP. Discussions with other major publishers are promising.  As with Maxoptra, the new Maxifier solution adopts a business model which has been designed to secure recurring revenue flow over long contractual periods.  

Following a further funding this year, Eurovestech raised its stake in Magenta from 41.9 per cent. to 46.9 per cent.

LOGNET INFORMATION SYSTEMS plc

LogNet is making encouraging progress with its e-billing software. In July 2008 LogNet acquired sophisticated technology to support the advanced billing needs of telecoms and utility companies from MaxBill.   LogNet is confident that the acquisition will accelerate its growth and assist it to become a leading vendor of billing software.

The new technology has already been fully integrated with LogNet's own systems and the first customer order for the integrated offering has been secured.

Eurovestech owns 25.4 per cent. of LogNet's issued share capital.

MIST TECHNOLOGIES SA

Mist has developed an innovative sound separation technology which allows soundtracks to be filtered into individual tracks for each voice and instrument. This separation allows users to remix the sound, enabling the re-mastering of older recordings to modern surround sound quality.  It has commercial application both as a high value product in the film industry and for mass market consumers using music and video online. Using the technology consumers can 'mash' (combine and edit) multiple video and audio soundtracks.

On 3 November 2008 Mist announced the completion of a fundraising of €3.325million (£2.6 million) led by a major institutional investor with Eurovestech investing a further €200,000 (£160,000).  The additional funding is being applied to further the strategy of accelerating the enhancement and commercialisation of Mist's sound separation products under its new 'Audionamix' brand.   This strategy is being led by Olivier Attia, an experienced media entrepreneur, who was appointed as Mist's new chief executive officer on completion of the funding.

The fundraising values Mist at €11.45 million (£9 million), three times the value when Eurovestech originally invested in 2007. Following the fundraising Eurovestech holds 37.8 per cent. of Mist's issued share capital. 

ARKeX Ltd

ARKeX conducts geophysical surveys for oil, gas and mineral explorers using airborne gravity gradiometry, a new technology which delivers an accurate picture of sub-surface geology over inaccessible terrain.

In June 2008, ARKeX raised £15.4 million, the largest venture round for a service company in the oil and gas exploration sector since 2003. The funds will be used to expand the operational capabilities of its gravity gradiometry imaging and to accelerate production of its proprietary technology.

ARKeX has started its first survey in the Middle East for a national oil company. It has also introduced its first twin-engined aircraft, a DeHavilland Twin Otter. This allows ARKeX to satisfy demand for its surveys over the 'transition zone' between land and sea, where traditional land based surveys are particularly difficult and expensive.

Following the funding, Eurovestech owns 2.4 per cent. of ARKeX's fully diluted share capital.

PROSPECTS

Your board remains focused on ensuring that the group's portfolio companies are well positioned not only to weather the continuing economic downturn but also to build value for their stakeholders.  We believe our companies are resilient enough to survive in the difficult conditions which seem likely to persist for some time and we will endeavour to help them to develop strategies to ensure that they can thrive in circumstances that cause others to falter.  Your Board is constantly seeking out opportunities produced by the current economic conditions from which Eurovestech may benefit.  For the medium and longer term prospects of your group, we remain cautiously confident.

Richard Grogan

Chairman

FURTHER ENQUIRIES

Eurovestech plc
Richard Bernstein	020 7491 0770
John East & Partners Limited
David Worlidge / Simon Clements	020 7628 2200

  CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

		Six months to  30 September	Six months to 30 September	Year to  31 March
		2008	2007	2008
		£'000	£'000	£'000
		Unaudited	Unaudited	Audited
			Restated
	Notes
Revenue	3	16,922	9,201	19,642
Investment income		45	96	160
Net gains/(losses) on financial assets at fair value		1,467	(30)	(422)
Operating expenses	3	(14,593)	(9,327)	(20,542)
Operating profit/(loss)		3,841	(60)	(1,162)
Finance income		78	16	207
Finance costs		(92)	(77)	(166)
Profit/(Loss) before tax		3,827	(121)	(1,121)
Income tax expense		(664)	(184)	(348)
Profit for the period		3,163	(305)	(1,469)
Attributable to:
Equity holders of the Company		2,006	(1,218)	(2,561)
Minority interest		1,157	913	1,092
Profit for the period		3,163	(305)	(1,469)
Earnings per share
Basic earnings per share (pence per share)	4	0.92	(0.10)	(0.46)
Diluted earnings per share (pence per share)	4	0.91	(0.10)	(0.46)

  CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

	Six months to  30 September	Six months to  30 September	Year to  31 March
	2008	2007	2008
	£'000	£'000	£'000
	Unaudited	Unaudited	Audited
		Restated
Profit/(Loss) for the financial period	3,163	(305)	(1,469)
Foreign exchange movements	148	(74)	764
Total income and expense recognised in the period	3,311	(379)	(705)
Attributable to:
Equity holders of the Company	2,279	(1,304)	(2,602)
Minority interest	1,032	925	1,897
	3,311	(379)	(705)

  CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2008

		30 September	30 September	31 March
		2008	2007	2008
		£'000	£'000	£'000
		Unaudited	Unaudited	Audited
			Restated
	Notes
Assets
Non-current assets
Property, plant and equipment		1,022	644	729
Goodwill	5	5,894	2,076	2,076
Other intangible assets		5,313	2,157	3,386
Financial assets at fair value through profit and loss	6	8,386	6,818	6,991
Deferred tax asset		1,545	2,755	1,372
		22,160	14,450	14,554
Current assets
Trade and other receivables		12,024	6,383	7,946
Financial assets at fair value through profit and loss		4,182	367	3,840
Cash and cash equivalents		1,885	3,733	6,995
		18,091	10,483	18,781
Liabilities
Current liabilities
Trade and other payables		9,027	5,580	7,817
Income tax liabilities		860	-	469
Borrowings		1,395	-	260
		11,282	5,580	8,546
Net current assets		6,809	4,903	10,235
Non current liabilities
Borrowings		148	-	115
Deferred tax liability		704	94	309
Provisions		2,372	1,573	1,945
		3,224	1,667	2,369
Net assets		25,745	17,686	22,420
Equity
Capital and reserves attributable to the equity holders of the Company
Issued capital		3,436	3,181	3,436
Share premium		18,680	13,885	18,680
Other reserve		578	331	291
Retained earnings		(3,290)	(4,046)	(5,296)
		19,404	13,351	17,111
Minority interest		6,341	4,335	5,309
Total equity		25,745	17,686	22,420

  CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

	Six months to  30 September	Six months to  30 September	Year to  31 March
	2008	2007	2008
	£'000	£'000	£'000
	Unaudited	Unaudited	Audited
		Unaudited
Cash flows from operating activities
Profit/(Loss) for the period before taxation	3,827	(121)	(1,121)
Adjustments for:
Net finance cost	14	61	(41)
Depreciation of property, plant and equipment	252	250	347
Amortisation of intangible assets	895	330	1,142
Gain on financial assets	(1,551)	-	(94)
Impairment of financial assets	84	55	516
Loss on disposal of property, plant and equipment	-	-	(51)
Movement on provision	350	324	648
Investment income	(45)	(96)	(160)
Share based payments	133	127	224
Increase in trade and other receivables	(2,830)	(269)	(2,989)
Increase/(Decrease) in trade and other payables	2,271	(4,787)	(381)
Net cash generated from/(used in) operations	3,400	(4,126)	(1,960)
Finance costs	(15)	(28)	(70)
Income tax paid	(237)	(577)	(623)
Net cash generated from/(used in) operating activities	3,148	(4,731)	(2,653)
Cash flows from investing activities
Finance income	78	16	207
Purchase of property, plant and equipment	(426)	(358)	(588)
Purchase of intangible assets	(1,329)	(1,101)	(3,143)
Dividends received	45	96	160
Purchase of subsidiary undertaking	(4,522)	-	-
Disposal of financial assets	24,581	57,999	68,339
Purchase of financial assets	(27,724)	(53,268)	(65,843)
Net cash (used in)/generated from investing activities	(9,297)	3,384	(868)
Cash flows from financing activities
Finance lease capital repayments	(70)	-	(65)
Finance lease loan drawn down	33	112	305
Dividends paid to minority interest	(137)	-	(155)
Proceeds from issue of equity shares	-	74	5,011
Net cash generated by financing activities	(174)	186	5,096
Net (decrease)/increase in cash and cash equivalents	(6,323)	(1,161)	1,575
Foreign exchange differences	143	(223)	168
Cash and cash equivalents at the start of the period	6,860	5,117	5,117
Cash and cash equivalents at the end of the period	680	3,733	6,860

The cash on the balance sheet at 30 September 2008 is shown as £1,885,000 and after the deduction of an overdraft of £1,205,000 the net amount of cash for the purposes of the cash flow is £680,000. The overdraft is included in borrowings in the balance sheet, which also include finance leases.

  NOTES TO THE HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

1.    LEGAL STATUS AND ACTIVITIES

Eurovestech Plc is principally involved in the making of investments in technology businesses.

The principal activities of the trading subsidiaries Toluna plc ('Toluna'), Knowledge Support Systems Limited ('KSS Ltd') and Knowledge Support Systems Retail Limited ('KSS Retail') are as follows:

Toluna is the leading European provider of online panels and services to the market research industry. It operates and builds online panels, and designs and operates application services that enable research to be undertaken online.

KSS Ltd is a provider of price optimisation technology and services to the oil and gas sectors.

KSS Retail is a provider of price optimisation technology and services to the convenience store, grocery and chain drug sectors.

The Company is a public limited liability company incorporated and domiciled in England and Wales. The address of its registered office is 29 Curzon Street, London, W1J 7TL.

The Company is quoted on the AIM market of the London Stock Exchange.

2.    BASIS OF PREPARATION

This interim condensed consolidated report is for the six month period ended 30 September 2008 and has been prepared in compliance with IAS 34 'Interim financial reporting'.  It does not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2008, which were prepared under International Financial Reporting Standards ('IFRS') as adopted by the European Union (EU). 

The accounting policies adopted in this report are consistent with those of the annual financial statements for the year to 31 March 2008 as described in those financial statements.

The following new accounting standards and amendments to existing standards are effective for the annual period beginning on or after 1 January 2009 and have not been early adopted by the Group:

IFRS 8 'Operating Segments'

IAS 23 (Revised) 'Borrowing Costs'

IFRS 3 (Revised) 'Business Combinations'

The financial information presented does not constitute statutory accounts as defined by section 240 of the Companies Act 1985. The Group's statutory accounts for the year to 31 March 2008 have been filed with the Registrar of Companies. The auditors, PricewaterhouseCoopers LLP, reported on these accounts and their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

The restatement of the interim period to 30 September 2007 has resulted from creating a provision for the payment of a bonus to the investment director of Eurovestech Plc. The details of this bonus scheme are included in the Group's annual financial statements to 31 March 2008. The impact on the interim period to 30 September 2007 amounts to administrative charges of £324,000 and interest charges of £48,000. This is mitigated by a deferred tax entry totalling £112,000. In addition, there is an accrual for holiday pay owed but not taken amounting to £195,000.

 3.  SEGMENTAL ANALYSIS

Primary reporting format - business segments

The segment results for the six months to 30 September 2008 are as follows:

	Venture capital	On-line market research	Software development	Total
	£'000	£'000	£'000	£'000
Total segment revenue	63	11,074	5,798	16,935
Inter segment revenue	(13)	-	-	(13)
Revenue	50	11,074	5,798	16,922
Investment income	45	-	-	45
Net gains on financial assets at fair value	1,467	-	-	1,467
Other operating expenses	(1,126)	(8,807)	(4,660)	(14,593)
Operating profit	436	2,267	1,138	3,841
Net finance costs				(14)
Profit before tax				3,827
Income tax expense				(664)
Profit for the period				3,163

The segment results for the six months to 30 September 2007 were as follows:

	Venture capital	On-line market research	Software development	Total
	£'000	£'000	£'000	£'000
Total segment revenue	10	6,054	3,137	9,201
Inter segment revenue	-	-	-	-
Revenue	10	6,054	3,137	9,201
Investment income	96	-	-	96
Net losses on financial assets at fair value	(30)	-	-	(30)
Other operating expenses	(966)	(3,415)	(4,946)	(9,327)
Operating (loss)/profit	(890)	2,639	(1,809)	(60)
Net finance costs				(61)
Loss before tax				(121)
Income tax expense				(184)
Loss for the period				(305)

The segment results for the year ended 31 March 2008 were as follows:

	Venture capital	On-line market research	Software development	Total
	£'000	£'000	£'000	£'000
Total segment revenue	17	13,101	6,602	19,720
Inter segment revenue	(17)	-	(61)	(78)
Revenue	-	13,101	6,541	19,642
Investment income	160	-	-	160
Net losses on financial assets at fair value	(422)	-	-	(422)
Other operating expenses	(2,424)	(10,312)	(7,806)	(20,542)
Operating (loss)/profit	(2,686)	2,789	(1,265)	(1,162)
Net finance income				41
Loss before tax				(1,121)
Income tax expense				(348)
Loss for the year				(1,469)

4.    EARNINGS PER SHARE

	Six months to  30 September	Six months to  30 September	Year to  31 March
	2008	2007	2008
	£'000	£'000	£'000
	Unaudited	Unaudited	Audited
Profit/(Loss) for the period attributable to equity shareholders	3,163	(305)	(1,469)
Earnings per share
Basic earnings per share (pence per share)	0.92	(0.10)	(0.46)
Diluted earnings per share (pence per share)	0.91	(0.10)	(0.46)
	Shares	Shares	Shares
Issued ordinary shares at start of the period	343,622,801	315,622,801	315,622,801
Ordinary shares issued in the period	-	2,500,000	28,000,000
Issued ordinary shares at end of the period	343,622,801	318,122,801	343,622,801
Weighted average number of shares in issue for the period.	343,622,801	316,633,730	318,952,036
Dilutive effect of options in issue	5,032,917	-	-
Weighted average shares for diluted earnings per share	348,655,718	316,633,730	318,952,036

Where a loss is shown for the period, the diluted loss per share does not differ from the basic loss per share as the exercise of share options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.

  5.    GOODWILL

	£'000
At 1 April 2007, 30 September 2007 and 31 March 2008	2,076
Acquisition	3,818
At 30 September 2008	5,894

The goodwill brought forward arose on the acquisition of Toluna GmbH (formerly Speedfacts Gesellschaft für Online Research GmbH). Common Knowledge Inc. was acquired on 17 June 2008, see note 8 for further details.

6.    FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS

Non-current
	£'000
	Equity investments
At 31 March 2007	4,104
Additions	2,714
At 30 September 2007	6,818
Additions	555
Net loss on investments at fair value	(382)
At 31 March 2008	6,991
Additions	224
Disposals	(296)
Net gain on investments at fair value	1,467
At 30 September 2008	8,386
Fair value
At 30 September 2008	8,386
At 31 March 2008	6,991
At 30 September 2007	6,818

  7.    CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Other reserve	Foreign exchange reserve	Retained earnings	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2007	3,156	13,855	189	218	(2,828)	3,410	18,000
Foreign exchange movements	-	-	-	(86)	-	12	(74)
(Loss)/Profit for the period after tax	-	-	-	-	(1,218)	913	(305)
Exercise of options	25	30	-	-	-	-	55
Share based payment charge	-	-	10	-	-	-	10
At 30 September 2007	3,181	13,885	199	132	(4,046)	4,335	17,686
Foreign exchange movements	-	-	-	43	-	795	838
(Loss)/Profit for the period after tax	-	-	-	-	(1,343)	179	(1,164)
Charity shares	5	94	-	-	-	-	99
Exercise of options	-	1	(93)	-	93	-	1
Issue of shares	250	4,700	-	-	-	-	4,950
Share based payment charge	-	-	10	-	-	-	10
At 31 March 2008	3,436	18,680	116	175	(5,296)	5,309	22,420
Foreign exchange movements	-	-	-	273	-	(125)	148
Profit for the period after tax	-	-	-	-	2,006	1,157	3,163
Share based payment charge	-	-	14	-	-	-	14
At 30 September 2008	3,436	18,680	130	448	(3,290)	6,341	25,745

8.    BUSINESS COMBINATION

On 17 June 2008 Toluna purchased the entire issued share capital of Common Knowledge Inc ('Common Knowledge'). 

Common Knowledge has been working in market research since 1988 and counts many of the top 100 US market research companies as clients. Specialising in digital data collection, it has now progressed to web-based and IVR survey methods.

The acquisition provides a significant presence in the US market for Toluna.

The total consideration was US$10,650,000 which, translated at the prevailing rate, is £5,456,000. Furthermore, acquisition costs of £547,000 were also incurred. Of this amount $8,490,000 was paid on the date of acquisition with $1,255,000 payable one year from acquisition and the remaining $905,000 payable two years from acquisition. The acquisition was partly financed by drawing down £1,229,000 against a £3,000,000 revolving facility obtained during the period. The fair values of the assets and liabilities acquired are summarised below. The values have been assessed on a provisional basis at this stage and are subject to subsequent revision pending a detailed fair value assessment of the assets and liabilities acquired.

	Acquired book value  £'000	Provisional fair value adjustments £'000	Fair value £'000
Other intangible assets	35	1,409	1,444
Property, plant and equipment	154	-	154
Trade and other receivables	1,381	-	1,381
Cash	374	-	374
Trade and other payables	(739)	-	(739)
Tax liabilities	(34)	-	(34)
Deferred tax	-	(395)	(395)
Net assets acquired	1,171	1,014	2,185
Goodwill			3,818
			6,003
Purchase consideration:
Consideration settled in cash			4,349
Deferred consideration			1,107
Other acquisition costs			547
Total consideration			6,003

The provisional fair value adjustment relating to intangible assets which were recognised at acquisition consists of the following:

Separable intangibles at acquisition £'000
Software	175
Panel acquisition costs	175
Customer lists	1,059
	1,409

A significant amount of the value of the acquired business is attributable to its workforce and sales knowhow. Also, the Group anticipates significant operational and geographical synergies to be achieved from the integration of the existing and acquired businesses. As no assets can be recognised in respect of these factors, they contribute to the goodwill recognised on acquisition.

  9.    COMPANY BALANCE SHEET

	At 30 September	At 30 September	At 31 March
	2008	2007	2008
	£'000	£'000	£'000
	Unaudited	Unaudited	Audited
Fixed assets
Tangible assets	4	8	6
Investments	62,484	48,700	53,533
	62,488	48,708	53,539
Current assets
Debtors	1,331	1,438	2,435
Investments	4,182	2,225	3,840
Cash at bank and in hand	15	256	3,010
	5,528	3,919	9,285
Creditors: amounts falling due within one year	(1,992)	(402)	(2,262)
Net current assets	3,536	3,517	7,023
Net assets	66,024	52,225	60,562
Capital and reserves
Called up share capital	3,436	3,181	3,436
Share premium account	18,680	13,885	18,680
Other reserve	116	173	100
Profit and loss account	43,792	34,986	38,346
Shareholders' funds	66,024	52,225	60,562

10.        DIVIDENDS

The Directors are not proposing an interim dividend for the six months ended 30 September 2008.

11.        INTERIM RESULTS

Copies of the interim results for the six months ended 30 September 2008 will be sent to shareholders shortly and will be available from the Company's website www.eurovestech.co.uk.

 

END

 

 

IR FFEFAWSASELE