Interim Results
First Derivatives PLC
04 October 2007
4 October 2007
First Derivatives plc
(AIM:FDP.L, IEX:GYQ.I)
Interim results for the six months ended 31 August 2007
The principal activities of First Derivatives plc ('FDP' or the 'Company') are
the provision of a range of support services to the investment banking market
and the derivatives technology industry and the provision of its own range of
niche banking applications.
Financial Highlights
- Turnover £ 5.641 m (2006: £4.178 m) +35%
- EBITDA £2.116 m (2006: £1.239 m) +71%
- Pre-tax profit £1.849 m (2006: £1.111 m) +66 %
- Earnings per share 10.2p (2006: 5.9p) +73 %
- Interim dividend 2.3p per share (2006: 1.4p) +64%
Business Highlights
- Further increase in Capital Market and Kx activity
- First sale of FDP software product
- Number of employees now exceeds 100
- Admission to the IEX market of the Irish Stock Exchange
- Improved performance expected to continue during the second half
David Anderson, Chairman of FDP commented
'We are extremely pleased to report further progress in the first half of the
year and the Company expects to be able to report further progress for the full
year.'
For further information please contact:
First Derivatives 028 3025 2242
Managing Director
Brian Conlon
www.firstderivatives.com
Charles Stanley Securities 020 7149 6000
Nominated Adviser
Russell Cook
Carl Holmes
Goodbody Stockbrokers +353 1 667 0410
Diane Hodgson
Linda Hickey
Stakeholder Communications 028 90339949
Carl Whyte
Lisa Nugent
First Derivatives plc
Interim results for the six months ended 31 August 2007
CHAIRMAN'S STATEMENT
I am pleased to report further progress for the Company in the six months to 31
August. Turnover and profits increased as anticipated in our last trading
statement on 23 August.
The Company announces an increased interim pre-tax profit of £1.849 million
compared with £1.111 million in the corresponding period of the previous year.
Revenues were £5.641 million (2006: £4.178 million) and earnings per share
increased by 73% to 10.2p (2006: 5.9p). The 2006 figures have been adjusted to
reflect the impact of IFRS which has been adopted with effect from 1 March 2007.
The Board announces the payment of an interim dividend of 2.3p per share (2006:
1.4p per share). This will be paid on 18 October 2007 to those shareholders on
the register on 12 October 2007. The shares will be marked ex-dividend on 10
October 2007.
In our recent trading statement we referred to increased capital markets
activities. We are continuing to experience strong levels of demand for our
consultants and are achieving high utilisation levels. Our recruitment drive is
continuing, supplemented by our evolving Capital Markets Training Programme and
we now have in excess of 100 staff.
During the period under review our partners had some significant wins. There
have been further sales of Kx products to such high profile customers as NYSE/
Euronext, HypoVereinsbank (HVB) and the Financial Services Authority.
Discussions are currently taking place with Kx on the existing partnership
agreement in response to changes in the technology market.
We continue to develop our own range of niche software products and the Board is
pleased to announce that FDP has just completed our first sale. Although for a
relatively small amount the sale is on an annual licence basis.
The balance sheet reflects an increase of £3,250,000 in borrowings in the six
months to 31 August which have financed the purchase of a further 3 properties
in Manhattan and 2 in central London. We are repaying our borrowings
aggressively and our loan to value ratio for our property portfolio is less than
60%.
The Company looks forward to reporting further progress for the full year.
Income statement (unaudited)
For the period ended 31 August 2007
6 months ended 31 6 months ended 31
August 2007 August 2006
£'000 £'000
(restated)
Revenue 5,641 4,178
Cost of sales (3,159) (2,761)
Gross profit/(loss) 2,482 1,417
Administrative expenses (496) (313)
Other income 23 38
Results from operating activities 2,009 1,142
Financial income 1 14
Financial expenses (149) (65)
Net financing costs (148) (51)
Share of (loss)/profit of equity accounted associates (12) 20
Profit before tax 1,849 1,111
Income tax expense (496) (358)
Profit for the period 1,353 753
Pence Pence
Earnings per Share
Basic 10.4 5.9
Statement of recognised income and expense (unaudited)
For the period ended 31 August 2007
6 months ended 6 months ended
31 August 2007 31 August 2006
£'000 £'000
(restated)
Profit/(loss) for the period 1,353 753
Total recognised income and expense for the period 1,353 753
Reconciliation of movement in capital and reserves
Share Shares to Retained
Share capital premium be issued earnings Total equity
£000 £000 £000 £000 £000
Balance at 1 March 2006 (restated) 64 910 55 2,235 3,264
Total recognised income and expense - - - 753 753
Own shares issued - 60 - - 60
Share based payments - - 65 - 65
Dividends to equity holders - - - (381) (381)
Deferred tax on share options - - - 5 5
Balance at 31 August 2006 64 970 120 2,612 3,766
Balance at 1 March 2007 65 1,020 186 4,206 5,477
Total recognised income and expense - - - 1,353 1,353
Own shares issued - 86 - - 86
Share based payments - - 121 - 121
Dividends to equity holders - - - (468) (468)
Deferred tax on share options - - - 5 5
Balance at 31 August 2007 65 1,106 307 5,096 6,574
Balance Sheet (unaudited)
As at 31 August 2007
As at 31 August As at 31 August
2007 2006
£'000 £'000
(restated)
Non-current assets
Intangible assets 140 270
Property, plant and equipment 11,327 4,585
Other investments 209 209
Investments accounted for using the equity method 243 41
Deferred tax asset 567 163
12,486 5,268
Current assets
Trade and other receivables 3,798 2,790
Cash and cash equivalents 1,077 860
4,875 3,650
Current liabilities
Interest bearing borrowings (2,415) (140)
Trade and other payables (1,491) (1,711)
Current tax payable (1,260) (752)
Employee benefits (711) (447)
(5,877) (3,050)
Net current (liabilities)/assets (1,002) 600
Total assets less current liabilities 11,484 5,868
Non-current liabilities
Interest bearing borrowings (4,910) (2,102)
Provisions - -
Net assets 6,574 3,766
Equity
Issued capital 65 64
Share premium account 1,106 970
Shares to be issued 307 120
Retained earnings 5,096 2,612
Total equity 6,574 3,766
Cash Flow Statement (unaudited)
For the period ended 31 August 2007
6 months ended 31 6 months ended 31
August 2007 August 2006
£'000 £'000
(restated)
Cashflows from operating activities
Cash receipts from customers 6,813 4,727
Cash paid to suppliers and employees (4,470) (3,430)
Cash generated from operations 2,343 1,297
Interest paid (333) (162)
Net cash from operating activities 2,010 1,135
Cashflows from investing activities
Interest received 1 25
Acquisition of property, plant and equipment (484) (1,412)
Acquisition of other investments - (76)
Development expenditure (50) -
Net cash from investing activities (533) (1,463)
Cash flow from financing activities
Repayment of borrowings (372) -
New borrowings 500 -
Issue of share capital 87 14
Dividends paid (468) (381)
Net cash from financing activities (753) 133
Net increase in cash and cash equivalents 724 (195)
Cash and cash equivalents at 1 March 353 1,055
Cash and cash equivalents at 31 August 1,077 860
Notes to the Interim Results
First Derivatives plc ('FDP', or the 'Company') is a company domiciled in
Northern Ireland. The interim financial statements of the Company for the six
months ended 31 August 2007 comprise the Company and its interest in associates.
The interim financial statements were authorised for issuance on 2 October 2007.
1. Significant accounting policies
(a) Statement of compliance
The interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) for interim financial
statements. These are the Company's first IFRS interim financial statements for
part of the period covered by the first IFRS annual financial statements. IFRS
1, First-time adoption of International Financial Reporting Standards has been
applied. The interim financial statements do not include all of the information
required for full annual financial statements.
An explanation of how the transition to IFRSs has affected the reported
financial position, financial performance and cash flows of the Company is
provided in note 4. This note includes reconciliations of equity and profit for
comparative periods reported under UK GAAP (previous GAAP) to those reported for
those periods under IFRSs.
(b) Basis of preparation
The results for the six months ended 31st August 2007 are unaudited.
The financial statements contained in this report do not constitute statutory
accounts within the meaning of Article 248 of the Companies (Northern Ireland)
Order 1986. The results for the period ended 28th February 2007 were prepared
under UK GAAP and reported on by the auditors and received an unqualified audit
report. Full accounts for the period ended 28th February 2007 have been
delivered to the Registrar of Companies.
The financial statements are presented in GBP, rounded to the nearest thousand.
They are prepared on the historical cost basis, except financial instruments
classified as available-for-sale are stated at their fair value where this can
be reliably measured.
Non-current assets are stated at the lower of carrying amount and fair value
less costs to sell.
The preparation of interim financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. Actual results may differ from these estimates.
The directors of the Company have decided that, as permitted under the Companies
(Northern Ireland) Order 1986, the next annual consolidated financial statements
of the company, for the year ending 28 February 2008 will be prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the EU ('adopted IFRSs').
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 2 October 2007
that are effective (or available for early adoption) at 28 February 2008, the
Company's first annual reporting date at which it has decided to use adopted
IFRSs. Based on these adopted IFRSs, the directors have applied the accounting
policies as set out below which they expect to apply when the first annual IFRS
financial statements are prepared for the year ending 28 February 2008.
However, the adopted IFRSs that will be effective (or available for early
adoption) in the annual financial statements for the year ending 28 February
2008 are still subject to change and to additional interpretations and therefore
cannot be determined with certainty. Accordingly, the accounting policies for
that annual period will be determined finally only when the annual financial
statements are prepared for the year ending 28 February 2008.
The preparation of the interim financial statements in accordance with IFRS
resulted in changes to the accounting policies as compared with the most recent
annual financial statements prepared under previous GAAP. The accounting
policies set out below have been applied consistently to all periods presented
in these interim financial statements. They also have been applied in preparing
an opening IFRS balance sheet at 1 March 2006 for the purposes of the transition
to IFRSs, as required by IFRS 1. The impact of the transition from previous GAAP
to IFRSs is explained in note 4 below.
(c) Associates
Associates are those entities for which the Company has significant influence,
but not control, over the financial and operating policies. The interim
individual financial statements of the Company include the Company's share of
the total recognised gains and losses of associates on an equity accounted
basis, as the Company does not have any subsidiaries and does not prepare
consolidated accounts. The Company's share of the total recognised gains and
losses of associates on an equity accounted basis is included from the date that
significant influence commences until the date that significant influence
ceases. When the Company's share of losses exceeds its interest in an associate,
the Company's carrying amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the Company has incurred legal
or constructive obligations or made payments on behalf of an associate.
Unrealised gains arising from transactions with associates are eliminated to the
extent of the Company's interest in the entity. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
(d) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction or at a contracted rate. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date are
translated to GBP at the foreign exchange rate ruling at that date or the
contracted rate. Foreign exchange differences arising on translation are
recognised in the income statement. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated at fair value are
translated to GBP at foreign exchange rates ruling at the dates the fair value
was determined.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost or deemed cost less
accumulated depreciation (see below) and impairment losses (see accounting
policy k). Cost includes expenditure that is directly attributable to the
acquisition of the asset.
When parts of an item of property, plant and equipment have different useful
lives, those components are accounted for as separate items of property, plant
and equipment.
(ii) Leased assets
Leases in terms of which the Company assumes substantially all of the risks and
rewards of ownership are classified as finance leases.
(iii) Subsequent costs
The Company recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits embodied within the item
will flow to the Company and the cost of the item can be measured reliably. All
other costs are recognised in profit or loss as an expense as incurred.
(iv) Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives are as follows:
Office furniture and equipment - 25% straight line
Plant and equipment - 25-50% straight line
Buildings - long leasehold and freehold - 2% straight line
Depreciation methods, useful lives and residual values are reviewed at each
reporting date.
(f) Investment property
Investment property is property held either to earn rental income or for capital
appreciation or for both, but not for sale in the ordinary course of business,
use in the production or supply of goods or services or for administrative
purposes. Investment property is measured at fair value with any change therein
recognised in profit or loss.
The fair values are estimated by the Directors and are based on market values,
being the estimated amount for which a property could be exchanged on the date
of the valuation between a willing buyer and a willing seller in an arm's length
transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion.
(g) Intangible assets
(i) Research and development
Expenditure on research activities undertaken with the prospect of gaining new
technical knowledge and understanding, is recognised in profit or loss as an
expense as incurred.
Expenditure on development activities, whereby research findings are applied to
a plan or design for the production of new or substantially improved products
and processes, is capitalised if the product or process is technically and
commercially feasible and the Company has sufficient resources to complete
development.
The expenditure capitalised includes the cost of materials, direct labour and an
appropriate proportion of overheads. Other development expenditure is recognised
in the income statement as an expense as incurred. Capitalised development
expenditure is stated at cost less accumulated amortisation (see below) and
impairment losses (see accounting policy k).
(ii) Other intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated
at cost less accumulated amortisation (see below) and impairment losses (see
accounting policy k).
(iii) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when
it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is expensed as incurred.
(iv) Amortisation
Amortisation is charged to profit or loss on a straight-line basis over the
estimated useful lives of intangible assets estimated to be 5 years.
(h) Investments in equity securities
Investments in unquoted equity instruments held by the Company are classified as
being available-for-sale, and relate to shares acquired on the exercise of
options previously granted to the Company in return for services. As the fair
value of these assets cannot be measured reliably, they are measured at cost,
subject to impairment testing.
(i) Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses (see
accounting policy k).
(j) Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Company's cash management are included
as a component of cash and cash equivalents for the purpose of the statement of
cash flows.
(k) Impairment
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in profit or loss unless the asset is recorded at a revalued amount
in which case it is treated as a revaluation decrease.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the
cash-generating unit (group of units) and then, to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
Goodwill and indefinite-lived intangible assets were tested for impairment at 1
March 2006, the date of transition to IFRSs, even though no indication of
impairment existed.
When a decline in the fair value of an available-for-sale financial asset has
been recognised directly in equity and there is objective evidence that the
asset is impaired, the cumulative loss that had been recognised directly in
equity is recognised in profit or loss even though the financial asset has not
been derecognised. The amount of the cumulative loss that is recognised in
profit or loss is the difference between the acquisition cost and current fair
value, less any impairment loss on that financial asset previously recognised in
profit or loss.
(i) Calculation of recoverable amount
The recoverable amount of the Company's investments in held-to-maturity
securities and receivables carried at amortised cost is calculated as the
present value of estimated future cash flows, discounted at the original
effective interest rate (i.e., the effective interest rate computed at initial
recognition of these financial assets). Receivables with a short duration are
not discounted.
The recoverable amount of other assets is the greater of their net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
(ii) Reversals of impairment
An impairment loss in respect of a held-to-maturity security or receivable
carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment
loss was recognised.
An impairment loss in respect of an investment in an equity instrument
classified as available-for-sale is not reversed through profit or loss. If the
fair value of a debt instrument classified as available-for-sale increases and
the increase can be related objectively to an event occurring after the
impairment loss was recognised in profit or loss, then the impairment loss is
reversed, with the amount of the reversal recognised in profit or loss.
In respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
(l) Earnings per share
The company presents basic and diluted earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, which comprise share options granted
to employees.
(m) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in profit or loss over the
period of the borrowings on an effective interest basis.
(n) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in profit or loss as incurred.
(ii) Share-based payment transactions
The share option programme allows Company employees to acquire shares of the
Company. The fair value of options granted is recognised as an employee expense
with a corresponding increase in equity. The fair value is measured at grant
date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted
is measured using an adjusted Black-Scholes model, taking into account the terms
and conditions upon which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest
except where forfeiture is only due to share prices not achieving the threshold
for vesting.
(iii) Short term benefits
Liabilities for employee benefits for wages, salaries and annual leave represent
present obligations resulting from employees' services provided to reporting
date and are calculated at undiscounted amounts based on remuneration wage and
salary rates that the Company expects to pay as at reporting date.
A liability is recognised for the amount expected to be paid under short-term
cash bonus plans if the Company has a present legal or constructive obligation
to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
(o) Provisions
A provision is recognised in the balance sheet when the Company has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, when appropriate, the risks specific to the
liability.
(p) Trade and other payables
Trade and other payables are stated cost.
(q) Revenue
(i) Services rendered
Revenue from services rendered is recognised in profit or loss in proportion to
the stage of completion of the transaction at the balance sheet date. No revenue
is recognised if there are significant uncertainties regarding recovery of the
consideration due.
(ii) Government grants
An unconditional government grant is recognised in the income statement as other
operating income when the grant becomes receivable. Any other government grant
is recognised in the balance sheet initially as deferred income when there is
reasonable assurance that it will be received and that the Company will comply
with the conditions attaching to it. Grants that compensate the Company for
expenses incurred are recognised as revenue in profit or loss on a systematic
basis in the same periods in which the expenses are incurred. Grants that
compensate the Company for the cost of an asset are recognised in profit or loss
as other operating income on a systematic basis over the useful life of the
asset.
(r) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in profit or loss on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in profit or loss as an integral part of the total lease expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
(iii) Net financing costs
Net financing costs comprise interest payable on borrowings calculated using the
effective interest rate method, dividends on preference shares classified as
liabilities, interest receivable on funds invested, dividend income, and foreign
exchange gains and losses.
Interest income is recognised in profit or loss as it accrues, using the
effective interest method. The interest expense component of finance lease
payments is recognised in profit or loss using the effective interest rate
method.
(s) Income tax
Income tax on the profit or loss for the periods presented comprises current and
deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantially enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill not deductible
for tax purposes, the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are
recognised at the same time as the liability to pay the related dividend.
2. Dividends
An Interim Dividend of 2.0p per share is proposed for the year ending 28
February 2008. This will be paid to shareholders on 18 October to shareholders
on the register on 12 October 2007. Shares will be Ex-Dividend on 10 October
2007.
3. Earnings per Share
The earnings per share for the six months ended 31 August 2007 has been
calculated on the basis of the profit after taxation of £1.353m. Earnings per
share of 10.4 pence has been calculated based on 13,018,429 shares outstanding.
4. Explanation of transition to IFRSs
As stated in note 1(a), these are the Company's interim financial statements for
part of the period covered by the first IFRS annual financial statements
prepared in accordance with IFRSs.
The basis of the accounting policies referred to in note 1 have been applied in
preparing the interim financial statements for the six months ended 31 August
2007, the comparative information for the six months ended 31 August 2006 and
the preparation of an opening IFRS balance sheet at 1 March 2006 (the Company's
date of transition).
In preparing its opening IFRS balance sheet and comparative information for the
six months ended 31 August 2006, the Company has adjusted amounts reported
previously in financial statements prepared in accordance with previous GAAP.
An explanation of how the transition from previous GAAP to IFRSs has affected
the Company's financial position, financial performance and cash flows is set
out in the following tables and the notes that accompany the tables.
Reconciliation of equity
Effect of Effect of
Previous transition Previous transition
GAAP to IFRSs IFRSs GAAP to IFRSs IFRSs
1 March 2006 31 August 2006
£000 £000 £000 £000 £000 £000
Assets
Intangible assets 360 - 360 270 - 270
Property, plant and equipment 3,238 23 3,261 4,551 34 4,585
Other investments 111 - 111 209 - 209
Investment accounted for using the 90 (90) - 111 (70) 41
equity method
Deferred tax assets - 131 131 - 163 163
Total non-current assets 3,799 64 3,863 5,141 127 5,268
Trade and other receivables 2,251 - 2,251 2,790 - 2,790
Cash and cash equivalents 1,061 - 1,061 860 - 860
Total current assets 3,312 - 3,312 3,650 - 3,650
Total assets 7,111 64 7,175 8,791 127 8,918
Liabilities
Interest-bearing loans and borrowings 140 - 140 140 - 140
Trade and other payables 1,078 - 1,078 1,711 - 1,711
Corporation tax payable 551 - 551 752 - 752
Employee benefits 313 112 425 307 140 447
Provisions - - - - - -
Total current liabilities 2,082 112 2,194 2,910 140 3,050
Interest-bearing loans and borrowings 1,717 - 1,717 2,102 - 2,102
Total non-current liabilities 1,717 - 1,717 2,102 - 2,102
Total liabilities 3,799 112 3,911 5,012 140 5,152
Net assets 3,312 (48) 3,264 3,779 (13) 3,766
Effect of Effect of
Previous transition Previous transition
GAAP to IFRSs IFRSs GAAP to IFRSs IFRSs
As at 1 March 2006 As at 31 August 2006
£000 £000 £000 £000 £000 £000
Equity
Issued capital 64 - 64 64 - 64
Shares to be issued 4 51 55 4 116 120
Share premium account 910 - 910 970 - 970
Retained earnings 2,334 (99) 2,235 2,741 (129) 2,612
Total equity 3,312 (48) 3,264 3,779 (13) 3,766
(a) Under previous GAAP, the investment in associate was not equity accounted
in the individual financial statements of FDP, as the Company has no
subsidiaries and consolidated financial statements were not prepared. Under
IFRSs this investment in associate is equity accounted in the individual
financial statements of the Company.
The effect is to decrease the investment in associate by £90k at 1 March
2006, £70k at 31 August 2006 and to increase the investment in associate
by £143k at 31 August 2007.
(b) Under IFRS all leases of land and buildings have been reassessed, with
leasehold land classified as held under operating leases where material and
where a reliable split of land and buildings is available. In addition,
the Company has reassessed the residual value of buildings at the relevant
balance sheet date. The effect is to increase property, plant and equipment
by £23k at 1 March 2006, £34k at 31 August 2006 and £91k at 31 August 2007.
(c) The Company's holiday year runs concurrent with its financial year, and
at the half year employees can carry forward any unused holiday into the
second half of the year, hence an accrual is required under IAS 19. Up to
5 days of holiday leave not taken by the end of February can be carried
forward into the new financial year. The effect is to increase the employee
benefits creditor by £112k at 1 March 2006, £140k at 31 August 2006 and
£225k at 31 August 2007.
(d) The Company has adopted IAS 38: Intangible Assets from 1 March 2006.
This has had no impact on the balance sheet at 1 March 2006 and 31 August
2006. As at 31 August 2007, £50k has been capitalised as development
assets, comprising the cost of software development.
(e) The Company applied FRS 20: Share Based Payments in its financial
statements for the year ended 28 February 2007, however no adjustment in
respect of FRS 20 had been made in the interim results for 31 August 2006.
As IAS 2: Share Based Payments is consistent with FRS 20, the Company has
adjusted its results as set out above to reflect share based payments in
accordance with IAS 2. The effect is to decrease 'retained earnings' and
increase 'shares to be issued' reserve by £51k at 1 March 2006, £116k at
31 August 2006 and £302k at 31 August 2007.
(f) The Company has applied IAS 12: Income taxes from 1 March 2006, resulting
in the recognition of a deferred tax asset arising from the future tax
deduction expected on the exercise of share options. This has increased
the Company's deferred tax asset by £100k at 1 March 2006, £124k at 31
August 2006 and £504k at 31 August 2007. In addition, a deferred tax asset
on the holiday pay accrual established under IAS 19 has been recorded,
resulting in an increase in the deferred tax asset of £31k at 1 March 2006,
£39k at 31 August 2006 and £63k at 31 August 2007.
Effect of
Previous transition
GAAP to IFRSs IFRSs
£000 £000 £000
Note For the six months ended
31 August 2006
Revenue 4,178 - 4,178
Cost of sales (2,679) (82) (2,761)
Gross profit 1,499 (82) 1,417
Administrative expenses (313) - (313)
Other operating expenses 38 - 38
Operating profit before 1,224 (82) 1,142
financing costs
Financial income 14 - 14
Financial expenses (65) - (65)
Net financing costs (51) - (51)
Share of profit of - 20 20
associates
Profit before tax 1,173 (62) 1,111
Income tax expense (385) 27 (358)
Profit for the period 788 35 753
Basic earnings per share (£) 5.9p - 5.9p
The profit for the period ended 31 August 2006 is impacted by the adjustments
described in the reconciliation of equity above. The share based payment charge
reduced profit by £65k, the share of profit of associate increased profit by
£20k, the reduction of depreciation on property increased profit by £11k, the
increase in holiday leave accrual reduced profit by £28k and the increase in
deferred tax asset on share based payments and holiday pay accrual has increased
profit for the period by £27k.
Explanation of material adjustments to the cash flow statement
There are no material differences between the cash flow statement presented
under IFRSs and the cash flow statement presented under previous GAAP.
This information is provided by RNS
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