IFRS Restatement
Begbies Traynor Group PLC
30 January 2008
BEGBIES TRAYNOR GROUP PLC
IFRS Restatement Report
30 January 2008
This report covers the restatement of the opening consolidated balance sheet as
at 1 May 2006, the consolidated accounts for the year ended 30 April 2007 and
the consolidated accounts for the six months ended 31 October 2006 under
International Accounting Standards and International Financial Reporting
Standards (collectively referred to as 'IFRS' through this document) in respect
of Begbies Traynor Group plc. The IFRS adjustments are not audited.
1. Introduction
All companies listed on the Alternative Investment Market ('AIM') are required
to prepare consolidated financial statements in accordance with IFRS for
accounting periods commencing on or after 1 January 2007. Begbies Traynor Group
plc ('the Group') will publish its 2008 annual report in accordance with IFRS.
Previously, the Group prepared its financial statements in accordance with
accounting standards generally accepted in the UK ('UK GAAP'). This document
provides information on the impact of adoption of IFRS on the Group's financial
statements. The adoption of IFRS represents a change in the basis of preparation
of financial statements and does not therefore affect the operations or cash
flows of the Group.
The Group has adopted IFRS with effect from 1 May 2007. The transition date is
1 May 2006 as this is the start of the earliest period for which the Group will
present full comparative information under IFRS in the 2008 Annual Report and
Accounts.
The purpose of this document is to provide information on the expected impact of
IFRS. The financial information represents our current best estimates and may be
affected by business or other changes or by changes to IFRS standards or the
interpretation thereof. As such, it should be treated with appropriate caution.
The information is based on IFRS expected to be effective at 30 April 2008. The
standards currently in issue are subject to ongoing review and endorsement by
the European Union, and the application of the standards continues to be subject
to interpretation by the International Financial Reporting Interpretations
Committee ('IFRIC') and emerging practice.
This document presents the unaudited consolidated income statement for the year
ended 30 April 2007 and the six months ended 31 October 2006 and the unaudited
consolidated balance sheets as at 1 May 2006, 31 October 2006 and 30 April 2007
under IFRS.
The financial information set out in this statement relating to the year ended
30 April 2007 does not constitute statutory accounts for that period. Full
audited accounts of the Group in respect of that financial period in accordance
with UK GAAP, which received an unqualified audit opinion and did not contain a
statement under either section 237(2) or (3) of the Companies Act 1985, have
been delivered to the Registrar of Companies.
2. Financial highlights
The key financial highlights of adopting IFRS are:
--------------------------------------------------------------------------------
Year ended Six months ended
30 April 2007 31 October 2006
UK GAAP as UK GAAP as
IFRS 2 reported 1 IFRS 2 reported 2
£000 £000 £000 £000
--------------------------------------------------------------------------------
EBITA 3 9,286 10,064 4,099 4,442
Profit for the period 5,040 3,380 2,244 1,382
Basic earnings per share
(pence) 6.7 4.5 3.0 1.8
--------------------------------------------------------------------------------
----------------------------------------------------------------------
Net assets UK GAAP
IFRS as reported
£000 £000
----------------------------------------------------------------------
As at 30 April 2007 49,825 2 48,788 1
As at 31 October 2006 40,008 2 39,770 2
As at 1 May 2006 37,742 2 38,365 1
----------------------------------------------------------------------
Notes:
1. Audited
2. Unaudited
3. Earnings before interest, tax and amortisation of goodwill (UK GAAP) /
intangible assets arising on acquisition (IFRS)
The impact of significant changes in accounting policies is detailed in
section 5 with a reconciliation of the impact on profit for the period and
net assets in section 6.
3. Basis of preparation
The Group's financial statements for the year ended 30 April 2008 will be
prepared in accordance with IFRS and the comparatives for those periods will be
restated to reflect IFRS, except where otherwise required or permitted by IFRS
1, 'First Time Adoption of International Financial Reporting Standards'.
This document has been prepared in accordance with the accounting policies
described in more detail in Appendix 1; these comply in all material aspects
with IFRS and interpretations from the IFRIC.
4. IFRS transitional arrangements
The International Accounting Standards Board (IASB) issued IFRS 1 'First Time
Adoption of International Financial Reporting Standards' to establish
requirements for the first time adoption of IFRS. In general a company is
required to select accounting policies that comply with IFRS and apply these
accounting policies retrospectively to all of the periods presented in the first
IFRS financial statements. The opening IFRS balance sheet is to be prepared at
the date of transition to IFRS based upon the selected accounting policies under
IFRS. The transition date is the earliest period for which the full comparative
information is presented in accordance with IFRS. The Group's transition date is
1 May 2006.
IFRS 1 allows a number of exemptions to be taken in preparing the opening
balance sheet as at 1 May 2006 and in preparing the comparative information for
the year ended 30 April 2007. The Group has elected to take the business
combinations exemption. Under this exemption, business combinations that took
place before the transition date are not restated and all goodwill amortised
prior to the date of transition remains written off to reserves. No further
exemptions have been taken.
5. Significant changes in accounting policies
Significant changes in accounting policies are discussed below along with the
financial impact on previously reported results under UK GAAP.
(a) Business combinations
Under IFRS 3, goodwill is not amortised but is measured at cost less impairment
losses. Under UK GAAP goodwill was amortised on a straight line basis over the
period of its expected useful life. This adjustment increases profit before tax
and goodwill for the six months to 31 October 2006 by £1,898,000 and for the
year to 30 April 2007 by £3,951,000.
IFRS 3 requires that intangible assets arising on acquisition, that are
separable or arise from contractual or other legal rights, be recognised as
intangible assets separately from goodwill. This adjustment results in
additional intangible assets of £876,000 at 31 October 2006 and £1,041,000 at 30
April 2007 with a corresponding reduction in goodwill. This adjustment gives
rise to a deferred tax liability and a corresponding increase in goodwill of
£263,000 at 31 October 2006 and £312,000 at 30 April 2007. The intangible assets
will be amortised on a straight line basis over their expected useful economic
life. This decreases profit before tax and intangible assets for the six months
to 31 October 2006 by £219,000 and for the year to 30 April 2007 by £520,000.
IFRS 3 requires the restatement of comparative figures in relation to the adjust
ment of initial acquisition accounting completed using provisional estimates.
This decreases goodwill at 31 October 2006 and 30 April 2007 by £108,000,
decreases recoverable income and costs on cases at 30 April 2007 by £236,000 and
decreases profit before tax for the six months to 31 October 2006 by £108,000
and for the year to 30 April 2007 by £344,000.
The deferred tax impact of these adjustments is decreased profit after tax and a
deferred tax liability of £503,000 for the six months to 31 October 2006 and
£958,000 for the year to 30 April 2007.
(b) Deferred consideration
IFRS 3 requires deferred consideration on business combinations to be recognised
at present value. This results in reduced deferred consideration of £441,000 at
1 May 2006, with a corresponding reduction in goodwill. The subsequent unwind of
the discounting is charged to the income statement as a finance cost on an
annual basis. This adjustment decreases profit after tax for the six months to
31 October 2006 by £42,000 and for the year to 30 April 2007 by £165,000.
(c) Prepayments
IAS 38 requires all advertising and promotional activities to be expensed as
incurred. This reduces prepayments by £136,000 at 1 May 2006 and 31 October 2006
and £339,000 at 30 April 2007 and reduces profit before tax for the year to 30
April 2007 by £203,000.
The deferred tax impact of these adjustments is a deferred tax asset of £41,000
at 1 May 2006 and 31 October 2006 and £102,000 at 30 April 2007 and increased
profit after tax for the year to 30 April 2007 by £61,000.
(d) Impairment review at date of transition
IFRS 1 requires an impairment review to be performed at the date of transition.
As a result of this review an impairment has been allocated against the
following assets at 1 May 2006: Goodwill £110,000, intangible assets £187,000,
prepayments £330,000.
The deferred tax impact is the recognition of a deferred tax asset of £99,000 at
1 May 2006.
(e) Revenue recognition
IAS 18 includes the following conditions for the recognition of revenue relating
to services rendered:
• The amount of revenue can be measured reliably;
• It is probable that economic benefits will flow to the entity;
• The stage of completion of the engagement at the balance sheet date can
be measured reliably; and
• The costs incurred for the transaction and the costs to complete can be
measured reliably.
The directors have reviewed the accounting policy for revenue recognition on
contingent fee engagements and believe that a more appropriate policy under IAS
18 is to recognise revenue only after having achieved virtual certainty of a
successful outcome to an engagement at the balance sheet date. The impact of
this revised accounting policy is to reduce recoverable income and costs on
cases, reported revenue and EBITA by £235,000 in the six months to 31 October
2006 and by £231,000 in the year to 30 April 2007, a deferred tax credit to the
income statement and related deferred tax asset of £71,000 at 31 October 2006
and £69,000 at 30 April 2007.
6. Reconciliation of financial impacts on reported net assets and profit for the
period
The financial impact on reported net assets is as follows:
--------------------------------------------------------------------------------
30 April 2007 31 October 2006 1 May 2006
£000 £000 £000
--------------------------------------------------------------------------------
UK GAAP net assets 48,788 39,770 38,365
(a) Business combinations 2,129 1,068 -
(b) Deferred consideration (165) (42) -
(c) Prepayments (237) (95) (95)
(d) Impairment (528) (528) (528)
(e) Revenue recognition (162) (165) -
--------------------------------------------------------------------------------
IFRS net assets 49,825 40,008 37,742
--------------------------------------------------------------------------------
The financial impact on profit for the period is as follows:
--------------------------------------------------------------------------------
Year ended Six months ended
30 April 2007 31 October 2006
£000 £000
--------------------------------------------------------------------------------
UK GAAP profit for the period 3,380 1,382
(a) Business combinations 2,129 1,068
(b) Deferred consideration (165) (42)
(c) Prepayments (142) -
(d) Impairment - -
(e) Revenue recognition (162) (165)
--------------------------------------------------------------------------------
IFRS profit for the period 5,040 2,244
--------------------------------------------------------------------------------
Appendix 1:
Revised accounting policies under IFRS
The significant accounting policies which the Group has applied to its half year
financial statements for the six months to 31 October 2007 and which it expects
to apply to its full financial statements for the year ending 30 April 2008 are
set out below.
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
Begbies Traynor Group plc and entities controlled by Begbies Traynor Group plc
(its subsidiaries). Control is achieved where Begbies Traynor Group plc (the
Company) has the power to govern the financial and operating policies of an inve
stee entity so as to obtain benefits from its activities.
The results of subsidiaries are included in the consolidated income statement
and the interest of minority shareholders is stated at the minority's proportion
of the fair values of the assets and liabilities recognised. Subsequently,
losses applicable to the minority in excess of the minority's interest in the
subsidiary's equity are allocated against the interests of the Group except to
the extent that the minority has a binding obligation and is able to make an
additional investment to cover the losses.
The results of entities 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, as appropriate.
Where necessary, the accounts of the subsidiaries are adjusted to conform to the
Group's accounting policies. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
(b) Business combinations
The acquisition of subsidiaries and businesses is accounted for using the
purchase method. The cost of the acquisition is measured at the aggregate of the
fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of
the acquiree, plus any costs directly attributable to the business combination.
The acquiree's identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 are recognised at their fair
values at the acquisition date, except for non-current assets (or disposal
groups) that are classified as held for sale in accordance with IFRS 5, which
are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured
at cost, being the excess of the cost of the business combination over the
Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities recognised.
If, after reassessment, the Group's interest in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities exceeds
the cost of the business combination, the excess is recognised immediately in
profit or loss. The interest of minority shareholders in the acquiree is
initially measured at the minority's proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.
(c) Intangible Assets
Goodwill
Goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment reviews, at lea
st annually, and measured at initial value less accumulated impairment losses.
Any impairment is recognised immediately in the income statement and is not
subsequently reversed.
On disposal of a subsidiary the attributable amount of goodwill is included in
the determination of the gain or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the previous UK GAAP amounts, subject to being tested for impairment
at that date.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a st
raight-line basis over their estimated useful lives. Carrying amount is reduced
by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets
already recognised in the balance sheet of the acquired entity at their fair
value, identifiable intangible assets that are separable or arise from
contractual or other legal rights are also included in the acquisition balance
sheet at fair value.
Amortisation on intangible assets is charged at 20% - 50% of cost.
(d) Property, plant and equipment
All assets are stated at depreciated historical cost less accumulated
depreciation and accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets,
other than land, over their estimated useful lives, on the following basis:
Computer equipment 33% of cost
Motor cars 25% of opening book value
Fixtures, fitting 15% of cost
Leasehold improvements evenly over period of lease
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in profit or loss for the period.
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets, or where shorter, over the relevant
lease term.
(e) Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of any impairment loss. Where the asset does not generate cash flows that
are independent from other assets, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs. An intangible asset with an
indefinite useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell 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 and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately.
(f) Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions of the inst
rument.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits and other
short term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Trade receivables
Trade receivables are stated at nominal value less allowances for estimated
irrecoverable amounts.
Trade payables
Trade payables are stated at their nominal value.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the sub
stance of the contractual arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
amortised cost basis to the income statement using the effective interest method
and are added to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
(g) Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that the Group will be
required to settle the obligation and the amount can be reliably estimated.
(h) Leases
Leases are classified according to the substance of the transaction. A lease
that transfers substantially all the risks and rewards of ownership to the
lessee is classified as a finance lease. All other leases are classified as
operating leases.
Finance leases
Finance leases are capitalised in the consolidated balance sheet at their fair
value or, if lower, at the present value of the minimum lease payments, each
determined at the inception of the lease. The corresponding liability is shown
as a finance lease obligation to the lessor. Leasing repayments comprise both a
capital and a finance element. The finance element is written off to the income
statement so as to produce an approximately constant periodic rate of charge on
the outstanding obligation. Such assets are depreciated over the shorter of
their estimated useful lives and the period of the lease.
Operating leases
Operating lease rentals are charged to the income statement on a straight line
basis over the period of the lease. Lease incentives are spread over the period
of the lease.
(i) Revenue recognition
Professional services (Insolvency, Forensics and Corporate Finance)
Revenue relating to professional services rendered is recognised when the
following conditions included in IAS 18 have been met:
• The amount of revenue can be measured reliably;
• It is probable that economic benefits will flow to the entity;
• The stage of completion of the engagement at the balance sheet date can
be measured reliably; and
• The costs incurred for the transaction and the costs to complete can be
measured reliably.
Revenue is recognised on a case by case basis, based on the stage of completion,
the fee structure and the partner's estimate of likelihood of completion. When a
minimum fixed fee is agreed, it is fully recognised when the necessary elements
of the case are completed for it to be recognised.
For contingent fee engagements, revenue is only recognised when it is virtually
certain at the balance sheet date of a successful outcome to the engagement.
Unbilled revenue on individual client assignments is included within recoverable
income and costs on cases within current assets.
Consumer debt
Nominee fees are recognised following the approval of the creditors' meeting for
the Individual Voluntary Arrangements.
Supervisory fees are recognised over the life of Individual Voluntary
Arrangements.
Re-mortgage commission is recorded at the date on which approval of the mortgage
is obtained from the provider.
Debt management fees are recorded as the services are provided.
(j) Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are
incurred.
(k) Pensions and retirement benefits
The Group operates a defined contribution scheme in the United Kingdom for
certain employees. The costs of the pension funding borne by the Group is
charged to the income statement as an expense as they fall due.
(l) Taxation
The tax expense represents the sum of current tax and deferred tax.
Current taxation
Current tax is based on taxable profit for the period. Taxable profit differs
from net profit as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or subst
antively enacted by the balance sheet date.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial st
atements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited to equity, in which case the deferred tax is also dealt with
in equity.
(m) Earnings before interest, tax and amortisation (EBITA)
EBITA includes the results from operating activities of the Group, stated before
finance costs, amortisation of intangible assets arising on acquisition and
taxation.
Appendix 2: Reconciliation of balance sheets from UK GAAP to IFRS
(i) Balance sheet at 30 April 2007
Accounting
GAAP differences policy change
------------------------------------------------------- ---------------
UK GAAP as Business Deferred Prepayments Impairment Revenue IFRS
reported combinations consideration recognition
£000 £000 £000 £000 £000 £000 £000
Non current assets
Goodwill 39,348 3,114 (441) 0 (110) 0 41,911
Other intangible
assets 187 521 0 0 (187) 0 521
Property plant
and equipment 4,277 0 0 0 0 0 4,277
----------------------------------------------------------------------------------------------
43,812 3,635 (441) 0 (297) 0 46,709
----------------------------------------------------------------------------------------------
Current assets
Trade and other
receivables 3,583 0 0 0 0 0 3,583
Recoverable
income and
costs on cases 20,130 (236) 0 0 0 (231) 19,663
Prepayments 2,141 0 0 (339) (330) 0 1,472
Cash and cash
equivalents 527 0 0 0 0 0 527
----------------------------------------------------------------------------------------------
26,381 (236) 0 (339) (330) (231) 25,245
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Total assets 70,193 3,399 (441) (339) (627) (231) 71,954
----------------------------------------------------------------------------------------------
Current liabilities
Obligations under
finance leases 667 0 0 0 0 0 667
Trade and other
payables 763 0 0 0 0 0 763
Corporation tax
liabilities 1,485 0 0 0 0 0 1,485
Other taxes and
social security 2,448 0 0 0 0 0 2,448
Other financial
liabilities -
deferred
considerations 2,852 0 0 0 0 0 2,852
Accruals 5,274 0 0 0 0 0 5,274
----------------------------------------------------------------------------------------------
13,489 0 0 0 0 0 13,489
----------------------------------------------------------------------------------------------
Non current liabilities
Interest bearing loans
and borrowings 4,506 0 0 0 0 0 4,506
Obligations under the
finance leases 625 0 0 0 0 0 625
Corporation tax 193 0 0 0 0 0 193
Deferred Tax 0 1,270 0 (102) (99) (69) 1,000
Other financial
liabilities -
deferred
considerations 2,592 0 (276) 0 0 0 2,316
----------------------------------------------------------------------------------------------
7,916 1,270 (276) (102) (99) (69) 8,640
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Total liabilities 21,405 1,270 (276) (102) (99) (69) 22,129
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Net assets 48,788 2,129 (165) (237) (528) (162) 49,825
----------------------------------------------------------------------------------------------
Equity
Called up share
capital 4,044 0 0 0 0 0 4,044
Share premium account 21,696 0 0 0 0 0 21,696
Other reserves 17,584 0 0 0 0 0 17,584
Retained earnings 5,464 2,129 (165) (237) (528) (162) 6,501
0 0 0 0
----------------------------------------------------------------------------------------------
Equity shareholders
funds 48,788 2,129 (165) (237) (528) (162) 49,825
----------------------------------------------------------------------------------------------
Appendix 2 (continued)
(ii) Balance sheet at 31 October 2006
Accounting
GAAP differences policy change
------------------------------------------------------- ---------------
UK GAAP as Business Deferred Prepayments Impairment Revenue IFRS
reported combinations consideration recognition
£000 £000 £000 £000 £000 £000 £000
Non current assets
Goodwill 40,700 1,177 (441) 0 (110) 0 41,326
Other intangible
assets 187 657 0 0 (187) 0 657
Property plant
and equipment 4,283 0 0 0 0 0 4,283
---------------------------------------------------------------------------------------------
45,170 1,834 (441) 0 (297) 0 46,266
---------------------------------------------------------------------------------------------
Current assets
Trade and other
receivables 3,330 0 0 0 0 0 3,330
Recoverable
income and
costs on cases 17,599 0 0 0 0 (235) 17,364
Available for
sale financial
assets 0 0 0 0 0 0 0
Prepayments 1,518 0 0 (136) (330) 0 1,052
Cash and cash
equivalents 547 0 0 0 0 0 547
---------------------------------------------------------------------------------------------
22,994 0 0 (136) (330) (235) 22,293
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Total assets 68,164 1,834 (441) (136) (627) (235) 68,559
---------------------------------------------------------------------------------------------
Current liabilities
Obligations under
finance leases 725 0 0 0 0 0 725
Trade and other
payables 7,724 0 0 0 0 0 7,724
Corporation tax
liabilities 1,761 0 0 0 0 0 1,761
Other financial
liabilities -
deferred
considerations 3,822 0 0 0 0 0 3,822
---------------------------------------------------------------------------------------------
14,032 0 0 0 0 0 14,032
---------------------------------------------------------------------------------------------
Non current liabilities
Interest bearing loans
and borrowings 9,674 0 0 0 0 0 9,674
Obligations under the
finance leases 661 0 0 0 0 0 661
Deferred tax 0 766 0 (41) (99) (71) 556
Other financial
liabilities -
deferred
considerations 4,027 0 (399) 0 0 0 3,628
---------------------------------------------------------------------------------------------
14,362 766 (399) (41) (99) (71) 14,519
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Total liabilities 28,394 766 (399) (41) (99) (71) 28,551
---------------------------------------------------------------------------------------------
Net assets 39,770 1,068 (42) (95) (528) (165) 40,009
---------------------------------------------------------------------------------------------
Equity
Called up share
capital 3,779 0 0 0 0 0 3,779
Share premium account 14,185 0 0 0 0 0 14,185
Other reserves 17,584 0 0 0 0 0 17,584
Retained earnings 4,222 1,068 (42) (95) (528) (165) 4,460
---------------------------------------------------------------------------------------------
Equity shareholders
funds 39,770 1,068 (42) (95) (528) (165) 40,008
---------------------------------------------------------------------------------------------
Appendix 2 (continued)
(iii) Balance sheet at 1 May 2006
GAAP differences
-----------------------------------------
UK GAAP Deferred Prepayments Impairment IFRS
consideration
£000 £000 £000 £000 £000
Non current assets
Goodwill 37,429 (441) 0 (110) 36,878
Other intangible assets 187 0 0 (187) 0
Property plant and equipment 3,731 0 0 0 3,731
------------------------------------------------------------
41,347 (441) 0 (297) 40,609
------------------------------------------------------------
Current assets
Trade and other receivables 4,078 0 0 0 4,078
Recoverable income and
costs on cases 13,942 0 0 0 13,942
Prepayments 1,952 0 (136) (330) 1,486
Deferred tax 0 0 41 99 140
Cash and cash equivalents 598 0 0 0 598
------------------------------------------------------------
20,570 0 (95) (231) 20,244
------------------------------------------------------------
------------------------------------------------------------
Total assets 61,917 (441) (95) (528) 60,853
------------------------------------------------------------
Current liabilities
Obligations under finance
leases 681 0 0 0 681
Trade and other payables 835 0 0 0 835
Corporation tax liabilities 1,425 0 0 0 1,425
Other taxes and social
security 1,702 0 0 0 1,702
Other financial
liabilities - Deferred
considerations 1,771 0 0 0 1,771
Accruals 4,200 0 0 0 4,200
------------------------------------------------------------
10,614 0 0 0 10,614
------------------------------------------------------------
Non current liabilities
Interest bearing loans
and borrowings 8,035 0 0 0 8,035
Obligations under the
finance leases 495 0 0 0 495
Corporation tax 198 0 0 0 198
Other financial
liabilities - deferred
considerations 4,210 (441) 0 0 3,769
Provisions 0 0 0 0 0
------------------------------------------------------------
12,938 (441) 0 0 12,497
------------------------------------------------------------
------------------------------------------------------------
Total liabilities 23,552 (441) 0 0 23,111
------------------------------------------------------------
------------------------------------------------------------
Net assets 38,365 0 (95) (528) 37,742
------------------------------------------------------------
Equity
Called up share capital 3,744 0 0 0 3,744
Share premium account 13,009 0 0 0 13,009
Other reserves 18,023 0 0 0 18,023
Retained earnings 3,589 0 (95) (528) 2,966
0 0 0 0
------------------------------------------------------------
Equity shareholders funds 38,365 0 (95) (528) 37,742
------------------------------------------------------------
Appendix 3: Reconciliation of income statements from UK GAAP to IFRS
(i) Income statement for the year ended 30 April 2007
Accounting
policy
GAAP differences change
-------------------------------------------- -------------
UK GAAP as Business Deferred Prepayments Revenue IFRS
reported combinations consideration recognition
£000 £000 £000 £000 £000 £000
Turnover and
other revenue 45,058 (344) 0 0 (231) 44,483
Cost of sales (20,053) 0 0 0 0 (20,053)
---------------------------------------------------------------------------------
Gross profit 25,005 (344) 0 0 (231) 24,430
Admin expenses (14,950) 0 0 (203) 0 (15,153)
Other operating
income 9 0 0 0 0 9
---------------------------------------------------------------------------------
EBITA 10,064 (344) 0 (203) (231) 9,286
Amortisation (3,951) 3,431 0 0 0 (520)
---------------------------------------------------------------------------------
Operating profit 6,113 3,087 0 (203) (231) 8,766
Net interest
receivable and
similar income (792) 0 (165) 0 0 (957)
---------------------------------------------------------------------------------
Profit on ordinary
activities before
taxation 5,321 3,087 (165) (203) (231) 7,809
Taxation of profit
on ordinary
activities (1,941) (958) 0 61 69 (2,769)
---------------------------------------------------------------------------------
Profit on ordinary
activities after
taxation 3,380 2,129 (165) (142) (162) 5,040
---------------------------------------------------------------------------------
Appendix 3 (continued)
(ii) Income statement for the six months ended 31 October 2006
Accounting
policy
GAAP differences change
---------------------------- --------------
UK GAAP as Business Deferred Revenue IFRS
reported combinations consideration recognition
£000 £000 £000 £000 £000
Turnover and
other revenue 21,857 (108) 0 (235) 21,514
Cost of sales (10,191) 0 0 0 (10,191)
-------------------------------------------------------------------
Gross profit 11,666 (108) 0 (235) 11,323
Admin expenses (7,233) 0 0 0 (7,233)
Other operating
income 9 0 0 0 9
-------------------------------------------------------------------
EBITA 4,442 (108) 0 (235) 4,099
Amortisation (1,898) 1,679 0 0 (219)
-------------------------------------------------------------------
Operating profit 2,544 1,571 0 (235) 3,880
Net interest
receivable and
similar income (355) 0 (42) 0 (397)
-------------------------------------------------------------------
Profit on ordinary
activities before
taxation 2,189 1,571 (42) (235) 3,483
Taxation of profit
on ordinary
activities (807) (503) 0 71 (1,240)
-------------------------------------------------------------------
Profit on ordinary
activities after
taxation 1,382 1,068 (42) (165) 2,244
-------------------------------------------------------------------
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