Final Results

Christie Group PLC 04 April 2006 CHRISTIE GROUP plc 4th April 2006 Audited Preliminary Results for the year ended 31 December 2005. Christie Group, a leading business services and software group, today announces its preliminary results for the year ended December 2005 HIGHLIGHTS - Turnover up 11% to Â£77.5 million (2004 : Â£70.0 million) - Operating profit up 15% to Â£4.4 million (2004 : Â£3.8 million) - Proposed final dividend up 25% to 2.5p per share, totalling 3.5p (2004 : 3.0p) - Strategic partnership with Wincor Nixdorf - Largest year end order book for Software Solutions Division - Christie + Co open Munich office - Successful transfer to AIM - International Financial Reporting Standards adopted David Rugg, Chief Executive of Christie Group, said: '2005 was a year of continuing development for Christie Group. We trade across three major sectors, and operate on a wide yet focused geographical scale, enjoying the custom of corporate and private operators. Our sources of income are diverse but complementary and capable of providing further sound progress in 2006 and beyond.' Enquiries: Christie Group 020 7227 0707 David Rugg, Chief Executive Robert Zenker, Finance Director Brunswick 020 7404 5959 Ash Spiegelberg Charles Stanley Securities 020 7953 2457 Philip Davies Notes to Editors Christie Group plc (CTG.L) is quoted on AIM. It is a leading business services and software group with three business divisions: Professional Business Services, Software Solutions and Stock and Inventory Services. The three complementary businesses focus on the leisure, retail and care markets. Christie Group has 31 offices across Europe - located in the UK as well as in Belgium, France, Germany, Italy and Spain, and 1 office in Canada. For more information, please go to: www.christiegroup.com CHAIRMAN'S STATEMENT I am pleased to report a further year of progress. Our operating profit has increased by 15% to Â£4.4 million (2004: Â£3.8 million) on turnover up 11% to Â£77.5 million (2004: Â£70.0 million). Our full year figures are reported for the first time under the International Financial Reporting Standards. The Board proposes an increased final dividend of 2.5p per share (2004: 2.0p) bringing the dividend for the year to 3.5p per share (2004: 3.0p). We continue our underlying strategy of the continental expansion of our existing activities and the development of a new generation of products for our software business. Both of these moves we strongly believe will benefit shareholders in the years ahead. All of this is made possible through the continuing success of our established operations which generated some Â£7.9 million (2004: Â£6.6 million) of operating profit between them. I should like to thank all our staff who have contributed to these results. I am pleased to say that 2006 has started well in our Professional Services and Stock & Inventory divisions and that the order book of our Software Solutions division is at the highest level we have experienced. Philip Gwyn Chairman OPERATING REVIEW Christie Group's results for 2005 demonstrate both the flexibility and inherent strength of our group structure. This is an encouraging performance in what was a year of investing for growth and the integration and development of recent acquisitions. All businesses operate on a strong stand alone basis and generate good margins. Net cash increased by Â£3.5 million to Â£6.8 million. In developing the operational plans which now guide our various activities, we made provision for both organic growth and growth by acquisition. Professional Business Services Our Professional Business Services Division - which includes Christie + Co, Christie First, Pinders and Pinders Caversham (formerly West London Estates) - has shown further strong growth in both revenues and profitability. The increase in the Division's development costs principally reflects the first year's operational costs associated with our new offices in Enfield and Epsom. We fully expect these losses to recede as 2006 progresses. At Â£41 million, turnover for the Division's UK operations was up by 14% year-on-year, while our non-UK operations continued their progress of the recent past. Turnover on the Continent has increased by Â£1 million and losses have been pegged, despite the cost of opening new offices in Berlin, Munich and Madrid. With a total of six operational centres on the Continent, we expect 2006 to produce another year of revenue growth from our international business. Christie + Co celebrated its 70th anniversary in 2005 with the launch of a new image which reflects a sharpened focus on its core activity: the provision of business intelligence for all its clients. It also saw a string of important new business wins, notably The Priory, where Christie + Co's specialist healthcare valuation team was asked to value The Priory Group's extensive portfolio after its acquisition by ABN AMRO. Christie First also completed its biggest-ever funding deal when it arranged the refinancing of Marston Hotels, valued at more than Â£150 million, thereby enabling the hotel group to remain independent. The division now has a wide geographical reach and is recognised as a leading player in its core sectors of Hospitality, Leisure, Care and Retail. The range of assignments undertaken continues to broaden with both transactional and advisory services now being provided on many deals worth over Â£100 million, with the largest in 2005 being the Punch Taverns acquisition of Spirit Group at Â£2.7 billion. This increased activity reflects the quality of our people and clients' appreciation of knowledgeable, accurate and consistently sound advice. Software Solutions The Software Solutions Division, VcsTimeless Group, a pan-European business involved in leading edge systems and technologies in the retail and hospitality sectors, had another important year of development. Despite the generally poor trading conditions for retailers across much of continental Europe, 2005 was a good year for VcsTimeless. Turnover increased by 6% to Â£13.7 million. Software revenues were up by 11%. This was partly down to the internationalisation of the VcsTimeless business, with more than 70% of the company's revenue now derived from countries outside the UK. The major achievement of the year has been the finalisation of the strategic partnership with Wincor Nixdorf. With this in place, VcsTimeless is developing BeStore, a new EPoS solution based on Wincor Nixdorf's flagship solution, TP.net, dedicated to tier one and tier two retailers. By bringing together the expertise of three of the sector's leading innovators - Wincor Nixdorf, VcsTimeless and Microsoft - it will add a new strand to what is already one of the best portfolios in the market. The company is now well-placed for what should be a decisive year in its development. The launch of Colombus.next and BeStore should give VcsTimeless the product advantages needed for a new era of growth and prosperity in Europe. Stock and Inventory Services Our Stock and Inventory Services Division spent much of the early part of 2005 planning and implementing the transfer of Venners' retail business to Orridge. This move, which is now complete, will do much to strengthen the two brands by allowing Venners to concentrate on developing its already substantial share of the hospitality market while Orridge builds its business on an enlarged retail base. The value of this organisational change can be seen in the strong performances put in by both companies during the latter part of the year. The greater efficiencies across the Division produced improved gross margins on a sustained turnover of Â£20.5 million. Venners is now totally committed to providing the UK's licensed trade with first-rate stock audit and stock management systems designed to deliver valuable, easy-to-access data relevant to present-day business practices, whereas Orridge's aim is to deliver high quality, customised, added-value stocktaking solutions to clients in the retail, pharmacy and supply chain sectors. Operating from offices in both the UK and continental Europe, its reputation for technological innovation was enhanced last year by the introduction on the continent of its Piccolink scanning systems. The division is now well-placed to develop its business in all its chosen sectors with the expectation of further long-term contracts being signed and we look forward to another year of continued progress. Strategy Overall, our results for 2005 demonstrate not only the strength of our group structure, but also the commercial value of our knowledge base, and the gains to be made by targeting bigger businesses. Our aim is to continue to take advantage of every suitable opportunity for progress and growth. Each of our three divisions has identified areas of activity where the prospects are good, and we have the resources needed for them to achieve their ambitions. David Rugg Chief Executive Table of Contents TOC /o '1-3' /h /z /u Consolidated income statement Company Statement of changes in Shareholders' equity Consolidated Balance sheet Company Balance sheet Consolidated Cash Flow Statement Company Cash Flow Statement Notes to the Financial Statements Five year record Consolidated income statement - Audited For the year ended 31 December 2005 Note 2005 2004 Â£'000 Â£'000 Revenue 5 77,506 69,968 Employee benefit expenses 6 (43,497) (40,029) 34,009 29,939 Depreciation and amortisation (1,292) (1,203) Other operating expenses (28,308) (24,892) Operating Profit 5 4,409 3,844 Interest payable 7 (249) (268) Interest receivable 7 221 92 Exceptional finance credit (net) 7 - 2,455 Total finance (costs)/credit 7 (28) 2,279 Profit before tax and exceptional finance credit 4,381 3,668 Exceptional finance credit (net) - 2,455 Profit before tax 8 4,381 6,123 Taxation 9 (1,694) (360) Profit for the year after tax 2,687 5,763 Attributable to: Minority interest 3 10 Equity Shareholders of the parent 2,684 5,753 2,687 5,763 Earnings per share -Basic 11 10.79p 23.28p* -Fully diluted 11 10.69p 22.94p* * Includes exceptional finance credit All the amounts derive from continuing activities. Consolidated Statement of changes in shareholders' equity - Audited As at 31 December 2005 Attributable to the Equity Holders of the Company Minority Total Share Fair value Cumulative Retained Interest Equity capital and other translation earnings reserves reserve (Note 20) Balance at 1 January 2004 493 4,411 (359) (2,029) 6 2,522 Issue of share capital 2 46 - - - 48 Currency translation adjustments - - 12 - - 12 Net income recognised directly in equity 2 46 12 - - 60 Profit for the year - - - 5,753 10 5,763 Total recognised income for the year 2 46 12 5,753 10 5,823 Movement in respect of employee share scheme - (11) - - - (11) Employee share option scheme: - value of services provided - 38 - - - 38 Dividends - - - (722) - (722) Balance at 1 January 2005 495 4,484 (347) 3,002 16 7,650 Issue of share capital 5 109 - - - 114 Currency translation adjustments - - (40) - - (40) Net income/(expenses) recognised 5 109 (40) - - 74 directly in equity Profit for the year - - - 2,684 3 2,687 Total recognised income/(expenses) for the year 5 109 (40) 2,684 3 2,761 Movement in respect of employee share scheme - 64 - - - 64 Employee share option scheme: - value of services - 65 - - - 65 provided Exchange difference on repayment of foreign exchange loan - - 158 (158) - - Dividends - - - (726) - (726) Balance at 31 December 2005 500 4,722 (229) 4,802 19 9,814 Company Statement of changes in shareholders' equity - Audited As at 31 December 2005 Attributable to the Equity Holders of the Company Total equity Share capital Fair value and other Retained reserves (Note 20) earnings Balance at 1 January 2004 493 4,499 6,068 11,060 Issue of share capital 2 46 - 48 Net income recognised directly in equity 2 46 - 48 Profit for the year - - 2,471 2,471 Total recognised income for the year 2 46 2,471 2,519 Movement in respect of employee share - (11) - (11) scheme Employee share option scheme: - value of services - 1 - 1 provided Dividends - - (722) (722) Balance at 1 January 2005 495 4,535 7,817 12,847 Issue of share capital 5 109 - 114 Net income recognised directly in equity 5 109 - 114 Profit for the year - - 2,417 2,417 Total recognised income for the year 5 109 2,417 2,531 Movement in respect of employee share scheme - 64 - 64 Dividends - - (726) (726) Balance at 31 December 2005 500 4,708 9,508 14,716 Consolidated Balance sheet - Audited As at 31 December 2005 Note 2005 2004 Â£'000 Â£'000 ASSETS Non-current assets Property, plant and equipment 12 2,179 2,659 Intangible assets - Goodwill 13 3,939 3,918 Intangible assets - Other 14 2,810 1,153 Deferred tax assets 15 1,977 2,327 Available-for-sale financial assets 16a 300 100 11,205 10,157 Current assets Inventories 17 310 355 Trade and other receivables 18 14,117 13,371 Available-for-sale financial assets 16a - 504 Current tax assets - 413 Cash and cash equivalents 6,811 3,499 21,238 18,142 Total assets 32,443 28,299 Equity Capital and reserves attributable to the Company's equity holders Share capital 19 500 495 Fair value and other reserves 20 4,722 4,484 Cumulative translation reserve (229) (347) Retained earnings 20 4,802 3,002 9,795 7,634 Minority interest 19 16 Total equity 9,814 7,650 LIABILITIES Non-current liabilities Borrowings 23 2,221 2,108 Retirement benefit obligations 21 6,790 7,117 9,011 9,225 Current liabilities Trade and other payables 22 12,748 11,150 Current tax liabilities 732 - Borrowings 23 138 274 13,618 11,424 Total liabilities 22,629 20,649 Total equity and liabilities 32,443 28,299 These consolidated financial statements have been approved for issue by the Board of Directors on 3 April 2006. Company Balance sheet - Audited As at 31 December 2005 Note 2005 2004 Â£'000 Â£'000 ASSETS Non-current assets Deferred tax assets 15 172 203 Fixed asset investments 16 11,250 11,250 Available-for-sale financial assets 16a 300 100 11,722 11,553 Current assets Trade and other receivables 18 7,932 5,131 Available-for-sale financial assets 16a - 504 Current tax assets - 364 Cash and cash equivalents 1,445 648 9,377 6,647 Total assets 21,099 18,200 Equity Capital and reserves attributable to the Company's equity holders Share capital 19 500 495 Fair value and other reserves 20 4,708 4,535 Retained earnings 20 9,508 7,817 Total equity 14,716 12,847 LIABILITIES Non-current liabilities Borrowings 23 2,000 2,000 Retirement benefit obligations 21 613 660 2,613 2,660 Current liabilities Trade and other payables 22 3,004 2,693 Current tax liabilities 766 - 3,770 2,693 Total liabilities 6,383 5,353 Total equity and liabilities 21,099 18,200 These Company financial statements have been approved for issue by the Board of Directors on 3 April 2006. Consolidated Cash Flow Statement - Audited For the year ended 31 December 2005 2005 2004 Note Â£'000 Â£'000 Cash flow from operating activities Cash generated from operations 24a 6,772 3,689 Interest paid (249) (268) Tax paid (214) (1,439) Net cash generated from operating activities 6,309 1,982 Cash flow from investing activities Acquisition of subsidiary (net of cash acquired) 24b (79) - Purchase of property, plant and equipment (PPE) (858) (1,317) Proceeds from sale of PPE 132 29 Intangible assets expenditure (1,712) (1,020) Proceeds from sale of available-for-sale asset 70 - Increased investment in available-for-sale asset (200) - Interest received 221 92 Net cash used in investing activities (2,426) (2,216) Cash flow from financing activities Proceeds from issue of share capital 114 48 Proceeds from/(investment in) ESOP 64 (13) Proceeds from borrowings 510 2,121 Repayment of borrowings (277) - Renegotiation of loan - (1,730) Payments of finance lease liabilities (111) (115) Dividends paid (726) (722) Exceptional gain - 277 Net cash used in financing activities (426) (134) Net increase/(decrease) in net cash (including bank overdrafts) 3,457 (368) Cash and bank overdrafts at beginning of year 3,354 3,722 Cash and bank overdrafts at end of year 6,811 3,354 Company Cash Flow Statement - Audited For the year ended 31 December 2005 Note 2005 2004 Â£'000 Â£'000 Cash flow from operating activities Cash used in operations 24a (2,633) (5,015) Interest paid (264) (107) Tax received 1,155 368 Net cash used in operating activities (1,742) (4,754) Cash flow from investing activities Proceeds from sale of available-for sale financial asset 70 - Investment in available-for-sale financial asset (200) - Proceeds from sale of shares in fixed asset investment - 305 Investment income from fixed asset investments 2,778 2,768 Interest received 439 249 Net cash generated from investing activities 3,087 3,322 Cash flow from financing activities Proceeds from issue of share capital 114 48 Proceeds from/(investment in) ESOP 64 (11) Proceeds from borrowings - 2,000 Dividends paid (726) (722) Net cash (used in)/generated from financing activities (548) 1,315 Net increase/(decrease) in net cash (including bank overdrafts) 797 (117) Cash and bank overdrafts at beginning of year 648 765 Cash and bank overdrafts at end of year 1,445 648 Notes to the Consolidated Financial Statements - Audited 1. General information Christie Group plc is the parent undertaking of a group of companies covering a range of related activities. These fall into three divisions - Professional Business Services, Software Solutions and Stock and Inventory Services. Professional Business Services principally covers business valuation and agency, mortgage and insurance services, and business appraisal. Software Solutions covers EPoS, head office systems and supply chain management. Stock and Inventory Services covers Stock and Audit inventory preparation and valuation. 2. Summary of significant accounting policies Accounting policies for the year ended 31 December 2005 The principal accounting policies adopted in the preparation of these Financial Statements are set out below. 2.1 Basis of preparation The consolidated and Company financial statements of Christie Group plc have been prepared in accordance with International Financial Reporting Standards (IFRS). These consolidated and Company financial statements have been prepared under the historic cost convention. These consolidated and Company financial statements of Christie Group plc are for the year ended 31 December 2005 and are covered by IFRS 1, 'First-time Adoption of International Accounting Standards'. The financial statements have been prepared in accordance with IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (March 2006). The policies set out below have been consistently applied to all the periods presented except for those relating to the classification and measurement of financial instruments. The Group has made use of the exemption available under IFRS 1 to only apply IAS 32 and IAS 39 from 1 January 2005, although no significant adjustments occurred. The policies applied to financial instruments for 2004 and 2005 are disclosed separately below. Christie Group plc's consolidated and Company financial statements were prepared in accordance with UK Generally Accepted Accounting Principles (GAAP) until 31 December 2004. GAAP differs in some areas from IFRS. In preparing Christie Group plc's 2005 consolidated and Company financial statements, management has amended certain accounting and valuation methods applied in the GAAP financial statements to comply with IFRS. The comparative figures in respect of 2004 were restated to reflect these adjustments, except as described in the accounting policies. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and parent company statements are disclosed in Note 4. Interpretations and amendments to published standards effective in 2005 The following amendments and interpretations to standards are mandatory for the Group's Accounting years beginning on or after 1 January 2005. - IFRIC 2, Members' Shares in Co-operative Entities and Similar Instruments; - SIC 12 (Amendment), Consolidation - Special Purpose Entities; and - IAS 39 (Amendment), Transition and Initial Recognition of Financial Assets and Financial Liabilities. Management assessed the relevance of these amendments and interpretations with respect to the Group's operations and concluded that they are not relevant to the group. Standards, interpretations and amendments to published standards that are not yet effective Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning on or after 1 January 2006 or later periods but which the group has not early adopted, as follows: - IAS 19 (Amendment), Employee Benefits (effective from 1 January 2006). This amendment introduces the option of an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements. As the Group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses the adoption of this amendment will only impact the format and extent of disclosures presented in the financial statements. - IFRIC 4, Determining whether an Arrangement contains a Lease (effective from 1 January 2006). IFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset): and (b) the arrangement conveys a right to use the asset. Management is currently assessing the impact of IFRIC 4 on the Group's operations. It is anticipated that new standards or interpretations not covered specifically above will have no impact on the Group's financial statements. 2.2 Consolidation The Group financial statements include the results of Christie Group plc and all its subsidiary undertakings on the basis of their financial statements to 31 December 2005. The results of businesses acquired or disposed of are included from the date of acquisition or disposal. A subsidiary is an entity controlled, directly or indirectly, by Christie Group plc. Control is regarded as the power to govern the financial and operating policies of the entity so as to obtain the benefits from its activities. 2.3 Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in pounds sterling, which is the Company's functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; b) income and expenses for each income statement are translated at average exchange rates; and c) all resulting exchange differences are recognised as a separate component of equity, the cumulative translation reserve. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings, are taken to shareholders' equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. 2.4 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services provided in the ordinary course of the Group's activities. Revenue derived from the Group's principal activities (which is shown exclusive of applicable sales taxes or equivalents) is recognised as follows: Agency and valuations Net agency fees are recognised as income on exchange of contracts. In respect of valuations, turnover is recognised once the property or business has been inspected. Appraisal income is recognised in the accounting period in which the service is rendered, by reference to completion of the specific transaction, assessed on the basis of actual service provided as a proportion of the total services to be provided. Business mortgage broking Fee income is taken either when a loan offer is secured or when the loan is drawn down. Insurance broking Insurance brokerage is accounted for on an accruals basis when insurance commences. Software solutions Hardware revenues are recognised on installation or as otherwise specified in the terms of the contract. Software revenues are recognised on the signing of contracts. Revenues on maintenance contracts are recognised over the period of the contracts. Services, such as implementation, training and consultancy, are recognised when the services are performed. Stock and inventory services Fees are recognised on completion of the visit to client's premises. Other income is recognised as follows: Interest income Interest income is recognised on a time-proportion basis using the effective interest method. Dividend income Dividend income is recognised when the right to receive payment is established. 2.5 Segmental reporting In accordance with the Group's risks and returns, the definition of segments for primary and secondary segment reporting reflects the internal management reporting structure. Segment expenses consist of directly attributable costs and other costs, which are allocated based on relevant criteria. A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of components operating in other economic environments. 2.6 Intangible assets Goodwill On the acquisition of a business, fair values are attributed to the net assets acquired. Goodwill arises on the acquisition of subsidiary undertakings, representing any excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired. Goodwill arising on acquisitions is capitalised and subject to impairment review, both annually and when there are indications that the carrying value may not be recoverable. Goodwill arising on acquisitions prior to the date of transition to IFRS has been retained at previous UK GAAP amounts as permitted by IFRS 1 'First time adoption of International Accounting Standards'. Prior to 1 January 2004, goodwill was amortised over its estimated useful life, such amortisation ceased on 31 December 2003, subject to an impairment review at the date of transition, in which no impairment was recognised. The Group's policy for the years up to 31 March 1998 was to eliminate goodwill arising on acquisitions against reserves. Under IFRS 1 and IFRS 3, such goodwill will remain eliminated against reserves. Research and Development Development products are capitalised when the following criteria are demonstrated: - The technically feasibility of completing the product so that it will be available for use or sale; - The intention to complete the product and use or sell it; - The ability to use the completed product or sell it; - It is probable that the completed product will generate future economic benefits; - The availability of adequate technical, financial and other resources to complete the development and to use or sell the completed product; and - The ability to reliably measure the expenditure on the intangible asset during its development. Development costs are amortised in equal annual instalments over the expected product or system life, commencing in the year when the product is completed. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. All other research and development costs are written off in the year in which they are incurred. Other Intangible fixed assets such as software, trademarks and patent rights are stated at cost, net of amortisation and any provision for impairment. Amortisation is calculated to write down the cost of all intangible fixed assets to their estimated residual value by equal annual instalments over their expected useful economic lives. The expected useful lives are between three and ten years. 2.7 Property plant and equipment Tangible fixed assets are stated at cost, net of depreciation and provision for any impairment. Depreciation is calculated to write down the cost of all tangible fixed assets to estimated residual value by equal annual instalments over their expected useful lives as follows: Leasehold property Lease term Fixtures, fittings and equipment 5 - 10 years Computer equipment 2 - 3 years Motor vehicles 4 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the income statement. 2.8 Leases Leases where the lessor retains a significant portion of the risks and rewards of ownership are classified as operating leases. Rentals under operating leases (net of any incentives received) are charged to the income statement on a straight-line basis over the period of the lease. Assets, held under finance leases, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future lease obligations are recorded as liabilities, whilst the interest elements are charged to the income statement over the period of the leases at a constant rate. 2.9 Impairment of assets Non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Value in use is based on the present value of the future cash flows relating to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Any assessment of impairment based on value in use takes account of the time value of money and the uncertainty or risk inherent in the future cash flows. The discount rates applied are post-tax and reflect current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. 2.10 Investments From 1 January 2004 to 31 December 2004 Financial fixed assets include investments in companies other than subsidiaries and associates, financial receivables held for investment purposes, treasury stock and other securities. Financial fixed assets are recorded at cost, including additional direct charges. Current assets may also include investments and securities acquired as a temporary investment, which are valued at the lower of cost and market value, cost being determined on a last-in-first-out (LIFO) basis. From 1 January 2005 The Group classifies its investments depending on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Purchases and sales of investments are recognised on trade date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. 2.11 Inventories Inventory held for resale is valued at the lower of cost and net realisable value. 2.12 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement. 2.13 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term, highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet. 2.14 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 2.15 Taxation including deferred tax Tax on company profits is provided for at the current rate applicable in each of the relevant territories. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. This is reviewed annually. 2.16 Share capital and share premium Ordinary shares are classified as equity. Where any Group company or the Employee Share Ownership Plan (ESOP) trust purchases the Company's equity share capital (own shares), the consideration paid, including any directly attributable incremental costs (net of taxes), is deducted from equity attributable to the Company's equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related tax effects, is included in equity attributable to the Company's equity holders. 2.17 Dividend distribution Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. In respect of interim dividends, which are paid prior to approval by the Company's shareholders they are recognised on payment. 2.18 Employee benefits Pension obligations The Group has both defined benefit and defined contribution schemes. A defined benefit scheme is a pension scheme that defines the amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and remuneration. A defined contribution scheme is a pension scheme under which the Group pays fixed contributions into a separate entity. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. Pension obligations - Defined benefit schemes The liability recognised in the balance sheet in respect of defined benefit pension schemes is the present value of the defined benefit obligation at the balance sheet date less the fair value of scheme assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Cumulative actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of scheme assets or 10% of the defined benefit obligation are charged or credited to income statement over the employees' expected average remaining working lives. Past-service costs are recognised immediately in the income statement, unless the changes to the pension scheme are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. Pension obligations - Personal pension scheme Group companies contribute towards a personal pension scheme for their participating employees. These employees are currently entitled to such contributions after a qualifying period has elapsed. Payments to the scheme are charged as an employee benefit expense as they fall due. The Group has no further payment obligations once the contributions have been paid. Share based compensation The fair value of employee share option schemes, including Save As You Earn (SAYE) schemes, is measured by a Black-Scholes pricing model. Further details are set out in note 19a. In accordance with IFRS 2 'Share-based Payments' the resulting cost is charged to the income statement over the vesting period of the options. The value of the charge is adjusted to reflect expected and actual levels of options vesting. No expense is recognised in respect of share options granted before 7 November 2002 and that vested before 1 January 2005. The expense is recognised when the options are exercised and proceeds received allocated between share capital and share premium. For share options granted after 7 November 2002 and vested after 1 January 2005 the Group operates an equity-settled, long term incentive plan designed to align management interests with those of shareholders. The fair value of the employee's services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Commissions and bonus plans The Group recognises a liability and an expense for commissions and bonuses, based on formula driven calculations. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation. 3. Financial risk management The Group uses a limited number of financial instruments, comprising cash, short-term deposits, bank loans and overdrafts and various items such as trade receivables and payables, which arise directly from operations. The Group does not trade in financial instruments. 3.1 Financial risk factors The Group's activities expose it to a variety of financial risks: market risk (including currency risk, and interest rate risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. a) Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the UK pound and the Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is that is not the entity's functional currency. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. b) Credit risk The Group has no significant concentrations of credit risk and has policies in place to ensure that sales are made to customers with an appropriate credit history. A number of subsidiaries utilise credit insurance to mitigate credit risk. c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and available funding through an adequate amount of committed credit facilities. The Group ensures it has adequate cover through the availability of bank overdraft and loan facilities. d) Cash flow and interest rate risk The Group finances its operations through a mix of cash flow from current operations together with cash on deposit and bank and other borrowings. Borrowings are generally at floating rates of interest and no use of interest rate swaps has been made. Overall the Group's trading operations are normally cash generative. 3.2 Fair value estimation The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. 4. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Estimated impairment of goodwill Goodwill is subject to an impairment review both annually and when there are indications that the carrying value may not be recoverable, in accordance with the accounting policy stated in note 2.6. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 13). (b) Retirement benefit obligations The assumptions used to measure the expense and liabilities related to the group's two defined benefit pension plans are reviewed annually by professionally qualified, independent actuaries, trustees and management as appropriate. The measurement of the expense for a period requires judgement with respect to the following matters, among others: - the probable long-term rate of increase in pensionable pay; - the discount rate - the expected return on plan assets - the estimated life expectancy of participating members The assumptions used by the Group may differ materially from actual results, and these differences may result in a significant impact on the amount of pension expense recorded in future periods. In accordance with IAS 19, the group amortises actuarial gains and losses outside the 10% corridor, over the average future service lives of employees. Under this method, major changes in assumptions, and variances between assumptions and actual results, may affect retained earnings over several future periods rather than one period, while more minor variances and assumption changes may be offset by other changes and have no direct effect on retained earnings. 5. Segment information a. Primary reporting format - business segments The Group is organised into three main business segments: Professional Business Services, Software Solutions and Stock and Inventory Services. The segment results for the year ended 31 December 2005 are as follows: Stock and Professional Business Software Inventory Services Solutions Services Other Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Continuing Operations Total gross segment sales 43,289 13,714 20,536 2,554 80,093 Inter-segment sales (33) - - (2,554) (2,587) Revenue 43,256 13,714 20,536 - 77,506 Operating profit 4,519 (1,268) 1,356 (198) 4,409 Net finance costs (28) Profit before tax 4,381 Taxation (1,694) Profit for the year after tax 2,687 The segment results for the year ended 31 December 2004 are as follows: Professional Business Software Stock and Services Solutions Inventory Â£'000 Â£'000 Services Other Group Â£'000 Â£'000 Â£'000 Continuing Operations Total gross segment sales 37,289 12,976 19,723 2,452 72,440 Inter-segment sales (20) - - (2,452) (2,472) Revenue 37,269 12,976 19,723 - 69,968 Operating profit 4,055 (1,145) 996 (62) 3,844 Net finance costs (176) Exceptional finance credit 2,455 Profit before tax 6,123 Taxation (360) Profit for the year after tax 5,763 Other segment items included in the income statements for the years ended 31 December 2005 and 2004 are as follows: Professional Stock and Business Software Inventory Services Solutions Services Other Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 31 December 2005 Depreciation and amortisation 673 304 269 46 1,292 Impairment of trade receivables 644 166 2 - 812 31 December 2004 Depreciation and amortisation 647 247 248 61 1,203 Impairment of trade receivables 430 115 21 - 566 The segment assets and liabilities at 31 December 2005 and capital expenditure for the year then ended are as follows: Stock and Professional Software Inventory Business Services Solutions Services Other Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Assets 14,589 9,984 4,707 1,186 30,466 Deferred tax assets 1,977 32,443 Liabilities 10,066 3,507 4,006 2,024 19,603 Current tax liabilities 732 Borrowings (excluding finance leases) 2,294 22,629 Capital expenditure 1,130 1,224 187 29 2,570 The segment assets and liabilities at 31 December 2004 and capital expenditure for the year are as follows; Stock and Professional Software Inventory Business Services Solutions Services Other Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Assets 10,678 8,960 3,928 1,993 25,559 Deferred tax assets 2,327 Current tax 413 28,299 Liabilities 9,001 3,968 3,366 2,108 18,443 Borrowings (excluding finance leases) 2,206 20,649 Capital expenditure 1,283 826 306 10 2,425 Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating cash. They exclude deferred taxation. Segment liabilities comprise operating liabilities. They exclude items such as taxation and corporate borrowings. Capital expenditure comprises additions to property, plant and equipment and intangible assets. b. Secondary format - geographical segments The Group manages its business segments on a global basis. The UK is the home country of the parent. The operations are based in two main geographical areas. The main operations in the principal territories are as follows: - Europe - Rest of the World (primarily North America) The Group's sales are mainly in Europe. Sales are allocated based on the country in which the customer is located. 2005 2004 Â£'000 Â£'000 Sales Europe 77,080 69,428 Rest of the World 426 540 77,506 69,968 Total segment assets Europe 30,169 25,431 Rest of the World 297 128 30,466 25,559 Capital expenditure is allocated based on where the assets are located. 2005 2004 Â£'000 Â£'000 Capital expenditure Europe 2,570 2,400 Rest of the World - 25 2,570 2,425 2005 2004 Â£'000 Â£'000 Analysis of sales by category Sales of goods 2,568 2,681 Revenue from services 74,938 67,287 77,506 69,968 6. Employee benefit expenses 2005 2004 Staff costs for the Group during the year Â£'000 Â£'000 Wages and salaries 36,588 33,633 Social security costs 5,387 5,094 Pension costs - defined benefit schemes (note 21) 1,169 1,038 Pension costs - defined contribution scheme 288 226 Cost of employee share scheme 65 38 43,497 40,029 Average number of people (including executive directors) employed by the Group 2005 2004 during the year was Operational 1,025 900 Administration and support staff 305 322 1,330 1,222 7. Finance costs / (credits) 2005 2004 Â£'000 Â£'000 Interest payable on bank loans and overdrafts 242 259 Interest payable on finance leases 7 9 Total interest and similar charges payable 249 268 Bank interest receivable (126) (92) Other interest receivable (95) - Exceptional finance credit (net) - (2,455) Total interest receivable (221) (2,547) Net finance costs / (credits) 28 (2,279) 8. Profit before tax Group 2005 2004 Â£'000 Â£'000 Profit before tax is stated after charging/(crediting): Depreciation of property, plant and equipment - owned assets 1,125 1,054 - under finance leases 126 121 Amortisation of intangible fixed assets 41 28 (Profit)/loss on sale of property, plant and equipment (20) 16 Loss on sale of intangible fixed asset - 31 Profit on sale of current available for sale financial assets (including Company (176) - Â£176,000 (2004: Â£nil)) Operating lease charges - buildings 1,412 1,293 - other 752 1,492 Repairs and maintenance expenditure on property, plant and equipment. 397 265 Research and development 1,308 1,519 Loss on foreign exchange (including Company Â£31,000 (2004: Â£nil)) 28 40 Inventories - cost of inventories recognised as an expense (included in other operating expenses) 41 (34) - write down of inventories 1 - Services provided by the group's auditor and network firms During the year the group (including its overseas subsidiaries) obtained the following services from the group's auditor or a related company of the group's auditor as detailed below: Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Audit services - statutory audit 113 88 5 11 Tax services 130 129 23 10 Other services not covered above 45 6 - - In addition to the above services, the group's auditor acted as auditor to the Christie Group plc Pension & Assurance Scheme and the Venners Retirement Benefit Scheme. The appointment of auditors to the group's pension schemes and the fees paid in respect of those audits are agreed by the trustees of each scheme, who act independently from the management of the group. The aggregate fees paid to the group's auditor for audit services to the pension schemes during the year were Â£9,000 (2004: Â£9,000) 9. Taxation 2005 2004 Â£'000 Â£'000 Current tax UK Corporation tax at 30% (2004: 30%) 1,324 897 Foreign tax 57 75 Adjustment in respect of prior period (37) (970) Total current tax 1,344 2 Deferred tax Origination and reversal of timing differences 350 358 Total deferred tax 350 358 Tax on profit on ordinary activities 1,694 360 The tax for the year is higher (2004: lower) than the standard rate of corporation tax in the UK (30%). The differences are explained below: Tax on profit on ordinary activities 2005 2004 Â£'000 Â£'000 Profit before tax and exceptional finance credit 4,381 3,668 Exceptional finance credit (net) - 2,455 Profit on ordinary activities before tax 4,381 6,123 Profit on ordinary activities at standard rate of UK corporation tax 1,837 of 30% (2004: 30%) 1,314 Effects of: - foreign tax losses not yet utilised 236 238 - expenses not deductible for tax purposes 105 28 - adjustment to tax charge in respect of previous periods (37) 47 - depreciation in excess of capital allowances (15) (81) - other timing differences (259) (241) - benefit prior year dual residence tax losses - (1,017) - exceptional non-taxable finance credit - (800) - rate differential on certain tax losses - (9) Total current tax 1,344 2 10. Dividends 2005 2004 Group and Company Â£'000 Â£'000 Final dividend paid, relating to the years ending 31 December 2004 and 2003: 2.0p (2004: 2.0p) 481 480 per 2p share Interim dividend paid, relating to the years ending 31 December 2005 and 2004: 1.0p (2004: 1.0p) 245 242 per 2p share 726 722 A dividend in respect of the year ended 31 December 2005 of 2.5p per share, amounting to a total dividend of Â£608,000, is to be proposed at the Annual General Meeting on 28 June 2006. These financial statements do not reflect this proposed dividend. 11. Earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. 2005 2004 Profit attributable to equity holders of the Company (Â£'000) 2,684 5,753 24,866 24,709 Weighted average number of ordinary shares in issue (thousands) Basic earnings per share (pence) 10.79 23.28 Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: share options. The calculation is performed for the share options to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. 2005 2004 Profit attributable to equity holders of the Company (Â£'000) 2,684 5,753 Weighted average number of ordinary shares in issue (thousands) 24,866 24,709 Adjustment for share options (thousands) 249 368 Weighted average number of ordinary shares for diluted earnings per share (thousands) 25,115 25,077 Diluted earnings per share (pence) 10.69 22.94 12. Property, plant and equipment Fixtures, Fittings, Computer Equipment and Short Leasehold Property Motor Vehicles Total Â£'000 Â£'000 Â£'000 Group Cost At 1 January 2005 517 6,827 7,344 Exchange adjustments - (22) (22) Additions at cost 14 844 858 Acquisitions - 32 32 Disposals - (502) (502) At 31 December 2005 531 7,179 7,710 Accumulated depreciation At 1 January 2005 245 4,440 4,685 Exchange adjustments - (15) (15) Charge for the year 96 1,155 1,251 Reclassification 7 (7) - Disposals - (390) (390) At 31 December 2005 348 5,183 5,531 Net book amount at 31 December 2005 183 1,996 2,179 Fixtures, Fittings, Computer Equipment and Short Leasehold Property Motor Vehicles Total Â£'000 Â£'000 Â£'000 Group Cost At 1 January 2004 309 8,135 8,444 Exchange adjustments - 1 1 Additions at cost 208 1,187 1,395 Disposals - (2,496) (2,496) At 31 December 2004 517 6,827 7,344 Accumulated depreciation At 1 January 2004 180 5,777 5,957 Charge for the year 65 1,110 1,175 Disposals - (2,447) (2,447) At 31 December 2004 245 4,440 4,685 Net book amount at 31 December 2004 272 2,387 2,659 Depreciation in the year on fixtures, fittings, computer equipment and motor vehicles includes Â£126,000 (2004: Â£121,000) on assets held under finance lease or hire purchase agreements which have a net book value at 31 December 2005 of Â£62,000 (2004: Â£189,000). At 31 December 2005 and 2004 the Company held Fixtures, Fittings, Computer Equipment and Motor Vehicles with a cost of Â£9,000 and accumulated depreciation of Â£9,000. 13. Intangible assets - Goodwill Group Total Â£'000 Cost At 1 January 2005 3,918 Acquisitions 21 At 31 December 2005 3,939 Group Total Â£'000 Cost At 1 January 2004 and 31 December 2004 3,918 Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to country of operation and business segment. The carrying amounts of goodwill by segment as at 31 December 2005 are as follows: Goodwill Professional Business Stock and Inventory Services Software Solutions Services Â£'000 Â£'000 Â£'000 UK 21 - 833 Continental Europe - 3,085 - During the year, the acquired goodwill in respect of Timeless Groupe SA, Orridge & Co Ltd and West London Estates was tested for impairment in accordance with IAS 36 on the basis of the relevant CGUs. Following the impairment tests there has been no change to the carrying values. The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on current business plans. The key assumptions for the value-in-use calculations are those regarding revenue growth rates, discount rates and long-term growth rates. Management determined budgeted revenue growth based on past performance and its expectations for the market development. Discount rates were determined using post-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Cash flows beyond the five-year period are extrapolated using estimated long term growth rates. The growth rate does not exceed the long-term average growth rate for the businesses in which the CGUs operate. 14. Intangible assets - Other Group Software Software Total Â£'000 Development Â£'000 Â£'000 Cost At 1 January 2005 103 1,122 1,225 Exchange adjustments (2) (14) (16) Additions 101 1,611 1,712 At 31 December 2005 202 2,719 2,921 Accumulated amortisation At 1 January 2005 72 - 72 Exchange adjustments (2) - (2) Charge for the year 41 - 41 At 31 December 2005 111 - 111 Net book amount at 31 December 2005 91 2,719 2,810 The expected useful lives are as follows: Software 3 - 10 years Software development 5 - 10 years The investment in software development relates to the following: - Development of products for resale in the Software Solutions division; and - An operational support system in the Professional Business Services division. Costs relating to the Christie + Co operational support system at 31 December 2005 totalled Â£1,193,000. The subsidiary is in dispute with a substantial third party software house which is contracted to provide the system. Resulting from the software house's admitted failure regarding aspects of the system, Christie + Co has commenced legal proceedings against it. Group Software Software Total Â£'000 Development Â£'000 Â£'000 Cost At 1 January 2004 171 106 277 Additions 14 1,016 1,030 Disposals (82) - (82) At 31 December 2004 103 1,122 1,225 Accumulated amortisation At 1 January 2004 98 - 98 Charge for the year 28 - 28 Disposals (54) - (54) At 31 December 2004 72 - 72 Net book amount at 31 December 2004 31 1,122 1,153 15. Deferred tax Deferred tax assets have been recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets where it is probable that these assets will be recovered. The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS 12) during the year are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net. Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Deferred income tax assets/(liabilities) comprises: Accelerated capital allowances 109 209 2 (22) Short-term timing differences (152) (2) (13) 27 Deferred tax (liability) / asset (43) 207 (11) 5 Deferred tax asset on pension 2,020 2,120 183 198 At 31 December 2005 1,977 2,327 172 203 Movements in the deferred tax asset: Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 At 1 January 2,327 2,685 203 211 Transfer to the income statement (350) (358) (31) (8) At 31 December 1,977 2,327 172 203 Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred tax assets of Â£307,000 (2004: Â£78,000) in respect of losses that can be carried forward against future taxable income. 16. Fixed Asset Investments Shares in Loans to subsidiary subsidiary undertakings undertakings Total Â£'000 Â£'000 Â£'000 Company Cost At 1 January 2005 and at 31 December 2005 5,559 6,301 11,860 Provisions At 1 January 2005 and at 31 December 2005 610 - 610 Net book amount at 31 December 2005 4,949 6,301 11,250 Net book amount at 31 December 2004 4,949 6,301 11,250 Subsidiary undertakings At 31 December 2005 the principal subsidiaries were as follows: Company Country of Nature of business incorporation Christie, Owen & Davies plc (trading as Christie + UK Business valuers, surveyors and agents Co)* Christie + Co SARL* France Business valuers, surveyors and agents Christie + Co GmbH* Germany Business valuers, surveyors and agents Christie, Owen & Davies SL* Spain Business valuers, surveyors and agents Pinders Professional & Consultancy Services Ltd UK Business appraisers West London Estates Ltd* (trading as Pinders UK Building surveyors Caversham) RCC Business Mortgage Brokers plc (trading as UK Business mortgage brokers Christie First) RCC Insurance Brokers plc* (trading as Christie UK Insurance brokers First) Orridge & Co Ltd UK Stocktaking and inventory management services Orridge SA** Belgium Stocktaking and inventory management services Venners plc UK Licensed stock and inventory auditors and valuers VcsTimeless Ltd* UK EPoS, head office systems and merchandise control Venners Computer Systems Corporation* Canada EPoS, head office systems and merchandise control Timeless SA* France EPoS, head office systems and merchandise control Timeless Premier SL* Spain EPoS, head office systems and merchandise control Timeless Italia Srl* Italy EPoS, head office systems and merchandise control The company directly or indirectly* owns 100% of the ordinary share capital of each of the above companies. The company indirectly** owns 90% of Orridge SA. 16a. Available-for-sale financial assets Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 At 1 January 2005 604 604 604 604 Additions 200 - 200 - Disposals (504) - (504) - At 31 December 2005 300 604 300 604 Current assets - 504 - 504 Non-current assets 300 100 300 100 At 31 December 2005 300 604 300 604 The available-for-sale financial assets represent an unquoted investment held at cost. The fair value of the unquoted investment at 31 December 2005 approximates to cost. 17. Inventories Group 2005 2004 Â£'000 Â£'000 Finished goods and goods for resale 310 355 A provision of Â£21,000 (2004: Â£nil) is held against goods for resale to reflect the net realisable value of the inventory. 18. Trade and other receivables Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Amounts falling due within one year: Trade receivables 10,621 10,648 - - Less: Provision for impairment of receivables (1,778) (1,090) - - Amounts owed by group undertakings - - 6,761 4,841 Other debtors 2,273 1,169 1,151 273 Prepayments and accrued income 3,001 2,644 20 17 14,117 13,371 7,932 5,131 The fair values of trade and other receivables approximates to the cost as detailed above. Concentrations of credit risk with respect to trade receivables are limited due to the Group's customer base being large and diverse. Due to this, management believe there is no further credit risk provision required in excess of the normal provision for doubtful receivables. 19. Share capital Ordinary shares of 2p each Number 2005 Number 2004 Â£'000 Â£'000 Authorised: 30,000,000 600 30,000,000 600 At 1 January 2005 and 31 December 2005 Allotted and fully paid: At 1 January 2005 24,747,496 495 24,638,495 493 Issued during the year 256,056 5 109,001 2 At 31 December 2005 25,003,552 500 24,747,496 495 The consideration received for the shares issued in the year was Â£114,000 (2004: Â£48,000). The Company has one class of ordinary shares which carry no right to fixed income. At 31 December 2005 the outstanding loan by the company to the ESOP to finance the purchase of ordinary shares was Â£641,000 (2004: Â£341,000). The market value at 31 December 2005 of the ordinary shares held in the ESOP was Â£768,000 (2004: Â£690,000). The investment in own shares represents 665,000 shares (2004: 700,000) with a nominal value of 2p each 19a Share based payments Certain employees hold options to subscribe for shares in the Company at prices ranging from 35.70p to 145.00p under share option schemes for the period from August 1996 to October 2005. The remaining options outstanding under approved schemes (unapproved options marked*) at 31 December are shown below: Number of Shares Option exercise price Date granted Option exercise period 2005 2004 27,000 43,000 35.70p Aug 1996 Aug 1999 - Aug 2006 65,833 133,333 48.00p Dec 1997 Dec 2000 - Dec 2007 6,000 9,000 47.50p Aug 1998 Aug 2001 - Aug 2008 40,667 73,001 41.50p Dec 1998 Dec 2001 - Dec 2008 15,000 34,000 81.00p Sep 1999 Sep 2002 - Sep 2009 - 46,000* 81.00p Sep 1999 Sep 2002 - Sep 2006 34,333 37,333 145.00p May 2000 May 2003 - May 2010 21,000 24,000 81.50p Oct 2000 Oct 2003 - Oct 2010 43,333 58,333 53.50p May 2001 May 2004 - May 2011 9,000 22,000 40.00p Oct 2001 Oct 2004 - Oct 2011 26,333 116,555 36.00p May 2002 May 2005 - May 2012 25,000 25,000 45.50p Sep 2002 Sep 2005 - Sep 2012 - 3,000 44.50p Oct 2002 Oct 2005 - Oct 2012 81,000 87,000 47.50p Apr 2003 Apr 2006 - Apr 2013 57,000 60,000 46.50p Jun 2003 Jun 2006 - Jun 2013 103,000 113,000 94.00p May 2004 May 2007 - May 2014 41,000 41,000 111.50p Jun 2004 Jun 2007 - Jun 2014 52,000 52,000 98.50p Oct 2004 Oct 2007 - Oct 2014 175,000 - 100.00p Apr 2005 Apr 2008 - Apr 2015 44,000 - 101.50p Oct 2005 Oct 2008 - Oct 2015 866,499 977,555 Under the Share Option Scheme the Remuneration Committee can grant options over shares to employees of the company. Options are granted with a fixed exercise price equal to the market price of the shares under option at the date of grant. The contractual life of an option is 10 years. Awards under the Share Option Scheme are generally reserved for employees at senior management level and 88 employees are currently participating in this group. The company has made grants at least annually. Options granted under the Share Option Scheme will become exercisable on the third anniversary of the date of grant. Exercise of an option is subject to continued employment. The Group also operates a Save As You Earn (SAYE) scheme which was introduced in 2002. Under the SAYE scheme eligible employees can save up to Â£250 per month over a three or five year period and use the savings to exercise options granted between 67.5p to 111.5p. There were 814,000 (2004: 855,000) remaining options outstanding under the SAYE scheme at 31 December 2005. Share options (including SAYE schemes) were valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value calculations. The key assumptions used in the calculations are as follows: 2005 2004 Share price at grant date 47.50p - 111.50p 47.50p - 111.50p Exercise price 47.50p - 111.50p 47.50p - 111.50p Expected volatility 36.3% - 52.6% 43.1% - 52.6% Expected life (years) 3 - 5 years 3 - 5 years Risk free rate 4.40% 4.40% Dividend yield 2.7% 2.7% Fair value per option 19.04p - 45.63p 19.04p - 45.63p The expected volatility is based on historical volatility over the last 7 years. The expected life is the average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life. A reconciliation of share option movements (excluding SAYE schemes) over the year to 31 December 2005 is shown below: 2005 2004 Weighted average Weighted exercise price average Number Number exercise price Outstanding at 1 January 977,555 63.37p 919,556 52.93p Granted 226,000 100.29p 215,000 98.43p Forfeited / Lapsed (81,000) 81.36p (48,000) 65.09p Exercised (256,056) 44.59p (109,001) 40.56p Outstanding at 31 December 866,499 76.87p 977,555 63.37p Exercisable at 31 December 313,499 59.86p 480,000 60.92p The weighted average share price for options exercised over the year was 102.16p (2004: 107.73p). The total charge for the year relating to employee share based payment plans was Â£65,000 (2004: Â£38,000), all of which related to equity-settled share based payment transactions. The weighted average remaining contractual life of share options outstanding at 31 December 2005 was 6.8 years (2004: 6.3 years). 20. Reserves Share Merger Share based Own Capital Fair value Profit and premium reserve payments shares redemption and other loss account reserve reserves Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 1 January 2005 3,826 945 38 (335) 10 4,484 3,002 Share issues 109 - - - - 109 - Movement in respect of - - 64 - 129 - employee share scheme 65 Exchange difference on - - - - - (158) repayment of foreign exchange loan - Retained profit for the year - - - - - - 1,958 31 December 2005 3,935 945 103 (271) 10 4,722 4,802 Share Merger Share based Own Capital Fair value Profit and premium reserve payments shares redemption and other loss account reserve reserves Group Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 1 January 2004 3,780 945 - (324) 10 4,411 (2,029) Share issues 46 - - - - 46 - Movement in respect of - - (11) - 27 - employee share scheme 38 Retained profit for the year - - - - - - 5,031 At 31 December 2004 3,826 945 38 (335) 10 4,484 3,002 Own shares Capital Other Fair value Profit and Share Merger redemption reserves and other loss premium reserve reserve reserves account Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Company At 1 January 2005 3,826 945 (335) 10 89 4,535 7,817 Share issues 109 - - - - 109 - Movement in respect of 64 employee share scheme - - 64 - - - Retained profit for the year - - - - - - 1,691 At 31 December 2005 3,935 945 (271) 10 89 4,708 9,508 Own shares Capital Other Fair value Profit and Share Merger redemption reserves and other loss premium reserve reserve reserves account Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Company At 1 January 2004 3,780 945 (324) 10 88 4,499 6,068 Share issues 46 - - - - 46 - Movement in respect of (10) employee share scheme - - (11) - 1 - Retained profit for the year - - - - - - 1,749 At 31 December 2004 3,826 945 (335) 10 89 4,535 7,817 21. Retirement benefit obligations The amounts recognised in the balance sheet are determined as follows: 2005 2004 Â£'000 Â£'000 United Kingdom 6,732 7,067 Overseas 58 50 6,790 7,117 United Kingdom The Group operates two defined benefit schemes, providing benefits on final pensionable pay. The contributions are determined by qualified actuaries on the basis of triennial valuations using the projected unit method. When a member retires, the pension and any spouse's pension is either secured by an annuity contract or paid from the managed fund. Assets of the schemes are reduced by the purchase price of any annuity purchase and the benefits no longer regarded as liabilities of the scheme. The amounts recognised in the balance sheet are determined as follows: 2005 2004 Â£'000 Â£'000 Present value of obligations 30,527 28,556 Fair value of plan assets (22,054) (18,325) 8,473 10,231 Unrecognised actuarial losses (1,741) (3,164) Liability in the balance sheet 6,732 7,067 The amounts recognised in the income statement are as follows: 2005 2004 Â£'000 Â£'000 Current service cost (897) (885) Interest cost (1,515) (1,351) Expected return on plan assets 1,269 1,198 Net actuarial loss recognised in the year (26) - Total included in employee benefit expenses (note 6) (1,169) (1,038) The actual return on plan assets was Â£2,718,000 (2004: Â£1,250,000). The movement in the liability recognised in the balance sheet is as follows: 2005 2004 Â£'000 Â£'000 Beginning of the year 7,067 7,466 Expenses included in employee benefit expenses 1,169 1,038 Contributions paid (including employee contributions) (1,504) (1,437) End of the year 6,732 7,067 The principal actuarial assumptions used were as follows: 2005 2004 % % Discount rate 4.70 - 4.80 5.20 - 5.25 Inflation rate 2.75 2.75 - 3.00 Expected return on plan assets 6.00 - 6.25 5.20 - 9.20 Future salary increases 2.75 - 3.10 3.00 - 4.50 Future pension increases 3.00 - 3.60 3.00 - 3.25 Assumptions regarding future mortality experience are set based on advice from published statistics and experience. The average life expectancy in years of a pensioner retiring at age 65 is as follows: 2005 2004 Years Years Male 19.8 19.9 Female 22.8 22.8 The income statement charge of Â£108,000 (2004: Â£92,000) and balance sheet liability Â£613,000 (2004: Â£660,000) recognised by the Company in relation to the Christie Group defined benefit scheme has been allocated on the basis of contributions to the scheme. For the year ended 31 December 2005 contributions paid by the Company amounted to Â£155,000 (2004: Â£136,000) Overseas In accordance with French law a retirement indemnity provision is held. Rights to these benefits accrue on the condition that the employee will be with the employer at retirement date. The movement in the liability recognised in the balance sheet is as follows: 2005 2004 Â£'000 Â£'000 Beginning of the year 50 45 Expenses included in employee benefit expenses 8 5 End of the year 58 50 The principal assumptions used were as follows: 2005 2004 % % Discount rate 2.50% 1.60% Future salary increases 3.00% 1.60% Employee turnover 12.00% 8.00% Assumptions regarding future mortality experience are set based on advice from published statistics and experience with mortality table INSEE statistic ref: TD-TV 00-02 being used. 22. Trade and other payables Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Trade payables 2,565 3,566 - - Amounts owed to group undertakings - - 1,856 1,642 Other taxes and social security 3,332 3,223 856 782 Other creditors 898 719 139 13 Accruals and deferred income 5,953 3,642 153 256 12,748 11,150 3,004 2,693 23. Borrowings Group Company 2005 2004 2005 2004 Non-current Â£'000 Â£'000 Â£'000 Â£'000 Bank and other borrowings (unsecured) 2,212 2,040 2,000 2,000 Finance lease obligations 9 68 - - 2,221 2,108 2,000 2,000 Group Company Current 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Bank loans: Unsecured 82 166 - - Finance lease obligations 56 108 - - 138 274 - - Total borrowings 2,359 2,382 2,000 2,000 The Group is not subject to any contractual repricing. The financial liabilities comprise: Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Floating interest rate loans 2,294 2,061 2,000 2,000 Invoice discounting - 145 - - Finance lease liabilities 65 176 - - 2,359 2,382 2,000 2,000 The maturity of non-current borrowings is as follows: Group Company 2005 2004 2005 2004 Â£'000 Â£'000 Â£'000 Â£'000 Bank loans repayable between one and two years 477 22 400 - Bank loans repayable between two and five years 1,735 2,018 1,600 2,000 Obligation under finance leases: -between one and two years 9 68 - - 2,221 2,108 2,000 2,000 Interest on the Group's borrowings is as follows: - Floating interest rate loans - 1.25% to 1.37% above LIBOR; - Invoice discounting -1.75% above base rate; and - Finance lease liabilities - variable. The carrying amounts of short-term and non current borrowings approximate to their fair value. 24. Notes to the cash flow statement a) Cash generated from / (used in) operations 2005 Group Company Â£'000 2004 2005 2004 Â£'000 Â£'000 Â£'000 Profit for the year 2,687 5,763 2,416 2,471 Adjustments for: - Taxation 1,694 360 (49) (159) - Finance costs / (credits) 28 176 (2,953) (2,910) - Exceptional finance credit - (2,455) - - - Depreciation 1,251 1,175 - - - Amortisation of intangible assets 41 28 - - - (Profit)/loss on sale of property, plant and equipment (20) 16 - - - Profit on sale of current available for sale financial (176) - (176) - assets - Loss on sale of intangible assets - 31 - - - Foreign currency translation (19) (9) - - Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation): - Movement in share option charge 65 38 - 1 - Movement in retirement benefit obligation (327) (399) (47) (44) - Decrease/(increase) in inventories 45 (43) - - - Increase in trade and other receivables (515) (733) (2,695) (3,557) - Decrease in current available for sale financial 504 - - assets 504 - Increase/(decrease) in trade and other payables 1,514 (259) 367 (817) Cash generated from/(used in) operations 6,772 3,689 (2,633) (5,015) b) Acquisition of subsidiary On 18 January 2005 the Group purchased West London Estates Limited. The cash outflow as a result of the acquisition is detailed below: 2005 Â£'000 Property, plant and equipment 32 Net current assets 270 Assets acquired 302 Goodwill on acquisition 21 Consideration paid 323 Cash acquired (244) Net cash outflow (79) 25. Reconciliation of movement in net debt As at 31 Dec 1 Jan Acquisition (excluding As at 2005 Cash flow cash and overdrafts) 2005 Â£'000 Â£'000 Â£'000 Â£'000 Cash in hand and at bank 3,499 3,635 (323) 6,811 Overdrafts (145) 145 - - Debt due after one year (2,040) (172) - (2,212) Debt due within one year (21) (61) - (82) Finance leases due after one year (68) 59 - (9) Finance leases due within one year (108) 52 - (56) 1,117 3,658 (323) 4,452 Movement in borrowings Â£'000 Debt due within one year: Repayment of part of bank loan (254) New unsecured bank loan 315 61 Debt due after one year: Repayment of part of bank loan (23) New unsecured bank loan 195 172 26. Operating lease commitments At 31 December 2005 the group has lease agreements in respect of properties, vehicles, plant and equipment, for which the payments extend over a number of years. Property 2005 Vehicles Property 2004 and equipment Vehicles and equipment Commitments under non-cancellable operating leases due: Within one year 1,379 552 1,066 550 Within two to five years 3,914 1,431 4,316 1,536 After five years 3,579 - 4,183 - 8,872 1,983 9,565 2,086 Operating lease payments represent: - rentals payable by the group for certain of its office properties. The leases have varying terms, break clauses and renewal rights. - rentals for vehicles and equipment under non-cancellable operating lease agreements - The Group also sub-lets an element of office space in respect of certain property lease agreements. 27. Contingent liabilities In the ordinary course of business, claims arise in Group companies. In the opinion of the directors, appropriate amounts have been set aside in respect of liabilities which individual companies within the Group may suffer as a result of the resolution of these claims. 28. Capital commitments The Group has contracted but not provided for capital commitments for Â£298,000 (2004: Â£554,000) of intangible asset expenditure. FIVE YEAR RECORD In 2005 the Group has adopted IFRS for the first time and in accordance with the requirements of IFRS, 2004 figures have been restated. Restatement of earlier years is not required under IFRS and accordingly the information presented below for 2003 and earlier years in respect of the income statement is prepared under UK GAAP. The main adjustments that would be required to comply with IFRS are the recognition of the defined benefit pension funds liabilities on the balance sheet in accordance with IAS 19 and the reversal of goodwill amortisation (IFRS 3). Consolidated income statements IFRS UK GAAP 2005 2004 2003 2002 2001 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue 77,506 69,968 62,457 46,473 43,833 Operating profit before goodwill amortisation 4,409 3,844 3,245 2,614 2,318 Goodwill amortisation - - (551) (497) (566) Exceptional item - 2,455 - - (262) Finance charges net (28) (176) (206) (164) (244) Profit on ordinary activities before taxation 4,381 6,123 2,488 1,953 1,246 Taxation (1,694) (360) (1,469) (1,182) (891) Profit on ordinary activities after taxation 2,687 5,763 1,019 771 355 Minority interest (3) (10) - - - Dividends (726) (722) (722) (625) (637) Retained profit/(loss) for the year 1,958 5,031 297 146 (282) Earnings per share - basic 10.79p 23.28p 4.15p 3.06p 1.39p - basic before exceptional items (net of tax)* 10.79p 9.23p 4.15p 3.06p 2.11p - basic before goodwill amortisation and exceptional 10.79p 9.23p 6.39p 5.03p 4.34p items (net of tax)* Dividends per ordinary share (payable in respect of 3.5p 3.0p 3.0p 2.5p 2.5p the year) *Exceptional items include credit for the prior year dual residence tax losses and the exceptional finance credit of Â£2,455,000 in 2004. Consolidated balance sheets 2005 2004 Â£'000 Â£'000 Non-current assets 11,205 10,157 Current assets 21,238 18,142 Current liabilities (13,618) (11,424) 18,825 16,875 Non-current borrowings (2,221) (2,108) Retirement benefit obligations (6,790) (7,117) Net assets 9,814 7,650 Shareholders' funds - equity interests 9,795 7,634 Minority interest 19 16 9,814 7,650 Financial information The financial information does not constitute the statutory financial statements of the Company as defined by Section 240 of the Companies Act 1985. It is an extract from the financial statements for the year ended 31 December 2005, which have not yet been filed with the Registrar of Companies. The auditors' report was unqualified. The auditors' report does not contain a statement under either Section 237(2) or (3) of the Companies Act 1985. The group's auditors have reported on the financial statements as required by Section 235 of the Companies Act 1985. Key dates The Annual Report and Financial Statements are scheduled to be posted to shareholders in early May. The Annual General Meeting of the Company is scheduled to take place at 10am on Wednesday 28 June 2006 at 39 Victoria Street, London, SW1H 0EU. Dividends, the ex-dividend date is 31 May 2006, the record date 2 June 2006 and the date payable is 30 June 2006. GROUP COMPANIES PROFESSIONAL BUSINESS SERVICES SOFTWARE SOLUTIONS STOCK AND INVENTORY SERVICES Business Sales and Valuations, EPoS and Head Office Systems. Stock and Inventory Control Consultancy, Financial Services Christie + Co VcsTimeless Orridge www.christie.com and www.vcstimeless.com www.orridge.co.uk www.christiecorporate.com Retail Europe's longest established The leading specialist firm stocktaking business, specialising providing business intelligence in The VcsTimeless retail applications in all fields of retail the hospitality, leisure, retail and address such sectors as fashion, stocktaking including high street, care sectors. International accessories, luggage, leather goods, warehousing and factory. In operations are based in Barcelona, sport, footwear, home furnishings, addition, it has a specialised Berlin, Frankfurt, London, Madrid, DIY, perfumery and toys. Solutions pharmacy division providing Munich and Paris. Its 16 offices include head office, back office, valuation and stocktaking across the UK are focused on agency, EPoS, CRM, supply chain optimisation services. A full range of valuation services, investment and and business intelligence stocktaking and inventory consultancy activity in its key applications. The Colombus Enterprise management solutions is provided sectors - hotels, public houses, Suite is a comprehensive retail for a wide range of clients in the restaurants, leisure, care and management software suite, proven to UK and Europe. retail. meet the specific needs of single and multi-channel retailers. Christie First www.christiefirst.com Leisure and cinemas Venners VcsTimeless' VENPoS and Vista-branded www.venners.com The market leader in finance and leisure, hospitality and cinema insurance for the leisure, retail management software comprise Leading supplier of stocktaking, and care sectors. Services include admissions, head office, back office, inventory, control audit and finance for business purchase or and online ticketing modules. related stock management services re-financing arranged in conjunction to the hospitality sector. Bespoke with major financial institutions, software and systems enables real and the provision of tailored time management reporting to its insurance schemes. customer base using the most up-to-date technology. Pinders www.pinders.co.uk and www.pinderpack.com The UK's leading specialist business appraisal, valuation and consultancy company, principally providing professional services to the licensed leisure, retail and care sectors, and increasingly within the commercial and corporate business sectors, especially in relation to professional practices and service businesses. Pinders also has an expanding Building Consultancy Division that offers a full range of project management, building monitoring and building surveying services. Instructions are undertaken for a broad cross section of corporate, charity, private and public sector clients. This information is provided by RNS The company news service from the London Stock Exchange

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