Final Results

RNS Number : 7220V

Timestrip PLC

02 June 2008

 



TIME:L

Timestrip Plc

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007

Timestrip Plc ('Timestrip') develops, manufactures and sells two technologies in the field of time and temperature measurement. The patented Timestrip smart label monitors for how long perishable food and other replaceable products have been open or in use. The patent pending iStrip undergoes an irreversible colour change when exposed to freezing temperatures and is designed to indicate that the efficacy of products, such as vaccines, has been compromised.

Key Points

• Solid progress made during the year under review despite lengthy sales cycles. 

• Total sales during 2007 already exceeded in first five months of current year, with regular shipments to largest customer, United Pet Group, and existing customers placing repeat orders with increasing frequency.

• Healthy pipeline of new potential orders boosted by increased market awareness and acceptance.

• Progress being made towards key strategic milestone of licensing manufacturing rights in US market.

For further information:

Paul Freedman, Joint CEO, Timestrip                01462-440700

Shane Dolan, Biddicks                                     020 7448 1000

Bobbie Hilliam, Evolution Securities                   020 7071 4300

TIMESTRIP PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 was a challenging year for the group in the context of delivering the revenues that we had anticipated. The delay in revenues led to a shortage of cash, which was addressed by the placing of new shares earlier this month. I am pleased to report that our efforts during 2007 have delivered sales momentum into 2008. In the first five months of the new financial year, for example, the group has exceeded its entire sales for 2007. In order to develop our unique technology and build a strong customer base, the group has established an excellent Production and R&D facility, as well as a robust sales infrastructure.  Financial Results Revenue for the year to 31 December 2007, was £176,900 (2006 - £378,975). At the pre-tax level the group recorded a loss of £1,679,927 (2006 - loss of £1,099,408 as restated) under International Financial Reporting Standards ('IFRS'). Due to a material deferred tax asset being credited to the accounts, the group's loss after tax is £572,617 (2006 - loss of £1,009,844 as restated) The resultant loss per share is 0.18p (2006 - loss of 0.33p as restated). Cash at the end of 2007 was £834,000. The group has since issued 53,820,000 new Ordinary Shares in May 2008, to raise an additional £1,023,993 net of expenses. Current trading and prospects Despite the challenges faced in 2007, there is much cause for optimism to be derived from the underlying trends within the business. There is consistent repeat-ordering from existing customers confirming that the Timestrip technology has real traction. This repeat business is driving sales and brand loyalty for an increasingly blue-chip customer base. Further, existing customers are also adopting the technology on new products in their ranges, confirming that the technology has lateral traction and is considered to be a part of their core brand proposition. New contract wins with blue chip companies have reinforced our progress along the path towards broad market acceptance. The group remains confident in its ability to secure large contracts with major corporations and despite the long sales cycles involved continues to focus much of its effort in this direction..  Every contract win, large or small, helps to build the credibility of the technology and expose it to an increasing number of potential customers. The direct impact of new contract wins is seen in our expanding pipeline of potential orders and in this way we believe that the technology is poised to 'tip' from a 'nice to have' feature into a 'must-have' feature on a wide range of products. As the group continues to secure regular contracts, our production facility has been able to increase its efficiency. In addition, our product development team have been able to focus not only on customer driven projects, but also on ways of improving the production processes, driving down unit costs and increasing gross margins.
S.V.Oakes
Chairman
30th  May 2008

TIMESTRIP PLC

JOINT CHIEF EXECUTIVES' STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

Operating Review

The group has developed, and is now commercialising, two patent protected technologies. Each technology is capable of radically transforming the markets in which they are targeted. Marketed as Timestrip ® and iStrip ®, these technologies operate in the fields of time and temperature measurement and target six international mass markets; Food and Beverage, Appliances, Catering, Medical Devices, Pharmaceuticals and Cosmetics.

The group continues to invest in the development of these technologies to meet customer and market needs. It has established in-house production capabilities that make the group able to meet near-term anticipated demand for the products. The group plans to expand production rapidly and at low additional cost by licensing the rights to manufacture Timestrips to third parties in local markets. This will typically involve the sale of Production Machines to Licensees, who will purchase raw materials from the group and will also pay a per-unit royalty to the group based on sales of finished units.

Timestrip ®

Timestrips ® are smart labels that visually communicate how long a product has been open or how long it has been in use - otherwise known as the 'Period after Opening Date'. Timestrips ® consist of a patented diffusion system in which a liquid travels across a specialised membrane inside the label at a controlled and repeatable rate. The level of repeatability in this process is such that, it is possible to use the progress of the liquid to measure elapsed time - being the time since the label was activated. Timestrips ® are activated by either manual or mechanical pressure exerted on the button in which the liquid is stored.

Timestrips ® smart labels are targeted at six international mass markets:

Appliances and Consumables

Timestrip has developed a visual reminder system which is positioned as a cost effective method of improving customer compliance with manufacturer's instructions such as 'replace every three months'. Existing customers include; Hamilton Beach/Febreze ® (air filters), Hygolet (washroom devices), DryandStore ® (hearing aids), Bioconservacion SA (ethylene filters), and Whirlpool (fridge filters).  

Timestrip ® has become a standard component for these customers, whose repeat order frequency is evidence that they are experiencing increased sales of the products to which Timestrip ® is attached. Indeed, our growing track record in helping brands to sell more products through better compliance with replacement instructions is now generating significant interest from manufacturers across a broad range of sectors. We are very encouraged that Bioconservacion and Whirlpool have extended the number of products using a Timestrip ®. In August 2007 the group announced a $3 million, three year deal with United Pet Group to supply Timestrips for use with their market-leading brand of aquarium filters, Tetra ®, to encourage monthly replacement of filters. Shipments are scheduled to be made monthly and commenced in March 2008.

Food and Beverage

In the F&B sector, Timestrips are positioned as a tool to help consumers gauge the freshness of products, as well as avoid unnecessary waste by providing the opportunity to consume products before they expire. 

We continue to develop relationships with solution providers in the packaging industry such as Plastek, CCL Label and, most recently, Bedford Industries. We have commenced a high profile trial of the Timestrip ®  technology with the UK's leading branded food manufacturer, Premier Foods, which is currently testing the impact of the Timestrip ® on their Branston Pickle brand. 

The F&B market is characterised by high volume, price sensitive products with related packaging solutions and is therefore one of our biggest challenges. We are encouraged by the growing importance of product freshness and are positioned to take advantage of the increasing social awareness of waste and its impact on the environment. It is our belief that F&B companies have yet to fully address the dilemma of how to help reduce consumer waste without impacting sales and profitability. As a result, the group spends much of its time targeting brands to view Timestrip ®  as a device that will boost their 'green credentials' by helping consumers to reduce waste through using products before they pass their best. Part of that effort continues to involve selling Timestrips ®  to consumers directly in order to generate a pull effect on the brands. 

Catering / Foodservice

Timestrips have two potential applications in the catering and food service industry. Firstly, it can be used as a simple mechanism that helps catering businesses comply with the food safety (HACCP) principles under the EU Directive on Food Hygiene and in State regulations across North America. Secondly, it saves money by reducing waste by up to 50%.

In the US market, our partners Daymark continue to invest in the marketing of Timestrip ® as part of their range of food safety solutions. We are no longer in a contractual relationship with Labellord in Northern Europe but we are delighted with the progress being made in the UK and with the recent announcement of trials with Nando's restaurants in South Africa.

In Europe we have successfully introduced  trials of the Timestrip ® system to a number of leading contract caterers such as Caterplus. This effort has culminated in the UK's leading food-service distributor, 3663, ordering a full range of products that will be promoted by their sales team across multiple markets in the Europe. We are confident that this model for success can be translated to other markets internationally.

Cosmetics, Pharmaceuticals and Medical Devices

There remains a high level of interest in Timestrip from the cosmetic, pharmaceutical and medical device sectors. We have established excellent relationships with a number of cosmetic companies, where the challenge is to integrate the Timestrip ® in an aesthetically pleasing format, and with manufacturers of sun creams, where the dangers of using the product beyond its Period after Opening date are well documented.

Cosmetics, Pharmaceuticals and Medical Devices 

We are encouraged that initial tests with a leading medical device company in Europe have been extended into another phase. We have also succeeded in forging relationships in Europe and the US with a number of leading pharmaceutical and medical device companies and are hopeful that our efforts during 2007 will be rewarded with some contract wins in 2008. 

iStrip ®

iStrip is a unique, patent pending label that changes colour irreversibly if an accidental freezing event takes place in the cold chain for products such as vaccines and agri-chemicals.

The group has focused on entering the market with a case-level solution, developing in parallel the capabilities to manufacture unit-level products for use with vaccines. During 2007 we established small-scale production in order to seed the market and are now in the process of scaling up our production capabilities in line with anticipated demand. 

We are building relationships with a number of distributors worldwide who will carry iStrips in their existing range of time and temperature labels. We are particularly pleased to have developed a commercial relationship with DHL Exel as well as a leading pharmaceutical company, who is using iStrip with their clinical trial activities.

Our work with PATH (the Seattle based international non-profit organisation) is ongoing and directed towards acceptance of the technology for use by the World Health Organisation in connection with vaccines distributed worldwide.

Staff

We greatly appreciate the efforts of everyone in the organisation, as well as those of our growing team of distributors and agents across the world.  

Strategy

The group's strategy is driven by its revenue model which seeks to license the rights to manufacture and distribute Timestrip and iStrip in local markets to customers, joint venture partners and distributors. This strategy is shaped by the manufacturing process and prevailing market dynamics for both Timestrip and iStrip.

The implementation of this strategy requires us to maintain in-house production capacity at a sufficient level to seed markets in the early stages and ensure production machinery is kept at levels that will enable the group to satisfy initial contracts. Royalty revenues will be enhanced through the supply of key raw materials and technical support to licensees. The group will enter into such arrangements at the earliest opportunity.

We also continually seek to broaden our product range and recent successes from our R&D team will enable us to add further products to our portfolio during 2008. We look forward to unveiling these products in due course.

The group stipulates the use of its registered trademark on all Timestrip® products, and there has been, to date, no objection to this policy from even the largest of international brand owners. It is the Directors' belief that the exposure to be gained by Timestrip® within the marketing campaigns of leading brands will in time, lead to the creation of an internationally recognised brand.

Competition

It is anticipated that the ongoing commercialisation of Timestrip will stimulate competition at some point in the future. Currently, the Directors are not aware of any competing technologies. Although competition exists for the iStrip technology, it is generally represented by devices that are designed and manufactured for use at case level, not unit level. When used at unit level on products such as vaccines, the iStrip will enable the product condition to be monitored more accurately and allow brand owners to reduce the cost of rejection. 

As the group gains more exposure to the needs of different markets it continually reviews and, if necessary, expands its intellectual property portfolio to protect the technologies as they evolve. 

Results and dividends
The results for the year are set out in the consolidated income statement.
The directors do not recommend payment of an ordinary dividend.

Paul Freedman                                    Reuben Isbitsky

Joint Chief Executive Officer                  Joint Chief Executive Officer

30th May 2008                                     30th May 2008                                                                                                                                                                                                                                                                                                                                                

TIMESTRIP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
			2007		2006
					As restated
	Notes		£		£
Revenue	2		176,900		378,975
Cost of sales			(112,918)		(281,069)
			─────────		─────────
Gross profit			63,982		97,906
Administrative expenses			(1,833,099)		(1,311,636)
			─────────		─────────
Operating loss	3		(1,769,117)		(1,213,730)
Finance income			98,164		122,651
Finance costs	4		(8,974)		(8,329)
			─────────		─────────
Loss before taxation			(1,679,927)		(1,099,408)
Tax on loss on ordinary activities			1,107,310		89,564
			─────────		─────────
Loss for the year			(572,617)		(1,009,844)
			══════		═══════
Attributable to:
Equity holders of the Company			(572,617)		(1,009,844)
			══════		═══════
Loss per share (basic & diluted)	5		(0.0018)		(0.0033)
			═════		══════
The income statement has been prepared on the basis that all operations are continuing operations.
There is no difference between basic and diluted loss per share.

TIMESTRIP PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007
	Notes	2007		2006
				As restated
		£		£
Non Current assets
Intangible assets		7,441,582		6,969,161
Property plant & equipment		357,223		371,702
Investments		-		-
		7,798,805		7,340,863
Current assets
Inventory		234,525		183,318
Trade and other receivables		161,862		185,610
Cash and cash equivalents		833,903		2,517,341
Current tax receivable		131,891		195,255
		1,362,181		3,081,524
Current Liabilities
Bank overdraft and loans		(14,280)		(20,524)
Trade and other payables		(303,042)		(403,697)
Obligations under finance leases		(6,244)		(6,244)
		(323,566)		(430,465)
Net current assets		1,038,615		2,651,059
Non current assets
Deferred tax asset		951,742		-
Total assets less current liabilities		9,789,162		9,991,922
Non Current Liabilities
Bank loans		(38,101)		(52,386)
Finance lease		(8,615)		(18,170)
		(46,716)		(70,556)
		9,742,446		9,921,366
Equity
Capital and reserves attributable to equity holders of the Group
Called up share capital		3,607,991		3,606,621
Share premium account		27,719,167		27,541,931
Share Option Reserve		395,366		180,274
Profit and loss account		(21,980,078)		(21,407,460)
Total Equity		9,742,446		9,921,366
The financial statements were approved and authorised for issue by the board on 30th May 2008
S V Oakes
Director

TIMESTRIP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT 31 DECEMBER 2007

	Deferred shares of 24p	Deferred shares of 49.8p	Ordinary shares 0.02p	Share premium	Share Options Reserve	Retained Losses	Total equity
Balance at 1 Jan 2006	3,206,119	337,728	59,484	26,587,956	-	(20,397,616)	9,793,671
Corrections of prior period adjustments	-	-	-	-	66,308	-	66,308
	──────	───────	───────	───────	──────	─────────	────────
Restated Balance	3,206,119	337,728	59,484	26,587,956	66,308	(20,397,616)	9,859,979
Loss for the period	-	-	-	-	-	(1,009,844)	(1,009,844)
	──────	───────	───────	───────	──────	─────────	────────
Total recognised income and expense for the period	-	-	-	-	-	(1,009,844)	(1,009,844)
Shares issued during period	-	-	3,290	953,975	-	-	957,265
Share Option charge	-	-	-	-	113,966	-	113,966
	──────	───────	───────	────────	──────	─────────	────────
Balance at 31 Dec 2006	3,206,119	337,728	62,774	27,541,931	180,274	(21,407,460)	9,921,366
	═════	═════	═════	═════	═════	═════	═════
Balance at 1 Jan 2007	3,206,119	337,728	62,774	27,541,931	180,274	(21,407,460)	9,921,366
Loss for the period	-	-	-	-	-	(572,617)	(572,617)
	──────	───────	───────	──────	──────	────────	───────
Total recognised income and expense for the period	-	-	-	-	-	(572,617)	(572,617)
Shares issued during period	-	-	1,371	177,234	-	-	178,605
Share Option charge	-	-	-	-	215,092	-	215,092
	───────	───────	───────	───────	──────	────────	───────
Balance at 31 Dec 2007	3,206,119	337,728	64,144	27,719,167	395,366	(21,980,078)	9,742,446
	═════	═════	═════	═════	═════	═════	═════
Share capital (deferred and ordinary) is the amount subscribed for shares at nominal value. Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share issue expenses. There were no share issue expenses in the period ended 31 December 2007.  Retained loss represents the cumulative loss of the Group attributable to equity shareholders. The balances as at 1 January 2006 and 31 December 2006 have already been restated as a result of the transition to IFRS. Refer to note 30 for details. Share options reserve relates to increases in equity for services received in equity-settled share based payment transactions. The prior period adjustment is in respect of share options and this has been fully disclosed in the financial Statements for the year ended 31 December 2006.

TIMESTRIP PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

	2007		2006
			As restated
Notes
	£	£	£	£
Net cash outflow from operating activities  1		(1,837,012)		(1,442,280)
Investing Activities
Investment in intangible assets	(43,412)		(21,885)
Purchase of property plant & equipment	(65,502)		(53,591)
Interest received	98,164		122,651
	───────		───────
Net cash inflow for returns on investments and servicing of finance		(10,750)		47,175
		───────		───────
Net cash outflow before management of liquid resources and financing		(1,847,761)		(1,395,105)
Financing activities
Issue of ordinary share capital	178,608		957,096
Repayment of long term bank loan	(14,285)		(23,918)
	───────		───────
Net cash inflow from financing		164,323		933,178
		───────		───────
(Decrease) in cash in the period		(1,683,439)		(461,927)
Cash and cash equivalents at the start of the year 2		2,517,341		2,979,268
		══════		══════
Cash and cash equivalents at the end of the year 2		833,903		2,517,341
		══════		══════

TIMESTRIP PLC
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
1	Reconciliation of operating profit to net cash inflow from operating activities			2007	2006
					As restated
				£	£
	Operating loss			(1,769,117)	(1,213,730)
	Depreciation, amortisation and impairment charges of intangible assets			120,927	89,728
	Depreciation of property plant & equipment			79,981	66,845
	Increase in inventories			(51,208)	(117,252)
	Decrease / (Increase) in receivables			23,749	(96,566)
	(Decrease) / Increase in payables			(104,766)	161,843
	Cost of Share Options			215,092	113,966
	Research & Development Capitalised			(549,936)	(438,785)
	Interest paid			(8,974)	(8,329)
	Corporation tax received			207,240	-
				───────	───────
	Net cash outflow from operating activities			(1,837,012)	(1,442,280)
				══════	═══════

2	Cash and cash equivalents
	The amounts disclosed in the cash flow statement in respect of cash and cash equivalents are in respect of these balance sheet amounts:
						Group
						2007	2006
						£	£
	Bank accounts					833,903	2,517,341
						══════	══════

TIMESTRIP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2007
1	Accounting policies
	The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated, and in preparing an opening IFRS balance sheet at 1 January 2006 for the purpose of transition to International Financial Reporting Standards (IFRS).
1.1	Financial information
	The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 31 December 2007 and 2006.  The accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use by the European Union and therefore comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared in accordance with IFRS for the first time with a transition date of 1 January 2006. The disclosures required by IFRS1 concerning the transition from UK GAAP to IFRS are given in note 7. Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, it does not include sufficient information to comply with IFRS. The Group expects to publish full financial statements which comply with IFRS in June 2008. The comparative financial information for the year ended 31 December 2006 is derived from the statutory accounts for the year ended 31 December 2006 as adjusted for the conversion from UK GAAP to IFRS. The statutory accounts for the year ended 31 December 2006 have been delivered to the Registrar of Companies. The auditors have reported on the UK GAAP 2006 accounts; their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The financial information set out in this announcement was approved by the Board of Directors on 30th May 2008.
	Going concern
	This statement has been prepared on the assumption that the Group is a going concern. When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this report. The forecast cash-flow requirements of the business are contingent upon the ability of the group to generate future sales. The group is still at an early stage of its commercialisation and the success of the business depends on the realisation of projected sales that are currently in the pipeline together with existing customers extending the use of Timestrips within their organisations.  The uncertainty as to the timing of the future growth in sales, require the directors to consider the group's ability to continue as a going concern. Notwithstanding this uncertainty, the directors believe that the group has demonstrated progress in achieving its objective of positioning the group as a major supplier of smart labels to the industries served by the group. Therefore the directors consider that it is appropriate to prepare the group's financial statements on a going concern basis, which assumes that the company is to continue in operational existence for the foreseeable future. Were the Group be unable to continue as a going concern, adjustments may have to be made to the balance sheet of the Group to reduce balance sheet values of assets to their recoverable amounts, to provide for future liabilities that might arise and to reclassify non-current assets and long-term liabilities as current assets and liabilities.

2	Revenue
	Sales are made by the group in the following geographical markets:
		2007	2006
		£	£
	United Kingdom	913	18,094
	Europe	58,098	157,975
	North America	38,172	181,147
	Rest of World	79,717	21,759
		───────	───────
		176,900	378,975
		══════	══════
	Loss for the year
	United Kingdom	(2,956)	(48,215)
	Europe	(188,062)	(420,951)
	North America	(123,562)	(482,697)
	Rest of World	(258,037)	(57,981)
		───────	───────
		(572,617)	(1,009,844)
		══════	══════
	There are no separately reportable business segments

						United Kingdom	Europe
	Net assets					11,874,405	(1,012,950)
	Liabilities					(185,539)	(186,080)
	Property plant & equipment acquired					15,725	49,777
	Intangible assets acquired					593,348	-
	Depreciation					3,950	76,301
	Amortisation					120,927	-

3	Operating loss					2007	2006
							As Restated
						£	£
	Operating loss is stated after charging:
	Depreciation of property plant and equipment					79,981	66,845
	Amortisation of Patents					50,633	48,797
	Amortisation of Website					5,756	3,871
	Amortisation of Development					64,538	37,061
	Research and development expenditure recognised as an expense					55,101	75,784
	Operating lease rentals - buildings & motor					72,669	65,305
	Auditors' remuneration (company £15,000) - audit fees					21,000	20,000
	Auditors' remuneration - non-audit fees					6,000	4,500
	Profit or loss on foreign currency translation					3,560	4,135
						═════	════

4		Interest payable												2007	2006
														£	£
		On bank loans and overdrafts												8,974	8,329
														───────	───────
														8,974	8,329
														═══════	═══════
5	Basic and diluted loss per share
	Basic and diluted loss per ordinary share has been calculated using the weighted average number of shares in issue during the financial period. The weighted average number of equity shares in issue was 318,206,472 (2006 - 307,944,104) and the loss after tax, was  £ 572,617 (2006 - £1,009,844 - as restated). After the year end the company issued 53,820,000 new shares as part of a placing. They will increase the weighted average number of equity shares in issue to 356,060,596 for 2008.
	Share options are anti-dilutive as they decrease the loss per share. Therefore, for the period ended 31 December 2007, the diluted loss per share is equivalent to the basic loss per share.

6	Post Balance Sheet Events
	On 6 May 2008 the company raised £1,162,512, before expenses, through a placing of 53,820,000 new ordinary shares of 0.02 pence each at a price of 2.16 pence per share. The net proceeds from the placing were £1,024,035.

7	Transition to IFRS
	Introduction Timestrip Plc ('Timestrip') has previously prepared its consolidated Financial Statements under United Kingdom Generally Accepted Accounting Practice (GAAP). With effect from 1 January 2007, it is required to prepare its consolidated Financial Statements in accordance within International Reporting Standards (IFRS) as adopted by the European Union. The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 December 2007, the comparative information presented in these financial statements for the year ended 31 December 2006 and in the preparation of the opening IFRS balance sheet at 1 January 2006. (transition date). The IFRS transition statement has been prepared to explain the impact on the reported result of Timestrip and to set out the changes to the accounting policies of the group together with provision of reconciliations of the restatement of previously published comparative financial information. References to IFRS throughout this document refer to the application of International Accounting Standards and International Financial Reporting Standards. Overview of impact of adoption of IFRS Conversion to IFRS affect Timestrip Plc's reporting particularly in respect of intangible assets and capitalised development expenditure. It does not affect the cashflows or the underlying prospects of the business; however, the implementation of the new standards may result in increased volatility in reported result due to changes in accounting for intangible asset and development expenditure.
	Revised Group Accounting policies under IFRS.
	The following accounting policies represent changes from the accounting policies stated in the financial statements for the year ended 31 December 2006. The remaining accounting policies remain the same as in the financial statements for the year ended 31 December 2006 which are consistent with IFRS.
	Internally-generated Intangible Assets -Research and Development Expenditure
	Expenditure on research activities is recognised as an expense in the period in which it is incurred.
	An internally-generated intangible asset arising is recognised only if all of the following conditions are met:
	an asset is created that can be identified ;
	it is probable that the asset created will generate future economic benefits; and
	the development cost of the asset can be measured reliably.
	Under UK GAAP, expenditure on research and development was written off in the period incurred.

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Internally-generated Intangible Assets -Trademarks

The cost of trademarks which protect internally generated brands and logos are specifically prohibited from recognition as an intangible asset under IAS 38. Under UK GAAP, trademarks were capitalised and classified as intangible assets on the balance sheet and these were amortised over their estimated useful economic life of 20 years.

TRANSITION STATEMENT FROM UK GAAP TO IFRS - 31 DECEMBER 2006
FOR THE YEAR ENDED 31 DECEMBER 2007

Income statement	UK GAAP at 31 December 2006	Trademarks IAS 38	Research & Development IAS 38	IFRS at 31 December 2006
	£'000	£'000	£'000	£'000
Revenue	379	-	-	379
Cost of sales	(281)	-	-	(281)
Gross Profit	98	-	-	98
Administrative expenses	(1,707)	(7)	402	(1,312)
Loss from Operations	(1,609)	(7)	402	(1,214)
Investment Revenue	123	-	-	123
Finance costs	(8)	-	-	(8)
Loss before tax	(1,495)	(7)	402	(1,100)
Taxation	90	-	-	90
Loss for the period	£ (1,405)	£ (7)	£ 402	£ (1,010)

TRANSITION STATEMENT FROM UK GAAP TO IFRS - 1 JANUARY 2006
FOR THE YEAR ENDED 31 DECEMBER 2007

Consolidated Balance sheet	UK GAAP at 1 January 2006	Trademarks IAS 38	Research & Development IAS 38	IFRS at 1 January 2006
	£'000	£'000	£'000	£'000
Non current assets
Goodwill	5,408	-	-	5,408
Other intangible assets	931	(23)	287	1,195
Property, plant & equipment	304	-	-	304
	6,643	(23)	287	6,907
Current assets
Inventory	67	-	-	67
Trade and other receivables	194	-	-	194
Corporation tax	-	-	-	-
Cash and cash equivalents	2,979	-	-	2,979
	3,240	-	-	3,240
Total Assets	9,883	(23)	287	10,147
Current Liabilities
Trade and other payables	(208)	-	-	(208)
Bank overdrafts and loans	(14)	-	-	(14)
Obligations under finance leases	-	-	-	-
	(222)	-	-	(222)
Non-current Liabilities
Bank Loans	(67)	-	-	(67)
Obligations under finance leases	-	-	-	-
Total Liabilities	(289)	-	-	(289)
Net Assets	£9,594	£(23)	£287	£9,858
Equity
Share Capital	3,603	-	-	3,603
Share Premium Account	26,588	-	-	26,588
Share Options Reserve	66	-	-	66
Retained losses	(20,663)	(23)	287	(20,399)
	£9,594	£(23)	£287	£9,858

TRANSITION STATEMENT FROM UK GAAP TO IFRS - 31 DECEMBER 2006
FOR THE YEAR ENDED 31 DECEMBER 2007

Consolidated Balance sheet	UK GAAP at 31 December 2006	Trademarks IAS 38	Research & Development IAS 38	IFRS at 31 December 2006
	£'000	£'000	£'000	£'000
Non current assets
Goodwill	5,408	-	-	5,408
Other intangible assets	901	(30)	690	1,561
Property, plant & equipment	372	-	-	372
	6,680	(30)	690	7,341
Current assets
Inventory	184	-	-	184
Trade and other receivables	186	-	-	186
Corporation tax	195	-	-	195
Cash and cash equivalents	2,517	-	-	2,517
	3,082	-	-	3,082
Total Assets	9,762	(30)	690	10,422
Current Liabilities
Trade and other payables	(404)	-	-	(404)
Bank overdrafts and loans	(21)	-	-	(21)
Obligations under finance leases	(5)	-	-	(5)
	(430)	-	-	(430)
Non-current Liabilities
Bank Loans	(52)	-	-	(52)
Obligations under finance leases	(18)	-	-	(18)
				-
Total Liabilities	(501)	-	-	(501)
Net Assets	£9,261	£ (30)	£ 690	£ 9,921
Equity
Share Capital	3,607	-	-	3,607
Share Premium Account	27,542	-	-	27,542
Share Options Reserve	180	-	-	180
Retained losses	(22,068)	(30)	690	(21,408)
	£9,261	£ (30)	£ 690	£ 9,921

 

END

 

 

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