Final Results

Westminster Group PLC 08 April 2008 8th April 2008 Westminster Group plc Preliminary announcement Westminster Group plc ('Westminster' or 'the Group'), the AIM listed supplier of system solutions and products to the security, defence, fire protection and safety markets worldwide, today announces its maiden preliminary results for the 12 months to 31 December 2007. Highlights for the period â€¢ Successful admission to AIM in June 2007 and share placing raising Â£2.5m net; â€¢ 71% pro rata increase in revenue to Â£2.7million; â€¢ Increase in gross profit margin to 35.7% from 30.2%; â€¢ Significant upturn in revenue in H2; â€¢ Order book of Â£1.5million at year end (2006: Â£0.9million); â€¢ New Dubai office opened to service important Middle East market; â€¢ New agents appointed in Cameroon, Angola, Gabon, Oman, Saudi Arabia, Yemen, Malaysia Singapore, Philippines and Indonesia; â€¢ New multi lingual corporate web site launched; Commenting on the results, Peter Fowler, Chief Executive Officer, said: 'This has been a very exciting year for the Westminster Group. We have achieved significant progress as a company through our flotation on AIM, raising our profile, visibility, infrastructure and customer support network. As a global business, we have further demonstrated that we can secure and deliver a wide range of cutting edge solutions to a blue chip client base across a world market, often in inhospitable environments. 'We feel that this is very much the beginning of what can ultimately be achieved by the Westminster Group. We have an excellent team, a growing reputation for delivering quality solutions and a significant market opportunity.' Enquiries: Peter Fowler 01295 756 300 Chief Executive Officer - Westminster Group Plc Clive Carver/Charles Cunningham 020 7600 1658 FinnCap Tom Cooper/Paul Vann 0117 920 0092 Winningtons Financial 0797 122 1972 Chief Executive Officer's review Overview 2007 was a milestone year for the Westminster Group, the highlight of which was our successful admission to AIM in June 2007. This has given the company the additional resources and working capital required to exploit and capitalise on the significant opportunities we have developed in recent years. The Group's principal activity is the design, supply and ongoing support of advanced technology security, defence, fire and safety solutions. Target clients are Governments and related agencies, non-governmental organisations, military establishments, airports, sea ports, banks, power stations and blue chip commercial organisations worldwide. The results of our considerable efforts over the course of the last few years to develop the business and expand our international reach are starting to benefit the Group as we are increasingly emerging as a credible international security organisation. Our key strengths lie in our ability to offer a complete bespoke service to clients, our broad yet detailed product knowledge and an innovative and practical approach to developing solutions to client requirements. Our Market The market in which we operate is large and growing; it is also a wide and diverse market with intense competition in certain areas, whilst having under-developed, fragmented competition in others. These latter areas are the primary focus of our international activities. We are focused on providing niche products and services to niche markets around the world, particularly in many of the emerging and third world economies. Many of these have high security requirements but an under-developed indigenous security industry and therefore look to companies such as Westminster to provide the expertise required. Competition in these areas is often extremely fragmented due to logistical, cultural and political complications. It is usually limited to large multi-national companies who favour western economies, or local but less technically astute companies. Owing to the investment we have made in building up our international presence and agency network and the strategy we have developed to capitalise on the market opportunities that undoubtedly exist in these regions, I believe Westminster is developing a competitive advantage and is therefore well placed to achieve significant growth from the many opportunities presented. This belief is borne out by the high level of enquiry activity we are experiencing for large scale and niche solutions, not only from our target client base, but also from a number of the large multi-national and local indigenous security companies, who are increasingly turning to Westminster for niche area solutions. Whilst our focus is on delivering major projects and equipment internationally, the UK nevertheless remains an important market for us. Here we are focused on niche market segments including the provision of low voltage integrated systems, predominantly in high rise-buildings. In the UK the demand for new and refurbished high-rise developments means that there are significant opportunities for the delivery of such systems and our UK based subsidiary RMS Integrated Solutions Ltd (RMS) is experiencing growing demand particularly with the provision of multi-disciplinary integrated systems for example fire, security, structured cable, data networks and distributed TV. Strategy Our strategy and business model is to concentrate on niche products and services in niche markets around the world and in particular where competition is limited or fragmented. Our target clients are potentially high value repeat order customers with demanding performance criteria. We believe success in our target markets requires meeting exacting criteria: credibility, financial stability, professionalism, experience with a demonstrable track record and crucially, 'in-country' knowledge and connections. These, together with the political and logistical issues presented in many countries, present a significant barrier to entry for many companies and yet, give an opportunity for those, like Westminster, who have the right credentials and are properly structured with local support. In our opinion we have established credibility and a demonstrable track record with a number of successful high profile projects around the world. We have, in recent years, devoted much of our efforts to establishing a credible worldwide network of agents who can provide in-country logistics support, manpower, intelligence and critically for our clients, service support once we have provided the goods or services. Agents are chosen for their connections and knowledge of the country or region and for their ability to act as provide a conduit between Westminster and its target clients. In this regard, we now have over 70 Agents in over 45 countries. In addition we have devoted much time and effort in establishing relationships with manufacturers of niche products from around the world, wherever possible negotiating advantageous or exclusive rights prior to promoting them to our target client base. We are not a manufacturer and are not therefore tied to any one single product or technology. Instead, we offer a broad range of products and services from manufacturers all over the world. We believe that one of the key strengths of the Group is our ability to bring together a wide range of technologies from different sources to produce comprehensive bespoke solutions suited to clients' needs. Web Sites We have invested heavily in our international web site (www.wi-ltd.com) which runs to hundreds of pages and is extensively used as a reference site by clients and industry consultants alike, being one of the largest security web sites of its type in the world. The site has tens of thousands of hits per month generating a high level of enquiry activity and is an important marketing tool for international buyers. A new multi-lingual version of the site is currently under construction and will be launched later this year. I am pleased to report that in December we launched our multi-lingual new Group web site (www.wg-plc.com) which is fully compliant with rule 26 of the London Stock Exchange and has been designed to provide shareholders access to a wide range of shareholder information, including an email alert system as well as acting as a portal to our various group companies and services. I am also pleased to announce that we have recently launched our new RMS web site (www.rms-is.com), a first for this division, which will help promote our UK services to a far wider audience. All three websites are fully interactive and provide an excellent showcase for the Group's extensive range of products and services. Business review Our focus has been on building a professional, credible and sustainable international presence as a platform from which we can deliver significant long term growth and shareholder value. The number of enquiries the Group responded to during 2007 increased by 26%. Whilst many of these are long term in nature and not all will materialise into orders, the Board believes that the increasing rate of enquiries and 'quote' activity underpins our confidence in the Group's growth prospects. The enhanced credibility of the Group has really emerged in 2007 with the Group involved in late stage negotiations on a number of high profile projects in the Middle East, Far East and Africa. A review of activities by region is given below: In Africa Our operations in Africa continue to expand with numerous new enquiries being received from Governments and non-governmental agencies throughout the continent. We are currently working on a number of potentially high value enquiries, some of which we are expecting a decision shortly. There are also a large number of small to medium size projects. During the period, the Group won major projects for part of the branch network of a leading African banking group, following the previously successful implementation of pilot systems to their principal offices. We have established new agent representation in Cameroon, Angola and Gabon which is significantly developing our presence in Francophone Africa. We have also extended our representation in Nigeria, Kenya and Southern Sudan. In the Middle East The Group has won substantial orders to supply specialist scanning devices and equipment to various Middle Eastern agencies and a major contract to supply perimeter detection systems to a global energy company based in Yemen. The Middle East remains an important market for the Group where we see significant short to medium term growth. We have established our Middle East operations in the heart of the commercial centre of Dubai, in prestigious offices located on the 41st floor of the Emirates Towers. The office covers business development opportunities and supports our agent activities in the Middle East region. We have appointed business development staff with considerable industry experience and local knowledge who are already generating a substantial level of interest including electronic surveillance and protection for a major airport in the region. We have extended our agent representation in the Middle East with new appointments in Oman, Saudi Arabia and Yemen and have forged a close working relationship with a progressive consultancy business based in Kuwait, which has already led to the development of some significant enquiries. The Americas We consider South America a growth area for Westminster and a region where we anticipate a significant increase in enquiries, particularly from Latin America. The expected launch of the Spanish version of the website during 2008 is an important development as part of our development within the region. We are in the process of identifying and appointing new agents in anticipation of this. To date we have established agent representation in Colombia, Venezuela, Brazil, Argentina and Uruguay. During the period in question we have won several small orders from the region but more importantly we have generated interest and enquiries from several potential major projects including a specialist detection and surveillance system for a major airport in Colombia and several sizeable prospects for oil companies in the region. In Asia and Pacific The Asia and Pacific region is also a focus area for the Group where we anticipate growing demand for our services. During the year we received a large number of enquiries resulting in a number of significant contract awards. The Group has secured contracts for bomb jamming equipment for the military of a Far Eastern country and secured an important scanning equipment contract for an Asian Government department to help counter rising terrorism within that country. We have also extended our agency representation in the region with new agents appointed in Malaysia, Singapore, Philippines and Indonesia. In UK & Europe The period in question was a particularly active time for the Group in the UK and Europe and we continued to expand our customer base in the region with a broader range of products and services and potential security solutions. During the year we have won a prestigious contract for an integrated security solution for a stately home, the supply of baggage handling and personnel security systems to various UN entities in Eastern Europe, the supply of security equipment to HM Prisons, numerous police forces throughout the UK, the Northern Ireland Office and many other commercial businesses. Our RMS division was extremely busy during 2007. The company provided integrated security and safety solutions to a number of high rise buildings and student accommodation facilities including Ontario Towers, a 29 storey residential block, St George's medical student accommodation for 322 student bedrooms and the 20 storey Rotunda Building, as well as many other projects. The company ended the year by securing circa Â£750,000 of new business in the last quarter, most of should be delivered in 2008. The development of the UK headquarters is also progressing with significant building and site developments underway. These include improving the facilities for visiting clients and developing the demonstration suite to cover a greater range of product offerings. Management & Staff We started 2007 with 26 staff which by the year end had grown to 33 reflecting our increased activity levels, including our overseas operatives. We have significantly strengthened the Board including the appointment of our Chairman, Sir Malcolm Ross, a new Finance Director, Nicholas Mearing-Smith, and a new Non Executive Director, Sir Michael Pakenham, all of whom I am delighted to have on board and all of whom have been enormously supportive. Current trading and Outlook We are now at a turning point for the business, having delivered on much of our plans for building our international infrastructure and having secured an order book worth Â£1.5 million at 31 December 2007. We have a substantial, active quote bank and are starting to see an increasing rate at which orders are being won. This is reflected in the activity seen since the year end. In the first quarter of 2008 we have won contracts to supply multi-storey security systems, radio frequency jamming equipment, GSM interception systems and perimeter protection technology, into markets including London, Middle East, Sub Saharan Africa and Kuwait. Westminster's reputation in these markets is significantly enhanced with each contract delivered. In addition, we have received a Letter of Appointment from the Government of Southern Sudan, signed by the Minister of Transport & Roads, confirming that Westminster International Limited has been awarded the contract for extensive security enhancements at Juba Airport. The contract, valued at circa 4.7 million USD, involves the installation of a high security perimeter fence which will be protected by Westminster's FOSS fibre detection system. It will detect any attempt to cut, climb or lift the fence, together with airport surveillance cameras, a control & command system and a range of specialist scanning equipment. In the month of March alone, the Group is pleased to have announced client commitment for four large orders valued at cÂ£3m. With resources in place to permit the development of the image of the business, clear strategic goals and objectives and continuing development of the operational infrastructure, the Board and I are confident of a solid performance for 2008 and exciting growth beyond. P.D. Fowler Chief Executive Officer Income statement 15 month period to Year ended 31 Dec 31 Dec 2007 2006 Restated Â£'000 Â£'000 Revenue 2,744 2,011 Cost of sales (1,765) (1,404) -------- -------- Gross profit 979 607 Administrative expenses General (1,349) (847) IPO preparation expenses (66) - -------- -------- Total (1,415) (847) -------- -------- -------- -------- Loss before financing costs (436) (240) Financing costs (34) (46) Finance income 46 - -------- -------- Loss before tax (424) (286) Income tax benefit 71 107 -------- -------- Loss from continuing operations (353) (179) Loss on discontinued operations - (343) -------- -------- Loss for the financial period (353) (522) ======== ======== Loss attributable to equity shareholders (353) (522) ======== ======== Basic and fully diluted loss per share 3.2 7.4 Balance sheet Group Group 31 Dec 31 Dec 2007 2006 Restated Â£'000 Â£'000 Assets Non-current assets Property, plant and equipment 1,060 985 Investments - - Deferred tax assets 181 107 -------- -------- Total non-current assets 1,241 1,092 -------- -------- Current assets Inventories 61 86 Trade and other receivables 884 340 Cash and cash equivalents 1,588 1 -------- -------- Total current assets 2,533 427 -------- -------- -------- -------- Total assets 3,774 1,519 ======== ======== Shareholders' equity Issued capital 1,402 713 Share premium 2,304 - Share based payment reserve 11 - Revaluation reserve 265 253 Retained earnings (741) (388) -------- -------- Total equity 3,241 578 -------- -------- Liabilities Non-current liabilities Interest bearing loans and borrowings - 16 Deferred tax liabilities 52 64 -------- -------- Total non-current liabilities 52 80 -------- -------- Current liabilities Interest bearing loans and borrowings 14 606 Trade and other payables 467 255 -------- -------- Total current liabilities 481 861 -------- -------- Total liabilities 533 941 -------- -------- Total equity and liabilities 3,774 1,519 ======== ======== Consolidated cash flow statement Group Group Year to 15 months to 31 Dec 31 Dec 2007 2006 Restated Â£'000 Â£'000 Cash flows from operating activities Loss for the financial period (353) (522) Income tax benefit (71) (107) Finance income (46) - Finance costs 34 46 Depreciation and amortisation 37 62 Increase in inventories 25 65 (Increase)/decrease in trade and other receivables (541) 733 744 Increase/(decrease) in trade and other payables 212 (449) (450) Negative goodwill - (12) Share-based payment 8 - Interest paid (34) (46) Interest received 44 - Tax paid - (2) -------- -------- Net cash used from operating activities (685) (232) -------- -------- Cash flows from investing activities Purchase of property, plant and equipment (112) (60) Proceeds from disposal of property, plant and equipment - 14 Acquisition of subsidiary net of cash acquired - (27) -------- -------- Net cash used in investing activities (112) (73) -------- -------- Cash flows from financing activities Gross proceeds from the issue of ordinary share capital 3,377 - - Proceeds from payment of part paid shares - 38 IPO costs paid (575) - Loans from Directors 96 49 Finance lease repayments (4) (2) -------- -------- Net cash generated from financing activities 2,894 85 -------- -------- Net change in cash and cash equivalents 2,097 (220) Cash and cash equivalents at start of period (509) (289) -------- -------- Cash and cash equivalents at end of period 1,588 (509) ======== ======== Consolidated statement of changes in equity for the year ended 31 December 2007 Share Ordinary Share based share premium payment Revaluation Retained capital account reserve reserve earnings Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 30 September 2005 675 - - 216 134 1,025 Loss for period from continuing activities (restated) - - - - (179) (179) Loss for period from discontinued activities - - - - (343) (343) Revaluation of non-current assets - - - 49 - 49 Deferred tax liability on revaluation of non-current assets - - - (12) - (12) ------- ------- ------- -------- ------- ------- Total recognised income and expense for the period - - - 37 (522) (485) ------- ------- ------- -------- ------- ------- Proceeds from payment of part paid shares 38 - - - - 38 ------- ------- ------- -------- ------- ------- Total recognised changes in equity for the period 38 - - - - 38 ------- ------- ------- -------- ------- ------- Balance at 31 December 2006 713 - - 253 (388) 578 Loss for period from continuing activities - - - - (353) (353) ------- ------- ------- -------- ------- ------- Total recognised income and expense for the period - - - - (353) (353) ------- ------- ------- -------- ------- ------- Directors loans converted into ordinary share capital 191 - - - - 191 Share capital issued for cash 498 2,879 - - - 3,377 Expenses in connection with IPO - (575) - - - (575) Share based payments - - 8 - - 8 Deferred tax adjustments - - 3 12 - 15 ------- ------- ------- -------- ------- ------- Total recognised changes in equity for the period 689 2,304 11 12 - 3,016 ------- ------- ------- -------- ------- ------- Balance at 31 1,402 2,304 11 265 (741) 3,241 December 2007 Notes 1. Preliminary announcement This preliminary announcement was approved by the directors on 7 April 2008. The financial information set out above does not constitute the Company's statutory financial statements for the year ended 31 December 2007 but is derived from those financial statements. The comparative figures are those of the financial statements for the fifteen month period ended 31 December 2006. The statutory financial statements for the year ended 31 December 2007 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information contained in this Preliminary Statement does not constitute statutory accounts. 2. Segmental information (i) Business segments For management purposes, the Group has been organised into three operating divisions: (a) Advanced technological; (b) Low voltage systems; and (c) Manufacturing These segments are the basis on which the Group reports its primary segment information. In the period ended 31 December 2006 the Group disposed of is electronic manufacturing division. Segment information about these businesses is presented below: Advanced Low voltage technological systems Manufacturing Unallocated Group Continuing Continuing Discontinued Continuing Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 15 month period ended 31 December 2006 Supply of goods 1,456 774 148 - 2,378 Supply of services - 58 - 14 72 Intersegment sales (291) - - - (291) --------- --------- --------- --------- --------- Gross revenue 1,165 832 148 14 2,159 Discontinued activities - - (148) - (148) --------- --------- --------- --------- --------- Revenue 1,165 832 - 14 2,011 --------- --------- --------- --------- --------- Segment result 10 (24) (343) (226) (583) Net finance costs (14) (5) - (27) (46) Income tax benefit 87 20 - - 107 --------- --------- --------- --------- --------- Profit/(loss) for the financial period 83 (9) (343) (253) (522) --------- --------- --------- --------- --------- ------------- --------- --------- --------- --------- --------- Segment assets 342 190 - 987 1,519 ------------- --------- --------- --------- --------- --------- Segment liabilities 195 121 77 548 941 ------------- --------- --------- --------- --------- --------- Capital expenditure 16 2 - 42 60 Depreciation 18 8 22 14 62 ------------- --------- --------- --------- --------- --------- Advanced Low voltage technological systems Manufacturing Unallocated Group Continuing Continuing Discontinued Continuing Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Year ended 31 December 2007 Supply of goods 2,111 713 - - 2,824 Supply of services 11 86 - 6 103 Intersegment sales (146) (37) - - (183) --------- --------- --------- -------- --------- Revenue 1,976 762 - 6 2,744 --------- --------- --------- -------- --------- Segment result (70) (3) - (363) (436) Net finance income (9) (3) - 24 12 Income tax benefit 68 1 - 2 71 --------- --------- --------- -------- --------- Loss for the financial year (11) (5) - (337) (353) --------- --------- --------- -------- --------- ------------- --------- --------- --------- -------- --------- Segment assets 1,404 241 - 2,129 3,744 ------------- --------- --------- --------- -------- --------- Segment liabilities 263 80 - 189 533 ------------- --------- --------- --------- -------- --------- Capital expenditure 51 1 - 60 112 Depreciation 16 9 - 12 37 ------------- --------- --------- --------- -------- --------- (ii) Geographical segments The Group's international business is conducted on a global scale, with agents present in all major continents. The following table provides an analysis of the Group's sales by geographic market, irrespective of the origin of the goods/ services: Group Group 31 December 31 December 2007 2006 Â£'000 Â£'000 United Kingdom 1,507 998 Asia 847 757 Africa 244 224 Europe 146 18 South America - 8 Australasia - 6 --------- --------- 2,744 2,011 ========= ========= 3. Loss per share Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares is calculated as follows: Group Group Year ended Year ended 31 December 31 December 2007 2006 '000 '000 Issued ordinary shares Start of period 7,125 6,750 Effect of shares issued during the period 4,046 300 --------- --------- Weighted average number of shares for period 11,171 7,050 ========= ========= The calculation of weighted average number of shares issued in the year ended 31 December 2006 potentially results in a distorted view of loss per share due to the consolidation of the Company's share capital in April 2007. Therefore, for the purposes of this calculation, the consolidation of the Company's share capital has been deemed to have been effective throughout. Basic and fully diluted loss per share is calculated as follows: Group Group Year ended Year ended 31 December 31 December 2007 2006 Â£'000 Â£'000 Loss for the year attributable to equity shareholders of the Company (353) (522) Weighted average number of shares 11,171 7,050 Loss per share (pence) 3.2 7.4 ========= ========= There is no difference between basic and fully diluted loss per share as the inclusion of the share options in the calculation of the weighted average number of shares would have the effect of reducing the loss per share. The potential dilutive effect on the weighted average number of ordinary shares would be to increase the weighted average number of ordinary shares by 377,812 shares and solely comprises the dilutive effect of the share options issued under the share option scheme. 4. Reserves Share based Revaluation Retained Total payment reserve reserve earnings Â£'000 Â£'000 Â£'000 Â£'000 At 1 October 2005 - 216 134 350 Total recognised income and expense - - (522) (522) Revaluation increase - 49 - 49 Deferred tax arising from revaluation - (12) - (12) -------- -------- -------- -------- At 31 December 2006 - 253 (388) (135) ======== ======== ======== ======== At 1 January 2007 - 253 (388) (135) Total recognised income and expense - - (353) (353) Share based payments 8 - - 8 Deferred tax adjustments 3 12 - 15 -------- -------- -------- -------- At 31 December 2007 11 265 (741) (465) ======== ======== ======== ======== 5. Transition to IFRS The transition from UK GAAP to IFRS has been made in accordance with IFRS 1, First-time doption of International Financial Reporting Standards ('IFRS 1'). Set out below are the UK GAAP to IFRS equity reconciliations for the Group and the Company at 30 September 2005 (date of transition) and 31 December 2006 (last financial statements under UK GAAP) and profit reconciliation for the 15 month period ended to 31 December 2006. There is no material effect of transition on the cash flow statement other than reclassifications. Balance sheet Group Note UK GAAP Effect of IAS 8 IFRS 30 Sep transition Adjustment 30 Sep 2005 2005 Â£'000 Â£'000 Â£'000 Â£'000 ------- Non-current assets Property, plant and equipment a 862 96 - 958 -------- -------- -------- -------- 862 96 - 958 Current assets 958 - - 958 -------- -------- -------- -------- Total assets 1,820 96 - 1,916 ======== ======== ======== ======== Equity Share capital 675 - - 675 Revaluation reserve a 198 44 - 242 Retained earnings 134 - - 134 -------- -------- -------- -------- 1,007 44 - 1,051 -------- -------- -------- -------- Non-current liabilities Interest bearing loans and borrowings 34 - - 34 Deferred tax liability b - 52 - 52 -------- -------- -------- -------- 34 52 - 86 Current liabilities 779 - - 779 -------- -------- -------- -------- Total liabilities 813 52 - 865 -------- -------- -------- -------- Total equity and liabilities 1,820 96 - 1,916 ======== ======== ======== ======== Group Note UK GAAP Effect of IAS 8 IFRS 31 Dec transition Adjustment 31 Dec 2006 2006 Â£'000 Â£'000 Â£'000 Â£'000 ------- Non-current assets Property, plant and equipment a 866 119 - 985 Deferred tax asset b - - 107 107 -------- -------- -------- -------- 866 119 107 1,092 Current assets 427 - - 427 -------- -------- -------- -------- Total assets 1,293 119 107 1,519 ======== ======== ======== ======== Equity Share capital 713 - - 713 Revaluation reserve a 198 55 - 253 Other reserves 12 (12) - - Retained earnings (506) 12 107 (387) -------- -------- -------- -------- 417 55 107 579 -------- -------- -------- -------- Non-current liabilities Interest bearing loans and borrowings 15 - - 15 Deferred tax liability b - 64 - 64 -------- -------- -------- -------- 15 64 79 Current liabilities 861 - - 861 -------- -------- -------- -------- Total liabilities 876 64 - 940 -------- -------- -------- -------- Total equity and liabilities 1,293 119 107 1,519 ======== ======== ======== ======== Income statement Group UK GAAP Effect of IAS 8 IFRS 15 month period transition Adjustment 31 Dec ended 31 Dec 2006 2006 Â£'000 Â£'000 Â£'000 Â£'000 Revenue 2,159 (148) - 2,011 Cost of sales (1,582) 178 - (1,404) -------- -------- -------- -------- Gross Profit 577 30 - 607 Administrative expenses (1,160) 313 - (847) -------- -------- -------- -------- Loss before financing costs (583) 343 - (240) Financing costs (46) - - (46) Finance income - - - - -------- -------- -------- -------- Loss before tax (629) 343 (286) Income tax benefit c - - 107 107 -------- -------- -------- -------- Loss continuing operations (629) 450 107 (179) Loss on discontinued activities - (343) - (343) -------- -------- -------- -------- Loss for the financial year (629) - 107 (522) ======== ======== ======== ======== Loss attributable to: Equity holders of the Group c (629) - 107 (522) Minority interest - - - - -------- -------- -------- -------- (629) - 107 (522) ======== ======== ======== ======== A reconciliation of cash flow statements has not been presented as the cash flow statements were unaffected by the transition to IFRS. Notes a. Revaluation of land and buildings Under UK GAAP, land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their re-valued amounts; being the fair value on the basis of their existing use at the date of revaluation. Under IFRS, the carrying value is permitted to be the market value, deemed to be the highest possible price that could be obtained for the land and buildings. Accordingly, if valued for residential purposes the valuation would have been an amount in excess of the commercial fair value. The excess valuation was credited, net of deferred tax liabilities to the revaluation reserve. b. Deferred tax Under IFRS, deferred tax is recognised in respect of all temporary differences arising between the tax base and the accounting base of balance sheet items. This means deferred tax is recognised on certain temporary differences that would not have given rise to deferred tax under UK GAAP. IFRS also requires separate disclosure of deferred tax assets and liabilities on the face of the balance sheet. Under UK GAAP the deferred tax liability on the revaluation of the freehold property would not have been recognised unless there was a binding agreement to dispose of the property and if it was more likely than not that the taxable gain would be rolled over into replacement assets and charged to tax only where the replacement assets are sold. Under IFRS, a full provision is recognised irrespective of intent. The deferred tax liability is not recognised in the income statement as the Company has adopted a policy of revaluation of the freehold property, recognising the deferred taxation charge in equity. c. IAS 8 (Accounting Policies, changes in accounting estimates and errors) adjustment In the IFRS historic financial information published in the Admission Document, a deferred tax benefit was recognised in the period to 31 December 2006 of Â£107,000, which was not recognised in the UK GAAP financial statements for that period due to omission. This information is provided by RNS The company news service from the London Stock Exchange

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