21st Sep 2007 14:00
TG21 Plc21 September 2007 21 September 2007 TG21 plc ("TG21", "the Company" or "the Group") Adoption of International Financial Reporting Standards ("IFRS") INTRODUCTION As required by the AIM Rules for Companies and European Union Law, the Companywill prepare its consolidated financial statements under International FinancialReporting Standards ("IFRS") with effect from 1 January 2007. Previously theCompany has applied United Kingdom Generally Accepted Accounting Principles ("UKGAAP"). The first financial statements that will be prepared for the Group underIFRS will be the unaudited interim results for the six months to 30 June 2007followed by the audited financial statements for the year ending 31 December2007. These financial statements will include IFRS restated 2006 comparativefigures and, consequently, the transition date for the Group's adoption of IFRSis 1 January 2006. The key changes for the Group are: •Non-amortisation of goodwill from 1 January 2006 •Inclusion of a deferred tax charge in respect of the property revaluation as at 1 January 2006 •Reversal of the hindsight adjustment made to goodwill in the year ended 31 December 2006 •Full recognition of the total deferred tax asset arising on decelerated capital allowances at 1 January 2006 •Inclusion of interest rate swap agreements and forward currency contracts in the balance sheets at their fair value •Balance sheet reclassification of computer software and website development costs to intangible assets The net impact of these changes is that for the year ended 31 December 2006 theGroup's profit after minority interest increased from £1,000 to £400,000 (EPS upfrom 0p to 0.49p). This document sets out the following: •A commentary on the key issues arising from the adoption of IFRS •The Group's accounting policies under IFRS •The opening IFRS consolidated balance sheet as at 1 January 2006 for the Group reconciled to the previously published UK GAAP balance sheet at this date •The IFRS balance sheet as at 31 December 2006 for the Group reconciled to the previously published UK GAAP balance sheet at this date •The IFRS consolidated income statement for the six months ended 30 June 2006 reconciled to the previously published UK GAAP consolidated income statement for the same period •The IFRS consolidated income statement for the year ended 31 December 2006 reconciled to the previously published UK GAAP consolidated income statement for the same period Standards currently in issue and adopted by the EU may be subject to change.Additionally, IFRS is currently being applied in the UK and in a large number ofother countries almost simultaneously for the first time, and practice iscontinuing to evolve. Therefore, at this preliminary stage, the full financialeffect of reporting under IFRS as it will be applied and reported on in theGroup's first IFRS financial statements for the six months ended 30 June 2007and for the year ended 31 December 2007 may be subject to change. During the assessment of the impact of IFRS on the Group and the preparation ofthis Press release the Company has consulted with its auditors, but thesenumbers are unaudited. A copy of this document will be available from the Company's website atwww.tg21plc.com. For Further Information: TG21 plc Wilson Jennings 020 8710 4000 Finance DirectorHogarth Partnership Limited Barnaby Fry 020 7357 9477 Sarah RichardsonDaniel Stewart & Co plc (Nomad) Graham Webster 020 7776 6550 COMMENTARY ON THE KEY ISSUES First time adoption of IFRS (IFRS 1) IFRS 1 requires that IFRS is applied retrospectively to establish the Group'sbalance sheet at the date of transition, 1 January 2006, unless a permittedexemption is applied. The exemptions adopted by the Group are set out below: •Not to apply IFRS 3 Business Combinations to business combinations that occurred before 1 January 2006 •Under IAS 16 Property, plant and Equipment an entity must adopt either a cost or valuation model for valuing its property, plant and equipment. The Group has elected to use the previous revaluation of its property as deemed cost at the transition date •Not to apply IFRS 2 Share-based Payments to share-based payments granted before 7 November 2002 (Note that under UK GAAP the Group adopted FRS 20 Share-based payments in its financial statements for the year ended 31 December 2006 and no adjustment is required on the adoption of IFRS 2.) Description of IFRS adjustments The following commentary describes the differences between IFRS and UK GAAP thathave a material impact on the income or net assets of the Group. The adjustmentsthat result from these differences are set out in the Appendices which containdetailed reconciliations of previously reported results under UK GAAP torestated results under IFRS. Intangible assets (IAS 38) (a) Goodwill Under UK GAAP, goodwill arising on the acquisition of businesses after 22December 1988 was amortised on a straight line basis over its estimated usefuleconomic life of 10 years. On transition to IFRS on 1 January 2006, amortisationceased to be charged. Instead annual reviews of goodwill are performed to testfor potential impairment. Therefore, although it may be possible to carrygoodwill for longer than the normal maximum amortisation period of 20 yearsunder UK GAAP, there is the potential for increased volatility to be introducedto the income statement by way of impairment charges if the forecast cash flowsare not sufficient to support the carrying value. Impairment tests have been carried out for goodwill at 1 January 2006 and 31December 2006 and have shown that there was no impairment. The impact of this on profit before tax for the year ended 31 December 2006 andnet assets at 31 December 2006 is an increase of £576,000 due to the reversal ofthe amortisation charge for that year. Under UK GAAP in 2006 we made a hindsight adjustment to the carrying value ofgoodwill of £173,000 - no such adjustment is allowed under IFRS and so this hasbeen reversed resulting in a charge of £173,000 in the year to 31 December 2006. (b) Computer software and website development costs Computer software, which is not an integral part of a related item of hardware,and website development costs are required under IFRS to be treated asintangible assets. Under UK GAAP, all such software was included in tangiblefixed assets. The amounts reclassified to intangible assets are £439,000 at 1January 2006 and £352,000 at 31 December 2006 in respect of computer softwareand £45,000 at both dates in respect of website development costs. In the incomestatement for the year ended 31 December 2006 the depreciation on these assetswill be reclassified as intangible amortisation with no overall impact onreported profits. (c) Research and development Under IAS 38, development costs must be capitalised as intangible assets if theysatisfy certain specified criteria. There is no impact of this on the Group'sprofit before tax for the year ended 31 December 2006 and net assets at 31December 2006, but the Group's accounting policies have been changed toaccommodate the possibility of some development costs being capitalised underIAS 38 in the future. Deferred tax (IAS 12) IAS 12 Income Taxes requires deferred tax to be provided on temporarydifferences between the tax base and the carrying value of assets andliabilities rather than just taxable timing differences under UK GAAP. As aresult, the Group's opening IFRS balance sheet at 1 January 2006 and the balancesheet at 31 December 2006 include an additional deferred tax liability of£626,000 relating to the revaluation of the property which it was anticipatedpreviously would be rolled over into a replacement property. At 31 December 2005 and 31 December 2006, under UK GAAP the Group recognised£100,000 as a deferred tax current asset in respect of decelerated capitalallowances being the amount that was estimated would reverse in the following 12months. The unrecognised deferred tax asset (estimated to fall due after 12months) was £155,000 at 31 December 2005 and £156,000 at 31 December 2006. Thispreviously unrecognised deferred tax asset in respect of decelerated capitalallowances has been recognised in the IFRS financial statements. This hasresulted in an increase in the deferred tax asset of £155,000 in the Group'sopening IFRS balance sheet at 1 January 2006 which is increased by a further£1,000 in the balance sheet at 31 December 2006. Financial instruments (IAS 39) IAS 39 Financial Instruments: Recognition and Measurement requires allderivative financial instruments to be included in the balance sheet at fairvalue and contains provisions which restrict the use of hedge accounting. UnderUK GAAP estimated fair values were included in the financial statements by wayof note only. In the opinion of the directors hedge accounting cannot be appliedby the Group in respect of its interest rate swaps and forward exchange ratepurchases and consequently changes in fair value have been reported through theincome statement. At 1 January 2006 the fair value of the Group's currency andinterest swap financial interests result in the creation of a current liabilityof £24,000 which is increased to £29,000 at 31 December 2006. Cash flow statement There are no material adjustments to the cash flow statement previouslypresented under UK GAAP arising from identified IFRS adjustments. IFRS ACCOUNTING POLICIES The Group's accounting policies under IFRS are set out below: Basis of preparation The financial statements are prepared in accordance with International FinancialReporting Standards and IFRIC interpretations and with those parts of theCompanies Act, 1985 applicable to companies reporting under IFRS. The financialstatements have been prepared under the historical cost convention as modifiedby the revaluation of available for sale investments, financial assets andliabilities held for trading. A summary of the more important Group accountingpolicies is set out below. The preparation of financial statements in conformity with generally acceptedaccounting principles requires the use of estimates and assumptions that affectthe reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Although these estimates are based on management's bestknowledge of the amount, event or actions, actual results may differ from thoseestimates. The significant judgements made by management in applying the Group'saccounting policies and the key sources of estimation uncertainty were: (i) Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value inuse of the cash generating units to which goodwill has been allocated. The valuein use calculation requires the Group to estimate future cash flows expected toarise from the cash generating unit at a suitable discount rate in order tocalculate the present value. (ii) Share based payments In determining the fair value of equity settled share based payments and therelated charge to the income statement, the Group makes assumptions about futureevents and market conditions. In particular, judgement must be made as thelikely number of shares that will vest, and the fair value of each awardgranted. The fair value is determined using a valuation model which is dependenton further estimates, including the Group's future dividend policy, employeeturnover, the timing with which options will be exercised and the futurevolatility in the price of the Group's shares. Such assumptions are based onpublicly available information and reflect market expectations and advice takenfrom qualified personnel. Different assumptions about these factors to thosemade by the Group could materially affect the reported value of share basedpayments. Basis of consolidation The consolidated income statement and balance sheet include the financialstatements of the Company and entities controlled by the Company (its subsidiaryundertakings) made up to 31 December each year. Control is achieved where theCompany has the power to govern the financial and operating policies of aninvestee entity so as to obtain benefits from its activities. The acquisition ofsubsidiaries is accounted for using the purchase method. The results ofsubsidiaries sold or acquired are included in the consolidated income statementup to, or from, the date control passes. Intra-Group sales and profits areeliminated fully on consolidation. Minority interests have been disclosed separately from the Group's profit andshareholders' equity and stated as a separate item. Associates An associate is an entity over which the Group is in a position to exercisesignificant influence, but not control or joint control, through participationin the financial and operating policy decisions of the investee. Associatedundertakings are accounted for using the equity method. The consolidated incomestatement includes the Group's share of the associates' profits less losses,where appropriate, while the Group's share of the net assets of the associatesare shown on the consolidated balance sheet. Any unamortised balance of goodwillis included in the carrying value of the investment in associates. Onacquisition, the Group's share of the associates' assets and liabilities arerecorded at fair values reflecting their condition at that date. Where thesefair values are provisional, adjustments are made where deemed appropriate inthe hindsight period which is the first full year after acquisition. Goodwill Goodwill arising on acquisitions prior to 22 December 1998 was written offimmediately against reserves. Goodwill arising on acquisitions between 23December 1998 and 31 December 2005 was capitalised, classified as an asset onthe balance sheet and amortised on a straight line basis over its usefuleconomic life of 10 years. From 1 January 2006 goodwill is recognised as anintangible asset and reviewed for impairment at least annually. Any impairmentis recognised immediately in the income statement and may not be subsequentlyreversed. Goodwill previously eliminated has not been reinstated onimplementation of IAS 38 On disposal of a subsidiary or business, the attributable goodwill is includedin the determination of profit or loss on disposal. Turnover Turnover represents amounts invoiced to customers, net of value added tax andtrade discounts. Turnover from sales of equipment is recognised on delivery tothe customer. Where the sale of equipment includes installation, the turnover isrecognised once the installation has been completed. Turnover also includesincome from the granting of distribution rights. Turnover is accounted for onthe date that the rights transfer to the third party. Taxation Income tax on profit or loss for the year comprises current and deferred tax.Income tax is recognised in the income statement except to the extent that itrelates to items recognised directly in equity, in which case it is recognisedin equity. Current tax is the expected tax payable on the taxable income for the year,using tax rates enacted or substantially enacted at the balance sheet date, andany adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method on anytemporary differences between the carrying amounts for financial reportingpurposes and those for taxation purposes. The amount of deferred tax provided isbased on the expected manner of realisation or settlement of the carrying amountof assets and liabilities. A deferred tax asset is recognised only to the extent that it is probable thatsufficient taxable profit will be available to utilise the temporary difference. Earnings per ordinary share Basic earnings per share ("EPS") is calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of ordinaryshares in issue during the year. For diluted earnings, the weighted average number of ordinary shares in issue isadjusted to assume conversion of all dilutive potential ordinary shares. Fixed asset investments Investments in Group undertakings are stated at cost less any provision forimpairment. The carrying values of fixed asset investments are reviewed forimpairment in periods if events or changes in circumstances indicate thecarrying value may not be recoverable. Property, plant and equipment The cost of tangible fixed assets is their purchase price or, in the case ofproperty included at its valuation prior to the adoption of IFRS, the revaluedamount is taken as deemed cost. Depreciation is calculated so as to write off the cost or valuation of tangiblefixed assets on a straight line basis to their estimated residual values overthe expected useful economic lives of the assets concerned. Periodic reviews aremade of estimated remaining useful lives and residual values and thedepreciation rates applied are: %Freehold buildings 2Motor vehicles 25Plant and equipment 20-33 Assets under construction are not depreciated until they come into use. Freeholdland is not depreciated. Impairment Assets that have an indefinite useful life are not subject to amortisation andare tested for impairment. Assets that are subject to amortisation ordepreciation are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. If anysuch condition exists, the recoverable amount of the asset is estimated in orderto determine the extent, if any, of the impairment loss. Where the asset doesnot generate cash flows that are independent from other assets, estimates aremade of the cash flows of the cash generating unit to which the asset belongs. Recoverable amount is the higher of fair value, less costs to sell, and value inuse. In assessing value in use, estimated future cash flows are discounted totheir present value using a discount rate appropriate to the specific asset orcash generating unit and by comparing the internal rate of return generated bythe cash flows to target return rates established by management. If the recoverable amount of an asset or cash generating unit is estimated to beless that its carrying amount, the carrying value of the asset or cashgenerating unit is reduced to its recoverable amount. Impairment losses arerecognised immediately in the income statement. In respect of assets other than goodwill, an impairment loss is reversed ifthere has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset'scarrying amount does not exceed the carrying amount that would have beendetermined net of depreciation or amortisation, if that impairment loss had notbeen recognised. Impairment losses in respect of goodwill are not reversed. Intangible assets Software, trademarks and patents which can be separately identified arecapitalised as intangible assets at cost of acquisition and amortised over theirestimated useful economic lives of between 3 and 20 years. Intangible assetsacquired as part of a business combination are stated in the balance sheet attheir fair value at the date of acquisition and amortised over their estimateduseful lives. Research and development Expenditure on research is written off in the period in which it is incurred. Development expenditure is capitalised where it relates to a specific projectwhere technical feasibility has been established, adequate technical, financialand other resources exist to complete the project, the expenditure attributableto the project can be measured reliably and overall project profitability isreasonably certain. In this case, it is recognised as an intangible asset andamortised over its useful economic life. All other development expenditure isrecognised as an expense in the period in which it is incurred. Inventories Stock is stated at the lower of cost and net realisable value. Cost comprisesdirect materials and, where applicable, direct labour costs and those overheadsthat have been incurred in bringing the inventories to their present locationand condition. Where necessary, provision is made for obsolete, slow moving anddefective stocks. Work in progress is valued at the cost of work completed on contracts in hand,net of provisions. Cash and cash equivalents Cash and cash equivalents comprises cash balances and call deposits withmaturity of less than or equal to three months. Financial instruments Derivative financial instruments The Group's activities expose it to the financial risks of changes in foreigncurrency exchange rates and interest rates. The Group uses foreign exchangeforward contracts and interest rate swap contracts to hedge these exposures.These financial instruments are included in the balance sheet as assets orliabilities at their fair values. The Group does not use derivative financialinstruments for speculative purposes but its financial instruments do notqualify for hedge accounting and consequently changes in their fair values arerecognised in the income statement as they arise. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct issue costs. Direct issue costs are amortised over theperiod of the bank facility, other finance charges including interest areaccounted for on an accrual basis in the income statement in the period in whichthey are incurred. Trade receivables and trade payables Trade receivables and trade payables are measured at initial recognition at fairvalue, and are subsequently measured at amortised cost using the effectiveinterest rate method. Appropriate allowances for estimated irrecoverable tradereceivables are recognised in the income statement when there is objectiveevidence that the asset is impaired. Leasing and hire purchase commitments Assets held under finance leases, which are leases where substantially all therisks and rewards of ownership of the asset are passed to the Group, and hirepurchase contracts are capitalised in the balance sheet and are depreciated overtheir useful lives. The capital elements of future obligations under leases andhire purchase contracts are included as liabilities in the balance sheet. Theinterest elements of the rental obligations are charged in the income statementover the duration of the leases and hire purchase contracts and represent aconstant proportion of the balance of capital repayments outstanding. Rentals payable under operating leases are charged in the income statement on astraight line basis over the lease term. Pensions The Group operates a defined contribution scheme. The pension cost charge to theincome statement is the contributions payable to the pension scheme for theperiod. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction or at the contracted rate if the transaction is covered by aforward currency contract. Monetary assets and liabilities denominated inforeign currencies are retranslated at the rate of exchange ruling at thebalance sheet date or if appropriate at the forward contract rate. Alldifferences are taken to the income statement. Share- based payments Share options granted after 7 November 2002 are measured at their fair value atthe date of grant using a Black Scholes model. The fair value determined at thegrant date is expensed on a straight line basis over the vesting period, basedupon the Group's estimate of participants eligible to receive shares at thepoint of vesting. Impact of standards not yet effective The International Accounting Standards Board has issued a number ofinternational financial reporting standards which are effective for futureaccounting periods of the Group. The directors do not anticipate that theadoption of any of these would make a material impact on these financialstatements. Appendices APPENDIX 1 IFRS RECONCILIATION IFRS Transition date consolidated balance sheet as at 1 January 2006 UK GAAP in IAS IAS IAS 12 IAS 12 IAS 39 Restated 38 12 Deferred Deferred Under IFRS format Reclassifica Reclassifica tax asset full tax on Financial IFRS -tion -tion provision revaluation Ins- of of surplus truments intangible Income assets taxes £'000 £'000 £'000 £'000 £'000 £'000 £'000Non-currentassetsGoodwill 4,850 - - - - - 4,850Other intangible - 484 - - - - 484assetsProperty, plant 4,645 (484) - - - - 4,161and equipmentDeferred tax - - 100 155 - - 255asset 9,495 - 100 155 - - 9,750---------------- -------- -------- -------- -------- -------- -------- -------- Current assetsInventories 3,799 - - - - - 3,799Trade and other 6,771 - (100) - - - 6,671receivablesCash and cash equivalents 1,525 - - - - - 1,525---------------- -------- -------- -------- -------- -------- -------- -------- 12,095 - (100) - - - 11,995---------------- -------- -------- -------- -------- -------- -------- -------- Total assets 21,590 - - 155 - - 21,745 CurrentliabilitiesTrade and other (6,856) - - - - - (6,856)payablesTax liabilities (159) - - - - - (159)Bank overdrafts (1,850) - - - - - (1,850)and loansDerivative financial instruments - - - - - (24) (24)---------------- -------- -------- -------- -------- -------- -------- -------- (8,865) - - - - (24) (8,889)---------------- -------- -------- -------- -------- -------- -------- --------Net current assets 3,230 - (100) - - (24) 3,106 Non-currentliabilitiesBank loans (3,468) - - - - - (3,468)Deferred tax liabilities - - - - (626) - (626)---------------- -------- -------- -------- -------- -------- -------- -------- (3,468) - - - (626) - (4,094)--------------- -------- -------- -------- -------- -------- -------- --------Total liabilities (12,333) - - - (626) (24) (12,983)---------------- -------- -------- -------- -------- -------- -------- --------Net assets 9,257 - - 155 (626) (24) 8,762================ ======== ======== ======== ======== ======== ======== ======== EquityShare capital 8,169 - - - - - 8,169Share premium 12,110 - - - - - 12,110accountOther reserve 43 - - - - - 43Revaluation 1,378 - - - - - 1,378reserveRetained earnings (12,665) - - 155 (626) (24) (13,160)---------------- -------- -------- -------- -------- -------- -------- --------Equity 9,035 - - 155 (626) (24) 8,540attributable toshareholders Minority interest 222 - - - - - 222in equity---------------- -------- -------- -------- -------- -------- -------- --------Total equity 9,257 - - 155 (626) (24) 8,762================ ======== ======== ======== ======== ======== ======== ======== APPENDIX 2A IFRS RECONCILIATION Consolidated balance sheet as at 31 December 2006 - Net assets UK GAAP in IAS 38 IAS 38 IAS 38 IAS 12 IAS 12 IAS 12 IAS 39 Restated IFRS format Reclass- Reversal Reversal Reclass- Deferred Deferred Financial Under ification of Good- of hind- ification tax asset tax on re- instru- IFRS of intang- will sight of income full prov- valuation ments ible Amortis- adjust- taxes ision surplus assets ation ment-------------- -------- --------- -------- -------- --------- -------- -------- -------- -------- £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non-currentassetsGoodwill 4,447 - 576 (173) - - - - 4,850Other - 397 - - - - - - 397intangibleassetsProperty, plant 4,600 (397) - - - - - - 4,203and equipmentDeferred tax - - - - 100 156 - - 256asset -------------- -------- --------- -------- -------- --------- -------- -------- -------- -------- 9,047 - 576 (173) 100 156 - - 9,706-------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Current assets Inventories 3,114 - - - - - - - 3,114Trade and other 4,662 - - (100) - - - 4,562receivablesCash and cash 745 - - - - - - - 745equivalents -------------- -------- --------- -------- -------- --------- -------- -------- -------- -------- 8,521 - - - (100) - - - 8,421-------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Total assets 17,568 - 576 (173) - 156 - - 18,127 CurrentliabilitiesTrade and other (4,302) - - - - - - - (4,302)payablesTax liabilities - - - - - - - - -Bank overdrafts (2,032) - - - - - - - (2,032)and loansDerivative - - - - - - - (29) (29)financial instruments-------------- -------- --------- -------- -------- --------- -------- -------- -------- -------- (6,334) - - - - - (29) (6,363)-------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Net current 2,187 - - - (100) - - (29) 2,058assetsNon-currentliabilitiesBank loans (1,989) - - - - - - - (1,989)Deferred tax - - - - - - (626) - (626)liabilities -------------- -------- --------- -------- -------- --------- -------- -------- -------- -------- (1,989) - - - - - (626) - (2,615)-------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Total (8,323) - - - - - (626) (29) (8,978)liabilities -------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Net assets 9,245 - 576 (173) - 156 (626) (29) 9,149============== ======== ========= ======== ======== ========= ======== ======== ======== ======== APPENDIX 2B IFRS RECONCILIATION Consolidated balance sheet as at 31 December 2006 - Equity UK GAAP in IAS 38 IAS 38 IAS 38 IAS 12 IAS 12 IAS 12 IAS 39 Restated IFRS Reclass- Reversal Reversal Reclass- Deferred Deferred Financial Under format ification of Good of hind- ification asset on re- instru- IFRS of intang- will sight of income full valuation ments able Amort- adjust- taxes provision surplus assets isation ment £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000EquityShare capital 8,169 - - - - - - - 8,169 Share premium 3,387 - - - - - - - 3,387account Special reserve 1,206 - - - - - - - 1,206 Other reserve 43 - - - - - - - 43 Revaluation 1,350 - - - - - - - 1,350reserveRetained (4,954) - 576 (173) - 156 (626) (29) (5,050)earnings -------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Equityattributable toshareholders 9,201 - 576 (173) - 156 (626) (29) 9,105 Minority 44 - - - - - - - 44interest inequity-------------- -------- --------- -------- -------- --------- -------- -------- -------- --------Total equity 9,245 - 576 (173) - 156 (626) (29) 9,149============== ======== ========= ======== ======== ========= ======== ======== ======== ======== APPENDIX 3 IFRS RECONCILIATION Consolidated income statement for the six months ended 30 June 2006 UK GAAP in IAS 38 IAS 38 IAS 39 Restated IFRS Reversal Hind- Financial Under format of Good- sight Instru- IFRS will adjust- ments amort- ment isation £'000 £'000 £'000 £'000 £'000Continuing operations Revenue 17,403 - - - 17,403Cost of sales (11,105) - - - (11,105)---------------- -------- -------- -------- -------- --------Gross profit 6,298 - - - 6,298Administrative expenses (6,032) 288 (173) - (5,917)---------------- -------- -------- -------- -------- --------Group operating profit 266 288 (173) - 381Share of operating loss in - - - - -associate---------------- -------- -------- -------- -------- --------Profit from operations 266 288 (173) - 381 Finance costs (234) - - (3) (237)---------------- -------- -------- -------- -------- --------Profit before tax 32 288 (173) (3) 144Tax - - - - ----------------- -------- -------- -------- -------- --------Profit for the period 32 288 (173) (3) 144================ ======== ======== ======== ======== ========Profit attributable to 15 - - - 15minority interest Profit attributable to equity 17 288 (173) (3) 129shareholders ---------------- -------- -------- -------- -------- -------- 32 288 (173) (3) 144================ ======== ======== ======== ======== ======== APPENDIX 4 IFRS RECONCILIATION Consolidated income statement for the year ended 31 December 2006 UK GAAP in IAS 38 IAS 38 IAS 12 IAS 39 Restated IFRS Reversal Hind- Deferred Financial Under format of Good- sight asset Instru- IFRS will adjust- full ments amort- ment pro- isation vision £'000 £'000 £'000 £'000 £'000 £'000Continuingoperations Revenue 31,228 - - - - 31,228 Cost of sales (19,310) - - - - (19,310)---------------- -------- -------- -------- -------- -------- --------Gross profit 11,918 - - - - 11,918 Administrative (11,403) 576 (173) - - (11,000)expenses---------------- -------- -------- -------- -------- -------- --------Group operating 515 576 (173) - - 918profit Share of operating (60) - - - - (60)loss in associate---------------- -------- -------- -------- -------- -------- --------Profit from 455 576 (173) - - 858operations Finance costs (427) - - - (5) (432)---------------- -------- -------- -------- -------- -------- --------Profit before tax 28 576 (173) - (5) 426Tax - - - 1 - 1---------------- -------- -------- -------- -------- -------- --------Profit for the period 28 576 (173) 1 (5) 427================ ======== ======== ======== ======== ======== ========Profit attributableto minorityinterest 27 - - - - 27Profit attributableto equityshareholders 1 576 (173) 1 (5) 400---------------- -------- -------- -------- -------- -------- -------- 28 576 (173) 1 (5) 427================ ======== ======== ======== ======== ======== ======== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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