27th Mar 2007 07:02
Flomerics Group PLC27 March 2007 IMMEDIATE RELEASE March 2007 FLOMERICS GROUP PLC Preliminary Results Flomerics Group PLC, global supplier of simulation software to the engineeringand electronics industries, today announces its results for the year ended 31December 2006. Key Points • Turnover up 24% at £14.2 million (2005 : £11.4 million). Excluding the acquisition in the year revenues up by 13%. • Profit before tax, amortisation of goodwill, exceptional items and share-based payment increased by 30% to £1.5 million (2005: £1.1 million). • Proposed dividend increased by 8% to 1.4p per share (2005 : 1.3p) • Cash balance at year end £2.3 million (2005: £4.1 million) • Acquisition in July 2006 of Nika GmbH (NIKA). • Asia Pacific and US revenues up by 20% and 16% respectively at constant exchange rates. • Revenues from the Electronics Cooling line of business (Flotherm and Flo/ pcb ) increased by 11% and Flovent revenues increased by 24% at constant exchange rates. Commenting on the results, David Mann, Chairman, said: "With a new stable of products and excellent technology, the Group is positionedto achieve strong growth in turnover and an increase in profit margin." Enquiries: Flomerics 020 8487 3000Gary Carter, Chief ExecutiveChris Ogle, Finance Director Conduit PR 020 7429 6666Laurence Read/ Christian Taylor-Wilkinson Chairman's Statement Flomerics made good progress with the implementation of its growth strategy inthe year ended 31 December 2006. While significant effort was devoted to theacquisition and integration of NIKA, the company achieved good increases inrevenue from its traditional products in US and Asia Pacific. The managementteam in Europe was strengthened at the beginning of 2007. Experience of workingwith NIKA since the acquisition has confirmed assessments of the majorcontributions that its products and technology can make to the future of theGroup. Results Total revenues were up by 24% at £14.2 million (2005:£11.4 million). Revenues,excluding those resulting from the acquisition of NIKA made during the year,grew by 13% to £12.9 million. Profit before tax, amortisation of goodwill, exceptional items (of £222,000) andshare-based payment increased by 30% to £1.5 million (2005: £1.1 million). As aresult of the acquisition, which we indicated would be dilutive in the firstyear, earnings per share were 1.87p (2005: 5.83p). Earnings per share beforeamortisation of goodwill were 5.44p (2005: 6.90p). Cash generated from operations was 0.7 million (2005: £1.8 million). £1.3million of cash was used as part of the consideration for the acquisition. Cashbalances for the group at 31 December 2006 were £2.3 million (2005: £4.1million). Dividend The board is pleased with the progress being made and is proposing that thedividend should be increased by 8% to 1.4 p per share (2006:1.3p). Subject toapproval at the Annual General Meeting, the dividend will be paid on 25 May 2007to shareholders on the register at 27 April 2007. Lines of Business and regional performance All percentages in this section are at constant exchange rates. Revenue from our Electronics Cooling line of business (Flotherm and Flo/pcb)increased by 11%. Revenues from the Electromagnetic Products line of business(FLO/EMC and Micro-Stripes) grew by 4%. Flovent revenues were up 24% andrevenues related to MicReD, acquired in 2005, were up 80%. Excluding the NIKAacquisition and the MicReD revenues, the increase in turnover by region was:Asia Pacific 20%, US 16% and Europe 2%. Acquisition On 5 July 2006 the Board announced the acquisition of Nika GmbH. The initialconsideration was £8.8 million with potential further consideration of £3.9million depending on the after tax results of the Group in 2007. The acquisition of NIKA will enable the Group to sell solutions for a far widerrange of applications whilst still providing the electronics sector with morespecialised products and services. Other benefits include the potential todrive a higher level of sales through each of our existing offices and theshortening of the sales cycle for the new products. In the period from theacquisition to the end of the year, sales from NIKA added £1.4 million to groupturnover. The acquisition has also brought some powerful new technology to theGroup as well as a highly specialised product development team, which is basedin Moscow. Board Changes On 31 December 2006 David Tatchell, the Chief Technology Officer (CTO) andformer Chief Executive of the company stepped down from the Board. David willcontinue in his role as CTO on a part-time basis. David was the joint founderof the company in 1988 and the Board expresses its gratitude to him for hisoutstanding contribution to the success of the company. In last year's annual report we announced our intention to conduct a searchfor a successor to Tim Morris, Non-Executive Director and Chairman of the AuditCommittee. On 24 January 2007, Tim was succeeded by Peter Teague, who hasserved as Finance Director of several major international enterprises and iscurrently Chairman of the Audit Committee of Ofcom. I thank Tim for hisconsiderable contribution to the Board for more than ten years and, inparticular, for agreeing to stay on longer than originally intended through theacquisition of NIKA. Outlook The acquisition of NIKA has resulted in a step-change in the Group's potentialand ambitions. With a new stable of products and excellent technology, the Group is positionedto achieve strong growth in turnover and an increase in profit margin. As aresult of the considerable investments during the last two years, including thestrengthening of our management team, the directors are excited about theprospects for delivering a significant increase in value to shareholders. David MannChairman Chief Executive's Review 2006 proved to be a transformational year for Flomerics. I can report someconsiderable achievements, the most significant of which was the acquisition ofNIKA GmbH. At the beginning of the year we set out to achieve three clear objectives. Ourfirst objective was to continue to drive the top line growth of our existingproduct set. The second objective was to consolidate the acquisition of MicReDwhich we completed in 2005, and our third objective was to evaluate freshacquisition opportunities. Acquisitions must meet our twin criteria of securingworld-leading technology whilst also adding a complementary product set to ourexisting lines of business. I am delighted to announce that we havesuccessfully achieved all three of these objectives. Acquisition of NIKA GmbH The acquisition of NIKA GmbH (NIKA) in July represented a significant move forFlomerics. NIKA is a specialist software developer that provides simulationtools for the prediction of fluid flow and heat transfer. NIKA's principalproduct is EFD.Lab; a Computational Fluid Dynamics (CFD) simulation tool used byengineers in the design of a diverse range of products which includes vehicles,home appliances and electronics. EFD.Lab enables engineers to optimise theirdesigns in the shortest possible time and is tightly integrated with the majorMechanical Computer Aided Design (MCAD) systems. There is clear synergy between NIKA's and Flomerics' product applications. Theclient lists of both companies feature big-name companies, such as Alcatel, BAESystems, Black & Decker, Bosch, Delphi, Intel, Mitsubishi, Thales, Samsung,Siemens and Toyota. However, NIKA's extensive client base also includes DAF,Electrolux, Honda, Lufthansa, Miele, Olympus, Pirelli, Tyco and Volkswagen.This provides the potential to cross-sell both NIKA and Flomerics solutions intothe combined client base. Key benefits of the NIKA acquisition include: • Ownership of world-leading CFD technology which can be applied to improve and extend Flomerics products • The broadening of the Flomerics business beyond electronics applications • The opportunity to sell the NIKA products through existing Flomerics sales operations around the world quickly and economically • Significantly enhanced sales opportunities resulting from close technical integration and sales collaboration with leading MCAD companies An acquisition such as this does not happen without a great deal of work fromemployees on both sides. I would therefore like to take this opportunity tothank all the Flomerics and former Nika employees for the contributions theymade throughout the year. Lines of Business The acquisition of NIKA has led us to revaluate the way we organise and drivethe success of our products. This has resulted in the establishment of threedistinct areas of business focus: electronics cooling; CFD applications; andelectromagnetic products. Electronics Cooling is the largest part of our business. Flomerics is themarket leader in the provision of software tools used by electrical andmechanical engineers to analyse and predict temperatures in the design ofcircuit boards and complete electronic systems. These software tools are basedaround our market-leading FLOTHERM product and now also include the MicReDfamily of products and the NIKA EFD product set. CFD for Mechanical Applications extends Flomerics' marketplace beyond the worldof electronics. This line of business provides software that enables mechanicaldesign engineers to analyse and optimise complex fluid flow and heat transferprocesses across an extremely wide range of products and industries. Inaddition to NIKA's EFD family of products, CFD applications also includesFLOVENT which addresses the Heating, Ventilation and Air Conditioning (HVAC)market. Electromagnetic Products are used by engineers to simulate electromagneticradiation. Applications include the design of wireless equipment within thetelecommunications, military, automotive and aerospace industries and containingthe problem of electromagnetic interference, also in these industries. Ourelectromagnetic products business is being given an increased level of focuswith the appointment of a dedicated line of business manager. Management Team The acquisition of NIKA has brought a number of highly skilled and experiencedpeople into the Flomerics management team. These include Alexander Sobachkinwho manages our Moscow office. This is now our largest office and the centre ofEFD product development. Roland Feldhinkel, the former managing director ofNIKA, now manages a newly formed product group. We have bolstered our management team further still with the appointment ofDavid Barry, our new European Sales Director. David brings extensive sales andmanagement experience gained within the Computer Aided Engineering sector andwill be responsible for the growth of all of our business throughout Europe. 2006 Achievements I am delighted to be able to report on the continued improvements in performancethroughout the business. Our electronics cooling business continues to performstrongly having achieved revenue growth of 11% over 2005. Results for the electromagnetic business were less strong with only modestgrowth over 2005. However, the business should benefit from an increasedinvestment in sales resources made during the later part of 2006. We have alsotaken steps to reduce our development costs for this line of business by movingour two electromagnetic products to a single platform. Many of our individual products have performed extremely well. Revenues forFLOVENT are up 24% and MicReD product revenues are up by 80%. The performanceof the MicReD products is especially pleasing as it demonstrates how quickly andsuccessfully the Flomerics sales organisation has been able to adapt to sellingnew hardware-based solutions. The MicReD product set was extended furtherduring 2006 with the addition of the TERALED product. This has been developedspecifically in response to demand from leading LED manufacturers and provides aunique, complete solution for LED testing. All geographic regions of our operations delivered sound performances. Growthin the US was 16%, whilst Asia-Pacific grew by 20%. Japan and South-East Asiawere among our best performing territories and we anticipate continued andaccelerating sales growth within these regions in the years ahead. As I mentioned earlier, the acquisition of NIKA provides the opportunity toexpand our sales and marketing activities within the US whilst achievingfirst-time sales within new territories. In some cases we have been able totake advantage of the sales resources and infrastructures we already have inplace, whilst in other regions we have invested in new sales resources. Theexcellent sales results achieved during the later part of 2006 has validated ourconviction that significant opportunities exist to sell NIKA's EFD products inboth new and existing territories. Industry Collaboration I have, in the past, emphasised the importance of strategic partnerships to thecontinued success of Flomerics. The value and longevity of our softwaresolutions depend greatly on their ability to be applied to a wide variety ofdesign tools and applications. The acquisition of NIKA has brought new orenhanced partnerships with a number of MCAD companies including DassaultSystemes and PTC. Our relationship with SolidWorks (a subsidiary of Dassault)is particularly strong and a significant share of NIKA's revenue has come fromroyalties on sales of COSMOSFloWorksTM ; a CFD tool embedded within SolidWorksTMthat is based on EFD.Lab technology. The Future 2006 was a year of significant development for Flomerics. The addition of newproducts, new customers and new people has placed us in a strong position toachieve even greater growth across each of our areas of business focus. With much of the investment to capitalise on the NIKA acquisition already inplace, I am now looking forward to bringing to fruition the exciting growthopportunities we have created. The aim is to repeat throughout the world thesame levels of success that the NIKA products have achieved within Germany. In 2007, we begin to share the leading technologies found in Flomerics and NIKAproducts in order to realise continual improvements in performance and breadthof application for the benefit of customers of all our products. With a clearand determined focus on our three areas of business, the strengthening of oursales resources and a greater marketing presence for our EFD productsworld-wide, I look forward with confidence and enthusiasm to a successful futurefor Flomerics, our customers and our shareholders. Gary Carter Chief Executive Operating and Financial Review Group Financial Performance Turnover for 2006 increased by 24% at £14.2 million. Excluding revenue resultingfrom the acquisition of NIKA GmbH made during the year, revenues were up by 13%. Profit before tax and amortisation of goodwill, share-based payments andexceptional items was up by 30% at £1.5 million. The charge for the year forshare-based payments was £97,000. It is a new requirement of UK GAAP to make acharge for share-based payments and the 2005 accounts have been restated toinclude a charge for this of £66,000. The results for 2006 have been impacted by exchange rates and the weakening ofthe US dollar and this is expected to continue into 2007. The average rate ofexchange to the pound in 2006 was 1.843. Exceptional costs totalled £222,000, of which approximately 50% relates torestructuring costs arising from the acquisition. The goodwill amortisation figure of £644,000 (2005:£158,000) includes the sum of£456,000 which is attributable to the acquisition. This is a pro-rated chargeas the acquisition was completed at the beginning of July 2006. The headline tax rate is 32% (2005 restated : 4.1%). This was higher than in2005 because the goodwill charge is not a tax deductible expense. Excluding thegoodwill charge, the tax rate would have been just 14%. The tax charge hasbeen kept low because of the use of tax credits for research and developmentreceived in the UK and the availability of tax losses in the US. All of the taxlosses arising in the US have now been utilised. There are significant taxlosses in NIKA but these have not been reflected in these accounts as a deferredtax asset. The net result is that basic earnings per share for 2006 were 1.87p (2005:5.83p). Earnings per share before amortisation of goodwill were 5.44p (2005:6.90p) Costs Cost of sales, which comprise royalties paid to third-party licensors andmanufacturing costs of the Group's hardware products for the full year, amountedto 3.9% (2005: 2.5%) of revenue. Research and development (R&D) costs have increased. This is primarily due tothe acquisition of NIKA which has a large R&D facility based in Moscow. In theperiod since the acquisition, R&D costs in Moscow were £547,000. R&D costsaccounted for 20.8% of Group revenue (2005: 19.4%) in the period. Staff related costs are the Group's biggest expense. These increased by 23% to£7.6 million. The average number of staff increased by 40%, from 136 to 191.At the end of the year the Group employed 235 people. At the time of theacquisition NIKA employed 72 people, 52 of which were based in Moscow. Contribution from Nika The profit and loss account for Nika shows an operating loss of £655,000. Thisincludes a goodwill amortisation charge of £456,000 relating to the cost of theacquisition set out in Note 28 and certain costs which benefited the Group. Forexample the Chief Executive of Nika took on the role of European Sales Directorfollowing the acquisition and the development operation in Moscow undertookvarious tasks related to Flomerics' legacy products. Taking these into account,it is estimated that the actual impact on the Group's operating profit fromNika's activities was a loss of about £100,000. Cashflow and Financing Cash generated from operating activities was £685,000 (2005: £1.8 million.).This was lower than the 2005 figure because a very significant amount of theGroup's turnover occurred late in the year. As a result, trade debtors were£1.4 million higher than they were at the end of 2005. Major non-operating cashflow included cash invested in the acquisition of NIKAof £1.3 million; capital expenditure of £512,000 (2005: £380,000); deferredconsideration in respect of the acquisition of MicReD made in 2005 of £165,000;and a dividend paid of £195,000 (2005:£161,000). The net decrease in cash was£1.7 million at the year end. The Group has borrowings of £376,000 which relate to the mortgage on a freeholdproperty that is being repaid over ten years. With a cash balance of £2.3million, net funds are £2.0 million. Trade debtors at the end of 2006 were £4.8 million (2005: £3.4 million). Debtordays at 31 December were 72 (2005:76.) Share Capital On 18 April 2006, 130,000 shares were issued to the vendors of MicReD as part ofthe deferred consideration under the terms of the acquisition. On 10 May 200650,000 shares were issued to the vendors of MicReD pursuant to the release ofthe retained consideration due to the vendors. On 7 July 2006 6,293,000 shares were issued to the vendors of NIKA GmbH as partof the consideration under the terms of the acquisition. A further 1,265,000shares were retained, and will not be issued until the expiry of the warrantyperiod. In order to facilitate the issue of shares to the vendors of NIKA, the Group'sauthorised share capital was increased from £200,000 to £400,000. This wasapproved at an Extraordinary General Meeting of shareholders which was held on 5July 2006. Deferred Consideration Under the terms of the acquisition of MicReD, deferred consideration was duedepending on the results in 2005 and 2006. Following the performance in 2006,it is expected that the final instalment of the deferred consideration will bepaid out during 2007. Key Performance Indicators Measures of the Group's performance reviewed by the management include: • Performance against budget by turnover and contribution to profit, by region and line of business. • Rate of renewals of licenses. • New sales won and lost against the competition. An important forward looking indicator is the level of identified business as apercentage of budget and compared to previous years. Non-financial measures monitored include: • Staff turnover rates • Results of staff surveys • Enquiries to the website Accounting Standards The Group has adopted International Financial Reporting Standards (IFRS) witheffect from 1 January 2007. We have been assessing the impact of IFRS on our accounts. The acquisition ofNIKA will be restated under IFRS 3 and a value will be attributed to theintangible assets acquired (such as customer lists and technology). Theintangible assets will be amortised and the goodwill arising will be subject toan impairment review. We have had the acquisition of NIKA valued for thispurpose and the effect of the new treatment has been quantified. This issubject to review by our auditors. The remaining goodwill, which related toprevious acquisitions, will no longer be amortised but will be subject to anannual impairment review and subject to foreign exchange movement. The other significant change under IFRS will be the treatment of research anddevelopment costs. Under IAS 38, if certain criteria are satisfied, thedevelopment costs must be capitalised and amortised over the anticipated periodthat benefits are expected. We have identified the projects that are likely tobe affected by this change and are currently assessing the financial impact. Chris OgleFinance Director FLOMERICS GROUP PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2006 Continuing activities Acquisitions Group 2006 2006 2006 2005* £'000 £'000 £'000 £'000 Turnover 12,864 1,357 14,221 11,424Cost of sales (444) (106) (550) (291) _________ _________ _________ _________ Gross profit 12,420 1,251 13,671 11,133 Administrative expensesResearch and development cost (2,408) (547) (2,955) (2,214) Goodwill amortisation (188) (456) (644) (158) Share-based payment (97) - (97) (66) Exceptional restructuring costs (110) - (110) - Exceptional staff costs (112) - (112) - Other (8,350) (903) (9,253) (7,917) ________ ________ ________ ________ Total administrative expenses (11,265) (1,906) (13,171) (10,355) ________ ________ ________ ________ 1,155 (655) 500 778Other operating income 61 - 61 66 ________ ________ ________ ________ Operating profit 1,216 (655) 561 844 Other interest receivable and similar 101 92income Interest payable and similar charges (164) (36) ________ ________Profit on ordinary activities beforetaxation (Note 3) 498 900Tax on profit on ordinary activities (Note 5) (160) (37) _________ _________ Profit for the financial year 338 863 ________ ________Earnings per share (Note 6) 1.87p 5.83pDiluted earnings per share (Note 6) 1.47p 5.59p * As restated (see Note 7) FLOMERICS GROUP PLCCONSOLIDATED BALANCE SHEETAT 31 DECEMBER 2006 2006 2006 2005* 2005* £'000 £'000 £'000 £'000Fixed assetsIntangible assets 10,041 1,353Tangible assets 1,709 1,726 _______ _______ 11,750 3,079Current assetsStock 33 59Debtors 5,467 3,953Cash at bank and in hand 2,339 4,081 _______ _______ 7,839 8,093 Creditors: amounts falling due withinone year (5,205) (4,386) _______ _______ Net current assets 2,634 3,707 _______ _______ Total assets less current liabilities 14,384 6,786Creditors: amounts falling due aftermore than one year (305) (377) ________ ________Net assets (Note 3) 14,079 6,409 _______ _______ Capital and reservesCalled up share capital 213 148Shares to be issued 1,112 33Share premium account 1,735 1,602Merger reserve 7,185 892Profit and loss account 3,834 3,734 ________ ________Shareholders' funds 14,079 6,409 _______ _______ * As restated (see Note 7) FLOMERICS GROUP PLCSUMMARY CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005* £'000 £'000Operating ActivitiesOperating profit 561 844Depreciation and amortisation charges 1,028 492Share-based payment 97 66Loss / (gain) on disposal of fixed assets 2 (1)Exchange differences (123) 113Decrease / (increase) in stocks 30 (6)(Increase) / decrease in debtors (1,081) 53Increase in creditors 171 283Net cash inflow from operating activities 685 1,844 Net cash inflow / (outflow) from returns on investment and servicing of finance (63) 56 Tax paid (176) (126) Net cash outflow from capital expenditure (507) (376) Net cash paid for acquisition (including deferredconsideration) (1,418) (405) Equity dividend paid (195) (161) ________ ________Net cash inflow before financing (1,674) 832 Net cash outflow from financing (68) (65) ________ ________(Decrease) / Increase in cash in the year (1,742) 767 ________ ________ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NETFUNDS(Decrease) / Increase in cash in period (1,742) 767Cash outflow from decrease in debt and leasefinancing 68 65 ________ ________Movement in net funds in the year (1,674) 832Net funds at 1 January 3,637 2,805Net funds at 31 December 1,963 3,637 * As restated (see Note 7) Notes: 1. The Group recognised unrealised losses on translation of foreigncurrency net investments of £140,000 (2005: gain of £124,000) in the year, whichwere taken to reserves and are not included in the profits above. 2. The financial information shown for the years ended 31 December 2006and 2005 set out above does not constitute statutory accounts but is derivedfrom those accounts. The results have been prepared using accounting policiesconsistent with those used in the preparation of the statutory accounts. Thefinancial information contained in this announcement does not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985.The financial information for the year ended 31 December 2005 has been extractedfrom the statutory accounts for that year and amended as per note 7. Theseaccounts have been filed with the Registrar of Companies and contain anunqualified audit report. The financial information for the year ended 31December 2006 has been extracted from the statutory accounts for that yearwhich contain an unqualified auditor report but have not yet been filed atCompanies House . Copies of this announcement are available at the registeredoffices of the Company (81 Bridge Road, Hampton Court, Surrey, KT8 9HH) and atthe offices of the Company's nominated advisors, Oriel Securities Limited. (125Wood Street, London, EC2V 7AN) for a period of 14 days from the date hereof. 3. Segmental Information The Group's turnover and profit before tax for each geographic area of operationby location and by destination relating to its sole class of business is: Turnover Profit/(Loss) Before Taxation Restated 2006 2005 2006 2005 £'000 £'000 £'000 £'000United States of America 5,563 4,609 280 250Europe 5,946 4,438 (980) (307)Asia Pacific 2,712 2,377 1,198 957 _______ _______ _______ _______ 14,221 11,424 498 900 _______ _______ _______ _______ The loss in Europe is after central costs including research and development. The net assets attributable to each geographic area are: 2006 2005 £'000 £'000United States of America 1,334 1,211Europe 12,560 5,064Asia Pacific 185 134 _______ _______ 14,079 6,409 4. Profit before Taxation Restated 2006 2005 £'000 £'000Profit before Taxation 498 900Amortisation of goodwill 644 158Share based payment 97 66Exceptional restructuring costs 110 -Exceptional staff costs 112 - _______ _______Profit before Tax, amortisation of goodwill, sharebased payment and exceptional items 1,461 1,124 _______ _______ 5. Taxation The taxation reconciliation is as follows: Restated 2006 2005 £'000 £'000Profit on ordinary activities before tax 498 900 Current TaxTax charge on profit before tax at the standard rate ofcorporation tax in the UK of 30% (2005:30%) 149 270 Effects of:Enhanced relief for research and development (194) (227)Permanent differences 243 96Depreciation in excess of capital allowances 19 36Utilisation of brought forward losses (76) (64)Unrelieved current year losses 50 11Over provision in prior years (14) (80)Earnings of subsidiary not subject to tax (14) -Tax rate differences (34) (35)Unrelieved overseas tax 28 24Timing differences 10 6 _______ _______Current tax charge for year 167 37 _______ _______ Deferred tax (7) - _______ _______Total taxation on profit on ordinary activities 160 37 _______ _______ 6. Earnings per share Earnings per share figure is calculated by dividing the profit on ordinaryactivities after taxation by the weighted average number of shares in issue asfollows: Restated 2006 2005 2006 2005 2006 2005 Earnings Earnings Weighted Weighted Earnings per Earnings per average number average number share share £'000 £'000 of shares of shares pence pence No.'000 No.'000Profit for thefinancial yearbefore goodwillamortisation 982 1,021 18,063 14,783 5.44 6.90 Goodwillamortisation (644) (158) - - (3.57) (1.07) _______ _______ _______ _______ _______ _______Profit for thefinancial year 338 863 18,063 14,783 1.87 5.83 Dilutive effect ofshare options - - 4,905 656 (0.40) (0.24) _______ _______ _______ _______ _______ _______ 338 863 22,968 15,439 1.47 5.59 _______ ______ _______ _______ _______ ______ 7. Prior year adjustment In order to conform with the requirements of FRS 20 ' Share-based payment', theresults for 2005 have been restated to include an expense for share-basedpayment of £66,000. The profit for the financial year has been reduced from£929,000 to £863,000. 8. On 6 July 2006, the Group acquired the entire share capital of Nika GmbHfor initial consideration of £8.8 million settled thorough a combination ofshares and cash as shown below. Further consideration will become payable in theevent that the Group's profits after tax in 2007 are in excess of £2.7 million,settled by the issue of up to a maximum of 4.1 million shares. In calculatingthe goodwill figure it has been assumed that no further consideration will bepayable: £'000 Fair value of net assets acquired: (391)Goodwill 9,168 _______ 8,777 _______Satisfied by:Shares issued 6,356Shares to be Issued in escrow 1,112Cash 1,011Acquisition costs 298 _______ 8,777 _______ 9. The AGM will be held at 10.30 am on 23 May 2007 at the registered officeof the company (81 Bridge Road, Hampton Court, Surrey, KT8 9HH). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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