9th May 2006 07:01
First Derivatives PLC09 May 2006 First Derivatives plc (FDP) Preliminary results for the year ended 28th February 2006 9th May 2006 The principal activities of FDP ("the Company") are the provision of a range ofsupport services to the investment banking market and the derivatives technologyindustry and the provision of its own range of e-business applications. Financial highlights • Turnover £6.313m (2005: £3.793m) +66% • Earnings before tax, depreciation and amortisation £1.916m (2005: £1.126m) + 70% • Normalised PBT of £1.717m (2005: £0.991m) +73% • Pre-tax profit £1.537m (2005: £0.811m) +90%, the first year to exceed £1.0m • Earnings per share 8.6p (2005: 4.6p) + 87% • Normalised EPS 10.0p(2005:6.1p) +64% • Proposed final dividend more than doubled to 3.0p per share (2005: 1.46p) • Cash balances as at 28th February 2006 of £1.061m (2005: £788,000) +35% Business highlights • Capital Markets consulting, support and development services continue to grow: this and other recurring revenues account for 70% of FDP's income • A new partnership with Kx on enhanced terms and the Company, after exercising options, now holds approximately 4% of Kx • Post year end - signed two more major Kx contracts with US banks • FDP is now working with two other non-competing software vendors • e-commerce division - remains small in relative terms but contributes to profitability David Anderson, Chairman of FDP, commented: "2005-06 has seen another year of growth for the Company, with the second halffinishing strongly. For the first year, pre-tax profits have exceeded £1.0million. The Company continues to increase its Capital Markets activity,increasing levels of business with existing customers and adding new customers.The Company's relationship with Kx has enhanced our credibility with the world'smajor investment banks and has resulted in additional consultancy work for theCompany. Headcount has increased substantially in the past year and theCompany's plans for staffing for future growth are well in hand." For further information please contact: First Derivatives Corporate Synergy Parkgreen Communications Brian Conlon Brian Stockbridge Justine Howarth/Victoria Thomas Managing Director T: 020 7448 4419 T: 020 7493 3713 T: 02830 252242 www.firstderivatives.com Chairman's Statement 2005/2006 has seen another year of growth for the Company with the second halffinishing strongly. Turnover for the year was £6.313 million, up from £3.793million, and earnings before tax, depreciation and amortisation were £1.916million compared with £1,126,000 in the previous year, an increase of 70%.Pre-tax profits for the year were £1.537 million compared with £811,000 in theprevious year, an increase of 90%. This is the first year that pre - tax profitshave exceeded £1.0 million. Earnings per share increased by 87% from 4.6p to 8.6p. The Board is recommendinga dividend for the year of 3.0 p which will be covered approximately three timesby earnings. The Board continues to review its dividend policy and barringunforeseen circumstances, intends to pay a maiden interim dividend in thefinancial year ending 28th February 2007. In my interim statement I referred to a further increase in our Capital Marketsactivity. This has continued in the second half of the year and the companycontinues to increase the level of business with its existing customer base andat the same time adding new customers. This activity continues to benefit fromthe relationship with Kx which has enhanced our credibility with the world'smajor investment banks resulting in additional consultancy work for the Company. The sales and support for Kx database technology continues to be a significantpart of our continuing business. There were further substantial sales to newcustomers in the second half of the year both in the USA and in the UK.Increasingly the company is receiving orders from existing customers for otherareas of their activities. A new partnership agreement with Kx has recently beensigned on enhanced commission terms and the company, after exercising options,now holds approximately 4% of the share capital of Kx. During the year two partnership agreements were entered into and the Companycontinues to look for further opportunities. The e-business activity has continued at a relatively low level during thecurrent year. The company has continued its policy of acquiring residential properties toaccommodate staff supporting contracts with London and New York based clients.The company has acquired further units which bring the portfolio to 8properties. Shareholders' funds now stand at £3.372 million compared with £2.297million a year ago. I would like to thank Brian Conlon and his team for their continued anddedicated hard work which has led to the further growth during the financialyear. There has been a significant increase in headcount in the financial yearand the plans for staffing to cater for future growth are well in hand. Since the financial year end the company has signed two major Kx contracts withUS banks and the level of Capital Markets activity has seen a further increase.(Whilst it is too early in the year to predict the outcome for the whole year,management accounts to date together with the current order book indicate thatthe company will show further growth in the first half of the year. David Anderson 9 May 2006 Chairman Managing Director's Statement FDP operates primarily in the capital markets sector and major financialinstitutions continue to invest heavily in technology. Banks continue to focuson getting value for money from suppliers and are placing severe pressure oncharge out rates, increasingly looking to outsource non-core functions. FDP hassecured a small number of lucrative nearshore support contracts but thechallenge from low cost centres such as India remains. Review of activities First Derivatives operates loosely as four profit centres. Personnel can easilytransfer from one profit centre to another. Capital markets and SalesPartnerships contribute the vast majority of our current turnover andprofitability but our investment in R&D has started to bear fruit and we madesome small sales in this financial year. We are currently effectively operatingat 100% utilisation of staff and have plans to increase our headcount by 25% inthe coming year. Capital Markets - FDP provides highly skilled resources to the capital marketsin the areas of consulting, support and development services. We have ongoingcontracts with 5 of the largest banks in Europe and have 4 nearshore supportcontracts in place. These nearshore contracts involve providing remote supportservices from our offices in Newry. This and other recurring revenues accountsfor about 70% of our income. Sales Partnership - FDP continues to provide sales and marketing support for allindustry sectors (excluding insurance) to KX Systems on a worldwide basis. Thecontract was renegotiated with more favourable commercial terms, effective as of1 January 2006. Their products continue to be widely used by some of the world'sleading financial institutions including JP Morgan, Merrill Lynch, Deutsche Bankand Dresdner. We have provided consulting and support services to 20 of theseorganisations in the past year at various locations including London, New Yorkand Tokyo. Most of these contracts are recurring in nature. We continue to buildour portfolio of alliances with other non-competing software vendors and arecurrently working with 2 other vendors. Product Development - this group is still in the process of developing a numberof products, primarily for the use of customers of KX Systems. No significantrevenue will accrue from this division until the next financial year. e-business - this division is now quite small in relative terms but makes acontribution to profits and will continue to do so. Personnel The company now employs more than 70 people and has staff based in London, NewYork and Stockholm. We will continue to source staff in Ireland due to thefavourable cost differential vis-a-vis major financial centres. Many of ouremployees are participating in options schemes which we see as a key driver inretaining staff. Our staff turnover is relatively low which means that we areseeing increasing wage inflation as the experience profile of staff changes. Once again I would like to pay tribute to all FDP employees who withoutexception are hard working, talented, flexible and dedicated. Our customerretention rates are evidence of this. Property Portfolio As the number of staff working on-site in the major financial centres increaseswe will continue to buy property in lieu of paying for hotels and rentedaccommodation. As at the balance sheet date we had purchased 6 properties inLondon financed by cash and term loans and a further property in New Yorkpurchased with cash Financial Review Our pre-tax profit (2006: £1,537,000; 2005: £811,000), EBITDA (2006: £1,916,000;2005: £1,126,000) and turnover (2006: £6,313,000; 2005: £3,793,000) weresignificantly up on last year. This was largely due to increased consultantutilisation and sales commission from partner agreements. Our operating marginsincreased to 26% from 23%. Our balance sheet is strong with a cash balance of£1,061,000 and equity shareholders' funds of £3,372,000. This and our confidencein our ability to generate cash going forward enables us to declare a dividendof 3p per share. Outlook We are increasing headcount to meet demand from the current sales pipeline andto develop product. Our outlook for the year ahead is for trading to continue inline with previous trends and the further strengthening of our balance sheet. Wenow have a spread of activities with our recurring revenue stream insulating usagainst general industry downturn and our interest in the sale of varioussoftware products giving us the benefit of considerable potential upside. Brian Conlon 9 May 2006 Managing Director First Derivatives plc Profit and loss accountYear ended 28 February 2006 Year ended Year ended 28 February 28 February Note 2006 2005 Restated £'000 £'000 Turnover - continuing operations 2 6,313 3,793 Cost of sales (3,959) (2,411) ______ ______ Gross profit 2,354 1,382 Administrative expenses (812) (560) Other income 101 55 ______ ______ Operating profit - 1,643 877continuing operations Interest receivable 7 8 Interest payable and other 4 (113) (74)similar charges ______ ______ Profit on ordinary 3 1,537 811activities before taxation Tax on profit on ordinary 5 (468) (242)activities ______ ______ Profit for the financial year 18 1,069 569 ______ ______ Earnings per share - basic 9a 8.6p 4.6p - diluted 9a 8.5p 4.5p ______ ______ The company has no recognised gains or losses other than those included aboveand therefore no separate statement of total recognised gains and losses hasbeen presented. There is no material difference between the company's results asreported and on a historical cost basis. Accordingly no note of historical costprofits and losses has been prepared. The turnover and operating profit amountsas stated above are derived solely from continuing operations. The notes on pages 15 to 27 form part of these financial statements. First Derivatives plc Balance sheetYear ended 28 February 2006 At 28 At 28 February February 2006 2005 Restated Note £'000 £'000 £'000 £'000Fixed assets Intangible assets 10 360 540Tangible assets 11 3,238 2,032Investment in associates 12 90 -Other investments 12 111 111 ______ _____ 3,799 2,683Current assets Debtors 13 2,251 1,046 Cash at bank and in hand 1,061 788 3,312 1,834 Creditors - amounts falling due within one year 14 (2,082) (928) ______ _____ Net current assets 1,230 906 ______ _____ Total assets less current 5,029 3,589liabilities Creditors - amounts falling due after more than one year 15 (1,717) (1,289) Provisions for liabilities 16 - (3)and charges ______ _____ Net assets 3,312 2,297 ______ _____ Share capital and reserves Called-up share capital 17 64 62Shares to be issued 18 4 9Share premium account 18 910 780Profit and loss account 18 2,334 1,446 ______ _____ Shareholders' funds 19 3,312 2,297 ______ _____ These financial statements were approved by the board of directors on 4 May2006. Brian ConlonDirector The notes on pages 14 to 27 form part of these financial statements. First Derivatives plc Cash flow statementYear ended 28 February 2006 Year ended Year ended 28 February 28 February Note 2006 2005 £'000 £'000Cash inflow from operating activities 25 1,606 752 Returns on investment and servicing of finance 26a (106) (66)Taxation 26b (232) (160)Capital expenditure 26c (1,389) (1,318)Equity dividends paid (181) (135) ______ _______ Cash inflow before financing (302) (927) Financing 26d 574 867 ______ _______ Increase/(decrease) in cash in the 272 (60)year ______ _______ Reconciliation of net cash flow tomovement in net debtYear ended 28 February 2006 Year ended Year ended 28 February 28 February Note 2006 2005 £'000 £'000 Increase/(decrease) in cash in the year 272 (60)Decrease in debt 103 93 ______ _______ Change in net debt resulting from 27 375 33cash flows New long term loan (550) (932) ______ _______ Movement in net debt in the year (175) (899) Net (debt)/funds at start of the year (622) 277 ______ _______ Net debt at end of the year 27 (797) (622) ______ _______ The notes on pages 14 to 27 form part of these financial statements. First Derivatives plc Notes(forming part of the financial statements)1 Accounting policies The following accounting policies have been applied consistently in dealing withitems which are considered material in relation to the financial statements,except as noted below. In these financial statements the following new standards have been adopted forthe first time: • FRS 21 'Events after the balance sheet date'; • FRS 22 'Earnings per share'; and • FRS 28 'Corresponding amounts' The adoption of FRS 22 'Earnings per share' has not resulted in any materialdifference to the company's calculation of earnings per share. The adoption of FRS 21 'Events after the balance sheet date' has been discussedin note 8. FRS 28 'Corresponding amounts' has had no material effect as itimposes the same requirements for comparatives as previously required. Basis of preparing the financial statements The financial statements have been prepared under the historical costconvention, and in accordance with applicable accounting standards. Intangible fixed assets Intangible fixed assets comprise intellectual property rights over software andare capitalised where purchased on an arm's length basis. Such assets areamortised over their estimated useful lives, estimated to be 5 years and arereviewed for impairment only if there is some indication that an impairment mayhave occurred. Tangible fixed assets Tangible fixed assets are stated at historical cost, less accumulateddepreciation. Depreciation is calculated to write off the original cost less theexpected residual value of fixed assets over their anticipated useful lives atthe following annual rates: Motor vehicles - 25% straight line Office furniture and equipment - 25% straight line Plant and equipment - 25-50% straight line Buildings - 2% straight line Tangible fixed assets are reviewed for impairment only if there is someindication that an impairment may have occurred. Fixed asset investments Fixed asset investments are stated at cost unless, in the opinion of theDirectors, there has been an impairment, in which case an appropriate adjustmentis made. For shares acquired on the exercise of an option previously granted tothe company, cost includes any in the money element of the option, as calculatedat the date the option was granted. The fair value of this in the money elementof the option reviewed is recorded in turnover and held as a current asset untilthe option has been exercised. Fixed asset investments are reviewed forimpairment only if there is some indication that an impairment may haveoccurred. First Derivatives plc Notes (continued) 1 Accounting policies (continued) Research and development All research and development expenditure is written off in the period in whichit is incurred. Pension plans The company operates "Personal Pension Plans" whereby the company agrees to pay,for eligible employees, a defined contribution into the employee's own personalpension scheme. The pension charge represents contributions payable by thecompany for the period. The company's liability is limited to the amount of thecontribution. The liability for meeting future pension payments rests solelywith the employee's personal pension scheme. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the dateof the transactions or at a contracted rate. The resulting monetary assets andliabilities are translated at the balance sheet rate or the contracted rate andthe exchange differences are dealt with in the profit and loss account. Government grants Government grants are recognised in the profit and loss account so as to matchthem with the expenditure towards which they are intended to contribute. Taxation The charge for taxation is based on the profit for the year and takes intoaccount taxation deferred because of timing differences between the treatment ofcertain items for taxation and accounting purposes. Deferred tax is recognised,without discounting, in respect of all timing differences between the treatmentof certain items for taxation and accounting purposes which have arisen but notreversed by the balance sheet date, except as otherwise required by FRS 19. 2 Turnover Turnover excludes value added tax and represents the fair value of servicesdelivered to customers in the accounting period. Services are deemed to havebeen delivered to customers when, and to the extent that, the entity has met itsobligations under its service contracts. Credit for enterprise software licencerevenue is deferred and released over the period of the licence on a straightline basis. Share options received in lieu of services are recorded in turnoverat the fair value of the services provided. The directors are of the opinion that disclosure of the analysis of turnover andprofit by geographical market would be prejudicial to the interests of thecompany. First Derivatives plc Notes (continued ) 3 Profit on ordinary activities before taxation Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000Profit on ordinary activities before taxation has been arrived at after charging: Depreciation 93 69Amortisation 180 180Auditors' remuneration - audit 18 17 - other services 7 7Hire of premises - rentals payable 15 14under operating lease Grants received (85) (11) _________ ________ 4 Interest payable and other similar charges Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000 On bank loans 113 74 _________ ________ 5 Tax on profit on ordinary activities Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000 UK corporation tax for the period 492 246Adjustments relating to earlier years - - _________ ________ Total current tax charge 492 246 Deferred tax (see note 16) (24) (4) _________ ________ 468 242 _________ ________ The basis by which taxation is calculated is stated in Note 1. First Derivatives plc Notes (continued ) 5 Tax on profit on ordinary activities (continued) The current tax charge for the period is lower (2005: lower) than the standardrate of corporation tax in the UK. The differences are explained below: Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000Current tax reconciliation Profit on ordinary activities before tax 1,537 811 _________ ________ Current tax at 30% (2004: 30%) 461 243 Effects of: Expenses not deductible for tax purposes 29 6Capital allowances for period in excess of 9 15depreciation Other differences 44 -Small companies relief - (18)Relief on share options exercised (70) -Timing of pension contributions 19 - _________ ________ Total current tax charge 492 246 _________ ________ The directors are not aware of any issues that will significantly impact on thefuture tax charge. First Derivatives plc Notes (continued ) 6 Staff numbers and costs The average weekly number of persons (including the directors) employed by thecompany during the year is set out below. Year ended Year ended 28 February 28 February 2006 2005 Average No. Average No. Administration 1 1Technical 57 38 _________ ________ 58 39 _________ ________ Their total remuneration was: £'000 £'000 Wages and salaries 2,133 1,180Social security costs 226 132Other pension costs 70 70 _________ ________ 2,429 1,382 _________ ________ 7 Emoluments of directors The remuneration paid to the directors was: Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000 Aggregate emoluments (including benefits 187 140in kind) Company pension contributions 27 22 _________ ________ 214 162 _________ ________ During the period there were 2 directors accruing benefits under a definedcontribution pension scheme (29 February 2005: 2). No directors exercised shareoptions in the year. The aggregate emoluments and company pension contributions of the highest paiddirector amounted to £84,133 and £20,135 respectively during the year (2005:£55,000 and £16,056 respectively). First Derivatives plc Notes (continued ) 8 Dividends Year ended Year ended 28 February 28 February 2006 2005 Restated Restated £'000 £'000 Dividend paid 1.46p (2005: 1.1p) per share 181 135 _________ ________ Following the adoption of FRS21: Events after the balance sheet date, dividendshave been accounted for in the financial year in which they were declared andapproved. A prior year adjustment has been made in this regard which hasresulted in the following adjustments: Profit and loss Dividend paid in Profit and loss account at the year ended account at 1 March 2004 28 February 1 March 2005 2005 £'000 £'000 £'000 As previously stated 877 181 1,265 Add back dividend previously accounted for 135 (181) 181 Correct dividend based on approved date - 135 - _______ _______ _______ Restated 1,012 135 1,446 _______ _______ _______ 9 (a) Earnings per ordinary share Basic The calculation of basic earnings per share is based on the profit on ordinaryactivities after taxation and before deduction of dividend appropriations inrespect of equity shares, namely £1,069,000 (2005: £569,000). The weightedaverage number of ordinary shares for the year ended 28 February 2006 andranking for dividend was 12,494,139 (2005: 12,360,620). Year ended Year ended 28 February 28 February 2006 2005 Pence per share Pence per share Basic earnings per share 8.6 4.6 ______ ______ First Derivatives plc Notes (continued ) 9 (a) Earnings per ordinary share (continued) Diluted The calculation of diluted earnings per share is based on the profit on ordinaryactivities after taxation and before deduction of dividend appropriations inrespect of equity shares, namely £1,069,000 (2005: £569,000). The weightedaverage number of ordinary shares for the year ended 28 February 2006 andranking for dividend was 12,634,363 (2005: 12,560,149). Weighted average numberof shares has been increased by 140,224 to reflect the shares under optiondisclosed in note 17. Year ended Year ended 28 February 28 February 2006 2005 Pence per Pence per share share Diluted earnings per share 8.5 4.5 _____ _____ 9 (b) Adjusted earnings per ordinary share Adjusted earnings per share are based on profit before taxation of £1,537,000(2005: £811,000). The number of shares used in this calculation is consistentwith note 9(a) above. Year ended Year ended 28 February 28 February 2006 2005 Pence per share Pence per share Basic adjusted earnings per ordinary 12.3 6.6share Diluted adjusted earnings per ordinary 12.2 6.5share _____ _____ Reconciliation from earnings per ordinary share to adjusted earnings perordinary share. Year ended Year ended 28 February 28 February 2006 2005 Pence per share Pence per share Basic earnings per share 8.6 4.6Impact of taxation charge 3.7 2.0 _____ _____ Adjusted basic earnings per share 12.3 6.6 _____ _____ Diluted earnings per share 8.5 4.5Impact of taxation charge 3.7 2.0 _____ _____ Adjusted diluted earnings per share 12.2 6.5 _____ _____ Adjusted earnings per share has been presented to facilitate pre-tax comparisonreturns on comparable investments. First Derivatives plc Notes (continued ) 10 Intangible fixed assets 2006 £'000 At 1 March 2005 540Additions -Amortisation (180) _____ At 28 February 2006 360 _____ The intangible fixed asset relates to a software asset used in the company'strading activities. 11 Tangible fixed assets Office Land and Plant and furniture and buildings equipment equipment Total £'000 £'000 £'000 £'000Cost At 1 March 2005 2,015 193 25 2,233Additions 1,286 13 - 1,299 _______ _______ _______ _______ At 28 February 2006 3,301 206 25 3,532 _______ _______ _______ _______ Depreciation At 1 March 2005 49 128 24 201Charged during period 51 42 - 93 _______ _______ _______ _______ At 28 February 2006 100 170 24 294 _______ _______ _______ _______ Net book value At 28 February 2006 3,201 36 1 3,238 _______ _______ _______ _______ At 1 March 2005 1,966 65 1 2,032 _______ _______ _______ _______ The basis by which depreciation is calculated are stated in Note 1. 12 Other investments (1) Investment in (2) Other 2006 associates investments £'000Unlisted investments At 1 March 2004 - 111 111Additions 90 - 90 ______ ______ ______ At 28 February 2006 90 111 201 ______ ______ ______ First Derivatives plc Notes (continued ) 12 Other investments (continued) (1) Investment in associates The unlisted investment in which the company's interest is more than 20% is asfollows: Country of Class and percentage Name incorporation Principal activity of shares held Carrickbridge Northern Ireland Property 45% ordinary sharesDevelopments investment Limited and development Carrickbridge Developments Limited was incorporated on 24 February 2006 and itsregistered office is 21 Arthur Street, Belfast, BT1 4GA. Its share capital andnet assets on incorporation were £200,000. No material transactions haveoccurred between 24 February 2006 and 28 February 2006 and as such no profit orloss has been accounted for in these financial statements. (2) Trade investment The company's investment in Kx Systems Inc., a company resident in the UnitedStates was valued on acquisition by the directors, on the basis of financialinformation available at that time. 13 Debtors 28 February 28 February 2006 2005 £'000 £'000Trade debtors 1,872 828Amounts due from related undertaking - 19Sundry debtors 319 109Deferred tax asset 21 -Prepayments 39 39Accrued income - 51 _____ _____ 2,251 1,046 _____ _____ All debtors in the current and prior year are due within one year. 14 Creditors - amounts falling due within one year 28 February 28 February 2006 2005 £'000 £'000Bank loans 140 121Trade creditors 272 182Corporation tax 551 291Other taxation and social security 272 111Other creditors 313 34Accruals and deferred income 534 189 _____ _____ 2,082 928 _____ _____ First Derivatives plc Notes (continued ) 15 Creditors - amounts falling due after more than one year 28 February 28 February 2006 2005 £'000 £'000 Loans 1,717 1,289 _____ _____ Analysis of debt: Debt can be analysed as falling due: In one year or less 140 121Between one and two years 151 133Between two and five years 524 466In five years or more 1,042 690 _____ _____ 1,857 1,410 _____ _____ The company refinanced its borrowings during the year into one loan. Interestwill be charged on this loan at the aggregate amount of 1.5% per annum above theBank of Ireland's Northern Ireland Base rate (at present 4.5% but subject tovariation). 16 Provisions for liabilities and charges 28 February 28 February 2006 2005 £'000 £'000Deferred taxation At beginning of period 3 7(Release)/charge for the period (see note 5) (24) (4)Transfer to debtors 21 - _____ _____ At end of period - 3 _____ _____ The basis by which taxation is calculated is stated in Note 1. There is nounprovided deferred tax. The elements of deferred taxation are as follows: 28 February 28 February 2006 2005 £'000 £'000Difference between accumulated depreciation and amortisation and capital allowances 1 (4)Other timing differences 20 1 _____ _____ Deferred tax asset/(liability) 21 (3) _____ _____ First Derivatives plc Notes (continued ) 17 Share capital 28 February 28 February 2006 2005 Number £'000 Number £'000Equity shares Authorised Ordinary shares of 0.5pence each 20,000,000 100 20,000,000 100 __________ ______ ___________ ______ Issued, allotted and fully paid Ordinary shares of 0.5pence each 12,714,858 64 12,397,825 62 __________ ______ ___________ ______ Options have been granted as set out below under the company's two share optionschemes which are open to all directors and employees of the company. Theoptions are subject to performance conditions as set by the company prior to thegrant of the option, and are exercisable following the satisfaction of theperformance criteria for a period not exceeding 10 years. Options granted are as follows: Number of Number of shares shares under under option at option 28 Exercise at 28 Granted Exercised Lapsed February price February 2006 2005 195,000 - 110,000 - 85,000 26.5 pence 219,000 - 62,000 20,000 137,000 51.0 pence 329,000 - 67,033 10,000 251,967 53.5 pence70,000 - 60,000 - 10,000 40.0 pence 279,000 - 15,000 18,000 246,000 62.0 pence 285,000 - - 285,000 102.0 pence 314,033 share options were exercised during the year, giving rise to an increasein share capital of £1,585 and an increase in share premium of £129,869. 18 Share premium and reserves Shares to Share Profit and be premium loss issued account account Restated £'000 £'000 At beginning of year as previously stated 9 780 1,265Prior year adjustment - dividend paid - - 181 ____ ____ _______ At beginning of year - restated 9 780 1,446Retained profit for the period - - 1,069Premium on shares issued - 130 -In the money element of options accrued (5) - -Dividend paid - - (181) ____ ____ _______ At end of year 4 910 2,334 ____ ____ _______ First Derivatives plc Notes (continued ) 19 Shareholders' funds 28 February 28 February 2006 2005 Restated Restated £'000 £'000 Profit for the financial year 1,069 569Dividend (restated) (181) (135)Net proceeds on issue of share capital 132 28In the money element of options accrued (5) 2 ______ ______ Increase in shareholders' funds 1,015 464 Opening shareholders' funds as originally 2,116 1,698stated Prior year adjustment - dividend paid 181 135 _____ _____ Opening shareholders' funds - restated 2,297 1,833 ______ ______ Closing shareholders' funds 3,312 2,297 ______ ______ 20 Commitments and contingencies There was a capital commitment at the period end in relation to an apartmentpurchased in London for £460,000 which was completed post year end. 21 Leasing commitments Annual commitments under non-cancellable operating leases are as follows: 28 February 2006 28 February 2005 Land and Land and buildings buildings £'000 £'000Operating leases which expire: In the next 12 months 15 -In the second to fifth years - 14 _____ ______ 15 14 _____ ______ 22 Pension contributions The company makes contributions to the personal pension schemes of certainemployees. The pension charge for the year amounted to £70,000 (2005: £70,000).Contributions amounting to £10,000 (2005: £Nil) were payable to the scheme andare included in creditors. First Derivatives plc Notes (continued ) 23 Contingent liabilities Contingent liabilities exist in respect of grants received by the company,whereby, in the event of the company failing to meet one or more of theconditions contained in the letters of offer to the company, the company wouldbe liable to repay the grant. 24 Related party transactions Brian Conlon is a shareholder of e-hub.com Limited. During the current and priorperiod the company did not trade with e-hub.com Limited. The amount due bye-hub.com Limited to the company at 28 February 2006 amounted to £13,287 (2005:£14,542). A full provision has been made against this receivable balance in thecurrent year. The amount owed to e-hub.com Limited at 28 February 2006 amountedto £11,525 (2005: £11,525). Brian Conlon is the majority shareholder in k-hub Limited. The company did nottrade with k-hub in the current or prior year. The amount due from k-hub to thecompany at 28 February 2006 amounted to £15,933 (2005: £15,933). A fullprovision has been made against this receivable balance in the current year. The company is charged rent annually for the use of apartments owned by themanaging director, located in London. The charge incurred during the financialyear amounted to £52,800 (2005: £52,800). Rent deposits of £26,400 have beenpaid to Brian Conlon in respect of these apartments. The company provided a short term loan of £240,000 to its associate,Carrickbridge Developments Limited in February 2006 which was repaid in April2006. 25 Ultimate controlling party The company is controlled by Brian Conlon, its majority shareholder. 26 Reconciliation of operating profit to net cashinflow from operating activities Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000 Operating profit 1,643 877Depreciation on tangible fixed assets 93 69Amortisation of intangible asset 180 180(Increase)/decrease in debtors (1,184) (445)(Decrease)/increase in creditors 879 69In the money element of options accrued (5) 2 _______ _______ Net cash inflow from operating activities 1,606 752 _______ _______ First Derivatives plc Notes (continued ) 27 Analysis of cash flows for headings in the cash flow statement Year ended Year ended 28 February 28 February 2006 2005 £'000 £'000a) Returns on investment and servicing of finance Interest paid (113) (74) Interest received 7 8 _______ _______ Net cash inflow from returns on investment and servicing of (106) (66) finance _______ _______ b) Taxation Corporation tax paid (232) (160) _______ _______ c) Capital expenditure Purchase of tangible fixed assets (1,389) (1,318) _______ _______ d) Financing Repayment of long term loan (103) (93) Issue of share capital 127 28 Receipt of new long term loan 550 932 _______ _______ 574 867 _______ _______ 28 Analysis of changes in net debt during the year Cash in Bank Debt due Debt due hand overdrafts within one after one year year Total £ £ £ £ £ Balance at 1 March 848 - (48) (523) 2772004 Cash flow (60) - 48 45 33New long term loan - - (37) (895) (932)Other non cash change - - (84) 84 - ______ ______ _______ _______ _______ Balance at 1 March 788 - (121) (1,289) (622)2005 Cash flow 272 - 103 - 375New long term loan - - (122) (428) (550)Other non cash change - - - - - ______ ______ _______ _______ _______ Balance at 28 February 1,060 - (140) (1,717) (797)2006 ______ ______ _______ _______ _______ First Derivatives plc Notice of Annual General Meeting Notice is hereby given that the Ninth Annual General Meeting of FirstDerivatives plc ("the company") will be held at the offices of Mills Selig, 21Arthur Street, Belfast, BT1 6DH on Thursday, 1 June 2006 at 11.30am for thefollowing purposes. Ordinary business 1 That the directors' report, statement of accounts and independent auditor'sreport for the year ended 28 February 2006 be received and approved. 2 That a dividend of 3.0p per share be declared for the year ended 28 February2006. 3 To re-elect David Anderson as a director of the company in accordance withArticle 115 of the Articles of Association of the company. 4 To re-appoint KPMG as auditors of the company to hold office from the conclusionof this meeting until the conclusion of the next general meeting at whichaccounts are laid before the company at a remuneration to be fixed by thedirectors. 5 That in substitution for all existing and unexercised authorities, the directorsof the company be and they are hereby generally and unconditionally authorisedpursuant to Article 90 of the Companies (Northern Ireland) Order 1986 (the"Order") to allot relevant securities (as defined in the Article) up to anaggregate nominal amount of £20,000, such authority to expire on the earlier ofthe date falling 15 months after the date of passing of this resolution, and thenext Annual General Meeting of the company, whichever is the later, but so thatthe company may, before such expiry, make an offer or agreement which could ormight require relevant securities in pursuance of any such offer or agreement asif such authority has not expired. 6 That in substitution for all existing and unexercised authorities and subject to the passing of the immediately preceding resolution, the directors of thecompany be and they are hereby empowered pursuant to Article 105 of the Order toallot equity securities pursuant to the authority conferred by the precedingresolution as if Article 99(1) of the Order did not apply to any such allotmentprovided that the power conferred by the resolution, unless previously revokedor varied by special resolution of the company in general meeting, shall belimited: (a) to the allotment of equity securities in connection with a rights issue infavour of ordinary shareholders where the equity securities respectivelyattributable to the interest of all such shareholders are proportionate (asnearly as may be) to the respective numbers of the ordinary shares held by themsubject only to such exclusions or other arrangements as the directors of thecompany may consider appropriate to deal with fractional entitlements or legaland practical difficulties under the laws of, or the requirements of anyrecognised regulatory body in, any territory, and; (b) to the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount of £xx representing 10% of the current issued share capital of the company; and shall expire on the date of the next Annual General Meeting of the companyor (if earlier) 15 months from the date of the passing of this resolution savethat the company may before such expiry make an offer or agreement which wouldor might require equity securities to be allotted after such expiry and thedirectors may allot equity securities in pursuance of such offer or agreement asif the power conferred hereby had not expired. By order of the Board Registered Office: 21 Arthur Street Belfast BT1 4GA John F GibbonsSecretary 4 May 2006 Notes 1 A member entitled to attend and vote at this meeting is entitled to appointone or more proxies to attend and vote in his/her stead. A proxy need not be amember of the company. 2 A proxy form is enclosed with this notice. Proxies must be lodged at theoffice of the company, Kilmorey Business Park, Kilmorey Street, Newry, BT34 2DH,not less than 48 hours before the time of the meeting. 3 The completion and return of a proxy will not prevent a member from attendingand voting in person at the meeting if so desired. 4 To be entitled to attend and vote at all the annual general meetings (and forthe purpose of determination by the company of the number of votes they maycast), members must be entered in the Companies Register of Members by xx May2006. 5 Copies of the executive directors service contracts of service together withthe engagement letters of the non-executive directors are available the registerof directors (and their families) interest in the share capital of the companyand the Memorandum and Articles of Association for inspection at the registeredoffice of the company during usual business hours, and will be available forinspection at the Annual General Meeting from 11.15 am until the conclusion ofthe meeting. 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FD Technologies