13th Jun 2006 07:01
Helphire Group PLC13 June 2006 Date June 13th 2006 : 07.00 Helphire Group plc (Helphire or the Company) 2nd interim results for the twelve months ending 31 March 2006 Highlights (Highlights and commentary in the Chief Executive's statement compare resultsfor the twelve months ending 31 March 2006 to the twelve months ending 31 March2005.) • Revenue increased by 51% to £178.5m • Adjusted operating margin increased from 15% to 17% * (statutory operating margin 16% (2005: 17%)) • Adjusted operating profit increased by 71% to £31.1m* (statutory operating profit increased by 39% to £28.4m) • Adjusted pre-tax profits increased by 82% to £27.1m * (statutory pre-tax profits increased by 42% to £24.4m) • Adjusted diluted EPS increased by 40% to 17.63p (statutory diluted EPS increased by 7.5% to 15.58p) • Second interim dividend of 3p per share • Successful integration of Swift Rentacar Ltd * Adjusted results for the twelve months ending 31 March 2006 are beforeamortisation of intangible fixed assets of £2,182k and share option charge of£497k. Adjusted results for the twelve months ending 31 March 2005 are beforegoodwill impairment charge of £1,453k, intangible assets impairment charge of£1,000k, amortisation of intangible assets of £1,048k, profit on sale oftangible fixed assets of £6,175k and share option charge of £412k. Contacts Mark B Jackson Tel: 01225 321 205 David E Lindsay 01225 321 298 Helphire Group plc Chris Steele Tel: 07979 604 687 Chief Executive's statement for the twelve months ending 31 March 2006 Overview Helphire is moving its financial year to a 30 June year-end from a 31 Marchyear-end, so as to remove the effect of seasonality on its results. Thisstatement reviews the first twelve months to 31 March 2006 of the currentfifteen-month accounting period. I am pleased to be able to report that the strong growth reported in the firstsix months to 30 September 2005 has continued. Hires increased in thetwelve-month period by 46% to 104,000 cases (2005: 71,000) including acontribution of 4,000 cases from Swift which was acquired in September 2005.Repairs have increased by 52% to 38,000 cases (2005: 25,000). Personal injuryclaims have increased by 63% to 26,000 cases (2005: 16,000). Financial Results Turnover for the twelve-month period was £178.5m, an increase of 51% from thesame period last year (2005: £118.4m). Gross profit of £75.8m represents anincrease of 39% (2005: £54.4m) at a margin of 42.5% (2005: 45.9%). This movementin the margin primarily reflects the increase in commissions paid to referrers. Operating profit increased by 39% to £28.4m (2005: £20.4m). This resultincorporates the amortisation of intangible assets and a charge relating toshare options, whilst the comparative figure for the twelve months to 31 March2005 also includes an exceptional profit following the sale and leaseback of theGroup's head office and impairment charges relating to goodwill and intangibleassets. Excluding these items, adjusted operating profit increased by 72% to£31.1m with the adjusted operating margin increasing from 15% to 17% as a resultof economies of scale and efficiency gains. Pre-tax profit on ordinary activities increased by 42% to £24.4m (2005: £17.2m).Excluding the items noted in arriving at the adjusted operating profit,adjusted pre-tax profit increased by 82% to £27.1m. Diluted earnings per share increased by 7.5% to 15.58p (2005: 14.49p) with theincrease impacted by a higher tax charge of 16.4% (2005: zero) and theexceptional profit of £6.2m reported in the year to 31 March 2005. On acomparable tax charge (16.4%) for the year to 31 March 2005, the growth indiluted earnings per share is 29%. A tax charge of 30% is expected in the yearto 30 June 2007. Bank borrowings and loan notes at the year-end were £66.2m (2005: £60m)including £38.0m acquisition finance for Albany. Operations The Company continues to focus on the supply of services to non-fault accidentvictims and the generation of additional revenue streams from the development ofthese services. A trading statement issued on 2 May announced the signing of the latestsignificant contract for the provision of accident management services to amajor insurance company. Volumes of cases from this contract are growingstrongly. The policyholder base of Angel Assistance, our legal expenses business, hascontinued to grow, increasing to over 790,000 policyholders. Albany, which wasacquired in October 2004, has continued to perform strongly and the integrationof Swift is now complete. The vehicle fleet has continued to expand and now comprises over 10,000 vehiclesoperating from twenty-five depots, with the latest new depot due to open inLeeds on 26 June. More than 96% of hires are fulfilled using our own vehiclesas opposed to cross hiring from daily rental companies. Utilisation hasfluctuated between 75% and 82% during the year. The Group now employs over1,500 staff and a new call centre facility has been opened in Bristol to servicethe insurance contract announced at the beginning of May. Dividends I am pleased to announce a second interim dividend payment of 3.0p giving atotal dividend so far this financial period of 6.0p. This dividend will be paidon 19 September 2006 to shareholders on the register on 23 June 2006. A first interim dividend payment of 3.0p per share (2004: 2.3p) was announcedfor the period to 30 September 2005, an increase of 30% over the same periodlast year. We intend to maintain that level of pro rata increase for thefifteen-month period as a whole. A final dividend will be announced inSeptember 2006 with the results for the full fifteen-month period ending on 30June 2006. Outlook Trading in the final quarter of the current fifteen-month accounting period hasbeen in line with expectations with a number of new key accounts referringbusiness. Current business levels provide the Board with confidence thatexpectations relating to the growth in cases in the year to 30 June 2007 will beachieved and that the operating margin can continue to be increased. Mark JacksonChief Executive12 June 2006 IFRS STATEMENT REPORTING UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS') With effect from 1 April 2005, Helphire Group plc will produce financialstatements in accordance with IFRS. Previously the Company reported under UKGenerally Accepted Accounting Practice ('UK GAAP'). This commentary highlightsthe key changes that have arisen due to the transition from reporting under UKGAAP to reporting under IFRS. The Company's date of transition to IFRS is 1April 2004, which is the beginning of the comparative period for the 2006financial year. Therefore, the opening balance sheet for IFRS purposes is thatreported at 31 March 2004 as amended for changes due to IFRS. This interim report is the second to be prepared under IFRS. The comparativefigures have been prepared on the same basis and have been restated from thosepreviously reported under UK GAAP. To help understand the impact of thetransition, the income reconciliation set out on page 15 shows the changes madeto the six month period ending 31 March 2005. Equity reconciliations for 1April 2004, 30 September 2004 and 31 March 2005 and income reconciliations for30 September 2004 and 31 March 2005 have been previously reported in the interimstatement for the six month period ending 30 September 2005. Key accounting policy changes are included within this report. A full set ofIFRS accounting policies will be published in the Company's financial statementsfor the fifteen-month period to 30 June 2006. The net effect of adopting IFRS rather than UK GAAP in the 2005 full yearfinancial statements is to decrease profit before tax from £17.5m to £17.2m andincrease net assets from £48.8m to £54.4m. The cash flows previously reportedin the 2005 full year have decreased by £0.5m. The key areas of change areoutlined below. FIRST TIME ADOPTION IFRS 1'First Time Adoption of International Financial Reporting Standards' setsout the approach to be followed when IFRS are applied for the first time. Ingeneral, a company is required to define its IFRS policies and apply themretrospectively. IFRS 1 does, however, allow a company to take advantage of anumber of exemptions from restating historical data in certain instances. Theseexemptions, designed to simplify the transition process, have been describedbelow to the extent that the company has applied them. IAS 10 POST BALANCE SHEET EVENTS IAS 10 requires dividends to be recognised as a liability when they areapproved. For a final dividend this is usually after the accounting period towhich it relates. Consequently, there is an adjustment to remove the liabilityfor the 2005 dividend declared on 10 June 2005 from the 31 March 2005 balancesheet. The net impact as at 31 March 2005 is a decrease in liabilities of£4,372,000. IAS 27 CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Fishers Legal Practice Limited ('Fishers') is a member of Helphire's panel ofsolicitors which handles cost bearing cases. The Directors have considered thenature of the relationship with Fishers against the requirements of IAS 27 andhave concluded that it satisfies the definition of a subsidiary. As such, theresults of Fishers have been consolidated into these financial statements. Thenet impact as at 31 March 2005 is an increase in net assets of £3,000. IAS 34 INTERIM FINANCIAL REPORTING The Directors have chosen not to comply with IAS 34. Accordingly, the interimfinancial statements do not comply with all the disclosures in IAS 34 on interimreporting and are therefore not in full compliance with IFRS. IFRS 2 SHARE-BASED PAYMENT IFRS 2 requires an expense to be recorded in the income statement for all formsof share-based payment. This expense is based on the fair value of the shareaward at the date the award is made. The expense is recorded over the period inrespect of which the employee provides services in respect of the share scheme.The Company has taken advantage of the transitional arrangements in IFRS 1 andaccordingly has applied IFRS 2 only to options granted since 7 November 2002 andnot fully vested at 1 April 2005. The impact has been a charge to operatingprofit for the year to 31 March 2005 of £412,000. There is no impact on totalequity as the income statement charge is offset by an equivalent amount creditedto the equity reserve. IAS 38 INTANGIBLE ASSETS Under IAS 38, expenditure is capitalised as an intangible asset where thecriteria within IAS 38 are met. Where acquisitions include an ongoingcontractual right to supply, and the fair value of the relationship can bemeasured, then that relationship is recognised as an intangible asset. The Directors have identified certain software licence and developmentexpenditure classified as tangible fixed assets under UK GAAP which they believemore closely meet the definition of intangible assets under IAS 38. Accordinglythese costs, which did not arise from a business acquisition, have beenreclassified as intangible assets under IFRS. The amounts reclassified from tangible fixed assets into intangible assets are£1,150,000 at 1 April 2004 and £456,000 at 31 March 2005. An impairment chargeof £1m relating to these assets, charged in the year ended 31 March 2005 hasaccordingly been reclassified as an impairment of intangible assets. IFRS 3 BUSINESS COMBINATIONS Under UK GAAP, Goodwill was amortised over its useful economic life. Under IFRS3 Goodwill is not amortised but is carried at cost with impairment reviews beingundertaken annually or when there is an indication that the carrying value hasreduced. Under the transitional arrangements of IFRS 1 a company has the optionof applying IFRS 3 prospectively from the transition date to IFRS. HelphireGroup plc has chosen this option rather than restate all previous businesscombinations and accordingly acquisitions prior to 1 April 2004 have not beenrestated for the effects of IFRS 3. The impact of IFRS 3 and associatedtransitional arrangements are as follows: - All prior business combination accounting is frozen at the transition date; and - The value of Goodwill is frozen at 1 April 2004 and amortisation previously reported under UK GAAP subsequent to 1 April 2004 is removed. The net impact on operating profit is an increase, resulting from a reversal ofGoodwill amortisation of £1,035,000 for the year ended 31 March 2005. The Directors have identified certain significant customer relationshipsacquired in the acquisition of Albany in October 2004 and Swift in September2005 as falling within the definition of intangible assets under IAS 38 as theyarise from contractual rights and can be measured reliably using appropriateassumptions regarding expected future economic benefits. Accordingly, part ofthe consideration paid for the shares in Albany is reclassified from Goodwillunder UK GAAP to Intangible Assets under IFRS, with an appropriate amortisationrate applied. The impact has been a charge to operating profit in the year ended 31 March 2005of £1,048,000, and a reclassification from Goodwill to Intangible Assets of£6,846,000. consolidated income statement for the six months to 31 March 2006 Unaudited Unaudited Unaudited Audited 6 months ended 6 months 12 months 12 months ended ended ended 31 March 31 March 31 March 31 March 2006 2005 2006 2005 Total Total Total Total £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Revenue Existing operations 93,659 74,892 169,029 118,442 Acquisitions 8,328 - 9,424 --------------------------------------------------------------------------------------------------------------Total revenue 101,987 74,892 178,453 118,442 Cost of sales (59,051) (39,756) (102,654) (64,056)-------------------------------------------------------------------------------------------------------------Gross profit 42,936 35,136 75,799 54,386-------------------------------------------------------------------------------------------------------------Administrative Expenses: Goodwill impairment charge - (1,453) - (1,453) Intangible asset impairment charge - (1,000) - (1,000) Amortisation of intangible assets (1,122) (1,048) (2,182) (1,048) Profit on sale of tangible fixed assets - 6,175 - 6,175 Other (25,976) (22,423) (47,939) (38,562)------------------------------------------------------------------------------------------------------------- (27,098) (19,749) (50,121) (35,888) Other operating income 1,557 1,203 2,751 1,915------------------------------------------------------------------------------------------------------------- Operating profit analysed between: Existing operations excluding profit and sale oftangible fixed assets 16,001 10,415 26,864 14,238 Profit on sale of tangible fixed assets - 6,175 - 6,175 Existing operations 16,001 16,590 26,864 20,413Acquisitions 1,394 - 1,565 -------------------------------------------------------------------------------------------------------------- Total operating profit 17,395 16,590 28,429 20,413-------------------------------------------------------------------------------------------------------------Finance costs (1,835) (2,396) (4,034) (3,255)-------------------------------------------------------------------------------------------------------------Profit on ordinary activities before taxation 15,560 14,194 24,395 17,158 Tax on profit on ordinary activities (2,316) 261 (3,992) 102-------------------------------------------------------------------------------------------------------------Profit for the period 13,244 14,455 20,403 17,260------------------------------------------------------------------------------------------------------------- Earnings per share Basic 9.77p 12.33p 15.95p 14.80p Diluted 9.53p 12.08p 15.58p 14.49p Adjusted basic (see note 4) 10.75p 10.25p 18.04p 12.86p Adjusted diluted (see note 4) 10.48p 10.04p 17.63p 12.59p All activities relate to continuing operations. The accompanying notes are an integral part of this consolidated income statement. consolidated balance sheet as at 31 March 2006 Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 31 March 30 September 31 March 2006 2005 2005 Total Total Total £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Assets Non-current assets: Goodwill 66,413 65,779 42,644 Other intangible assets 5,718 6,317 6,254 Property, plant and equipment (including vehicles) 49,377 34,171 14,442 Investments 300 300 300 Deferred tax asset 4,951 5,604 3,973------------------------------------------------------------------------------------------------------------- 126,759 112,171 67,613------------------------------------------------------------------------------------------------------------- Current assets: Trade and other receivables 116,820 96,825 81,558 Cash and cash equivalents 9,705 9,480 3,568------------------------------------------------------------------------------------------------------------- 126,525 106,305 85,126-------------------------------------------------------------------------------------------------------------Total assets 253,284 218,476 152,739------------------------------------------------------------------------------------------------------------- Liabilities Current liabilities: Trade and other payables (27,652) (24,725) (22,776) Tax liabilities (3,968) (2,694) - Obligations under finance leases (33,213) (28,641) (11,583) Short term borrowing and overdrafts (47,643) (31,701) (39,883)------------------------------------------------------------------------------------------------------------- (112,476) (87,761) (74,242)-------------------------------------------------------------------------------------------------------------Net current assets 14,049 18,544 10,884------------------------------------------------------------------------------------------------------------- Non-current liabilities: Bank loans (18,555) (26,393) (20,111) Deferred tax liability (1,616) (1,508) (1,739) Obligations under finance leases (9,591) (2,392) (2,237)------------------------------------------------------------------------------------------------------------- (29,762) (30,293) (24,087)-------------------------------------------------------------------------------------------------------------Total liabilities (142,238) (118,054) (98,329)-------------------------------------------------------------------------------------------------------------Net assets 111,046 100,422 54,410------------------------------------------------------------------------------------------------------------- Equity Share capital 6,796 6,759 5,907 Share premium account 65,993 65,166 23,936 Equity reserve 3,313 2,728 1,585 Retained earnings 34,944 25,769 22,982-------------------------------------------------------------------------------------------------------------Total equity 111,046 100,422 54,410------------------------------------------------------------------------------------------------------------- consolidated statement of changes in equity for the six months ended 31 March2006 Share Share premium Equity Retained capital account reserve earnings Total £'000 £'000 £'000 £'000 £'000------------------------------------------------------------------------------------------------------------- Six months ending 31 March 2005 Balance at 1 October 2004 5,803 22,231 2,100 11,240 41,374 Profit for the current period - - - 14,455 14,455 Issue of new ordinary shares 104 1,705 - - 1,809 Share based incentive plans - - 235 - 235 Deferred tax-share based incentive plan - - (750) - (750) Dividend paid - - - (2,713) (2,713) ------------------------------------------------------------------------------------------------------------- Balance at 31 March 2005 5,907 23,936 1,585 22,982 54,410------------------------------------------------------------------------------------------------------------- Year ended 31 March 2005 Balance at 1 April 2004 5,800 22,186 1,335 11,335 40,656 Profit for the current period - - - 17,260 17,260 Issue of new ordinary shares 107 1,750 - - 1,857 Share based incentive plans - - 412 - 412 Deferred tax-share based incentive - - (162) - (162)plan Dividend paid - - - (5,613) (5,613)------------------------------------------------------------------------------------------------------------- Balance at 31 March 2005 5,907 23,936 1,585 22,982 54,410------------------------------------------------------------------------------------------------------------- Six months ended 31 March 2006 Balance at 1 October 2005 6,759 65,166 2,728 25,769 100,422 Profit for the current period - - - 13,244 13,244 Issue of new ordinary shares 37 827 - - 864 Share based incentive plans - - 205 - 205 Deferred tax-share based incentive plan - - 380 - 380 Dividend paid - - - (4,069) (4,069)-------------------------------------------------------------------------------------------------------------Balance at 31 March 2006 6,796 65,993 3,313 34,944 111,046------------------------------------------------------------------------------------------------------------- Twelve months ended 31 March 2006 Balance at 1 April 2005 5,907 23,936 1,585 22,982 54,410 Profit for the current period - - - 20,403 20,403 Issue of new ordinary shares 889 42,057 - - 42,946 Share based incentive plans - - 497 - 497 Deferred tax-share based incentive plan - - 1,231 - 1,231 Dividend paid - - - (8,441) (8,441)-------------------------------------------------------------------------------------------------------------Balance at 31 March 2006 6,796 65,993 3,313 34,944 111,046------------------------------------------------------------------------------------------------------------- consolidated cash flow statement for the six months to 31 March 2006 Unaudited Unaudited Unaudited Audited 6 months 6 months 12 months 12 months ended ended ended ended 31 March 31 March 31 March 31 March 2006 2005 2006 2005 Total Total Total Total £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Cash flows from operating activities: Operating profit 17,395 16,590 28,429 20,413 Depreciation and amortisation charges 6,986 5,724 11,143 7,502 Loss / (gain) on sale of tangible fixed assets 220 (6,111) (4) (6,141) Shared based payment charge 205 235 497 412 Increase in debtors (18,396) (20,766) (33,663) (25,216) Increase in creditors 2,879 6,677 4,876 7,193------------------------------------------------------------------------------------------------------------- Cash generated from operations 9,289 2,349 11,278 4,163 Bank and loan interest paid (1,641) (2,066) (3,584) (2,710) Interest element of finance lease payment (190) (330) (450) (545)------------------------------------------------------------------------------------------------------------- (1,831) (2,396) (4,034) (3,255) Taxation paid (1,429) (222) (1,429) (222)-------------------------------------------------------------------------------------------------------------Net cash flow from operating activities 6,029 (269) 5,815 686 Cash flows from investing activities: Purchase of property, plant and equipment (60) - (347) (404) Purchase of intangible assets (1,356) - (1,356) - Purchase of unlisted investments - (300) - (300) Proceeds from sale of plant and equipment 1,059 1,038 4,540 862 Proceeds from sale of freehold property - 17,779 - 17,779 Acquisitions - (29,941) (17,051) (29,941)------------------------------------------------------------------------------------------------------------- Net cash outflow from investing activities (357) (11,424) (14,214) (12,004) Cash flows from financing activities: Net proceeds from issue of ordinary share capital 864 1,809 39,721 1,857 Net proceeds from issue of new loans 7,700 29,271 16,450 33,447 Repayment of borrowings (23,894) (13,765) (37,347) (13,765) Capital element of other loans repayment - (556) - (556) Finance lease principal repayments (10,342) (3,127) (18,925) (5,019) Dividends paid to shareholders (4,069) (2,713) (8,441) (5,613)------------------------------------------------------------------------------------------------------------- Net cash (outflow) / inflow from financing activities (29,741) 10,919 (8,542) 10,351-------------------------------------------------------------------------------------------------------------Net decrease in cash & cash equivalents (24,069) (774) (16,941) (967) Cash and cash equivalents at beginning of period 7,323 969 195 1,162-------------------------------------------------------------------------------------------------------------Cash and cash equivalents at end of period (16,746) 195 (16,746) 195-------------------------------------------------------------------------------------------------------------Cash and cash equivalents consist of: Cash in hand 5,683 3,568 5,683 3,568 Cash held in restricted deposit 4,022 - 4,022 - Bank overdraft (26,451) (3,373) (26,451) (3,373)------------------------------------------------------------------------------------------------------------- (16,746) 195 (16,746) 195------------------------------------------------------------------------------------------------------------- analysis and reconciliation of net debt 30 September Other non-cash 31 March 2005 Cash flow changes 2006 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Cash at bank and in hand 5,458 225 - 5,683 Cash held in restricted deposit 4,022 - - 4,022 Overdrafts (2,157) (24,294) - (26,451)------------------------------------------------------------------------------------------------------------- 7,323 (24,069) - (16,746) Debt due after one year (18,994) 439 - (18,555) Debt due within one year (36,942) 15,750 - (21,192) Finance leases (31,033) 10,342 (22,113) (42,804)-------------------------------------------------------------------------------------------------------------Net debt (79,646) 26,531 (22,113) (99,297)------------------------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Audited 6 months 6 months 12 months 12 months ended ended ended ended 31 March 31 March 31 March 31 March 2006 2005 2006 2005 Total Total Total Total £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------- Decrease in cash in the period (24,069) (774) (16,941) (967) Cash inflow from increase in debt andlease financing 26,531 (12,220) 39,821 (14,111)------------------------------------------------------------------------------------------------------------- Change in net debt resulting from cash flows 2,462 (12,994) 22,880 (15,078) Issues of loan notes - (17,170) (4,022) (17,170) New finance leases (22,113) (9,351) (47,909) (12,419)------------------------------------------------------------------------------------------------------------- Movement in net debt in period (19,651) (39,515) (29,051) (44,667) Net debt as start of period (79,646) (30,731) (70,246) (25,579)-------------------------------------------------------------------------------------------------------------Net debt at end of period (99,297) (70,246) (99,297) (70,246)------------------------------------------------------------------------------------------------------------- notes to the interim report 1 BASIS OF PREPARATION Historically Helphire Group plc ('Helphire') has prepared its financialstatements in accordance with UK Generally Accepted Accounting Principles ('UKGAAP'). As a result of changes in EU legislation, Helphire is preparingfinancial statements in accordance with International Financial ReportingStandards ('IFRS') for accounting periods beginning on or after 1 April 2005.Except as described in note 2, the interim financial statements have beenprepared under the historical cost convention, and on the basis of theaccounting policies set out in the Annual Report and Accounts for the year ended31 March 2005. The unaudited interim financial statements have been prepared on the basis ofall IFRS that are expected to be applicable for the Company's interim reportingfor the fifteen-month period ending 30 June 2006. The standards are subject toongoing review and possible amendment. Further standards and/or interpretationsmay be issued that could apply to 2006. If any such amendments, new standardsor new interpretations are issued these may require the financial informationprovided in this interim report to be changed. Helphire will also continue toreview its accounting policies in the light of emerging industry consensus onthe practical application of IFRS. Consequently, the financial informationprovided in this interim report may require modification until the firstcomplete set of audited IFRS financial statements are prepared for thefifteen-month period to 30 June 2006. The Directors have chosen not to comply with IAS 34. Accordingly, the interimfinancial statements do not comply with all of the disclosures in IAS 34 oninterim reporting and are therefore not in full compliance with IFRS. The interim financial information for the six months and twelve months ended 31March 2006 and six months ended 31 March 2005 has not been audited and does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The information for the year ended 31 March 2005 does not constitute statutoryaccounts as defined in Section 240 of the Companies Act 1985. A copy of thestatutory accounts, which were prepared under UK GAAP and on which the Company'sauditors gave an unqualified report, has been filed with the Registrar ofCompanies. 2 ACCOUNTING POLICIES The accounting policies followed in the preparation of this interim report havebeen applied consistently to all years presented and do not differ significantlyfrom those applying in the last financial statements for the year ended 31 March2005 other than where the following changes to accounting policies have beenadopted in order to comply with IFRS. Post Balance Sheet Events IAS 10 requires dividends to be recognised as a liability when they areapproved. For a final dividend this is when it is approved by shareholders atan Annual General Meeting. Interim dividends are accounted for when paid. Share-based Payment IFRS 2 requires that share-based payments are recognised as an expense in theincome statement at fair value. The expense is based on the fair value of theshare award at the date the award is made. The fair value is calculated usingthe Black-Scholes model and is applied only to options granted after 7 November2002 and not vested at 1 April 2005. Business Combinations In accordance with IFRS 3, Goodwill is carried at cost subject to impairmentreview. Under the transitional arrangements of IFRS 1, the Company hasexercised its option of applying IFRS 3 prospectively from the date oftransition to IFRS. Accordingly, Goodwill arising from acquisitions prior to 1April 2004 is frozen at its written down value as at that date. Intangible Assets Where expenditure meets the criteria set out in IAS 38, it should be capitalisedas an intangible asset. The Directors have identified that part of the cost ofacquisitions that include a continued supply contract post acquisition should becapitalised as an intangible asset. These are amortised over a period of two tofour years. The Directors have also identified certain software licence and developmentexpenditure classified as intangible fixed assets under UK GAAP which theybelieve more closely meet the definition of intangible assets under IAS 38.Accordingly, these costs, which did not arise from a business acquisition, havebeen reclassified as intangible assets under IFRS. Consolidated and Separate Financial Statements Fishers Legal Practice Limited ('Fishers') is a member of Helphire's panel ofsolicitors which includes cost bearing cases. The Directors have considered thenature of the relationship with Fishers against the requirements of IAS 27 andhave concluded that it satisfies the definition of a subsidiary. As such, theresults of Fishers have been consolidated into these financial statements. Impairments of Assets Impairment tests are carried out whenever events or changes in circumstancesindicate that the carrying value of assets may not be recoverable, and alsoannually in the case of Goodwill, which has an indefinite useful life and is notsubject to amortisation and intangible assets not yet available for use. Animpairment loss is recognised in respect of the amount by which the asset'scarrying amount exceeds its recoverable amount, defined as the higher of theasset's fair value less costs of disposal and value in use. For the purposes ofassessing impairment, assets are grouped at the lowest levels for which thereare separately identifiable cash flows (cash-generating units). 3 TAXATION Unaudited Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 12 months ended 31 March 31 March 31 March 31 March 2006 2005 2006 2005 Total Total Total Total £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Current year UK corporation tax 1,348 201 3,096 201 Current year deferred tax 968 (462) 896 (303)-------------------------------------------------------------------------------------------------------------Total tax charge/(credit) 2,316 (261) 3,992 (102)------------------------------------------------------------------------------------------------------------- The tax charge is based on the estimated effective tax rate for the full year. 4 EARNINGS PER SHARE The calculation of basic earnings per share is based on the profit after tax andusing the weighted average number of ordinary shares during the six-month periodto 31 March 2006 and the year ended 31 March 2006. The number of shares are135,596,126 and 127,948,616 respectively. The comparative figures for the sixmonths ended 31 March 2005 and the year ended 31 March 2005 are 117,191,534 and116,612,903 respectively. The calculation of diluted earnings per share isbased on 139,021,234 for the six months ended 31 March 2006 and 130,946,988 forthe year ended 31 March 2006 potential ordinary shares. The comparative figurefor the six-month period ended 31 March 2005 and year ended 31 March 2005 are119,669,823 and 119,091,192 respectively. Adjusted earnings per share is based on the profit for the period adjusted forthe following factors and the weighted average number of ordinary shares shownabove. For the six month period to 31 March 2006, adjusted profit for theperiod is before amortisation of intangible fixed assets of £1,122,000 (2005:£1,048,000), share option charge of £205,000 (2005: £235,000), goodwillimpairment charge of £nil (2005: £1,453,000), intangible asset impairment chargeof £nil (2005: £1,000,000) and profit on sale of tangible fixed assets of £nil(2005: £6,175,000). For the twelve month period to 31 March 2006, adjustedprofit for the period is before amortisation of intangible fixed assets of£2,182,000 (2005: £1,048,000), share option charge of £497,000 (2005: £412,000),goodwill impairment charge of £nil (2005: £1,453,000), intangible assetimpairment charge of £nil (2005: £1,000,000) and profit on sale of tangiblefixed assets of £nil (2005: £6,175,000). 5 DIVIDENDS Unaudited Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 12 months ended 31 March 31 March 31 March 31 March 2006 2005 2006 2005 Total Total Total Total £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Amounts recognised as distributions toequity holders in the period: Final dividend for the year ended 31March 2005 of 3.7p (2004: 2.5p) per ordinary share - - 4,372 2,900 Interim dividend for the 15 month periodending 30 June 2006 3p (2005: 2.3p) perordinary share 4,069 2,713 4,069 2,713------------------------------------------------------------------------------------------------------------- 4,069 2,713 8,441 5,613------------------------------------------------------------------------------------------------------------- A proposed dividend of 3.0p was approved by the Board on 8 June 2006 and has notbeen recognised as a liability at 31 March 2006. It will be paid on 19September 2006 to shareholders on the register on 23 June 2006. consolidated IFRS income reconciliation for the six month period to 31 March2005 Per UK IFRS 2 IFRS 3 IAS 38 IAS 27 Per IFRS GAAP Share-based Business Intangible Consolidated payment combination assets and separate financial statements £'000 £'000 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------Continuing Operation Revenue 74,627 - - - 265 74,892 Cost of sales (39,756) - - - - (39,756)-------------------------------------------------------------------------------------------------------------Gross profit 34,871 - - - 265 35,136------------------------------------------------------------------------------------------------------------- Administrative expenses: Goodwill impairment charge (1,453) - - - - (1,453) Intangible asset impairment charge (1,000) - - - - (1,000) Profit on sale of tangible fixed assets 6,175 - - - - 6,175 Other (23,003) (235) 885 (1,048) (70) (23,471)------------------------------------------------------------------------------------------------------------- (19,281) (235) 885 (1,048) (70) (19,749)Other operating income 1,203 - - - - 1,203-------------------------------------------------------------------------------------------------------------Total operating profit 16,793 (235) 885 (1,048) 195 16,590 Finance costs (2,341) - - - (55) (2,396)-------------------------------------------------------------------------------------------------------------Profit on ordinary activities before taxation 14,452 (235) 885 (1,048) 140 14,194 Tax on profit on ordinary activities (53) - - 314 - 261-------------------------------------------------------------------------------------------------------------Profit for the period 14,399 (235) 885 (734) 140 14,455------------------------------------------------------------------------------------------------------------- independent review report to helphire group plc INTRODUCTION We have been instructed by the Company to review the financial information forthe six months ended 30 March 2006 which comprises the consolidated incomestatement, the consolidated balance sheet, the consolidated statement of changesin equity, the consolidated cash flow statement, the analysis and reconciliationof net debt, the related notes 1 to 5, the IFRS income reconciliation and theIFRS statement. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. DIRECTORS' RESPONSIBILITIES The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. International Financial Reporting Standards As disclosed in note 1, the next annual financial statements of the Group willbe prepared in accordance with the International Financial Reporting Standardsas adopted for use in the EU. Accordingly, the interim report has been preparedin accordance with the recognition and measurement criteria of IFRS and thedisclosure requirements of the Listing Rules. The accounting policies areconsistent with those that the Directors intend to use in the annual financialstatements. There is, however, a possibility that the Directors may determinethat some changes to these policies are necessary when preparing the full annualfinancial statements for the first time in accordance with IFRS as adopted foruse in the EU. REVIEW WORK PERFORMED We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Boards for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as test of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with the International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six and twelvemonth periods ended 31 March 2006. Deloitte and Touche LLPChartered Accountants Bristol12 June 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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