4th Oct 2007 07:01
First Derivatives PLC04 October 2007 4 October 2007 First Derivatives plc (AIM:FDP.L, IEX:GYQ.I) Interim results for the six months ended 31 August 2007 The principal activities of First Derivatives plc ("FDP" or the "Company") arethe provision of a range of support services to the investment banking marketand the derivatives technology industry and the provision of its own range ofniche banking applications. Financial Highlights - Turnover £ 5.641 m (2006: £4.178 m) +35% - EBITDA £2.116 m (2006: £1.239 m) +71% - Pre-tax profit £1.849 m (2006: £1.111 m) +66 % - Earnings per share 10.2p (2006: 5.9p) +73 % - Interim dividend 2.3p per share (2006: 1.4p) +64% Business Highlights - Further increase in Capital Market and Kx activity - First sale of FDP software product - Number of employees now exceeds 100 - Admission to the IEX market of the Irish Stock Exchange - Improved performance expected to continue during the second half David Anderson, Chairman of FDP commented "We are extremely pleased to report further progress in the first half of theyear and the Company expects to be able to report further progress for the fullyear." For further information please contact: First Derivatives 028 3025 2242Managing DirectorBrian Conlonwww.firstderivatives.com Charles Stanley Securities 020 7149 6000Nominated AdviserRussell CookCarl Holmes Goodbody Stockbrokers +353 1 667 0410Diane HodgsonLinda Hickey Stakeholder Communications 028 90339949Carl WhyteLisa Nugent First Derivatives plcInterim results for the six months ended 31 August 2007 CHAIRMAN'S STATEMENT I am pleased to report further progress for the Company in the six months to 31August. Turnover and profits increased as anticipated in our last tradingstatement on 23 August. The Company announces an increased interim pre-tax profit of £1.849 millioncompared with £1.111 million in the corresponding period of the previous year.Revenues were £5.641 million (2006: £4.178 million) and earnings per shareincreased by 73% to 10.2p (2006: 5.9p). The 2006 figures have been adjusted toreflect the impact of IFRS which has been adopted with effect from 1 March 2007. The Board announces the payment of an interim dividend of 2.3p per share (2006:1.4p per share). This will be paid on 18 October 2007 to those shareholders onthe register on 12 October 2007. The shares will be marked ex-dividend on 10October 2007. In our recent trading statement we referred to increased capital marketsactivities. We are continuing to experience strong levels of demand for ourconsultants and are achieving high utilisation levels. Our recruitment drive iscontinuing, supplemented by our evolving Capital Markets Training Programme andwe now have in excess of 100 staff. During the period under review our partners had some significant wins. Therehave been further sales of Kx products to such high profile customers as NYSE/Euronext, HypoVereinsbank (HVB) and the Financial Services Authority.Discussions are currently taking place with Kx on the existing partnershipagreement in response to changes in the technology market. We continue to develop our own range of niche software products and the Board ispleased to announce that FDP has just completed our first sale. Although for arelatively small amount the sale is on an annual licence basis. The balance sheet reflects an increase of £3,250,000 in borrowings in the sixmonths to 31 August which have financed the purchase of a further 3 propertiesin Manhattan and 2 in central London. We are repaying our borrowingsaggressively and our loan to value ratio for our property portfolio is less than60%. The Company looks forward to reporting further progress for the full year. Income statement (unaudited)For the period ended 31 August 2007 6 months ended 31 6 months ended 31 August 2007 August 2006 £'000 £'000 (restated)Revenue 5,641 4,178Cost of sales (3,159) (2,761)Gross profit/(loss) 2,482 1,417 Administrative expenses (496) (313)Other income 23 38Results from operating activities 2,009 1,142 Financial income 1 14Financial expenses (149) (65)Net financing costs (148) (51) Share of (loss)/profit of equity accounted associates (12) 20Profit before tax 1,849 1,111 Income tax expense (496) (358) Profit for the period 1,353 753 Pence PenceEarnings per ShareBasic 10.4 5.9 Statement of recognised income and expense (unaudited)For the period ended 31 August 2007 6 months ended 6 months ended 31 August 2007 31 August 2006 £'000 £'000 (restated)Profit/(loss) for the period 1,353 753 Total recognised income and expense for the period 1,353 753 Reconciliation of movement in capital and reserves Share Shares to Retained Share capital premium be issued earnings Total equity £000 £000 £000 £000 £000 Balance at 1 March 2006 (restated) 64 910 55 2,235 3,264Total recognised income and expense - - - 753 753Own shares issued - 60 - - 60Share based payments - - 65 - 65Dividends to equity holders - - - (381) (381)Deferred tax on share options - - - 5 5Balance at 31 August 2006 64 970 120 2,612 3,766 Balance at 1 March 2007 65 1,020 186 4,206 5,477Total recognised income and expense - - - 1,353 1,353Own shares issued - 86 - - 86Share based payments - - 121 - 121Dividends to equity holders - - - (468) (468)Deferred tax on share options - - - 5 5Balance at 31 August 2007 65 1,106 307 5,096 6,574 Balance Sheet (unaudited)As at 31 August 2007 As at 31 August As at 31 August 2007 2006 £'000 £'000 (restated)Non-current assetsIntangible assets 140 270Property, plant and equipment 11,327 4,585Other investments 209 209Investments accounted for using the equity method 243 41Deferred tax asset 567 163 12,486 5,268Current assetsTrade and other receivables 3,798 2,790Cash and cash equivalents 1,077 860 4,875 3,650Current liabilitiesInterest bearing borrowings (2,415) (140)Trade and other payables (1,491) (1,711)Current tax payable (1,260) (752)Employee benefits (711) (447) (5,877) (3,050) Net current (liabilities)/assets (1,002) 600 Total assets less current liabilities 11,484 5,868 Non-current liabilitiesInterest bearing borrowings (4,910) (2,102)Provisions - - Net assets 6,574 3,766 EquityIssued capital 65 64Share premium account 1,106 970Shares to be issued 307 120Retained earnings 5,096 2,612 Total equity 6,574 3,766 Cash Flow Statement (unaudited)For the period ended 31 August 2007 6 months ended 31 6 months ended 31 August 2007 August 2006 £'000 £'000 (restated)Cashflows from operating activitiesCash receipts from customers 6,813 4,727Cash paid to suppliers and employees (4,470) (3,430)Cash generated from operations 2,343 1,297Interest paid (333) (162)Net cash from operating activities 2,010 1,135 Cashflows from investing activitiesInterest received 1 25Acquisition of property, plant and equipment (484) (1,412)Acquisition of other investments - (76)Development expenditure (50) -Net cash from investing activities (533) (1,463) Cash flow from financing activitiesRepayment of borrowings (372) -New borrowings 500 -Issue of share capital 87 14Dividends paid (468) (381)Net cash from financing activities (753) 133 Net increase in cash and cash equivalents 724 (195)Cash and cash equivalents at 1 March 353 1,055Cash and cash equivalents at 31 August 1,077 860 Notes to the Interim Results First Derivatives plc ("FDP", or the "Company") is a company domiciled inNorthern Ireland. The interim financial statements of the Company for the sixmonths ended 31 August 2007 comprise the Company and its interest in associates. The interim financial statements were authorised for issuance on 2 October 2007. 1. Significant accounting policies (a) Statement of compliance The interim financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) for interim financialstatements. These are the Company's first IFRS interim financial statements forpart of the period covered by the first IFRS annual financial statements. IFRS1, First-time adoption of International Financial Reporting Standards has beenapplied. The interim financial statements do not include all of the informationrequired for full annual financial statements. An explanation of how the transition to IFRSs has affected the reportedfinancial position, financial performance and cash flows of the Company isprovided in note 4. This note includes reconciliations of equity and profit forcomparative periods reported under UK GAAP (previous GAAP) to those reported forthose periods under IFRSs. (b) Basis of preparation The results for the six months ended 31st August 2007 are unaudited. The financial statements contained in this report do not constitute statutoryaccounts within the meaning of Article 248 of the Companies (Northern Ireland)Order 1986. The results for the period ended 28th February 2007 were preparedunder UK GAAP and reported on by the auditors and received an unqualified auditreport. Full accounts for the period ended 28th February 2007 have beendelivered to the Registrar of Companies. The financial statements are presented in GBP, rounded to the nearest thousand.They are prepared on the historical cost basis, except financial instrumentsclassified as available-for-sale are stated at their fair value where this canbe reliably measured. Non-current assets are stated at the lower of carrying amount and fair valueless costs to sell. The preparation of interim financial statements in conformity with IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. Actual results may differ from these estimates. The directors of the Company have decided that, as permitted under the Companies(Northern Ireland) Order 1986, the next annual consolidated financial statementsof the company, for the year ending 28 February 2008 will be prepared inaccordance with International Financial Reporting Standards (IFRSs) as adoptedby the EU ("adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs as at 2 October 2007that are effective (or available for early adoption) at 28 February 2008, theCompany's first annual reporting date at which it has decided to use adoptedIFRSs. Based on these adopted IFRSs, the directors have applied the accountingpolicies as set out below which they expect to apply when the first annual IFRSfinancial statements are prepared for the year ending 28 February 2008. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 28 February2008 are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 28 February 2008. The preparation of the interim financial statements in accordance with IFRSresulted in changes to the accounting policies as compared with the most recentannual financial statements prepared under previous GAAP. The accountingpolicies set out below have been applied consistently to all periods presentedin these interim financial statements. They also have been applied in preparingan opening IFRS balance sheet at 1 March 2006 for the purposes of the transitionto IFRSs, as required by IFRS 1. The impact of the transition from previous GAAPto IFRSs is explained in note 4 below. (c) Associates Associates are those entities for which the Company has significant influence,but not control, over the financial and operating policies. The interimindividual financial statements of the Company include the Company's share ofthe total recognised gains and losses of associates on an equity accountedbasis, as the Company does not have any subsidiaries and does not prepareconsolidated accounts. The Company's share of the total recognised gains andlosses of associates on an equity accounted basis is included from the date thatsignificant influence commences until the date that significant influenceceases. When the Company's share of losses exceeds its interest in an associate,the Company's carrying amount is reduced to nil and recognition of furtherlosses is discontinued except to the extent that the Company has incurred legalor constructive obligations or made payments on behalf of an associate. Unrealised gains arising from transactions with associates are eliminated to theextent of the Company's interest in the entity. Unrealised losses are eliminatedin the same way as unrealised gains, but only to the extent that there is noevidence of impairment. (d) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rateruling at the date of the transaction or at a contracted rate. Monetary assetsand liabilities denominated in foreign currencies at the balance sheet date aretranslated to GBP at the foreign exchange rate ruling at that date or thecontracted rate. Foreign exchange differences arising on translation arerecognised in the income statement. Non-monetary assets and liabilities that aremeasured in terms of historical cost in a foreign currency are translated usingthe exchange rate at the date of the transaction. Non-monetary assets andliabilities denominated in foreign currencies that are stated at fair value aretranslated to GBP at foreign exchange rates ruling at the dates the fair valuewas determined. (e) Property, plant and equipment(i) Owned assets Items of property, plant and equipment are stated at cost or deemed cost lessaccumulated depreciation (see below) and impairment losses (see accountingpolicy k). Cost includes expenditure that is directly attributable to theacquisition of the asset. When parts of an item of property, plant and equipment have different usefullives, those components are accounted for as separate items of property, plantand equipment. (ii) Leased assets Leases in terms of which the Company assumes substantially all of the risks andrewards of ownership are classified as finance leases. (iii) Subsequent costs The Company recognises in the carrying amount of an item of property, plant andequipment the cost of replacing part of such an item when that cost is incurredif it is probable that the future economic benefits embodied within the itemwill flow to the Company and the cost of the item can be measured reliably. Allother costs are recognised in profit or loss as an expense as incurred. (iv) Depreciation Depreciation is charged to profit or loss on a straight-line basis over theestimated useful lives of each part of an item of property, plant and equipment.Land is not depreciated. The estimated useful lives are as follows: Office furniture and equipment - 25% straight linePlant and equipment - 25-50% straight lineBuildings - long leasehold and freehold - 2% straight line Depreciation methods, useful lives and residual values are reviewed at eachreporting date. (f) Investment property Investment property is property held either to earn rental income or for capitalappreciation or for both, but not for sale in the ordinary course of business,use in the production or supply of goods or services or for administrativepurposes. Investment property is measured at fair value with any change thereinrecognised in profit or loss. The fair values are estimated by the Directors and are based on market values,being the estimated amount for which a property could be exchanged on the dateof the valuation between a willing buyer and a willing seller in an arm's lengthtransaction after proper marketing wherein the parties had each actedknowledgeably, prudently and without compulsion. (g) Intangible assets (i) Research and development Expenditure on research activities undertaken with the prospect of gaining newtechnical knowledge and understanding, is recognised in profit or loss as anexpense as incurred. Expenditure on development activities, whereby research findings are applied toa plan or design for the production of new or substantially improved productsand processes, is capitalised if the product or process is technically andcommercially feasible and the Company has sufficient resources to completedevelopment. The expenditure capitalised includes the cost of materials, direct labour and anappropriate proportion of overheads. Other development expenditure is recognisedin the income statement as an expense as incurred. Capitalised developmentexpenditure is stated at cost less accumulated amortisation (see below) andimpairment losses (see accounting policy k). (ii) Other intangible assets Intangible assets other than goodwill that are acquired by the Group are statedat cost less accumulated amortisation (see below) and impairment losses (seeaccounting policy k). (iii) Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only whenit increases the future economic benefits embodied in the specific asset towhich it relates. All other expenditure is expensed as incurred. (iv) Amortisation Amortisation is charged to profit or loss on a straight-line basis over theestimated useful lives of intangible assets estimated to be 5 years. (h) Investments in equity securities Investments in unquoted equity instruments held by the Company are classified asbeing available-for-sale, and relate to shares acquired on the exercise ofoptions previously granted to the Company in return for services. As the fairvalue of these assets cannot be measured reliably, they are measured at cost,subject to impairment testing. (i) Trade and other receivables Trade and other receivables are stated at their cost less impairment losses (seeaccounting policy k). (j) Cash and cash equivalents Cash and cash equivalents comprises cash balances and call deposits with anoriginal maturity of three months or less. Bank overdrafts that are repayable ondemand and form an integral part of the Company's cash management are includedas a component of cash and cash equivalents for the purpose of the statement ofcash flows. (k) Impairment An impairment loss is recognised whenever the carrying amount of an asset or itscash-generating unit exceeds its recoverable amount. Impairment losses arerecognised in profit or loss unless the asset is recorded at a revalued amountin which case it is treated as a revaluation decrease. Impairment losses recognised in respect of cash-generating units are allocatedfirst to reduce the carrying amount of any goodwill allocated to thecash-generating unit (group of units) and then, to reduce the carrying amount ofthe other assets in the unit (group of units) on a pro rata basis. Goodwill and indefinite-lived intangible assets were tested for impairment at 1March 2006, the date of transition to IFRSs, even though no indication ofimpairment existed. When a decline in the fair value of an available-for-sale financial asset hasbeen recognised directly in equity and there is objective evidence that theasset is impaired, the cumulative loss that had been recognised directly inequity is recognised in profit or loss even though the financial asset has notbeen derecognised. The amount of the cumulative loss that is recognised inprofit or loss is the difference between the acquisition cost and current fairvalue, less any impairment loss on that financial asset previously recognised inprofit or loss. (i) Calculation of recoverable amount The recoverable amount of the Company's investments in held-to-maturitysecurities and receivables carried at amortised cost is calculated as thepresent value of estimated future cash flows, discounted at the originaleffective interest rate (i.e., the effective interest rate computed at initialrecognition of these financial assets). Receivables with a short duration arenot discounted. The recoverable amount of other assets is the greater of their net selling priceand value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflectscurrent market assessments of the time value of money and the risks specific tothe asset. For an asset that does not generate largely independent cash inflows,the recoverable amount is determined for the cash-generating unit to which theasset belongs. (ii) Reversals of impairment An impairment loss in respect of a held-to-maturity security or receivablecarried at amortised cost is reversed if the subsequent increase in recoverableamount can be related objectively to an event occurring after the impairmentloss was recognised. An impairment loss in respect of an investment in an equity instrumentclassified as available-for-sale is not reversed through profit or loss. If thefair value of a debt instrument classified as available-for-sale increases andthe increase can be related objectively to an event occurring after theimpairment loss was recognised in profit or loss, then the impairment loss isreversed, with the amount of the reversal recognised in profit or loss. In respect of other assets, an impairment loss is reversed if there has been achange in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carryingamount does not exceed the carrying amount that would have been determined, netof depreciation or amortisation, if no impairment loss had been recognised. (l) Earnings per share The company presents basic and diluted earnings per share (EPS) data for itsordinary shares. Basic EPS is calculated by dividing the profit or lossattributable to ordinary shareholders of the company by the weighted averagenumber of ordinary shares outstanding during the period. Diluted EPS isdetermined by adjusting the profit or loss attributable to ordinary shareholdersand the weighted average number of ordinary shares outstanding for the effectsof all dilutive potential ordinary shares, which comprise share options grantedto employees. (m) Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value lessattributable transaction costs. Subsequent to initial recognition,interest-bearing borrowings are stated at amortised cost with any differencebetween cost and redemption value being recognised in profit or loss over theperiod of the borrowings on an effective interest basis. (n) Employee benefits(i) Defined contribution plans Obligations for contributions to defined contribution pension plans arerecognised as an expense in profit or loss as incurred. (ii) Share-based payment transactions The share option programme allows Company employees to acquire shares of theCompany. The fair value of options granted is recognised as an employee expensewith a corresponding increase in equity. The fair value is measured at grantdate and spread over the period during which the employees becomeunconditionally entitled to the options. The fair value of the options grantedis measured using an adjusted Black-Scholes model, taking into account the termsand conditions upon which the options were granted. The amount recognised as anexpense is adjusted to reflect the actual number of share options that vestexcept where forfeiture is only due to share prices not achieving the thresholdfor vesting. (iii) Short term benefits Liabilities for employee benefits for wages, salaries and annual leave representpresent obligations resulting from employees' services provided to reportingdate and are calculated at undiscounted amounts based on remuneration wage andsalary rates that the Company expects to pay as at reporting date. A liability is recognised for the amount expected to be paid under short-termcash bonus plans if the Company has a present legal or constructive obligationto pay this amount as a result of past service provided by the employee and theobligation can be estimated reliably. (o) Provisions A provision is recognised in the balance sheet when the Company has a presentlegal or constructive obligation as a result of a past event, and it is probablethat an outflow of economic benefits will be required to settle the obligation.If the effect is material, provisions are determined by discounting the expectedfuture cash flows at a pre-tax rate that reflects current market assessments ofthe time value of money and, when appropriate, the risks specific to theliability. (p) Trade and other payables Trade and other payables are stated cost. (q) Revenue(i) Services rendered Revenue from services rendered is recognised in profit or loss in proportion tothe stage of completion of the transaction at the balance sheet date. No revenueis recognised if there are significant uncertainties regarding recovery of theconsideration due. (ii) Government grants An unconditional government grant is recognised in the income statement as otheroperating income when the grant becomes receivable. Any other government grantis recognised in the balance sheet initially as deferred income when there isreasonable assurance that it will be received and that the Company will complywith the conditions attaching to it. Grants that compensate the Company forexpenses incurred are recognised as revenue in profit or loss on a systematicbasis in the same periods in which the expenses are incurred. Grants thatcompensate the Company for the cost of an asset are recognised in profit or lossas other operating income on a systematic basis over the useful life of theasset. (r) Expenses(i) Operating lease payments Payments made under operating leases are recognised in profit or loss on astraight-line basis over the term of the lease. Lease incentives received arerecognised in profit or loss as an integral part of the total lease expense. (ii) Finance lease payments Minimum lease payments are apportioned between the finance charge and thereduction of the outstanding liability. The finance charge is allocated to eachperiod during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability. (iii) Net financing costs Net financing costs comprise interest payable on borrowings calculated using theeffective interest rate method, dividends on preference shares classified asliabilities, interest receivable on funds invested, dividend income, and foreignexchange gains and losses. Interest income is recognised in profit or loss as it accrues, using theeffective interest method. The interest expense component of finance leasepayments is recognised in profit or loss using the effective interest ratemethod. (s) Income tax Income tax on the profit or loss for the periods presented comprises current anddeferred tax. Income tax is recognised in profit or loss except to the extentthat it relates to items recognised directly in equity, in which case it isrecognised in equity. Current tax is the expected tax payable on the taxable income for the year,using tax rates enacted or substantially enacted at the balance sheet date, andany adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing fortemporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for taxation purposes. Thefollowing temporary differences are not provided for: goodwill not deductiblefor tax purposes, the initial recognition of assets or liabilities that affectneither accounting nor taxable profit, and differences relating to investmentsin subsidiaries to the extent that they will probably not reverse in theforeseeable future. The amount of deferred tax provided is based on the expectedmanner of realisation or settlement of the carrying amount of assets andliabilities, using tax rates enacted or substantively enacted at the balancesheet date. A deferred tax asset is recognised only to the extent that it is probable thatfuture taxable profits will be available against which the asset can beutilised. Deferred tax assets are reduced to the extent that it is no longerprobable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends arerecognised at the same time as the liability to pay the related dividend. 2. Dividends An Interim Dividend of 2.0p per share is proposed for the year ending 28February 2008. This will be paid to shareholders on 18 October to shareholderson the register on 12 October 2007. Shares will be Ex-Dividend on 10 October2007. 3. Earnings per Share The earnings per share for the six months ended 31 August 2007 has beencalculated on the basis of the profit after taxation of £1.353m. Earnings pershare of 10.4 pence has been calculated based on 13,018,429 shares outstanding. 4. Explanation of transition to IFRSs As stated in note 1(a), these are the Company's interim financial statements forpart of the period covered by the first IFRS annual financial statementsprepared in accordance with IFRSs. The basis of the accounting policies referred to in note 1 have been applied inpreparing the interim financial statements for the six months ended 31 August2007, the comparative information for the six months ended 31 August 2006 andthe preparation of an opening IFRS balance sheet at 1 March 2006 (the Company'sdate of transition). In preparing its opening IFRS balance sheet and comparative information for thesix months ended 31 August 2006, the Company has adjusted amounts reportedpreviously in financial statements prepared in accordance with previous GAAP. An explanation of how the transition from previous GAAP to IFRSs has affectedthe Company's financial position, financial performance and cash flows is setout in the following tables and the notes that accompany the tables. Reconciliation of equity Effect of Effect of Previous transition Previous transition GAAP to IFRSs IFRSs GAAP to IFRSs IFRSs 1 March 2006 31 August 2006 £000 £000 £000 £000 £000 £000AssetsIntangible assets 360 - 360 270 - 270Property, plant and equipment 3,238 23 3,261 4,551 34 4,585Other investments 111 - 111 209 - 209Investment accounted for using the 90 (90) - 111 (70) 41equity methodDeferred tax assets - 131 131 - 163 163Total non-current assets 3,799 64 3,863 5,141 127 5,268 Trade and other receivables 2,251 - 2,251 2,790 - 2,790Cash and cash equivalents 1,061 - 1,061 860 - 860Total current assets 3,312 - 3,312 3,650 - 3,650Total assets 7,111 64 7,175 8,791 127 8,918 LiabilitiesInterest-bearing loans and borrowings 140 - 140 140 - 140Trade and other payables 1,078 - 1,078 1,711 - 1,711Corporation tax payable 551 - 551 752 - 752Employee benefits 313 112 425 307 140 447Provisions - - - - - -Total current liabilities 2,082 112 2,194 2,910 140 3,050 Interest-bearing loans and borrowings 1,717 - 1,717 2,102 - 2,102Total non-current liabilities 1,717 - 1,717 2,102 - 2,102Total liabilities 3,799 112 3,911 5,012 140 5,152 Net assets 3,312 (48) 3,264 3,779 (13) 3,766 Effect of Effect of Previous transition Previous transition GAAP to IFRSs IFRSs GAAP to IFRSs IFRSs As at 1 March 2006 As at 31 August 2006 £000 £000 £000 £000 £000 £000EquityIssued capital 64 - 64 64 - 64Shares to be issued 4 51 55 4 116 120Share premium account 910 - 910 970 - 970Retained earnings 2,334 (99) 2,235 2,741 (129) 2,612Total equity 3,312 (48) 3,264 3,779 (13) 3,766 (a) Under previous GAAP, the investment in associate was not equity accounted in the individual financial statements of FDP, as the Company has no subsidiaries and consolidated financial statements were not prepared. Under IFRSs this investment in associate is equity accounted in the individual financial statements of the Company. The effect is to decrease the investment in associate by £90k at 1 March 2006, £70k at 31 August 2006 and to increase the investment in associate by £143k at 31 August 2007. (b) Under IFRS all leases of land and buildings have been reassessed, with leasehold land classified as held under operating leases where material and where a reliable split of land and buildings is available. In addition, the Company has reassessed the residual value of buildings at the relevant balance sheet date. The effect is to increase property, plant and equipment by £23k at 1 March 2006, £34k at 31 August 2006 and £91k at 31 August 2007. (c) The Company's holiday year runs concurrent with its financial year, and at the half year employees can carry forward any unused holiday into the second half of the year, hence an accrual is required under IAS 19. Up to 5 days of holiday leave not taken by the end of February can be carried forward into the new financial year. The effect is to increase the employee benefits creditor by £112k at 1 March 2006, £140k at 31 August 2006 and £225k at 31 August 2007. (d) The Company has adopted IAS 38: Intangible Assets from 1 March 2006. This has had no impact on the balance sheet at 1 March 2006 and 31 August 2006. As at 31 August 2007, £50k has been capitalised as development assets, comprising the cost of software development. (e) The Company applied FRS 20: Share Based Payments in its financial statements for the year ended 28 February 2007, however no adjustment in respect of FRS 20 had been made in the interim results for 31 August 2006. As IAS 2: Share Based Payments is consistent with FRS 20, the Company has adjusted its results as set out above to reflect share based payments in accordance with IAS 2. The effect is to decrease 'retained earnings' and increase 'shares to be issued' reserve by £51k at 1 March 2006, £116k at 31 August 2006 and £302k at 31 August 2007. (f) The Company has applied IAS 12: Income taxes from 1 March 2006, resulting in the recognition of a deferred tax asset arising from the future tax deduction expected on the exercise of share options. This has increased the Company's deferred tax asset by £100k at 1 March 2006, £124k at 31 August 2006 and £504k at 31 August 2007. In addition, a deferred tax asset on the holiday pay accrual established under IAS 19 has been recorded, resulting in an increase in the deferred tax asset of £31k at 1 March 2006, £39k at 31 August 2006 and £63k at 31 August 2007. Effect of Previous transition GAAP to IFRSs IFRSs £000 £000 £000 Note For the six months ended 31 August 2006 Revenue 4,178 - 4,178Cost of sales (2,679) (82) (2,761)Gross profit 1,499 (82) 1,417 Administrative expenses (313) - (313)Other operating expenses 38 - 38Operating profit before 1,224 (82) 1,142financing costs Financial income 14 - 14Financial expenses (65) - (65)Net financing costs (51) - (51) Share of profit of - 20 20associatesProfit before tax 1,173 (62) 1,111 Income tax expense (385) 27 (358)Profit for the period 788 35 753 Basic earnings per share (£) 5.9p - 5.9p The profit for the period ended 31 August 2006 is impacted by the adjustmentsdescribed in the reconciliation of equity above. The share based payment chargereduced profit by £65k, the share of profit of associate increased profit by£20k, the reduction of depreciation on property increased profit by £11k, theincrease in holiday leave accrual reduced profit by £28k and the increase indeferred tax asset on share based payments and holiday pay accrual has increasedprofit for the period by £27k. Explanation of material adjustments to the cash flow statement There are no material differences between the cash flow statement presentedunder IFRSs and the cash flow statement presented under previous GAAP. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FD Technologies