Interim Results

22nd May 2008 07:00



22nd May 2008

FULCRUM PHARMA PLC

("the Group" or "the Company")

Interim Results for the six months to 29 February 2008

Fulcrum Pharma plc (AIM: FUL), the drug development and regulatory services company, today announces its interim results for the six months to 29 February 2008. 

Highlights

Sales up by 12% to £7.4 million (compared to H2 2007 and 53% compared to H12007)

Operating profit has more than doubled to £218,000 (H1 2007: £107,000). 

Net cash generation of £451,000 (after £618,000 of loan repayments)

EBITDA up 73% to £409,000 (H1 2007: £236,000)

Note: The Company has adopted International Financial Reporting Standards (IFRS) in these interim results. The adoption of this accounting standard represents a change in accounting policy and the comparative figures have been restated accordingly.

Commenting on the results, Chairman Prof. Sir Charles George said: 

"We continue to implement our plan to grow and develop our global business through a combination of M&A and organic growth. This is enabling Fulcrum to expand its pharmaceutical development and regulatory services and drive sales growth and profitability. We were pleased to announce the appointment on 1 April 2008 of Dr Frank Armstrong as CEO. He will be conducting a review of the business to deliver a strategy for further future profitable growth. The Board would like to thank Dr Jon Court, who retired as CEO, and to all of our staff for contributing to the progress Fulcrum has made".

For further information, please contact:

Fulcrum Pharma PLC
Dr Frank M Armstrong, Chief Executive	Tel: 07508 010912
Seymour Pierce
Jonathan Wright	Tel: 0207 107 8000

  Fulcrum Pharma PLC

Interim Results for the Period Ended 29 February 2008

Report of the Chairman

 

Introduction

I am pleased to report continued growth in sales and operating profit and significant cash generation during the first half of the year.  

Strategic Review

The group strategy to develop the business with a combination of organic growth and M&A has resulted in significant growth in sales and operating profit. The Group appointed a new Chief Executive, Dr Frank Armstrong, on 1 April 2008. Dr Armstrong brings extensive experience of the pharma and biotech industries in Europe and the US. He is leading the management team and the Board in an exercise to determine how Fulcrum will be best placed to develop the business.

 

Financial Review

The Group has adopted International Financial Reporting Standards (IFRS) in these interim results. The adoption of this accounting standard represents a change in accounting policy and the comparative figures have been restated accordingly. The impact of adoption of IFRS on the Group's income statement for the period ended 29 February 2008 has been to reduce the UK GAAP profit for the period by £50,000 (H1 2007: increase of £42,000) as a result of the changes in accounting for employee benefits, business combinations and lease inducements. Revenue is reported under IFRS as essentially the fee sales excluding passthrough sales, where costs are passed through with no margin.

The results for the half year ended 29 February 2008 show sales have risen by 53% to £7.4 million, compared with the corresponding period, in line with increased headcount of 134 (2007: 90). Operating profit has increased to £218,000 (H1 2007: £107,000). Retained profit is £66,000 (H1 2007: £108,000). The results include a provision against available-for- sale financial assets of £99,000, which represents the director's estimate of the permanent diminution in value of the investment in NanoCarrier Co Ltd.

Earnings before interest, tax, depreciation and amortisation ("EBITDA") were £409,000 (H1 2007: £236,000). Earnings per share were 0.04p (H1 2007:0.07p)

The balance sheet remains strong with an increase in net cash during the period of £451,000 to £2.7 million at 29 February 2008, after £618,000 of loan repayments.

The directors do not propose a dividend but will keep under review the possibility of a dividend payable out of profits for the full year (H1 2007: £nil).

Operating Review

Commercial, Sales and General Business Development 

Group sales increased by 12% to £7.4 million compared to the second half of 2007 at £6.6 million and by 53% compared with £4.9 million for the same period last year. We expect to see the seasonal increase in sales in the second half year. 

Europe

Fulcrum Pharma (Europe) Ltd was formed on 1st April 2008 as the single trading company in Europe. This legally integrated the acquired subsidiary companies, Quadramed Ltd and Unicus Regulatory Services Ltd ("Unicus"), with Fulcrum Pharma Developments Limited. This is part of the group's strategic plan for organic growth.

Sales have grown by 47% to £5.0 million in the period to 29 February 2008 (H1 2007: £3.4 million) reflecting the strong contribution from Unicus which was acquired in March 2007. The initial issues experienced in Unicus in the quarter following its acquisition have been resolved and the sales performance endorses the Group strategy to invest in regulatory services.

As part of the MHRA's routine audit schedule Fulcrum has undergone three audits, two for Good Clinical Practice and one for Pharmacovigilance in the reporting period.

  

US

The recovery of the US business has continued. Sales in the period to 29 February 2008 have more than doubled to £1.2 million (H1 2007: £588,000) and are 37% higher than the second half of last year. Demand has been strong for non-clinical services and, in order to satisfy this demand, a new office was opened in Ann Arbor, Michigan in November 2007. The next step is to build upon the existing base of non-clinical services and establish strong clinical and regulatory services.

Japan 

Domestic sales and profits have grown strongly in the first half of this year. Sales are 44% higher than for the same period last year and 7% higher than the second half of last year. Demand for Fulcrum's specialist oncology development services continues to grow, with new clients being added to a substantial repeat client base. Fulcrum now has an established position as the development partner of choice for early clinical studies in oncology in Japan. Sales activity on behalf of the Fulcrum affiliates in Europe and the United States continues to deliver substantial business from Japanese clients for the operating groups in both those regions.

Future Strategy and Outlook

The Group intends to pursue optimising the business through the remainder of the 2008 financial year and will look to further develop the offerings by continued organic growth and selective acquisition.

Finally I would like to thank all of our staff for contributing to the progress Fulcrum has made, particularly Dr Jon Court, who has now stepped down from the Board, for his years of leadership of the Fulcrum business. 

Prof. Sir Charles George, 

Chairman

20th May 2007

Consolidated Income Statement

For the period ended 29 February 2008

		Period ended	Period ended	Year  ended
		29 February	28 February	31 August
		2008	2007	2007
		Unaudited	Unaudited	Unaudited
	Note	£'000	£'000	£'000
Revenue	3	7,444	4,859	11,503
Cost of sales		(4,266)	(2,794)	(6,808)
Gross profit		3,178	2,065	4,695
Selling expenses		(359)	(212)	(504)
Administrative expenses		(2,621)	(1,791)	(4,039)
Other operating income		20	45	95
Operating profit		218	107	247
Provision against Available-for-sale financial assets		(99)	-	-
Interest receivable and similar income		31	20	42
Interest payable and similar charges		(56)	(19)	(77)
Profit on ordinary activities before taxation		94	108	212
Tax on profit on ordinary activities	4	(28)	-	(10)
Profit attributable to shareholders		66	108	202
Proposed dividend	5	-	-	-
Profit for the period		66	108	202
Earnings per share (pence)
Basic	6	0.04p	0.07p	0.11p
Diluted	6	0.04p	0.07p	0.11p

All items included in the profit and loss accounts relate to continuing operations.

Consolidated statement of recognised income and expense

	Period ended	Period  Ended	Year  Ended
	29 February	28 February	31 August
	2008	2007	2007
	Unaudited	Unaudited	Unaudited
	£'000	£'000	£'000
Fair value losses net of tax: Available for sale financial assets	(29)	-	-
Net expense recognised directly in equity	(29)	-	-
Profit for the year	66	108	190
Total recognised income for the period	37	108	190
Prior year adjustment - FRS 20	-	(171)	(128)
Total recognised gains/(losses) attributable to the shareholders	37	(63)	62

Consolidated Balance Sheet

For the period ended 29 February 2008

	Period ended	Period  ended	Year  Ended
	29 February	28 February	31 August
	2008	2007	2007
	Unaudited	Unaudited	Unaudited
	£'000	£'000	£'000

Assets Non current assets Goodwill Intangible assets Property, plant and equipment  Available-for-sale financial assets	3,527 88 670 341	1,315 - 605 469	3,507 151 715 469
	4,626	2,389	4,842
Current assets Trade and other receivables Cash and cash equivalents	5,036 2,670	4,707 946	5,923 2,434
	7,706	5,653	8,357
Liabilities Current liabilities Bank and other borrowings Loan notes Deferred cash consideration Trade and other payables Current tax liabilities	329 136 114 4,967 258	76 364 - 3,395 236	1,248 450 - 5,144 285
	5,804	4,071	7,127
Net current assets	1,902	1,582	1,230
Non current liabilities Bank loans and other borrowings Convertible loan stock Deferred cash consideration	772 - -	142 250 -	116 136 114
	772	392	366
Net assets	5,756	3,579	5,706
Equity Share capital Share premium account Merger reserve Profit and loss account	1,779 6,082 (454)  (1,651)	1,285 4,547 (454) (1,799)	1,779 6082 (454) (1,701)
Total equity	5,756	3,579	5,706

Consolidated cash flow statement

For the period ended 29 February 2008

	Period ended	Period ended	Year Ended
	29 February	28 February	31 August
	2008	2007	2007
	Unaudited	Unaudited	Unaudited
	£'000	£'000	£'000

Continuing operations Operating profit Adjustments for: Depreciation of property, plant and equipment Amortisation of Intangible assets Share based payments Loss on disposal of fixed assets Changes in working capital: Decrease//(increase) in trade and other receivables Increase in payables	218 138 53 30 - 631 5	107 129 - 40 47 (1,053) 402	247 275 44 64 48 (1,293) 1,532
Cash generated by operations	1,074	(328)	917
Cash generated from/(absorbed by) operating activities Interest received Interest paid - bank and other loans Taxation paid	34 (72) (49)	20 (19) (7)	39 (44) (78)
Net cash generated/(absorbed) by operating activities	988	(334)	834
Purchase of tangible fixed assets Acquisition of a subsidiary	(90) 155	(236) -	(450) (2,456)
Net cash used in investing activities	65	(236)	(2,906)
Financing activities Issuing of ordinary shares, net Increase in bank borrowings Repayment of obligations under finance leases Repayment of bank loans Loan note repayments New bank loans Purchase of own shares for employees share options and awards	- - (5) (168) (450) 52 (17)	- 4 (13) - (575)  - -	2,029 1,043 (17) (104) (740) - (20)
Net cash from financing activities	(589)	(584)	2,191
Effect of foreign exchange rate changes	(13)	5	5
Net increase/(decrease) in cash and cash equivalents	451	(1,149)	124
Cash and cash equivalents at the beginning of the period	2,219	2,095	2,095
Cash and cash equivalents at the end of the period	2,670	946	2,219

Notes to the financial statements

For the period ended 29 February 2008

1. Basis of preparation

The Company has adopted International Financial Reporting Standards (IFRS) for the accounting period commencing

1 September 2007. The Company will apply IFRS in its consolidated financial statements for the year ending 31 August 2008.

2. Accounting policies

The interim results for the six months ended 29 February 2008 are unaudited and do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 August 2007 were prepared under UK GAAP and have been reported on by the Company's auditors, PricewaterhouseCoopers LLP, and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act.

The accounting policies adopted are consistent with those of the Financial Statements for the year ended 31 August 2007. In addition, the Company has adopted the following IFRS standards and the previously reported figures for the six months ended 28 February 2007 and the year ended 31 August 2007 have been restated to reflect:.

Transitional arrangements

Under the provisions of IFRS 1 "First time Adoption of IFRS" specific exemptions may be applied in certain areas as part of the transition of the financial statements to IFRS. The Group has elected to apply the following exemptions:

IRFS 3 "Business Combinations"

IFRS 3 has been adopted from the transition date and is only being applied to acquisitions made on or after 1 September 2006.

IFRS also requires goodwill to be carried at cost with impairment reviews carried out at least annually. The Group has applied the standard from the transition date and so the net carrying value of goodwill at 31 August 2006 has been brought forward as the cost at 1 September 2006, with no amortisation charge from that date.

IAS 21 "The Effects of Changes in Foreign Exchange Rates"

Under IAS 21 cumulative translation differences arising on the consolidation of overseas subsidiaries are being accumulated for each individual subsidiary from the date of transition to IFRS and not from the original acquisition date.

The transition from UK GAAP to IFRS is disclosed in note 9.

2a IFRS 3 "Business Combinations"

IFRS 3 deals with accounting for business combinations including goodwill and intangible assets.

Under UK GAAP, the Group adopted FRS 10 "Goodwill and intangible assets" from March 2000 and goodwill arising on acquisitions after this date was capitalised and amortised over its useful economic life, which was presumed to be ten years. Goodwill arising before this date was eliminated against reserves. In addition, the Group tested for impairment when there was an indication that the carrying value of an asset might be impaired.

Under IFRS 3 this policy has been replaced by impairment tests performed annually or whenever there is an indication that the carrying value of an asset might be impaired. Goodwill amortisation has also ceased.

At the transition date, the Group had goodwill assets with a net book value of £1,216,000, which under the transitional arrangements laid out in IFRS 1 was deemed to be the costs carried forward for these assets from that date.

Although the Group has adopted IFRS 3 from the transition date, 1 September 2006, the Group completed the acquisition of Unicus Regulatory Services Limited on 19 March 2007.

The accounting treatment of this acquisition has therefore been reviewed in accordance with the requirements of IFRS 3. As a result of this review, intangible assets have been separately identified, and goodwill has been reduced by the corresponding net amount. The newly identified intangible assets are being amortised over 1 to 3 years.

2b IAS 17 "Leases"

IAS 17 requires companies to make an adjustment with respect to 'Rent Free' periods. 

2c IAS 18 "Revenue"

Under IAS 18 companies are required to eliminate turnover where the company acted as principal, but the substance of the transaction was that the company acted as agent, as costs were passed through with no margin.

2d IAS 19 "Employee Benefits"

IAS 19 requires companies to make an accrual for holiday pay. 

The transition from UK GAAP to IFRS does not change the cash flows of the Group nor does it impact Group strategy or commercial decisions. 

3. Turnover

Geographical analysis by origin

	Period ended	Period ended	Year ended
	29 February	28 February	31 August
	2008	2007	2007
	£'000	£'000	£'000
Europe	5,045	3,437	8,081
USA	1,198	588	1,464
Japan	1,201	834	1,958
Total sales	7,444	4,859	11,503

4. Tax on profit on ordinary activities

Period ended	Period ended	Year Ended
	29 February	28 February	31 August
	2008	2007	2007
	£'000	£'000	£'000
Current taxation
UK corporation tax at 30%	-	-	(26)
Overseas taxation	-	-	-
Corporation taxes	28	-	36
Tax on profit on ordinary activities	28	-	10

4. Tax on profit on ordinary activities (continued)

The tax charge for the period differs from the standard rate of corporation tax in the UK of 30% (2007: 30%). The differences are explained below:

	Period ended	Period ended	Year ended
	29 February	28 February	31 August
	2008	2007	2007
	£'000	£'000	£'000
Profit on ordinary activities before tax	94	108	212
Profit/on ordinary activities before tax and exceptional
items multiplied by the standard rate of corporation tax in
the UK of 30% (2007: 30%)	28	32	64
Effects of:
Capital allowances in excess of depreciation	3	5	(1)
Expenses not deductible for tax purposes	90	11	60
Tax losses for the period not relieved	89	20	75
Relief for losses brought forward	(107)	-	(35)
Research and development tax credits	(75)	(68)	(153)
Current tax charge for the period	28	-	10

5. Dividends

The Directors do not propose to pay an interim dividend (H1 2007: £nil per share).

6. Earnings per share

	Period ended	Period ended	Year ended
	29 February	28 February	31 August
	2008	2007	2007
		(restated)	(restated)
	£'000	£'000	£'000
Profit on ordinary activities after
taxation for basic earnings per share	66	108	202
Weighted average number of shares	177,940,743	128,528,987	147,633,249
Weighted average number of shares held by the ESOP Trust	(4,588,929)	(3,885,099)	(4,093,963)
Weighted average number of  shares
for basic earnings per share	173,351,814	124,643,888	143,539,286
Number of dilutive shares under option	2,888,501	1,865,532	2,888,501
Weighted average number of shares for diluted earnings per share	176,240,315	126,509,420	146,427,787

The basic earnings per share is based on the Group's profit for the half year of £165,000 (H12007: £108,000) divided by the number of ordinary shares in issue, excluding those shares held by the ESOP Trust. 

  7.  Notes to the consolidated cash flow statement

 Analysis of net funds

	As at		As at
	1 September		29 February
	2007	Cash flow	2008
	£'000	£'000	£'000
Cash at bank and in hand	2,434	236	2,670
Bank overdraft	(215)	215	-
Net cash	2,219	451	2670
Bank loans	(1,133)	168	(965)
Loan notes - Quadramed	(450)	450	-
Loan notes - Unicus	(136)	-	(136)
Finance leases	(16)	5	(11)
Net funds	484	1,074	1,558

8. Movement in shareholders' funds

	Period ended	Period  Ended	Year  ended
	29 February	28 February	31 August
	2008	2007	2007
	£'000	£'000	£'000
Profit for the period	66	108	202
Share based payments	30	40	-
Issue of ordinary shares	-	-	2,029
Options compensation charge	-	-	64
Purchase of own shares for ESOT	(17)	-	(20)
Fair value adjustment - Available-for-sale financial assets	(29)	-	-
Net increase in shareholders' funds for the period	50	148	2,275
Opening shareholders' funds	5,706	3,431	3,431
Closing shareholders' funds	5,756	3,579	5,706

9. Explanation of transition to International Financial Reporting Standards

Reconciliation of the consolidated income statement for the period ended 29 February 2008 from UK GAAP to IFRS

	UK GAAP Management Accounts £'000	IFRS 3 Business  Combinations £'000	IAS 17 Leases £'000	IAS 18 Revenue £'000	IAS 19 Employee  benefits £'000	As restated in accordance with IFRS £'000
Continuing operations Revenue Cost of sales	12,007 (8,757)	- -	- -	(4,563) 4,563	- (72)	7,444 (4,266)
Gross profit	3,250	-	-	-	(72)	3,178
Selling expenses Administrative expenses Other operating income	(359) (2,742) 20	- 144 -	- (5) -	- - -	- (18) -	(359) (2,621) 20
Operating profit from continuing operations	169	144	(5)	-	(90)	218
Provision against Available-for-sale financial assets Interest receivable and similar income Interest payable and similar charges	- 31 (56)	(99) - -	- - -	- - -	- - -	(99) 31 (56)
Profit on continuing activities before taxation Tax on profit on ordinary activities	144 (28)	45 -	(5) -	- -	(90) -	94 (28)
Profit for the period	116	45	(5)	-	(90)	66
Earnings per share (pence) Basic Diluted	0.07p 0.07p	0.02p 0.02p	0.00p 0.00p	0.00p 0.00p	(0.05p) (0.05p)	0.04p 0.04p

9. Explanation of transition to International Financial Reporting Standards (continued)

Reconciliation of the consolidated balance sheet as at 29 February 2008 from UK GAAP to IFRS

	Reformatted UK GAAP as Previously reported £'000	IFRS  Reclassification £'000	IFRS 3 Business  Combinations £'000	IAS 17 Leases £'000	IAS 19 Employee benefits £'000	As restated In accordance with IFRS £'000
Assets Non current assets Goodwill Intangible assets Property, plant and equipment  Available-for-sale financial assets	3,254 - 670 469	(185) 185 - (128)	458 (97) - -	- - - -	- - - -	3,527 88 670 341
	4,393	(128)	361	-	-	4,626
Current assets Trade and other receivables Short-term investments Cash and cash equivalents	- 5,036 - 2,670	- - - -	- - - -	- - - -	- - - -	- 5,036 - 2,670
	7,706	-	-	-	-	7,706
Liabilities Current liabilities Bank and other borrowings Loan notes Deferred cash consideration Trade and other payables Current tax liabilities	329 136 114 4,680 258	- - - - -	- - - - -	- - - 12 -	- - - 275 -	329 136 114 4,967 258
	5,517	-	-	12	275	5,804
Net current assets	2,189	-	-	(12)	(275)	1,902
Non current liabilities Bank loans and other borrowings	772	-	-	-	-	772
	772	-	-	-	-	772
Net assets	5,810	(128)	361	(12)	(275)	5,756
Equity Share capital Share premium account Merger reserve Profit and loss account	1,779 6,082 (454)  (1,597)	- - -  (128)	- - - 361	- - - (12)	- - - (275)	1,779 6,082 (454)  (1,651)
Total equity	5,837	(128)	361	(12)	(275)	5,756

9. Explanation of transition to International Financial Reporting Standards (continued)

Reconciliation of the consolidated income statement for the year ended 31 August 2007 from UK GAAP to IFRS

	Reformatted UK GAAP as Previously reported £'000	IFRS Reclassification £.000	IFRS 3 Business  Combinations £'000	IAS 17 Leases £'000	IAS 18 Revenue £'000	IAS 19 Employee  benefits £'000	As restated in accordance with IFRS £'000
Continuing operations Revenue Cost of sales	19,237 (14,510)	- -	- -	- -	(7,734) 7,734	- (32)	11,503 (6,808)
Gross profit	4,727				-	(32)	4,695
Selling expenses Administrative expenses Amortisation of intangible assets Other operating income	(504) (3,980) (261) 95	- 6 - -	- - 217 -	- (13) - -	- - - -	- (8) - -	(504) (3,995) (44) 95
Operating profit from continuing operations	77	6	217	(13)	-	(40)	247
Interest receivable and similar income Interest payable and similar charges	42 (77)	- -	- -	- -	- -	- -	42 (77)
Profit on continuing activities before taxation Tax on profit on ordinary activities	42 (10)	- -	217 -	(13) -	- -	(40) -	212 (10)
Profit for the financial year	32	6	217	(13)	-	(40)	202
Earnings per share (pence) Basic Diluted	0.02p 0.02p	0.00p 0.00p	0.13p 0.13p	(0.01p) (0.01p)	0.00p 0.00p	(0.02p) (0.02p)	0.11p 0.11p

9. Explanation of transition to International Financial Reporting Standards (continued)

Reconciliation of the consolidated balance sheet as at 31 August 2007 from UK GAAP to IFRS 

	Reformatted UK GAAP as Previously reported £'000	IFRS  Reclassification £'000	IFRS 3 Business  Combinations £'000	IAS 17 Leases £'000	IAS 19 Employee benefits £'000	As restated in accordance with IFRS £'000
Assets Non current assets Goodwill Intangible assets Property, plant and equipment  Available-for-sale financial assets	3,441 715 469	(195) 195 - -	261 (44) - -	- - - -	- - - -	3,507 151 715 469
	4,625	-	217	-	-	4,842
Current assets Trade and other receivables Short-term investments Cash and cash equivalents	5,923 500 1,934	- - -	- - -	- - -	- - -	5,923 500 1,934
	8,357	-	-	-	-	8,357
Liabilities Current liabilities Bank and other borrowings Loan notes Trade and other payables Current tax liabilities	1,248 450 5206 31	- - - -	- - - -	- - 7 -	- - 185 -	1,248 450 5,398 31
	6,935	-	-	7	185	7,127
Net current assets	1,422	-	-	(7)	(185)	1,230
Non current liabilities Bank loans and other borrowings Convertible loan stock Deferred cash consideration	116 136 114	- - -	- - -	- - -	- - -	116 136 114
	366	-	-	-	-	366
Net assets	5,681		217	(7)	(185)	5,706
Equity Share capital Share premium account Merger reserve Profit and loss account	1,779 6,082 (454)  (1,726)	- - - -	- - - 217	- - - (7)	- - - (185)	1,779 6082 (454) (1,701)
Total equity	5,681	-	217	(7)	(185)	5,706

9. Explanation of transition to International Financial Reporting Standards

Reconciliation of the consolidated income statement for the period ended 28 February 2007 from UK GAAP to IFRS

	Reformatted UK GAAP as Previously  reported £'000	IFRS Reclassification £'000	IFRS 3 Business  Combinations £'000	IAS 17 Leases £'000	IAS 18 Revenue £'000	IAS 19 Employee  benefits £'000	As restated in accordance with IFRS £'000
Continuing operations Revenue Cost of sales	8,266 (6,166)	- -	- -	- -	(3,407) 3,407	- (35)	4,859 2,794
Gross profit	2,100	-	-	-	-	(35)	2,065
Selling expenses Administrative expenses Amortisation of intangible assets Other operating income	(212) (1,798) (70) 45	- 22 - -	- - 70 -	- (7) - -	- - - -	- (8) - -	(212) (1,791) - 45
Operating profit from continuing operations	65	22	70	(7)	-	(43)	107
Interest receivable and similar income Interest payable and similar charges	20 (19)	- -	- -	- -	- -	- -	20 (19)
Profit on continuing activities before taxation Tax on profit on ordinary activities	66 -	22 -	70 -	(7) -	- -	(43) -	108 -
Profit for the period	66	22	70	(7)	-	(43)	108
Earnings per share (pence) Basic Diluted	0.04p 0.04p	0.01p 0.01p	0.04p 0.04p	(0.00p) (0.00p)	0.00p 0.00p	(0.02p) (0.02p)	0.07p 0.07p

9. Explanation of transition to International Financial Reporting Standards (continued)

Reconciliation of the consolidated balance sheet as at 28 February 2007 from UK GAAP to IFRS

	Reformatted UK GAAP as Previously reported £'000	IFRS  Reclassification £'000	IFRS 3 Business  Combinations £'000	IAS 17 Leases £'000	IAS 19 Employee benefits £'000	As restated in accordance with IFRS £'000
Assets Non current assets Goodwill Property, plant and equipment  Available-for-sale financial assets	1,245 605 469	- - -	70 - -	- - -	- - -	1,315 605 469
	2,319	-	70	-	-	2,389
Current assets Trade and other receivables Short-term investments Cash and cash equivalents	4,707 19 927	- - -	- - -	- - -	- - -	4,707 19 927
	5653	-	-	-	-	5,653
Liabilities Current liabilities Bank and other borrowings Loan notes Trade and other payables Current tax liabilities	76 364 3,206 236	- - - -	- - - -	- - 1 -	- - 188 -	76 364 3,395 236
	3,882	-	-	1	188	4,071
Net current assets	1,771	-	-	(1)	(188)	1,582
Non current liabilities Bank loans and other borrowings Convertible loan stock	142 250	- -	- -	- -	- -	142 250
	392	-	-	-	-	392
Net assets	3,698	-	70	(1)	(188)	3,579
Equity Share capital Share premium account Merger reserve Profit and loss account	1,285 4,547 (454) (1,680)	- - - -	- - - 70	- - - (1)	- - - (188)	1,285 4,547 (454) (1,799)
Total equity	3,698	-	70	(1)	(188)	3,579

9. Explanation of transition to International Financial Reporting Standards (continued)

Reconciliation of the consolidated balance sheet as at 1 September 2006 from UK GAAP to IFRS

	Reformatted UK GAAP as Previously reported £'000	IFRS  Reclassification £'000	IFRS 2 Shares £'000	IAS 17 Leases £'000	IAS 19 Employee benefits £'000	As restated in accordance with IFRS £'000
Assets Non current assets Goodwill Property, plant and equipment Available-for-sale financial assets	1,216 552 469	- - -	- - -	- - -	- - -	1,216 552 469
	2,237	-	-	-	-	2,237
Current assets Trade and other receivables Short-term investments Cash and cash equivalents	3,657 524 1,571	- - -	- - -	- - -	- - -	3,657 524 1,571
	5,752	-	-	-	-	5,752
Liabilities Current liabilities Bank and other borrowings Loan notes Trade and other payables Current tax liabilities	82 690 3,025 77	- - - -	- - - -	- - (6) -	- - 145 -	82 690 3,164 77
	3,874	-	-	(6)	145	4,013
Net current assets	1,878	-	-	6	(145)	1,739
Non current liabilities Bank loans and other borrowings Convertible loan stock	145 400	- -	- -	- -	- -	145 400
	545	-	-	-	-	545
Net assets	3,570	-	-	6	(145)	3,431
Equity Share capital Share premium account Merger reserve Profit and loss account	1,285 4,547 (454)  (1,808)	- - - -	- - - -	- - - 6	- - - (145)	1,285 4,547 (454) (1,947)
Total equity	3,570	-	-	6	(145)	3,431

ENDIR SEAFMFSASELI

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