19th Sep 2007 07:00
Newcourt Group plc ("Newcourt", the "Group" or the "Company")(LSE:NEW) (ISE:NEW), a leading Irish support and outsourced servicegroup with businesses in the security, recruitment, studentaccommodation and other related sectors, today announces its resultsfor the six months ended 30 June 2007. These interim results are thefirst financial statements of the Group prepared under InternationalFinancial Reporting Standard (IFRS). The Group's IFRS accountingpolicies are attached as an appendix to this report. £ Highlights \* T Six months Six months ended ended Year ended 30 June 2007 Change 30 June 2006 31 December 2006 EUR '000 % EUR '000 EUR '000 Restated - Restated - Unaudited Unaudited Audited Revenue 65,780 +45% 45,391 116,464 Gross profit 14,835 +89% 7,843 22,170 Trading profit 7,610 +107% 3,668 10,487 Profit before tax 5,242 +108% 2,518 7,662 Adjusted EBITDA(a) 7,557 +108% 3,633 11,046 cents cents centsAdjusted diluted earnings per share 5.74 +79% 3.21 10.01\* T £ -- Revenue increased by EUR 20.4m (45%) on the same period in the prior year, of which EUR 0.33m relates to contributions from 2007 acquisitions. £ -- Trading profit has increased by EUR 4m (107%) on the same period in the prior year, of which EUR 60k relates to contributions from 2007 acquisitions. £ -- The following trading profit growth, by division, was achieved: £ Support Services and Student Accommodation: 139% Recruitment and Aviation Outsourcing : 42% £ -- Newcourt completed the following acquisitions during the period: £ Company CCM Recruitment Limited Aldborough Developments Limited £ Group management are pleased with the integration of these acquisitions. £ -- In July 2007, the Group was authorised by way of an EGM to increase the issued share capital by a further 35%. £ (a) adjusted for share option and warrant costs, the amortisationof intangible assets and tender costs £ Chairman's Statement £ I am very pleased to report a strong trading performance for thefirst six months of 2007. £ Results £ Revenue in the period was EUR 66m, an increase of 45% over thesame period last year. New acquisitions accounted for EUR 330k ofturnover with existing businesses increasing their turnover by EUR 20mor 44%. £ Profit before tax of EUR 5.2m compares with profit before tax ofEUR 2.5m in the six months to June 2006, equating to a 108% increasein pre-tax profits. £ The group completed two acquisitions in the first half of the yearto further develop existing areas of the business. The group'smanagement are very pleased with the progress of the integration ofthese acquisitions. £ Extraordinary General Meeting (EGM) £ In July 2007, Newcourt held an EGM, the primary purpose of whichwas to seek shareholder approval to increase the Company's authorisedshare capital and its authority to issue and allot shares. Allresolutions put to shareholders at the EGM were passed. Shareholdersshould note that the Board of Newcourt does not intend to exercise thefull extent of those new authorities unless in the context of asignificant acquisition. £ Outlook £ Strong organic growth, together with the successful integration ofacquisitions, delivered a strong performance in the first half of theyear. I am optimistic that this performance will continue for theremainder of the year. £ James Osborne £ Chairman \* TGroup Income Statementfor the 6 month period ended 30 June 2007 6 months ended 30 June 2007 Before Amortisation amortisation and and other other costs costs Total EUR '000 EUR '000 EUR '000 Unaudited Revenue 65,780 - 65,780 Cost of sales (50,945) - (50,945) ------------- ------------- --------Gross profit 14,835 - 14,835 Administration expenses (7,225) - (7,225) ------------- ------------- -------- Trading profit 7,610 - 7,610 Tender costs - (190) (190)Share options and warrants - (150) (150)Group overhead - (736) (736)Amortisation of intangible assets - (452) (452) ------------- ------------- -------- Operating profit 7,610 (1,528) 6,082 Finance costs (890)Finance income 50 -------- (840) Profit before tax 5,242 Income tax expense (876) -------- Profit after tax for the period 4,366 -------- All activities were in respect of continuing operations. Basic earnings per share 5.01 -------- Diluted earnings per share 4.86 -------- Group Income Statementfor the 6 month period ended 30 June 2007 6 months ended 30 June 2006 - Restated Before Amortisation amortisation and and other other costs costs Total EUR '000 EUR '000 EUR '000 Unaudited Revenue 45,391 - 45,391 Cost of sales (37,548) - (37,548) ------------ ------------ --------Gross profit 7,843 7,843 Administration expenses (4,175) - (4,175) ------------ ------------ -------- Trading profit 3,668 - 3,668 Tender costs - - -Share options and warrants - (87) (87)Group overhead - (500) (500)Amortisation of intangible assets - (184) (184) ------------ ------------ -------- Operating profit 3,668 (771) 2,897 Finance costs (404)Finance income 25 -------- (379) Profit before tax 2,518 Income tax expense (444) -------- Profit after tax for the period 2,074 -------- All activities were in respect of continuing operations. Basic earnings per share 2.89 -------- Diluted earnings per share 2.84 --------\* T \* TGroup Balance Sheetat 30 June 2007 31 30 June 30 June December 2007 2006 2006 Restated Restated EUR '000 EUR '000 EUR '000 Unaudited Unaudited AuditedAssetsNon current assetsGoodwill 68,803 42,989 64,698Intangible assets 3,459 1,940 3,408Property, plant and equipment 5,347 5,268 5,424Investment property 800 - 800Assets under construction 10,774 - -Investment in Joint Venture - - - --------- --------- ---------Total non-current assets 89,183 50,197 74,330 --------- --------- ---------Current assetsInventories 7,717 679 6,523Trade and other receivables 29,080 23,750 29,455Corporation tax refundable - - 5Cash and cash equivalents 12,338 5,001 7,805 --------- --------- ---------Total current assets 49,135 29,430 43,788 --------- --------- ---------Total assets 138,318 79,627 118,118 --------- --------- ---------EquityShare capital 22,508 18,917 21,733Share premium 31,859 16,867 27,602Share options / warrants reserve 360 87 211Foreign exchange reserve (96) (86) (96)Retained earnings 11,194 2,152 6,828 --------- --------- ---------Total equity 65,825 37,937 56,278 --------- --------- ---------LiabilitiesNon current liabilitiesFinancial liabilities 17,755 9,317 13,166Trade and other payables 2,558 - 2,640Deferred consideration on acquisitions 2,618 3,687 4,426Deferred tax liabilities 491 667 491 --------- --------- ---------Total non-current liabilities 23,422 13,671 20,723 --------- --------- ---------Current liabilitiesFinancial liabilities 17,487 5,571 12,066Trade and other payables 26,768 14,987 23,809Deferred consideration on acquisitions 4,499 6,928 5,242Corporation tax payable 317 533 - --------- --------- ---------Total current liabilities 49,071 28,019 41,117 --------- --------- ---------Total liabilities 72,493 41,691 61,840 --------- --------- ---------Total equity and liabilities 138,318 79,627 118,118 --------- --------- ---------\* T \* TGroup Cash Flow Statementfor the period ended 30 June 2007 6 months 6 months ended ended 30 June 30 June 2007 2006 Restated EUR 000 EUR 000 Unaudited UnauditedCash flows from operating activitiesProfit for the financial year 4,366 2,074Adjustments for:Depreciation 683 465Amortisation of intangible assets 452 184Share options and warrants 150 87Profit on sale of property, plant and equipment (6) -Finance income (50) (25)Finance costs 890 404Income tax expense 876 444 --------- --------- 7,361 3,633Movement in inventories (1,194) (244)Movement in trade and other receivables 571 (2,500)Movement in trade and other payables 1,634 1,771 --------- ---------Cash generated from operations 8,372 2,660Interest paid (868) (382)Interest element of finance lease payments (22) (22)Income tax paid (573) (180) --------- ---------Net cash flows from operating activities 6,909 2,076 --------- ---------Cash flows from investing activitiesInterest received 50 25Proceeds from sale of property, plant and equipment 59 -Acquisition of subsidiaries, net of cash acquired (1,860) (11,800)Payments in respect of deferred consideration (3,687) (1,439)Acquisition of property, plant and equipment (590) (226)Payments in respect of assets under construction (38) -Acquisition of investment property - 133 --------- ---------Net cash used in investing activities (6,066) (13,307) --------- ---------Cash flows from financing activitiesProceeds from issue of share capital - 8,736Drawdown of loans / Repayment of loans 4,372 (2,375)Repayment of finance leases (22) (90) --------- ---------Net cash flows from financing activities 4,350 6,271 --------- ---------Net increase (decrease) in cash and cash equivalents 5,193 (4,960)Cash and cash equivalents at beginning of period 3,536 4,830 --------- ---------Cash and cash equivalents at end of period 8,729 (130) ========= =========\* T \* TGroup Statement of Recognised Income and Expensefor the period ended 30 June 2007 6 months 6 months ended ended 30 June 30 June 2007 2006 Restated EUR '000 EUR '000 Unaudited UnauditedItems of income / (expense) recognised directly within equity: Foreign currency translation differences for foreign operations - (86) Group profit for the period 4,366 2,074 --------- --------- Total recognised income and expense for the period 4,366 1,988 ========= =========\* T £ Notes to the Interim Results £ for the period ended 30 June 2007 £ 1. International Financial Reporting Standards £ Basis of Preparation £ The consolidated interim financial information of the Group hasbeen prepared in accordance with the recognition and measurementprinciples of International Financial Reporting Standards (IFRS),including interpretations issued by the International AccountingStandards Board (IASB) and its committees and endorsed by the EuropeanCommission. The Group's first consolidated financial statementsprepared in accordance with IFRS will be prepared for the year ended31 December 2007. The accounting policies that the Group expects touse in the preparation of IFRS as adopted by the EU compliantfinancial statements are set out in an attachment to this document. £ The figures for the half year ended 30 June 2007 are unaudited.The comparative figures for the half year ended 30 June 2006 are alsounaudited. The amounts for the year ended 31 December 2006 representan audited abbreviated version of the restatement of the Group'sstatutory financial statements from Irish GAAP to IFRS, as adopted bythe EU, and these will be attached to the annual return of the Groupto be filed with the Companies Office. These statutory financialstatements were audited and the auditor issued an unqualified reportthereon. £ The preparation of financial information in conformity with IFRSrequires management to make judgements, estimates and assumptions thataffect the application of policies and reported amounts of assets andliabilities, income and expenses. The estimates and associatedassumptions are based on historical experience and various otherfactors that are believed to be reasonable under the circumstances,the results of which form the basis of making judgements about thecarrying values of assets and liabilities that are not readilyapparent from other sources. £ 2. Segmental reporting \* T 6 months ended 6 months ended 30 June 2007 30 June 2006 EUR '000 EUR '000 Revenue by segmentSupport services & student accommodation 48,240 32,980Recruitment and aviation outsourcing 17,540 12,411 -------------- -------------- 65,780 45,391 ============== ============== Trading profit by segmentSupport services & student accommodation 5,766 2,415Recruitment and aviation outsourcing 1,844 1,253 -------------- -------------- 7,610 3,668 -------------- --------------Amortisation of intangible assets & other costs (1,528) (771) -------------- --------------Operating profit from continuing operations 6,082 2,897 ============== ==============\* T £ 3. Earnings per Share and Adjusted Earnings per Share \* T 6 months ended 6 months ended 30 June 2007 30 June 2006 EUR '000 EUR '000 Earnings as reported 4,366 2,074Adjustment for tender costs 190 -Adjustment for share options and warrants 150 87Adjustment for intangible asset amortisation 452 184 -------------- --------------Earnings as adjusted 5,158 2,345 ============== ============== Weighted average number of shares 87,122,473 71,659,254 Dilutive potential shares:Employee warrants to purchase shares 1,207,216 730,496Employee share options 1,506,698 714,794 Diluted weighted average number of shares 89,836,387 73,104,544 cent centBasic earnings per share Basic earnings per share 5.01 2.89 Adjusted basic earnings per share (a) 5.92 3.27 Diluted earnings per share Diluted earnings per share 4.86 2.84 Adjusted diluted earnings per share (a) 5.74 3.21\* T £ Basic earnings per share is calculated by dividing the profitattributable to equity shareholders of the company by the weightedaverage number of shares in issue during the period, excluding shareoptions and warrants. £ Diluted earnings per share is calculated by adjusting for theweighted average number of shares outstanding to assume conversion ofall dilutive potential ordinary shares. Options and warrants grantedunder Employee Share Option Schemes dilute the earnings per share byincreasing the weighted average number of shares without changing thenet profit. £ (a) adjusted to exclude share options and warrant costs,amortisation of intangible assets and tender costs. £ 4. Analysis of net debt \* T 30 June 2007 30 June 2006 EUR '000 EUR '000 Non-current assets:Cash and cash equivalents - - ------------- ------------- Current assets:Cash and cash equivalents 12,338 5,001 ------------- ------------- Non-current liabilities:Financial liabilities (17,755) (9,316) ------------- ------------- (17,755) (9,316) ------------- -------------Current liabilitiesFinancial liabilities (17,487)(a) (5,571) ------------- ------------- (17,487) (5,571) ------------- ------------- Net debt (22,904) (9,886) ============= =============\* T £ (a) includes an amount of EUR 10,430k (2006:EUR nil) relating tostudent accommodation and healthcare developments. These assets aresecured on the developments to which they relate. £ Appendix : Newcourt Group plc £ Statement of Accounting Policies £ The accounting policies to be applied in the preparation of thefinancial statements for the financial year ended 31 December 2007 areset out below: £ Newcourt Group plc (the 'Company') is a company incorporated inIreland. The Group's financial statements for the year ended 31December 2007 consolidate the individual financial statements of theCompany and its subsidiaries and joint ventures. £ First time adoption of IFRS £ The Group is required to determine their IFRS accounting policiesand apply them retrospectively to establish their opening balancesheets under IFRS at their date of transition. The date of transitionto IFRSs for the Group is 1 January 2006. Where estimates had beenmade under Irish GAAP, consistent estimates (after adjustments toreflect any difference in accounting policies) have been made ontransition to IFRS. Judgements affecting the balance sheets of thecompany and Group have not been revisited with the benefit ofhindsight. IFRS 1, First Time Adoption of International FinancialReporting Standards, allows a number of exemptions on adoption of IFRSfor the first time. The Group has applied the following exemptions aspermitted by IFRS: £ Business combinations £ Business combinations prior to the transition date of 1 January2006 have not been restated. IFRS 3, "Business Combinations", has beenapplied with effect from the transition date of 1 January 2006.Consequently, goodwill at the transition date is carried forward atits net book amount under Irish GAAP at its deemed cost. Thisgoodwill, along with that arising on subsequent acquisitions, will nolonger be amortised but will be tested annually for impairment. £ Foreign currencies £ The cumulative currency translation difference arising at thetranslation date has been reset to zero. Any movements that havearisen since 1 January 2006, the date of transition to IFRS, arerecognised in the currency translation reserve and are recycledthrough the income statement on disposal of the related business.Translation differences that arose before the date of transition toIFRS in respect of all non-euro denominated operations are notpresented separately and will not be taken into account in calculatinggains and losses in the event of future disposals of these operations. £ Basis of preparation £ The Group's financial statements are prepared on the historicalcost basis except that investment properties and share based paymentsare stated at fair value. The financial statements are presented ineuro and all values are rounded to the nearest (EUR '000) except whereotherwise indicated. £ The preparation of financial statements in conformity with IFRSrequires management to make judgements, estimates and assumptions thataffect the application of policies and reported amounts of assets andliabilities, income and expenses. The estimates and associatedassumptions are based on historical experience and various otherfactors that are believed to be reasonable under the circumstances,the results of which form the basis of making the judgements aboutcarrying values of assets and liabilities that are not readilyapparent from other sources. £ The main areas where judgements and estimates have been appliedare in the annual testing of goodwill for impairment and in thevaluation of intangible assets. The estimates and underlyingassumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate isrevised if the revision affects only that period or in the period ofthe revision and future periods if the revision affects both currentand future periods. £ Accounting for subsidiaries and joint ventures £ Subsidiaries £ Subsidiaries are those entities over which the Group has the powerto control the operating and financial policy so as to obtain economicbenefit from its activities. Subsidiaries are consolidated from thedate on which control is transferred to the Group and are no longerconsolidated from the date that control ceases. Where necessary, theaccounting policies of subsidiaries have been changed to ensureconsistency with the policies adopted by the Group. Intragroupbalances and any unrealised gains and losses or income and expensesarising from intragroup transactions are eliminated in preparing theGroup financial statements, except to the extent they provide evidenceof impairment. £ Joint Ventures £ Joint ventures are those entities over which the Group exercisescontrol jointly, under a contractual agreement, with one or moreparties. Investments in joint ventures are accounted for under theequity method of accounting. £ Under the equity method of accounting, the Group's share of thepost-acquisition profits or losses of its joint ventures arerecognised in the Group income statement. The income statementreflects in profit before tax, the Group's share of profit after taxof its joint ventures in accordance with IAS 31, Interests in JointVentures. The Group's interest in their net assets is included asinvestments in joint ventures in the Group balance sheet at an amountrepresenting the Group's share of the fair value of the identifiablenet assets at acquisition plus the Group's share of post acquisitionretained income and expenses. The Group's investment in joint venturesincludes goodwill on acquisition. Where necessary, the accountingpolicies of joint ventures have been changed to ensure consistencywith the policies adopted by the Group. £ Unrealised gains and income and expenses arising from transactionswith jointly controlled entities are eliminated to the extent of theGroup's interest in the equity. Unrealised losses are eliminated inthe same way as unrealised gains, but only to the extent that they arenot evidence of impairment. £ Revenue Recognition £ Support services and student accommodation £ Revenue represents the fair value of goods and services providedto customers and excludes Value Added Tax. Services invoiced inadvance and in arrears are recognised as deferred income and accruedincome respectively. £ Where the Group acts as principal in the provision of theseservices, Revenue is recognised together with the corresponding costof sale. Where the Group acts as agent in the provision of theseservices, the Revenue recognised amounts to the net fee earned. £ Revenue arising on the installation of security systems isrecognised over the contract term based on the degree of completion ofthe contract. £ Income in relation to commission on the sale of studentaccommodation properties is recognised upon the exchange of contracts.All other commission type income derived from the sale of theseproperties is recognised when the related service has been completedand recoverability is certain. £ Recruitment and aviation outsourcing £ Revenue in respect of permanent placements is recognised when thecandidate commences employment. Revenue in respect of the Group'scontractors and temporary employees is recognised when the relatedhours have been worked. £ Share based payments £ The fair value of options granted under the Group's equity settledshare option scheme is recognised as an expense with a correspondingincrease in equity. The fair value is measured at grant date andspread over the period during which employees become unconditionallyentitled to the options. The fair value of the options granted ismeasured using a binomial lattice model, taking into account the termsand conditions upon which the options were granted. Vesting conditionsare non-market and, consequently, the amount recognised as an expenseis adjusted to reflect the actual number of share options that vest. £ The proceeds received net of any directly attributable transactioncosts are credited to share capital (nominal value) and share premiumwhen exercised. £ The Group has no cash-settled share-based payment transactions asdefined in IFRS 2. £ Dividends £ Dividends unpaid at the balance sheet date are only recognised asa liability at that date to the extent that they are appropriatelyauthorised and are no longer at the discretion of the Company. £ Property, plant and equipment £ Property is recognised at cost. Cost includes expenditures thatare directly attributable to the acquisition of the asset. The cost ofself constructed assets includes the cost of materials and directlabour and any other costs directly attributable to bringing the assetto a working condition for its intended use. Borrowing costs on fundsspecifically identified with the construction activity are capitalisedas part of the cost of assets under construction. £ Plant and equipment is stated at cost less accumulateddepreciation and impairment losses. Expenditure incurred to replace acomponent of property, plant and equipment that is accounted forseparately is capitalised. Other subsequent expenditure is capitalisedonly when it increases the future economic benefits embodied in theitem of property, plant and equipment. All other expenditure includingrepairs and maintenance costs is recognised in the income statement asan expense as incurred. £ Depreciation is calculated to write off the carrying amount ofproperty, plant and equipment, other than freehold land, to theirestimated residual values, on a straight line basis, by reference tothe following estimated useful lives:- \* TLand - no depreciation chargedBuildings - 2%Computer equipment - 25-33%Plant & machinery - 20-33%Motor vehicles - 20-25%Fixtures & fittings - 12.5%\* T £ The residual value of assets, if not insignificant, and the usefullife of assets is reassessed annually. Gains and losses on disposalsare determined by comparing the proceeds received with the carryingamount and are included in operating profit. £ Property that is being constructed for future use as investmentproperty is accounted for as property, plant and equipment untilconstruction or development is complete, at which time it isremeasured to fair value and reclassified as investment property. Anygain or loss arising on remeasurement is recognised in the incomestatement. £ When the use of a property changes from owner-occupied toinvestment, the property is remeasured to fair value and reclassifiedas investment property. Any gain arising on remeasurement isrecognised directly in equity. Any loss is recognised immediately inthe income statement. £ Investment property £ Investment property is property which is held for rental income orcapital appreciation and is not occupied by the Group. Investmentproperty is stated at fair value. The fair value is based on marketvalue, being the estimated amount for which a property could beexchanged in an arms length transaction. Any gain or loss arising froma change in fair value is recognised in the income statement. Whenproperty is transferred to investment property following a change inits use, any differences arising at the date of transfer between thecarrying amount of the property immediately prior to transfer and itsfair value is recognised in equity if it is a gain. Upon disposal ofthe property, the gain is transferred to retained earnings. Any lossarising in this manner, unless it represents the reversal of apreviously recognised gain, is recognised immediately in the incomestatement. £ Inventories - security equipment £ Inventories are stated at the lower of cost and net realisablevalue. In the case of finished goods, cost is defined as the aggregatecost of raw materials, direct labour and the attributable proportionof direct production overheads. Net realisable value is based onnormal selling price, less further costs expected to be incurred tocompletion and disposal. £ Inventories - student accommodation held for sale £ Accommodation held for sale comprise student accommodationproperties currently being developed which are stated at the lower ofcost and net realisable value. Cost includes direct expenditure andinterest which is capitalised from the date of commencement of thedevelopment until the development is complete. Interest is calculatedby reference to specific borrowings. £ Leases £ Where the Group has entered into lease arrangements on land andbuildings, the lease payments are allocated between land and buildingsand each is assessed separately to determine whether it is a financeor operating lease. £ Finance leases, which transfer to the Group substantially all therisks and benefits of ownership of the leased asset, are capitalisedat the inception of the lease at the fair value of the leased assetor, if lower, the present value of the minimum lease payments. Thecorresponding liability to the lessor is included in the balance sheetas a finance lease obligation. Lease payments are apportioned betweenthe finance charges and reduction of the lease obligation so as toachieve a constant rate of interest on the remaining balance of theliability. Finance charges are charged to the income statement as partof finance costs. Capitalised leased assets are depreciated over theshorter of the estimated useful life of the asset or the lease term. £ Leases where the lessor retains substantially all the risks andbenefits of ownership of the assets are classified as operatingleases. Operating lease payments are recognised as an expense in theincome statement on a straight line basis over the lease term. £ Intangible assets £ Intangible assets acquired separately are capitalised at cost andintangible assets acquired in the course of a business combination arecapitalised at fair value being their deemed cost as at the date ofacquisition. Subsequent to initial recognition, intangible assetswhich have a finite life are carried at cost less any applicableaccumulated amortisation and any accumulated impairment losses. Whereamortisation is charged on assets with finite lives, this expense istaken to the income statement. The amortisation of intangible assetsis calculated to write-off the book value of intangible assets overtheir useful lives on a straight-line basis. \* TThe amortisation rates used are as follows:Customer relationships - 3 yearsCustomers contracts - 8 months to 6 yearsRental contracts - 2 to 10 years\* T £ Goodwill £ Business combinations on or after 1 January 2006 are accounted forunder IFRS 3 using the purchase method. Any excess of the cost of thebusiness combination over the group's interest in the net fair valueof the identified assets, liabilities and contingent liabilities isrecognised in the balance sheet as goodwill. Goodwill recognised as anasset as at 1 January 2006 is recorded at its carrying amount underIrish GAAP and is not amortised. £ Goodwill arising on the Group's joint ventures is included withinvestments in joint ventures in the balance sheet under the equitymethod and is tested for impairment as discussed below. £ After initial recognition, goodwill is stated at cost less anyaccumulated impairment loss, with the carrying value being tested forimpairment at least annually and whenever events or changes incircumstances indicate that the carrying value impaired may beimpaired. £ For the purpose of impairment testing, goodwill is allocated tothe related cash generating units, monitored by management, usually atbusiness segment level or statutory company level. Where therecoverable amount of the cash generating unit is less than itscarrying amount, including goodwill, an impairment loss is recognisedin the income statement. £ The Group has availed of the exemption under IFRS 1, "First-timeAdoption of International Financial Reporting Standards", wherebybusiness combinations prior to the transition date of 1 January 2006have not been restated. IFRS 3, "Business Combinations", has beenapplied with effect from the transition date of 1 January 2006 andgoodwill amortisation ceased from that date. £ Impairment of non financial assets £ The carrying amounts of the Group's non financial assets with theexception of deferred tax assets (which are recognised based onrecoverability), and investment properties (which are carried at fairvalue) are reviewed to determine whether there is any indication ofimpairment when an event or transaction indicates that there may be.If any such indication exists, an impairment test is carried out andthe asset is written down to its recoverable amount. In the case ofgoodwill, impairment testing is carried out annually. £ The recoverable amount of an asset is the greater of its estimatednet selling price and its value in use. In assessing value in use, theestimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessmentsof the time value of money and the risks specific to the asset. For anasset that does not generate largely independent cash inflows, therecoverable amount is determined for the cash-generating unit to whichthe asset belongs. £ Goodwill and intangible assets with an indefinite useful life aretested for impairment at each balance sheet date. Impairment lossesare recognised in the income statement. Impairment losses recognisedin respect of cash generating units are allocated first to reduce thecarrying amount of any goodwill allocated to cash generating units andthen, to reduce the carrying amount of the other assets in the unitson a pro rata basis. £ An impairment loss, other than in the case of goodwill, isreversed if there has been a change in the estimates used to determinethe recoverable amount. An impairment loss is reversed only to theextent that the assets carrying amount does not exceed the carryingamount that would have been determined, net of depreciation oramortisation, if no impairment loss had been recognised. £ Finance income and costs £ Finance income comprises interest income and foreign currencygains arising on bank balances. Interest income is recognised as itaccrues using the effective interest method. £ Finance costs comprise interest expenses on borrowings, unwindingof discount provisions and foreign currency losses arising in respectof financial liabilities. All finance costs, except to the extent thatthey are capitalised, are recognised in profit or loss using theeffective interest method. £ Foreign currencies £ Transactions in foreign currencies are translated into thefunctional currency of the entity at the foreign exchange rate rulingat the date of the transaction. Non-monetary assets carried athistoric cost are not subsequently retranslated. Monetary assets andliabilities denominated in foreign currencies at the balance sheetdate are translated into functional currencies at the foreign exchangerate ruling at that date. Foreign exchange movements arising ontranslation are recognised in the income statement. £ The assets and liabilities of foreign operations, includinggoodwill and fair value adjustments arising on consolidation, aretranslated to euro at the foreign exchange rates ruling at the balancesheet date. The revenues and expenses of foreign operations aretranslated to euro at the average exchange rate for the financialperiod. Foreign exchange movements arising on translation of the netinvestment in a foreign operation, including those arising on longterm intra Group loans deemed to be quasi equity in nature, arerecognised directly in equity, in the foreign currency translationreserve. £ Any movements that have arisen since 1 January 2006, the date oftransition to IFRS, are recognised in the currency translation reserveand are recycled through the income statement on disposal of therelated business. Translation differences that rose before the date oftransition to IFRS in respect of all non-euro denominated operationsare not presented separately and are deemed to be permanently offsetagainst retained earnings. £ Classification of financial instruments £ Financial instruments issued by the Company are treated as equity( i.e. forming part of the shareholders' funds ) only to the extentthey meet the following two conditions: £ (i) They include no contractual obligations upon the Company todeliver cash or other financial assets or to exchange financial assetsor financial liabilities with another party under conditions that arepotentially unfavourable to the Company; and £ (ii) Where the instrument will or may be settled in the Company'sown equity instruments, it is either a non-derivative that includes noobligation to deliver a variable number of the Company's equityinstruments or is a derivative that will be settled by the Companyexchanging a fixed amount of cash or other financial assets for afixed number of its own equity instruments. £ To the extent that this definition is not met, the proceeds ofissue are classified as a financial liability. Where the instrument soclassified takes the legal form of the Company's own shares, theamounts presented in these financial statements for called up sharecapital and share premium account excludes amounts in relation tothose shares. £ Finance payments associated with financial liabilities instrumentsare dealt with as part of finance costs. Finance payments associatedwith financial instruments that are classified as part of equity aredealt with as appropriations of equity. £ Taxation £ Taxation on the profit or loss for the year comprises current anddeferred tax. Taxation is recognised in the income statement except tothe extent that it relates to items recognised directly in equity, inwhich case the related tax is recognised in equity. Current tax is theexpected tax payable on the taxable income for the year, using taxrates and laws that have been enacted or substantially enacted at thebalance sheet date, and any adjustment to tax payable in respect ofprevious years. £ Deferred tax is provided using the balance sheet liability methodon temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used fortaxation purposes. If the temporary difference arises from initialrecognition of an asset or liability in a transaction other than abusiness combination that at the time of the transaction does notaffect accounting nor taxable profit or loss, it is not recognised.Deferred tax is provided on temporary differences arising oninvestments in subsidiaries and joint ventures, except where thetiming of the reversal of the temporary difference is controlled bythe Group and it is probable that the temporary difference will notreverse in the foreseeable future or where no taxation is expected toarise on any ultimate remittance. The amount of deferred tax providedis based on the expected manner of realisation or settlement of thecarrying amount of assets and liabilities, using tax rates enacted orsubstantively enacted at the balance sheet date. A deferred tax assetis recognised only to the extent that it is probable that futuretaxable profits will be available against which the asset can beutilised. Deferred tax assets are reduced to the extent that it is nolonger probable that the related tax benefit will be realised. £ Trade and other receivables £ Trade and other receivables are initially measured at fair valueand are thereafter measured at amortised cost using the effectiveinterest method less any provision for impairment. A provision forimpairment of trade receivables is recognised when there is objectiveevidence that the Group will not be able to collect all amounts dueaccording to the original terms of the receivables. £ Cash and cash equivalents £ Cash and cash equivalents comprise cash at bank and in hand andshort term deposits with an original maturity of three months or less.Invoice discounting facilities that are collected daily and that arerepayable on demand are consolidated by the Group to form part of theGroup's cash management and are included as a component of cash andcash equivalents for the purpose of the cash flow statement. £ Provisions £ A provision is recognised in the balance sheet when the Group hasa present legal or constructive obligation as a result of a pastevent, and it is probable that an outflow of economic benefits will berequired to settle the obligation. If the effect of the time value ofmoney is material, provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects the timevalue of money and, where appropriate, the risks specific to theliability. Where discounting is used, the increase in the provisiondue to the passage of time is recognised as a finance cost. £ Pensions £ Pension benefits for employees are met by payments to externaldefined contribution schemes administered by third parties.Contributions are charged to the income statement in the period overwhich the employee service is received. £ Financial liabilities £ Financial liabilities are initially recorded at fair value andsubsequently at amortised cost using the effective interest ratemethod. £ Segmental Reporting £ A segment is a distinguishable component of the Group that isengaged either in providing products or services (business segment) orin providing products or services within a particular economicenvironment (geographic segment), which is subject to risks andreturns different from those of other segments. The Group's primaryreporting segments comprise the business segments of (i) Supportservices and student accommodation and (ii) Recruitment and aviationoutsourcing. Copyright Business Wire 2007Related Shares:
New World Oil And Gas