31st Mar 2008 07:02
Kellan Group (The) PLC31 March 2008 Embargoed until 7.00am onMonday, 31st March, 2008 KELLAN GROUP PLC PRELIMINARY RESULTS FOR THE 15 MONTH PERIOD ENDED 31ST DECEMBER 2007 DRAMATIC TURNAROUND UNDERWAY Kellan Group PLC (AIM: KLN.L), a leading IT, accountancy, hospitality, leisureand professional services recruitment group, announces its preliminary resultsfor the enlarged group for the 15 month period ended 31st December 2007. Operational and Financial Highlights • Substantial progress in turnaround of Berkeley Scott making an Adjusted EBITDA in the last Quarter of the period of £172k, following a loss of £122k in the corresponding calendar quarter of 2006 • Last two quarters of 2007 Berkeley Scott grew its like for like net fee income ("NFI") by 15% and 18%, this growth is on track to significantly surpass these figures for Q1 2008 • Quantica in line with expectations. RK Accountancy and RK Supply Chain businesses producing record NFI quarters in Q1 2008 with Quantica Technology business growing NFI for Q1 by 20% on prior year • Senior management team restructured. Tony Reeves and John Bowmer appointed Co-Chairman and John Rose appointed CEO, joined from Hudson UK/Ireland where he was CEO • Quantica plc acquired in September 2007, integration of enlarged group going well, and annualised cost savings of almost £1m already realised. A further minimum £0.3m identified saving will be realised by 2009 • Acquisition of Quantica expands the group into information technology, finance and accounting and search and selection • An adjusted EBITDA of £402,000 is reported in line with market expectations with a loss for the period of £1,762,000 • Gearing profile of the Group improved from 128.7% to 18.4% • Change of the Group name from Berkeley Scott plc to Kellan Group plc to distinguish the publicly listed company from its trading brands Commenting on the results Tony Reeves and John Bowmer, Co-Chairman of KellanGroup said: "In a short space of time the operations of the Berkeley Scott business havebeen transformed and a strong growth momentum has been established in theoverall Group, now renamed Kellan Group. We are achieving consistent growth anda steady increase in profitability across the Group, which is in line withexpectations. We expect this to continue. The Group remains focussed onprestigious new business and capitalising on the most profitable opportunities.The move to profitability in only fifteen months reflects the commitment andskill of all our people, the investment in the Group, along with the successfulacquisition of Quantica and the opportunities that this has delivered. Adramatic turnaround in the Group is underway. The outlook for the group is very positive and we remain confident about ourprospects. We continue to see strong demand and our business is now diversifiedacross a good range of sectors." Trading Outlook "We have not witnessed any negative impact on our business from the recentturmoil in the financial markets and we are optimistic that the very strongstart to 2008 can be maintained throughout the rest of the year. Moreover thebusiness has minimal exposure to those recruitment sectors that currently areshowing greatest volatility." Enquiries:Kellan group PlcAnthony Reeves, Co Chairman 01483 414141John Rose, Chief Executive OfficerWill Coker, Chief Financial Officer Daniel StewartMike Stoddart, Equity Research 020 7776 6550Simon Leathers, Corporate Finance Brunswick Group LLPJames Hogan 020 7404 5959Helen Barnes Co-Chairman's statementThere has been great progress in the Kellan Group plc, formerly Berkeley ScottGroup plc, since our last report. Most notably we have changed the name of theGroup to distinguish the publicly listed holding company from its tradingbrands. In addition we've appointed an outstanding CEO for the Group, acquiredtwo leading recruitment brands, rationalised the cost base to increaseprofitability and established our strategic priorities for future growth. Kellan Group plc became the new name for Berkeley Scott Group plc on 18 February2008. The Berkeley Scott name will remain for Kellan's hospitality and leisurerecruitment business where it is well known and regarded in those markets. Itnow sits alongside Kellan's other separately branded, specialist staffingentities in such sectors as technology, retail, finance and accounting, legal,niche manufacturing and supply chain. Rationalising Kellan Group's cost base to increase profitability was our firsttask when we refinanced the company in January 2007. Making Berkeley Scottprofitable and cash generative as quickly as possible and restoring its positionas a pre-eminent hospitality and leisure recruitment brand was quickly achieved.Branch rationalisation, general cost cutting, improved product offerings andstrengthening the sales culture through the business helped achieve this goal,along with the appointment of a very experienced CEO, John Rose, who joined inMay 2007 from Hudson UK and Ireland. We are now embarked on growing the Kellan brands faster than the market. Ourlonger term ambitions are to grow Kellan organically and by acquisition into abroad based stable of notable, well respected brands in temporary and permanentspecialist staffing. To this end Kellan acquired fellow AIM listed Quantica plcin September 2007 for £30.3m. Quantica has excellent brands in informationtechnology, finance and accounting, search and selection and supply chain. Webelieve these brands can be developed to produce excellent growth and profits. Key to our success will be the hard work and talent of the people of Kellan. Ouraim is to develop and promote existing colleagues and to bring in gifted peoplefrom the outside when necessary. We have discussed our key CEO hire, who hasworked hard on the transformation of Berkeley Scott including the promotion ofan existing manager to Managing Director as well as the appointment of severalmanagers from the outside. Quantica too has many accomplished people who haveresponded well to their new challenges. We thank everyone for their outstandingcontributions to our 2007 results and look forward to our continuing success. We are pleased that these results reflect our stated strategic, operational andfinancial aims for 2007 and are happy to report that further significantprogress has been made in the first quarter of 2008. Kellan is performing verywell. We are not seeing any impact from the turmoil in the world economy ontrading to date. We are optimistic for a positive performance in the remainderof the year. We will continue to strive to build a successful, durable company that willbe a significant force in the staffing industry in the next few years. We thankyou, our shareholders, for your past support and look forward to a brightfuture. Tony Reeves John BowmerCo-Chairman Co-Chairman28 March 2008 28 March 2008 Business Review: Chief Executive's reportIt gives me great pleasure to write my first review as Chief Executive sincejoining the company in May 2007. Kellan Group is barely recognisable as the business it was just two years ago.In 2006 we were a business operating purely in the hospitality & leisure sectorwith a market capitalisation of under £2m. As I write this report weare a profitable, acquisitive, ambitious and multi-functional recruitmentbusiness with a clear growth strategy for the future. 2007 was a pivotal period in the development of our company, with thesubscription by Tony Reeves and John Bowmer, my arrival as CEO and our firstacquisition - that of Quantica plc. With the strength of our individual brands,we believe that we are well positioned to deliver strong growth both by makingfurther acquisitions and through the development of our existing businesses. Financial PerformanceWe have changed our prior September year end to bring it in line with Quantica'sDecember year end. Consequently, this set of results represents 15 months oftrading for Berkeley Scott and the 3 months from Quantica post-acquisition upuntil the period end. In future results will be based on full calendar years.Given the relatively late timing of the Quantica acquisition and there structuring activity that has occurred in the Group, the 2007 resultspresented do not yet show the turnaround in bottom line profitability thatwe anticipate in 2008. Not withstanding these comments, there has beensignificant progress made in our trading divisions, most notably Berkeley Scott. Operating Review by Business Unit Berkeley Scott LtdSince the injection of funds early last year, a great deal of change has beenimplemented at our hospitality and leisure recruitment business. In the firstfew months under new management we: • undertook an analysis of the strengths and weaknesses of the business; • spent much time with our people and our customers, understanding its perception both internally and in the marketplace; • set a new strategic direction for the business, as a result of which we pulled out of non-core geographies and businesses; and • restructured the operations, rationalised our cost base and introduced a sales culture. These measures continue to re-energise the Company, driving improved efficiencyand financial performance. The net effect is a much more robust business with anexciting growth path. The key goal for Berkeley Scott during 2007 was to return it to profitability.This has meant a number of changes within the business. 1. Implementation of a business rationalisation programme We have refocused our resources to ensure greater focus and penetration in asmaller number of offerings, locations and businesses. Consequently we closeddown our 'Solutions' business which had delivered recruitment related servicesto clients. We also decided to focus our recruitment business into higherpotential and strategically important geographies and so closed offices inCardiff, Edinburgh and Cambridge. Finally, in order to clarify our serviceoffering, we discontinued our executive search brand ISIS. As a result of thesedecisions, our strategy in hospitality recruitment is now supported by a singlemarket offering, in locations with strong growth prospects. 2. Streamlining of management team In December 2007 we announced the appointment of Mark Darby as Managing Directorof Berkeley Scott. Mark is an outstanding leader of people and has quicklystamped his personality on the business. He is continuing to drive the strategywe spent 2007 building and I am confident that he and his team will continue totake the business forward. 3. Adoption of a strategy of 'higher margin, higher value' Moving up the value chain has been key to our turnaround. Historically thecompany has placed candidates into low value, low wage roles. We have workedhard, with excellent results, to refocus our consultants to place more seniorcandidates into higher value roles and into capturing the pricing potential ofBerkeley Scott's premium brand. The early success of this strategy can be seenby the increase in like for like (prior period quarter adjusted to only includeexisting businesses at 31 December 2007) net fee income (revenue less the costof wages and fees paid to temporary workers and contractors: "NFI") of 15% and18% in the last two quarters of 2007. 4. Introduction of a strong sales culture The appointment of Alistair Rennie as Sales Director has already had a hugeeffect on the sales culture of the business and he has driven the 'highermargin, higher value' strategy with great success. To further support thestrategy we have introduced a new bonus scheme across the business whichencourages and rewards higher fee performance. We have also significantlyadapted our front office recruitment systems to provide the necessary tools andmanagement information. 5. Staff development and retention Our investment in internal recruitment, training and career development hasensured much greater control over our staff turnover. The Group's rapidemergence into the spotlight since John and Tony's investment, coupled with thestrong brand which already existed, has started to create a far strongeremployer brand. Additionally, we are hopeful that the confidence of our staff inthe future of the business has grown, along with the career options for them asemployees of a bigger, stronger Group. Given the 15 month period, prior year comparisons are difficult but when oneassesses the adjusted EBITDA (earnings before interest, tax, depreciation andamortisation adjusted to add back non recurring costs and share based paymentscharges) of Berkeley Scott Ltd in the Oct-Dec quarter for 2006 (a loss of £122k)and compare it with the same period for 2007 (a profit of £172k) the turnaroundis dramatic. It is an absolute testament to the support of the management teamand staff at Berkeley Scott, the way they have embraced change and their desireto be part of a success story. We are confident of a bright future for BerkeleyScott. Quantica Group Our first acquisition, that of Quantica plc in September was completely in linewith our strategy for growth and fitted our criteria perfectly: Strong brandnames allowing us diversification into new markets, high calibre management andstaff and excellent potential for growth and greater scale. Quantica Search & Selection Quantica Search & Selection have established a strong position in the marketplace, particularly within the manufacturing, retail and legal sectors. 2007 wasa positive year for the business with significant growth at both revenue andcontribution levels. Historically the business was located in non-city centrelocations, however the last 2 quarters of 2007 saw some heavy investment intothe business with the opening of two new offices in Manchester and Leeds citycentres. Consequently, we have focused on attracting and recruiting experiencedconsultants into the business and we are delighted with the calibre of theindividuals attracted to working for us by our strong brand. We are confident that this focus on recruiting experienced consultants willenable us to widen our client base and further establish our brand reputation in2008. Historically the business has been 100% permanent recruitment but towards theend of 2007 we moved into the contract arena. We will continue to focus on andgrow this revenue stream in 2008. In addition, last year we extended our retailoffering into Europe where we believe the retail market is more stable.This will also be a continued focus in 2008. Quantica Technology Technology places high calibre IT professionals, predominantly in the Northof England. It is a very profitable business but at only 10% of Group's NFI itis still a small business in a large market giving significant scope for growthfrom a strong platform. 2007 saw the start of a strategy for growth with asignificant headcount increase at its office in Elland and crucially, theopening of its first satellite office: Leeds was opened in July and has alreadydelivered above management expectation and is trading profitably. Consistency of delivery is critical in this sector and Quantica Technology'swell established record of repeat business is most impressive. Added to itscustomer base and strong local brand is an outstanding management team,all possessing extensive market experience. Technology have commenced 2008 with a contractor base 35% higher than at thestart of 2007 and we are very confident about their continued growth potential. RK Accountancy We see much growth potential in this business which specialises in the temporaryand permanent clerical to junior management accountancy markets. Currentlyoperating out of seven locations, the business has delivered strong organicgrowth in 2007 but is now ready to move into the next stage of its development.A minimum of two new offices are planned for 2008 with Warrington due to open inMay. Additionally, and to assist this platform of growth, a large IT investmentinto both the infrastructure and platform is being made during the first half ofthis year. RK Supply Chain The London, Manchester and Toronto based supply chain recruitment businessoperates in a fast growing niche sector of the recruitment market. We specialisein management positions within the procurement, supply chain, planning &logistics industry. The market remains strong with a high demand across allsectors. In quarters 3 and 4 of 2007 we invested heavily in the London operation andrecruited in excess of 15 new team members. We benefited from some very earlysuccesses from these new recruiters and our revenue per head in quarters 3 and 4made significant improvements on the previous 2 quarters. We fully expect to seethis success continue and consider 2008 as a year of opportunity for RK SupplyChain with the main focus being on the continued development of the new teammembers to enable them to reach their full potential. RK Search RK's niche Search businesses go into 2008 with a strong platform for growth. Robinson Keane has always had a well diversified client base at board levelacross most sectors of commerce and industry and is particularly strong on CEO,Chairman and N.E.D. assignments. In 2007 it has also made progress in developingits presence in the private/public sector interface where it has made a numberof high profile appointments. The regional strength of the Robinson Keane brandcoupled with an increasingly experienced consultancy team and a rigorous inhouse research process has ensured a very strong business pipeline going into2008. Within this business, RK's niche search offering enjoyed significant growth in2007. They deal largely with multinational corporations at senior managementlevel in relation to scarce skill sets which directly impact clients' bottomline performance. Increased fee earner headcount in the second half of 2007is expected to generate further growth in fee income in 2008. Employees There is no single success factor more critical than attracting, developing andretaining good people. Kellan Group's beliefs are centred around investing inits people and recognising Learning and Development as a key contributor to thesuccess of individuals and the profitability of the business as a whole. Ourobjectives are that employees at all levels receive structured job-relatedtraining to enable them to competently perform their duties and meet theorganisation's short, medium and long term goals. To this end we are investing heavily in our people through the creation of adedicated Internal Recruitment team and the growth of our Learning & Developmentcapabilities. Through this HR capability, we will focus extensively on theentire life cycle of our staff from recruitment through to on-boarding,training, management and leadership development and ultimately the retention ofwhat we hope will be some of the best talent in the industry. What is clear is that within Kellan Group there exists some of the mostimpressive leaders and consultants I have seen in my 20+ years in this industry.It is crucial that we give them, and others who will join us, all the tools,career opportunities, development, recognition, reward and culture they willneed to succeed. Name change In February 2008 we changed our name to the Kellan Group plc. Kellan is theCeltic word for 'powerful'. The name was chosen after running an internal Groupcompetition. Our staff were asked to suggest a name for the new parent companywith an explanation for their choice. The winning entry was selected by theKellan Group Main Board with the winner, Arisa Cairns enjoying a family holiday,fully paid for by the Company. Strategic Review Strategy for growth Since joining the Group, the Board and I have been focusing on driving salesgrowth as well as creating efficiencies that will ultimately generate costsavings and improved margins for the Group. We are still on track with ourexpansion plans through organic growth and the acquisition of complementaryrecruitment consultancy businesses which will allow us to diversify into newmarkets. Kellan Group benefits from a strong management team with extensive industryexperience. Our co-chairmen have a combined 65 years of recruitment industryexperience and more critically, given the Group's strategy, they have bothsuccessfully undertaken numerous mergers and acquisitions including severalof the largest deals ever undertaken in the industry. As CEO of Hudson UK/Ireland, I presided over an 800 person business which demonstrated a significantprofit growth, delivering a six fold increase in Operating Profit in a 3 yearperiod. Will Coker possesses an excellent track record, qualifying with PriceWaterhouse followed by a number of years in blue-chip environments. He joinedKellan in 2005, shortly after its IPO as Berkeley Scott Group. We see the management team's past experience and successful track recordas a key competitive advantage and crucial in being able to deliverever-increasing value to our businesses and to our shareholders. Business Review: Chief Financial Officer's report Non-recurring costs The Group recorded non-recurring costs of £891,000 (2006: £73,000) during theperiod. £646,000 of this related to termination and restructure chargeshighlighted in the interim accounts at 31 March 2007. A further £245,000 relatedto onerous property costs associated with our declared strategy of propertyrationalisation. Although significant progress has been made in ourrestructuring activity, the process is ongoing as we strive to furtherrationalise our cost base and extract further efficiencies. Synergies from acquiring Quantica Immediately, upon completion of the Quantica acquisition, around £1m worth ofannualised cost savings were realised, mostly through duplicated Board costs andthe costs associated with Quantica having been a public company. Further savingstotalling £0.1m have already been identified through areas such as procuringgroup-wide insurance and the consolidation of our Learning & Developmentcapabilities and subsequent creation of a Group Training Department. Furtherefficiencies have been identified in our property portfolio, with consolidationof our five properties in Leeds into one office planned for the 2nd half of 2008and consolidating three offices in Manchester into two in July 2008. We continueto look for efficiencies and consolidation opportunities and expect totalsynergies and efficiencies to total in excess of £1.3m by 2009. International Financial Reporting Standards ("IFRS") The consolidated accounts are presented for the first time under IFRS as adoptedby the EU. An exercise was conducted to assess what areas would be affected bysuch a move. The accounts of the holding Company, Kellan Group plc continue tobe reported under UK GAAP. In the main, the most noticeable impact to the annual report and accounts is inthe amount of disclosure required compared to previous years in the notes to theaccounts. Notwithstanding this additional disclosure, there are financialimpacts in reporting our current period results as follows: • Historic goodwill balances brought forward from Berkeley Scott acquisitions were previously amortised under UK GAAP. On transition to IFRS the Group has taken advantage of the exemption under IFRS 1 to fix the value of goodwill at its book value at the date of transition, being £2,518,000 on 1 October 2005. From this point onwards the balance will not be amortised, but will be subject to annual impairment testing. • Under IFRS any acquisition requires quantification of intangibles that ascribe to the business being purchased. Consequent to the acquisition of Quantica plc we recognised intangibles other than goodwill of £4,531,000 which are, and will be subject to an annual amortisation charge. • The intangible valuation required recognition of a corresponding deferred tax liability of £1,269,000 under IFRS. This liability will be released over the corresponding period of amortisation of the intangibles. • The Group entered into an interest rate collar arrangement in protecting its exposure to interest rates on loans it raised in acquiring Quantica plc. Under IFRS such instruments are required to be recorded at fair value with any changes from one accounting period to the next being recorded in the income statement. The 2007 income statement has a charge of £37,000 in respect of this treatment. Monitoring, risk and KPIs Risk management is an important part of the management process throughout theGroup. The composition of the Kellan Group plc Board is structured to givebalance and expertise when considering governance, financial and operationalrecruitment issues. Meetings incorporate, amongst other agenda items, a reviewof monthly management accounts, operational and financial KPIs and major issuesand risks facing the business. An analysis of the KPIs has not been presented due to the misleading impact ofthe acquisition and the extended accounting period. The principal risks faced by the Group are considered to be: • Market The Group operates in a dynamic market place, and constantly seeks to ensure the solutions it offers to customers are completive. Whilst to some degree, unpredictable sector downturns are difficult to mitigate, the Company has a stated strategy of operating in multiple sectors and offers temporary or contractor offerings where possible alongside that of permanent recruitment to mitigate downturns in any one market. • Operational The Group's most significant asset is its employees and the market for skilled staff is competitive. Recruiting, retaining, developing and motivating staff remain a constant challenge. The Group maintains a number of initiatives, referred to in the Chief Executive's report, to contain staff turnover the main KPI against which it monitors this risk. • Acquisition The Group continues to seek to acquire businesses that complement its existing activities, as well as similar businesses in new markets. Such a strategy has inherent risks in both valuing target businesses and successfully integrating them within the existing Group. The Group adopts a rigorous due diligence and assessment process prior to pursuing any potential acquisition. • Financial The main financial risks arising from the company's activities are credit risk, interest rate risk and liquidity risk. These are monitored by the board of directors. The company's policies in respect of credit risk require appropriate creditchecks on potential customers before sales are made, the appropriate limiting ofcredit to each customer and the close monitoring of KPI trending such as DaysSales Outstanding and debtor ageing. The Group's policy in respect of liquidity risk is to maintain a mixture of longterm and short term debt finance, including an invoice discounting facility, toensure the company has sufficient funds for operations. Although a significantproportion of its senior debt is protected against interest rate movementsthrough an interest rate collar instrument, some debt is maintained at bankvariable rates which inherently bring interest rate risk. The Company maintainsdetailed cash flow forecasts enabling it to factor, amongst other things,incremental changes in interest rates into its risk profile and liquidity andreact accordingly. The treasury function is not a profit centre and all activities are undertakenprimarily to support the underlying exposures faced by the operating companies.The Group does not enter into speculative treasury arrangements and there are nosignificant balances or exposures denominated in foreign currencies. Cash flow and financing Net cash outflow from operating activities was £3,454,000 (2006: £564,000inflow). Current period outflows include the non recurring costs in Berkeley Scott Ltd(£646,000) as well as settlement of Quantica's 2006 tax liability (£336,000) andcosts that crystallised in Quantica on the acquisition (£2,022,000). The net cash outflow in respect of acquisitions and disposals was £7,792,000(2006: £353,000). The main cash outflow related to the consideration paid forQuantica net of cash acquired. Cash inflow from financing was £12,454,000 (2006: £692,000 outflow). The net increase in cash in the period was £1,208,000 (2006: £481,000 outflow). As a result of the refinancing initiatives the Group has significantly improvedits gearing profile (face value of loans and borrowings, £5,253,000 (2006:£2,773,000) as a percentage of total equity, £28,515,000 (2006: £2,155,000) to18.4% from 128.7%. Financial income and expenses The financial expenses for the period of £538,000 comprises interest andamortised loan costs in respect of bank loans, confidential invoice discountingfacilities, overdrafts and a charge for the fair value of the interest ratecollar instrument. Charges are partially offset by financial income (interest)of £56,000 (2006: £3,000). Tax The Group's underlying tax charge was a £32,000 credit relating to the releaseof £32,000 in respect of deferred tax on the intangible amortisation. It isanticipated that the Group's ongoing rate will be broadly in line with thestandard rate of corporation tax, subject to its ability to utilise tax lossesbrought forward and temporary timing differences. Loss per share Basic loss per share increased to 5.4p (2006: Loss of 2.4p). Options held inrespect of the ordinary shares of the company do not have a dilutive effect onthe loss per share calculation. Outlook We believe that the prospects for Kellan Group over the next few years are verybright. The repository of sector knowledge that exists within the business,coupled with the Mergers and Acquisitions experience, is a potent mix that wefully intend to exploit. We also believe that the Group's portfolio hassignificant untapped potential. The year ahead looks very exciting and the firstquarter of 2008 has begun well. We will continue the consolidation of the back office support functions whichwill ensure that we offer a robust, scaleable and cost effective service to thebusiness. This also facilitates our ability to share information and bestpractice regarding the ever changing issues and opportunities created byemployment legislation, health and safety and environmental factors. We expect clear and measurable financial improvements in the combined Groupthrough the strengthened management team, centralised back office systems,consolidation of offices across the country and the cross selling opportunitiesavailable. Our investment in people, IT and operational best practice ensures wehave the capability to make the most of the growth opportunity available to us. Overall the quality and strength of our individual operations continues toimprove and we aim to build on these strengths to drive further profitabilityfor the Group as we continue on the growth journey we have set ourselves. Ourfuture objectives are clear. We aim to have a professional recruitment focusedbusiness with strong brands in niche sectors, scalable businesses and highmargins. However, strategies and goals, change management, first class support areas anda raising of the bar cannot, by themselves, deliver the kind of growth andtransformation that Kellan Group is experiencing and that we expect to continueto deliver in the future. Only our people can do that and we are committed tobuilding a Group which can develop individuals and enhance careers. We remain very confident about the future of the Group and delivering results toour shareholders at the same time as fostering a great supportive workingenvironment for all our employees. John Rose Will CokerChief Executive Officer Chief Financial Officer28 March 2008 28 March 2008 Consolidated Income Statementfor the 15 months ended 31 December 2007 15 months ended 12 months ended 31 Dec 30 Sep Note 2007 2006 £000 £000 Revenue 30,275 17,977Cost of sales (15,294) (8,390) ----- -----Gross profit 14,981 9,587Administrativeexpenses (16,293) (9,481) ----- -----Operating(loss) /profit 2 (1,312) 106Financial income 6 56 3Financial expenses 6 (538) (311) ----- -----Loss before tax 4 (1,794) (202)Tax credit 7 32 1 ----- -----Loss for the period (1,762) (201) ===== ===Attributable to:Equity holdersof the parent (1,762) (201) ===== === Loss per share in pence(basic and diluted) 8 (5.4) (2.4) ===== === The above results relate to continuing operations. Consolidated Balance Sheetat 31 December 2007 Note 31 Dec 2007 30 Sep 2006 £000 £000Non-current assetsProperty, plant and equipment 833 808Intangible assets 9 29,407 2,518 ------------- ------------- 30,240 3,326 ------------- -------------Current assetsTrade and other receivables 11 10,572 3,343Cash and cash equivalents 12 692 3 ------------- ------------- 11,264 3,346 ------------- -------------Total assets 41,504 6,672 ============= ============= Current liabilitiesBank overdraft 12 73 592Other loans and borrowings 13 1,692 1,964Trade and other payables 14 6,186 1,744Corporation tax payable 378 -Other financial liabilities 37 -Provisions 15 45 - ------------- ------------- 8,411 4,300 ------------- -------------Non-current liabilitiesOther loans and borrowings 13 3,141 217Provisions 15 200 -Deferred tax liabilities 10 1,237 - ------------- ------------- 4,578 217 ------------- -------------Total liabilities 12,989 4,517 ============= =============Net assets 28,515 2,155 ============= =============Equity attributable to equity holders of theparentShare capital 16 1,742 170Share premium 13,740 3,572Merger reserve 16,081 -Capital redemption reserve 2 2Retained earnings (3,050) (1,589) ------------- -------------Total equity 28,515 2,155 ============= ============= Consolidated Statement of Changes in Equityfor the 15 months ended 31 December 2007 Capital Share Share Merger redemption Retained Total Note capital premium reserve reserve earnings equity £000 £000 £000 £000 £000 £000 Balance at1 October 2005 170 3,572 - 2 (1,388) 2,356Loss forthe period - - - - (201) (201) --- --- --- --- --- ---Totalrecognisedincome andexpensefor the period - - - - (201) (201) --- --- --- --- --- ---Balance at30 September2006 170 3,572 - 2 (1,589) 2,155 ====== ====== ====== === ====== ====== Balance at1 October2006 170 3,572 - 2 (1,589) 2,155Loss forthe period - - - - (1,762) (1,762) --- --- --- --- --- ---Totalrecognisedincome andexpense for the period - - - - (1,762) (1,762)Issue ofordinaryshares 16 1,549 11,302 16,081 - - 28,932Exercise of warrants 23 178 - - - 201Share issue costs - (1,312) - - - (1,312)Share based paymentcharge - - - - 301 301 --- --- --- --- --- ---Balance at31 December2007 1,742 13,740 16,081 2 (3,050) 28,515 ====== ====== ====== === ====== ====== Consolidated Cash Flow Statementfor the 15 months ended 31 December 2007 15 months ended 12 months ended Note 31 Dec 2007 30 Sep 2006 £000 £000Cash flows from operating activitiesLoss for the period (1,762) (201)Adjustments for:Depreciation and amortisation 522 294Financial income (56) (3)Financial expense 538 311Loss on sale of property,plant and equipment 63 3Equity settled share-based paymentexpenses 301 -Taxation (32) (1) ------------- ------------- (426) 403(Increase)/decrease in tradeand other receivables (256) 281(Decrease)/increase in tradeand other payables (2,681) (121)Increase/(decrease) in provisions 245 - ------------- ------------- (3,118) 563Tax (paid)/receivable (336) 1 ------------- -------------Net cash (outflow) / inflow fromoperating activities (3,454) 564 ------------- -------------Cash flows from investing activitiesProceeds from sale of property,plant and equipment 5 1Interest received 56 3Acquisition of subsidiary, net of cashacquired 3 (7,592) -Acquisition of property, plant andequipment (261) (357) ------------- -------------Net cash from investingactivities (7,792) (353) ------------- -------------Cash flows from financing activitiesProceeds from the issue of share capital,net of issue costs 10,956 -Proceeds from new loan 4,200 -Decrease in invoicing discountingbalances (1,512) (233)Interest paid and loan costs (847) (306)Repayment of borrowings (316) (100)Payment of the capital element offinance lease liabilities (26) (48)Payment of the interest element offinance lease liabilities (1) (5) ------------- -------------Net cash from financing activities 12,454 (692) ------------- -------------Net increase / (decrease) incash and cash equivalents 1,208 (481)Cash and cash equivalents atthe beginning of the period (589) (108) ------------- -------------Cash and cash equivalents atthe end of the period 12 619 (589) ============= ============= Notes 1 Basis of Preparation and accounting policies The preliminary announcement was approved by the Board of Directors on 28 March2008. The financial information set out in this announcement does not constitute theGroup's financial statements as defined by s240 of the Companies Act 1985 forthe 15 months ended 31 December 2007 or the 12 month period ended 30 September2006. The results for the periods ended 31 December 2007 and 30 September 2006are extracted from the audited accounts of The Kellan Group plc, on which theauditors have issued an unqualified report, which did not include references toany matters to which the auditors drew attention by way of emphasis withoutqualifying their report and did not contain a statement under s237(2) or (3)Companies Act 1985. The audited financial statements for the period ended 30 September 2006 havebeen delivered to the Registrar of Companies. The Annual Report for the periodended 31 December 2007 will be mailed to shareholders in April 2008 and will bedelivered to the Registrar of Companies following the Annual General Meetingwhich will be held on Monday 19th May at the Company's office at 11-13 OckfordRoad, Godalming, Surrey, GU7 1QU. Copies will be available to the public from the Company's registered office at11-13 Ockford Road, Godalming, Surrey, GU7 1QU. Transition to Adopted IFRSs The Group is preparing its financial statements in accordance with Adopted IFRSsfor the first time and consequently has applied IFRS 1. The Group has madeestimates under IFRSs at the date of transition, which are consistent with thoseestimates made for the same date under UK GAAP unless there is objectiveevidence that those estimates were in error, i.e. the Group has not reflectedany new information in its opening IFRS balance sheet but reflected that newinformation in its income statement for subsequent periods. An explanation ofhow the transition to Adopted IFRSs has affected the reported financialposition, financial performance and cash flows of the Group is provided in note18. In addition to exempting companies from the requirement to restate comparativesfor IAS 32 and IAS 39, IFRS 1 grants certain exemptions from the fullrequirements of Adopted IFRSs in the transition period. The following exemptionshave been taken in these financial statements: • Business combinations - Business combinations that took place prior to 1 October 2005 have not been restated. • Share based payments - IFRS 2 is being applied to equity instruments that were granted after 7 November 2002 and that had not vested by 1 October 2005. Concurrently with the transition to IFRS, a review was performed in respect ofthe classification of costs within the Income Statement. Consultants andoperating staff costs are now included in administrative expenses in accordancewith industry practice whereas historically these were included in cost ofsales. The effect of the reclassification on the comparatives was an increase inGross profit of £5,428,000. 2 Reconciliation of Operating (Loss)/Profit to Adjusted EBITDA 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Operating (Loss) / profit as peraccounts (1,312) 106 Add backDepreciation of assets 409 294Amortisation of intangibleassets 113 -Share based payments charge 301 -Non-recurring costs (i) 891 73 ________ ________AdjustedEBITDA (ii) 402 473 ________ ________ (i) Non-recurring items of £891,000 consist of costs of £245,000 incurred inrespect of onerous leases and £646,000 incurred in respect of the restructuringof the Group. The prior period non-recurring costs of £73,000 related torestructuring and redundancies. (ii) In calculating its Adjusted EBITDA the Group adds back share based paymentscharges and non-recurring costs. 3 Acquisition of subsidiaries On 25 September 2007, the Group acquired all of the ordinary shares in QuanticaPlc for cash of £12,651,000 and the issue of 39,221,572 ordinary shares. TheCompany provides permanent and contract recruitment services, focusing on nicheprofessional markets within the UK recruitment staff sector. In the three monthsto 31 December 2007 the subsidiary contributed profit before tax of £289,000 tothe consolidated loss before tax for the period. Due to the extended accountingperiod of the Group, it is not practicable to disclose the revenue and profit orloss for the period as though the acquisition date of the business combinationhad been at the beginning of the period. Effect of acquisitions The acquisitions had the following effect on the Group's assets and liabilities. Acquiree's book Accounting Fair value Acquisition values policy adjustments amounts £000 £000 £000 £000 Property, plant andequipment 240 - - 240Intangibleassets (note 1) - - 4,531 4,531Financialassets 12,268 549 - 12,817Liabilities (8,407) (83) - (8,490)Deferred tax on intangibles - - (1,269) (1,269) --- --- --- ---Netidentifiableassets andliabilities 4,101 466 3,262 7,829 === === === === Cash paid 12,651Issue ofshare 16,865capitalCost ofacquisition 784 --- ---Considerationpaid 30,300 === === Goodwill 22,471 === === The accounting policy alignment was required to bring the subsidiaries' revenuerecognition policy in line with the Group. The fair value of the shares issuedwas determined by reference to their quoted market price of £0.43 at the date ofacquisition. The fair values assigned to the identifiable assets and liabilitieshave been determined provisionally due to the timing of the acquisition. Included in financial assets was cash of £5,843,000 resulting in a net cashoutflow of £7,592,000 on acquisition. Residual goodwill of £22,471,000 reflects the value attributable to theworkforce acquired and a premium to reflect the future potential andunrecognised value existing in the subsidiaries at the time of acquisition. 4 Expenses and auditors' remuneration Included in profit/loss are the following: 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Pension contributions 134 91Depreciation of ownedproperty, plant andequipment 407 244Depreciation of assets heldunder finance leases 2 50Amortisation of intangibleassets 113 -Operating leases rentals- hire of plant &machinery 97 66Operating leases rentals- hire of other assets 762 471Loss on sale of propertyplant and equipment 63 3 ================ ================ Auditors' remuneration: Amounts payable to BDO Stoy Hayward LLP in respect of both audit and non auditservices are set out below: 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Fees payable to the auditors forthe audit of the company's annualaccounts 18 10 ================ ================Fees payable to the auditors for otherservices:The audit of the company'ssubsidiaries 57 25Other services relating totaxation 41 6Services relating to corporate financetransactions 273 -Other non-audit services 27 10 ---------------- ---------------- 391 41 ================ ================ 5 Staff numbers and costs The weighted average number of persons employed by the Group (includingdirectors) during the period, analysed by category, was as follows: Number of employees 2007 2006 Recruitment 202 146Advertising - 3Administrative staff 50 34Temporary workers (whose costs are included in cost ofsales and services charged 1,115 1,014within revenue) --- --- 1,367 1,197 === === The aggregate payroll costs of these persons were as follows: 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Wages and salaries 18,583 13,116Social security costs 1,593 1,080Other pension costs 134 91Share based payments (see note 16) 301 - ---------------- ---------------- 20,611 14,287 ================ ================ Directors' and key management personnel remuneration: Key management personnel are those persons having authority and responsibilityfor planning, directing and controlling the activities of the Group. During theperiod these were considered to be the directors of the company. 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Emoluments 385 290Compensation for loss ofoffice 175 25Company contributions to moneypurchase pension schemes 29 23Fees paid to non-executivedirectors 14 9Share based payments (seenote 16) 296 - ---------------- ---------------- 899 347 ================ ================ There were 3 directors in defined contribution pension schemes during the period(2006: 2). The total amount payable to the highest paid director in respect of emolumentswas £220,713 (2006: £129,074). Company pension contributions of £4,248 (2006:£12,744) were made to a money purchase scheme on his behalf. During the period, the directors exercised warrants to subscribe for 1,140,216ordinary shares at 17.5p per share 6 Finance income and expense 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Interest income on financialassets 56 3 ---------------- ----------------Financial income 56 3 ================ ================Interest expense onfinancial liabilities 359 304Amortisation of loan costs 140 -Finance leases and hirepurchase contracts 1 5Net foreign exchange loss 1 2Net loss on measurement ofinterest rate swap to fairvalue 37 - ---------------- ----------------Financial expenses 538 311 ================ ================ 7 Taxation Recognised in the income statement 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Current tax expenseCurrent period - -Adjustments for prior periods - (1) --- --- - (1)Deferred tax expenseOrigination and reversal of temporarydifferences (32) - --- --- (32) - --- ---Total tax in income statement (32) (1) === === Reconciliation of effective tax rate 15 month period ended 12 month period ended 31 Dec 2007 30 Sep 2006 £000 £000 Loss before tax for the period (1,794) (202)Total tax credit 32 1 ================ ================Loss after tax (1,762) (201) ================ ================Tax using the UK corporationtax rate of 30% (2006 : 30%) (538) (61)Non-deductible expenses 149 40Depreciation in excess ofcapital allowances 39 56Other short term timingdifferences (131) 4Losses carried forward 481 (39)Under / (over) provided inprior periods - (1)Origination and reversalof temporary deferred taxdifference (32) - ---------------- ----------------Total tax credit (32) (1) ================ ================ 8 Earnings per share Basic earnings per share The calculation of basic earnings per share at 31 December 2007 was based on theloss attributable to ordinary shareholders of £1,762,000 (2006: loss of£201,000) and a weighted average number of ordinary shares outstanding of32,612,008 (2006: 8,518,615), calculated as follows: Weighted average number of shares 2007 2006 Issued ordinary shares at 1 October 8,518,615 8,518,615Effect of share options exercised 5 -Effect of warrants exercised 124,750 -Effect of shares issued 23,968,638 - ---------------- ----------------Weighted average number of shares at end of period 32,612,008 8,518,615 ================ ================Loss per share in pence (5.4) (2.4) ================ ================ Diluted earnings per share Options held in respect of the ordinary shares of the Company do not have adilutive effect on the loss per share calculation in any of the periods coveredby these accounts. 9 Intangible assets Customer Goodwill Brand name relations Total £000 £000 £000 £000CostBalance at 1 October 2005 2,518 - - 2,518 -------------- -------------- -------------- --------------Balance at 30 September 2006 2,518 - - 2,518 ============== ============== ============== ==============Balance at 1 October 2006 2,518 - - 2,518Acquisitions throughbusiness combinations 22,471 922 3,609 27,002 -------------- -------------- -------------- --------------Balance at 31 December 2007 24,989 922 3,609 29,520 ============== ============== ============== ==============Amortisation andimpairmentBalance at 1 October 2005 - - - - -------------- -------------- -------------- --------------Balance at 30 September 2006 - - - - ============== ============== ============== ==============Balance at 1 October 2006 - - - -Amortisation - 23 90 113 -------------- -------------- -------------- --------------Balance at 31 December 2007 - 23 90 113 ============== ============== ============== ==============Net book valueAt 1 October 2005 2,518 - - 2,518 ============== ============== ============== ==============At 30 September 2006and 1 October 2006 2,518 - - 2,518 ============== ============== ============== ==============At 31 December 2007 24,989 899 3,519 29,407 ============== ============== ============== ============== Amortisation and impairment charge The amortisation and impairment charge is recognised in the following line itemsin the income statement: 31 Dec 2007 30 Sep 2006 £000 £000 Administrative expenses 113 - ---------------- --------------- 113 - ================ =============== Impairment testing of goodwill Goodwill acquired through business combinations has been allocated forimpairment testing purposes to the groups of cash generating units (CGUs) listedbelow. These represent the lowest level within the Group at which goodwill ismonitored by management for internal reporting purposes: Goodwill 31 Dec 2007 30 Sep 2006 £000 £000 Regional (Former Gold Helm Roche) branch network 1,920 1,920London (Former Sherwoods) branch network 569 569RK Group 10,582 -Quantica Technology 6,129 -Quantica Search and Selection 5,760 -Other 29 29 --- --- 24,989 2,518 === === The recoverable amount of all the CGUs is based on a value in use calculationusing cash flow projections based on the latest one year budget forecast. Anappropriate terminal value based on a perpetuity calculation is then generated.The key assumptions used in the impairment testing were contribution, rates ofgrowth and discount rates. Contribution Contribution is based on the margins achieved remaining at the levels currentlybeing achieved and after allocating shared overheads that entered the Group'scost base as part of the same acquisition. Discount rate A discount rate of 12% reflects management's estimate of the pre-tax cost ofcapital of the Group and is applied to each of the CGUs listed above. Rates of growth For the purposes of impairment testing only, growth rate assumptions are set atnil, which are less than published industry estimates. Goodwill impairment Management believes that no reasonably possible change in the key assumptionsabove would cause any of the identified CGUs to become impaired. 10 Deferred tax assets and liabilities Recognised deferred tax liabilities Deferred tax liabilities are attributable to the following: 31 Dec 2007 30 Sep 2006 £000 £000 Balance at 1 October 2006 - -Business combinations 1,269 -Credited to the income statement (32) - ---------------- -------------Balance at 31 December 2007 1,237 - ================ ============= At 31 December 2007 there was an unprovided deferred tax asset as set out below.This asset has not been included in the balance sheet as its recoverability isuncertain. 31 Dec 2007 30 Sep 2006 £000 £000 Losses carried forward 600 42Decelerated capital allowances 123 71Other temporary and deductible differences 304 13 ---------------- ---------------- 1,027 126 ================ ================ 11 Trade and other receivables 31 Dec 2007 30 Sep 2006 £000 £000 Trade receivables 8,187 2,489Other receivables 267 98Prepayments and accrued income 2,118 756 ---------------- ---------------- 10,572 3,343 ================ ================ 12 Cash and cash equivalents/ bank overdrafts 31 Dec 2007 30 Sep 2006 £000 £000 Cash and cash equivalents per balance sheet 692 3Bank overdrafts (73) (592) ---------------- ----------------Cash and cash equivalents per cash flow statement 619 (589) ================ ================ 13 Other interest-bearing loans and borrowings The book value and fair value of loans and borrowings are as follows: 31 Dec 2007 30 Sep 2006 £000 £000Non-current liabilitiesSecured bank loans 3,141 216Finance lease liabilities - 1 ---------------- ---------------- 3,141 217 ================ ================Current liabilitiesCurrent portion of secured bank loans 712 100Current portion of finance lease liabilities 1 26Invoice discounting facility 979 1,838 ---------------- ---------------- 1,692 1,964 ================ ================ Terms and debt repayment schedule Currency Nominal Year of Face Carrying Face Carrying interest rate maturity value amount value amount 31 Dec 31 Dec 30 Sep 30 Sep 2007 2007 2006 2006 £000 £000 £000 £000 Bank loan Sterling 1.5% above 2012 4,200 3,853 - -(Barclays) LIBORBank loan Sterling 2.25% above Repaid - - 316 316(RBS) RBS base --- --- --- --- 4,200 3,853 316 316 === === === === The 5 year term loan of £4,200,000 and invoice discounting facility balances of£979,000 are secured through deeds of composite guarantees and mortgagedebentures on Group companies. Finance lease liabilities Finance lease liabilities are payable as follows: Minimum lease Minimum lease payments Interest Principal payments Interest Principal 31 Dec 2007 31 Dec 2007 31 Dec 2007 30 Sep 2006 30 Sep 2006 30 Sep 2006 £000 £000 £000 £000 £000 £000 Less than one year 1 - 1 27 1 26Betweenone andfiveyears - - - 1 - 1More thanfiveyears - - - - - - -------------- -------------- -------------- -------------- -------------- -------------- 1 - 1 28 1 27 ============== ============== ============== ============== ============== ============== Obligations under finance leases and hire purchase contracts are secured on theassets concerned. 14 Trade and other payables 31 Dec 2007 30 Sep 2006 £000 £000 Trade payables 777 298Social security and other taxes 1,715 658Other creditors 1,261 162Accruals and deferred income 2,433 626 ---------------- ---------------- 6,186 1,744 ================ ================ 15 Provisions Onerous contracts £000 Balance at 1 October 2006 -Provisions made during the period 245Provisions used during the period - -------------Balance at 31 December 2007 245 =============Non-current 200Current 45 ------------- 245 ============= Onerous contracts predominantly relate to the remaining rents and dilapidationspayable on properties which have been vacated and incremental costs that will beincurred on vacating existing properties where a commitment to do so exists atthe balance sheet date. Inherent uncertainties in measuring the provision arethe estimated cost of returning the properties to their original state at theend of the lease and estimates of rents that will be received in the future onvacant property. 16 Capital Share capital Ordinary sharesIn thousands of shares 31 Dec 2007 30 Sep 2006 On issue at 1 October 8,519 8,519Issued on acquisition 39,222 -Exercise of warrants 1,140 -Other issues for cash during the period 38,205 - -------------- ----------------On issue at 31 December - fully paid 87,086 8,519 ============== ================ 31 Dec 2007 30 Sep 2006 £000 £000AuthorisedOrdinary shares of £0.02 each 2,895 1,000 ================ ===============Allotted, called up and fully paidOrdinary shares of £0.02 each 1,742 170 ================ ============== The holders of ordinary shares are entitled to receive dividends as declaredfrom time to time and are entitled to one vote per share at meetings of theCompany 17 Post balance sheet events Following an Extraordinary General Meeting on 18 February 2008, the Companychanged its name from Berkeley Scott Group plc to Kellan Group plc. On 28th January 2008, 4,754,319 share options were granted to directors of theCompany. 18 Explanation of transition to Adopted IFRSs As stated in note 1, these are the Group's first consolidated financialstatements prepared in accordance with Adopted IFRSs. The accounting policies set out in note 1 have been applied in preparing thefinancial statements for the period ended 31 December 2007, the comparativeinformation presented in these financial statements for the period ended 30September 2006 and in the preparation of an opening IFRS balance sheet at 1October 2005 (the Group's date of transition). In preparing its opening IFRS balance sheet, the Group has adjusted amountsreported previously in financial statements prepared in accordance with its oldbasis of accounting (UK GAAP). An explanation of how the transition from UK GAAPto Adopted IFRSs has affected the Group's financial position, financialperformance and cash flows is set out in the following tables and the notes thataccompany the tables. Reconciliation of equity 1 October 2005 30 September 2006 Effect of Effect of transition transition to adopted Adopted to adopted Adopted UK GAAP IFRSs IFRSs UK GAAP IFRSs IFRSs Note £000 £000 £000 £000 £000 £000Non-currentassetsProperty,plant andequipment 750 - 750 808 - 808Intangibleassets b 2,518 - 2,518 2,332 186 2,518 --- --- --- --- --- --- 3,268 - 3,268 3,140 186 3,326 --- --- --- --- --- ---Current assetsTrade andotherreceivables 3,624 - 3,624 3,343 - 3,343Cash and cashequivalents 3 - 3 3 - 3Assets classified asheld for sale - - - - - - --- --- --- --- --- --- 3,627 - 3,627 3,346 - 3,346 --- --- --- --- --- ---Total assets 6,895 - 6,895 6,486 186 6,672 === === === === === === CurrentliabilitiesBank overdraft 111 - 111 592 - 592Otherinterest-bearing loans andborrowings 2,219 - 2,219 1,964 - 1,964Trade andother payables 1,859 - 1,859 1,728 - 1,728Employeebenefits 6 - 6 16 - 16Liabilities classified asheld for sale - - - - - - --- --- --- --- --- --- 4,195 - 4,195 4,300 - 4,300 --- --- --- --- --- ---Non-currentliabilitiesOtherinterest-bearing loans andborrowings 344 - 344 217 - 217 --- --- --- --- --- ---Totalliabilities 4,539 - 4,539 4,517 - 4,517 === === === === === ===Net assets 2,356 - 2,356 1,969 186 2,155 === === === === === ===Equityattributableto equityholders of theparentShare capital 170 - 170 170 - 170Share premium 3,572 - 3,572 3,572 - 3,572Reserves 2 - 2 2 - 2Retainedearnings (1,388) - (1,388) (1,775) 186 (1,589) --- --- --- --- --- ---Total equity 2,356 - 2,356 1,969 186 2,155 === === === === === === Reconciliation of the loss for the 12 months ended 30 September 2006 Effect of transition to Note UK GAAP Adopted IFRSs Adopted IFRSs £000 £000 £000Revenue 17,977 - 17,977Cost of sales (8,390) - (8,390) --- --- ---Gross profit 9,587 - 9,587Administrative expenses b (9,667) 186 (9,481) --- --- ---Operating (loss) / profit (80) 186 106Financial income 3 - 3Financial expenses (311) - (311) --- --- ---Loss before tax (388) 186 (202)Taxation 1 - 1 --- --- ---Loss for the period (387) 186 (201) === === ===Attributable to:Equity holders of the parent (387) 186 (201) --- --- ---Loss for the period (387) 186 (201) === === === Notes to the reconciliation of equity and loss for the period a) Presentation of financial statements - The formats of the income statement,balance sheet and particularly the cash flow statement are different under IFRSas compared to those used for UK GAAP. b) Goodwill - Goodwill is not amortised under IFRS. Instead goodwill is subjectto annual impairment testing, which indicated that no provision for impairmentwas required. Explanation of material adjustments to the cash flow statement for the periodended 30 September 2006 There are no material differences between the cash flow statement presentedunder Adopted IFRSs and the cash flow statement presented under UK GAAP. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kellan Group