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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Sagentia Grp | LSE:SGA | London | Ordinary Share | CH0012324965 | CHF0.10 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:2694P Sagentia Group AG 04 March 2008 PART 2 Notes to the Financial Statements For the year ended 31 December 2007 1 General information Sagentia Group AG (the Company) and its subsidiaries (together the Group) is an integrated technology consulting, development and venture organisation, that commercialises emerging science and technology. The Company is the ultimate parent company in which results of all Group companies are consolidated. The Group develops technologies that underpin the future of the widest range of industries. Its key areas of expertise include: engineering, materials, telecommunications, life sciences, business innovation and electronics. Sagentia's facilities include state-of-the-art laboratories located in Europe in Cambridge, Frankfurt, and Stockholm; in the US in Baltimore, and in Asia in Hong Kong. The accounts of Sagentia Group AG were prepared under Swiss Law and have been audited by Grant Thornton BFB SA. Accounts are available from the company's registered office; Bahnhofstrasse 44, CH-8023, Zurich, Switzerland. The Company is incorporated in Switzerland and has its primary listing on the London Stock Exchange (SGA.L) These consolidated financial statements have been approved for issue by the Board of Directors on 3 March 2008. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued and effective or issued at the time of preparing these statements These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain assets at fair value, as allowed by IAS39 Financial Instruments: Recognition and Measurement. Of the new Standards and Interpretations effective for the year ended 31 December 2007, listed below, there was no impact on the presentation of the financial statements of Sagentia Group AG. Number Title IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies IFRS 7 Financial Instruments: Disclosures IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment The Standards and Interpretations in issue but not yet effective for the year ending 31 December 2007 are listed below. The Group has not adopted these early. Other than additional disclosure, there will be no impact on the preparation of the accounts of the group on the adoption of these standards. Number Title Effective IFRIC 11 IFRS 2: Group and Treasury Share Transactions 1 Jan 2008 IFRIC 12 Service Concession Arrangements 1 Jan 2008 IFRIC 13 Customer Loyalty Programmes 1 Jul 2008 IFRIC 14 Defined Benefit Asset and Minimum Funding 1 Jan Requirements 2008 IFRS 3 (Revised) Business Combinations 1 Jul 2009 IFRS 2 (Amendment) Share Based Payments 1 Jan 2009 IAS 1 Presentation of Financial Statements - Capital 1 Jan Disclosures 2009 IAS 23 (Revised) Borrowing Costs 1 Jan 2009 IAS 27 (Revised Consolidated and Separate Financial Statements 1 Jul 2008) 2009 IFRS 8 Operating Segments 1 Jan 2009 IAS 1, Presentation of Financial Statements (Revised 2007) will result in changes to the presentation of the Group's financial statements as the format currently adopted for the Statement of Changes in Equity will no longer be permitted. Instead, the Group will present a Statement of Comprehensive Income combining the existing Income Statement with other income and expenses currently presented as part of the Statement of Changes in Equity. In addition, the Group will present a separate Statement of Changes in Equity showing owner changes in equity. IAS 23 Borrowing Costs (Revised 2007) requires that borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of the asset. The standard must be applied for accounting periods beginning on or after 1 January 2009. The Group's current accounting policy is to recognise borrowing costs in the income statement as incurred. Where the Group has funded the acquisition or construction of property, plant and equipment through borrowings, application of the standard is expected to increase the cost of the asset and the depreciation charge and reduce finance costs. IFRS 3 Business Combinations (Revised 2008) will apply to any future business combinations that the Group may undertake once it is in force. The Group has no plans to adopt the revised standard in advance of its mandatory implementation date and it is not possible to quantify the effect of the standard on future business combinations until those combinations take place. The other standards and interpretations are not expected to have any significant impact on the Group's financial statements, in their periods of initial application, except for the additional disclosures on operating segments when IFRS 8 Operating Segments comes into effect. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 26. 2.2 Basis of consolidation The consolidated financial statements of Sagentia have been prepared in conformity with International Financial Reporting Standards ("IFRS"). In accordance with the rules of the London Stock Exchange and applicable legislation, Sagentia was required to adopt IFRS for accounting periods beginning on January 1, 2005. The Group has applied the business combinations exemptions in IFRS 1. It has not restated business combinations that took place prior to the 1 January 2004 transition date. The Group financial statements consolidate the financial statements of Sagentia Group AG and its subsidiary undertakings drawn up to 31 December each year. The Company was incorporated in 1996 under the name of Catella AG; in 1998 changed its name to The Generics Group AG; and in 2006 changed its name to Sagentia Group AG. The Company, as part of a group reorganisation, became the parent of The Generics Group Ltd (now Sagentia Group Ltd) in 1998 via a share-for-share exchange in that company. The company, as part of a group rebranding exercise, changed its name again during 2006 to Sagentia Group AG. This combination qualified as a group reconstruction under FRS 6 'Acquisitions and Mergers', and, as such, was accounted for via merger accounting. Thus the results and cash flows of the combined entities were brought into the financial statements of the combined entity as though they had always been combined. The basis of consolidation is set out below: Subsidiaries - Subsidiaries are entities over which the Group has the power to govern the financial and operating policies accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. These acquisitions are accounted for using the purchase method of accounting. Venture subsidiaries - Venture subsidiaries are investments in which the Group holds control, but holds these investments for ultimate disposal and capital gain. The Group accounts for such investments as subsidiaries until either they are disposed of or the Group issues shares to minorities and allows control to pass. Investments - Investments are investments in which the Group does not hold significant influence. Where the Group holds these investments for ultimate disposal and capital gain, they are accounted for in accordance with IAS39, and are designated as at fair value through profit and loss. 2.3 Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments. 2.4 Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/ associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of the goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units represents the Group's investment in each country of operating by each primary reporting segment. (b) Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised on a straight-line basis over their estimated useful lives. Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefit greater than one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads. Computer software development costs recognised as assets (see 2.7 re requirements of internally developed software) are amortised over their useful lives (not exceeding three years). 2.5 Impairment of assets Assets that have an indefinite useful life are not subject to amortisation but are tested annually for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment losses are expensed when foreseen. The recoverable amount is the higher of an assets fair value less costs to sell, and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). 2.6 Research expenditure Research expenditure is written off as incurred. 2.7 Development expenditure Development expenditure is also written off as incurred, except where the Directors are satisfied that the technical, commercial and financial viability of individual projects criteria are met that would allow such costs to be capitalised. The Group recognises an intangible asset if it believes it can demonstrate the following: * The technical feasibility of completing the intangible asset so that it will be available for use or sale. * Its ability to complete and use or sell the intangible asset. * How the intangible asset will generate probable future economic benefits; either by the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset. * The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. * Its ability to measure reliably the expenditure attributable to the intangible asset during its development. Identifiable expenditure is then capitalised and amortised over the period during which benefits are expected (3-5 years). 2.8 Property, plant and equipment Land and buildings comprise offices and laboratories at Harston Mill, Harston, Cambridge, UK. Land and buildings are shown at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefit associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost less their residual values over their estimated useful lives, as follows: Buildings 25 years Furniture and fittings 3-10 years Equipment 3-4 years The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount, when an indicator of impairment is identified, in accordance with the policy note 2.5. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. 2.9 Investments The Directors consider that a substantial measure of the performance of the Group is assessed through changes in fair value arising from the investment activity of the Group. Consequently, the Group classifies its investments that are not controlled investments as equity investments and loans and receivables at fair value through profit or loss. Initial recognition is at fair value, with transaction costs expensed. Fair value through profit or loss investments that are not controlled investments are shown on the balance sheet at their fair value and any associated changes in fair value are included in the income statement in the period they arise. Valuation policy - In determining fair value, investments have been valued by the Directors in compliance with the principles of the International Private Equity and Venture Capital Guidelines, updated and effective 1 January 2005, as recommended by the British Venture Capital Association (BVCA). Listed investments - the fair values of quoted investments are based on bid prices at the balance sheet date. Unlisted investments - the valuation methodology used most commonly by the Group is the "price of recent investment", reflecting the early stage nature of the investments. The following considerations are used when calculating the fair value using the "price of recent investment" guidelines: * Where the investment being valued was itself made recently, its cost will generally provide a good indication of fair value; and * Where there has been any recent investment by third parties, the price of that investment will provide a basis of the valuation. Controlled investments - The Group also undertake investment activities in investments that are controlled, the performance of which, therefore, cannot be measured by changes in fair value arising from the investment activity of the Group. The Group identify these activities separately as Venture Subsidiaries, and such investments are consolidated, in accordance with the Group's policy on consolidation. 2.10 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all the amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement. 2.11 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. 2.12 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised costs; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 2.13 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company's equity share capital (Treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes,) is deducted from equity attributable to the Company's equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, and are included in equity attributable to the Company's equity holders. The Group also has an Employee Share Ownership Trust (ESOT) for assisting with the obligations under share option and other employee remuneration schemes. The ESOT is consolidated as if it were a subsidiary. Shares in the Group held by the ESOT are stated at cost and presented in the balance sheet as a deduction from equity under the heading of Investment in Own Shares. Finance and administration costs relating to the ESOT are charged to operating costs. 2.14 Revenue recognition Group revenue comprises the value of sales (excluding VAT) of services provided in the normal course of business. The Group revenue recognition policies by revenue type are as follows: * Consulting revenues are recognised in proportion to the stage of completion of each project. The stage of completion takes into account the milestones achieved in relation to the project deliverables. Any success elements of consultancy revenues are recognised in the period when believed to be relatively certain and attributable. * Licence and royalty income is recognised in the related period in line with the contract. * Share of manufacturer's margin - income recognised in the related period in line with the agreement. * Management fees (and any carried interest income) relating to the provision of investment management services are recognised when earned. Management fees are typically a percentage of funds under management. * Rental income from leases over property held is recognised in the related period in line with the lease agreement. 2.15 Long-term contracts Amounts recoverable on long-term contracts, which are included in trade receivables, are stated at the value of the work done less amounts received as progress payments on account. Progress payments in excess of work done are included in payables as payments on account. 2.16 Foreign currency (a) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in sterling, which is the Company's functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. In respect of translation differences on non-monetary items, items held at cost are translated at the exchange rate at the date of transaction and items held at fair value are translated at the exchange rate when the fair value was determined. (c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows'. (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and (iii) All resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders' equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. 2.17 Employee benefits (a) Pension obligations Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies based on a percentage of salary earned, currently ranging between 0% and 20%, or trustee-administered funds determined by periodic actuarial calculations. The Group has defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (b) Share-based compensation The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, as calculated using the Black-Scholes option- pricing method, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The Group has elected to apply the share based payment exemption. It applied IFRS 2 from 1 January 2004 to those options that were issued after 7 November 2002 but that had not vested by 1 January 2005. (c) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value. (d) Profit-sharing and bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Company's shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation 2.18 Deferred income tax Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from goodwill, the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 2.19 Income Tax Income tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws of the relevant countries that have been enacted or substantively enacted by the balance sheet date. 2.20 Leases In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability. Leases of land and buildings are split into land and buildings elements according to the relative fair values of the leasehold interests at the date the asset is initially recognised. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease. All other leases are treated as operating leases and are charged on a straight-line basis over the lease term, even if payments are not made on such a basis. 2.21 Capitalisation of borrowing costs and interest Finance costs of debt are recognised in the profit and loss account over the term of such instruments at a constant rate on the carrying amount. Finance costs which are directly attributable to the construction of qualifying assets are capitalised as part of the cost of those assets. The commencement of capitalisation begins when both finance costs and expenditures for the asset are being incurred and activities that are necessary to get the asset ready for use are in progress. Capitalisation ceases when substantially all the activities that are necessary to get the asset ready for use are complete. 2.22 Financial instruments Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or are designated by the entity to be carried at fair value through profit or loss upon initial recognition. By definition, all derivative financial instruments that do not qualify for hedge accounting fall into this category. However, no other type of Sagentia's financial instruments currently falls into this category. Any gain or loss arising from derivative financial instruments is based on changes in fair value, which is determined by direct reference to active market transactions or using a valuation technique where no active market exists. 3 Financial risk management 3.1 Financial risk factors The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, liquidity risk and cash flow interest-rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest-rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investing excess liquidity. (a) Foreign currency sensitivity The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, Euro and Hong Kong dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. To manage their foreign exchange risk arising from future commercial transactions, recognised assets and liabilities, entities in the Group use forward contracts, transacted with Group Treasury. Foreign exchange risk arises when future commercial transactions, recognised assets and liabilities are denominated in a currency that is not the entity's functional currency. Group Treasury is responsible for managing the net position in each foreign currency by using external forward currency contracts. The Group's risk management policy is to hedge anticipated transactions when there is certainty of receipt of funds. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group's foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies. Foreign currency denominated financial assets and liabilities, translated into GBP at the closing rate, are as follows. 2007 £000s US$ Euro HK$ Swedish Krona Other ---------------- -------- -------- -------- -------- -------- Financial assets 911 523 284 144 5,180 51 Financial liabilities (17) (51) (44) (93) (1,439) ---------------- -------- -------- -------- -------- -------- Short-term exposure 894 472 240 51 3,741 ---------------- -------- -------- -------- -------- -------- Financial assets 17 - - - 7,553 Financial liabilities - - (10) (65) (7,368) ---------------- -------- -------- -------- -------- -------- Long-term exposure 17 - (10) (65) 185 ---------------- -------- -------- -------- -------- -------- 2006 £000s US$ Euro HK$ Swedish Krona Other ---------------- -------- -------- -------- -------- -------- Financial assets 690 465 168 174 4,323 51 Financial liabilities - (21) (32) (86) (693) ---------------- -------- -------- -------- -------- -------- Short-term exposure 690 444 136 88 3,630 ---------------- -------- -------- -------- -------- -------- Financial assets 17 - - - 11,262 Financial liabilities - - - (62) (7,067) ---------------- -------- -------- -------- -------- -------- Long-term exposure 17 - - (62) 4,195 ---------------- -------- -------- -------- -------- -------- The following table illustrates the sensitivity of the net movement on reserves and equity in regards to the Group's financial assets and financial liabilities and the US dollar - GBP exchange rate, Euro - GBP exchange rate and Hong Kong dollar - GBP exchange rate. It assumes a +/- 5% change of the GBP / US dollar exchange rate for the year ended at 31 December 2007 (2006: 10%). A +/- 10% change is considered for the GBP / Euro exchange rate (2006: 5%). A +/- 5% change is considered for the GBP / Hong Kong dollar exchange rate (2006: 10%). Each of these percentages has been determined based on the month on month volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on Sagentia's foreign currency financial instruments held at each balance sheet date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates. If the GBP had strengthened against the US dollar, Euro and Hong Kong dollar by 5% (2006: 10%), 10% (2006: 5%) and 5% (2006: 10%) respectively then this would have had the following impact: 2007 £000s US$ Euro HK$ Total --------------------- -------- -------- -------- -------- Movement on reserves in the year (46) (47) (11) (104) Equity (46) (47) (11) (104) --------------------- -------- -------- -------- -------- If the GBP had weakened against the US dollar, Euro and Hong Kong dollar by 5% (2006: 10%), 10% (2006: 5%) and 5% (2006: 10%) respectively then this would have had the following impact: 2007 £000s US$ Euro HK$ Total --------------------- -------- -------- -------- -------- Movement on reserves in the year 46 47 11 104 Equity 46 47 11 104 --------------------- -------- -------- -------- -------- Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of Sagentia's exposure to currency risk. (b) Interest rate sensitivity Sagentia's policy is to minimise interest rate cash flow exposures on long term financing. Longer term borrowings are therefore usually at fixed rates. At 31 December 2007, Sagentia is exposed to changes in market interest rates through its short term bank borrowings, which are subject to variable interest rates - see note 22 for further information. The Group manages its longer term cash flow interest-rate risk by using floating-to-fixed interest-rate swaps. Such interest-rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest-rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts. The Group's financial liabilities and their interest rate profile are as follows: ------------------- --------- --------- 2007 2006 £000 £000 ------------------- --------- --------- Sterling - bank loan 7,578 6,531 Swedish Krona - bank loan 58 41 ------------------- --------- --------- 7,636 6,572 ------------------- --------- --------- Weighted average interest rate % % ------------------- --------- --------- Sterling - fixed rate bank loan 7.1 7.1 Swedish Krona - floating rate bank loan 5.5 5.5 ------------------- --------- --------- For benchmark rates of interest, the Group refers to both the LIBOR and EUROBOR rates. The bank loans are secured via a fixed charge over assets of the Group and are repayable as disclosed in Note 22. Terms and conditions of the interest rate swap are as disclosed in Note 20 The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in interest rates of +0.5% and -0.5% (2006: +/- 0.5%), with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on Sagentia's financial instruments held at each balance sheet date. All other variables are held constant. ------------------------ -------- -------- -------- -------- 2007 2007 2006 2006 £000 £000 £000 £000 ------------------------ -------- -------- -------- -------- +0.5% -0.5% +0.5% -0.5% Net result for the year (12) 12 (3) 3 Equity (12) 12 (3) 3 ------------------------ -------- -------- -------- -------- (c) Price risk Sagentia is exposed to other price risk in respect of its listed equity securities, and the participation in CMR Fuel Cells plc. Sagentia's sensitivity to price risk in regards to its participation in CMR Fuel Cells plc cannot be reliably determined due to numerous uncertainties regarding the future development of the company. Sagentia holds 2,234,540 shares (2006 - 2,234,540 shares) in CMR Fuel Cells plc. If the share price moves by +/- 1p then Sagentia's investment at fair value moves by +/- £22,345. Sagentia holds no shares (2006 - 3,549,265 shares) in Nanoscience Inc. Any investments in listed equity securities are considered long-term, strategic investments. In accordance with Sagentia's policies, no specific hedging activities are undertaken in relation to these investments. The investments are continuously monitored and voting rights arising from these equity instruments are utilised in Sagentia's favour. (d) Credit risk analysis The Group has no significant concentrations of credit risk. It has policies in place to ensure that sales are made to clients with an appropriate credit history. Derivative counterparties and cash transactions are limited to high-credit-quality financial institutions. The Group has policies that limit the amount of credit exposure to any financial institution. Sagentia's exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date, as summarised below: ------------------------ -------- -------- 2007 2006 £000 £000 ------------------------ -------- -------- Classes of financial assets - carrying amounts Loans and receivables and equity investments 7,570 11,279 Cash and cash equivalents 859 1,963 Trade and other receivables 6,183 3,857 ------------------------ -------- -------- 14,612 17,099 ------------------------ -------- -------- Sagentia continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and / or reports on customers and other counterparties are obtained and used. Sagentia's policy is to deal only with creditworthy counterparties. Sagentia's management considers that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. None of Sagentia's financial assets are secured by collateral or other credit enhancements. In respect of trade and other receivables, Sagentia is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. (e) Liquidity risk analysis Sagentia manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business. Liquidity needs are monitored on a weekly and monthly basis. Long-term liquidity needs for a quarterly and semi-annual period are reviewed monthly. Sagentia maintains cash to meet its liquidity requirements in interest bearing current accounts. Funding for long-term liquidity needs is secured by committed credit facilities. As at 31 December 2007, Sagentia's liabilities have contractual maturities which are summarised below: ---------------- ---------------- ------------------ 2007 Current Non-current within 6 months 6 to 12 months 1 to 5 years Later than 5 years £000 £000 £000 £000 ---------------- --------- --------- ---------- ---------- Long-term bank loans 823 - 7,243 - Trade payables 821 - - - Derivatives - - 200 - 1,644 - 7,443 - ---------------- --------- --------- ---------- ---------- This compares to the maturity of Sagentia's financial liabilities in the previous reporting period as follows: ---------------- ---------------- ------------------ 2006 Current Non-current within 6 months 6 to 12 months 1 to 5 years Later than 5 years £000 £000 £000 £000 ---------------- --------- --------- ---------- ---------- Long-term bank loans 41 - 6,948 - Trade payables 791 - - - Derivatives - - 181 - 832 - 7,129 - ---------------- --------- --------- ---------- ---------- The above contractual maturities reflect the gross cash flows, which may differ to the carrying values of the liabilities at the balance sheet date. (f) Summary of financial assets and liabilities by category The carrying amounts of Sagentia's financial assets and liabilities as recognised at the balance sheet date of the reporting periods under review may also be categorised as follows. ------------------------- -------- -------- 2007 2006 £000 £000 ------------------------- -------- -------- Non-current assets Loans and receivables 1,678 1,836 Equity investments 5,892 9,443 ------------------------- -------- -------- 7,570 11,279 ------------------------- -------- -------- Current assets Trade and other receivables: - trade receivables 6,183 3,857 Cash and cash equivalents 859 1,963 ------------------------- -------- -------- 7,042 5,820 ------------------------- -------- -------- Non current liabilities Borrowings: - Financial liabilities designated at fair value through 7,243 6,948 profit and loss Derivative financial instruments: - Financial liabilities held for trading (carried at fair value 200 181 through profit and loss) ------------------------- -------- -------- 7,443 7,129 ------------------------- -------- -------- Current liabilities Borrowings: - Financial liabilities designated at fair value through 823 41 profit and loss Trade payables: - Financial liabilities measured at amortised cost 821 791 ------------------------- -------- -------- 1,644 832 ------------------------- -------- -------- 3.2 Fair value estimation The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Techniques, such as estimated discounted cash flows, are used to determine fair value for non-traded financial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. 4 Segment information Primary reporting format - business segments On 31 December 2007, the Group was organised on a worldwide basis into four main business segments: Year ended 31 Consulting Venture Asset Property December 2007 and IP subsidiaries management and central exploitation services Total £000 £000 £000 £000 £000 -------- -------- -------- -------- -------- Fees 17,852 169 689 2,621 21,331 Recharged project expenses 2,737 - - - 2,737 Licence / royalty income 387 - - - 387 Less: Inter company trading (50) - (226) (1,217) (1,493) ----------------- -------- -------- -------- -------- -------- Revenue 20,926 169 463 1,404 22,962 ----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Expenses (17,699) (1,559) (634) (2,574) (22,466) Recharged project expenses (2,737) - - - (2,737) Less: Inter company trading 50 - 226 1,217 1,493 ----------------- -------- -------- -------- -------- -------- Expenses (20,386) (1,559) (408) (1,357) (23,710) ----------------- -------- -------- -------- -------- -------- ----------------- -------- -------- -------- -------- -------- Gross profit (loss) 540 (1,390) 55 47 (748) ----------------- -------- -------- -------- -------- -------- Profit on disposal of investments - - 1,376 - 1,376 Change in fair value of financial assets - - (3,701) - (3,701) Bonus accrual - - 327 - 327 Cost of options (67) - (7) (9) (83) ----------------- -------- -------- -------- -------- -------- Operating profit (loss) 473 (1,390) (1,950) 38 (2,829) ----------------- -------- -------- -------- -------- -------- Finance charges (485) ----------------- -------- -------- -------- -------- -------- Loss before income tax (3,314) ----------------- -------- -------- -------- -------- -------- Tax income 80 ----------------- -------- -------- -------- -------- -------- Loss for the year (3,234) ----------------- -------- -------- -------- -------- -------- Balance sheet analysis -------- -------- -------- -------- -------- Intangible assets 9 - - - 9 Intangible assets - amortisation (4) - - - (4) Goodwill 312 651 - - 963 Goodwill - amortisation (312) (651) - - (963) Property, plant and equipment 7,001 44 16 14,168 21,229 Property, plant and equipment - depreciation (3,999) (44) (16) (2,596) (6,655) ----------------- -------- -------- -------- -------- -------- 3,007 - - 11,572 14,579 ----------------- -------- -------- -------- -------- -------- Investments (2,560) - 7,570 2,560 7,570 Deferred income tax assets - - - 2,657 2,657 -------- -------- -------- -------- -------- Current assets (excluding cash) 7,460 39 (1,588) 1,881 7,792 Cash and cash equivalents (169) 1 201 826 859 ----------------- -------- -------- -------- -------- -------- Total assets 7,738 40 6,183 19,496 33,457 ----------------- -------- -------- -------- -------- -------- Total liabilities (excluding bank loans and interest bearing liabilities) 8,033 3,248 35 3,580 14,896 ----------------- -------- -------- -------- -------- -------- Total equity (excluding loans and interest bearing liabilities) (295) (3,208) 6,148 15,916 18,561 ----------------- -------- -------- -------- -------- -------- Loans and interest bearing liabilities (823) - - (200) 1,023 ----------------- -------- -------- -------- -------- -------- Total equity (1,118) (3,208) 6,148 15,716 17,538 ----------------- -------- -------- -------- -------- -------- ----------------- -------- -------- -------- -------- -------- Total equity and liabilities 7,738 40 6,183 19,496 33,457 ----------------- -------- -------- -------- -------- -------- On 31 December 2006, the Group was organised on a worldwide basis into four main business segments: Year ended 31 Consulting Venture Asset Property December 2006 and IP subsidiaries management and central exploitation services Total £000 £000 £000 £000 £000 -------- -------- -------- -------- -------- Fees 18,003 531 764 2,188 21,486 Recharged project expenses 3,392 - - - 3,392 Licence / royalty income 137 - - - 137 Less: Inter company trading (60) - (279) (1,030) (1,369) ----------------- -------- -------- -------- -------- -------- Revenue 21,472 531 485 1,158 23,646 ----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Expenses (18,549) (1,188) (700) (2,683) (23,120) Recharged project expenses (3,392) - - - (3,392) Less: Inter company trading 60 - 279 1,030 1,369 ----------------- -------- -------- -------- -------- -------- Expenses (21,881) (1,188) (421) (1,653) (25,143) ----------------- -------- -------- -------- -------- -------- ----------------- -------- -------- -------- -------- -------- Gross (loss) profit (409) (657) 64 (495) (1,497) ----------------- -------- -------- -------- -------- -------- Profit on disposal of investments - - 2 390 392 Change in fair value of financial assets - - (876) - (876) Bonus accrual - - 384 - 384 Cost of options (80) - (71) (84) (235) Rebranding (367) - - (265) (632) ----------------- -------- -------- -------- -------- -------- Operating loss (856) (657) (497) (454) (2,464) ----------------- -------- -------- -------- -------- -------- Finance charges (59) ----------------- -------- -------- -------- -------- -------- Loss before income tax (2,523) ----------------- -------- -------- -------- -------- -------- Tax income 51 ----------------- -------- -------- -------- -------- -------- Loss for the year (2,472) ----------------- -------- -------- -------- -------- -------- Balance sheet analysis -------- -------- -------- -------- -------- Intangible assets 13 - - - 13 Intangible assets - amortisation (4) - - - (4) Goodwill 312 651 - - 963 Goodwill - amortisation (312) (651) - - (963) Property, plant and equipment 6,757 50 16 14,248 21,071 Property, plant and equipment - depreciation (3,713) (50) (16) (2,505) (6,284) ----------------- -------- -------- -------- -------- -------- 3,053 - - 11,743 14,796 ----------------- -------- -------- -------- -------- -------- Investments (2,474) - 11,279 2,474 11,279 Deferred income tax assets - - - 3,014 3,014 -------- -------- -------- -------- -------- Current assets (excluding cash) 4,507 346 (1,792) 2,204 5,265 Cash and cash equivalents 1,051 82 206 624 1,963 ----------------- -------- -------- -------- -------- -------- Total assets 6,137 428 9,693 20,059 36,317 ----------------- -------- -------- -------- -------- -------- Total liabilities (excluding loans and interest bearing liabilities) 8,251 2,867 381 783 12,282 ----------------- -------- -------- -------- -------- -------- Total equity (excluding bank loans and interest bearing liabilities) (2,114) (2,439) 9,312 16,262 21,021 ----------------- -------- -------- -------- -------- -------- Loans and interest bearing liabilities (41) - - (181) (222) ----------------- -------- -------- -------- -------- -------- Total equity (2,155) (2,439) 9,311 15,900 20,799 ----------------- -------- -------- -------- -------- -------- ----------------- -------- -------- -------- -------- -------- Total equity and liabilities 6,137 428 9,693 20,059 36,317 ----------------- -------- -------- -------- -------- -------- 4 Segment information (continued) Capital expenditure by business and geographical segment ---------------- -------- -------- -------- -------- -------- Year ended 31 Consulting Venture Asset Property December 2007 and IP subsidiaries management and central exploitation services Total £000 £000 £000 £000 £000 United Kingdom 65 - - 5 70 Other European countries 92 - - - 92 North America 17 - - - 17 Other 16 - - - 16 ---------------- -------- -------- -------- -------- -------- 190 - - 5 195 ---------------- -------- -------- -------- -------- -------- ---------------- -------- -------- -------- -------- -------- Year ended 31 Consulting Venture Asset Property December 2006 and IP subsidiaries management and central exploitation services Total £000 £000 £000 £000 £000 United Kingdom 78 - - 7 85 Other European countries 85 - - - 85 North America 34 - - - 34 Other 8 - - - 8 ---------------- -------- -------- -------- -------- -------- 205 - - 7 212 ---------------- -------- -------- -------- -------- -------- Secondary reporting format - geographical segments The Group's four business segments operate in four main geographical areas, even though they are managed on a worldwide basis. Revenue by geographical area is as follows: ---------------- -------- -------- -------- -------- -------- United Other European North America Other Total Kingdom countries £000 £000 £000 £000 £000 Year ended 31 December 2007 11,839 5,555 4,736 832 22,962 Year ended 31 December 2006 10,755 8,210 4,149 532 23,646 ---------------- -------- -------- -------- -------- -------- For the purpose of the analysis of revenue, geographical markets are defined as the country or area in which the client is based. Turnover and operating results arise from the Group's principal activities and are primarily generated by employees of the Group's United Kingdom subsidiary undertakings. Assets by geographical area is as follows ---------------- -------- -------- -------- -------- -------- United Other European North America Other Total Kingdom countries £000 £000 £000 £000 £000 Year ended 31 December 2007 25,187 7,374 585 311 33,457 Year ended 31 December 2006 27,523 8,199 673 192 36,317 ---------------- -------- -------- -------- -------- -------- For the purpose of the analysis of assets, geographical markets are defined as the country or area in which the asset is based. 5 Operating expenses ------------------ ------ -------- --------- Expenses by nature Note 2007 2006 Year ended 31 December £000 £000 ------------------ ------ -------- --------- Employee benefit expense (excluding share options) 7 13,303 14,966 Rechargeable project expenses 2,737 3,392 Operating third party expenses 1,473 1,152 Occupancy costs 1,684 1,443 Equipment and consumables 918 972 Selling and marketing expenses 1,654 1,703 Depreciation of property, plant and equipment 14 405 418 Patent fees 293 341 Recruitment and training 345 360 Amortisation of intangible assets 13 4 4 Foreign currency losses (gains) 16 335 Other 878 57 ------------------ ------ -------- --------- 23,710 25,143 ------------------ ------ -------- --------- -------------------------------- -------- --------- Included above 2007 2006 £000 £000 Research and development 6,085 5,193 Operating lease rentals Plant and machinery 52 49 Other 138 76 Auditors' remuneration Services to the Company and its subsidiaries Fees payable to the Company's auditors for the audit of the financial statements 23 25 Fees payable to the Company's auditors and its associates for other services: Audit of the financial statements of the Company's subsidiaries (associates) pursuant to legislation 63 58 Other services supplied pursuant to legislation 7 8 Other services relating to taxation - - Services relating to information technology - - Internal audit services - - Valuation and actuarial services - - Services relating to litigation - - Services relating to recruitment and remuneration - - Services relating to corporate finance transactions - - All other services - - Services to the Company's associated pension scheme Audit of the financial statements of the Scheme pursuant to - - legislation Other services - - -------------------------------- -------- --------- 6 Finance income and finance costs Finance costs include all interest-related income and expenses, other than those arising from financial assets at fair value through the profit or loss. The following have been included in the income statement line for the reporting periods presented: -------------------------------- -------- --------- Year ended 31 December 2007 2006 £000 £000 -------------------------------- -------- --------- Finance income Bank interest receivable and similar income 86 110 Finance costs Bank loans and overdrafts (552) (411) -------------------------------- -------- --------- Other financial result -------------------------------- -------- --------- Year ended 31 December 2007 2006 £000 £000 -------------------------------- -------- --------- Change in fair value of interest rate swap (19) 242 -------------------------------- -------- --------- 7 Employee benefit expense Employment costs are shown below: -------------------------- -------- --------- Year ended 31 December 2007 2006 £000 £000 -------------------------- -------- --------- Wages and salaries (including bonuses and healthcare costs) 10,807 12,244 Social security costs 1,538 1,651 Share options granted to directors and employees 83 235 Other pension costs 958 1,071 -------------------------- -------- --------- 13,386 15,201 -------------------------- -------- --------- The average monthly number of persons employed (including executive directors) by the Group was as follows: -------------------------- -------- --------- Year ended 31 December 2007 2006 Number Number -------------------------- -------- --------- Technology consultants 153 158 Marketing, support, administration and other technically-qualified staff 60 72 -------------------------- -------- --------- 214 230 -------------------------- -------- --------- 8 Directors' remuneration, interests and transactions Aggregate remuneration ----------------------- --------- --------- Year ended 31 December 2007 2006 £000 £000 ----------------------- --------- --------- Emoluments 336 366 Bonuses 19 9 Money purchase pension scheme contributions 20 40 Compensation for loss of office - 191 ----------------------- --------- --------- 375 606 ----------------------- --------- --------- Fees to third parties 24 74 ----------------------- --------- --------- Fees to third parties comprise amounts paid to Wiederkehr Forster under an agreement by which Martin Forster provides the Group with legal services. 8 Directors' remuneration, interests and transactions (continued) Directors' emoluments and benefits include --------------- -------- ------ ------ -------- -------- -------- ------ Bonuses Taxable Pension Gains on Compensation Salary/ Benefits contribution exercise of for loss of fee share options office Total £000 £000 £000 £000 £000 £000 £000 Year ended 31 December 2007 Name of Director --------------- -------- ------ ------ -------- -------- -------- ------ Masters 50 - - - - - 50 Frost 150 19 1 18 - - 188 Flicos 88 - 1 2 - - 91 Edge 15 - 1 - - - 16 Bjorklund - - - - - - - Forster - - - - - - - Kylberg 15 - - - - - 15 15 Rauh 15 - - - - - 15 Ludvigsson - - - - - - - --------------- -------- ------ ------ -------- -------- -------- ------ Aggregate emoluments 333 19 3 20 - - 375 --------------- -------- ------ ------ -------- -------- -------- ------ --------------- -------- ------ ------ -------- -------- -------- ------ Year ended 31 Salary/ Bonuses Taxable Pension Gains on Compensation December 2006 fee Benefits contribution exercise of for loss of share options office Total Name of Director £000 £000 £000 £000 £000 £000 £000 --------------- -------- ------ ------ -------- -------- -------- ------ Masters 31 - - - - - 31 Frost 150 6 1 18 - - 175 Davey 138 3 1 22 - 191 355 Edge 15 - - - - - 15 Bjorklund - - - - - - - Forster - - - - - - - Kylberg 15 - - - - - 15 15 Rauh 15 - - - - - 15 Ludvigsson - - - - - - - --------------- -------- ------ ------ -------- -------- -------- ------ Aggregate emoluments 364 9 2 40 - 191 606 --------------- -------- ------ ------ -------- -------- -------- ------ The above figures for emoluments do not include any gains made on the exercise of share options or the value of any shares or share options received under long-term incentive schemes. 9 Tax income The tax charge comprises: -------------------- --------- -------- Year ended 31 December 2007 2006 £000 £000 Foreign taxation (16) 3 Current taxation 96 48 Deferred taxation (Note 10) - - -------------------- --------- -------- 80 51 -------------------- --------- -------- The Group has available tax losses of approximately £78.8m (2006: £88.4m). The tax on the Group's losses before tax differs from the theoretical amount that would arise using the weighted average statutory tax rate applicable to profits of the consolidated companies as follows: -------------------- --------- -------- 2007 2006 £000 £000 -------------------- --------- -------- Loss on ordinary activities before tax (3,314) (2,523) --------- --------- Tax calculated at domestic tax rates applicable to profits / (losses) in the respective countries (994) (757) Expenses not deductible for tax purposes 545 40 Income not subject to tax (101) (89) Accelerated capital allowances (205) (64) R & D tax relief (203) - R&D tax credit received in respect of prior years (96) (48) Other timing differences 33 7 Tax losses for which no deferred income tax asset was recognised 941 860 --------------------------- --------- --------- Tax credit (80) (51) --------------------------- --------- --------- The weighted average statutory applicable tax rate was 30% (2006: 30%). 10 Deferred income tax Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority and the intention is to settle net. The offset amounts are as follows: -------------------- --------- -------- 2007 2006 £000 £000 -------------------- --------- -------- Deferred tax assets: Deferred tax asset to be recovered after more than 12 months 2,657 3,014 Deferred tax asset to be recovered within 12 months - - -------------------------- --------- --------- 2,657 3,014 -------------------- --------- -------- Deferred tax liabilities: Deferred tax asset to be recovered after more than 12 months (2,657) (3,014) Deferred tax asset to be recovered within 12 months - - -------------------------- --------- --------- (2,657) (3,014) -------------------- --------- -------- Total - - -------------------- --------- -------- The gross movement on the deferred income tax account is as follows: -------------------------- --------- --------- 2007 2006 £000 £000 -------------------------- --------- --------- Beginning of the year - - Exchange differences - - Income statement charge (Note 9) - - -------------------------- --------- --------- End of year - - -------------------------- --------- --------- The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows: Deferred tax liability** Deferred tax asset* Total At 1 January 2006 (2,951) 2,951 - Charged / (credited) to the income statement (63) 63 - Exchange differences - - - ------------------- --------- --------- --------- At 31 December 2006 (3,014) 3,014 - Charged / (credited) to the income statement 357 (357) - Exchange differences - - - ------------------- --------- --------- --------- At 31 December 2007 (2,657) 2,657 - ------------------- --------- --------- --------- *Tax losses **Accelerated tax depreciation Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Group did not recognise deferred income tax assets of £20,994,000 (2006: £23,521,000) in respect of losses amounting to £70,273,000 (2006: £78,700,000) and other temporary differences amounting to £88,000 (2006: £89,000) that can be carried forward against future taxable income. 11 Loss per share The calculations of loss per share are based on the following losses and numbers of shares: Basic --------- --------- 2007 2006 £000 £000 ------------------- --------- --------- Profit (loss) for the financial year (3,234) (2,472) ------------------- --------- --------- Weighted average number of shares: 2007 2006 Number Number ------------------- --------- --------- For basic earnings per share 215,965,577 215,158,527 For fully diluted earnings per share 215,965,577 215,157,670 ------------------- --------- --------- Only the share options granted, as disclosed in note 19, are dilutive. Options have no dilutive effect in loss-making years, and hence the diluted loss per share for 2007 is the same as the basic loss per share. 12 Goodwill On transition from UK GAAP to IFRS, the carrying value of the Group's goodwill was £Nil. 13 Intangible assets ----------------------- --------- Software Total £000 ----------------------- --------- At 1 January 2006 Cost 14 Accumulated amortisation (1) ----------------------- --------- Net book amount 13 ----------------------- --------- Year ended 31 December 2006 Opening net book amount 13 Amortisation charge (4) ----------------------- --------- Closing net book amount 9 ----------------------- --------- At 31 December 2006 Cost 14 Accumulated amortisation (5) ----------------------- --------- Net book amount 9 ----------------------- --------- Year ended 31 December 2007 Opening net book amount 9 Amortisation charge (4) ----------------------- --------- Closing net book amount 5 ----------------------- --------- At 31 December 2007 Cost 14 Accumulated amortisation (9) Net book amount 5 ----------------------- --------- Computer software is amortised on a straight line basis over its estimated useful life of 3 years. The annual amortisation charge is recognised in operating expenses of core operations in the income statement. 14 Property plant and equipment Freehold land and Furniture Equipment Total buildings and fittings £000 £000 £000 £000 --------------------- -------- -------- -------- ------- At 1 January 2006 Cost 16,682 1,107 3,833 21,622 Accumulated depreciation (2,389) (818) (3,410) (6,617) --------------------- -------- -------- -------- ------- Net book amount 14,293 289 423 15,005 --------------------- -------- -------- -------- ------- Year ended 31 December 2006 Opening net book amount 14,293 289 423 15,005 Exchange differences on cost - (1) (61) (62) Exchange differences on depreciation - - 50 50 Additions - 83 129 212 Disposals - - (701) (701) Depreciation charge (85) (102) (231) (418) Depreciation on disposals - - 701 701 --------------------- -------- -------- -------- ------- Closing net book amount 14,208 269 310 14,787 --------------------- -------- -------- -------- ------- At 31 December 2006 Cost 16,682 1,189 3,200 21,071 Accumulated depreciation (2,474) (920) (2,890) (6,284) --------------------- -------- -------- -------- ------- Net book amount 14,208 269 310 14,787 --------------------- -------- -------- -------- ------- Year ended 31 December 2007 Opening net book amount 14,208 269 310 14,787 Exchange differences on cost - (1) (13) (14) Exchange differences on depreciation - 1 9 10 Additions - 48 152 200 Disposals - - (32) (32) Depreciation charge (85) (104) (216) (405) Depreciation on disposals - - 28 28 --------------------- -------- -------- -------- ------- Closing net book amount 14,123 213 238 14,574 --------------------- -------- -------- -------- ------- At 31 December 2007 --------------------- -------- -------- -------- ------- Cost 16,682 1,236 3,307 21,225 --------------------- -------- -------- -------- ------- Accumulated depreciation (2,559) (1,023) (3,069) (6,651) --------------------- -------- -------- -------- ------- Net book amount 14,123 213 238 14,574 --------------------- -------- -------- -------- ------- The property is held at cost less depreciation. Included within land and buildings for the Group is freehold land, to the value of £1,360,000 (2006: £1,360,000) which has not been depreciated. Cumulative interest capitalised at 31 December 2007 was £340,000 (2006: £340,000) of which £Nil was capitalised during 2007 (2006: £Nil). The property was last valued during February 2006 by independent valuers. The directors therefore do not believe that the property is materially misstated. The property generated rental income of £1,713,000 in 2007 (2006: £1,375,000) of which £868,000 (2006: £746,000) was charged to related group companies. The interest in freehold land and buildings has been charged as security to the bank loan (see Note 22). 15 Investments Designated at fair value through profit or loss ----------------------------------- ------------- ------- Equity Loans and Total investments receivables £000 £000 £000 Fair value, January 2006 8,962 2,082 11,044 Additions 1,293 - 1,293 Disposals (150) (14) (164) Change in fair value (658) (218) (876) Foreign exchange (4) (14) (18) ----------------------------------- ------- -------- ------- Fair value, December 2006 9,443 1,836 11,279 ----------------------------------- ------- -------- ------- Fair value, January 2007 9,443 1,836 11,279 Additions 315 - 315 Disposals (130) (193) (323) Change in fair value (3,736) 35 (3,701) Impairment of financial assets - - - Foreign exchange - - - ----------------------------------- ------- -------- ------- Fair value, December 2007 5,892 1,678 7,570 ----------------------------------- ------- -------- ------- All disposals during the year were for a cash consideration. Financial assets held at fair value include the following: ----------------------------------- ----------- ---------- 2007 2006 £000 £000 ----------------------------------- ----------- ---------- Quoted securities Cost - equity securities - UK 1,426 409 - equity securities - US - - ----------------------------------- ----------- ---------- 1,426 409 Fair value adjustment 701 3,632 ----------------------------------- ----------- ---------- 2,126 4,041 ----------------------------------- ----------- ---------- Unquoted securities Cost 10,202 9,892 Fair value adjustment (6,436) (4,490) ----------------------------------- ----------- ---------- 3,766 5,402 ----------------------------------- ----------- ---------- Financial assets held at fair value 5,892 9,443 ----------------------------------- ----------- ---------- Quoted securities are listed investments with fair value based on bid prices at the balance sheet date. Unquoted securities are unlisted investments with fair value based on a valuation methodology used most commonly by the Group, being the "price of recent investment" reflecting the early stage nature of the investments. Disposal / deemed disposal of subsidiary undertakings in 2007 ----------------------- ------- -------- Intrasonics Total Ltd £000 £000 ----------------------- ------- -------- Non-current assets - Intellectual Property - - - Property, plant and equipment - - Current assets 78 78 Borrowings - - Current liabilities (43) (43) ----------------------- ------- -------- Total equity 35 35 ----------------------- ------- -------- Minority interests 77 77 Cash invested - - Realised profit on sale 1,376 1,376 Unrealised gain on issue of shares - - Cost of investment - - ----------------------- ------- -------- Sale proceeds 1,488 1,488 ----------------------- ------- -------- Intrasonics Ltd was sold to Mainframe Participarties BV in December 2007 for an initial cash consideration of £1.5m, before costs of disposal of £0.1m, together with anticipated future royalties of up to £4.5m, which may become payable, but have not been recognised to date, due to their uncertainty in nature. Intrasonics Ltd incurred a loss after taxation and minority interests of £272,000 before the disposal. During 2007, Intrasonics Limited utilised £316,000 of the group's net operating cash flows, paid £21,000 in respect of net returns on financial assets and servicing of finance, and utilised £500,000 for capital expenditure and financial investment. There was no disposal of operating subsidiaries during 2006. Principal Group investments The Group held investments in the following subsidiaries, associated undertakings and investments at 31 December 2007. To avoid a statement of excessive length, details of investments that are not significant have been omitted. Subsidiary, associate Country of Principal Shares % undertakings and investments of incorporation activity held ----- Sagentia Group AG --------- ----------------- ------- --------------------- Venture Subsidiaries AtranovaTM Limited England Battery Ordinary 91 technology Sensopad Limited England Sensor technology Ordinary 77 Investments Sphere Medical Holding Limited England Medical sensor Ords & 11 technology A's CMR Fuel Cells plc* England Fuel cell Ordinary 11 technology AtraverdaTM Limited England Battery Ords & 18 technology A's Sensortec Limited Jersey Environmental Ordinary 12 sensing technology Turftrax Holding plc* England Location tracking Ords & 10 technology Prefs Core Operations Sagentia Group Limited England Holding company Ordinary 100 Sagentia Limited England Consultancy Ordinary 100 Sagentia Catella AB Sweden Battery Ordinary 100 technology Manage5nines Limited England IT Consultancy Ordinary 80 Sagentia Inc. USA Consultancy Ordinary 100 S-GAI Tech Limited Hong Kong Consultancy Ordinary 63 Sagentia GmbH Germany Consultancy Ordinary 100 Chord Capital Limited England Fund management Ordinary 100 services Cascade Generics Limited England Fund management Ordinary 100 --------------------- --------- services ------- ----- ----------------- * Quoted on the UK Alternative Investment Market (AIM). IntrasonicsTM Ltd and Nanoscience Inc were disposed of for cash during the year. Turftrax Holding plc was quoted on Aim on 30 January 2008. All subsidiaries have year-ends of 31 December other than S-Gai Tech Ltd which is 31 March, but for which accounts are provided to 31 December. 16 Trade and other receivables --------------------------------- --------- --------- 2007 2006 £000 £000 --------------------------------- --------- --------- Current assets: Trade receivables 6,280 3,865 Provision for impairment (97) (8) --------------------------------- --------- --------- Trade receivables - net 6,183 3,857 Amounts recoverable on contracts 1,350 729 VAT 23 57 Prepayments and accrued income 177 569 --------------------------------- --------- --------- 7,733 5,212 --------------------------------- --------- --------- Current tax asset 59 30 --------------------------------- --------- --------- 7,792 5,242 --------------------------------- --------- --------- All amounts disclosed above are short-term. The carrying value of trade receivables is considered a reasonable approximation of fair value. All of Sagentia's trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an additional provision of £89,000 has been provided, bringing the total provision to £97,000 (2006: £8,000). In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets past due but not impaired is as follows: -------------------------------- --------- --------- 2007 2006 £000 £000 Not more than 3 months 6,025 3,598 Mor More than 3 months but not more than 6 months 123 235 More than 6 months but not more than 1 year 22 3 More than 1 year 13 21 --------------------------------- --------- --------- 6,183 3,857 --------------------------------- --------- --------- 17 Investments --------------------------------- --------- --------- 2007 2006 £000 £000 --------------------------------- --------- --------- Quoted investments - 23 --------------------------------- --------- --------- Aggregate market value of listed investments - 86 --------------------------------- --------- --------- The tax liability if listed investments were sold at market value - - --------------------------------- --------- --------- These are current asset investments held for disposal. The Company granted options over shares held in Synaptics Inc against the time that the options will be exercised to the employees of Absolute Sensors Ltd as part of the disposal of Absolute Sensors Limited to Synaptics Inc. The Company retained shares in Synaptics Inc, a company quoted on NASDAQ. The value of the asset was the net price achievable by the Company, being the lower of the market price of the share and exercise price of the option. These options have now all been exercised. 18 Cash and cash equivalents --------------------------------- --------- --------- 2007 2006 £000 £000 --------------------------------- --------- --------- Short term bank deposits - 8 Cash at bank and in hand 859 1,955 --------------------------------- --------- --------- 859 1,963 --------------------------------- --------- --------- Of the cash at bank and in hand detailed above, the following amounts are held, principally in spin-out companies and are not available for general use by the Group. ------------------- --------- --------- 2007 2006 £000 £000 ------------------- --------- --------- Cash held within spin-out companies 1 81 ------------------- --------- --------- Effective interest rates achieved are shown in Note 3. 19 Called-up share capital ---------------------- --------- --------- 2007 2006 £000 £000 ---------------------- --------- --------- Authorised Ordinary shares of CHF 0.10 each 10,552 10,552 ---------------------- --------- --------- Allotted, called-up and fully paid Ordinary shares of CHF 0.10 each 9,307 9,307 ---------------------- --------- --------- Number Number ---------------------- --------- --------- Authorised Ordinary shares of CHF 0.10 each 248,048,800 248,048,800 ---------------------- --------- --------- Allotted, called-up and fully paid Ordinary shares of CHF 0.10 each 215,965,577 215,965,577 ---------------------- --------- --------- Sagentia Group AG is incorporated in Switzerland; therefore the ordinary shares are denominated in Swiss Francs with a nominal value of CHF 0.10. Authorised share capital comprises allotted shares of 215,965,577 (2006:215,965,577), and conditional capital of 32,083,223 (2006: 32,083,223) being 16,284,000 approved on 21 June 2005, 11,916,000 approved on the 15 September 2000 and 4,300,000 approved on 30 April 2004 for the future issue of options under a company scheme. 416,777 of these approved shares were sold on 16 May 2006. Sagentia Group AG holds an interest in its own shares. At 31 December 2007, the Group held 610,800 (2006: 610,800) of its own shares in Sagentia Group AG, and a further 42,100 (2006: 42,100) shares in The Generics Group Employee Share Trust. Of the 610,800 treasury shares, 471,000 are to be utilised against share options already granted. The value of Sagentia Group AG shares, as quoted on the London Stock Exchange plc at 31 December 2007, was 4.0 pence per share (2006: 8.75p). Reconciliation of options in grant 2007 2006 Weighted Weighted Average Average No. exercise price No. exercise price ---------------------------- ----------- --------- --------- --------- At beginning of year 15,966,368 13.4p 17,694,881 13.5p Granted during year 11,193,834 4.4p 708,518 9.8p Exercised during year - - (716,777) 9.7p Lapsed or cancelled during year (2,838,507) 14.3p (1,720,254) 14.6p ---------------------------- ----------- --------- --------- --------- At end of year 24,321,695 9.3p 15,966,368 13.4p ---------------------------- ----------- --------- --------- --------- No options were exercised in 2007. (2006: The weighted average share price during the period for options exercised over the year was 9.7p). 19 Called-up share capital (continued) Exercise of an option is subject to continued employment, and normally lapse upon leaving employment, although this period may be extended where an employee is deemed a 'good leaver'. Options were valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value calculations; expected dividends were assumed to be nil; possibility of ceasing employment before vesting was assumed to be nil. The risk free rate was taken as 5.5%. Volatility is taken from data provided by Bloomberg L.P. over an appropriate time period, usually being a 100 day rolling average. Other assumptions which varied with the option issue are given in the table below. The total charge for the year under the Black-Scholes model relating to employee share based payment plans was £83,000 (2006: £235,000), all of which related to equity-settled share based payment transactions. After deferred tax the total charge was £83,000 (2006: £235,000). The fair value per option granted and the assumptions used in the calculation are as follows: At 31 December 2007, options granted to subscribe for ordinary shares of the company are as follow: Date of Option exercise period Number of shares under grant option From (1) To(2) Approved Unapproved Exercise Fair Value of Expected Volatility scheme scheme price (pence options(4) Life (years) (3)* Oct 2000 Feb 2002 Dec 2007 - 300,000 18.0 Oct 2000 Jun 2002-Dec Oct 2010 - 386,354 40.0 2004 Sep 2001 Sep-2005 Sep 2011 5,000 - 68.0 Sep 2001 Sep 2004-Sep Sep 2011 16,500 - 94.0 2005 Dec 2001 Jun 2003-Dec Dec 2011 37,500 195,000 84.0 2005 Dec 2001 Dec 2005-Dec Dec 2011 47,092 - 94.0 2005 Mar 2002 Mar 2005-Mar Mar 2012 37,500 37,500 68.5 2006 Mar 2002 Mar 2005-Mar Mar 2012 16,500 - 71.0 2006 Sep 2002 Sep 2005-Sep Sep 2012 8,000 - 8.0 2006 Dec 2002 Dec 2005-Dec Dec 2012 16,500 - 8.8 5.6p 10 45% 2006 Sep 2004 Mar 2006-Mar Mar 2013 205,000 - 7.0 4.4p 10 45% 2008 Jun 2005 Jun 2007 Jun 2015 11,755,946 258,402 10.9 2.8p 10 40% Sep 2005 Sep 2007 Sep 2015 674,724 775,207 11.8 7.0p 2 40% Dec 2005 Dec 2007 Dec 2015 50,013 435,112 11.8 6.5p 2 35% Jun 2006 Jun 2008-Jun Jun 2016 358,427 350,091 9.8 5.8p 2 40% 2009 Dec 2007 Dec 2007-Dec Dec 2017 - 11,193,834 4.5p 2.9p 10 58% 2009 (1) Subject to earlier exercise in certain limited circumstances. Where range of dates provided, shares under option have been granted with exercise periods which commence on different dates. (2) Where range of dates provided, shares under options have been granted with exercise periods which expire on different dates. (3) The exercise price is also the share price at grant date. (4) The fair value of options has not been calculated for options granted but not expired before November 2002 in accordance with IFRS2. 20 Other non current liabilities ----------------------------- ----- --------- --------- Note 2007 2006 £000 £000 Loans from minorities to subsidiaries 22 430 417 Bank loans 22 6,813 6,531 ----------------------------- ----- --------- --------- 7,243 6,948 Other creditors 69 41 Fair value of interest rate swap 200 181 Deferred income tax liabilities 2,657 3,014 ----------------------------- ----- --------- --------- 10,169 10,184 ----------------------------- ----- --------- --------- Loans from minorities to subsidiaries and bank loans: See explanation per note 22. Fair value of interest rate swap: The interest rate swap was used to separately fix the interest rate on the original floating rate mortgage over the property at Harston Mill at 6.1%. The swap matched the repayment schedule envisaged over 10 years from £8.0m to £2.5m. The loan balance was expected to be £5.0m at the end of 2007 (2006: £5.6m). 21 Current liabilities ----------------------------- ----- --------- --------- Note 2007 2006 £000 £000 ----------------------------- ----- --------- --------- Trade and other payables - current Payments received on account 1,345 1,431 Trade payable 821 791 Other taxation and social security 613 659 VAT 448 181 Accruals 1,664 2,188 ----------------------------- ----- --------- --------- 4,891 5,250 Bank loans and overdrafts 22 823 41 Current tax liabilities 36 43 ----------------------------- ----- --------- --------- 5,750 5,334 ----------------------------- ----- --------- --------- 22 Borrowings ------------ ------------ ------------ 2007 2006 ---------------- ----- ------- ------- ------- ------- ------- ------- Note UK Foreign Total UK Foreign Total £000 £000 £000 £000 £000 £000 ---------------- ----- ------- ------- ------- ------- ------- ------- Non-current Bank borrowings 20 6,813 - 6,813 6,531 - 6,531 Loans from minorities to 20 430 - 430 417 - 417 subsidiaries ---------------- ----- ------- ------- ------- ------- ------- ------- 7,243 - 7,243 6,948 - 6,948 ---------------- ----- ------- ------- ------- ------- ------- ------- Current Bank borrowings 21 765 58 823 - 41 41 ---------------- ----- ------- ------- ------- ------- ------- ------- Total borrowings 8,008 58 8,066 6,948 41 6,989 ---------------- ----- ------- ------- ------- ------- ------- ------- As at 31 December 2007, Group companies have granted charges over their assets to secure a five year bank loan from March 2006 for £9.0m (2006: £9.0m) for Sagentia Group Ltd, and an annual revolving facility of £2.0m (2006 £2.0m) for Sagentia Ltd, renewable each year Of the current bank loans and overdrafts, at 31 December 2007, £6,813,000 (2006: £6,531,000) has been drawn down and is repayable by Sagentia Group Ltd to Lloyds TSB Bank Plc, and £58,000 (2006: £41,000) is repayable on call by Sagentia Catella AS. Loans from minorities to venture subsidiaries are usually non interest bearing and repayable on call. They are shown in current borrowings, although they are unlikely to be able to be recalled within 12 months. In accordance with an agreed repayment schedule with the bank, bank loans and overdrafts are repayable to Lloyds TSB Bank Plc as follows: ------------------- --------- -------- 2007 2006 £000 £000 ------------------- --------- -------- Between 1 and 2 years - - Between 2 and 5 years 6,813 6,531 Over 5 years - - ------------------- --------- -------- 6,813 6,531 ------------------- --------- -------- An interest rate swap has effectively fixed the majority of the loan at an interest rate at 6.13% plus bank charges of 1%, which is payable quarterly. 23 Commitments Lease commitments The minimum annual rentals under non-cancellable operating leases are as follows: ------------------- --------- --------- Plant and equipment lease commitments 2007 2006 £000 £000 ------------------- --------- --------- Operating leases which expire: Within one year 14 9 Between one and five years 17 11 ------------------- --------- --------- Property lease rentals ------------------- --------- --------- Operating leases which expire: Within one year 136 129 Between one and five years 111 103 ------------------- --------- --------- 24 Capital and other financial commitments At 31 December 2007 the Group and the Company had commitments of £Nil (2006: £Nil). The Group had a committed un-drawn overdraft facility of £2.2m at 31 December 2007 (2006: £2.5m) At 31 December 2007, the Group had a 5 year loan facility of £9.0m secured on Harston Mill, Cambridge, UK, of which £6.8m (2006: £6.5m) had been drawn down. This facility is repayable in accordance with an agreed repayment schedule with the bank as detailed in Note 22 and renewable on an annual basis. 25 Related party transactions The Group provided support, IT and consultancy services to associated undertakings and made loans as follows: ------------------- --------- -------- --------- --------- 2007 2007 2006 2006 Loans Sale of goods Loans Sale of goods and Services and services £000 £000 £000 £000 ------------------- --------- -------- --------- --------- 3D Molecular Science - - - - Ltd Flying Null Ltd 833 - 833 - Sensopad Ltd 979 129 910 54 FD Technologies 160 - 160 - Atranova Ltd 494 47 141 36 ------------------- --------- -------- --------- --------- 2,466 176 2,044 54 ------------------- --------- -------- --------- --------- Disclosure above is for subsidiary undertakings in the group when Sagentia own less than 90% and provide funding and / or other services. Key personnel are the executive directors and non executive directors of the Group. Remuneration to key personnel is disclosed in note 8. Related party transactions also comprise legal fees paid to Wiederkehr Forster as disclosed in note 8. 26 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 26.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Fair value of investments The Group tests regularly whether investments and other loans have suffered any impairment, in accordance with the accounting policy stated in Note 2. The recoverable amounts have been determined based on BVCA calculations. These calculations require the use of estimates on individual investment basis. (b) Project accounting The Group undertakes a number of fixed price consultancy projects. The state of completeness of each project, and hence, revenue recognised, requires the use of estimates. (c) Other loans recognition The Group has recognised other loans amounting to £1,677,000 (2006 £1,677,000) that will become due and payable as part of the consideration of the disposal of Sensopad Ltd to TT Electronics plc. The repayment of the loan is dependent upon TT Electronics plc achieving various target revenues which will generate a royalty payable to Sagentia. 27 Post balance sheet events Following the year end, Turftrax Holdings plc was listed on AIM in January 2008 at an admission price of 40p per share. Sagentia hold 3.2m shares. This information is provided by RNS The company news service from the London Stock Exchange END FR EAFDDESAPEAE
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