Final Results

 

TIDMSTEC 
 
RNS Number : 0309Z 
Shieldtech PLC 
15 September 2009 
 

For immediate release 
Shieldtech plc (the "Company" or the "Group") 
 
 
 
 
Results for the year ended 30 June 2009 
 
 
 
 
Shieldtech plc, a specialist provider of products and services to the Homeland 
Security market, announces its results for the year ended 30 June 2009. 
 
 
Highlights 
 
 
  *  Turnover increased 72% to GBP10.3m (2008: GBP6.0m) 
  *  Return to profit: Operating profit* GBP0.4m (2008: loss of GBP0.8m) 
  *  Completed investment of new monies into the Group and refinancing of bank 
  facilities 
  *  Trading momentum built up in the last quarter 
  *  Awarded a contract to supply ballistic panels for "Osprey" body armour systems 
  to MoD 
  *  Signed long term agreement with UNICEF 
  *  Developed new body armour constructions addressing wearers' preferences 
 
 
 
*before amortisation of intangible fixed assets, share based payments and any 
charge for impairment of goodwill 
 
 
 
 
Tim Wightman, Chairman, commented: 
 
 
"We are confident that our market place will develop further in this current 
financial year. The Group is well positioned with innovative new products and a 
strong sales network to capitalise on exciting opportunities both in the UK and 
overseas." 
 
 
 
 
Contacts: 
+---------------------------------------------+---------------------------+ 
| Shieldtech plc                              |  Tel: [phone] | 
| Tony O'Neill, Chief Executive Officer       |                           | 
| Robert Denton, Group Finance Director       |                           | 
|                                             |                           | 
+---------------------------------------------+---------------------------+ 
| Seymour Pierce                              | Tel: [phone] | 
| Nicola Marrin/Mark Percy                    |                           | 
+---------------------------------------------+---------------------------+ 
| Buchanan Communications                     | Tel: [phone] | 
| Tim Anderson / Isabel Podda / Ben Romney    |                           | 
|                                             |                           | 
+---------------------------------------------+---------------------------+ 
 
 
 
 
 
 
Chairman's Statement 
 
 
It is less than four months since I wrote in last year's annual report, 
publication of which was delayed until May 2009 whilst we negotiated the 
refinancing of the Group, completed in June just before the year end. 
 
 
The Group returned to profit in the year ended 30 June 2009 following the 
disappointing results of the previous year. Activity levels generally began to 
improve, both in the UK, where Aegis has been well established for some years, 
and in targeted overseas markets. In conjunction with these efforts we 
concentrated on achieving further manufacturing and administrative efficiencies. 
 
 
Trading momentum built up through the last quarter of the year. 
 
 
Financial results 
 
 
Revenue in the year was GBP10.3m, 72% higher than the previous year's GBP6.0m. 
The gross profit was GBP3.0m, GBP1.0m greater than the year before's GBP2.0m. 
There was no goodwill impairment charge (2008: GBP8.8m), nor any share-based 
payments charge (2008: GBP0.3m), and other administrative expenses reduced by 
GBP0.2m to GBP2.5m (2008: GBP2.7m). 
 
 
The operating profit was GBP0.2m compared to last year's loss of GBP10.1m. The 
profit before tax was GBP0.1m (2008: loss GBP10.2m). The profit per share was 
0.05 pence (2008: loss 18.94 pence). Net cash outflow from operating activities 
was GBP0.1m (2008: GBP1.1m). In the last month of the financial year, following 
Shareholders' approval, we refinanced the Group, as described below. This was 
necessary since HSBC had reduced the Group's overdraft facility without prior 
notice in the last quarter of the previous year in response to the losses made 
and the "credit crisis". We are particularly grateful to our key suppliers who 
assisted by permitting extensions to normal payment terms during the year. 
 
 
At the end of the year total Shareholders' equity was GBP1.9m (2008: GBP1.8m) 
and borrowings were GBP2.0m (2008: GBP1.5m). 
 
 
Strategy 
 
 
The Group's performance in 2008 curtailed its immediate plans to acquire further 
businesses and thereby expand its customer base and portfolio to become a 
leading supplier of products and services for customers across the Homeland 
Security market. The Directors continue to believe there will be attractive 
opportunities to grow by acquisition. However, the short-term priority is to 
re-establish sustainable profitable organic growth. Although the global economic 
climate remains difficult, we do not expect it to have a detrimental effect on 
the overall demand for Aegis' products. 
 
 
Business development 
 
 
In June we announced that Aegis had been awarded a significant contract, the 
value of which cannot be disclosed, as part of the UK MOD's defence clothing 
project valued at a total of GBP16m to supply soft armour protective ballistic 
panel inserts to be used within the "Osprey" body armour systems currently in 
service with the Ministry of Defence. This armour is to protect military forces 
engaged in active theatres. Deliveries under this contract were completed in the 
first quarter of the current financial year. 
 
 
During the year Aegis entered into a long-term agreement with UNICEF. This marks 
a significant milestone for Aegis. Not only does it establish a specific new 
customer but also this agreement facilitates the marketing and selling of our 
products to other organisations and entities within, or associated with, the UN. 
Aegis has already received initial orders, to be delivered in the first half of 
the current financial year, and expects strong developments under these 
arrangements this year. 
 
 
There is increasing overseas interest in our products as Aegis develops its 
network of agents and distributors. Initial orders have been received recently 
from several European countries and Aegis expects to make further progress in 
these markets this year. 
 
 
We continue to develop new body armour constructions addressing the issues of 
heat, flexibility and physical stress and so improve the comfort for wearers of 
body armour systems. Aegis' resources, expertise and experience have been 
enhanced by the recent appointment of a senior design manager. 
 
 
Funding 
 
 
On 24 June 2009 we completed the investment and refinancing proposed in the 
circular dated 29 May 2009 and approved by Shareholders at the AGM on 22 June 
2009. 
 
 
The Company raised GBP1.1m, before expenses, by the issue of loan notes to three 
individuals under a Loan Note Instrument creating GBP1.1m 8% fixed rate secured 
loan notes 2011. The loan notes are secured by debentures granted by each 
company in the Group and by guarantees and indemnities granted by the subsidiary 
companies. The loan notes and the loan note securities are subject to the terms 
of an intercreditor agreement and the loan notes are subordinated to the Bank. 
 
 
The Company also issued warrants to subscribe for 20,625,000 ordinary shares at 
an exercise price of 6 pence per ordinary share. The warrants are exercisable, 
in whole or in part, at any time following the date falling six months from the 
date of issue of the warrants. The warrants will lapse to the extent not 
exercised by the fifth anniversary of the date of issue. In the event of the 
full exercise of the warrants the new ordinary shares thereby created would 
represent 28.1% of the Company's enlarged share capital. 
 
 
In conjunction with the issue of the loan notes, HSBC provided facilities 
comprising a GBP250,000 sterling net overdraft facility and a GBP900,000 LIBOR 
term loan facility. These bank facilities are secured by debentures granted by 
each company in the Group and by a composite guarantee entered into by each 
company in the Group. The bank facilities and the bank securities are subject to 
the terms of an intercreditor agreement and rank ahead of the loan notes and the 
loan note securities. 
 
 
The Board 
 
 
As reported in last year's statement, Glenn Hopkinson retired as a Director of 
the Company on 10 December 2008. 
 
 
Adrian Bradshaw resigned as a Director of the Company on 22 June 2009. On the 
same day, Prodaman Sarwal was elected a Director of the Company. 
 
 
Staff 
 
 
The Board is grateful for the efforts and contribution made by the entire 
Group's staff in what has been a difficult year. 
 
 
Prospects 
 
 
The Board expects a further improvement in trading performance in the year to 
June 2010. 
 
 
As reported last year, it is expected that the contract for the supply of 
certain body armour systems for the Metropolitan Police Authority will be put 
out to tender this autumn. Aegis is one of four companies qualified to 
participate in pre-tender discussions during which new products have been 
developed for review. The results of this tender may have an influence on the 
procurement strategies of other UK police forces, which will have the option of 
purchasing under the Metropolitan Police Authority framework agreement or may 
choose to continue with their own framework agreements and contracts. Aegis is 
monitoring the situation carefully and expects to have products available to 
meet both eventualities. 
 
 
The euro:GBP exchange rate continues to be a major parameter affecting our 
material costs, as we believe it does for our competitors in the UK market. We 
continue to maintain a tight control on overhead costs to assist profitability. 
 
 
The Board remains confident the Group will be able to capitalise on some 
exciting opportunities with new, innovative, cost-effective solutions for both 
existing customers and for new prospects in the UK and overseas. 
 
 
 
 
T R Wightman 
14 September 2009 
 
 
 
 
 
 
 
 
 
 
Consolidated Income Statement 
for the year ended 30 June 2009 
 
 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |   Note |  |      2009 |    |       2008 | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |   GBP000 |    |    GBP000 | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Revenue                             |        |  |    10,287 |    |      5,986 | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Cost of sales                       |        |  |   (7,321) |    |    (4,002) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Gross profit                        |        |  |     2,966 |    |      1,984 | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Administrative expenses             |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| amortisation of intangible fixed    |        |  |     (264) |    |      (264) | 
| assets                              |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|    share-based payments             |        |  |         - |    |      (280) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|    impairment of goodwill           |        |  |         - |    |    (8,808) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|    other                            |        |  |   (2,524) |    |    (2,743) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Total administrative expenses       |        |  |   (2,788) |    |   (12,095) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Operating profit/(loss)             |        |  |       178 |    |   (10,111) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Finance costs                       |        |  |      (86) |    |      (111) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Finance income                      |        |  |         - |    |          7 | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Profit/(loss) before income tax     |        |  |        92 |    |   (10,215) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Income tax                          |        |  |      (67) |    |        220 | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Profit/(loss) for the year          |        |  |        25 |    |    (9,995) | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Profit/(loss) per share             |        |  |           |    |            | 
| attributable to the equity holders  |        |  |           |    |            | 
| of the Company during the year      |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
|                                     |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
| Basic and diluted earnings/(loss)   |      4 |  |     0.05p |    |   (18.94)p | 
| per share                           |        |  |           |    |            | 
+-------------------------------------+--------+--+-----------+----+------------+ 
 
 
 
 
 
 
Consolidated Balance Sheet 
at 30 June 2009 
 
 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      | Note |   |  30 June |   |    30 June | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |     2009 |   |       2008 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |  GBP000 |   |    GBP000 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Assets                               |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Non-current assets                   |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Property, plant & equipment          |      |   |      179 |   |        207 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Goodwill                             |    5 |   |    2,000 |   |      2,000 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Other intangible assets              |      |   |      792 |   |      1,056 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |    2,971 |   |      3,263 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Current assets                       |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Inventories                          |      |   |    1,551 |   |        771 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Trade and other receivables          |      |   |    2,507 |   |      1,962 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Cash and cash equivalents            |      |   |      171 |   |          -- | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |    4,229 |   |      2,733 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Total assets                         |      |   |    7,200 |   |      5,996 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Liabilities                          |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Non-current liabilities              |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Financial liabilities -- borrowings   |      |   |    1,588 |   |        678 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Deferred income tax liabilities      |      |   |       14 |   |         14 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |    1,602 |   |        692 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Current liabilities                  |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Trade and other payables             |      |   |    3,500 |   |      2,635 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Financial liabilities -- borrowings   |      |   |      240 |   |        836 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |    3,740 |   |      3,471 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Total liabilities                    |      |   |    5,342 |   |      4,163 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Equity                               |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Capital and reserves attributable to |      |   |          |   |            | 
| equity holders of the Company        |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Share capital                        |      |   |    9,009 |   |      9,009 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Share premium account                |      |   |   14,200 |   |     14,200 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Share-based payment reserve          |      |   |      280 |   |        280 | 
+--------------------------------------+------+---+----------+---+------------+ 
| Retained earnings                    |      |   | (21,631) |   |   (21,656) | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Total Shareholders equity           |      |   |    1,858 |   |      1,833 | 
+--------------------------------------+------+---+----------+---+------------+ 
|                                      |      |   |          |   |            | 
+--------------------------------------+------+---+----------+---+------------+ 
| Total equity and liabilities         |      |   |    7,200 |   |      5,996 | 
+--------------------------------------+------+---+----------+---+------------+ 
 
 
 
 
Consolidated Cash Flow Statement 
for the year ended 30 June 2009 
 
 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |     2009 |    |       2008 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |  GBP000 |    |    GBP000 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Cash flows from operating activities      |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Profit/(loss) after taxation              |  |  |       25 |    |    (9,995) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Adjustments for:                          |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Depreciation                          |  |  |       58 |    |         60 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Impairment of goodwill                |  |  |        -- |    |      8,808 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Amortisation of intangible assets     |  |  |      264 |    |        264 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Share-based payment charge            |  |  |        -- |    |        280 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Finance costs                         |  |  |       86 |    |        111 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Finance income                        |  |  |        -- |    |        (7) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Taxation charge/(credit) recognised       |  |  |       67 |    |      (220) | 
| in income     statement                   |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| (Increase) in trade and other             |  |  |    (792) |    |      (444) | 
| receivables                               |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     (Increase)/decrease in inventories    |  |  |    (780) |    |        126 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|     Increase in trade and other payables  |  |  |      800 |    |        433 | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Cash flows from operations                |  |  |    (272) |    |      (584) | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Income tax received/(paid)                |  |  |      245 |    |      (444) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Interest paid                             |  |  |     (86) |    |      (106) | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Net cash outflow from operating           |  |  |    (113) |    |    (1,134) | 
| activities                                |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Cash flows from investing activities      |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Interest received                         |  |  |        -- |    |          7 | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Purchase of property, plant and equipment |  |  |     (30) |    |       (33) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Acquisition of subsidiaries               |  |  |        -- |    |    (6,002) | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Net cash used in investing activities     |  |  |     (30) |    |    (6,028) | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Cash flows from financing activities      |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Proceeds from issue of share capital      |  |  |        -- |    |     10,075 | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Payment for share issue costs             |  |  |        -- |    |    (1,075) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| New borrowings                            |  |  |    2,000 |    |      1,000 | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Payment for arrangement costs for new     |  |  |    (200) |    |          -- | 
| borrowings                                |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Repayment of borrowings                   |  |  |    (850) |    |    (2,950) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Repayment of loan notes                   |  |  |        -- |    |      (467) | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Repayment of finance leases               |  |  |     (23) |    |       (23) | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Net cash generated from financing         |  |  |      927 |    |      6,560 | 
| activities                                |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Net increase/(decrease) in cash and cash  |  |  |      784 |    |      (602) | 
| equivalents                               |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Cash and cash equivalents at beginning of |  |  |    (613) |    |       (11) | 
| year                                      |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
|                                           |  |  |          |    |            | 
+-------------------------------------------+--+--+----------+----+------------+ 
| Cash and cash equivalents at end of year  |  |  |      171 |    |      (613) | 
+-------------------------------------------+--+--+----------+----+------------+ 
 
 
Basis of preparation of the preliminary results 
 
 
The preliminary results for the year ended 30 June 2009 have been extracted from 
the audited financial statements which have not yet been delivered to the 
Registrar of Companies.  The financial information set out in this announcement 
does not constitute statutory financial statements for the year ended 30 June 
2009 or 30 June 2008. 
The statutory financial statements for the year ended 30 June 2009 were 
unqualified and did not contain a statement under section 435 of the Companies 
Act 2006.  The statutory financial statements for the year ended 30 June 2008 
have been delivered to the Registrar and were prepared in accordance with 
International Financial Reporting Standards (IFRS) as adopted by the European 
Union, while the statutory financial statements for the year ended 30 June 2009 
will be delivered to the Registrar f ollowing the Company's Annual General 
Meeting.  The preliminary results have been prepared in accordance with IFRS as 
adopted by the European Union and were approved by the Board of Directors on 14 
September 2009. 
 
 
The Group accounting policies used in the preliminary results are consistent 
with those applied in its most recent annual financial statements, an extract of 
which is set out in note 2 below. 
 
 
Notes to the Financial Statements 
for the year ended 30 June 2009 
 
 
 
 
1    NATURE OF OPERATIONS AND GENERAL INFORMATION 
 
 
Shieldtech plc is the Group's ultimate parent Company. It is incorporated and 
domiciled in England and Wales. Shieldtech plc's shares are listed on the AIM 
market of the London Stock Exchange. 
 
 
The address of its registered office and principal place of business is 5 
Chesford Grange, Woolston, Warrington, WA1 4RQ. 
 
 
The consolidated financial information extracted from the financial statements 
of Shieldtech plc are presented in pounds sterling (GBP), which is also the 
functional currency of the parent. The principal activity of the Company is a 
holding company. 
 
 
2 PRINCIPAL ACCOUNTING POLICIES 
 
 
2.1 Basis of preparation 
 
 
The consolidated financial statements have been prepared in accordance with 
International Financial Reporting Standards (IFRS) as adopted by the European 
Union (EU), including International Accounting Standards (IAS) and 
interpretations issued by the International Financial Reporting Interpretations 
Committee (IFRIC). Practice is continuing to evolve on the application and 
interpretations of IFRS. Further standards may be issued by the International 
Accounting Standards Board (IASB) and standards currently in issue and endorsed 
by the EU may be subject to interpretations issued by IFRIC. 
 
 
IFRS, as adopted by the EU, differs in certain respects from IFRS as issued by 
the IASB. However, the consolidated financial statements for the period 
presented would be no different had the Group applied IFRS as issued by the 
IASB. References to IFRS hereafter should be construed as references to IFRS as 
adopted by the EU. 
 
 
The preparation of financial statements, in conformity with generally accepted 
accounting principles under IFRS, requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities at the 
date of the financial statements and the reported amounts of revenues and 
expenses during the reported period. Although these estimates are based on 
management's best knowledge of the amount, event or actions, actual results may 
ultimately differ from those estimates. 
 
 
The financial statements have been prepared using the measurement basis 
specified by IFRS for each type of asset, liability, income and expense. The 
measurement bases are more fully described in the detailed accounting policies 
below. 
 
 
The financial statements have been prepared on a going concern basis under the 
historical cost convention. 
 
 
The Group's business activities, together with the factors likely to affect its 
future development, performance and position, and its cash flows, liquidity 
position and borrowing facilities are described in the Chairman's Statement. In 
addition, Note 21 to the financial statements includes the Group's policies and 
processes for managing its capital, its financial risk management objectives, 
details of financial instruments and hedging activities and its exposure to 
credit risk and liquidity risk. The Group meets its day-to-day working capital 
requirements through an overdraft facility that is due for renewal on 22 May 
2010. The current economic conditions create uncertainty over the level of 
demand for the Group's products; the exchange rate between sterling and euro and 
hence the cost of the Group's raw materials; and the availability of bank 
finance in the foreseeable future. 
 
 
The Group's forecasts and projections, taking account of reasonably possible 
changes in trading performance, show the Group should be able to operate within 
the level of its current facility. The Group will open renewal discussions with 
the bank in due course and has not at this stage sought any written commitment 
that the facility will be renewed. However, the Group has held discussions with 
its bank about its future borrowing needs and no matters have been drawn to its 
attention to suggest that renewal may not be forthcoming on acceptable terms. 
 
 
After making enquiries the Directors have a reasonable expectation that the 
Company and the Group have adequate resources to continue in operational 
existence for the foreseeable future and accordingly continue to adopt the going 
concern basis in preparing the annual report and financial statements. 
 
 
2.2 Basis of consolidation 
 
 
The Group financial statements consolidate those of the Company and all of its 
subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are 
entities over which the Group has the power to control the financial and 
operating policies so as to obtain benefits from its activities. The Group 
obtains and exercises control through voting rights. Subsidiaries are 
consolidated from the date on which control is transferred to the Group. 
 
 
Unrealised gains on transactions within the Group are eliminated. Unrealised 
losses are also eliminated unless the transaction provides evidence of an 
impairment of the asset transferred. Amounts reported in the financial 
statements of subsidiaries have been adjusted where necessary to ensure 
consistency with the accounting policies adopted by the Group. 
 
 
2.3 Business combinations 
 
 
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase 
method involves the recognition at fair value of all identifiable assets and 
liabilities, including contingent liabilities of the subsidiary, at the 
acquisition date, regardless of whether or not they were recorded in the 
financial statements of the subsidiary prior to acquisition. On initial 
recognition, the assets and liabilities of the subsidiary are included in the 
consolidated balance sheet at their fair values, which are also used as the 
bases for subsequent measurement in accordance with Group accounting policies. 
Goodwill is stated after separating out identifiable intangible assets. 
 
 
2.4 Intangible assets 
 
 
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 including separately 
identifiable intangible assets and contingent liabilities of the acquired 
subsidiary at the date of acquisition, regardless of whether or not they were 
recorded in the financial statements of the subsidiary prior to acquisition. 
Goodwill is tested annually for impairment. 
 
 
Other intangible assets 
Separately identifiable intangible assets are included at their fair value at 
the date of acquisition and amortised over their estimated useful lives, 
generally up to five years. 
 
 
2.5 Property, plant and equipment 
 
 
Property, plant and equipment are included at cost less accumulated depreciation 
and provision for impairment. No depreciation is charged during the period of 
construction or commissioning. 
 
 
2.6 Depreciation 
 
 
Depreciation is calculated to write down the cost, less any estimated residual 
value, of all property, plant and equipment on a straightline basis over their 
estimated useful economic lives as follows: 
 
 
Long leasehold land and buildings              term of lease 
Plant and machinery                                   up to 10 years 
Other                                                           up to 5 years 
 
 
Material residual value estimates are updated as required, but at least 
annually, whether or not the asset is revalued. 
 
 
2.7 Disposal of assets 
 
 
The gain or loss arising on the disposal of an asset is determined as the 
difference between the disposal proceeds and the carrying amount of the asset 
and is recognised in the income statement. 
 
 
2.8 Impairment testing of assets 
 
 
For the purposes of assessing impairment, assets are grouped at the lowest 
levels for which there are separately identifiable cash flows (cash-generating 
units). As a result, some assets are tested individually for impairment and some 
are tested at cash-generating unit level. 
 
 
Individual assets or cash-generating units are tested for impairment whenever 
events or changes in circumstances indicate that the carrying amount may not be 
recoverable. 
 
 
An impairment loss is recognised where the asset's or cash-generating unit's 
carrying amount exceeds its recoverable amount. The recoverable amount is the 
higher of fair value, reflecting market conditions less costs to sell, and value 
in use based on an internal discounted cash flow evaluation. Impairment losses 
recognised for cash-generating units, to which goodwill has been allocated, are 
credited initially to the carrying amount of goodwill. Any remaining impairment 
loss is charged pro rata to the other assets in the cash-generating unit. With 
the exception of goodwill, all assets are subsequently reassessed for 
indications that an impairment loss previously recognised may no longer exist. 
 
 
2.9 Leased assets 
 
 
In accordance with IAS17, 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 payment plus 
incidental payments, if any, to be borne by the lessee. A corresponding amount 
is recognised as a finance leasing liability. 
 
 
The interest element of leasing payments is charged to the income statement in 
constant proportion to the capital balance outstanding over the period of the 
lease. 
 
 
All other leases are regarded as operating leases and the payments made under 
them are charged to the income statement on a straight-line basis over the lease 
term. Lease incentives are spread over the term of the lease. 
 
 
2.10 Investments 
 
 
Investments in subsidiary companies are included at cost less provision for 
impairment. 
 
 
2.11 Inventories 
 
 
Inventories are stated at the lower of cost and net realisable value. Cost is 
calculated on a FIFO basis and includes materials, direct labour and an 
attributable proportion of manufacturing overheads based on normal levels of 
activity. Net realisable value is based on estimated selling price less further 
costs to be incurred to completion and disposal. 
 
 
2.12 Cash and cash equivalents 
 
 
For the purposes of the cash flow statement cash and cash equivalents comprise 
cash in hand and demand deposits together with other short-term highly liquid 
investments that are readily convertible into known amounts of cash and which 
are subject to an insignificant risk of changes in value. Bank overdrafts that 
are repayable on demand form an integral part of the Group's cash management and 
are also included as a component of cash and cash equivalents. For the purposes 
of the balance sheet cash and cash equivalents are cash on hand and deposits 
with banks and other financial institutions which are not restricted in their 
use. Bank overdrafts are included in borrowings in current liabilities. 
 
 
2.13 Revenue recognition 
 
 
Revenue is measured at the fair value of the consideration received or 
receivable. Revenue is reduced for any rebates and other similar allowances. The 
Group recognises income on an order by order basis, in each case assessing when 
substantially the risks and rewards have been passed to the customer. This 
assessment is based on the terms and conditions for individual orders and 
generally identifies the point of recognition as either the manufacture of a 
bespoke product or its delivery. 
 
 
Interest income is accrued on a time basis by reference to the principal 
outstanding and at the effective interest rates applicable. 
 
 
2.14 Foreign currency 
 
 
Transactions in foreign currency are translated into the functional currency 
using the exchange rates prevailing at the dates of the transactions. Foreign 
exchange gains and losses arising from the settlement of such transactions and 
from the translation of monetary assets and liabilities denominated in foreign 
currencies at the balance sheet date are recognised in the income statement. 
 
 
2.15 Employee benefits 
 
 
Pension contributions - defined contribution scheme 
The Group makes pension contributions only to defined contribution schemes. 
These contributions are recognised in the income statement during the period in 
which they become payable. The Group has no further payment obligations once the 
contributions have been paid. 
 
 
Share-based payments 
The Group operates a number of equity-settled, share-based compensation plans. 
The fair value of the services received in exchange for the grant of the options 
and warrants is recognised as an expense in the income statement with a 
corresponding adjustment to equity. The total amount to be expensed over the 
vesting period, or on grant if there is no vesting period, is determined by 
reference to the fair value of the options and warrants granted using an 
appropriate pricing model. 
 
 
2.16 Taxation 
 
 
Income tax expense represents the sum of the tax currently payable and deferred 
tax. 
 
 
Current tax is the tax currently payable or receivable based on the taxable 
profit or loss for the period. The Group's liability for current tax is 
calculated using tax laws and rates that have been enacted or substantively 
enacted by the balance sheet date. 
 
 
Deferred income taxes are calculated using the liability method on temporary 
differences. Deferred tax is generally provided on the difference between the 
carrying amounts of assets and liabilities and their tax bases. However, 
deferred tax is not provided on the initial recognition of goodwill, nor on the 
initial recognition of an asset or liability unless the related transaction is a 
business combination or affects tax or accounting profit. In addition, tax 
losses available to be carried forward as well as other income tax credits to 
the Group are assessed for recognition as deferred tax assets. 
 
 
Deferred tax liabilities are provided in full, with no discounting. Deferred tax 
assets are recognised to the extent that it is probable that the underlying 
deductible temporary differences will be able to be offset against future 
taxable income. Current and deferred tax assets and liabilities are calculated 
at tax rates that are expected to apply to their respective period of 
realisation, provided they are enacted or substantively enacted at the balance 
sheet date. 
 
 
Changes in deferred tax assets or liabilities are recognised as a component of 
tax expense in the income statement, except where they relate to items that are 
charged or credited directly to equity (such as the revaluation of land) in 
which case the related deferred tax is also charged or credited directly to 
equity. 
 
 
2.17 Segment reporting 
 
 
A segment is a distinguishable component of the Group that is engaged in 
providing goods or services (business segment), or in providing goods or 
services within a particular economic environment (geographical segment), which 
is subject to risks and returns that are different from those of other segments. 
 
 
2.18 Financial assets 
 
 
All financial assets are recognised when the Group becomes a party to the 
contractual provisions of the instrument. Financial assets are classified into 
the following specified categories: financial assets 'at fair value' through 
profit or loss (FVTPL), 'held to maturity' investments, 'available for sale' 
(AFS) financial assets and 'loans and receivables'. The classification depends 
on the nature and purpose of the financial asset and is determined at the time 
of initial recognition. The Group currently has only loans and receivables in 
these financial statements. 
 
 
Financial assets, other than those categorised as at fair value through profit 
or loss, are initially recognised at fair value plus transaction costs. 
 
 
Loans receivable are measured subsequent to initial recognition at amortised 
cost using the effective interest method, less provision for impairment. Any 
change in their value through impairment or reversal of impairment is recognised 
in the income statement. 
 
 
Provision against trade receivables is made when there is objective evidence 
that the Group will not be able to collect all amounts due to it in accordance 
with the original terms of those receivables. The amount of the write-down is 
determined as the difference between the asset's carrying amount and the present 
value of estimated future cash flows. 
 
 
An assessment for impairment is undertaken on each financial asset at least at 
each balance sheet date. 
 
 
2.19 Financial liabilities 
 
 
Financial liabilities are obligations to pay cash or other financial assets and 
are recognised when the Group becomes a party to the contractual provisions of 
the instrument. Financial liabilities are categorised as 'at fair value' through 
profit or loss (FVTPL) and 'amortised cost'. The Group currently has no 
liabilities categorised as FVTPL. 
 
 
Other financial liabilities are initially recognised at fair value, net of 
transaction costs, and are subsequently recorded at amortised cost using the 
effective interest method, with interest-related charges recognised as an 
expense in finance cost in the income statement. Finance charges, including 
premiums payable on settlement or redemption and direct issue costs, are charged 
to the income statement on an accruals basis using the effective interest method 
and are added to the carrying amount of the instrument to the extent that they 
are not settled in the period in which they arise. 
 
 
A financial liability is derecognised only when the obligation is extinguished, 
that is, when the obligation is discharged or cancelled or expires. 
 
 
2.20 Equity 
 
 
Equity comprises: 
 
 
Share capital - the nominal value of equity shares issued. 
 
 
Share premium account - the excess over nominal value of the fair value of 
consideration received for equity shares net of expenses of the share issue. 
 
 
Share-based payment reserve - the fair value of share-based payments that has 
been expensed in the income statement, until such share-based payments are 
exercised. 
 
 
Retained earnings - the retained profits and losses. 
 
 
2.21 Critical accounting estimates and judgements 
 
 
The preparation of the financial statements requires the use of estimates and 
assumptions. These affect the classification and valuation of assets, 
liabilities, income, expenses and contingent liabilities. Estimates and 
assumptions mainly relate to the useful life of non-current assets, the 
discounted cash flows used in impairment testing, the valuation of share-based 
payments and provision for taxes. Estimates are based on historical experience 
and other assumptions that are considered accurate in the circumstances. The 
actual values may vary from the estimates. The estimates and the assumptions are 
continually reviewed. 
 
 
Critical accounting and valuation policies and methods are those that are most 
important to the portrayal of the Group's financial position, results of 
operations and cash flows, and that require the application of difficult, 
subjective and complex judgements, often as a result of the need to make 
estimates about the effects of matters that are inherently uncertain and may 
change in subsequent periods. While not all of the significant accounting 
policies require difficult, subjective or complex judgements, the Company 
considers the following accounting policies to be significant. 
 
 
Intangible assets 
 
 
At 30 June 2009 the Group had intangible assets with a net carrying amount of 
GBP2.792m, comprising goodwill of GBP2m and customer relationships of GBP0.792m. 
 
 
Intangible assets other than goodwill are amortised over their estimated useful 
lives. The estimated useful lives are based on estimates of the period during 
which the assets will generate revenue. Intangible assets other than goodwill 
are tested for impairment whenever events or changes in circumstances indicate 
that the carrying amount of the assets may no longer be recoverable. 
 
 
Goodwill is tested annually for impairment. Impairment losses are measured by 
comparing the carrying amount to the discounted cash flows expected to be 
generated by the relevant cash-generating unit to which the goodwill belongs. 
The impairment loss is first allocated to goodwill and then to the other assets 
of a cash-generating unit. Estimating the discounted future cash flows involves 
significant assumptions regarding future sales prices, sales volumes and costs. 
The discounting process is also based on assumptions and estimations relating to 
business-specific costs of capital, which in turn are based on country risks, 
credit risks and additional risks resulting from the volatility of the 
respective line of business. 
 
 
Estimates are also used in the course of acquisitions to determine the fair 
value of the assets and liabilities acquired. If any intangible assets are 
identified, depending on the type of asset and the complexity of determining its 
fair value, the Company either consults with an independent external valuation 
expert or develops the fair value internally, using an appropriate valuation 
technique which is generally derived from a forecast of the total expected 
future net cash flows. 
 
 
Although the Company believes that its estimates of the relevant expected useful 
lives, its assumptions concerning the macroeconomic environment and developments 
in the industries in which the Group operates and its estimations of the 
discounted future cash flows are appropriate, changes in assumptions or 
circumstances could require changes in the analysis. This could lead to 
additional impairment charges in the future or to valuation write-backs should 
the trends expected by the Company reverse. 
 
 
Revenue recognition 
The Group recognises income on an order by order basis, in each case assessing 
when substantially the risks and rewards have been passed to the customer. This 
assessment is based on the terms and conditions for individual orders and 
generally identifies the point of recognition as either the manufacture of a 
bespoke product or its delivery. 
 
 
Share-based payments 
The fair value of share-based payments is determined under the Black-Scholes 
model and is dependent on estimates for the expected life of share options and 
warrants, volatility of shares, risk-free yield rate to maturity and expected 
dividend yield. 
 
 
Borrowings 
Borrowings are recognised initially at fair value on drawdown, net of 
arrangement costs incurred, and are stated subsequently at amortised cost. The 
Group determines the fair value at drawdown by reference to alternative 
borrowings then available and discounted cashflows. The carrying amount of 
borrowings approximates to their fair value as the impact of discounting is not 
significant. 
 
 
Income taxes 
Estimates are made to compute provisions for taxes. Judgements are necessary to 
determine whether deferred tax assets are recognised. These involve assessing 
the probabilities that deferred tax assets resulting from deductible temporary 
differences and tax losses can be utilised to offset future taxable income. 
Uncertainties exist with respect to the interpretation of complex tax 
regulations and the amount and timing of future taxable income. Differences 
arising between the actual results and the assumptions made, or future changes 
to such assumptions, could necessitate adjustments to tax income and expense in 
future periods. 
 
 
2.22 Adoption of new and revised standards 
 
 
The following standards were relevant to the Group's activities at 30 June 2009, 
although were not required to be adopted in the 30 June 2009 financial 
statements: 
 
 
IAS1 Presentation of Financial Statements (revised 2007) - IAS 1 (revised 2007) 
is effective for periods beginning on or after 1 January 2009. As the changes 
are presentational only the adoption will have no impact upon the results or net 
assets of the Group. 
 
 
Amendment to IFRS7 Financial Instruments: Disclosures - Improving Disclosures 
about Financial Instruments. This amendment is effective for annual periods 
beginning on or after 1 January 2009. The amendment expands significantly the 
disclosure requirements of IFRS7, in particular in relation to fair values where 
those values are not derived directly from quoted prices in active markets. A 
three-level hierarchy for fair value disclosures is introduced. Changes are also 
made to liquidity and risk disclosures, including maturity analysis. As the 
changes are presentational only the adoption will have no impact upon the 
results or net assets of the Group. 
 
 
IFRS8 - Operating Segments was issued in November 2006 and is effective for 
periods beginning on or after 1 January 2009. IFRS8 specifies how an entity 
should report information about its operating segments in its financial 
statements. Generally, financial information is required to be reported on the 
same basis as is used internally for evaluating operating segment performance 
and deciding how to allocate resources to operating segments. In addition an 
entity is required to provide information about the extent of its reliance on 
its major customers. As the changes are presentational only, the adoption will 
have no impact upon the results or net assets of the Group. 
 
 
IFRS3 Business Combinations and IAS27 (both revised 2008 and effective 1 July 
2009). IFRS3 requires transactions costs to acquire a business to be expensed as 
incurred rather than capitalised in the balance sheet and requires contingent 
consideration to be recognised at fair value on acquisition with all subsequent 
changes recognised in the income statement rather than against goodwill as 
currently permitted. The Group will assess the impact of the new requirements 
regarding acquisition accounting and consolidation in relation to future 
acquisitions. 
 
 
 
3. SEGMENTAL ANALYSIS 
 
 
Segment information is presented in respect of the Group's business and 
geographical segments. The primary format, business segments, is based on the 
Group's management and internal reporting structure. 
 
 
The Group operates in one business segment, that of the supply of goods and 
services to the Homeland Security Market. The Group's results, assets and 
liabilities are derived from the Group's single business segment. 
 
 
All of the Group's production facilities are located in the United Kingdom. The 
Group's results, assets and liabilities are derived from the Group's assets in 
the UK. 
 
 
4. EARNINGS/(LOSS) PER SHARE 
 
 
The earnings/(loss) per share is based on the profit of GBP25,000 (2008: loss of 
GBP9,995,000) and the weighted average of 52,788,223 (2008: 52,775,578) ordinary 
shares of 1 pence each in issue. 
 
+-----------------------------------------------+------------+--+--------------+ 
|                                               |       2009 |  |         2008 | 
+-----------------------------------------------+------------+--+--------------+ 
|                                               |            |  |              | 
+-----------------------------------------------+------------+--+--------------+ 
|                                               |            |  |              | 
+-----------------------------------------------+------------+--+--------------+ 
| Profit/(loss) attributable to equity holders  |         25 |  |      (9,995) | 
| of the Group in GBP000                       |            |  |              | 
+-----------------------------------------------+------------+--+--------------+ 
|                                               |            |  |              | 
+-----------------------------------------------+------------+--+--------------+ 
| Weighted average number of ordinary shares in | 52,788,223 |  |   52,775,578 | 
| issue                                         |            |  |              | 
+-----------------------------------------------+------------+--+--------------+ 
|                                               |            |  |              | 
+-----------------------------------------------+------------+--+--------------+ 
| Basic and diluted earnings/(loss) per share   |      0.05p |  |     (18.94)p | 
+-----------------------------------------------+------------+--+--------------+ 
 
 
The profit/(loss) for the period and the weighted average number of ordinary 
shares for the purpose of calculating the diluted earnings per share are the 
same as for the basic earnings per share calculation due to the Company's 
average share price during the year being lower than the exercise price for each 
of the options and warrants in issue at the end of the year. 
 
 
 
 
5GOODWILL 
 
 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |       2009 |    |      2008 | 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |    GBP000 |    |   GBP,000 | 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| Cost                                    |      |            |    |           | 
|                                         |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| At the start of the year                |      |     10,808 |    |         -- | 
+-----------------------------------------+------+------------+----+-----------+ 
| Movement in year                        |      |          -- |    |    10,808 | 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| At the end of the year                  |      |     10,808 |    |    10,808 | 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| Impairment                              |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| At the start of the year                |      |      8,808 |    |         -- | 
+-----------------------------------------+------+------------+----+-----------+ 
| Movement in year                        |      |          -- |    |     8,808 | 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| At the end of the year                  |      |      8,808 |    |     8,808 | 
+-----------------------------------------+------+------------+----+-----------+ 
|                                         |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| Net book value                          |      |            |    |           | 
+-----------------------------------------+------+------------+----+-----------+ 
| At the end of the year                  |      |      2,000 |    |     2,000 | 
+-----------------------------------------+------+------------+----+-----------+ 
 
 
 
 
Goodwill arose on the acquisition by the Company of the Aegis group in July 
2007, adding to the goodwill already recognised in the accounts of the Aegis 
group. Total goodwill amounted to GBP10.808m. Goodwill represents the value 
ascribed by the Company, at the time of the acquisition, incremental to the 
separately identified tangible and intangible assets, including customer 
relationships. In accordance with accounting standards the value of goodwill and 
other intangible assets was reviewed in the light of events since the 
acquisition. At the time of the acquisition it was known that revised regulatory 
standards would be published in the principal markets in which the Aegis group 
operates. It was expected that these markets would take a few months to adjust 
to the revised standards. In the event the period of adjustment took much longer 
than expected and the level of activity in the market reduced significantly. In 
the year ended 30 June 2008 the Aegis group suffered a substantial reduction in 
sales and operated at a loss. In parallel, business valuations generally fell 
greatly, reflecting the global economic challenges that developed in both equity 
and debt markets during 2008 and particularly the near complete retrenchment of 
commercial banks from corporate lending. 
 
 
At 30 June 2008 the Group assessed the carrying value of goodwill relating to 
the Aegis group, on a value in use basis, and determined that it was appropriate 
to reduce it to GBP2m. At 30 June 2009 the Group re-assessed the carrying value 
of goodwill relating to the Aegis group and determined that it was not impaired. 
The net book value of goodwill was determined from a value in use calculation 
using a discounted cash flow model. The discount rate was 13%. Cash flow 
forecasts of the Aegis group were prepared for the year ending 30 June 2010 
based on past performance and expectations and extrapolated for a further three 
years at a growth rate of 10% per annum then one year with no growth to give 
five year projections. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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