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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Eleksen Grp | LSE:ELG | London | Ordinary Share | GB00B12GJ944 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:4562E
Eleksen Group PLC
25 September 2007
21 September 2007
Eleksen Group plc
('Eleksen' or 'the Group')
Transition to International Financial Reporting Standards
Eleksen Group plc today announces the effects of the transition to International
Financial Reporting Standards ("IFRS") on its consolidated financial statements
up to the year ended 31 December 2006.
The results for the year ended 31 December 2006 under UK Generally Accepted
Accounting Principles ("UK GAAP") were released on 18 April 2007.
Both documents are also available in the Investors section of the group's
website at www.eleksen.com
The financial information in this announcement is unaudited.
Headlines from the IFRS Transition
* Reclassification of computer software
* Additional provision for employee benefits
* Presentation of the reverse acquisition
* Presentation of financial statements
For the year ended 31 December 2006, the expected impact of the adoption of the
adoption of IFRS is to decrease the loss before tax by #11k resulting from the
reversal of the unused holiday accrual recognised in the opening balance sheet
as at 1 January 2006. There is no impact upon the Group's net assets.
For further information, please contact:
Eleksen Group plc
Mark Gamber, Interim Group Finance Director 08700 727272
CONTENTS
1 Introduction
2 Basis of Preparation
3 IFRS 1 First-time adoption
4 Description of Key IFRS Adjustments
Appendix A Opening balance sheet as at 1 January 2006
Appendix B Consolidated income statement for the 6 months ended 30 June 2006
Appendix C Consolidated balance sheet as at 30 June 2006
Appendix D Consolidated income statement for the 12 months ended 31 December 2006
Appendix E Consolidated balance sheet as at 31 December 2006
1) Introduction
Eleksen Group plc has historically prepared its consolidated financial
statements under UK General Accepted Accounting Practice ("UK GAAP"). With
effect from 1 January 2007, the Group is required to prepare its consolidated
financial statements in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union. The Group's first Annual
Report under IFRS will be for the year ending 31 December 2007 with the first
published IFRS results being the Interim Report for the half year ended 30 June
2007. The Group is required to publish one year of comparative information,
which results in a date of transition to IFRS of 1 January 2006.
This document provides the unaudited IFRS consolidated accounts for the year
ended 31 December 2006 and the six months ended June 2006, as well as the IFRS
opening balance sheet as at 1 January 2006 and highlights the main differences
between these and the results previously reported under UK GAAP.
2) Basis of Preparation
The financial information presented in this document has been prepared on the
basis of current interpretations of all IFRSs and International Financial
Reporting Interpretation Committee ("IFRIC") interpretations published as at the
date of this announcement. These are subject to ongoing amendment by the
International Accounting Standards Board ("IASB") and subsequent endorsement by
the European Commission ("EC").
In addition, the Group may need to review accounting treatments as a result of
emerging industry consensus on the practical application of IFRS and further
technical opinion. It is therefore possible that the financial information
presented in this document could be modified by the time the Group publishes its
first complete set of IFRS financial statements for the year ending 31 December
2007.
The financial information contained in this document does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
Group's auditors have issued an unqualified opinion on the Group's UK GAAP
financial statements for the year ended 31 December 2006. The audit report of
such accounts was unqualified, did not include reference to any matters to which
the auditors drew their attention by way of emphasis without qualifying their
report, and did not contain any statement under Sections 237(2) or 237(3) of the
Companies Act 1985. These accounts have also been filed with the Registrar of
Companies.
3) IFRS 1 First-time Adoption
IFRS 1, "First-time Adoption of International Financial Reporting Standards"
sets out the rules that the Group must follow when it adopts IFRS for the first
time. Under this standard the Group is required to establish its IFRS accounting
policies as at 31 December 2007 and, in general, apply these retrospectively to
determine the IFRS opening balance sheet at its date of transition, 1 January
2006.
IFRS 1 provides a number of optional exemptions to this general principle. Set
out below is a description of the significant first time adoption choices made
by the Group.
Share based payments (IFRS 2)
Consistent with the Group's approach under UK GAAP the Group has elected to
apply IFRS 2 "Share-based Payment" only to those equity settled awards that were
granted after 7 November 2002 and not yet vested at 1 January 2006.
Under UK GAAP all share based payments have been fair valued under FRS 20 "Share
Based Payments" which is in line with the accounting treatment under IFRS 2.
Business combinations (IFRS 3)
The Group has elected to apply IFRS 3 "Business Combinations" prospectively from
the date of transition to IFRS rather than to restate previous business
combinations prior to 1 January 2006.
There were no business combinations prior to 1 January 2006 and hence no
goodwill held previously.
Presentation of financial information (IAS 1)
The primary financial statements in this document have been presented in
accordance with IFRS 1 "Presentation of Financial Statements".
4) Description of Key IFRS Adjustments
The following commentary describes the most significant differences between IFRS
and UK GAAP that have a material impact on the income or net assets of the
Group. The adjustments that result from these differences are set out in the
Appendices which contain detailed reconciliations of previously reported results
under UK GAAP to restated results under IFRS.
Computer Software (IAS 38)
Under UK GAAP, all capitalised computer software is included within tangible
fixed assets on the balance sheet. Computer software, which is not an integral
part of a related item of hardware, is required under IAS 16 "Property, Plant
and Equipment" to be classified as an intangible asset. Under UK GAAP such
software was included in tangible fixed assets.
The amounts reclassified from PPE to intangible assets are #4k at 1 January
2006, #8k at 30 June 2006 and #7k at 31 December 2006.
Employee Benefits (IAS 19)
Under IAS 19 "Employee Benefits", a provision is required to account for the
unused element of employees' holiday entitlements at each reporting period. This
was accounted for under UK GAAP as at 31 December 2006, except for in the
opening balance sheet and as at 30 June 2006 where adjustments of #11k and #33k
were made respectively to accrue unused holiday pay. Subsequent adjustments are
then made to reverse out this provision in the income statements for the 6
months to 30 June 2006 and for the year ended 31 December 2006.
Development Costs (IAS 38)
IAS 38 requires all research costs to be expensed in the year in which they are
incurred, but development costs must be capitalised if certain criteria are met
including that technical and commercial feasibility of the asset for sale or use
have been established. Under UK GAAP, both research and development costs were
expensed through the income statement.
None of the development costs incurred prior to the 31 December 2006 could be
capitalised as the recognition criteria were not satisfied. However, development
costs meeting the criteria thereafter were capitalised. Once the related
software and technology is available for use it is then amortised on a
straight-line basis over its useful economic life. The economic useful life for
these intangibles is 4 years.
Business Combinations (IFRS 3)
On 3 May 2006 Bora Communications Plc ('Bora') an AIM listed cash shell company
acquired Eleksen Limited. Due to a number of factors surrounding the transaction
it was accounted for as a reverse acquisition under UK GAAP with Eleksen Limited
being deemed to be the acquirer. This treatment is the same under IFRS 3 where
the reverse acquisition reflects the legal subsidiary (Eleksen Limited) as being
the acquirer. Therefore there were no adjustments required under IFRS 3 at the
date of reverse acquisition. The reverse acquisition reserve comprises
principally of the pre-acquisition reserves of Eleksen Limited, elimination of
the investment in Eleksen Limited, elimination of the net assets of Bora on
consolidation, and costs directly attributable to the acquisition. The financial
statements to 31 December 2006 were drawn up on this basis. The company
subsequently changed its name from Bora Communications Plc to Eleksen Group Plc.
Goodwill amounting to #743k arose on the difference between the fair value of
the consideration paid and the fair value of the net assets acquired from Bora
at the date of reverse acquisition. The goodwill was fully impaired at the date
of acquisition.
As a result of the reverse acquisition, the comparatives at 31 December 2005
under UK GAAP were restated to show as if the reverse acquisition reserve had
occurred prior to the date of acquisition. Under IFRS 3, the comparative
information presented in the consolidated financial statements is required to be
that of the legal subsidiary, that is the consolidated results of Eleksen
Limited and Eleksen Inc as at 31 December 2005. Accordingly, an adjustment was
made to classify the reverse acquisition reserve and restate the equity
structure to reflect Eleksen Limited. The effect of this presentational
adjustment was to reduce the Reverse Acquisition reserve by #15,189k, reduce
Share Capital by #1,837k and increase Share Premium by #17,026k at 1 January
2006.
Income Taxes (IAS 12)
IAS 12 "Income Taxes" required deferred tax on all temporary differences rather
than just timing differences as under UK GAAP. Deferred tax assets are
recognised to the extent that it is probable that future taxable profit will be
available against which temporary differences can be utilised. No deferred tax
asset was recognised under UK GAAP in respect of losses on the ground that the
availability of such future profits remain uncertain. This treatment remains the
same under IFRS.
Presentation of Financial Statements (IAS 1)
The key presentational differences are as follows:
Income statement
* All exceptional items are now reported in operating profit.
* Net financing costs are analysed between financing income and financing
costs on the face of the income statement.
Balance sheet
* All assets and liabilities are analysed between current and non-current.
Cash flow
* The reconciliation of profit before tax to operating cash flows is shown
at the beginning of the cash flow rather than in a note.
* None of the IFRS adjustments relate to cash and therefore there is no
impact on cash flows. IAS 7 "Cash Flow Statements" changes the definition of
cash used in the cash flow statement to cash and cash equivalents. Cash and
cash equivalents includes cash on hand and demand deposits that are
short-term highly liquid investments that are readily convertible to known
amounts of cash. This results in a change in presentation in the cash flow
statement.
Appendix A
Eleksen Group plc
Opening Balance Sheet
As at 1 January 2006
Previously Computer Employee Business Restated
Stated Software Benefits Combinations Under
UK GAAP IAS 38 IAS 19 IFRS 3 IFRS
#'000 #'000 #'000 #'000 #'000
ASSETS
Non current assets
Intangible assets 140 4 144
Property, plant and equipment 48 (4) 44
188 - - - 188
Current Assets
Inventories 126 126
Trade and other receivables 1,164 1,164
Cash and cash equivalents 2,721 2,721
4,011 - - - 4,011
LIABILITIES
Current liabilities
Trade and other payables (404) (404)
Employee benefits (317) (11) (328)
Provisions for liabilities (475) (475)
(1,196) - (11) - (1,207)
Non current liabilities
Interest bearing loans - -
- - - - -
NET ASSETS 3,003 - (11) - 2,992
EQUITY
Share capital 1,894 (1,837) 57
Share premium - 17,026 17,026
Reverse acquisition reserve 15,189 (15,189) -
Other Reserves 4 4
Foreign translation reserve - -
Loan note equity element - -
Warrant reserve - -
Retained earnings (14,084) (11) (14,095)
TOTAL SHAREHOLDERS' FUNDS 3,003 - (11) - 2,992
Appendix B
Eleksen Group plc
Consolidated Income Statement
6 months ended 30 June 2006
Previously Employee Restated
Stated Benefits Under
UK GAAP IAS 19 IFRS
#'000 #'000 #'000
Revenue 1,804 1,804
Cost of sales (1,360) (1,360)
Gross profit 444 - 444
Administrative expenses (2,724) (22) (2,746)
Loss from operations (2,280) (22) (2,302)
Finance costs (1) (1)
Finance income 32 32
Loss before taxation (2,249) (22) (2,271)
Income tax expense - -
Loss for the period (2,249) (22) (2,271)
Loss from operations analysed as:
Loss from operations before exceptional items (1,537) (22) (1,559)
Exceptional goodwill impairment (743) (743)
Appendix C
Eleksen Group plc
Consolidated Balance Sheet
As at 30 June 2006
Previously Computer Employee Restated
Stated Software Benefits Under
UK GAAP IAS 38 IAS 19 IFRS
#'000 #'000 #'000 #'000
ASSETS
Non current assets
Intangible assets 147 8 155
Property, plant and equipment 73 (8) 65
220 - - 220
Current Assets
Inventories 403 403
Trade and other receivables 1,170 1,170
Cash and cash equivalents 1,369 1,369
2,942 - - 2,942
LIABILITIES
Current liabilities
Trade and other payables (941) (941)
Employee benefits (231) (33) (264)
Provisions for liabilities (466) (466)
(1,638) - (33) (1,671)
Non current liabilities
Interest bearing loans - -
- - - -
NET ASSETS 1,524 - (33) 1,491
EQUITY
Share capital 2,047 2,047
Share premium 494 494
Reverse acquisition reserve 15,310 15,310
Other Reserves 6 6
Foreign translation reserve - -
Loan note equity element - -
Warrant reserve - -
Retained earnings (16,333) (33) (16,366)
TOTAL SHAREHOLDERS' FUNDS 1,524 - (33) 1,491
Appendix D
Eleksen Group plc
Consolidated Income Statement
12 months ended 31 December 2006
Previously Employee Restated
Stated Benefits Under
UK GAAP IAS 19 IFRS
#'000 #'000 #'000
Revenue 3,498 3,498
Cost of sales (2,607) (2,607)
Gross profit 891 - 891
Administrative expenses (5,115) 11 (5,104)
Loss from operations (4,224) 11 (4,213)
Finance costs (26) (26)
Finance income 32 32
Loss before taxation (4,218) 11 (4,207)
Income tax expense 188 188
Loss for the period (4,030) 11 (4,019)
Loss from operations analysed as:
Loss from operations before exceptional items (3,481) 11 (3,470)
Exceptional goodwill impairment (743) (743)
Appendix E
Eleksen Group plc
Consolidated Balance Sheet
As at 31 December 2006
Previously Computer Restated
Stated Software Under
UK GAAP IAS 38 IFRS
#'000 #'000 #'000
ASSETS
Non current assets
Intangible assets 169 7 176
Property, plant and equipment 65 (7) 58
234 - 234
Current Assets
Inventories 510 510
Trade and other receivables 1,607 1,607
Cash and cash equivalents 1,148 1,148
3,265 - 3,265
LIABILITIES
Current liabilities
Trade and other payables (1,175) (1,175)
Employee benefits (272) (272)
Provisions for liabilities (696) (696)
(2,143) - (2,143)
Non current liabilities
Interest bearing loans (1,471) (1,471)
(1,471) - (1,471)
NET ASSETS (115) - (115)
EQUITY
Share capital 2,047 2,047
Share premium 494 494
Reverse acquisition reserve 15,381 15,381
Other Reserves (4) (4)
Foreign translation reserve 10 10
Loan note equity element 18 18
Warrant reserve 53 53
Retained earnings (18,114) (18,114)
TOTAL SHAREHOLDERS' FUNDS (115) - (115)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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