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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Maxima Hldgs | LSE:MXM | London | Ordinary Share | GB00B034R743 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 23.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:1760O Maxima Holdings PLC 18 December 2006 For immediate release 18 December 2006 Maxima Holdings plc Transition to International Financial Reporting Standards Maxima Holdings plc ('Maxima' or the 'Group'), the IT systems integration and managed services group, is adopting International Financial Reporting Standards (IFRS) for the financial year ended 31 May 2007, ahead of the required timeframe for AIM quoted companies. Previously the Group has applied United Kingdom generally accepted accounting principles (UK GAAP). Maxima's first published financial statements under IFRS will be in respect of the six months ended 30 November 2006, with the first Annual Report and Accounts prepared on this basis being in respect of the year ending 31 May 2007 ("2007"). This document explains the impact of the adoption of IFRS on the Group's results and quantifies the expected impact on 2006 financial information which will be used for comparison purposes, including the May 2005 balance sheet, previously prepared under UK GAAP. Adoption of IFRS will have no effect on the Group's strategy, operations of its business or its trading cash flows. Distributable reserves in Maxima are also unaffected. For further information, please contact: Maxima Kelvin Harrison, Chief Executive 01242 211211 Linda Andrews, Group Finance Director 0141 880 1000 Smithfield Sara Musgrave/Tania Wild 020 7903 0676 Contents of this document A: Summary of IFRS impact B: Basis of preparation and transition arrangements C: Explanatory notes on the impact of IFRS Appendices: Reconciliations of financial statements from UK GAAP to IFRS A: Summary of IFRS impact The areas of accounting that are most significantly impacted are: * The treatment of purchased goodwill * Accounting for business combinations * Share based payments * Deferred taxation The following table summarises the impact of the adoption on the Group's profit for the six months ended 30 November 2005 and the year ended 31 May 2006. ----------- ----------- 6 months ended Year ended 30 November 2005 31 May 2006 #000 #000 ----------- ----------- Profit before tax as reported under UK GAAP 389 1,524 IFRS adjustments: Reversal of goodwill amortisation 662 1,533 Amortisation of intangibles recognised on acquisitions (91) (325) Finance costs charged on acquisition (47) (35) Share based payments expensed (37) (73) Annual leave pay accrued (12) (24) Capitalisation of R&D net of resultant amortisation - 32 ----------- ----------- Profit before tax as reported under IFRS 864 2,632 =========== =========== The impact on total equity (and net assets) at 31 May 2005, 30 November 2005 and 31 May 2006 is shown in the table below: May 2005 November 2005 May 2006 #000 #000 #000 Net assets as reported under UK GAAP 13,695 19,657 20,669 IFRS adjustments: Reverse acquisition of Maxima by Azur (8,457) (8,457) (8,457) Impairment of goodwill in Maxima (4,046) (4,046) (4,046) Annual leave pay accrued (43) (56) (68) Finance costs charged on acquisition (45) (91) (78) Reversal of goodwill amortisation - 662 1,533 Amortisation of intangibles - (91) (325) Capitalise Research & Development, net of amortisation - - 32 Deferred tax 11 60 154 ----------- ----------- ----------- Net Assets as reported under IFRS 1,115 7,638 9,414 =========== =========== =========== Detailed reconciliation information for the relevant statements is provided in the appendix. B. Basis of Preparation and transition arrangements Statement of compliance These extracts of the unaudited statements of Maxima have been prepared, for the first time, to reflect the anticipated impact of International Accounting and Financial Reporting Standards ('IFRS') and are covered by IFRS 1 "First-time Adoption of IFRS" in respect of measurement matters. As listed companies are adopting IFRS for the first time, there is limited established practice upon which to draw in terms of interpretation and application. Furthermore, it is possible that new standards, revisions to existing standards and new interpretations may be issued which affect the Group. Consequently it is not possible to quantify definitively the adoption of IFRS, and therefore the comparative information in the 2007 interim and annual reports may differ from that presented in this document. The financial information in this document does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The auditors have issued unqualified opinions on the Group's UK GAAP financial statements for the period ended 31 May 2005 and the year ended 31 May 2006. IFRS1 Exemptions The Group has applied IFRS1 'First Time Adoption of International Reporting Standards' to provide a starting point for reporting under IFRS. The Group's date of transition to IFRS is 1 June 2005 and all comparative information in the financial statements is restated to reflect the Group's adoption of IFRS, except where otherwise required or permitted under IFRS 1. IFRS 1 requires an entity to comply with each IFRS effective at the reporting date for its first IFRS financial statements, which will be 30 November 2006. As a general principle, IFRS 1 requires the standards effective at the reporting date to be applied retrospectively. However, retrospective application is prohibited in some areas, particularly where retrospective application would require judgements by management about past conditions after the outcome of the particular transactions are already known. A number of optional exemptions from full retrospective application of IFRS are granted where the cost of compliance is deemed to exceed the benefits to users of the financial statements. The Group has elected to take the following optional elections under IFRS 1: Business combinations that occurred before the date of transition (1 June 2005) The Group has elected to comply with IFRS for the acquisition of Azur Holdings Limited ('Azur') by Maxima in November 2004 and has therefore complied for all combinations after that date. It has not applied IFRS for any combinations prior to that date. Share based payments - the provisions of IFRS 2 have not been applied to equity instruments that were granted in Azur after 7 November 2002 and vested before 1 June 2005. C: Explanatory notes on the impact of IFRS The following notes explain the impact that the adoption of IFRS has had on the Group's consolidated results. Detailed reconciliations are set out in the Appendix, showing the impact on the income statement for the period ended 30 November 2005 and year ended 31 May 2006, and on the balance sheets at 1 June 2005, 30 November 2005 and 31 May 2006. 1. Business Combinations Acquisition of Azur Holdings Limited On 24 November 2004 the Group acquired the share capital of Azur. Under UK GAAP this was treated under acquisition accounting as the acquisition by Maxima. Under IFRS 3, this transaction is treated as a reverse acquisition as the shareholders in Azur gained control of Maxima Holdings plc, since their shareholdings in Maxima represented more than one-half of its share capital following the transaction. As a result, the goodwill arising on the proportion of shares owned by the Azur shareholders is reversed and goodwill relating to Azur's acquisition of Maxima is created. The value of the consideration was 12,849,759 shares acquired at 65.514p. The fair value of the net assets of Maxima acquired is: Book and fair value #000 Cash at Bank 4,877 Trade creditors (504) ------------- Fair value of net assets acquired 4,373 Goodwill capitalised 4,046 ------------- 8,419 ------------- Satisfied by the fair value of shares acquired 8,419 ------------- The goodwill of #4,046,000 has been written off in full in the opening balance sheet, as Maxima Holdings plc at the date of the transaction was a shell company and the goodwill arising on the reverse acquisition of Maxima therefore had no intrinsic value. Acquisition of Ringwood Group Limited On 11 August 2005 the Group acquired the share capital of Ringwood Group Limited. Under UK GAAP the fair value of the consideration was #2,980,000 and the fair value of the net assets acquired was #787,000, which gave rise to #2,193,000 goodwill on acquisition. The Group has accounted for this acquisition in accordance with IFRS 3 'Business Combinations'. Under IFRS 3, intangible assets purchased as part of a business combination may meet the criteria set out in IFRS 3 for categorisation as an intangible asset other than goodwill, and are then amortised over their useful economic life. The Group has recognised an intangible asset for the Intellectual Property and the associated customer relationships acquired. These have been valued at #704,000 at the date of acquisition by the Group. This intangible will be written off over its expected useful life of 7 years. Deferred tax has been provided on this intangible asset following the principles in IAS 12 'Income Taxes'. A reconciliation of goodwill recognised on the acquisition under UK GAAP compared to IFRS is set out below: #000's Goodwill recognised under UK GAAP 2,193 Recognition of intangible asset (704) Recognition of deferred tax relating to intangible asset 211 Recognition of deferred tax relating to tax losses (140) ------------- 1,560 ------------- Acquisition of Hanston Technology Partners Limited On 26 September 2005 the Group acquired the share capital of Hanston Technology Partners Limited. Under UK GAAP the fair value of the consideration was #8,792,000 and the fair value of the net assets acquired was #345,000, which gave rise to #8,447,000 goodwill on acquisition. The Group has accounted for this acquisition in accordance with IFRS 3 'Business Combinations'. Under IFRS 3, intangible assets purchased as part of a business combination may meet the criteria set out in IFRS 3 for categorisation as an intangible asset other than goodwill and are then amortised over their useful economic life. The Group has recognised an intangible asset under IFRS3 for the contracts and customer relationships acquired. These have been valued at #254,000 and #878,000 respectively at the date of acquisition by the Group. These intangibles will be written off over their expected useful lives of between 2 and 4 years. Deferred tax has been provided on this intangible asset in line with the principles in IAS 12 'Income Taxes'. A reconciliation of goodwill recognised on the acquisition under UK GAAP compared to IFRS is set out below: #000's Goodwill recognised under UK GAAP 8,447 Recognition of intangible asset for contracted open order book (254) Recognition of intangible asset for customer relationships (878) Recognition of deferred tax relating to intangible asset 340 ------------ 7,655 ------------ Acquisition of Seabrook Research Limited On 24 February 2006 the Group acquired the trade and assets of Seabrook Research Limited. Under UK GAAP the fair value of the consideration was #504,000 and the fair value of the net liabilities acquired was #136,000, which gave rise to #640,000 goodwill on acquisition. The Group has accounted for this acquisition in accordance with IFRS 3 'Business Combinations'. Under IFRS 3, intangible assets purchased as part of a business combination may meet the criteria set out in IFRS 3 for categorisation as an intangible asset other than goodwill and are then amortised over their useful economic life. The Group has recognised an intangible asset under IFRS 3 for the customer relationships acquired. These have been valued these at #194,000 and will be written off over their expected useful life of 5 years. Deferred tax has been provided on this intangible asset in line with the principles in IAS 12 'Income Taxes'. A reconciliation of goodwill recognised at acquisition under UK GAAP compared to IFRS is set out below: #000's Goodwill recognised under UK GAAP 640 Recognition of intangible asset for customer relationships (194) Recognition of deferred tax liability relating to intangible asset 58 ------------ 504 ------------ Acquisition of QED Business Systems Limited On 12 May 2006 the Group acquired the share capital of QED Business Systems Limited. Under UK GAAP the fair value of the consideration was #4,526,000 and the fair value of the net assets acquired was #121,000, which gave rise to #4,405,000 goodwill on acquisition. The Group has accounted for this acquisition in accordance with IFRS 3 'Business Combinations'. Under IFRS 3, intangible assets purchased as part of a business combination may meet the criteria set out in IFRS 3 for categorisation as an intangible asset other than goodwill and are then amortised over their useful economic life. The Group has recognised an intangible asset under IFRS 3 for the contracts and customer relationships acquired. These have been valued at #417,000 and #1,160,000 respectively at the date of acquisition by the Group, and will be written off over their expected useful lives of between 2 and 5 years. Deferred tax has been provided on this intangible asset in line with the principles in IAS 12 'Income Taxes'. A reconciliation of goodwill recognised on the acquisition under UK GAAP compared to IFRS is set out below: #000's Goodwill recognised under UK GAAP 4,405 Recognition of intangible asset for contracted open order book (417) Recognition of intangible asset for customer relationships (1,160) Recognition of deferred tax liability relating to intangible asset 473 ------------ 3,301 ------------ 2. Intangible assets (a) Goodwill Under IAS 38 'Intangible Assets', goodwill is not amortised but instead is reviewed annually for impairment. The Group has elected to not apply IFRS 3 retrospectively before the acquisition of Azur Holdings Limited in November 2004. The net book value of goodwill has therefore been frozen at November 2004 with no further amortisation charged on goodwill held at that date or on subsequent acquisitions. An impairment review is also required at the date of transition under IFRS 1 in accordance with the guidelines set out in IAS 36 'Impairment of Assets' regardless of whether any indications of impairment exist. The Group reviewed the goodwill held at the date of transition and no impairment was noted. The adjustments taken through the income statements in each of the periods has been set out below: ----------- ----------- 6 months ended Year ended 30 November 2005 31 May 2006 #000 #000 ----------- ----------- Reversal of goodwill amortisation previously charged 662 1,533 =========== =========== (b) Other intangibles The amortisation charge in respect of the intangible assets acquired as part of the above business combinations are set out below: ----------- ----------- 6 months ended Year ended 30 November 2005 31 May 2006 #000 #000 ----------- ----------- Intellectual Property - Ringwood Software Ltd 34 84 Customer Relationships - Hanston Technology Partners Ltd 37 146 - Seabrook Research Limited - 10 Contracts/Open Order Book - Hanston Technology Partners Ltd 21 85 ----------- ----------- 92 325 =========== =========== As QED Business Systems Limited was held for less than one month prior to 31 May 2006 no amortisation has been charged in respect of the intangible in that period. (c) Research and Development Under IAS 38 'Intangible Assets' research and development activities which meet certain criteria are capitalised and amortised over the period of their economic benefit. The Group has determined that it has certain activities which meet the IAS 38 criteria and therefore should be capitalised. The effect on the financial statements of the Group is set out below: ----------- ----------- 6 months ended Year ended 30 November 2005 31 May 2006 #000 #000 ----------- ----------- Research & Development activity capitalised - 49 Resulting amortisation - (17) ----------- ----------- Net book value of Research & Development - 32 =========== =========== 3. Share Based Payment IFRS 2 'Share Based Payments' requires that an expense is recognised over the vesting period in respect of all equity instruments that have been granted, based on their fair value at the date of grant, in order to reflect the cost of issuing these share options. The Group has applied the Black-Scholes method of valuing the fair value of the relevant share options. 4. Deferred Taxation Deferred tax under UK GAAP was not provided due to materiality. IAS 12 'Income Taxes' requires that full provision be made for all taxable temporary timing differences except those arising on goodwill. The principal impact of adopting IAS 12 has been to recognise deferred tax liabilities on the temporary differences arising on intangible assets and to recognise deferred tax assets on brought forward tax losses recognised in accordance with IFRS 3 relating to each of the acquisitions to the extent where recoverability is considered probable. 5. Employee benefits IFRS has introduced more detailed guidance on recognising employee benefits in accounts when the benefit is earned as opposed to when it is paid. The Group has made provision for the accrued holiday pay. Appendices 1. Reconciliation of balance sheet at 1 June 2005 (date of transition to IFRS) Effect of transition to IFRS UK Reverse Annual Acquisition Taxation Goodwill IFRS GAAP Acquire leave finance impairment Maxima expense costs ------- -------- ---------- ------- --------- #000 #000 #000 #000 #000 #000 #000 Non-current assets Goodwill 14,704 (8,457) (4,046) 2,201 Other intangible assets Property, plant & equipment 319 319 ------- -------- 15,023 2,520 Current assets Trade and other receivables 4,086 (45) 4,041 Cash and cash equivalents 2,925 2,925 ------- -------- 7,011 6,966 Non-current assets Deferred tax - 11 11 Total assets 22,055 9,497 Current Liabilities Trade and other (1,774) (1,774) payables Deferred Income (4,900) (4,900) Tax liabilities - - Short term provisions (1,665) (43) (1,708) ------- -------- (8,339) (8,382) Net current liabilities (1,328) (1,416) ------- -------- Net Assets 13,695 1,115 ======= ======== Equity Called up share capital 119 119 Reverse Acquisition Reserve (9,180) (9,180) Share premium account 12,510 12,510 Capital redemption Reserve 50 50 Translation reserve Retained earnings 1,016 723 (43) (45) 11 (4,046) (2,384) ------- -------- Total equity 13,695 1,115 ======= ======== 2.1 Reconciliation of profit for the six months ended 30 November 2005 Effect of transition to IFRS UK Annual Share Acquisition Goodwill Taxation Amortisation IFRS GAAP leave based finance amortisation of expense payments costs intangibles ------- -------- -------- --------- ------- ---------- #000 #000 #000 #000 #000 #000 #000 #000 Turnover 8,093 8,093 Cost of Sales (1,960) (1,960) ------- ------- Gross Profit 6,133 6,133 Administration Expenses (4,949) (12) (37) (47) (5,045) ------- ------- EBITA&E 1,184 1,088 Exceptional Items (119) (119) Goodwill amortisation (662) 662 (91) (91) ------- ------- Operating Income 403 878 Net interest (14) (14) ------- ------- Profit before tax 389 864 Tax (190) 11 41 (138) ------- ------- Profit after Tax 199 726 ======= ======= 2.2 Reconciliation of balance sheet at 30 November 2005 Effect of transition to IFRS UK Reverse Annual Acquisition Goodwill Asset Taxation Amortisation IFRS GAAP Acquire leave finance amortisation Reclassification of Maxima expense costs intangibles #000 #000 #000 #000 #000 #000 #000 #000 #000 Non-current assets Goodwill 24,655 (12,503) 662 (1,836) 481 11,459 Other intangible assets - 1,836 (91) 1,745 Property, plant & equipment 500 500 ------- ------- 25,155 13,704 Current assets Trade and other receivables 6,613 (91) 6,522 Cash and cash equivalents 1,278 1,278 ------- ------- 7,891 7,800 Non-current assets Deferred - 102 102 tax Total 33,046 21,606 assets Current Liabilities Trade and other (1,244) (1,244) payables Deferred Income (6,246) (6,246) Tax liabilities (566) (566) Bank loans (700) (700) Short term provisions (1,833) (56) (1,889) ------- ------- (10,589) (10,645) Net current liabilities (2,698) (2,845) Non-current liabilities Bank Loans (2,800) (2,800) Deferred - (523) (523) tax ------- ------- (3,323) Total Liabilities (13,389) (13,968) ------- ------- Net Assets 19,657 7,638 ======= ======= Equity Called up share capital 157 157 Reverse Acquisition Reserve (9,180) (9,180) Share premium account 18,463 18,463 Capital Redemption Reserve 50 50 Translation reserve 7 7 Retained earnings 980 (3,323) (56) (91) 662 60 (91) (1,859) ------- ------- Total 19,657 7,638 equity ======= ======= 3.1 Reconciliation of profit for the year ended 31 May 2006 Effect of transition to IFRS UK GAAP Annual Share Acquisition Goodwill Taxation Amortisation Capitalise IFRS leave based finance amortisation of R&D expense payments costs intangibles ------- ------- --------- --------- -------- -------- --------- #000 #000 #000 #000 #000 #000 #000 #000 #000 Turnover 19,131 19,131 Cost of (4,142) (4,142) Sales ------- -------- Gross Profit 14,989 14,989 Administration Expenses (11,623) (24) (73) (35) 48 (11,707) ------- -------- EBITA&E 3,366 3,282 Other operating income Exceptional Items (236) (236) Amortisation (1,533) 1,533 (325) (16) (341) ------- -------- Operating Income 1,597 2,705 Net interest (73) (73) ------- -------- Profit before tax 1,524 2,632 Tax (655) 22 97 (536) ------- -------- Profit after Tax 869 2,096 ======= ======== ------- ------- -------- --------- ---------- ------- --------- -------- UK Reverse Annual Acquisition Goodwill Asset Taxation Amortisation Capitalise IFRS GAAP Acquire leave finance amortisation Reclassi- of Maxima expense costs fication intangibles R&D ------- ------- -------- --------- ---------- ------- --------- -------- #000 #000 #000 #000 #000 #000 #000 #000 #000 #000 Non-current assets Goodwill 28,905 (12,503) 1,533 (3,608) 943 15,270 Other intangible assets - 3,608 (341) 48 3,315 Property, plant & equipment 556 556 ------- ------- 29,461 19,141 Current assets Trade and other receivables 6,464 (78) 6,386 Cash and cash equivalents 3,029 3,029 ------- ------- 9,493 9,415 Non-current assets Deferred - 196 196 tax Total 38,954 28,752 assets Current Liabilities Trade and other (1,559) (1,559) payables Deferred income (7,045) (7,045) Tax liabilities (1,132) (1,132) Bank loans (3,700) (3,700) Short term provisions (2,074) (68) (2,142) ------- ------- (15,510) (15,578) Net current liabilities (6,017) (6,163) Non-current liabilities Bank Loans (2,450) (2,450) Deferred - (985) (985) Tax Deferred Consideration (325) (325) ------- ------- (2,775) (3,760) Total Liabilities (18,285) (19,338) ------- ------- Net Assets 20,669 9,414 ======= ======= Equity Called up share capital 160 160 Reverse acquisition reserve - (9,180) (9,180) Share premium account 17,270 17,270 Capital redemption reserve 50 50 Merger 1,766 1,766 reserve Retained earnings 1,423 (3,323) (68) (78) 1,533 154 (341) 48 (652) ------- ------- Total 20,669 9,414 equity ======= ======= 3.2 Reconciliation of balance sheet at 31 May 2006 (date of last UK GAAP Financial Statements) Effect of transition to IFRS This information is provided by RNS The company news service from the London Stock Exchange END MSCDGMMZNRLGVZM
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