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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Z Grp | LSE:ZGP | London | Ordinary Share | GB00B09LQS34 | 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% | 13.00 | 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:7127I
Z Group PLC
29 November 2007
29 November 2007
Z GROUP plc
Interim Results for the six months ended 31 August 2007 and the proposed sale of
its operating subsidiaries
Z GROUP plc (Z GROUP or the Group), the AIM listed developer and provider of
leading consumer internet technologies, today announces its unaudited interim
results for the six months ended 31 August 2007.
Summary of Interim Results
* Revenues were #1.0m (2006: #1.5m) in line with anticipated market
expectations
* Gross margins remained stable at 74% (2006: 76%)
* Write down in investment of OnShare - including goodwill impairment -
of #6.9m
* Other administrative costs of #0.9m (2006: #1.4m)
* As a result, the Group reported a six month loss before tax of #7.1m
(2006: loss #0.5m)
* Loss per share of 29.8p (2006: loss of 1.7p)
* Underlying loss per share, as adjusted for non-cash items, of 0.6p
(2006: loss of 0.3p)
* Cash at bank #1.6m (2006: #3.6m)
Z GROUP also announces today that the Board has entered discussions with Jack
Bekhor and Jamie True, the Group's joint CEOs, to sell to them the operating
subsidiaries of the Group.
For further information:
Z GROUP plc
John Standen Tel: +44 (0) 8700 111 173
(Chairman)
Duncan Neale Tel: +44 (0) 8700 111 173
(Finance Director)
Landsbanki Securities (UK) Limited (NOMAD)
Jeff Keating / Tom Hulme Tel: +44 (0) 20 7426 9593
(Corporate Finance)
Chairman's statement
Summary
On 12 September 2007 the Board announced a trading update and indicated that,
whilst trading was in line with management expectations for the six months to 31
August 2007, the results for the year would be adversely affected both by the
lack of take-up by consumers for OnShare and the anticipated declining
performance of ONSPEED. Consequently, a write-off of our investment in OnShare
was likely to take place this financial year as a prudent measure. Also, we
indicated that we were looking at alternative ways to generate revenue from the
OnShare technology.
The financial results for the six months to 31 August 2007 are set out below.
Turnover was #1.0 million and the trading loss, including the proposed write-off
of our investment in Onshare Ltd which totals #6.9 million, amounts to #7.1
million. Our cash balance was #1.6m at 31 August 2007.
When Z GROUP came to AIM in June 2005, the intention was to grow the company
with a world beating product portfolio for users of the web. ONSPEED was already
established in its marketplace and OnShare was under development. OnShare has
taken much longer to come to market than originally anticipated and its future
is now uncertain: consumer uptake has been slow and it is not considered
economically viable in its current form.
The joint CEOs, Jack Bekhor and Jamie True, now believe that the sale of
software products to consumers for web enhancing purposes has become
increasingly difficult as such products are now mostly being provided free.
Consequently, with our principal product ONSPEED declining in turnover and
OnShare unviable, the Board has entered discussions with the joint CEOs to sell
to them the operating subsidiaries of the Group for a nominal consideration ('
the Proposal'). This Proposal would result in Z GROUP becoming an investment
company, should stem the trading losses considerably and is expected to leave
the Group with cash resources in excess of #1m and the obligation of the lease
on its premises. The Board has appointed a committee of independent directors,
comprising Polly Williams, Duncan Neale and me, to negotiate the Proposal with
the joint CEOs. The Proposal will require shareholder approval and, if agreement
is reached, a circular will be issued to shareholders to gain their consent to
the sale.
Financial summary
Turnover of #1.0 million for the six months to 31 August 2007, compared with
turnover of #1.5 million for the same period last year.
Administrative costs have been cut during the period to #0.9 million (2006: #1.4
million), reflecting the impact of a significant cost-cutting exercise carried
out by the executive team.
The write down of our investment in OnShare equates to #6.9 million.
After a charge of #27,000 in respect of share option charges, the resulting
operating loss was #7.1 million.
In spite of cost-cutting, our cash balance at 31 August 2007 had fallen to #1.6
million compared with #2.2 million at 28 February 2007. Since 31 August 2007 our
cash has reduced further and at 31 October 2007 was #1.3 million, representing
an average monthly cash burn of #110,000 since 1 March 2007.
In addition, the accounts are presented for the first time in accordance with
International Financial Reporting Standards (IFRS).
Operations
ONSPEED has performed in line with management expectations.
ONSPEED Mobile remains available to generate income. However, the directors have
undertaken extensive negotiations over the past eighteen months with operators
to try to commercialise this product profitably and to date no contract of
substance has proved possible.
The Net2Roam product provides revenue of #0.1 million, and Shrink My Tunes made
a small contribution to Group turnover in the period.
OnShare was launched to a test group of users in March 2006 and a soft launch
followed in February 2007 after a number of required improvements were
identified and incorporated into the product. By June 2007 the growth in users
was exceeding the directors' original expectations and we had planned to launch
the product commercially by September of this year. We issued the trading update
on 12 September 2007 to advise shareholders that the take up from consumers had
unfortunately not been sufficiently encouraging for us to undertake the
commercial launch with any confidence of a profitable outcome. The R&D invested
in OnShare's underlying protocol "ActiveStream" is also considered unlikely to
generate any additional income in the foreseeable future.
Immediate future
In view of the continued trading losses and the erosion of cash, the directors
believe that shareholders interests' would be best served by securing a speedy
solution to the current problems of the Group. Accordingly, the Proposal or any
other comparable solution will be pursued by the Board, or by the Committee of
Independent Directors, as a matter of urgency. Shareholders will be kept
informed of progress as appropriate.
John Standen
Chairman
29 November 2007
Independent Review report to Z GROUP plc
For the six months ended 31 August 2007
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 August 2007 which comprises the consolidated income
statement, the consolidated balance sheet, the consolidated statement of changes
in equity and the consolidated cash flow statement and related notes. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information. This report is made solely to the Company in
accordance with the terms of our engagement. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the AIM
rules of the London Stock Exchange which require that it must be prepared in a
form consistent with that which will be adopted in the next annual accounts
having regard to the accounting standards applicable to such annual accounts.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 August 2007.
Baker Tilly UK Audit LLP
London, UK
29 November 2007
Condensed Consolidated Interim Income Statement
for the six months ended 31 August 2007
Unaudited Unaudited Unaudited
Six months ended Six months ended Year ended
31 August 2007 31 August 2006 28 February 2007
Notes
#'000 #'000 #'000
Continuing operations
Revenue 1,016 1,536 2,630
Cost of sales (260) (361) (651)
-------------- ------------- ---------
Gross profit 756 1,175 1,979
Share option expense (27) (268) (344)
Write-down of intangible fixed
assets 5 (3,110)
Impairment of goodwill 4 (3,804)
Other administrative expenses (911) (1,449) (2,811)
-------------- ------------- -------------
Operating loss (7,096) (542) (1,176)
Financial income 24 64 101
-------------- ------------- -------------
Loss before tax (7,072) (478) (1,075)
Income tax expense - 143 64
-------------- ------------- -------------
Loss for the period (7,072) (335) (1,011)
Basic & diluted loss per share 6 (29.8p) (1.7p) (5.0p)
Condensed Consolidated Interim Balance Sheet
at 31 August 2007
Unaudited Restated Restated
31 August 2007 Unaudited Unaudited
Notes 31 August 2006 28 February 2007
#'000 #'000 #'000
Assets
Non-current assets
Goodwill 4 - - 3,804
Intangible assets 5 15 2,020 2,631
Property, plant and equipment 177 232 200
-------------- ------------- -------------
192 2,252 6,635
Current assets
Inventories 51 83 56
Trade and other receivables 539 1,119 683
Cash and cash equivalents 1,629 3,598 2,256
-------------- ------------- -------------
2,219 4,800 2,995
Total assets 2,411 7,052 9,630
Liabilities
Current liabilities
Trade and other payables (640) (1,325) (772)
Current tax liabilities (80) (101) (197)
Obligations under finance leases (9) (8) (4)
Bank overdrafts and loans - - (11)
-------------- ------------- -------------
(728) (1,434) (984)
-------------- ------------- -------------
Net current assets 1,490 3,366 2,011
Non-current liabilities
Deferred tax (40) (5) (39)
Other provisions (73) (52) -
Obligations under finance leases (25) (21) (17)
-------------- ------------- -------------
(137) (78) (56)
-------------- ------------- -------------
-------------- ------------- -------------
Net assets 1,545 5,540 8,590
-------------- ------------- -------------
Shareholders equity
Called up share capital 1,187 986 1,187
Share premium account 5,968 2,342 5,968
Merger reserve 1,066 1,066 1,066
Share based payments reserve 798 758 771
Retained (losses) / earnings (7,474) 388 (402)
============== ============== ==============
Total shareholders equity 1,545 5,540 8,590
============== ============== ==============
Consolidated Statement of Changes in Equity
for the period ended 31 August 2007
Share Share Merger Share based Retained Total
capital premium reserve payments (losses) /
reserve earnings
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 March 2006 974 2,322 1,066 740 296 5,398
Loss for the six month period ended 31
August 2006 - - - - (158) (158)
-------- -------- -------- -------- -------- --------
Total recognised (expense) / income for
the period - - - - (158) (158)
Share option charge in the period - - - 268 268
Adjustment for options subsequently (250) 250 0
exercised or forfeited
Shares issued in the period 12 20 - - - 32
-------- -------- -------- -------- -------- --------
Balance at 31 August 2006 986 2,342 1,066 758 388 5,540
-------- -------- -------- -------- -------- --------
Balance at 1 March 2006 974 2,322 1,066 740 296 5,398
Loss for the year-ended 28 February 2007 - - - - (1,011) (1,011)
-------- -------- -------- -------- -------- --------
Total recognised (expense) / income for
the year - - - - (1,011) (1,011)
Share option charge in the year - - - 344 - 344
Adjustment for options subsequently
exercised or forfeited (313) 313 0
Shares issued in the period 213 3,646 - - - 3,859
-------- -------- -------- -------- -------- --------
Balance at 28 February 2007 1,187 5,968 1,066 771 (402) 8,590
-------- -------- -------- -------- -------- --------
Balance at 1 March 2007 1,187 5,968 1,066 771 (402) 8,590
Loss for the six month period ended 31
August 2007 - - - - (7,072) (7,072)
-------- -------- -------- -------- -------- --------
Total recognised (expense) / income for
the period - - - 0 (7,072) (7,072)
Share option charge in the period - - - 27 - 27
Shares issued in the period - - - - - -
-------- -------- -------- -------- -------- --------
Balance at 31 August 2007 1,187 5,968 1,066 798 (7,474) 1,545
-------- -------- -------- -------- -------- --------
Condensed Consolidated Interim Statement of Cash Flows
for the six months ended 31 August 2007
Unaudited Unaudited Restated
Six months Six months Unaudited
ended ended Year ended
31 August 31 August 28 February
2007 2006 2007
#'000s #'000s #'000s
Cash flows used in operating activities
Operating loss for the period (7,096) (542) (1,176)
Depreciation 21 51 123
Amortisation 4 22 44
Impairment of intangible fixed assets (Note 5) 3,110
Impairment of goodwill (Note 4) 3,804
Share option charge 27 268 344
FX movement 9 2
Decrease / (increase) in stocks 5 (9) 17
Decrease in trade and other receivables 144 507 686
Increase in trade and other payables (173) (54) (249)
-------- -------- --------
Net cash from operating activities (146) 243 (209)
Income tax paid 0 0 (290)
-------- -------- --------
Net cash flows used in operating activities 0 0 (290)
-------- -------- --------
Cash flows used in investing activities
Interest receivable 24 64 101
Purchase of property, plant and equipment (1) (172) (319)
Purchase of intangible fixed assets (498) (686) (1,208)
-------- -------- --------
Net cash flows used in investing activities (475) (794) (1,426)
-------- -------- --------
Cash flows from financing activities
Share issue 32 55
Finance lease (6) (9) (9)
-------- -------- --------
Net cash flows used in investing activities (6) 23 46
-------- -------- --------
Net increase / (decrease) in cash and cash
equivalents (627) (528) (1,879)
Cash and cash equivalents at start of period 2,220 4,099 4,099
-------- -------- --------
Cash and cash equivalents at end of period 1,593 3,571 2,220
-------- -------- --------
Notes to the Consolidated Interim report
for the six months ended 31 August 2007
1. Basis of preparation
From 1 March 2007, the Group has adopted International Financial Reporting
Standards (IFRS) as adopted by the EU in the preparation of the consolidated
financial statements.
Prior to this accounting period, the Group prepared its audited annual financial
statements under UK Generally Accepted Accounting Principles (UK GAAP). For
periods commencing 1 March 2007, the Group is required to prepare its annual
consolidated financial statements in accordance with IFRS as adopted by the
European Union (EU) and implemented in the UK. As the financial statements for
the year to 28 February 2008 will include comparatives for the year ended 28
February 2007, the Group's date of transition to IFRS is 1 March 2006 and the
comparatives will be restated to IFRS. Accordingly, the financial information
for the six months to 31 August 2006 has been restated to present the
comparative information in accordance with IFRS based on a transition date of 1
March 2006. Note 7 of this interim financial information sets out how the
Group's previous financial position is affected by the change to IFRS.
The financial information for the six months ended 31 August 2007 and 31 August
2006 is unaudited. The comparative figures for the year ended 28 February 2007
were derived from the Group's audited financial statements for that period as
filed with the Registrar of Companies as restated for IFRS. The financial
information does not constitute the financial statements for that period. Those
accounts received an unqualified audit report which did not contain any
statement under s237 (2) or (3) of the Companies Act 1985.
At the date of authorisation of this report the following Standards and
Interpretations which have not been applied in these financial statements were
in issue but not yet effective:
IFRS 8 Operating Segments
IFRIC 8 Scope of IFRS 2 Share-based Payment
IFRIC 9 Reassessment of Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
The directors have also considered the amendments to IAS 1 and IAS 23.
The directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the financial
statements of the Group when the relevant statements come into effect for
periods commencing on or after 1 April 2007.
2. Principal Accounting Policies of the Group
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and enterprises controlled by the Company (its subsidiaries) made up
to 28 February each year. The excess of the cost of acquisition over the fair
values of the Group's share of identifiable net assets, including intangible
assets, acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair value of identifiable net assets acquired (i.e.
discount on acquisition) is recognised directly in the income statement.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at fair
value at acquisition date irrespective of the extent of any minority interest.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate. When necessary,
adjustments are made the financial statements of subsidiaries to bring the
accountant policies used into line with those used by other members of the
Group.
All intra-Group transactions, balances, and unrealised gains on transactions
between Group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
Goodwill
Goodwill, which represents the difference between the purchase consideration and
the fair values of those net assets (or book value of those net assets if the
difference between the book value and fair value is immaterial), is initially
recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses. An impairment loss recognised for goodwill is
not reversed in a subsequent period.
Intangible fixed assets - software development cost
Z GROUP invests a significant proportion of its resources in the development of
its own intellectual property to bring new products and services to the market.
Development expenditure (principally in the form of the salary costs of its
developers) is capitalised when its future recoverability can be foreseen with
reasonable assurance. All research and other development costs are written off
as incurred.
Intangible fixed assets - website development cost
The Group capitalises website development costs to comply with SIC32.
Property Plant and Equipment
Property, plant and equipment are initially recorded at cost of purchase and are
depreciated on a straight-line basis over their estimated useful lives, as
follows:
Computer equipment 4 years
Office equipment, fixtures and fittings 4 years
Motor vehicles 4 years
Leasing
Where the Group enters into a lease which entails taking substantially all the
risks and rewards of ownership, the lease is treated as a finance lease. The
asset is recorded in the balance sheet as a tangible fixed asset and is
depreciated in accordance with the above depreciation policies. Future
instalments under such leases, net of finance charges, are included with
creditors. Rentals payable are portioned between the finance element, which is
charged to the income statement, and the capitol element which reduces the
outstanding obligation for future instalments.
All other leases are classified as operating leases. Rentals applicable to
operating leases are charged against profits as incurred.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indications exist,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset for which the estimates for future cash flows have been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying
amount, the carrying amount of the asset is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately, unless the relevant
asset is carried at a re-valued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset in prior
years. A reversal of an impairment loss is recognised as income immediately,
unless the relevant asset is carried at a re-valued amount, in which case the
impairment loss is treated as revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net
realisable value is based upon the estimated selling price less further costs
expected to be incurred to completion and disposal. Provision is made for any
obsolete or slow-moving items.
Revenue recognition
Revenue from the sales of licences is recognised in full when an agreement is
signed, when delivery and acceptance of the software by the customer has
occurred, when the fee is fixed and determinable and when collection is
considered probable.
Revenue relating to the provision of services are delivered with that portion
relating to subsequent year included in the deferred income.
Revenue is stated exclusive of Value Added Tax.
Share based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In
accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested as of 1
March 2006.
The Group issues share options to certain employees. These options are measured
at fair value at the date of the grant, using the Black-Scholes option-pricing
model. The fair value of the options is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of when shares will vest,
applying the assumptions on a consistent basis with those used in the audited
financial statements for the year ended 28 February 2007.
Taxation
Deferred tax assets are recognised only to the extent that it is probable that
they will be recovered through sufficient future taxable profit. The carrying
amount of deferred tax assets is revalued at each balance sheet date.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised, based on tax
rates and laws that have been enacted or substantively enacted by the balance
sheet date. Deferred tax is charged or credited in the income statement, except
where it relates to items charged or credited directly to equity, in which case
the deferred tax is also taken directly to equity.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates and assumptions will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of asset and
liabilities within the next financial year are discussed below.
Estimation of software development costs
Z GROUP invests a significant proportion of its resources in the development of
its own intellectual property to bring new products and services to the market.
Development expenditure (principally in the form of the salary costs of its
developers) is capitalised when its future recoverability can be foreseen with
reasonable assurance. Employees of the Group typically work on a number of
projects at any given time, some of which relate to development work and some of
which relate to existing products. As such, the employees have to estimate the
amount of time devoted to each project, which means that the quantum of any
capitalised development cost is reliant on the accuracy of the employees'
estimates.
Share-based payments
The Group issues share-based payments to certain employees. The fair value and
the vesting periods use management assumptions in their calculation. While
management believes that the assumptions used are appropriate, a change in the
assumptions used would impact the results of the Group.
3. Segmental information
The Group has one business segment - the supply of software for data compression
purposes, with all activities taking place in the UK. Consequently, there is
no reporting by business segment
4. Goodwill
The Group purchased the 49% minority interest in Onshare Limited for a total
consideration of #3,804,160 on 15 December. The transaction gave rise to
goodwill of #3,804,160 since, at the date of acquisition, Onshare Limited had
net liabilities.
The Board of Z GROUP does not believe that Onshare will generate any income in
the foreseeable future, and as such consider the goodwill associated with
Onshare Limited to be fully impaired. Consequently, there is an impairment
charge in the current period of #3,804,160.
5. Intangible Fixed Assets Unaudited Unaudited Unaudited Unaudited Restated
Intellectual Unaudited
Development Website property Domain
expenditure expenditure rights names Total
#'000 #'000 #'000 #'000 #'000
Cost
1 March 2007 2,292 467 65 13 2,837
Additions 492 3 3 498
Impairment (2,784) (465) (68) (3,317)
-------- -------- -------- -------- --------
31 August 2007 - 2 16 18
-------- -------- -------- -------- --------
Amortisation
1 March 2007 (37) (153) (14) (2) (206)
Charged in the period 3 (1) (4)
Impairment 37 153 17 207
-------- -------- -------- -------- --------
31 August 2007 - - - (3) (3)
-------- -------- -------- -------- --------
Net book value
31 August 2007 - 2 - 13 15
28 February 2007 2,255 314 51 11 2,631
The net impairment charge in the period is #3,110,000 (#3,317,000 less #207,000)
and is the result of the Board of Z GROUP's belief that Onshare will not
generate any income in the foreseeable future.
6. Earnings per share
The calculation of basic earnings per share is based upon the profit after tax
divided by the weighted average number of shares in issue during the period.
The calculation of fully diluted earnings per share is based upon the profit
after tax divided by the weighted average number of shares in issue during the
period after taking into account the dilutive effect of share options.
Loss after tax Weighted average
Basic & diluted loss per share #'000 number of shares EPS (pence)
6 months ended 31 August 2007 (7,072) 23,745,879 (29.8)
6 months ended 31 August 2006 (335) 19,562,666 (1.7)
12 months ended 28 February 2007 (1,011) 20,284,347 (5.0)
Due to the loss incurred in the above periods, there is no dilutive effect from
the issue of share options.
7. Explanation of transition to IFRS
The Group's financial statements for the year ended 28 February 2008 will be the
first financial statements that comply with International Financial Reporting
Standards (IFRS). The Group's financial statements prior to and including 28
February 2007 had been prepared in accordance with Generally Accepted Accounting
Principles in the United Kingdom (UK GAAP).
As required by IFRS 1, the impact of the transition from UK GAAP to IFRS is
explained below. The accounting policies set out above have been applied
consistently to all periods presented in this interim financial information and
in preparing an opening IFRS balance sheet at 1 March 2006 for the purposes of
transition to IFRS.
IAS 1 - Presentation of Financial Statements. The form and presentation in the
UK GAAP financial statements has been changed to be in compliance with IAS 1.
IAS 7 - Cash Flow Statements. The IFRS Cash Flow Statement, prepared under IAS
7, presents cash flows in thee categories : cash flows from operating
activities, cash flows from investing activities and cash flows from financing
activities. Other than the reclassification of cash flow into the new
disclosure categories, there are no significant differences between the Group's
Cash Flow Statement under UK GAAP and IFRS. Consequently, no cash flow
reconciliations are provided. Purchases of tangible fixed assets under UK GAAP
have been reclassified to purchases of intangible assets and purchases of
property, plant and equipment under IFRS.
There is no change to the reported losses in the year ended 28 February 2007 as
a result of the transition to IFRS.
Reconciliation of shareholders equity at 1 March 2006
UK GAAP Effects of IFRS
transition
to IFRS
Notes #'000s #'000s #'000s
Non-current assets
Goodwill 0 0 0
Intangible assets 1 1,151 235 1,386
Property, plant and
equipment 1 319 (235) 84
-------- -------- --------
1,470 0 1,470
-------- -------- --------
Current assets
Inventories 64 0 64
Trade and other
receivables 1,369 0 1,369
Cash and cash
equivalents 4,135 0 4,135
-------- -------- --------
5,568 0 5,568
-------- -------- --------
Total assets 7,038 0 7,038
======== ======== ========
Current liabilities
Trade and other
payables (1,161) 0 (1,161)
Current tax liabilities (382) 0 (382)
Obligations under
finance leases (9) 0 (9)
Bank overdrafts and
loans (1) 0 (1)
-------- -------- --------
(1,553) 0 (1,553)
-------- -------- --------
-------- -------- --------
Net current assets 4,015 0 4,015
-------- -------- --------
Non-current liabilities
Deferred tax (61) 0 (61)
Other provisions 0 0 0
Obligations under
finance leases (26) 0 (26)
-------- -------- --------
(87) 0 (87)
-------- -------- --------
-------- -------- --------
Net assets 5,398 0 5,398
======== ======== ========
Shareholders equity
Called up share capital 974 0 974
Share premium account 2,322 0 2,322
Merger reserve 1,066 0 1,066
Share based payments
reserve 740 0 740
Retained earnings 296 0 296
-------- -------- --------
Total shareholders
equity 5,398 0 5,398
======== ======== ========
Reconciliation of shareholders equity at 31 August 2006
UK GAAP Effects of IFRS
transition
to IFRS
Notes #'000s #'000s #'000s
Non-current assets
Goodwill 0 0 0
Intangible assets 1 1,815 205 2,020
Property, plant and
equipment 1 437 (205) 232
-------- -------- --------
2,252 0 2,252
-------- -------- --------
Current assets
Inventories 83 0 83
Trade and other
receivables 1,119 0 1,119
Cash and cash
equivalents 3,598 0 3,598
-------- -------- --------
4,800 0 4,800
-------- -------- --------
-------- -------- --------
Total assets 7,052 0 7,052
======== ======== ========
Current liabilities
Trade and other
payables (1,325) 0 (1,325)
Current tax liabilities (101) 0 (101)
Obligations under
finance leases (8) 0 (8)
Bank overdrafts and
loans 0 0 0
-------- -------- --------
(1,434) 0 (1,434)
-------- -------- --------
-------- -------- --------
Net current assets 3,366 0 3,366
-------- -------- --------
Non-current liabilities
Deferred tax (5) 0 (5)
Other provisions (52) 0 (52)
Obligations under (21) 0 (21)
finance leases
-------- -------- --------
(78) 0 (78)
-------- -------- --------
-------- -------- --------
Net assets 5,540 0 5,540
======== ======== ========
Shareholders equity
Called up share capital 986 0 986
Share premium account 2,342 0 2,342
Merger reserve 1,066 0 1,066
Share based payments
reserve 758 0 758
Retained earnings 388 0 388
-------- -------- --------
Total shareholders
equity 5,540 0 5,540
======== ======== ========
Reconciliation of shareholders equity at 28 February 2007
UK GAAP Effects of IFRS
transition
to IFRS
Notes #'000s #'000s #'000s
Non-current assets
Goodwill 3,804 0 3,804
Intangible assets 1 2,316 315 2,631
Property, plant and
equipment 1 515 (315) 200
-------- -------- --------
6,635 0 6,635
-------- -------- --------
Current assets
Inventories 56 0 56
Trade and other
receivables 683 0 683
Cash and cash
equivalents 2,256 0 2,256
-------- -------- --------
2,995 0 2,995
-------- -------- --------
-------- -------- --------
Total assets 9,630 0 9,630
======== ======== ========
Current liabilities
Trade and other
payables (772) 0 (772)
Current tax liabilities (197) 0 (197)
Obligations under
finance leases (4) 0 (4)
Bank overdrafts and
loans (11) 0 (11)
-------- -------- --------
(984) 0 (984)
-------- -------- --------
-------- -------- --------
Net current assets 2,011 0 2,011
-------- -------- --------
Non-current liabilities
Deferred tax (39) 0 (39)
Other provisions 0 0 0
Obligations under
finance leases (17) 0 (17)
-------- -------- --------
(56) 0 (56)
-------- -------- --------
-------- -------- --------
Net assets 8,590 0 8,590
======== ======== ========
Shareholders equity
Called up share capital 1,187 0 1,187
Share premium account 5,968 0 5,968
Merger reserve 1,066 0 1,066
Share based payments
reserve 771 0 771
Retained earnings (402) 0 (402)
-------- -------- --------
Total shareholders
equity 8,590 0 8,590
======== ======== ========
Notes to the reconciliation of shareholders equity
1. Classification of website costs
Website development cost is included within intangibles under IFRS rather than
tangible assets as is the norm under UK GAAP. The effect of this is to
reclassify website development cost of #234,964 at March 2007, #205,296 at
August 2006 and #314,574 at February 2007 from tangible assets to intangible
assets. Total net assets remain unchanged by this adjustment.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EASFPASAXFFE
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