RNS Number : 6616Z
SSP Holdings PLC
23 July 2008
PRESS RELEASE
23 July 2008
SSP Holdings plc
Preliminary results for the twelve months ended 31 March 2008
SSP Holdings plc ("SSP" or the "Group"), the market-leading provider of business critical IT systems and services to the UK insurance
industry, announces its preliminary results for the twelve months ended 31 March 2008.
HIGHLIGHTS
Financial highlights
* Acquisition and successful integration of Sirius Financial Solutions plc
* Revenues increased by 67% to �64.4m (2007: �38.6m)
* Annualised revenue run-rate of �70.7mi
* Organic revenue growth of 12% - significant level of new customer wins
* High Visibility revenues of �42.9m (2007: �30.6m) representing 67% of total revenues (2007: 79%)
* Adjusted EBITAii up 53% to �15.3m (2007: �10.0m)
* Operating Profit (pre-exceptional items)iii - �14.1m (2007:�9.7m)
* Profit before tax up 38% to �8.8m (2007: �6.4m)
* Net cash from operating activities of �5.8m (2007: �7.4m)
* Pre-tax Adjusted EPSiv - 15.8p (2007: 12.5p); Basic EPS - 7.5p (2007: 13.5p)
* Net debt at �40.0m (2007: �13.5m)
* Net assets increased by 57% to �58.4m (2007: �37.3m)
i Defined as March 2008 revenues adjusted to include annualised revenues from the former Sirius business.
ii Adjusted EBITA being Operating profit as shown on the face of the Consolidated Income Statement (2008: �12,663,000 2007: �9,505,000),
plus intangible amortisation (2008: �1,219,000 2007: �287,000), plus reorganisation costs (2008: �1,331,000 2007: �Nil), plus share option
expense (2008: �105,000 2007: �236,000).
iii Defined as Operating profit as shown on the face of the Consolidated Income Statement (2008: �12,663,000 2007: �9,505,000), plus
reorganisation costs (2008: �1,331,000 2007: �Nil), plus share option expense (2008: �105,000 2007: �236,000).
iv Pre-tax Adjusted EPS calculated as explained in note 3.
Commercial highlights
� Strengthened international position:-
- successfully integrated African INSURE/90 insurance business
- recent acquisition of Asia-Pacific INSURE/90 insurance business
� Business opportunities strengthened through:-
- extended international rights to InsureJ latest SOA Java product via acquisition of Koukia
- further investment in eBusiness and insurance company systems
Recommended cash acquisition
* SSP has separately announced today that the Independent Directors have reached agreement on the terms of a recommended cash
acquisition to be made by H&F Sensor Bidco Limited
* Shareholders will receive 190 pence in cash for each share held which represents a premium of approximately 47.3% to the price of
129 pence per SSP share (being the average closing price for the six month period ending on 17 June 2008, the day before the announcement by
SSP that it was in discussions regarding a possible offer)
David Rasche, Executive Chairman, commented:
'The Board believes the outlook for the business is positive, both in the UK and overseas. With our strong recurring and visible
revenues from a large, secure and increasingly international customer base, we expect to continue to grow organically and maintain good
operating margins in the coming year and beyond'.
Enquiries:
SSP Holdings plc 01422 330022
David Rasche, Executive Chairman
Nick Bate, Finance Director
Weber Shandwick Financial 0207 067 0700
Nick Oborne/John Moriarty
KBC Peel Hunt 0207 418 8900
Oliver Scott
Notes to Editors
SSP is a market-leading IT systems and services provider to the global insurance and financial services industries. With over two decades*
experience, SSP has a proud history of delivering innovative solutions that improve business control, productivity and efficiency. SSP has
the largest share, by revenue, of the UK retail general insurance broker and intermediary systems market as well as the largest installed
base of general insurer systems in the UK.
SSP has a unique *consumer to carrier* proposition whereby its solutions facilitate communication and interaction across all participants in
the insurance chain, starting with insurance underwriters or agencies and ending with consumers. At one end of the chain, the Group*s
solutions enable the consumer to purchase insurance products through a range of channels including intermediaries, brokers, call centres,
affinity groups and the internet. At the other end of the chain, the Group provides insurers with back office and administration solutions.
SSP is the partner of choice for insurance businesses worldwide, with more than 41,000 users in over 50 countries. Customers include;
Fortis, Admiral, Norwich Union, AON, Brit, QBE, Zurich, ACE, RBS, HSBC Insurance Brokers, Jardine Lloyd Thompson, Towergate, Swinton, Kwik
Fit Insurance Services, Oval and Willis Commercial Network.
Over 830 people support customers from headquarters in Halifax and offices in Birmingham, the South of England, Northern Ireland, the
Republic of Ireland, Denmark, South Africa, Australia, New Zealand, Kenya, India and the United States.
SSP is quoted on AIM and has a market capitalisation of approximately �140m.
Executive Chairman's Report
Overview
I am pleased to report on another successful year for SSP, in which we achieved strong results in the UK and internationally, in both
broking and insurance company systems.
The acquisition of the Sirius business, announced this time last year, has been very successful. Its integration into the enlarged group
has been well managed, with further benefits expected, positioning SSP even more strongly in the UK and international markets. At the
financial year end and since we have enhanced our international footprint, adding more customers, staff and products with our
Australian/Asia Pacific acquisitions.
Our financial results were ahead of the Board's expectations, with revenues of �64.4m being 66.8% above last year and an adjusted EBITA
(as per the highlights section) 52.7% ahead at �15.3m. We have maintained good margins and the high quality of our visible revenue streams,
both of which are ahead of expectations set at the time of the Sirius acquisition. With continued double digit organic growth in the
original SSP business, the Group is significantly larger than last year; our annualised run rate of revenues are now �70.7m per annum.
During the year we further developed our already strong product base. In particular, it now includes very competitive UK broker
offerings and, through InsureJ, one of the very best new technology insurance company products available worldwide. While we do not expect
InsureJ to generate substantial short-term revenues, we believe it will be a significant revenue generator in future years.
The Board believes that the business is positioned extremely well for growth in the UK and international markets in both the broking and
insurance company sectors.
Business Scale and Employees
We are now one of the largest specialist providers of general insurance software worldwide, with over 830 staff experienced in the
sector. This scale enables us to bid for and manage larger projects than most competitors, outside the major international consultancies.
We believe that it also makes our services more attractive than those of our smaller competitors, to large UK brokers.
Our people are highly knowledgeable in general insurance systems with expertise across the whole consumer to carrier spectrum. They
have specialist skills in design, implementation and project management of solutions, from internet point of sale, through broking, to
underwriting systems for large and small customers. We have many highly talented individuals who work very well together in
multi-disciplined teams to deliver excellent modern technology solutions to our customers in over 50 countries.
They work hard to deliver for the business and our customers and the Board is very appreciative of their efforts.
Recommended cash acquisition
The board of directors of H&F Sensor Bidco Limited, a company formed at the direction of funds managed and advised by H&F, and the
Independent Directors have separately announced today that they have reached agreement on the terms of a recommended cash acquisition to be
made by H&F Sensor Bidco Limited of SSP Holdings plc.
Under the terms of the proposed acquisition, shareholders of the Company will receive 190 pence in cash for each of their shares in the
Company valuing the issued and to be issued ordinary share capital of the Company at approximately �161.6 million. This offer represents a
premium of approximately 47.3 per cent to the price of 129 pence, being the average closing price for the six month period ending 17 June
2008, the day before the announcement by the Company that it was in discussions regarding the Acquisition.
The acquisition is being unanimously recommended by the Independent Directors, who consider the terms of the Acquisition to be fair and
reasonable, having been so advised by KBC Peel Hunt Ltd.
Outlook
Continued structural changes to our core UK broking market are creating additional opportunities for us to win new customers and help
our existing customers grow their businesses.
The general insurance industry is expanding worldwide. Our experience and analysts surveys indicate that the general insurance sector
is reasonably well insulated from the direct effects of the credit crunch, as most players appear to have minimal exposure to impaired
investments. At present the UK commercial lines market is seeing more pressure on rates, but overall insurers remain confident. At the same
time, the large Bancassurers are likely to seek greater returns from general insurance as their profits are hit elsewhere and are therefore
likely to invest in this sector.
In most markets there are structural dynamics which demand new technology to cope with improved speed to market, changes in distribution
patterns and much greater eBusiness between business partners and customers. These developments play to our expertise and strengths,
gleaned over many years in the world's most sophisticated general insurance markets.
The Board of SSP believe the outlook for the business is positive, both in the UK and overseas and current trading is as expected. With
the SSP Group's strong recurring and visible revenues from a large, secure and increasingly international customer base, the Board of SSP
expects to continue to grow organically and maintain good operating margins in the coming year and beyond.
Chief Executive's Report
Financial Performance
I am pleased to report another strong performance, with an operating profit before interest, amortisation of goodwill, reorganisation,
tax and share option costs of �15.3m on revenues of �64.4m which are up 52.7% and 66.8% respectively compared to prior year. Our operating
divisions delivered a gross profit of over 40%. Profit before tax for the year increased from �6.4m to �8.8m.
The Group's balance sheet reflects the substantial investment in acquisitions during the year, with Net Assets increasing from �37.3m to
�58.4m.
Our Intermediary Division, which services small to medium sized UK broker market delivered a 31.7% increase in revenues to �23.9m. Our
Corporate Division, which services larger UK brokers, grew revenues by 43.3% to �21.4m. Our combined broker transaction and e-commerce
revenues grew by 26.1% to �13.1m.
The Insurer Division, responsible for the supply of software and services to UK insurance companies, showed strong growth of 141.2% to
�11.3m, reflecting an increased demand for core administration systems and e-commerce solutions within the UK insurer market and the
acquisition of Sirius. Important customer wins in all channels - intermediated, direct, internet, reflect the strength of our customer
proposition and capability.
In our International Division a strong performance in emerging markets has driven an over eightfold growth in revenue to �7.8m. This
primarily reflects the acquisition of Sirius and new customer wins. Our international business now has over 80 insurance company customers
in more than 50 countries and a number of opportunities exist for our insurance company solutions moving forward.
Products and Services
Increases in transaction volumes and our ability to e-enable the broker channel have continued to deliver strong growth and reflect the
efficiencies that SSP can deliver to its customers at both ends of the insurance value chain. Penetration of our Managed Service
proposition will continue to deliver efficiencies throughout the channel, as well as to our own operational activities. Deployment of one
core trading platform in personal and commercial lines throughout the SSP broker product set adds further value to our insurance company
customers by rationalising their e-trading channel.
The success of our sales effort with Sirius for Insurance (S4I) has further developed our insurance company systems capability and is
delivering significant additional functionality and value to customers.
Our InsureJ product is attracting significant interest from insurance companies, both foreign and domestic, and we are building delivery
capability that can be deployed globally from a core team.
Operating Structure
Following the acquisition of Sirius we have reviewed our operating structure in order to deliver efficiencies throughout the group. The
enlarged business has delivered better than anticipated synergies in our core operating functions and has strengthened our sales and
marketing proposition. Rationalisation of our product offerings will allow us to deliver further synergies moving forward.
Subsequent to this reporting period we combined the two broker divisions, Intermediary and Corporate, in order to enhance the service
proposition to both customer segments and to capitalise on rationalising our insurance distribution channel.
The structure of three market facing divisions, Insurer, Broker and International, serviced by central functions within Group
Operations, has allowed us to focus on our strategic objectives in our core markets. At the same time, it has allowed us to deliver
economies of scale throughout the business.
The acquisition of the Australasian I90 business from Computer Sciences Corporation has strengthened our international business and the
acquisition of Koukia from Wesfarmers has enhanced our insurer product offering by gaining the global rights to the InsureJ product.
Customers
Continued rationalisation of the broker market in the UK is driving growth in professional services, as brokers use technology to
increase efficiency and achieve competitive advantage. The penetration of personal lines e-trading into the broker channel is high and is
delivering high margin revenues within the Broker Division. The development of commercial lines e-trading has some way to go to reach the
maturity of personal lines, but we anticipate that it will provide the next phase of growth in our transaction based revenue streams.
Insurance companies have started to look at replacing their core administration systems after many years of focussing on peripheral
systems. These peripheral systems, used to deliver such facilities as e-commerce channel management, are now becoming too costly and are a
constraint to agility. Solutions, such as our InsureJ product, provide these facilities as part of the core administration system and
opportunities in this area will fuel long-term growth in our Insurer and International divisions.
Culture and Communication
Our capability led re-branding has delivered a higher market profile, as well as aligning our 830 staff around the core business values,
and the vision, set out as part of the Sirius acquisition process. This new brand better reflects a technology provider of our scale and
reach.
We have rolled out the new brand internally and we have started to change our marketing messages externally to reflect the new brand
essence of Knowledge, Talent, Technology.
I look forward to leading the business into the coming year and to capitalising on the opportunities that exist against a backdrop of
continued and positive market development.
Consolidated Income statement
Year ended 31 March 2008
Note 2008 2007
�'000 �'000
Revenue 64,405 38,621
Cost of sales (37,674) (23,026)
Gross profit 26,731 15,595
Operating expenses
- distribution costs (2,589) (2,108)
- administration expenses (8,824) (3,459)
- intangible amortisation (1,219) (287)
- reorganisation costs (1,331) -
- share option expense (105) (236)
Total operating expenses (14,068) (6,090)
Operating profit 12,663 9,505
Investment revenue 98 140
Other gains and losses (1,094) -
Finance costs (2,832) (3,262)
Profit before taxation 8,835 6,383
Taxation (2,871) 1,106
Profit for the period attributable to equity 5,964 7,489
holders of the parent
Earnings per share
- Basic and Diluted 3 7.50p 13.55p
- Pre-tax adjusted Basic and Diluted 3 15.82p 12.49p
All of the above results arose from continuing operations.
Consolidated Statement of Recognised Income and Expenditure
Year ended 31 March 2008
2008 2007
�'000 �'000
Exchange differences on translation of foreign operations (49) -
Equity settled share based payments recognised in equity 105 236
Deferred tax on items recognised directly in equity 29 -
85 236
Profit for the period 5,964 7,489
Total recognised income and expense for the period 6,049 7,725
Consolidated Balance Sheet
As at 31 March 2008
Note 2008 2007
�'000 �'000
Non-Current Assets
Goodwill 76,880 42,996
Other intangible assets 15,723 1,033
Property, plant & equipment 3,988 1,731
96,591 45,760
Current assets
Inventories 169 94
Trade and other receivables 25,281 11,655
Corporation tax - 841
Cash and cash equivalents - 6,089
Total current assets 25,450 18,679
Current Liabilities
Bank overdraft 1,597 -
Trade and other payables 16,637 7,150
Corporation tax 1,549 -
Obligations under finance leases 140 -
Deferred consideration 89 4,177
Bank loans 6,735 1,500
Provisions 133 -
Total current liabilities 26,880 12,827
Net Current (Liabilities)/Assets (1,430) 5,852
Non-Current Liabilities
Bank loans 31,368 13,927
Obligations under finance leases 40 -
Provisions 822 -
Derivative financial instruments 1,094 -
Deferred tax liability 3,399 386
Total non-current liabilities 36,723 14,313
Net assets 58,438 37,299
Equity
Share capital 83 72
Share premium account 29,372 14,293
Merger reserve 15,143 15,143
Capital redemption reserve 50 50
Translation reserve (49) -
Retained earnings 13,839 7,741
Equity attributable to equity 58,438 37,299
holders of the parent
Consolidated Cash flow statement
Year ended 31 March 2008
Note 2008 2007
�'000 �'000
Net cash flows from operating activities 2 5,767 7,368
Investing activities
Purchases of property, plant and equipment (1,178) (1,119)
Purchase of intangible assets (321) (362)
Expenditure on product development (1,942) (304)
Acquisition of subsidiary undertakings and businesses (32,966) 357
Payment of deferred consideration (4,177) (2,285)
Net cash used in investing activities (40,584) (3,713)
Financing activities
Dividends paid - (8)
Repayment of loans (20,677) (29,758)
Repayment of obligations under finance leases (158) (18)
Proceeds on issue of shares 4,802 14,083
New loans 43,353 15,427
Net cash from/(used in) financing activities 27,320 (274)
Net increase/(decrease) in cash and cash equivalents 3,381
(7,497)
Cash and cash equivalents at beginning of year 6,089 2,708
Effect of foreign exchange rate changes (189) -
Cash and cash equivalents at end of year (1,597) 6,089
1. Basis of preparation
The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 March 2008 or 2007,
but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be
delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and
did not contain statements under Section 237 (2) or (3) of the Companies Act 1985.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) for the first time.
The disclosures required by IFRS1 concerning the transition from UK GAAP to IFRSs are given at note 5. The financial statements have also
been prepared in accordance with IFRSs as adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation.
The financial statements have been prepared on the historical cost convention as modified by the revaluation of certain financial
instruments at fair value through profit or loss. The principal accounting policies adopted are published on the group's website
www.ssp-worldwide.com/investors/financial-information.
2. Net cash from operating activities
2008 2007
�'000 �'000
Profit for the year 5,964 7,495
Adjustments for:
Investment revenues (98) (140)
Finance costs 2,832 3,262
Income tax expense 2,871 (1,106)
Amortisation of intangible assets 1,219 287
Depreciation of property, plant and equipment 1,245 1,305
Share-based payment expense 105 236
Derivative financial instrument expense 1,094 -
Operating cash flows before movements in working 15,232 11,339
capital
Decrease/(Increase) in inventories (60) 84
(Increase) in receivables (6,856) (2,191)
Increase in payables 1,116 198
Cash generated by operations 9,432 9,430
Income taxes paid (1,029) 205
Interest received 98 140
Interest paid (2,734) (2,407)
Net cash from operating activities 5,767 7,368
3. Earnings per share
The calculation of basic and diluted earnings per share is based on the following:
2008 2007
�'000 �'000
Profit for the period attributable to 5,964 7,489
equity holders
No. No.
Number of shares:
Basic weighted average number of ordinary shares 79,561,751 55,288,383
Basic and diluted earnings per share 7.50p 13.55p
There is no dilutive impact of outstanding share options.
The calculation of pre-tax adjusted earnings per share is based on the following:
2008 2007
�'000 �'000
Profit for the period attributable to equity holders 5,964 7,489
Adjustments to earnings:
Taxation 2,871 (1,106)
Interest rate collar expense 1,094 -
Intangible amortisation 1,219 287
Re-organisation costs 1,331 -
Share option expense 105 236
Adjusted earnings 12,584 6,906
Basic and diluted pre-tax adjusted earnings per share 15.82p 12.49p
4. Acquisitions
On 9 July 2007, the Group acquired 100 per cent of the issued share capital of Sirius Financial Solutions plc for a total consideration
of �44.2m funded by a combination of shares and cash. Sirius Financial Solutions plc is the parent company of a group of companies engaged
in the development and supply of insurance specific application software, and related professional services, consultancy and support. The
transaction has been accounted for by the purchase method of accounting.
Book value Provisional fair value
�'000 �'000
Net assets acquired:
Intangible assets 69 13,321
Property, plant and equipment 2,324 2,324
Inventories 15 15
Trade and other receivables 8,035 6,738
Cash and cash equivalents 1,806 1,847
Trade and other payables (4,693) (13,072)
7,556 11,173
Goodwill 33,009
Total consideration 44,182
Satisfied by:
Cash 32,818
Shares 10,288
Directly attributable costs 1,076
44,182
Net cash outflow arising on
acquisition:
Cash consideration (including 33,894
costs)
Cash and cash equivalents (1,847)
acquired
32,047
The element of consideration that relates to shares represents 7,385,702 ordinary shares of 0.1p each at a fair value of �10,288,000
based on the market price at the date of issue.
The goodwill arising on the acquisition of Sirius Financial Solutions plc is attributable to the anticipated profitability of the
acquired business and the anticipated future operating synergies from the combination and the fair value of the workforce in place at the
date of acquisition.
The business units of Sirius Financial Solutions plc contributed �18,939,000 revenue and �2,442,000 to the Group's profit before tax for
the period between the date of acquisition and the balance sheet date.
If the acquisition had been completed on the first day of the financial year, Group revenues for the period would have been �70,718,000
and the Group profit attributable to equity holders of the parent would have been �6,640,000.
On 28 March 2008, the group acquired business and assets of CSC Australia Pty Limited, CSC Computer Sciences Pte Limited and CSC
Computer Sciences Sdn Bhd for a consideration of �1,008,000, funded by cash.
The acquired business is engaged in the development and supply of insurance specific application software, and related professional
services, consultancy and support. The transaction has been accounted for by the purchase method of accounting.
Book value Provisional fair value
�'000 �'000
Net assets acquired:
Intangible assets - 325
Trade and other receivables 97 97
Trade and other payables (76) (167)
21 255
Goodwill 753
Total consideration 1,008
Satisfied by:
Cash 1,008
Net cash outflow arising on
acquisition:
Cash consideration 919
Deferred consideration 89
1,008
The goodwill arising on the acquisition is attributable to the anticipated profitability of the acquired business and the anticipated
future operating synergies from the combination and the fair value of the workforce in place at the date of acquisition.
The business was acquired three days before the reporting date and therefore made no material contribution either to revenue or to the
Group's profit before tax for the period between the date of acquisition and the balance sheet date.
If the acquisition had been completed on the first day of the financial year, Group revenues for the period would have been �65,166,000
and the Group profit attributable to equity holders of the parent would have been �6,284,000.
On 30 May 2008, the group acquired the entire share capital of Koukia Pty Limited for a consideration of �1,795,000, funded by cash.
Koukia Pty Limited is engaged in the development and supply of insurance specific application software, and related professional services,
consultancy and support. The transaction has been accounted for by the purchase method of accounting.
Book value Provisional fair value
�'000 �'000
Net assets acquired:
Intangible assets - 718
Property, plant and equipment 184 184
Trade and other receivables 267 267
Cash and cash equivalents 340 340
Trade and other payables (693) (693)
Loans (1,861) (1,861)
(1,763) (1,045)
Goodwill 2,840
Total consideration 1,795
Satisfied by:
Cash 1,795
Net cash outflow arising on
acquisition:
Cash consideration 1,795
The goodwill arising on the acquisition of Koukia Pty Limited is attributable to the anticipated profitability of the acquired business
and the anticipated future operating synergies from the combination and the fair value of the workforce in place at the date of
acquisition.
For each of the business combinations above, the fair values represent the directors' current estimates of the net assets acquired. In
accordance with IFRS3, the values attributed may be revised as further information becomes available.
5. First time adoption of IFRS
The year ending 31 March 2008 is the first year that the Group has presented its consolidated financial statements under International
Financial Reporting Standards ('IFRS'). The last financial statements under UK GAAP were for the year ended 31 March 2007, the Group's date
of transition to IFRS was therefore 1 April 2006. The disclosures required in the year of transition are given below.
The adoption of IFRS represents an accounting change only and does not affect the operations or cash flows or the Group.
Reconciliation of equity at 1 April 2006
UK GAAP Effect of transition Restated under IFRS
31 to IFRS �'000
March �'000
2006
�'000
Non-Current Assets
Goodwill 43,342 - 43,342
Intangible assets 92 157 249
Property, plant & equipment 2,072 (157) 1,915
45,506 - 45,506
Current assets
Inventories 178 - 178
Trade and other receivables 9,032 - 9,032
Corporation tax 133 - 133
Cash and cash equivalents 2,708 - 2,708
Total current assets 12,051 - 12,051
Current Liabilities
Trade and other payables 8,992 - 8,992
Current tax liabilities - - -
Bank loans 4,052 - 4,052
Total current liabilities 13,044 - 13,044
Net Current Assets (993) - (993)
Non-Current Liabilities
Deferred consideration 2,731 - 2,731
Bank loans 25,826 - 25,826
Deferred tax liability 457 - 457
Total non-current liabilities 29,014 - 29,014
Net assets 15,499 - 15,499
Equity
Share capital - - -
Share premium account 282 - 282
Merger reserve 15,143 - 15,143
Capital redemption reserve - - -
Other reserve 664 - 664
Retained earnings (590) - (590)
Equity attributable to equity 15,499 - 15,499
holders of the parent
Notes to the reconciliation of equity at 1 April 2006
* The application of IAS 38 requires computer software to be recognised as an intangible asset. Computer software under UK GAAP was
capitalised and recorded as property, plant and equipment. Assets with a net book value of �157,000 have been reclassified.
* The amount reclassified represents an increase of �113,000 on the amount previously published, reflecting a more accurate analysis
of the group's non-current assets.
Reconciliation of profit for the year ended 31 March 2007
UK GAAP Effect of transition Restated under IFRS
Year ended 31 to IFRS �'000
March 2007 �'000
�'000
Revenue - Continuing 38,621 - 38,621
operations
Cost of sales (23,026) - (23,026)
Gross profit 15,595 - 15,595
Operating expenses
- other (6,014) 447 (5,567)
- intangible amortisation (4,861) 4,574 (287)
- share option expense (236) - (236)
Total operating expenses (11,111) 5,021 (6,090)
Operating profit - continuing 4,484 5,021 9,505
operations
Interest Received 140 - 140
Finance costs (3,262) - (3,262)
Profit on ordinary activities 1,362 5,021 6,383
before taxation
Taxation 1,106 - 1,106
Profit for the period 2,468 5,021 7,489
attributable to equity holders
of the parent
Notes to the reconciliation of profit for the year ended 31 March 2007
1 Under UK GAAP goodwill was amortised over its useful economic life, but under IFRS no amortisation charge is made. This increases
reported profit for the year ended 31 March 2007 by �4,817,000.
2 The application of IAS 38 requires computer software to be recognised as an intangible asset. Computer software under UK GAAP was
capitalised and recorded as property, plant and equipment. Consequently, depreciation of that asset amounting to �243,000 is reclassified as
intangible amortisation.
3 Under UK GAAP, the accounting policy was to expense all research and development cost in the period that it was incurred. Under IAS
38, however, development costs must be capitalised and amortised if certain criteria are met.
Whilst the majority of the Group's software development activity did not meet the criteria for recognition in IAS 38, costs of �204,000
were capitalised during the 12 month period to 31 March 2007. No amortisation has yet been charged in respect of the capitalised costs.
Reconciliation of equity at 31 March 2007
UK GAAP Effect of transition Restated under IFRS
31 to IFRS �'000
March �'000
2007
�'000
Non-Current Assets
Goodwill 38,462 4,534 42,996
Intangible assets 87 946 1,033
Property, plant & equipment 2,068 (337) 1,731
40,617 5,143 45,760
Current assets
Inventories 94 - 94
Trade and other receivables 11,655 - 11,655
Corporation tax 841 - 841
Cash and cash equivalents 6,089 - 6,089
Total current assets 18,679 - 18,679
Current Liabilities
Trade and other payables 7,150 - 7,150
Deferred consideration 4,177 - 4,177
Bank loans 1,500 - 1,500
Total current liabilities 12,827 - 12,827
Net Current Assets 5,852 - 5,852
Non-Current Liabilities
Bank loans 13,927 - 13,927
Deferred tax liability 264 122 386
Total non-current liabilities 14,191 122 14,313
Net assets 32,278 5,021 37,299
Equity
Share capital 72 - 72
Share premium account 14,293 - 14,293
Merger reserve 15,143 - 15,143
Capital redemption reserve 50 - 50
Other reserve - - -
Retained earnings 2,720 5,021 7,741
Equity attributable to equity 32,278 5,021 37,299
holders of the parent
Notes to the reconciliation of equity at 31 March 2007
1 The application of IAS 38 requires computer software to be recognised as an intangible asset. Computer software under UK GAAP was
capitalised and recorded as property, plant and equipment. Assets with a net book value of �337,000 have been reclassified. The amount
reclassified represents an increase of �254,000 on the amount previously published, reflecting a more accurate analysis of the group's
non-current assets.
2 Under UK GAAP goodwill was amortised over its useful economic life, but under IFRS no amortisation charge is made. This increases
reported profit for the period ended 31 March 2007 by �4,817,000.
3 In accordance with IFRS 3, intangible assets with a value of �405,000 have been recognised in relation to the acquisition of
Software Solutions Partners (Pty) Limited, with a corresponding reduction to goodwill. A related deferred tax liability of �122,000 arises.
4 Under UK GAAP, the accounting policy was to expense all research and development cost in the period that it was incurred. Under IAS
38, however, development costs must be capitalised and amortised if certain criteria are met. Whilst the majority of the Group's software
development activity did not meet the criteria for recognition in IAS 38, costs of �204,000 were capitalised during the 12 month period to
31 March 2007. No amortisation has yet been charged in respect of the capitalised costs.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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