RNS Number : 1705G
SatCom Group Holdings plc
20 October 2008
Press Release 20 October 2008
SatCom Group Holdings plc
("SatCom" or "the Group")
Preliminary Statement of Results for the Year Ended 30 June 2008
SatCom Group Holdings plc, a distributor of satellite communications, announces its preliminary results for the year ended 30 June 2008.
Financial Highlights
* Turnover increased 24.3% to US$72.1 million (FY 2007:US$58.0 million)
* Group EBITDA increased by 11.1% to US$6.0 million (2007: US$5.4 million)
* Profit before tax increased by 12.2% to US$4.6 million (2007: US$4.1
million)
* Basic EPS increased 5.3% to 6.17 cents (FY 2007: 5.86 cents)
* Final dividend proposed of 0.40 cents (FY 2007: 0.33 cents)
Operational Highlights
* Acquisition of SDN Global in April 2008 to extent product range to include
VSAT broadband products
* Master Distribution status agreement with Thrane & Thrane in September 2007
Commenting on the results, Mark White, Chief Executive of SatCom Group Holdings plc, said: "These results demonstrate SatCom's
continued solid performance in a competitive market. During the period, the Group has achieved a number of key milestones, including the
diversification of the Group's product offering to include VSAT following the acquisition of SDN. This will enable the Group to benefit from
the increased demand for faster data services.
SatCom continues to benefit from its strong relationship with Inmarsat, as evidenced by the Group's ongoing strong performance of its
BGAN offering. The Group has successfully won additional business from the US Government and we expect this to continue in the current
financial year."
- Ends -
For further information:
SatCom Group Holdings plc
Mark White, Chief Executive Officer Tel: +44 (0) 1722 439 206
mark.white@satcomgroup.com www.SatComgroup.com
Martin Ward, Chief Financial Officer Tel: +44 (0) 1722 439 201
martin.ward@satcomgroup.com www.SatComgroup.com
Teathers Limited
Gareth Price / Fred Walsh Tel: +44 (0) 207 426 9000
gareth.price@teathers.com www.teathers.com
Media enquiries:
Abchurch
Chris Lane / George Parker Tel: +44 (0) 20 7398 7700
george.parker@abchurch-group.com www.abchurch-group.com
Chairman's Statement
I am pleased to say that the SatCom Group continues to make good progress and to trade profitably in a market that is both competitive
and dynamic, showing good growth driven largely this year by global requirements for ever-faster data services. The Group is well-positioned
to take full advantage of that growth, following the investments in specialised Mobile Satellite service companies over the past two years
and recruitment of several high-quality Service Providers during the past year to extend our sales reach.
During the past year we have continued to invest in front and back office systems and staff training, to maintain our reputation for
providing excellent support to our customers, Group member companies and new Service Providers. We have continued to maintain an excellent
customer/supplier relationship with Inmarsat, following the Group's appointment as a BGAN Distribution Partner last year.
These investments, together with increasing customer take-up of the Inmarsat BGAN service, have all contributed to a further improvement
in year-on-year organic growth. The Group also moved during the year to acquire SDN, a US-based VSAT service company, whose product will
meet the growing requirement by our top-end customers for higher-speed data that cannot be economically met using BGAN.
This year has seen further developments in the consolidation of the Mobile Satellite Services sector. The Group remains a participant in
this consolidation and will continue to look at strategic, accretive acquisition opportunities as they arise.
The Group's activities are now spread across the world, with major activity centres in the Middle East, North America, Asia, Australia
and the UK, allowing us to provide 24/7 service throughout the year and to supply equipment from warehousing facilities closer to our major
markets and customers. Additionally, our network of sales offices and resellers put the Group in an excellent position to take advantage of
opportunities in the growing Mobile Satellite Services market.
Our ongoing success would not be possible without the enthusiasm of our people and I would like to take this opportunity to thank all of
the Group's employees who have worked so hard to achieve it.
Richard Vos
Chairman
17 October 2008
Chief Executive Officer's statement
HIGHLIGHTS
The attached accounts of SatCom Group Holdings Plc ("SatCom" or the "Group") show another year of growth in revenue and profits which
represents the fourth year in a row of growth since joining AIM.
In April 2008 SatCom acquired Shared Data Networks LLC ("SDN") in order to extend our product range to include VSAT broadband products.
With the introduction of Inmarsat's BGAN service, Mobile Satellite Service ("MSS") customers have been able to experience higher data rates
than have traditionally been available with portable terminals. Customers requiring an "upgrade path" to lower cost, higher bandwidth, fixed
terminal products can now be accommodated in the Group. VSAT products are fixed terminals with larger dish antenna that offer fixed price
bandwidth for unlimited use in comparison to the majority of mobile terminals which prices usage by megabyte for data and per minute for
voice. SDN have an excellent technical resource with a blue chip customer base primarily based in the US. The additional resources of SatCom
plus its global presence will enable SDN to grow significantly over the next few years. SDN will also benefit from the additional mobile
product range and services offered by SatCom and the global sales offices of the group.
FINANCIAL PERFORMANCE
I am pleased to report that the Group's results show increases across the board when compared with 2007 numbers as restated for IFRS.
The Group's turnover showed an increase of 25% to $72 million which includes $2 million arising from the acquisition of SDN Global. The
Group saw growth in BGAN and US Government business over the previous year and expects to see more in the forthcoming year. The overall
gross profit reduced marginally from 23.7% to 22.5% due to the increase in billing to the US Navy which is at low margins whilst the
remainder of business maintained its gross margin percentage. Overheads increased by 21.5%, a slightly lower rate than turnover, and as a
result the Group EBITDA increased by 11% to $6 million (2007: $5.4 million).
The Group's investment in a central integrated billing system in the UAE, has assisted in reducing administration costs across the
Group, the continued benefits of which will be seen in following years. During the year under review the Group saw the value of the US
Dollar reduce against the Euro and Sterling. In July 2007 SatCom purchased an option to protect the Group against further weakening of the
Dollar against Sterling particularly to cover the Sterling liabilities on Convertible Bonds totalling �3.45 million.
The Basic earnings per share has increased by 5.3% to 6.17 cents (2007: 5.86 cents) and diluted earnings per share has increased by 4.6%
to 5.89 cents (2007: 5.56 cents). The percentage increase in earnings per share has been affected by the increase in average number of
shares in issue for the year as set out in Note 13 to the accounts. SatCom continues its progressive dividend policy and it is the Board's
intention to propose a final dividend of 0.40 cents per share (2007: 0.33 cents). This dividend when added to the interim dividend paid in
April 2008 will provide total income of 0.60 cents per share (2007: 0.50cents) representing a 20% increase over 2007.
STRATEGY AND PROSPECTS
With our BGAN, Fleet Broadband and VSAT offerings together with new high speed data products from other satellite operators coming
through SatCom is well placed to expand its business in both mobile and fixed products. The Group continues with its strategy of looking to
acquire strategic businesses if and when opportunities arise. Despite the current worldwide trading uncertainty and talk of recession we
have seen continued growth in business for the first quarter and remain confident of the outcome for the current year.
I would echo Richard's thanks to the Group's global workforce and in addition thank our customers for their business in 2008 and look
forward to continuing our strong relationships with them in the future.
Mark White
Chief Executive
17 October 2008
Consolidated income statement for the year ended 30 June 2008
Notes 2008 2007
$'000 $'000
(as
restated)
Revenue
Continuing operations 69,803 58,013
Acquisitions 2,267 -
Group revenue 72,070 58,013
Cost of sales (55,825) (44,212)
Gross profit 16,245 13,801
Administration expenses (10,731) (8,830)
Operating profit 5
Continuing operations 5,520 4,971
Acquisitions (6) -
Group operating profit 5,514 4,971
Interest receivable and similar income 9 81 346
Finance costs 10 (998) (1,228)
Profit on ordinary activities before taxation 4,597 4,089
Taxation 11 (918) (794)
Profit for the financial year 3,679 3,295
Attributable to:
Equity holders of the parent company 3,679 3,295
Minority interests - -
3,679 3,295
Earnings per share 13
Basic 6.17 cents 5.86 cents
Diluted 5.89 cents 5.63 cents
Consolidated balance sheet as at 30 June 2008
Notes 2008 2007
$'000 $'000
(as
restated)
Assets
Non-current assets
Goodwill 14 18,045 12,641
Intangible fixed assets 15 1,406 777
Property, plant and equipment 16 1,775 975
21,226 14,393
Current assets
Inventories 18 5,475 5,588
Trade and other receivables 19 17,523 17,582
Bank balances and cash 20 2,097 959
25,095 24,129
Current liabilities
21 658 925
Financial liabilities
Convertible unsecured loan stock 22 6,451 -
Trade and other payables 24 19,277 18,349
Current tax 1,028 1,121
Obligations under finance leases 25 197 118
27,611 20,513
Net current (liabilities) / assets (2,516) 3,616
Non-current liabilities
Financial liabilities 21 4,977 750
Convertible unsecured loan stock 22 898 7,237
Obligations under finance leases 25 137 187
6,012 8,174
Net assets
12,698 9,835
Shareholders' equity
Share capital 26 6,053 6,053
Share premium account 4,845 4,845
Merger reserve 27 (10,884) (10,884)
Contingent share capital 28 - 500
Retained profits 29 12,684 9,321
Total shareholders funds 12,698 9,835
Minority interests - -
12,698 9,835
Approved and authorised for issue by the board of directors on 17 October 2008
Signed on behalf of the board of directors:
Mark White Martin Ward
Director Director
Company balance sheet as at 30 June 2008
Notes 2008 2007
$'000 $'000
(as
restated)
Assets
Non-current assets
Investments 17 18,146 17,852
18,146 17,852
Current assets
Trade and other receivables 19 208 480
Loans to related undertakings 23 5,286 3,617
Bank balances and cash 20 188 8,173
5,682 12,270
Current liabilities
Financial liabilities 21 851 925
Convertible unsecured loan stock 22 6,451 -
Loans from related undertakings 23 1,351 6,289
Trade and other payables 24 720 1,560
Current tax 33 -
9,406 8,774
Net current (liabilities) / assets (3,724) 3,496
Non-current liabilities
Convertible unsecured loan stock 22 898 7,237
898 7,237
Net assets 13,524 14,111
Shareholders' equity
Share capital 26 6,053 6,053
Share premium account 4,845 4,845
Contingent share capital 28 - 500
Retained profits 29 2,626 2,713
Total equity 13,524 14,111
Approved and authorised for issue by the board of directors on 17 October 2008
Signed on behalf of the board of directors:
Mark White Martin Ward
Director Director
Consolidated statement of changes in equity for the year ended 30 June 2008
Share Capital Share Premium Merger reserve Contingent Retained profits Total
$'000 $'000 $'000 Share $'000 $'000
Capital
$'000
Balance at 30 June 2006
- as originally stated 5,250 723 (10,884) 714 6,256 2,059
- changes in relation to first - - - - (18) (18)
time adoption of IFRS (note
35)
Restated balance at 30 June 5,250 723 (10,884) 714 6,238 2,041
2006
Changes in Equity for 2007
Profit for the year - - - - 3,295 3,295
Dividends paid - - - - (235) (235)
New shares issued (net of 803 4,122 - (214) - 4,711
costs)
Adjustment to minority - - - - 23 23
interests for Company now a
subsidiary
Balance at 30 June 2007 6,053 4,845 (10,884) 500 9,321 9,835
Changes in equity for 2008
Profit for the year - - - - 3,679 3,679
Dividends paid - - - - (316) (316)
New shares issued (net of - - - - - -
costs)
Adjustment to contingent share - - - (500) - (500)
capital for consideration paid
in cash
Balance at 30 June 2008 6,053 4,845 (10,884) - 12,684 12,698
Company statement of changes in equity for the year ended 30 June 2008
Share Capital Share premium Contingent share Retained Profits Total
$'000 $'000 Capital $'000
$'00
Balance at 30 June 2006
- as originally stated 5,250 723 714 3,375 10,062
- changes in relation to first - - - - -
times adoption of IFRS (note
35)
Restated balance at 30 June 5,250 723 714 3,375 10,062
2006
Changes in equity for 2007
Loss for the year - - - (427) (427)
Dividends paid (235) (235)
New shares issued (net of 803 4,122 (214) - 4,711
costs)
Balance at 30 June 2007 6,053 4,845 500 2,713 14,111
Changes in equity for 2008
Profit for the year - - - 229 229
Dividends paid - - - (316) (316)
New shares issued (net of - - - - -
costs)
Adjustment to contingent share - - (500) - (500)
capital for consideration paid
in cash
Balance at 30 June 2008 6,053 4,845 - 2,626 13,524
Consolidated cash flow statement for the year ended 30 June 2008
Note 2008 2007
$'000 $'000 $'000 ($'000
(as (as
restated restate
) d)
Net cash generated (used) by 32 4,585 (377)
operating activities
Cash flows from investing
activities
Interest received 81 346
Purchase of intangible fixed (673) (1,144)
assets
Purchase of property, plant (366) (58)
and equipment
Acquisition of subsidiary (net 31 (4,649) (2,467)
of cash acquired)
Net cash used in investing (5,607) (3,323)
activities
Cash flows from financing
activities
Dividends paid (316) (235)
Issue of ordinary share - 2,529
capital (net of costs)
Issue of Convertible Unsecured - 874
Loan Stock ("CULS")
Decrease in short term (267) (356)
borrowing
Increase in long term 2,885 -
borrowing
Capital element of finance (142) (54)
lease rental payments
Net cash generated by 2,160 2,758
financing activities
1,138 (942)
Net increase (decrease) in
cash and cash equivalents
Cash and cash equivalents at 959 1,901
beginning of year
Cash and cash equivalents at 2,097 959
end of year
Company cash flow statement for the year ended 30 June 2008
2008 2007
$'000 $'000 $'000 ($'000
(as (as
restated restate
) d)
Cash flows from operating
activities
Operating profit 9 298
Operating cash flows before 9 298
movement in working capital
(Increase)/decrease in (1,397) (310)
receivables
Increase/(decrease) in (5,261) 839
payables
Cash (used) generated by (6,649) 827
operations
Interest paid (654) (630)
Net cash (used) generated by (7,303) 197
operating activities
Cash flows from investing
activities
Interest received 2 27
Acquisition of subsidiary (1,294) (211)
Dividends received from 1,000 -
subsidiary
Net cash used in investment (292) (184)
activities
Financing activities
Issue of ordinary share - 2,529
capital (net of costs)
Issue of Convertible Unsecured - 874
Loan Stock ("CULS")
Decrease in short term (267) (356)
borrowings
Dividends paid (316) (235)
Net cash (used) generated by (583) 2,812
financing activities
Net (decrease) increase in (8,178) 2,825
cash and cash equivalents
Cash and cash equivalents at 8,173 5,348
beginning of year
Cash and cash equivalents at (5) 8,173
end of year
1. Nature of business and corporate information
SatCom Group Holdings plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered
office is given on Unit 3, The Woodford Centre, Old Sarum, Salisbury, SP4 6BU, UK.
2. Basis of preparation
These financial statements are the group's first consolidated financial statements prepared in accordance with International Financial
Reporting and Accounting Standards adopted by the European Union ("IFRS"), with a transition date of 1 July 2006. The disclosure required by
IFRS 1 ""First time adoption of International Financial Reporting Standards", concerning the transition from UK GAAP to IFRS is given in
note 35.
The financial statements are presented in US dollars since this is the currency in which the majority of the Company's transactions are
denominated.
The preparation of financial statements in conformity with general accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although the estimates are based on management's best knowledge of the amount, even or
actions, actual results ultimately may differ from those estimates.
At the date of authorisation of these financial statements, there were Standards and Interpretations that were in issue but not yet
effective and have not been applied in these financial statements. 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 or company, except for additional
disclosures when the relevant Standards come into effect.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.
3. Summary of significant accounting policies
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 30 June each year. Control is achieved where the company has the power to govern the financial and operating
policies of a subsidiary.
Minority interests in the net assets of consolidated subsidiaries are identified separately from the group's equity therein. Minority
interests consist of the amount of those interests at the date of the original business combination and the minority's share of changes in
equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity
are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make
additional investment to cover the losses.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate.
All intercompany transactions and balances between group enterprises are eliminated on consolidation.
3. Summary of significant accounting policies (continued)
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of
the fair values, at the acquisition date, of assets given, liabilities incurred or assumed, and equity instruments issued by the group, plus
any costs directly attributable to the acquisition. The acquiree's identifiable assets, liabilities and contingent liabilities are
recognised at their fair value at the acquisition date, except for non-current assets that are held for resale, which are recognised and
measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of cost over the group's
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised of a subsidiary, associate or
jointly controlled entity at the date of acquisition. Goodwill is recognised as an asset and is tested for impairment annually, or on such
occasions that events or changes in circumstances indicate that its value might be impaired.
On disposal of a subsidiary, the attributable amount of unamortised goodwill, which has not been subject to impairment, is included in
the determination of the profit or loss on disposal.
Positive goodwill arising on acquisitions before the date of the transition to International Financial Reporting Standards has been
retained at the previous UK GAAP amount subject to being tested for impairment at that date. Negative goodwill arising on acquisitions
before the date of the transition has been credited to retained earnings at the date of transition.
Revenue recognition
Revenue: is recognised
* on hardware and prepaid airtime sales when invoiced
* on postpaid airtime when invoiced and supplied.
Revenue is stated net of discounts, VAT and other sales related taxes.
Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance
sheet as finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the
lease term.
Borrowing costs
All borrowing costs are recognised in the income statement in the period to which they are incurred.
3. Summary of significant accounting policies (continued)
Taxation
The tax charge represents the sum of current and deferred tax.
Current tax payable is based on taxable profits for the year. Taxable profits differ from net profits as reported in the income
statement because it excludes items that are taxable or deductible in other years and items that are not taxable or deductible. The group's
liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheets date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability
method. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that it
is probable that taxable profits will be available against which temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability or the asset is realised.
Currencies
Transactions in currencies other than US Dollars are initially recorded at the rates of exchange prevailing on the dates of the
transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the rates prevailing on the balance sheet
date. The principal exchange rate ruling at 30 June 2008 was �1 = US$1.997. Profits and losses arising on exchange are included in the net
profit or loss for the period.
Impairment
At each balance sheet date, the group reviews the carrying amount of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of
an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Goodwill arising on acquisition is allocated to cash-generating units. The recoverable amount of the cash-generating unit to which
goodwill has been allocated is tested for impairment annually, or on such other occasions that events or changes in circumstances indicate
that its value might be impaired
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately, unless
the relevant asset is land or buildings at a revalued 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 (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but 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 (cash generating unit). A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase. Impairment losses relating to goodwill are not reversed.
Share based payments - employee services
The fair value of employee services received in exchange for the grant of options or shares is recognised as an expense. The total
amount to be expensed over the vesting period is determined by reference to the fair value of the options or shares determined at the grant
date, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are expected to become exercisable and the number of shares that the
employee will ultimately receive. This estimate is revised at each balance sheet date and the difference is charged or credited to the
income statement. Proceeds received on exercise of options, net of any directly attributable transaction costs, are credited to equity.
3. Summary of significant accounting policies (continued)
Share based payments - other goods or services
Goods or services (other than employee services) received in exchange for share-based payment are measured directly at their fair value
and are recognised as an expense. Proceeds received on exercise of options, net of any directly attributable transaction costs, are credited
to equity.
Intangible fixed assets
Intangible assets other than goodwill, acquired are measured initially at purchase cost and amortised on a straight-line basis over
their estimated useful lives, which is on average 20 years.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is charged so as to write the cost less
residual value over estimated useful lives, using the straight-line method commencing in the month following the purchase, on the following
basis:
Leasehold property improvements - Term of lease
Equipment - Between 3 and 5 years
Motor vehicles - 5 years
The useful lives and residual values of assets are reviewed annually.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
over the term of the lease.
The gain or loss arising on the disposal of an asset including disposal costs is recognised in the income statement.
Inventories
Inventories are stated at the lower of cost , using the average cost method, and net realisable value. Net realisable value represents
the estimated revenue less all estimated costs of completion and necessary selling costs.
Financial instruments
Financial assets and financial liabilities are recognised when the group or company has become a party to the contractual provisions of
the instrument.
Trade receivables
Trade receivables are stated at their nominal value less allowances for irrecoverability.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term deposits and liquid investments that are
readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement using
the effective interest rate method
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An
equity instrument is any contract that creates a residual interest in the assets of the group.
3. Summary of significant accounting policies (continued)
Trade payables
Trade payables are stated at cost.
Provisions
Provisions are recognised when the group has a present obligation as a result of a past event from which it is likely that an outflow of
economic benefits will occur which can be reasonably quantified.
Equity instruments
Equity instruments are recorded at the proceeds received, net of direct issue costs.
4. Segmental analysis
For management purposes, the group is currently organised into 4 geographical operating divisions - European Union, United States, Asia
and Rest or World. These divisions are the basis on which the Group reports its primary segment information.
Segmental information on a Group basis is set out below:
European Union United States Asia Rest of World Group
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
$000's $000's $000's $000's $000's $000's $000's $000's $000's $000's
Revenue
Revenue by
destination
Sales to third
Parties
12,526 6,605 36,073 31,495 18,504 14,387 4,967 5,526 72,070 58,013
Revenue by origin
Total sales 13,619 17,620 27,757 25,055 44,990 18,042 2,409 9,510 88,775 70,227
Inter-segment sales
(6,441) (3,757) (1,941) (1,814) (8,289) (2,290) (34) (4,353) (16,705) (12,214)
Sales to third parties
7,178 13,863 25,816 23,241 36,701 15,752 2,375 5,157 72,070 58,013
Result
Segment profit 136 1,078 977 796 4,473 2,740 147 598 5,733 5,212
Common costs (219) (241)
Operating 5,514 4,971
Profit
Net interest (917) (882)
Group profit before taxation
4,597 4,089
Other
Capital additions 122 311 184 75 846 766 - - 1,152 1,152
Depreciation and amortisation
150 135 151 145 205 139 - - 506 419
Net assets
Segment net assets 1,010 1,255 (1,188) 1,941 9,801 4,508 - 608 9,623 8,312
Unallocated
Assets 3,075 1,523
Minority interests
- -
Total net assets 12,698 9,835
5. Operating profit
2008 2007
$'000 $'000
Profit from operations has been arrived at after charging:
Auditor's remuneration - audit of parent company 45 40
Auditor's remuneration - audit of subsidiaries 99 91
Auditor's remuneration - non-audit
Services relating to corporate finance transactions 12 39
All other services 20 15
Amortisation 88 1
Depreciation of property, plant, and equipment
- owned assets 343 397
- leased assets 75 21
Staff costs 5,645 4,228
Directors' remuneration 606 543
Property lease rentals 511 228
Equipment lease rentals 12 -
(Gain)/loss on foreign currency translation 194 (24)
6. Income statement
As permitted by Section 230 of the Companies Act 1985, the income statement of the company is not presented as part of these accounts.
The retained profit for the year of the company was $228,981 (2007: $(427,132)).
7. Staff costs
2008 2007
$'000 $'000
The costs employing all staff and directors was:
Wages and salaries 5,238 3,847
Social security costs 407 381
5,645 4,228
No. No.
The average number of employees during the period was
Distribution 54 40
Administration 55 65
Management 16 11
125 116
All Group employees are paid through trading subsidiaries of the Group.
The directors have identified 4 (2007:3) key management personnel whose compensation
was as follows:
2008 2007
$' $'
000 000
Short-term employment benefits 446 355
Share options
There were no share options granted by the Company during the year to employees of the Group. Details of the Company schemes movements
during the year are as follows:
June 2007 Lapsed June 2008 Exercise price Exercise dates
EMI approved (UK) 28,440 - 28,440 9.6 pence April 2008 - 2015
Unapproved (Overseas) 10,760 - 10,760 9.6 pence April 2008 - 2015
EMI approved (UK) 5,110 (730) 4,380 34.0 pence October 2008 - 2015
Unapproved (Overseas) 125,278 (3,297) 121,981 34.0 pence October 2008 - 2015
EMI approved (UK) 21,890 (3,650) 18,240 36.5 pence December 2009 - 2016
Unapproved (Overseas) 129,436 (6,959) 122,477 36.5 pence December 2009 - 2016
TOTAL 320,914 (14,636) 306,278
8. Directors' remuneration
Remuneration paid to directors during the year was as follows:
2008 2007
$'000 $'000
Emoluments 621 555
Pension costs - -
621 555
Remuneration paid to the highest paid director was as
follows:
2008 2007
$'000 $'000
Emoluments 271 238
271 238
9. Interest receivable and similar income
2008 2007
$' $'
000 000
Interest on bank deposits 81 346
10. Finance costs
2008 2007
$' $'000
000
Interest and similar charges on bank loans and overdrafts 232 484
Interest on directors' and shareholders' loans 50 64
Interest on convertible loan stock 566 548
Amortisation of issue costs on convertible loan stock 128 122
Interest on obligations under finance leases 22 10
998 1,228
11. Taxation
Analysis of charge in period
2008 2007
$' $'
000 000
Current tax
UK taxation:
United Kingdom corporation tax in respect of the period 57 33
Adjustments in respect of previous periods - -
Foreign tax:
Current tax on income for the year 861 761
Total tax 918 794
Factors affecting tax charge for period
The differences between the total tax shown above and the amount calculated by applying the standard rate of United Kingdom corporation
tax to the profit before tax is as follows:
2008 2007
$'000 $'000
Profit from continuing operations before tax 4,597 4,089
Tax on profit from continuing operations at the average standard 1,359 1,227
United Kingdom corporation tax rate of 29.5% (2007: 30%)
Effects of:
Expenses not deductible for tax purposes 2 2
Capital allowances in period less than depreciation 22 1
Lower taxes on overseas earnings (498) (566)
Losses arising in year not relieved against current tax 33 130
Total tax charge for period 918 794
12. Dividends
2008 2007
$' $'
000 000
Amounts recognised as distributions in the year:
Final dividend of 0.33 cents (2007: 0.25 cents) per share 197 140
Interim dividend of 0.20 cents (2007: 0.17 cents) per share 119 95
316 235
The board is proposing a final dividend at the Annual General Meeting as set out in the Directors Report. The proposed final dividend is
subject to approval by shareholders at the Annual General Meeting and has not been accounted for in these financial statements.
13. Earnings per share
The calculations of the basic and diluted earnings per share are based on the following data:
2008 2007
$'000 $'000
Profit for the purpose of basic earnings per share 3,679 3,295
Effect of dilutive potential ordinary shares:
Interest on convertible loan notes 421 466
Profit for the purposes of diluted earnings per 4,100 3,761
share
No of shares No of shares
Weighted average number of ordinary shares in issue 59,628,644 56,220,132
during the year
Effect of dilutive potential ordinary shares:
Staff options 306,278 320,914
Convertible loan notes 9,615,685 10,313,054
Diluted weighted average number of ordinary shares 69,550,307 66,854,100
in issue during the year
14. Goodwill
Group $'000
Carrying amount
At 1 July 2006 5,844
Additions 6,797
At 30 June 2007 12,641
Additions 6,154
Write down of deferred consideration (750)
At 30 June 2008 18,045
Goodwill has been calculated in respect of single operating units purchased by the Group. The units recoverable amounts have been
determined on the value in use basis. These were calculated as the net present value of projected cash flows derived from budgets approved
by management for the three years ended 30 June 2011 and extended by a further two years to 30 June 2013 by assuming trading in those two
years would be similar to the budget for the year ended 30 June 2011 with a compound growth rate of 5% applied.
The key assumptions used for the budgets for the three years to 30 June 2011 were;
Growth - growth assumptions were related to forecasts on the take up of new technology being offered by the Group together with the
reasonably expected growth associated with existing large contracts.
Margin - based on existing margins achieved and those inherent in the future performance of existing contracts.
Acquisitions - No acquisitions have been assumed
15. Intangible fixed assets
Group Billing system
2008 $'000
Cost
At 1 July 2007 789
Additions 717
At 30 June 2008 1,506
Amortisation:
At 1 July 2007 12
Charge for the year 88
At 30 June 2008 100
Net book value: 1,406
At 30 June 2008
2007 Billing
system
$'000
Cost
At 1 July 2006 36
Additions 753
At 30 June 2007 789
Amortisation:
At 1 July 2006 11
Charge for the year 1
At 30 June 2007 12
Net book value:
At 30 June 2007 777
The Group billing system includes licences, trade marks and other ancillary costs.
16. Property improvements and equipment
Group 2008
Leasehold Motor Equipment Total
Property $'000 $'000
Improvements Vehic
$'000 les
$'000
Cost
At 1 July 2007 254 - 1,569 1,823
Acquisition of subsidiary - - 2,412 2,412
Additions 11 20 404 435
At 30 June 2008 265 20 4,385 4,670
Depreciation:
At 1 July 2007 42 - 806 848
Acquisition of subsidiary - - 1,629 1,629
Charge for the year 23 - 395 418
At 30 June 2008 65 - 2,830 2,895
Net book value: 200 20 1,555 1,775
At 30 June 2008
Group
2007
Leasehold Equipment Total
property $'000
improvements
Cost
At 1 July 2006 154 1,022 1,176
Acquisition of subsidiary - 248 248
Additions 100 299 399
At 30 June 2007 254 1,569 1,823
Depreciation:
At 1 July 2006 28 402 430
Charge for the year 14 404 418
At 30 June 2007 42 806 848
Net book value:
At 30 June 2007 212 763 975
The carrying amount of the group's fixtures and equipment includes an amount of $431,145 (2007: $341,071) in respect of assets held
under finance leases.
17. Investments in subsidiary undertakings
Company
2008 2007
$'000 $'000
Cost
At 1 July 17,852 17,641
Additions 294 211
At 30 June 18,146 17,852
The principal subsidiary undertakings of the company are shown below. They have share capitals comprising ordinary shares or common
stock, apart from Shared Data Networks, LLC where the equity is classified as Membership Interest, and all are consolidated into the group
accounts.
All companies shown are in the business of distribution of satellite communication equipment and airtime.
Subsidiaries Proportion Country of incorporation and operation
Held
SatCom Distribution Limited 100% UK
SatCom Distribution Inc. * 100% USA
O'Gara Satellite Systems Inc * 100% USA
SatCom Distribution (Asia) 100% Hong Kong
Limited *
SatCom Distribution Middle 55% UAE
East FZ LLC*
Horizon Mobile Communications 100% Thailand
Co. Limited *
Horizon Mobile Communications 100% Singapore
Pte Limited *
Horizon Mobile Communications 100% BVI
(HK) Co. Limited *
Horizon Mobile Communications 100% Australia
(Australia) Pty *
SatCom Global FZE 100% UAE
World Communication Center 100% USA
Inc*
Shared Data Networks, LLC* 100% USA
Registered branch
Horizon Mobile Communications 100% Japan
(HK) Co. Limited *
* Held by a subsidiary
undertaking
18. Inventories Group
2008 2007
$'000 $'000
Finished goods 5,475 5,588
The amount of inventories recognised as an expense during the year amounted to $22,511,000 (2007: $25,525,000)
19. Trade and other receivables
Group Company
2008 2007 2008 2007
$'000 $'000 $' $'
000 000
Trade receivables 14,248 12,888 - -
Current tax - 359 - -
Other taxes and social security 126 163 38 2
Other receivables 422 350 159 247
Prepayments and accrued income 2,727 3,822 11 231
17,523 17,582 208 480
The average credit period taken on sales of services was 72 days (2007: 81 days). The amounts presented in the financial statements are
net of allowances for doubtful receivables, estimated by the group's management based on prior experience and their assessment of the
current economic environment.
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Credit risk
The group and company have no significant concentration of credit risk, with exposure spread over a large number of counterparties and
customers.
20. Bank balances and cash
Bank balances and cash comprise cash held by the group and company and short-term bank deposits with an original maturity of three
months or less. The carrying value of these assets approximates their fair value.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international
credit-rating agencies.
21. Financial liabilities
Group Company
2008 2007 2008 2007
$'000 $'000 $' $'
000 000
Within one year
Bank overdraft and loans - - 193 -
Directors' loan accounts 658 925 658 925
658 925 851 925
Over one year
Bank overdraft and loans 2,500 - - -
Loan notes 2,477 - - -
Deferred liability - 750 - -
4,977 750 - -
Total 5,635 1,675 851 925
21. Financial liabilities (continued)
The principal features of the financial liabilities are as follows:
Directors' loan accounts
Details of Directors' loan accounts are set out in note 35. The loans are repayable on demand and accrue interest at 4% per annum.
Bank overdraft and loans
The Group has banking facilities with HSBC Bank Plc, which are supported by guarantees from main trading subsidiaries of the Group
together with a debenture over the cash and assets of SatCom Group Holdings Plc. There is a net UK facility of US$1.1 million in SatCom
Group Holdings Plc, which is set-off against cash balances in the UK within the Group. The interest chargeable is on the net balance at the
rate of 1.75% over the HSBC Bank base rate.
SatCom Distribution, Inc. has two facilities totalling US$3.5 million with HSBC Bank USA which are secured on cash balances and
receivables held by US subsidiaries of SatCom Distribution, Inc. The first facility is (a) a 5 year term revolving loan of US$3.0 million
repayments on which commence in July 2009 of which at the year end US$2.5 million had been drawn down. The second facility is an overdraft
of US$ 0.5 million none of which had been drawn down at the year end. The interest chargeable on the drawn balance is 2.5% over US Dollar
L.I.B.O.R.
Loan notes
The loan notes are repayable within 30 months of closing, with an annual interest rate of 4% of the amount repayable. The amount
repayable is based on the total profit before tax ("PBT") earned by Shared Data Networks, LLC in the 24 months post closing. If Shared Data
Networks, LLC earns US$1.0m PBT or less then no debt is repayable. The debt repayable will increase from US$Nil to US$2.4m on a linear basis
between PBT of US$1.0m to US$1.5m
Deferred liability
Under the terms of the acquisition of World Communication Center, Inc, SatCom had deferred consideration to pay of US$0.75 million.
During this financial period the terms of the agreement were not met, therefore this liability has been removed from financial liabilities
and the cost of acquisition previously recognised has been reduced by US$0.75 million.
Under the terms of the acquisition of Shared Data Networks LLC ("SDN") SatCom has deferred consideration of US 50 cents for every US
Dollar earned by SDN in excess of $1.5 million during the 24 months post closing. The maximum amount of deferred consideration payable
cannot exceed US$ 5.0 million. The Board do not believe it appropriate to provide for any deferred consideration in these accounts.
Maturity profile Group Company
2008 2007 2008 2007
$'000 $'000 $' $'
000 000
Within one year 658 925 851 925
Between one and two years 625 750 - -
Between two and five years 4,352 - - -
5,635 1,675 851 925
The fair value of the group's and company's overdrafts, bank loans and deferred consideration have been reviewed with the group's
advisers and their fair values are not considered to be material different from their book values.
22. Convertible unsecured loan stock ("CULS")
The amounts falling due within one year include the following:-
A. Redeemable/Convertible June 2009 with interest rate of 8% - �3.0 million, issued on 15 July 2005
B. Redeemable/Convertible June 2009 - $600,000 issued on 7 July 2006
The amounts falling due after more than one year include the following:-
* Redeemable/Convertible June 2010 - �450,000 issued on 7 July 2006
The CULS can be converted, at the option of the holder, into ordinary shares at 39p per share at any time during the conversion
period, which is the period from admission to three business days prior to the final maturity date of (A&B) 30 June 2009 and (C) 30 June
2010.
The Company incurred costs of $505,000 in relation to the issue of the CULS and is amortising these costs over the conversion period of
4 years. The unamortised balance of $141,000 has been deducted from the CULS balance of $7,490,000 resulting in a net balance at 30 June
2008 of $7,349,000 ($6,451,000 in current liabilities and $898,000 in non-current liabilities).
23. Loans to / from related undertakings
Company 2008 2007
$'000 $'000
Loans to subsidiaries 5,286 3,617
5,286 3,617
2008 2007
$'000 $'000
Loans from subsidiaries 1,351 6,289
1,351 6,289
The directors consider that the fair values of the loans outstanding are not considered to be materially different from their book
values. The loans are unsecured and repayable on demand. Interest is charged at commercial rates on long term elements of the loans.
24. Trade and other payables
Group Company
2008 2007 2008 2007
$'000 $'000 $' $'000
000
Trade payables 12,808 7,490 174 14
Other taxation and social 229 291 8 10
security
Other payables 1,404 2,600 397 1,202
Accruals and deferred income 4,836 7,968 141 334
19,277 18,349 720 1,560
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period
taken for trade payables was 76 days (2007: 56 days).
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
25. Obligations under finance leases
Group 2008 2007
Amounts payable under finance leases $' $'
000 000
Within one year 228 141
In the second to fifth years inclusive 160 227
388 368
Less: future finance charges (54) (63)
Value of minimum lease payments 334 305
Less: Amount due for settlement within 12 months 197 118
Amounts over one year 137 187
The average lease term is 3 years. For the year ended 30 June 2008 the average effective borrowing rate was 12.6%. All leases are on a
fixed repayment basis and no arrangements have been entered into for contingent rental payments.
There is no material difference between the total value of the future finance lease payments at the balance sheet dates and their
present value.
Obligations under finance leases are secured over the asset acquired.
26. Share capital
2008 2008 2007 2007
$'000 No of $'000 No of
Shares shares
'000 '000
Authorised:
Ordinary shares of $0.10 each 50,000 500,000 50,000 500,000
Deferred shares of �1 each 90 50 90 50
50,090 500,050 50,090 500,050
2008 2008 2007 2007
$'000 No of $'000 No of
Shares shares
'000 '000
Called up, allotted and fully
paid:
Ordinary shares of $0.10 each 5,963 59,629 5,963 59,629
Deferred shares of �1 each 90 50 90 50
6,053 59,679 6,053 59,679
Deferred shares of �1 each carry no voting or dividend rights and are redeemable at par.
27. Merger reserve
The acquisition by the company of SatCom Distribution Limited and its subsidiaries in May 2004 was accounted for as a merger.
Accordingly a debit merger reserve has been recognised in the consolidated balance sheet representing the difference between the
consideration paid to acquire the group and its net assets at the date of the transaction.
28. Contingent share capital
In November 2007, SatCom paid the final balance of deferred consideration in respect of the acquisition of HMC totalling $1.0 million.
The acquisition agreement allowed for the payment to be paid as to 50% in new ordinary shares of SatCom. However, to avoid unfavourable
dilution, the Board decided to negotiate a 100% cash payment which was accepted by the vendors.
29. Retained profit
Group Company
$'000 $'000
Balance at 1 July 2006
- as originally stated 6,256 3,375
-prior period adjustment arising from first-time adoption of (18) -
International Financing Reporting Standard (see Note 35)
As restated 6,238 3,375
Dividends paid (235) (235)
Net profit for the year 3,295 (427)
Adjustment to minority interest for company now a subsidiary 23 -
Balance at 1 July 2007 9,321 2,713
Dividends paid (316) (316)
Net profit for the year 3,679 229
Balance at 30 June 2008 12,684 2,626
30. Operating lease commitments
At the balance sheet date, the group and company had outstanding commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
Group Land and buildings Other Land and buildings Other
2008 2008 2007 2007
$'000 $'000
$'000 $'000
Total rentals payable on
leases expiring:
Within one year 755 14 380 12
Within two to five years 1,592 37 492 16
After five years 195 - 245 -
2,542 51 1,117 28
31. Acquisition of subsidiary
On 22 April 2008, the Group acquired 100 per cent of the equity of Shared Data Networks, LLC for cash consideration of $ 2,262,000
(including costs).
The Directors consider that the difference between book value of net assets acquired and fair value is not material
Net assets acquired 2008
$'000
Property, plant and equipment 783
Inventories 259
Trade and other receivable 792
Bank balances and cash (993)
Trade and other payables (2,189)
Financial liabilities (2,092)
Obligations under finance leases (58)
(3,498)
Goodwill 5,760
2,262
Satisfied by:
Cash 2,262
Net cash outflow arising on acquisition
Cash consideration 2,262
Bank balances and cash 993
3,255
Shared Data Networks, LLC contributed $2,276,000 of revenue and ($42,000) to the Group's profit before tax for the period between the
date of acquisition and the balance sheet date. If at the start of the year the company had been a 100 per cent subsidiary, the company
would have contributed $8,971,000 to revenue and $(658,000) to profit before tax. The initial consideration of US$1.0 million was paid in
cash together with the assumption of vendor debt totalling US$2.4million. This vendor debt is repayable within 30 months of closing, with an
annual interest rate of 4% of the amount repayable. The amount repayable is based on the total profit before tax ("PBT") earned in the 24
months post closing. If the company earns US$1.0m PBT or less then no debt is repayable. The debt repayable will increase from US$Nil to
US$2.4m on a linear basis between PBT of US$1.0m to US$1.5m. The consideration will be further increased by US50cents for every dollar
additional PBT in excess of US$1.5m in the 24 months post closing up to a maximum of US$5.0m.
Goodwill is attributed to the anticipated profitability of the distribution of new products throughout the Group and the anticipated
management and operating synergies from the combination.
32. Reconciliation of operating activities to operating cash flows
2008 2007
$'000 $'000
Operating profit 5,514 4,971
Amortisation 88 1
Depreciation 418 418
Operating cash flows before movement in
working capital 6,020 5,390
(Increase)/decrease in inventories 372 (2,073)
(Increase)/decrease in receivables 492 (4,693)
Increase/(decrease) in payables (777) 3,036
Cash generated by operations 6,107 1,660
Interest paid (870) (1,106)
Income taxes paid (652) (931)
Net cash generated (used) by
operating activities 4,585 (377)
33. Related party transactions
Transactions between group companies are eliminated on consolidation and are not disclosed in this note.
Transactions between the parent company and its subsidiaries totalled $228,000 (2007: $301,000) representing management fees raised.
Amounts due to Directors during the year were as follows:
Opening Loans Interest Closing
balance intro paid at balance
duced 4%
/
(
repai
d)
Name $'000 $'000 $'000 $'000
Mark White 556 (294) 22 284
Sandy Johnson 356 (15) 13 354
Martin Ward 13 7 - 20
925 (302) 35 658
The movement on the shareholder loan included in other payables is:
Opening Loans Interest Closing balance
balance intro paid at
duced 4%
/
(
repai
d)
Name $'000 $'000 $'000 $'000
Adam Thompson 402 (20) 15 397
SatCom Distribution Limited incurred consultancy costs in the period in the amount of EUR355,000 (2007: EUR297,660) from Satellite
Communications Consultancy BVBA. Satellite Communications Consultancy BVBA is a company incorporated in Belgium and is controlled by a
director Mark White.
34. Financial instruments
The Group faces certain risks not all of which are within our control. The main risk factors are outlined as follows:
a) Suppliers - The Group purchases its airtime from a few main satellite operators, the majority being from Inmarsat, Iridium and
Thuraya. We are reliant on the operators maintaining their capacity to enable our customers to use their equipment. The satellite operators
have contingency plans to protect their business and we feel the risk is not significant.
b) Foreign currency - The Group reports its results in US Dollars because the majority of the trading income and expenditure is in that
currency. The Group has some exposure to sterling/US dollar exchange rate due to the fact that UK head office, AIM costs and some interest
costs are payable in sterling.
c) Currency option - In July 2007 the Group sold its sterling balance held for US Dollars. In order to protect the Group against
exchange rate fluctuations against the sterling denominated CULS totalling �3.45 million, the Group bought an option to convert US Dollars
back into sterling at the same exchange rate at which the sale of sterling, was transacted. The cost of the option was $188,000 and the
value at the year end was not materially different.
35. First time adoption of IFRS
This is the first year that the group and company have presented their financial statements in accordance with IFRS as adopted by the EU
and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. Reference to IFRS throughout these financial
statements refers to the application of International Accounting Standards, International Financial Reporting Standards and IFRIC
interpretations.
The group and company have applied IFRS 1 for its initial implementation of IFRS. The last financial statements under UK GAAP were for
the year ended 30 June 2007, therefore the group's and company's date of transition to IFRS is 1 July 2006 and comparative information in
the financial statements has been restated to reflect the group's and company's adoption of IFRS except where otherwise required or
permitted by IFRS 1.
IFRS 1 requires an entity to comply with each IFRS effective at the reporting date for its first financial statements prepared under
IFRS. As a general rule, IFRS 1 requires such standards to be applied retrospectively. However, the standard permits several optional
exemptions from full retrospective application. The company has elected to take advantage of the following exemption:
* The company has adopted IFRS 3 "Business Combinations" to the extent that
it applies to acquisitions after 1 July 2006. Acquisitions before that
date will be recorded under previous accounting rules as the company has
taken advantage of the exemption permitted in IFRS 1.
The following details the disclosure that is required in the first year of adoption if IFRS:
* Group reconciliation of equity at 1 July 2006 and 30 June 2007.
* Group reconciliation of the income statement for the year ended 30 June
2007
* Parent company reconciliation of equity at 1 July 2006 and 30 June 2007.
On the grounds of materiality, no adjustment has been made in respect of the fair value of foreign currency hedging instruments or in
respect of the equity element of the CULS under IFRS.
35. First time adoption of IFRS
Group
Reconciliation of equity at 1 July 2006 (date of transition to IFRS)
Notes UK GAAP Transition IFRS
$'000 $'000 $'000
Non-current assets
Goodwill 5,844 - 5,844
Intangible fixed assets 25 - 25
Property, plant and equipment 746 - 746
6,615 - 6,615
Current assets
Inventories 3,216 - 3,216
Trade and other receivables 11,357 - 11,357
Bank balances and cash 1,901 - 1,901
16,474 - 16,474
Current liabilities
Financial liabilities 1,281 - 1,281
Trade and other payables 13,702 - 13,702
Current tax 906 - 906
Obligations under finance leases 18 - 18
15,907 - 15,907
Net current assets 567 - 567
Non-current liabilities
Financial liabilities 5,141 - 5,141
5,141 - 5,141
Net assets 2,041 - 2,041
Shareholders' equity
Share capital 5,250 - 5,250
Share premium account 723 - 723
Merger reserve (10,884) - (10,884)
Contingent share capital 714 - 714
Retained profits 2 6,256 (18) 6,238
2,059 (18) 2,041
Minority interests (18) 18 -
2,041 - 2,041
35. First time adoption of IFRS
Group
Reconciliation of equity at 30 June 2007
Notes UK GAAP Transition IFRS
$'000 $'000 $'000
Non-current assets
Goodwill 1 12,231 410 12,641
Intangible fixed assets 777 - 777
Property, plant and equipment 975 - 975
13,983 410 14,393
Current assets
Inventories 5,588 - 5,588
Trade and other receivables 17,582 - 17,582
Bank balances and cash 959 - 959
24,129 - 24,129
Current liabilities
Financial liabilities 925 - 925
Trade and other payables 18,349 - 18,349
Current tax 1,121 - 1,121
Obligations under finance leases 118 - 118
20,513 - 20,513
Net current assets 3,616 - 3,616
Non-current liabilities
Financial liabilities 7,987 - 7,987
Obligations under finance leases 187 - 187
8,174 - 8,174
Net assets 9,425 410 9,835
Shareholders' equity
Share capital 6,053 - 6,053
Share premium account 4,845 - 4,845
Merger reserve (10,884) - (10,884)
Contingent share capital 500 - 500
Retained profits 3 8,980 341 9,321
9,494 341 9,835
Minority interests (69) 69 -
9,425 410 9,835
35. First time adoption of IFRS
Group
Notes to the reconciliation of equity
1 - IFRS 3, 'Business Combinations' prohibits the amortisation of goodwill. Removal of the amortisation has increased the goodwill value
by $410,000
2 - The previously recognised debit minority interest is not permitted under IFRS and has been eliminated.
3 - The adjustments to retained earnings are as follows:
At 1 July 2006 (date of transition to IFRS)
Minority interest ($18,000)
Total decrease in retained earnings at 1 July 2006 ($18,000)
At 30 June 2007
Minority interest ($69,000)
Amortisation $410,000)
Total increase to retained earnings at 30 June 2007 $341,000
35. First time adoption of IFRS
Group
Reconciliation of profit for the year ended 30 June 2007
Notes UK GAAP Transition IFRS
$'000 $'000 $'000
Turnover 58,013 - 58,013
Cost of sales (44,212) - (44,212)
Gross profit 13,801 - 13,801
Administration expenses (9,240) 410 (8,830)
Operating profit 4,561 410 4,971
Interest receivable and similar income 346 - 346
Finance costs (1,228) - (1,228)
Profit on ordinary activities before
taxation 3,679 410 4,089
Taxation (794) - (794)
Profit for the financial year 1 2,885 410 3,295
Notes:
1 - The impact of the transition to IFRS is an increase in the profit for the year of $410,000. IFRS 3 'Business Combinations' prohibits
the amortisation of goodwill. Removal of the amortisation for the year increased the profit by �410,000.
Explanation of material adjustments to the cash flow statements
Group
Income taxes of $931,000 paid during the year ended 30 June 2007 are classified as operating cash flows under IFRSs, but were included
in a separate category of tax cash flows under previous GAAP.
Interest paid of $1,106,000 paid during the year ended 30 June 2007 is classified as operating cash flows under IFRSs, but was included
in a category of returns on investments and servicing of finance under previous GAAP.
There are no other material differences between the cash flow statement presented under IFRSs and the cash flow statement presented
under previous GAAP.
Company
Interest paid of $630,000 paid during the year ended 30 June 2007 is classified as operating cash flows under IFRSs, but was included in
a category of returns on investments and servicing of finance under previous GAAP.
There are no other material differences between the cash flow statement presented under IFRSs and the cash flow statement presented
under previous GAAP.
Adoption of IFRS has had no impact on the equity of the parent company and therefore no reconciliation is necessary.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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