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Mattioli Woods PLC (MTW)

  Print      Mail a friend       Annual reports

Tuesday 20 February, 2007

Mattioli Woods PLC

Interim Results

Mattioli Woods PLC
20 February 2007


Press Release                                                   20 February 2007


                               Mattioli Woods plc

                       ('Mattioli Woods' or 'the Group')

                                Interim Results

Mattioli Woods plc (AIM: MTW.L) the specialist pensions consultancy, reports its
Interim Results for the six months ended 30 November 2006.

Highlights

-    Revenue increased by 20.4% to £4.34 million (2005: £3.61million)
-    Profit before interest and tax up 55.1% to £1.52 million (2005: £0.98 million)
-    Earnings per share of 6.3 pence (2005: 5.0 pence)
-    Interim dividend to shareholders of 0.85 pence per share (2005: nil)
-    Normalised operating margin increased to 33.4% (2005: 28.1%)
-    Graduate recruitment is creating platform for growth
-    Continued development of innovative products and services

Commenting on the Interim Results, Bob Woods, Executive Chairman of Mattioli
Woods, said: 'It gives me great pleasure to report revenue up 20.4% and profit
before interest and tax up 55.1% in the six months ended 30 November 2006
compared with the same period in 2005.  We are operating in a sector that has
been stimulated by beneficial legislative changes and strong investment markets.
These factors, together with ongoing demand for self-administered and
self-invested pensions, have resulted in the anticipated increase in our
revenues.  Normalised operating margin also increased to 33.4% (2005: 28.1%) as
a result of efficiencies arising from changes made to our administration systems
in the run-up to A-Day and tight cost control.  Robust trading has continued
into the start of the second half, and I remain confident our business can look
forward to further growth in 2007 and beyond.'


                                    - Ends -


For further information:

Mattioli Woods plc
Bob Woods, Executive Chairman                                                   Tel: +44 (0) 116 240 8700
bob.woods@mattioli-woods.com                                                       www.mattioli-woods.com

Ian Mattioli, Chief Executive                                                   Tel: +44 (0) 116 240 8700
ian.mattioli@mattioli-woods.com                                                    www.mattioli-woods.com

Nathan Imlach, Finance Director                                                 Tel: +44 (0) 116 240 8700
nathan.imlach@mattioli-woods.com                                                   www.mattioli-woods.com

Evolution Securities Limited
Joanne Lake, Corporate Finance                                                  Tel: +44 (0) 113 243 1619
joanne.lake@evosecurities.com                                                       www.evosecurities.com

Media enquiries:
Abchurch Communications
Justin Heath / Louise Thornhill                                                 Tel: +44 (0) 20 7398 7700
justin.heath@abchurch-group.com                                                    www.abchurch-group.com


Chairman's statement

For the third consecutive reporting period since floating on AIM, it gives me
great pleasure to report continued growth, with revenue up 20.4% and profit
before interest and tax up 55.1% in the six months ended 30 November 2006
compared with the same period in 2005.  We are operating in a sector that has
been stimulated by beneficial legislative changes and strong investment markets.
These factors, together with ongoing demand for self-administered and
self-invested pensions, have resulted in the anticipated increase in our
revenues compared to the same period last year.

We now act for over 1,500 small self-administered pension scheme ('SSAS') and
self invested personal pension ('SIPP') clients throughout the UK with funds
under trusteeship at 30 November 2006 totalling over £760 million (2005: £551
million).  We believe an average scheme value of over £500,000 is well in excess
of the industry average.

We have continued to strengthen our investment services, and the successful
launch of two 'structured products' during the period, which link the
performance in major emerging market economies over a five-year period with a
100% capital guarantee, gives us the confidence to develop more products of this
nature going forward.  These products complement our mainstream investment
strategies, which are developed and delivered in partnership with a number of
leading financial institutions.  By maintaining relationships with a wide range
of product providers, we maintain the integrity of our impartial advice.

Trading results

In the six months ended 30 November 2006, increased revenue of £4.34 million
(2005: £3.61 million) was achieved.  Profit before interest and tax was £1.52
million (2005: £0.98 million), with EBITDA of £1.69 million (2005: £1.05
million).

Operating margin increased to 35.1% (2005: 27.2%) as a result of efficiencies
arising from changes made to our administration systems in the run-up to A-Day
and tight cost control.  We also benefited from £0.1 million of non-recurring
revenue associated with the introduction of Pension Simplification, giving a
normalised operating margin for the six months ended 30 November 2006 of 33.4%
(2005: 28.1%).  Costs in the same period last year were inflated by
approximately £0.2 million of one-off costs related to our AIM float and the
move to new office premises.

Time-based fees continue to represent our core revenue stream, with additional
revenues generated from our investment planning and syndicated property
initiatives.  We are seeing increasing demand for good quality commercial
property investment opportunities.  During the period we have facilitated the
creation of four new syndicates (2005: four), which will further enhance our
recurring revenue streams.

Earnings per share were 6.3 pence (2005: 5.0 pence).

Market overview

The SIPP is increasingly being seen as the pension vehicle of choice for a wider
market.  We also see growing demand from our clients for our investment
services, and in particular, good quality syndicated property investment
opportunities.

From April 2007 the Financial Services Authority ('FSA') will assume
responsibility for the regulation of SIPPs.  We believe Mattioli Woods was one
of the first businesses to submit its application for registration, and we are
confident we can comply with all the regulator's requirements.  The expectation
of increased capital adequacy requirements under the new regime has led
commentators to speculate some existing players may wish to exit the sector,
creating further acquisition opportunities.

We remain enthusiastic about the opportunity to develop consultancy services in
the Final Salary Scheme market, which we anticipate will also have a positive
impact on our SIPP business.

Dividends

The Board is pleased to announce an interim dividend for the half year ended 30
November 2006 of 0.85 pence (2005: nil) per ordinary share, in line with our
previously stated policy.  I reiterate our intention to grow dividend
distributions sensibly going forward.  The interim dividend will be paid on 23
March 2007 to shareholders on the Register at the close of business on 2 March
2007.

Staff

Our people have demonstrated an enormous amount of enthusiasm and commitment in
responding to the challenges faced by our fast-growing organisation.  Increasing
capacity remains crucial in an environment of growing demand, and our graduate
recruitment programme remains a key part of this strategy.  Seven new graduates
joined the Group during the period (2005: one), increasing our total headcount
to 96.  Our increased business profile following the admission to AIM has also
enhanced our ability to recruit experienced pension administration and support
staff.

I have highlighted previously that Mattioli Woods enjoys a strong team spirit
and commitment from its entire staff, and it remains our aim to build on that
culture by continuing to facilitate wider equity participation within the
organisation.  The introduction of the Consultants' Share Option Plan in
September 2006 was an important step towards this objective.

Shareholders

I am delighted that we have maintained a broad institutional shareholder base
since joining the AIM market.  We are also pleased to be developing a wider
private client shareholder base.  It is your board's intention to continue to
communicate fully with all our shareholders, current and future, and in so doing
build further awareness of Mattioli Woods over the coming years.

Outlook

Robust trading has continued into the start of the second half.  As the SIPP
market develops, we expect our consultancy team to continue to attract new
business at the top end of the market.  The arguments in favour of
self-administered and self-invested pensions have been strengthened by the
Government's introduction of Pension Simplification in April 2006.

We were pleased the Government has since confirmed the abolition of compulsory
annuity purchase after the age of 75.  This removes a long-standing drawback to
pension fund investment for many of our existing and potential clients.
However, we were disappointed by the Chancellor's announcement that pension
funds are to be subject to an onerous tax charge in the event of death after the
age of 75.  Whilst we await clarification of the Government's position on these
issues, we expect these proposals to widen planning opportunities for our
clients.

Against the backdrop of uncertain markets and a rapidly changing world economic
environment, we expect there to be further opportunities for growth in our core
markets.  I believe we are well placed to capitalise on these opportunities and
remain confident that our business can look forward to continued growth in 2007
and beyond.

Bob Woods
Chairman
19 February 2007


Independent review report to Mattioli Woods plc

Introduction

We have been instructed by the Group to review the financial statements which
comprise the condensed consolidated interim income statement, condensed
consolidated interim statement of recognised income and expense, condensed
consolidated interim balance sheet, condensed consolidated interim statement of
cash flows and related notes.  We have read the other information in the interim
statement and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

This report, including the conclusion, has been prepared for and only for the
Group for the purpose of their interim statement and for no other purpose.  We
do not, therefore, in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into
whose hands it may come, save as expressly agreed by our prior consent in
writing.

Directors' responsibilities

The interim statement, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors.  The Directors
are responsible for preparing the interim statement in accordance with the AIM
Market Rules which require that the accounting policies and presentation applied
to the interim figures must be consistent with those that will be adopted in the
Group's annual accounts.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board as if that Bulletin applied.  A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed.  A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions.  It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit.  Accordingly we do not express an audit
opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 November 2006.

Baker Tilly
Registered Auditor
Chartered Accountants
2 Whitehall Quay
Leeds, LS1 4HG



Condensed consolidated interim income statement

                                                          Notes         Unaudited       Unaudited         Audited
                                                                       Six months      Six months            Year
                                                                            ended           ended           ended
                                                                           30 Nov          30 Nov          31 May
                                                                             2006            2005            2006
For the six months ended 30 November 2006                                       £               £               £

Revenue                                                   4             4,342,664       3,605,970       7,572,845

Employee benefits expense                                             (1,878,673)     (1,480,420)     (3,271,679)
Other administrative expenses                                           (770,282)     (1,072,854)     (1,973,425)
Depreciation and amortisation                                           (166,047)        (70,136)       (169,184)
Profit/(loss) on disposal of property, plant and                          (3,876)               -               -
equipment

Operating profit before financing                         4             1,523,786         982,560       2,158,557

Financial income                                                           53,187          32,174         103,731
Financial expenses                                                           (51)        (76,760)        (94,010)

Net financing income/(costs)                                               53,136        (44,586)           9,721

Profit before tax                                                       1,576,922         937,974       2,168,278

Income tax expense                                        5             (495,759)       (304,063)       (674,585)

Profit for the period                                                   1,081,163         633,911       1,493,693

Attributable to:
Equity holders of the parent                                            1,081,163         633,911       1,493,693

Earnings per ordinary share:
Basic (pence)                                             6                   6.3             5.0            10.0
Diluted (pence)                                           6                   6.3             5.0            10.0

The operating profit for each period arises from the Group's continuing
operations.


Condensed consolidated interim statement of recognised income and expense

For six months ended 30 November 2006                                  Unaudited       Unaudited         Audited
                                                                      Six months      Six months            Year
                                                                           ended           ended           ended
                                                                          30 Nov          30 Nov          31 May
                                                                            2006            2005            2006
                                                                               £               £               £

Profit for the period                                                  1,081,163         633,911       1,493,693

Total recognised income and expense for the period                     1,081,163         633,911       1,493,693




Condensed consolidated interim balance sheet

                                                    Notes         Unaudited          Unaudited            Audited
                                                                30 Nov 2006        30 Nov 2005        31 May 2006
As at 30 November 2006                                                    £                  £                  £

Assets
Property, plant and equipment                       8               374,404            379,481            390,496
Intangible assets                                                 5,744,065          5,243,151          5,835,970
Deferred income tax assets                          5                41,738              4,667             16,946

Total non-current assets                                          6,160,207          5,627,299          6,243,412


Trade and other receivables                                       4,688,203          3,069,885          5,105,177
Cash and cash equivalents                          10             1,593,425          3,028,215            441,160

Total current assets                                              6,281,628          6,098,100          5,546,337

Total assets                                                     12,411,835         11,725,399         11,789,749

Equity
Issued capital                                     11               172,159            170,455            170,455
Share premium                                      11             5,601,458          5,321,151          5,321,151
Other reserves                                     11             2,086,545          2,069,870          2,094,687
Retained earnings                                  11             2,915,459          1,213,150          2,072,932

Total equity attributable to equity holders of                   10,775,621          8,774,626          9,659,225
the parent

Non-current liabilities
Deferred income tax liabilities                     5                     -              8,225                  -
Provisions and other liabilities                                    130,607            186,118            144,443

                                                                    130,607            194,343            144,443

Current liabilities
Trade and other payables                                            888,669            669,054          1,193,196
Current income tax liabilities                      5               515,841            306,486            374,107
Interest bearing loans and borrowings                                     -          1,200,000                  -
Bank overdraft                                     10                     -            450,644            347,705
Provision and other liabilities                                     131,097            130,246             71,073

                                                                  1,535,607          2,756,430          1,986,081

Total liabilities                                                 1,666,214          2,950,773          2,130,524

Total equities and liabilities                                   12,441,835         11,725,399         11,789,749



Condensed consolidated interim statement of cash flows

                                                          Notes       Unaudited       Unaudited         Audited
                                                                     Six months      Six months            Year
                                                                          ended           ended           ended
                                                                         30 Nov          30 Nov          31 May
                                                                           2006            2005            2006
For the six months ended 30 November 2006                                     £               £               £

Cash flows from operating activities
Cash receipts from customers                                          4,661,087       3,317,554       6,927,700
Cash paid to suppliers and employees                                (2,869,943)     (2,396,932)     (4,593,034)
New loans advanced to property syndicates                           (1,817,442)         (3,540)     (1,777,034)
Loan repayments from property syndicates                              1,915,994               -          95,540

Cash generated from operations                                        1,889,696         917,082         653,172

Interest paid                                                              (51)        (76,760)        (94,010)
Income taxes paid                                         5           (360,607)       (593,753)       (904,045)

Net cash from operating activities                                    1,529,038         246,569       (344,883)

Cash flows from investing activities
Proceeds from sale of property, plant and equipment       8                 474               -               -
Interest received                                                        53,187          32,174         103,731
Acquisition of subsidiaries, net of cash received                             -            (15)               -
Acquisition of property, plant and equipment              8            (62,400)       (209,232)       (273,768)
Acquisition of other investments                                              -       (383,791)     (1,091,316)

Net cash from investing activities                                      (8,739)       (560,864)     (1,261,353)

Cash flows from financing activities
Proceeds from the issue of share capital                  11            225,001       6,000,001       6,000,001
Payment of costs of share issue                                               -       (576,385)       (576,385)
Proceeds from new borrowings                                                  -       1,200,000       1,200,000
Redemption of preference shares                                               -     (2,000,000)     (2,000,000)
Repayments of borrowings                                                      -               -     (1,200,000)
Repayment of Directors' loans                                           (6,694)     (3,019,298)     (3,011,473)
Dividends paid                                            7           (238,636)               -               -

Net cash from financing activities                                     (20,329)       1,604,318         412,143


Net increase/(decrease) in cash and cash equivalents                  1,499,970       1,290,023     (1,194,093)
Cash and cash equivalents at start period                 10             93,455       1,287,548       1,287,548

Cash and cash equivalents at end period                               1,593,425       2,577,571          93,455



Notes to the condensed consolidated interim financial statements

1       Corporate information

Mattioli Woods plc ('the Company') is a public limited company incorporated and
domiciled in England and Wales.  The Company's ordinary shares are traded on the
AIM market of the London Stock Exchange plc.  The condensed consolidated interim
financial statements of the Company for the six months ended 30 November 2006
comprise the Company and its subsidiaries (together referred to as the 'Group').
The condensed consolidated interim financial statements were authorised for
issue in accordance with a resolution of the Directors on 19 February 2007.

2.1    Statement of compliance

The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ('IFRSs') for
interim financial statements.  These are the Group's first IFRS condensed
consolidated interim financial statements for part of the period covered by the
first IFRS annual financial statements and IFRS 1 First-time Adoption of
International Financial Reporting Standards has been applied.  The condensed
consolidated interim financial statements do not include all of the information
required for full annual financial statements.

An explanation of how the transition to IFRSs has affected the financial
position, financial performance and cash flows of the Group is provided in Notes
14 and 15.  These notes include reconciliations of equity and profit or loss for
comparative periods reported under UK Generally Accepted Accounting Practice ('
UK GAAP') to those reported periods under IFRSs.

2.2    Basis of preparation

The preparation of interim financial statements in conformity with IAS 34
Interim Financial Reporting requires management to make judgements, estimates
and assumptions that effect the application of policies and reported amounts of
assets and liabilities, income and expenses.  Actual results may differ from
these estimates.

These condensed consolidated interim financial statements have been prepared on
the basis of IFRSs in issue that are effective or available for early adoption
at the Group's first IFRS annual reporting date, 31 May 2007.  Based on these
IFRSs, the Board of Directors has made assumptions about the accounting policies
expected to be adopted when the first IFRS annual financial statements are
prepared for the year ended 31 May 2007.

The IFRSs that will be effective or available for voluntary early adoption in
the annual financial statements for the period ended 31 May 2007 are still
subject to change and to the issue of additional interpretation(s), and
therefore cannot be determined with certainty.  Accordingly, the accounting
policies for that annual period that are relevant to this interim financial
information will be determined only when the first IFRS financial statements are
prepared at 31 May 2007.

The preparation of the condensed consolidated interim financial statements in
accordance with IAS 34 resulted in changes to the accounting policies as
compared with the most recent annual financial statements prepared under UK
GAAP.  The accounting policies set out below have been applied consistently to
all periods presented in these condensed consolidated interim financial
statements.  They have also been applied in preparing an opening IFRS balance
sheet at 1 June 2005 for the purposes of the transition to IFRSs, as required by
IFRS 1.  The impact of the transition from UK GAAP to IFRSs is explained in
Notes 14 and 15.

The accounting policies have been applied consistently throughout the Group for
the purposes of these condensed consolidated interim financial statements.

2.3    Basis of consolidation

The condensed consolidated interim financial statements consolidate the
financial statements of the Company and its subsidiary undertakings drawn as at
November each year.  The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using consistent accounting
policies.

Subsidiaries are fully consolidated from the date of acquisition, being the date
on which the Group obtains control, and continue to be consolidated until the
date that such control ceases.  Control exists when the Company has the power,
directly or indirectly,  to govern the financial and operating policies of an
entity so as to obtain benefit from its activities and is achieved through
direct or indirect ownership of voting rights; currently exercisable or
convertible potential voting rights; or by way of contractual agreement.    All
inter-group balances, transactions, income and expenses and profits and losses
resulting from inter-group transactions that are recognised in assets are
eliminated in full.

2.4    Significant accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial years, are discussed below.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis.
This requires an estimation of the fair value less cost to sell of the
cash-generating unit to which the goodwill is allocated.  Estimating a fair
value less cost to sell amount requires management to make an estimate of the
realisable value of the cash generating unit.  The carrying amount of goodwill
at 30 November 2006 was £2,347,130 (2005: £2,347,130).

Deferred tax assets

Deferred tax assets include temporary differences related to employee benefits
settled via the issue of share options.  Recognition of the deferred tax assets
assumes share options will have a positive value at the date of vesting, which
is greater than the share option cost recognised in the income statement.

Recoverability of accrued time costs

The Group recognises accrued income in respect of time costs incurred on
clients' affairs during the accounting period, which have not been invoiced at
the balance sheet date.  This requires an estimation of the recoverability of
the time costs incurred but not invoiced to clients.  The carrying amount of
accrued time costs at 30 November 2006 was £1,107,594 (2005: £960,537).

Accrued commission income

Accrued commission income is recognised in respect of commissions due to the
Group on investments and bank deposits placed during the accounting period which
have not been received at the balance sheet date.  This requires an estimation
of the amount of commission income that will be received subsequent to the
balance sheet date in respect of the accounting period.  The carrying amount of
accrued commission income at 30 November 2006 was £485,956 (2005: £395,262).

Deferred consideration

The Group has entered into certain acquisition agreements that provide for
deferred consideration to be paid via an earn-out.  A provision is recognised
for all amounts management anticipates will be paid under the relevant
acquisition agreement.  This requires management to make an estimate of the
expected future cash flows from the acquired client portfolio and also to choose
a suitable discount rate for the calculation of the present value of those cash
flows.  The deferred consideration provision at 30 November 2006 was £103,030
(2005: £174,968).

2.5    Summary of significant accounting policies

Property, plant and equipment

Plant and equipment is stated at cost, excluding the costs of day-to-day
servicing, less accumulated depreciation and accumulated impairment in value.
Such cost includes the cost of replacing part of the plant and equipment when
that cost is incurred, if the recognition criteria are met.

Depreciation is provided on all property, plant and equipment at rates
calculated to write each asset down to its estimated residual value over its
expected useful life as follows:

•  Computer and office equipment      20/25% per annum on written down values;
•  Fixtures and fittings              20% per annum on written down values; and
•  Motor vehicles                     25% per annum on written down values.

An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal.  Any gain or
loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in
the income statement in the year the asset is derecognised.

The asset's residual values, useful lives and methods of depreciation are
reviewed, and adjusted if appropriate, at each financial year end.

Borrowing costs

Borrowing costs are recognised as an expense when incurred.

Business combinations and goodwill

Business combinations are accounted for using the acquisition accounting method.
This involves recognising identifiable assets and liabilities of the acquired
business at fair value.

Goodwill acquired in a business combination is initially measured at cost, being
the excess of the cost of the business combination over the Group's interest in
the net fair value of the acquiree's identifiable assets, liabilities and
contingent liabilities.  Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.  For the purpose of impairment
testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Group's cash-generating units, or groups of
cash-generating units, that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or liabilities of the Group
are assigned to those units or groups of units.  Each unit or group of units to
which the goodwill is allocated:

•                     Represents the lowest level within the Group at which the
goodwill is monitored for internal management purposes; and

•                     Is not larger than a segment based on the Group's
reporting format determined in accordance with IAS 14 Segment Reporting.

If a subsidiary was to be sold, the difference between the selling price and the
net assets and amortised goodwill would be recognised in the income statement.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at
cost.  The cost of intangible assets acquired in a business combination is fair
value as at the date of acquisition.  Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses.

The useful lives of intangible assets are assessed to be either finite or
indefinite.

Any intangible assets assessed as having finite lives are amortised over their
useful economic life and assessed for impairment whenever there is an indication
that the intangible asset may be impaired.  The amortisation period and the
amortisation method for an intangible asset with a finite useful life is
reviewed at least each financial year end.  Changes in the expected useful life
or the expected pattern of consumption of future economic benefits embodied in
the asset are accounted for by changing the amortisation period or method, as
appropriate, and treated as changes in accounting estimates.  The amortisation
expense on intangible assets with finite lives is recognised in the income
statement.

The Group amortises individual client portfolios acquired through business
combinations, on the basis of clients lost from the portfolio during the period.
Client portfolios acquired through business combinations are allocated for
amortisation testing purposes to three cash-generating units as follows:

•         Individual clients acquired on 2 September 2003 as part of the
unincorporated business Mattioli Woods Pension Consultants ('the Partnership
portfolio');

•         Individual clients acquired on 20 June 2005 as part of the Geoffrey
Bernstein portfolio; and

•         Individual clients acquired on 27 January 2006 as part of the Suffolk
Life portfolio.

Intangible assets with indefinite useful lives are tested for impairment
annually at the cash generating unit level.  Such intangibles are not amortised.
The useful life of an intangible asset with an indefinite life is reviewed
annually to determine whether indefinite life assessment continues to be
supportable.  If not, the change in the useful life assessment from indefinite
to finite is made on a prospective basis.

A summary of the policies applied to the Group's goodwill and intangible assets
is as follows:


                            Goodwill                Client portfolios          Software

Useful life                 Indefinite              Finite                     Finite
Measurement method used     Annual impairment       Amortised over the useful  Amortised over the useful
                            review                  economic life on the basis economic life on a
                                                    of the number of clients   reducing balance basis
                                                    lost from the portfolio

Internally generated or     Acquired                Acquired                   Both
acquired

Impairment of non-financial assets

The Group assesses at each reporting date whether there is any indication that
an asset may be impaired.  If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of the
asset's recoverable amount.  An asset's recoverable amount is the higher of an
asset's, or cash generating unit's fair value less cost to sell and its value in
use and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent from those of other assets or
group of assets.

When the carrying amount of an asset exceeds its recoverable amount, the asset
is considered impaired and is written down to its recoverable amount.  In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money, and the risks specific to the asset.  In
determining fair value less cost to sell, an appropriate valuation model is use.
These calculations are corroborated by valuation multiples or other available
fair value indicators.

Impairment losses of continuing operations are recognised in the income
statement.

For assets excluding goodwill, an assessment is made at each reporting date as
to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased.  If such indication exists, the Group
makes an estimate of recoverable amount.  A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to
determine the asset's recoverable amount since the last impairment loss was
recognised.  If that is the case, the carrying amount of the asset is increased
to its recoverable amount.  That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years.  Such reversal is recognised
in the income statement unless the asset is carried at revalued amount, in which
case reversal is treated as a revaluation increase.   Impairment losses
recognised in relation to goodwill are not reversed for subsequent increases in
its recoverable amount.

The following criteria are also applied in assessing impairment of specific
assets:

Goodwill

Goodwill is reviewed for impairment, annually or more frequently if events or
changes in circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of the
cash-generating unit (or group of cash-generating units) to which the goodwill
relates.  Where the recoverable amount of the cash-generating unit (or group of
cash-generating units) is less that the carrying amount of the cash-generating
unit (or group of cash-generating units) to which goodwill has been allocated,
an impairment loss is recognised.  Impairment losses relating to goodwill cannot
be reversed in future periods.   The Group performs its annual impairment test
of goodwill as at 31 May.

Goodwill was tested for impairment at 1 June 2005, the date of transition to
IFRSs, even though no indication of impairment existed.

Intangible assets

Intangible assets with indefinite useful lives will be tested for impairment
annually as of 31 May either individually or at the cash-generating unit level,
as appropriate.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.  After initial
measurement, loans and receivables are subsequently carried at amortised cost
using the effective interest method, less any allowance for impairment.
Amortised cost is calculated taking into account any discount or premium on
acquisition and includes fees that are an integral part of the effective
interest rate and transaction costs.  Gains and losses are recognised in the
income statement when the loans and receivables are derecognised or impaired, as
well as through the amortisation process.

Impairment of financial assets

The Group assesses at each balance sheet date whether a financial asset or group
of financial assets is impaired.

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables
carried at amortised cost has been incurred, the amount of the loss is measured
as a difference between the assets carrying amount and the present value of
estimated future cash flows (excluding future expected credit losses that have
not been incurred) discounted at the financial assets original effective
interest rate (i.e. the effective interest rate computed at initial
recognition).  The carrying amount of the asset is reduced through the use of an
allowance account.  The amount of the loss shall be recognised in profit or
loss.

The Group first assesses whether objective evidence of impairment exists
individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually
significant.  If it is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not,
the asset is included in a group of financial assets with similar credit risk
characteristics and that group of financial assets is collectively assessed for
impairment.  Assets that are individually assessed for impairment and for which
an impairment loss is or continues to be recognised are not included in a
collective assessment for impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment
was recognised, the previously recognised impairment loss is reversed.  Any
subsequent reversal of an impairment loss is recognised in profit or loss, to
the extent that the carrying value of the asset does not exceed its amortised
cost at the reversal date.

Trade and other receivables

In relation to trade and other receivables, a provision for impairment is made
when there is objective evidence (such as the probability of insolvency or
significant financial difficulties of the debtor) that the Group will not be
able to collect all of the amounts due under the original terms of the invoice.
The carrying amount of the receivable is reduced through use of an allowance
account.  Impaired debts are derecognised when they are assessed as
un-collectable.

Leases

The determination of whether an arrangement is, or contains a lease, is based on
the substance of the arrangement at inception date of whether the fulfilment of
the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset.  A reassessment is made after
inception of the lease, only if one of the following applies:

a)                              There is a change in contractual terms, other
than a renewal or extension of the arrangement;

b)                              A renewal option is exercised or extension
granted, unless the term of the renewal or extension was initially included in
the lease term;

c)                              There is a change in the determination of
whether fulfilment is dependent on a specified asset; or

d)                              There is substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the
date when the change in circumstances gave rise to the reassessment for
scenarios a), c) or d) and at the date of renewal or extension period for
scenario b).

The Group has no lease arrangements that were entered into prior to 1 June 2005.

Group as a lessee

Operating lease payments are recognised as an expense in the income statement on
a straight line basis over the lease term.

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at banks and in
hand and short-term deposits with an original maturity of three months or less.

For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.

Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the
consideration received less directly attributable transaction costs.  After
initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method.

Gains and losses are recognised in the income statement when the liabilities are
derecognised as well as through the amortisation process.

Interest bearing borrowings are recognised initially at fair value less
attributable transaction costs.  Subsequent to initial recognition, interest
bearing borrowings are stated at amortised cost, with any difference between
cost and redemption value being recognised in profit or loss over the period of
the borrowings on an effective interest basis.

Provisions

Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.  Where the
Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only
when the reimbursement is virtually certain.  The expense relating to any
provision is presented in the income statement, net of a reimbursement.  If the
effect of the time value of money is material, provisions are discounted using a
current pre-tax rate which reflects, where appropriate, the risks specific to
the liability.  Where discounting is used, the increase in the provision due to
the amount of time is recognised as a finance cost.

Share based payments

Employees (including senior executives) of the Group receive remuneration in the
form of share based payment transactions, whereby employees render services as
consideration for equity instruments ('equity settled transactions').

In situations where some or all of the goods or services received by the entity
as consideration for equity instruments cannot be specifically identified, they
are measured as the difference between the fair value of the share based payment
and the fair value of any identifiable goods or services received at the grant
date.

The cost of equity-settled transactions with employees is measured by reference
to the fair value at the date on which they are granted and is recognised,
together with a corresponding increase in equity, as an expense over the period
in which the performance and/or service conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled to the award ('the
vesting date').  Fair value is determined using the Black Scholes Merton pricing
model.

The cumulative expense recognised for equity settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of equity
instruments that will ultimately vest.  The income statement charge or credit
for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether or not the market condition is satisfied,
provided that all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified, the minimum expense
recognised is the expense if the terms had not been modified.  An expense is
recognised for any modification, which increases the total fair value of the
share based payment arrangement, or is otherwise beneficial to the employee as
measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on
the date of cancellation, and any expense not yet recognised for the award is
recognised immediately.  However, if a new award is substituted for the
cancelled award, and designated as a replacement award on the date it is
granted, the cancelled and new awards are treated as if they were a modification
of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of earnings per share (further details are given in
Note 6).

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates, and other sales taxes or duty.  The following specific
recognition criteria must also be met before revenue is recognised.

Rendering of services

The Group invoices clients six months in arrears for time costs incurred in
advising on and administering their affairs.  Revenue is recognised as time
costs accrue under fees and services agreements with clients, by reference to
the estimated recoverability of the time incurred but not invoiced.
Recoverability is measured by reference to the time costs incurred in the 12
months which ended six months prior to the balance sheet date, as a percentage
of the total time costs invoiced in respect of the same 12 month period.  No
revenue is recognised if there are significant uncertainties regarding recovery
of the time incurred.

Commission income

Commission is recognised as being earned at the point when an investment of
funds has been made by the client and submitted to the product provider.

Interest income

Revenue is recognised as interest accrues (using the effective interest method
that is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial instrument to the net carrying amount of the
financial asset).

Taxes

Current income tax

Current income tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or repaid to the taxation
authorities.  The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the balance sheet date.

Current income tax relating to items recognised directly in equity is recognised
in equity and not in the income statement.

Deferred income tax

Deferred income tax is provided using the liability method on temporary
differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary
differences, except:

•                     Where the deferred income tax liability arises from the
initial recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and

•                     In respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests in joint ventures
where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the
foreseeable future.

Deferred income tax assets are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except:

•                     Where the deferred income tax asset relating to the
deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the
time of the transaction, effects neither the accounting profit nor taxable
profit or loss; and

•                     In respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests in joint ventures,
deferred income tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be
utilised.

The carrying amount of deferred income tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.  Unrecognised deferred income tax assets are
reassessed at each balance sheet date and are recognised to the extent that it
has become probable that future taxable profit will allow deferred tax asset to
be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantially enacted at the balance sheet date.

Deferred income tax relating to items recognised directly in equity is
recognised in equity and not in the income statement.

Deferred income tax assets and deferred income tax liabilities are offset, if a
legally enforceable right exists to set off current tax assets against current
income tax liabilities and the deferred income taxes relate to the same taxable
entity and the same taxation authority.

Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax,
except:

•                     Where the sales tax incurred on a purchase of assets or
services is not recoverable from the taxation authority, in which case the sales
tax is recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and

•                     Receivables and payables that are stated with the amount
of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the balance sheet.

Pension costs

The Company makes discretionary payments into the personal pension schemes of
certain employees.  Contributions are recognised in the income statement as they
are payable.

Segment reporting

A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), which is subject to risks and
rewards that are different to those of other business segments.

The Group provides products or services within one economic environment
(geographical segment), the United Kingdom.

3.      Seasonality of operations

The Group's operations are not subject to any recurrent seasonal fluctuations as
a result of external factors.  Historically, revenues in the second-half year
typically have been higher than in the first half, due to SSAS scheme year-ends
being linked to the sponsoring company's year-end, which is often in  December
or March.  However, with the growth in the number of SIPP schemes under
administration and further diversification of the Group's revenue streams in
recent periods, the Board of Directors believes the seasonal impact of SSAS
scheme year-ends will no longer be material.

4.      Segment reporting

The primary segment reporting format is determined to be business segments, as
the Group's risks and returns are affected predominantly by differences in the
products and services provided to clients.  No secondary geographic basis for
segment information is reported, as the Group operates exclusively within the
United Kingdom.  Each segment represents a revenue stream subject to risks and
returns that are different to other business segments, although each business
segment's products and services are offered to the same market, as follows:

•         Time-based fees earned for setting up and administering pension
schemes.   Additional fees are generated from consultancy services provided for
special one-off activities;

•         Investment planning revenues generated from the placing of investments
on clients' behalf with banks and other financial institutions; and

•         Property syndicate revenues generated where the Group facilitates
commercial property transactions on behalf of its clients.


There are no transfers between business segments.

Business segments

Each reportable business segment utilises the same intangible and tangible
assets, and the reportable business segments have been financed together, rather
than individually.  The reportable business segments are managed together, as
one business operating from one location.  Accordingly, only employee benefit
expenses and other direct costs have been allocated across the reportable
business segments.

The following table presents revenue and profit and certain asset and liability
information regarding the Group's business segments:


4.   Segment reporting (continued)

                             Time-based fees             Investment planning          Property syndicates               
                       Six        Six                   Six        Six                  Six       Six
                    months     months       Year     months     months      Year     months    months       Year
                     ended      ended      ended      ended      ended     ended      ended     ended      ended
                    30 Nov     30 Nov     31 May     30 Nov     30 Nov    31 May     30 Nov    30 Nov     31 May
                      2006       2005       2006       2006       2005      2006       2006      2005       2006
Business                 £          £          £          £          £         £           £        £          £        
 segments

Total revenue    2,010,838  1,353,333  3,281,859  1,883,547  1,693,367  3,335,582    448,279  559,270    955,404  

Results

Employee         1,403,397  1,048,918  2,405,719    185,062    176,164    362,276    290,214  255,338    503,684  
benefits
expense                                                                                                 
Other              141,240    115,333    285,627     43,475    294,479    451,463          -        -          -    
administrative
expense

Segment results    466,201    189,082    590,513  1,655,010  1,222,724  2,521,843    158,065  303,932    451,720  

Unallocated                                                                                                
expenses

Operating                                                                                                
profit before
financing

Net finance                                                                                                 
income/(costs)

Profit before                                                                                          
income tax

Income tax                                                                                             
expense

Net profit for                                                                                         
the period

Assets and
liabilities
Segment assets   2,123,468  1,923,918  2,113,931    485,956    395,262    451,630  1,988,468  591,557  2,280,676  
Unallocated                                                                                              
assets

Total assets                                                                                            

Segment              3,114          -     43,014     12,674     12,050     12,674          -        -          -     
liabilities
Unallocated                                                                                              
liabilities


                                                      Total
                                     Six                Six         
                                  months             months         
                                   ended              ended    
                                  30 Nov             30 Nov         Year ended
                                    2006               2005        31 May 2006

Business segments                      £                  £                  £

Total revenue                  4,342,664          3,605,970          7,572,845

Results

Employee benefits
expense                        1,878,673          1,480,420          3,271,679
Other administrative
expense                          184,715            409,812            737,090

Segment results                2,279,276          1,715,738          3,564,076

Unallocated expenses             755,490            733,178          1,405,519

Operating profit before
financing                      1,523,786            982,560          2,158,557

Net finance
income/(costs)                    53,136            (44,586)             9,721

Profit before
income tax                     1,576,922            937,974          2,168,278

Income tax expense              (495,759)          (304,063)          (674,585)

Net profit for
the period                     1,081,163            633,911          1,493,693

Assets and liabilities
Segment assets                 4,597,892          2,910,737          4,846,237
Unallocated
assets                         7,843,943          8,814,662          6,943,512

Total assets                  12,441,835         11,725,399         11,789,749

Segment
liabilities                       15,788             12,050             55,688
Unallocated
liabilities                    1,650,426          2,938,723          2,074,836

Total
liabilities                    1,666,214          2,950,773          2,130,524


5.      Income taxes

Current tax

Current tax expense for the interim periods presented is the expected tax
payable on the taxable income for the period, calculated as the estimated
average annual effective income tax rate applied to the pre-tax income of the
interim period.

Current tax for current and prior periods is classified as a current liability
to the extent that it is unpaid.  Amounts paid in excess of amounts owed are
classified as a current asset.

Deferred tax

The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using the estimated average annual effective income tax rate for the interim
periods presented.

The primary components of the entity's recognised deferred taxed assets include
temporary differences related to employee benefits, provisions and other items.

The primary components of the entity's deferred tax liabilities include
temporary differences related to property, plant and equipment and intangible
assets.

The recognition of deferred tax in the income statement arises from the
origination and the reversal of temporary differences and the effects of changes
in tax rates.  The primary component of the deferred tax credit for the six
months ended 30 November 2006 of £6,581 (2005: £3,511) is related to temporary
differences arising on share-based payments to employees.

The total deferred tax asset recognised directly in equity was £18,211 for the
six months ended 30 November 2006 (2005: £1,156).

Reconciliation of effective tax rates

The current tax expense for the six months ended 30 November 2006 was calculated
based on the estimated average annual effective income tax rate of 31.4% (2005:
32.4%), as compared to the tax rates expected to be enacted or substantively
enacted at the balance sheet date of 30% (2005: 30%).  Differences between the
estimated average annual effective income tax rate and statutory rate include,
but are not limited to the effect of non-deductible expenses, tax incentives not
recognised in profit or loss and under/(over) provisions in previous periods

6.      Earnings per ordinary share

Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the  period.

Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted
earnings per share computations:
                                                                     Unaudited        Unaudited          Audited
                                                                    Six months       Six months             Year
                                                                         ended            ended            ended
                                                                        30 Nov           30 Nov           31 May
                                                                          2006             2005             2006

                                                                             £                £                £

Net profit and diluted net profit attributable to equity             1,074,582          618,698        1,493,693

 holders of the Company

Weighted average number of ordinary shares:                          Thousands        Thousands        Thousands

Issued ordinary shares at start period                                  17,045           12,500           12,500
Effect of shares issued in November 2005                                     -              199            2,366
Effect of shares issued in October 2006                                     42                -                -

Basic weighted average number of shares                                 17,087           12,699           14,866

Dilutive potential ordinary shares:
- non-employee share options                                                48                -               28

Diluted weighted average number of shares                               17,135           12,699           14,894


There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.

7.      Dividends paid and proposed
                                                                      Unaudited       Unaudited           Audited
                                                                     Six months      Six months              Year
                                                                          ended           ended             ended
                                                                         30 Nov          30 Nov            31 May
                                                                           2006            2005              2006
                                                                              £               £                 £
Paid during the year period:
Equity dividends on ordinary shares:
Final dividend for the year ended 31 May 2006: 1.40p                    238,636               -                 -

Dividends paid                                                          238,636               -                 -

Proposed  for approval:
Interim dividend for the half year ended 30 November 2006:              146,335               -                 -
0.85p (2005: nil)
Final dividend for the year ended 31 May 2006: 1.40p                          -         238,636                 -

Dividends proposed                                                      146,335         238,636                 -

The proposed interim dividend was approved on 22 January 2007.

8.      Property, plant and equipment

Acquisitions and disposals

During the six months ended 30 November 2006, the Group acquired assets with a
cost of £62,400 (2005: £209,232).  Assets with a net book value of £4,350 were
disposed of during the six months ended 30 November 2006 (2005: nil), resulting
in a loss on disposal of £3,876 (2005: nil).

Capital commitments

During the six months ended 30 November 2006, the Group entered into a contract
to purchase and install new accounting software for £123,075 (2005: nil).

9.      Share based payments

Share Option Plan

The Company operates the Share Option Plan by which certain of the executive
directors and other senior executives are able to subscribe for 875,000 ordinary
shares in the Company.  The exercise price of the options is £1.32, equal to the
placing price of the shares issued on 15 November 2005.  The options vest if and
when profit-based performance conditions between 1 June 2005 and 31 May 2011 are
fulfilled.   A failure to meet these performance conditions causes the options
to lapse.  The contractual life of each option once granted expires on 31 May
2015.

Consultants' Share Option Plan

On 5 September 2006, 255,684 options to subscribe for ordinary shares in the
Company were granted to senior executives under the Consultants' Share Option
Plan.  The exercise price of the options is £2.21, equal to the market price of
the shares at the close of business on the day immediately preceding the date of
grant.  The options vest if and when the option holder achieves certain
individual performance hurdles.  If these performance hurdles, which are linked
to individual sales revenues, are not met over the five financial years
commencing on 1 June before the date of grant, the options lapse.

The expense for share-based payments made in respect of employee services under
the Share Option Plan and the Consultants' Share Option Plan are recognised over
their expected vesting periods.  The expense recognised during the six months
ended 30 November 2006 is £30,658 (2005: £11,703), which entirely arises from
equity-settled share-based payment transactions.

The fair value of equity-settled share options granted is estimated as at the
date of grant using the Black-Scholes-Merton model, taking into account the
terms and conditions upon which the options were granted.  The following table
lists the inputs to the model used for the six months ended 30 November 2006:


                                                                                   Consultants'
                                                                                   Share Option
                                                                                           Plan     Share Option
                                                                                                            Plan

Share price at date of grant                                                              £2.20            £1.05
Option exercise price                                                                     £2.21            £1.32
Expected life of option (years)                                                               7                6
Expected share price volatility (%)                                                        30.0             30.0
Dividend yield (%)                                                                          1.0              1.0
Risk-free interest rate (%)                                                                4.58             4.58


The share price at date of grant for options issued under the Share Option Plan
and Consultants' Share Option Plan is based on the market value of the shares on
that date as agreed by HM Revenue & Customs.  The expected life of the options
is based on historical data and is not necessarily indicative of exercise
patterns that may occur.  The expected volatility reflects the assumption that
the historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome.   No other features of options grant were
incorporated into the measurement of fair value.

10.        Cash and cash equivalents

For the purpose of the interim condensed consolidated cash flow statement, cash
and cash equivalents are comprised of the following:

                                                                Unaudited           Unaudited             Audited
                                                              30 Nov 2006         30 Nov 2005         31 May 2006
                                                                        £                   £                   £

Cash at banks and on hand                                       1,593,425           3,028,215             441,160
Short-term deposits                                                     -                   -                   -

                                                                1,593,425           3,028,215             441,160
Bank overdrafts                                                         -           (450,644)           (347,705)

                                                                1,593,425           2,577,571              93,455


Cash at banks earns interest at floating rates based on daily bank deposit
rates.  Short-term deposits are made for varying periods of between one day and
three months, depending on the immediate cash requirements of the Group, and
earn interest at the respective short-term deposit rates.  The fair value of
cash and short-term deposits at 30 November 2006 is £1,593,425 (2005:
£2,577,571).

At 30 November 2006, the Group had available £600,000 (2005: £1,150,000) of
undrawn committed borrowing facilities in respect of which all conditions
precedent had been met.

11.    Capital and reserves

Share capital
                                                                   Unaudited         Unaudited           Audited
                                                                 30 Nov 2006       30 Nov 2005       31 May 2006
                                                                           £                 £                 £

Authorised
25,000,000 Ordinary Shares of 1p each                                      -           250,000           250,000
30,000,000 Ordinary Shares of 1p each                                300,000                 -                 -

                                                                     300,000           250,000           250,000

On 19 October 2006 the authorised share capital of the Company was increased
from £250,000 to £300,000 by the creation of 5,000,000 Ordinary Shares of 1p.

                                                                    Unaudited         Unaudited           Audited
                                                                  30 Nov 2006       30 Nov 2005       31 May 2006
                                                                            £                 £                 £

Allotted, called up and fully paid
17,215,910 Ordinary Shares of 1p each                                 172,159                 -                 -
17,045,455 Ordinary Shares of 1p each                                       -           170,455           170,455

                                                                      172,159           170,455           170,455


On 17 October 2006, the share capital of the Company was altered by the
allotment of 170,455 new Ordinary Shares of 1p in the capital of the Company at
£1.32 per share, following the exercise of options over these shares by W Deb
MVL plc (formerly Williams de Broe plc) under the option agreement dated 16
November 2005 made between the Company and Williams de Broe plc.

Share option schemes

The Company has two share option schemes under which options to subscribe for
the Company's shares have been granted to certain executives and senior
employees (Note 9).

                                                                                Other reserves
                                                        Share premium  Equity - share         Capital
                                                              account  based payments      redemption
                                                                    £               £         reserve     Retained
                                                                                                    £     earnings
                                                                                                                 £
Reserves                                                                                            

At 1 June 2005 - audited                                            -               -               -    2,654,239
Capitalised on bonus issue                                          -               -               -     (75,000)
Capitalised on redemption of preference shares                      -               -       2,000,000  (2,000,000)
Arising on share issue                                      5,954,547               -               -            -
Costs of share issue                                        (633,396)               -               -            -
Share-based payments                                                -          68,714               -            -
Deferred tax asset recognised in equity                             -           1,156               -            -
Profit for the financial year                                       -               -               -      633,911

At 30 November 2005 - unaudited                             5,321,151          69,870       2,000,000    1,213,150
Share-based payments                                                -          11,703               -            -
Deferred tax asset recognised in equity                             -          13,114               -            -
Profit for the financial period                                     -               -               -      859,782

At 31 May 2006 - audited                                    5,321,151          94,687       2,000,000    2,072,932
Arising on share issue                                        223,296               -               -            -
Share-based payments                                                -          30,658               -            -
Exercise of share options                                      57,011        (57,011)               -            -
Deferred tax asset recognised in equity                             -          18,211               -            -
Profit for the financial period                                     -               -               -    1,081,163
Dividends                                                           -               -               -    (238,636)

At 30 November 2006 - unaudited                             5,601,458          86,545       2,000,000    2,915,459

12.    Related party transactions

Transactions with key management personnel

The private pension schemes of Ian Mattioli, Robert Woods, Nathan Imlach and
Murray Smith, together with the private pension schemes of other key management
personnel of the Group, have a beneficial interest in MW Properties (No 16)
Limited.  The Group leases its premises at Grove Park, Enderby from MW
Properties (No 16) Limited, and paid rentals of £84,000 during the six months
ended 30 November.  At 30 November the Group had prepaid future rentals of
£11,047.

Key management personnel receive compensation in the form of short-term employee
benefits and equity compensation benefits (see Note 9).  Key management
personnel, representing the executive directors and four senior executives,
received total compensation of £666,273 for the six months ended 30 November
2006 (2005: £524,616).  Total remuneration is included in 'employee benefits
expense'.

13.    Financial instruments

The Group's principal financial instruments comprise bank loans and overdrafts,
trade payables and loans given.  The main purpose of these financial instruments
is to raise finance for the Group's operations.  The Group has various financial
assets, such as trade receivables and cash and short-term deposits, which arise
directly from its operations.

It is, and has been throughout the six months ended 30 November 2006 and year
ended 31 May 2006, the Group's policy that no trading in derivatives shall be
undertaken.

The main risks arising from the Group's financial instruments are cash flow
interest rate risk, liquidity risk and credit risk.  The Board of Directors
reviews and agrees policies for managing each of these risks which are
summarised below:

Interest rate risk

The Group's exposure to the risk of changes in market interest rate relates
primarily to the Group's cash and short-term deposits with floating interest
rates.

The Group's policy is to manage its interest income using a mix of fixed and
variable rate deposits.  The Group's policy is to secure competitive rates of
interest whilst maintaining sufficient funds available for it to pursue new
business opportunities.

Credit risk

The Group trades only with recognised, creditworthy third parties.  It is the
Group's policy that all customers who wish to trade on credit terms are subject
to credit verification procedures.  In addition, receivable balances are
monitored on an ongoing basis with the result that the Group's exposure to bad
debts is not significant.

With respect to credit risk arising from the other financial assets of the
Group, which comprise cash and cash equivalents and property syndicate loans,
the Group's exposure to credit risk arises from default of the counterparty,
with a maximum exposure equal to the carrying amount of these instruments.

Loans are only advanced to new property syndicates to facilitate the purchase of
commercial property.  In the event that a syndicate fails to raise sufficient
funds to complete the property purchase, the Group may either take up ownership
of part of the property or lose some or all of the loan.  However, to mitigate
this risk, loans are only approved by the Board under strict criteria, which
include independent professional advice confirming the market value of the
underlying property.

Liquidity risk

The Group monitors its risk to a shortage of funds by considering the maturity
of both its financial investments and financial assets (e.g. accounts
receivables, other financial assets) and projected cash flows from operations.

The Group's objective is to maintain a balance between continuity of funding and
flexibility through the use of bank overdrafts, bank loans and leases.

14.    Explanation of transition to IFRSs

As stated in Note 2, these are the Group's first condensed consolidated interim
financial statements for part of the period covered by the first IFRS annual
consolidated financial statements prepared in accordance with IFRSs.

The accounting policies in Note 2 have been applied in preparing the condensed
consolidated interim financial statements for the six months ended 30 November
2006, the comparative information for the six months ended 30 November 2005, the
financial statements for the year ended 31 May 2006 and the preparation of an
opening IFRS balance sheet at 1 June 2005 (the Group's date of transition).

In preparing its opening IFRS balance sheet, comparative information for the six
months ended 30 November 2005 and financial statements for the year ended 31 May
2006, the Group has adjusted amounts reported previously in financial statements
prepared in accordance with UK GAAP.

An explanation of how the transition from UK GAAP to IFRSs has effected the
Group's financial position and financial performance is set out in the tables
and the notes that accompany the tables in Note 15.  There are no material
differences between the cash flow statement presented under IFRSs and the cash
flow statement presented under UK GAAP.

15.    Reconciliations between UK GAAP and IFRS
                                                        UK GAAP      Note 1 Note 2 & 3  Notes 4 & 5        IFRS
                                                         Format        IAS1      IAS37        IAS38 1 June 2005
                                                    1 June 2005    Reformat Provisions   Intangible           £
15.1   Reconciliation of equity at 1 June 2005                £           £          £       assets
                                                                                                  £
                                                                             
Assets
Property, plant and equipment                           224,630           -          -      (2,219)     222,411
Intangible assets                                     4,695,220           -          -        7,144   4,702,364

Total non-current assets                              4,919,850           -          -        4,925   4,924,775

Trade and other receivables                           2,765,864           -      9,209            -   2,775,073
Cash and cash equivalents                             1,381,461           -          -            -   1,381,461

Total current assets                                  4,147,325           -      9,209            -   4,156,534

Total assets                                          9,067,175           -      9,209        4,925   9,081,309
Equity
Issued capital                                           50,000           -          -            -      50,000
Retained earnings                                     2,680,694           -   (31,380)        4,925   2,654,239

Total equity                                          2,730,694           -   (31,380)        4,925   2,704,239

Non-current liabilities
Deferred income tax liabilities                           8,225           -          -            -       8,225
Provisions and other liabilities                         47,966    (47,966)          -            -           -

                                                         56,191    (47,966)          -            -       8,225
Current liabilities
Trade and other payables                                593,711           -          -            -     593,711
Current income tax liabilities                          592,666           -          -            -     592,666
Interest-bearing loans and borrowings                 5,000,000           -          -            -   5,000,000
Bank overdraft                                           93,913           -          -            -      93,913
Provisions and other liabilities                              -      47,966     40,589            -      88,555

                                                      6,280,290      47,966     40,589            -   6,368,845

Total liabilities                                     6,336,481           -     40,589            -   6,377,070

Total equity and liabilities                          9,067,175           -      9,209        4,925   9,081,309


Notes:

1.   Under IFRS format £47,966 of client claim provision classified within
provisions for liabilities and charges under UK GAAP has been re-classified as a
provision within current liabilities.

2.   Under IFRS format £9,209 of clawback provision netted off against trade
receivables under UK GAAP has been re-classified as a provision within current
liabilities.

3.   Under IAS37 Provisions, Contingent Liabilities and Contingent Assets, a
provision is required where there is a present obligation as a result of a past
obligating event.  A provision for dilapidations of £31,380 on the Group's
former offices at Watling House, Hinckley has been recognised within current
liabilities.

4.   Under IAS38 Intangible Assets, software with a net book value of £2,219 has
been reclassified as intangible assets.

5.   Under IAS38 Intangible Assets, salary costs of £4,925 incurred developing
internally generated software have been capitalised as intangible assets.

                                  
                                                                                       
                                                                   Notes                 IFRS at
                          UK GAAP    Notes                         6,7&8      Note 9      30 Nov
15.2   Reconciliation of   Format    1,2&3   Note 4    Note 5      IAS38       IFRS2        2005    Note 10
equity at                  30 Nov     IAS1    IAS12     IAS37 Intangible Share-based      before       IAS8       30 Nov
30 November 2005             2005 Reformat Taxation Provision     assets    payments Restatement Restatement        2005
                                £        £        £         £          £           £           £           £           £

Assets
Property, plant and       388,766        -        -         -    (9,285)           -     379,481           -     379,481
equipment
Intangible assets       5,405,891        -        -         -  (162,740)           -   5,243,151           -   5,243,151
Deferred income tax             -        -    4,667         -          -           -       4,667           -       4,667
assets
Total non-current 
assets                  5,794,657        -    4,667         -  (172,025)           -   5,627,299           -   5,627,299

Trade and other         3,057,835   12,050        -         -          -           -   3,069,885           -   3,069,885
receivables
Cash and cash           3,028,215        -        -         -          -           -   3,028,215           -   3,028,215
equivalents
Total current assets    6,086,050   12,050        -         -          -           -   6,098,100           -   6,098,100
                                                                                                              
Total assets           11,880,707   12,050    4,667         -  (172,025)           -  11,725,399           -  11,725,399
Equity
Issued capital            170,455        -        -         -          -           -     170,455           -     170,455
Share premium           5,378,162        -        -         -          -    (57,011)   5,321,151           -   5,321,151
Reserves                        -        -    1,156         -          -      68,714      69,870   2,000,000   2,069,870
Retained earnings       3,474,747        -    3,511  (81,380)  (172,025)    (11,703)   3,213,150 (2,000,000)   1,213,150
Total equity            9,023,364        -    4,667  (81,380)  (172,025)           -   8,774,626           -   8,774,626

Non-current liabilities
Deferred income tax         8,225        -        -         -          -           -       8,225           -       8,225
liabilities
Provisions and other      222,934 (86,816)        -    50,000          -           -     186,118           -     186,118
liabilities
                          231,159 (86,816)        -    50,000          -           -     194,343           -     194,343
Current liabilities
Trade and other payables  669,054        -        -         -          -           -     669,054           -     669,054
Current income tax        306,486        -        -         -          -           -     306,486           -     306,486
liabilities
Interest-bearing loans  1,200,000        -        -         -          -           -   1,200,000           -   1,200,000
and borrowings
Bank overdraft            450,644        -        -         -          -           -     450,644           -     450,644
Provisions and other            -   98,866        -    31,380          -           -     130,246           -     130,246
liabilities
                        2,626,184   98,866        -    31,380          -           -   2,756,430           -   2,756,430

Total liabilities       2,857,343   12,050        -    81,380          -           -   2,950,773           -   2,950,773

Total equity and       11,880,707   12,050    4,667         -  (172,025)           -  11,725,399           -  11,725,399
liabilities



Notes:



1.   Under IFRS format £47,966 of client claim provision classified within
provisions for liabilities and charges under UK GAAP has been re-classified as a
provision within current liabilities.

2.   Under IFRS format £38,850 of deferred consideration classified within
provisions for liabilities and charges under UK GAAP has been re-classified as a
provision within current liabilities.

3.   Under IFRS format £12,050 of clawback provision netted off against trade
receivables under UK GAAP has been re-classified as a provision within
non-current liabilities.

4.   Under IAS12 Income Taxes, for employee share-based payment transactions the
difference between the tax base of the employee services received to date (being
the amount the taxation authorities will permit as a deduction in future
periods) and the carrying value of nil, is a deductible temporary difference
which results in a deferred tax asset of £4,667.

5.  Under IAS37 Provisions, Contingent Liabilities and Contingent Assets, a
provision is required where there is a present obligation as a result of a past
obligating event.  A provision of £31,380 for dilapidations on the Group's
offices at Watling House, Hinckley is recognised as a provision within current
liabilities.  In addition, a provision of £50,000 for dilapidations on the
Group's offices at Grove Park, Leicester has been recognised within non-current
liabilities.

6.  Under IAS38 Intangible Assets, software with a net book value of £9,285 has
been reclassified as intangible assets.

7.  Under IAS38 Intangible Assets, salary costs of £3,172 incurred developing
internally generated software have been capitalised as intangible assets during
the period.

8.  Under IAS38 Intangible Assets, amortisation of client portfolios of £28,212
is charged in the period.  Amortisation of £151,910 has been recognised in prior
periods.

9.  IFRS2 Share-based Payments requires the recognition of the cost of share
based payments, resulting in £57,011 of non-employee share option costs being
capitalised against the share premium account, and £23,406 of employee share
option costs being recognised in the income statement.

10. In accordance with IAS8 Accounting Policies, Changes in Accounting Estimates
and Errors, an adjustment has been made to recognise a Capital Redemption
Reserve of £2,000,000 at 30 November 2005.

                                                       UK GAAP                      Notes 3&4      Note 5        
                                                        Format   Note 1     Note 2      IAS38       IFRS2        IFRS
                                                        30 Nov    IAS12      IAS37 Intangible Share-based      30 Nov   
                                                          2005 Taxation Provisions     assets    payments        2005
15.3       Reconciliation of profits for the                 £        £          £          £           £           £
six months ended 30 November 2005

Revenue                                              3,605,970        -          -          -           -   3,605,970
Employee benefits expense                          (1,471,890)        -                 3,173    (11,703) (1,480,420)
Other administrative expenses                      (1,022,854)        -   (50,000)          -             (1,072,854)
Depreciation and amortisation                         (41,924)        -          -   (28,212)           -    (70,136)

Operating profit before financing costs              1,069,302        -   (50,000)   (25,039)    (11,703)     982,560

Financial income                                        32,174        -          -          -           -      32,174
Financial expenses                                    (76,760)        -          -          -           -    (76,760)

Net financing costs                                   (44,586)        -          -          -           -    (44,586)

Profit before tax                                    1,024,716            (50,000)   (25,039)    (11,703)     937,974

Income tax expense                                   (307,574)    3,511          -          -           -   (304,063)

Profit for the period                                  717,142    3,511   (50,000)   (25,039)    (11,703)     633,911

Attributable to:
Equity holders of the parent                           717,142    3,511   (50,000)   (25,039)    (11,703)     633,911


Notes:

1.     Under IAS12 Income Taxes, for employee share-based payment transactions
the difference between the tax base of the employee services received to date
(being the amount of taxation the authorities will permit as a deduction in
future periods) and the carrying value of nil, is a deductible temporary
difference which results in a deferred tax asset.  A deferred tax credit of
£3,511 relating to employee share option costs recognised in the income
statement has been recognised in the income statement.

 2.    Under IAS37 Provisions, Contingent Liabilities and Contingent Assets, a
provision is required where there is a present obligation as a result of a past
obligating event.  A provision of £50,000 for dilapidations on the Group's
offices at Grove Park, Leicester is recognised within non-current liabilities.

3.     Under IAS38 Intangible Assets, £3,173 of salary costs incurred developing
internally generated software have been capitalised as intangible assets.

4.     Under IAS38 Intangible Assets, amortisation on client portfolios of
£28,212 is recognised in the period.

5.     IFRS2 Share-based Payments requires the recognition of the cost of share
based payments, resulting in £23,406 of employee share option costs being
recognised in the income statement.



15.4    Reconciliation of equity at 31 May 2006 and 1     UK GAAP Notes 1,2&3   Note 4     Note 5  Notes 6&7       IFRS
June 2006                                                  Format        IAS1    IAS12      IAS37      IAS38     1 June
                                                           1 June    Reformat Taxation Provisions Intangible       2006
                                                             2006                                     assets
                                                                £           £        £          £          £          £
                                                                                                            
Assets
Property, plant and equipment                             398,566           -        -          -    (8,070)    390,496
Intangible assets                                       5,816,630           -        -          -     19,340  5,835,970
Deferred income tax assets                                  2,676           -   14,270                           16,946
Total non-current assets                                6,217,872           -   14,270          -     11,270  6,243,412

Trade and other receivables                             5,092,503      12,674        -          -          -  5,105,177
Cash and cash equivalents                                 441,160           -        -          -          -    441,160

Total current assets                                    5,533,663      12,674        -          -          -  5,546,337

Total assets                                           11,751,535      12,674   14,270          -          - 11,789,749

Equity
Issued capital                                            170,455           -        -          -          -    170,455
Share premium                                           5,321,151           -        -          -          -  5,321,151
Fair value and other reserves                           2,080,417           -   14,270          -          -  2,094,687
Retained earnings                                       2,111,662           -        -   (50,000)     11,270  2,072,932
Total equity                                            9,683,685           -   14,270   (50,000)     11,270  9,659,225

Non-current liabilities
Deferred income tax liabilities                                 -           -        -          -          -          -
Provisions and other liabilities                          152,842    (58,399)        -     50,000          -    144,443
                                                          152,842    (58,399)        -     50,000          -    144,443
Current liabilities
Trade and other payables                                1,193,196           -        -          -          -  1,193,196
Current income tax liabilities                            374,107           -        -          -          -    374,107
Interest-bearing loans and borrowings                           -           -        -          -          -          -
Bank overdraft                                            347,705           -        -          -          -    347,705
Provisions and other liabilities                                -      71,073        -          -          -     71,073
                                                        1,915,008      71,073        -          -          -  1,986,081
Total liabilities                                       2,067,850      12,674        -     50,000          -  2,130,524

Total equity and liabilities                           11,751,535      12,674   14,270          -     11,270 11,789,749


Notes:



1.     Under IFRS format £47,966 of client claim provision within provisions for
liabilities and charges under UK GAAP has been re-classified as a provision
within current liabilities.

2.     Under IFRS format £10,433 of deferred consideration classified within
provisions for liabilities and charges under UK GAAP has been re-classified as a
provision within current liabilities.

3.     Under IFRS format £12,674 of clawback provision netted off against trade
receivables under UK GAAP has been re-classified as a provision within
non-current liabilities.

4.     Under IAS12 Income Taxes for employee share-based payment transactions
the difference between the tax base of the employee services rendered to date
(being the amount the taxation authorities will permit as a deduction in future
periods) and the carrying value of nil, is a deductible temporary difference
which results in an additional deferred tax asset of £14,270 recognised in
equity.

5.     Under IAS37 Provisions, Contingent Liabilities and Contingent Assets, a
provision is required where there is a present obligation as a result of a past
obligating event.  A provision of £31,380 for dilapidations on the Group's
offices at Watling House, Hinckley has been released against dilapidation costs
incurred during the period, and a provision of £50,000 for dilapidations on the
Group's offices at Grove Park, Leicester has been recognised within non-current
liabilities.

6.     Under IAS38 Intangible Assets, software with a net book value of £8,070
has been reclassified as intangible assets.

7.     Under IAS38 Intangible Assets, salary costs of £6,345 incurred during the
period developing internally generated software have been capitalised as
intangible assets.



                                                                  UK GAAP  Notes 1&2      Note 3        IFRS
                                                                   Format      IAS37       IAS38      31 May
                                                                   31 May Provisions  Intangible        2006
                                                                     2006                 assets        
15.5     Reconciliation of profits for the year ended 31 May            £          £           £           £
2006

Revenue                                                         7,572,845          -           -   7,572,845

Employee benefits expense                                     (3,278,024)          -       6,345 (3,271,679)
Other administrative expenses                                 (1,954,805)   (18,620)           - (1,973,425)
Depreciation and amortisation                                   (169,184)          -           -   (169,184)

Operating profit before financing costs                         2,170,832   (18,620)       6,345   2,158,557

Financial income                                                  103,731          -           -     103,731
Financial expenses                                               (94,010)          -           -    (94,010)

Net financing costs                                                 9,721          -           -       9,721

Profit before tax                                               2,180,553   (18,620)       6,345   2,168,278

Income tax expense                                              (674,585)          -           -   (674,585)

Profit for the period                                           1,505,968   (18,620)       6,345   1,493,693

Attributable to:
Equity holders of the parent                                    1,505,968          -           -   1,493,693



Notes:

1.  Under IAS37 Provisions, Contingent Liabilities and Contingent Assets, a
provision is required where there is a present obligation as a result of a past
obligating event.  A provision of £50,000 for dilapidations on the Group's
offices at Grove Park, Leicester has been recognised within non-current
liabilities.

2.  Under IAS37 Provisions, Contingent Liabilities and Contingent Assets  a
provision for dilapidations on the Group's former offices at Watling House,
Hinckley of £31,380 was released against costs incurred during  the period.

3.  Under IAS38 Intangible Assets, £6,345 of salary costs incurred developing
internally generated software have been capitalised as intangible assets.




16.    Copies of interim report



Copies of the interim report will be posted to shareholders in due course and
are available from the Group head office at: MW House, 1 Penman Way, Grove Park,
Enderby, Leicester LE19 1SY.






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