Final Results
Flomerics Group PLC
27 March 2007
IMMEDIATE RELEASE March 2007
FLOMERICS GROUP PLC
Preliminary Results
Flomerics Group PLC, global supplier of simulation software to the engineering
and electronics industries, today announces its results for the year ended 31
December 2006.
Key Points
• Turnover up 24% at £14.2 million (2005 : £11.4 million). Excluding the
acquisition in the year revenues up by 13%.
• Profit before tax, amortisation of goodwill, exceptional items and
share-based payment increased by 30% to £1.5 million (2005: £1.1 million).
• Proposed dividend increased by 8% to 1.4p per share (2005 : 1.3p)
• Cash balance at year end £2.3 million (2005: £4.1 million)
• Acquisition in July 2006 of Nika GmbH (NIKA).
• Asia Pacific and US revenues up by 20% and 16% respectively at constant
exchange rates.
• Revenues from the Electronics Cooling line of business (Flotherm and Flo/
pcb ) increased by 11% and Flovent revenues increased by 24% at constant
exchange rates.
Commenting on the results, David Mann, Chairman, said:
"With a new stable of products and excellent technology, the Group is positioned
to achieve strong growth in turnover and an increase in profit margin."
Enquiries:
Flomerics 020 8487 3000
Gary Carter, Chief Executive
Chris Ogle, Finance Director
Conduit PR 020 7429 6666
Laurence Read/ Christian Taylor-Wilkinson
Chairman's Statement
Flomerics made good progress with the implementation of its growth strategy in
the year ended 31 December 2006. While significant effort was devoted to the
acquisition and integration of NIKA, the company achieved good increases in
revenue from its traditional products in US and Asia Pacific. The management
team in Europe was strengthened at the beginning of 2007. Experience of working
with NIKA since the acquisition has confirmed assessments of the major
contributions that its products and technology can make to the future of the
Group.
Results
Total revenues were up by 24% at £14.2 million (2005:£11.4 million). Revenues,
excluding those resulting from the acquisition of NIKA made during the year,
grew by 13% to £12.9 million.
Profit before tax, amortisation of goodwill, exceptional items (of £222,000) and
share-based payment increased by 30% to £1.5 million (2005: £1.1 million). As a
result of the acquisition, which we indicated would be dilutive in the first
year, earnings per share were 1.87p (2005: 5.83p). Earnings per share before
amortisation of goodwill were 5.44p (2005: 6.90p).
Cash generated from operations was 0.7 million (2005: £1.8 million). £1.3
million of cash was used as part of the consideration for the acquisition. Cash
balances for the group at 31 December 2006 were £2.3 million (2005: £4.1
million).
Dividend
The board is pleased with the progress being made and is proposing that the
dividend should be increased by 8% to 1.4 p per share (2006:1.3p). Subject to
approval at the Annual General Meeting, the dividend will be paid on 25 May 2007
to shareholders on the register at 27 April 2007.
Lines of Business and regional performance
All percentages in this section are at constant exchange rates.
Revenue from our Electronics Cooling line of business (Flotherm and Flo/pcb)
increased by 11%. Revenues from the Electromagnetic Products line of business
(FLO/EMC and Micro-Stripes) grew by 4%. Flovent revenues were up 24% and
revenues related to MicReD, acquired in 2005, were up 80%. Excluding the NIKA
acquisition and the MicReD revenues, the increase in turnover by region was:
Asia Pacific 20%, US 16% and Europe 2%.
Acquisition
On 5 July 2006 the Board announced the acquisition of Nika GmbH. The initial
consideration was £8.8 million with potential further consideration of £3.9
million depending on the after tax results of the Group in 2007.
The acquisition of NIKA will enable the Group to sell solutions for a far wider
range of applications whilst still providing the electronics sector with more
specialised products and services. Other benefits include the potential to
drive a higher level of sales through each of our existing offices and the
shortening of the sales cycle for the new products. In the period from the
acquisition to the end of the year, sales from NIKA added £1.4 million to group
turnover. The acquisition has also brought some powerful new technology to the
Group as well as a highly specialised product development team, which is based
in Moscow.
Board Changes
On 31 December 2006 David Tatchell, the Chief Technology Officer (CTO) and
former Chief Executive of the company stepped down from the Board. David will
continue in his role as CTO on a part-time basis. David was the joint founder
of the company in 1988 and the Board expresses its gratitude to him for his
outstanding contribution to the success of the company.
In last year's annual report we announced our intention to conduct a search
for a successor to Tim Morris, Non-Executive Director and Chairman of the Audit
Committee. On 24 January 2007, Tim was succeeded by Peter Teague, who has
served as Finance Director of several major international enterprises and is
currently Chairman of the Audit Committee of Ofcom. I thank Tim for his
considerable contribution to the Board for more than ten years and, in
particular, for agreeing to stay on longer than originally intended through the
acquisition of NIKA.
Outlook
The acquisition of NIKA has resulted in a step-change in the Group's potential
and ambitions.
With a new stable of products and excellent technology, the Group is positioned
to achieve strong growth in turnover and an increase in profit margin. As a
result of the considerable investments during the last two years, including the
strengthening of our management team, the directors are excited about the
prospects for delivering a significant increase in value to shareholders.
David Mann
Chairman
Chief Executive's Review
2006 proved to be a transformational year for Flomerics. I can report some
considerable achievements, the most significant of which was the acquisition of
NIKA GmbH.
At the beginning of the year we set out to achieve three clear objectives. Our
first objective was to continue to drive the top line growth of our existing
product set. The second objective was to consolidate the acquisition of MicReD
which we completed in 2005, and our third objective was to evaluate fresh
acquisition opportunities. Acquisitions must meet our twin criteria of securing
world-leading technology whilst also adding a complementary product set to our
existing lines of business. I am delighted to announce that we have
successfully achieved all three of these objectives.
Acquisition of NIKA GmbH
The acquisition of NIKA GmbH (NIKA) in July represented a significant move for
Flomerics. NIKA is a specialist software developer that provides simulation
tools for the prediction of fluid flow and heat transfer. NIKA's principal
product is EFD.Lab; a Computational Fluid Dynamics (CFD) simulation tool used by
engineers in the design of a diverse range of products which includes vehicles,
home appliances and electronics. EFD.Lab enables engineers to optimise their
designs in the shortest possible time and is tightly integrated with the major
Mechanical Computer Aided Design (MCAD) systems.
There is clear synergy between NIKA's and Flomerics' product applications. The
client lists of both companies feature big-name companies, such as Alcatel, BAE
Systems, Black & Decker, Bosch, Delphi, Intel, Mitsubishi, Thales, Samsung,
Siemens and Toyota. However, NIKA's extensive client base also includes DAF,
Electrolux, Honda, Lufthansa, Miele, Olympus, Pirelli, Tyco and Volkswagen.
This provides the potential to cross-sell both NIKA and Flomerics solutions into
the combined client base.
Key benefits of the NIKA acquisition include:
• Ownership of world-leading CFD technology which can be applied to improve
and extend Flomerics products
• The broadening of the Flomerics business beyond electronics applications
• The opportunity to sell the NIKA products through existing Flomerics sales
operations around the world quickly and economically
• Significantly enhanced sales opportunities resulting from close technical
integration and sales collaboration with leading MCAD companies
An acquisition such as this does not happen without a great deal of work from
employees on both sides. I would therefore like to take this opportunity to
thank all the Flomerics and former Nika employees for the contributions they
made throughout the year.
Lines of Business
The acquisition of NIKA has led us to revaluate the way we organise and drive
the success of our products. This has resulted in the establishment of three
distinct areas of business focus: electronics cooling; CFD applications; and
electromagnetic products.
Electronics Cooling is the largest part of our business. Flomerics is the
market leader in the provision of software tools used by electrical and
mechanical engineers to analyse and predict temperatures in the design of
circuit boards and complete electronic systems. These software tools are based
around our market-leading FLOTHERM product and now also include the MicReD
family of products and the NIKA EFD product set.
CFD for Mechanical Applications extends Flomerics' marketplace beyond the world
of electronics. This line of business provides software that enables mechanical
design engineers to analyse and optimise complex fluid flow and heat transfer
processes across an extremely wide range of products and industries. In
addition to NIKA's EFD family of products, CFD applications also includes
FLOVENT which addresses the Heating, Ventilation and Air Conditioning (HVAC)
market.
Electromagnetic Products are used by engineers to simulate electromagnetic
radiation. Applications include the design of wireless equipment within the
telecommunications, military, automotive and aerospace industries and containing
the problem of electromagnetic interference, also in these industries. Our
electromagnetic products business is being given an increased level of focus
with the appointment of a dedicated line of business manager.
Management Team
The acquisition of NIKA has brought a number of highly skilled and experienced
people into the Flomerics management team. These include Alexander Sobachkin
who manages our Moscow office. This is now our largest office and the centre of
EFD product development. Roland Feldhinkel, the former managing director of
NIKA, now manages a newly formed product group.
We have bolstered our management team further still with the appointment of
David Barry, our new European Sales Director. David brings extensive sales and
management experience gained within the Computer Aided Engineering sector and
will be responsible for the growth of all of our business throughout Europe.
2006 Achievements
I am delighted to be able to report on the continued improvements in performance
throughout the business. Our electronics cooling business continues to perform
strongly having achieved revenue growth of 11% over 2005.
Results for the electromagnetic business were less strong with only modest
growth over 2005. However, the business should benefit from an increased
investment in sales resources made during the later part of 2006. We have also
taken steps to reduce our development costs for this line of business by moving
our two electromagnetic products to a single platform.
Many of our individual products have performed extremely well. Revenues for
FLOVENT are up 24% and MicReD product revenues are up by 80%. The performance
of the MicReD products is especially pleasing as it demonstrates how quickly and
successfully the Flomerics sales organisation has been able to adapt to selling
new hardware-based solutions. The MicReD product set was extended further
during 2006 with the addition of the TERALED product. This has been developed
specifically in response to demand from leading LED manufacturers and provides a
unique, complete solution for LED testing.
All geographic regions of our operations delivered sound performances. Growth
in the US was 16%, whilst Asia-Pacific grew by 20%. Japan and South-East Asia
were among our best performing territories and we anticipate continued and
accelerating sales growth within these regions in the years ahead.
As I mentioned earlier, the acquisition of NIKA provides the opportunity to
expand our sales and marketing activities within the US whilst achieving
first-time sales within new territories. In some cases we have been able to
take advantage of the sales resources and infrastructures we already have in
place, whilst in other regions we have invested in new sales resources. The
excellent sales results achieved during the later part of 2006 has validated our
conviction that significant opportunities exist to sell NIKA's EFD products in
both new and existing territories.
Industry Collaboration
I have, in the past, emphasised the importance of strategic partnerships to the
continued success of Flomerics. The value and longevity of our software
solutions depend greatly on their ability to be applied to a wide variety of
design tools and applications. The acquisition of NIKA has brought new or
enhanced partnerships with a number of MCAD companies including Dassault
Systemes and PTC. Our relationship with SolidWorks (a subsidiary of Dassault)
is particularly strong and a significant share of NIKA's revenue has come from
royalties on sales of COSMOSFloWorksTM ; a CFD tool embedded within SolidWorksTM
that is based on EFD.Lab technology.
The Future
2006 was a year of significant development for Flomerics. The addition of new
products, new customers and new people has placed us in a strong position to
achieve even greater growth across each of our areas of business focus.
With much of the investment to capitalise on the NIKA acquisition already in
place, I am now looking forward to bringing to fruition the exciting growth
opportunities we have created. The aim is to repeat throughout the world the
same levels of success that the NIKA products have achieved within Germany.
In 2007, we begin to share the leading technologies found in Flomerics and NIKA
products in order to realise continual improvements in performance and breadth
of application for the benefit of customers of all our products. With a clear
and determined focus on our three areas of business, the strengthening of our
sales resources and a greater marketing presence for our EFD products
world-wide, I look forward with confidence and enthusiasm to a successful future
for Flomerics, our customers and our shareholders.
Gary Carter
Chief Executive
Operating and Financial Review
Group Financial Performance
Turnover for 2006 increased by 24% at £14.2 million. Excluding revenue resulting
from the acquisition of NIKA GmbH made during the year, revenues were up by 13%.
Profit before tax and amortisation of goodwill, share-based payments and
exceptional items was up by 30% at £1.5 million. The charge for the year for
share-based payments was £97,000. It is a new requirement of UK GAAP to make a
charge for share-based payments and the 2005 accounts have been restated to
include a charge for this of £66,000.
The results for 2006 have been impacted by exchange rates and the weakening of
the US dollar and this is expected to continue into 2007. The average rate of
exchange to the pound in 2006 was 1.843.
Exceptional costs totalled £222,000, of which approximately 50% relates to
restructuring costs arising from the acquisition.
The goodwill amortisation figure of £644,000 (2005:£158,000) includes the sum of
£456,000 which is attributable to the acquisition. This is a pro-rated charge
as the acquisition was completed at the beginning of July 2006.
The headline tax rate is 32% (2005 restated : 4.1%). This was higher than in
2005 because the goodwill charge is not a tax deductible expense. Excluding the
goodwill charge, the tax rate would have been just 14%. The tax charge has
been kept low because of the use of tax credits for research and development
received in the UK and the availability of tax losses in the US. All of the tax
losses arising in the US have now been utilised. There are significant tax
losses in NIKA but these have not been reflected in these accounts as a deferred
tax asset.
The net result is that basic earnings per share for 2006 were 1.87p (2005:
5.83p). Earnings per share before amortisation of goodwill were 5.44p (2005:
6.90p)
Costs
Cost of sales, which comprise royalties paid to third-party licensors and
manufacturing costs of the Group's hardware products for the full year, amounted
to 3.9% (2005: 2.5%) of revenue.
Research and development (R&D) costs have increased. This is primarily due to
the acquisition of NIKA which has a large R&D facility based in Moscow. In the
period since the acquisition, R&D costs in Moscow were £547,000. R&D costs
accounted for 20.8% of Group revenue (2005: 19.4%) in the period.
Staff related costs are the Group's biggest expense. These increased by 23% to
£7.6 million. The average number of staff increased by 40%, from 136 to 191.
At the end of the year the Group employed 235 people. At the time of the
acquisition NIKA employed 72 people, 52 of which were based in Moscow.
Contribution from Nika
The profit and loss account for Nika shows an operating loss of £655,000. This
includes a goodwill amortisation charge of £456,000 relating to the cost of the
acquisition set out in Note 28 and certain costs which benefited the Group. For
example the Chief Executive of Nika took on the role of European Sales Director
following the acquisition and the development operation in Moscow undertook
various tasks related to Flomerics' legacy products. Taking these into account,
it is estimated that the actual impact on the Group's operating profit from
Nika's activities was a loss of about £100,000.
Cashflow and Financing
Cash generated from operating activities was £685,000 (2005: £1.8 million.).
This was lower than the 2005 figure because a very significant amount of the
Group's turnover occurred late in the year. As a result, trade debtors were
£1.4 million higher than they were at the end of 2005.
Major non-operating cashflow included cash invested in the acquisition of NIKA
of £1.3 million; capital expenditure of £512,000 (2005: £380,000); deferred
consideration in respect of the acquisition of MicReD made in 2005 of £165,000;
and a dividend paid of £195,000 (2005:£161,000). The net decrease in cash was
£1.7 million at the year end.
The Group has borrowings of £376,000 which relate to the mortgage on a freehold
property that is being repaid over ten years. With a cash balance of £2.3
million, net funds are £2.0 million.
Trade debtors at the end of 2006 were £4.8 million (2005: £3.4 million). Debtor
days at 31 December were 72 (2005:76.)
Share Capital
On 18 April 2006, 130,000 shares were issued to the vendors of MicReD as part of
the deferred consideration under the terms of the acquisition. On 10 May 2006
50,000 shares were issued to the vendors of MicReD pursuant to the release of
the retained consideration due to the vendors.
On 7 July 2006 6,293,000 shares were issued to the vendors of NIKA GmbH as part
of the consideration under the terms of the acquisition. A further 1,265,000
shares were retained, and will not be issued until the expiry of the warranty
period.
In order to facilitate the issue of shares to the vendors of NIKA, the Group's
authorised share capital was increased from £200,000 to £400,000. This was
approved at an Extraordinary General Meeting of shareholders which was held on 5
July 2006.
Deferred Consideration
Under the terms of the acquisition of MicReD, deferred consideration was due
depending on the results in 2005 and 2006. Following the performance in 2006,
it is expected that the final instalment of the deferred consideration will be
paid out during 2007.
Key Performance Indicators
Measures of the Group's performance reviewed by the management include:
• Performance against budget by turnover and contribution to profit, by
region and line of business.
• Rate of renewals of licenses.
• New sales won and lost against the competition.
An important forward looking indicator is the level of identified business as a
percentage of budget and compared to previous years.
Non-financial measures monitored include:
• Staff turnover rates
• Results of staff surveys
• Enquiries to the website
Accounting Standards
The Group has adopted International Financial Reporting Standards (IFRS) with
effect from 1 January 2007.
We have been assessing the impact of IFRS on our accounts. The acquisition of
NIKA will be restated under IFRS 3 and a value will be attributed to the
intangible assets acquired (such as customer lists and technology). The
intangible assets will be amortised and the goodwill arising will be subject to
an impairment review. We have had the acquisition of NIKA valued for this
purpose and the effect of the new treatment has been quantified. This is
subject to review by our auditors. The remaining goodwill, which related to
previous acquisitions, will no longer be amortised but will be subject to an
annual impairment review and subject to foreign exchange movement.
The other significant change under IFRS will be the treatment of research and
development costs. Under IAS 38, if certain criteria are satisfied, the
development costs must be capitalised and amortised over the anticipated period
that benefits are expected. We have identified the projects that are likely to
be affected by this change and are currently assessing the financial impact.
Chris Ogle
Finance Director
FLOMERICS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2006
Continuing
activities Acquisitions Group
2006 2006 2006 2005*
£'000 £'000 £'000 £'000
Turnover 12,864 1,357 14,221 11,424
Cost of sales (444) (106) (550) (291)
_________ _________ _________ _________
Gross profit 12,420 1,251 13,671 11,133
Administrative expenses
Research and development cost (2,408) (547) (2,955) (2,214)
Goodwill amortisation (188) (456) (644) (158)
Share-based payment (97) - (97) (66)
Exceptional restructuring costs (110) - (110) -
Exceptional staff costs (112) - (112) -
Other (8,350) (903) (9,253) (7,917)
________ ________ ________ ________
Total administrative expenses (11,265) (1,906) (13,171) (10,355)
________ ________ ________ ________
1,155 (655) 500 778
Other operating income 61 - 61 66
________ ________ ________ ________
Operating profit 1,216 (655) 561 844
Other interest receivable and similar 101 92
income
Interest payable and similar charges (164) (36)
________ ________
Profit on ordinary activities before
taxation (Note 3) 498 900
Tax on profit on ordinary activities (Note 5) (160) (37)
_________ _________
Profit for the financial year 338 863
________ ________
Earnings per share (Note 6)
1.87p 5.83p
Diluted earnings per share (Note 6)
1.47p 5.59p
* As restated (see Note 7)
FLOMERICS GROUP PLC
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2006
2006 2006 2005* 2005*
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 10,041 1,353
Tangible assets 1,709 1,726
_______ _______
11,750 3,079
Current assets
Stock 33 59
Debtors 5,467 3,953
Cash at bank and in hand 2,339 4,081
_______ _______
7,839 8,093
Creditors: amounts falling due within
one year (5,205) (4,386)
_______ _______
Net current assets 2,634 3,707
_______ _______
Total assets less current liabilities 14,384 6,786
Creditors: amounts falling due after
more than one year (305) (377)
________ ________
Net assets (Note 3) 14,079 6,409
_______ _______
Capital and reserves
Called up share capital 213 148
Shares to be issued 1,112 33
Share premium account 1,735 1,602
Merger reserve 7,185 892
Profit and loss account 3,834 3,734
________ ________
Shareholders' funds 14,079 6,409
_______ _______
* As restated (see Note 7)
FLOMERICS GROUP PLC
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005*
£'000 £'000
Operating Activities
Operating profit 561 844
Depreciation and amortisation charges 1,028 492
Share-based payment 97 66
Loss / (gain) on disposal of fixed assets 2 (1)
Exchange differences (123) 113
Decrease / (increase) in stocks 30 (6)
(Increase) / decrease in debtors (1,081) 53
Increase in creditors 171 283
Net cash inflow from operating activities 685 1,844
Net cash inflow / (outflow) from returns on
investment and servicing of finance (63) 56
Tax paid (176) (126)
Net cash outflow from capital expenditure (507) (376)
Net cash paid for acquisition (including deferred
consideration) (1,418) (405)
Equity dividend paid (195) (161)
________ ________
Net cash inflow before financing (1,674) 832
Net cash outflow from financing (68) (65)
________ ________
(Decrease) / Increase in cash in the year (1,742) 767
________ ________
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
FUNDS
(Decrease) / Increase in cash in period (1,742) 767
Cash outflow from decrease in debt and lease
financing 68 65
________ ________
Movement in net funds in the year (1,674) 832
Net funds at 1 January 3,637 2,805
Net funds at 31 December 1,963 3,637
* As restated (see Note 7)
Notes:
1. The Group recognised unrealised losses on translation of foreign
currency net investments of £140,000 (2005: gain of £124,000) in the year, which
were taken to reserves and are not included in the profits above.
2. The financial information shown for the years ended 31 December 2006
and 2005 set out above does not constitute statutory accounts but is derived
from those accounts. The results have been prepared using accounting policies
consistent with those used in the preparation of the statutory accounts. The
financial information contained in this announcement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The financial information for the year ended 31 December 2005 has been extracted
from the statutory accounts for that year and amended as per note 7. These
accounts have been filed with the Registrar of Companies and contain an
unqualified audit report. The financial information for the year ended 31
December 2006 has been extracted from the statutory accounts for that year
which contain an unqualified auditor report but have not yet been filed at
Companies House . Copies of this announcement are available at the registered
offices of the Company (81 Bridge Road, Hampton Court, Surrey, KT8 9HH) and at
the offices of the Company's nominated advisors, Oriel Securities Limited. (125
Wood Street, London, EC2V 7AN) for a period of 14 days from the date hereof.
3. Segmental Information
The Group's turnover and profit before tax for each geographic area of operation
by location and by destination relating to its sole class of business is:
Turnover Profit/(Loss) Before
Taxation
Restated
2006 2005 2006 2005
£'000 £'000 £'000 £'000
United States of America 5,563 4,609 280 250
Europe 5,946 4,438 (980) (307)
Asia Pacific 2,712 2,377 1,198 957
_______ _______ _______ _______
14,221 11,424 498 900
_______ _______ _______ _______
The loss in Europe is after central costs including research and development.
The net assets attributable to each geographic area are:
2006 2005
£'000 £'000
United States of America 1,334 1,211
Europe 12,560 5,064
Asia Pacific 185 134
_______ _______
14,079 6,409
4. Profit before Taxation
Restated
2006 2005
£'000 £'000
Profit before Taxation 498 900
Amortisation of goodwill 644 158
Share based payment 97 66
Exceptional restructuring costs 110 -
Exceptional staff costs 112 -
_______ _______
Profit before Tax, amortisation of goodwill, share
based payment and exceptional items 1,461 1,124
_______ _______
5. Taxation
The taxation reconciliation is as follows:
Restated
2006 2005
£'000 £'000
Profit on ordinary activities before tax 498 900
Current Tax
Tax charge on profit before tax at the standard rate of
corporation tax in the UK of 30% (2005:30%) 149 270
Effects of:
Enhanced relief for research and development (194) (227)
Permanent differences 243 96
Depreciation in excess of capital allowances 19 36
Utilisation of brought forward losses (76) (64)
Unrelieved current year losses 50 11
Over provision in prior years (14) (80)
Earnings of subsidiary not subject to tax (14) -
Tax rate differences (34) (35)
Unrelieved overseas tax 28 24
Timing differences 10 6
_______ _______
Current tax charge for year 167 37
_______ _______
Deferred tax (7) -
_______ _______
Total taxation on profit on ordinary activities 160 37
_______ _______
6. Earnings per share
Earnings per share figure is calculated by dividing the profit on ordinary
activities after taxation by the weighted average number of shares in issue as
follows:
Restated
2006 2005 2006 2005 2006 2005
Earnings Earnings Weighted Weighted Earnings per Earnings per
average number average number share share
£'000 £'000 of shares of shares pence pence
No.'000 No.'000
Profit for the
financial year
before goodwill
amortisation 982 1,021 18,063 14,783 5.44 6.90
Goodwill
amortisation (644) (158) - - (3.57) (1.07)
_______ _______ _______ _______ _______ _______
Profit for the
financial year 338 863 18,063 14,783 1.87 5.83
Dilutive effect of
share options - - 4,905 656 (0.40) (0.24)
_______ _______ _______ _______ _______ _______
338 863 22,968 15,439 1.47 5.59
_______ ______ _______ _______ _______ ______
7. Prior year adjustment
In order to conform with the requirements of FRS 20 ' Share-based payment', the
results for 2005 have been restated to include an expense for share-based
payment of £66,000. The profit for the financial year has been reduced from
£929,000 to £863,000.
8. On 6 July 2006, the Group acquired the entire share capital of Nika GmbH
for initial consideration of £8.8 million settled thorough a combination of
shares and cash as shown below. Further consideration will become payable in the
event that the Group's profits after tax in 2007 are in excess of £2.7 million,
settled by the issue of up to a maximum of 4.1 million shares. In calculating
the goodwill figure it has been assumed that no further consideration will be
payable:
£'000
Fair value of net assets acquired: (391)
Goodwill 9,168
_______
8,777
_______
Satisfied by:
Shares issued 6,356
Shares to be Issued in escrow 1,112
Cash 1,011
Acquisition costs 298
_______
8,777
_______
9. The AGM will be held at 10.30 am on 23 May 2007 at the registered office
of the company (81 Bridge Road, Hampton Court, Surrey, KT8 9HH).
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