Preliminary Results
HIGHLIGHTS
ITIS Holdings plc a leading road traffic and information data specialist is pleased to announce its preliminary results for the year ended 31 March 2008.
Highlights
· Revenue from continuing operations up 29.3% to £18.32m (2007: £14.17m), of which £1.43m
is from Trafficlink
Stuart Marks, Chief Executive of ITIS commented: 'This has been a record year for ITIS in terms of both revenues and profits from continuing operations. We anticipate revenue from the international markets is set to grow strongly this year as we now convert prospects into customers and as we continue to find new countries that are eager to deploy our technologies. Our acquisition of Trafficlink has brought immediate benefits to the quality of our information in the UK and we are now implementing operational synergies between the companies, which will enable us to grow both businesses. ITIS enjoys a reputation for market leading technology combined with unparalleled commercial success and we are building on these strengths to expand our business around the world.'
FINANCIAL OVERVIEW
For the year ended 31st March 2008, revenue from continuing operations increased by 29.3% to £18.32m (2007: £14.17m). Following the sale on 27 March 2007 of NavTrak Limited, the Group's stolen vehicle tracking subsidiary, to Cobra Automotive Technologies spa, £4.62m of revenue for the year ended 31 March 2007 has been presented as discontinued. Revenue for the year ended 31st March 2008, also included a revenue contribution of £1.43m from Trafficlink Limited ('Trafficlink') post its acquisition on 7 December 2007. Revenue arose predominantly from the Group's UK business, being traffic data sales to RDS-TMC customers, data sales to local and central Government and other third party organisations as well as from customers using the Group's various mobile telephone information services.
Whilst the majority of the UK's traffic business costs are fixed, there has been a step change of just under £0.5m in those fixed costs during the year, mainly as a consequence of establishing a data centre. This necessitates additional annual communications, licensing and running costs but allows all live systems to be run from one site of the highest quality with extensive capacity for expansion. Additional FM bandwidth has been acquired to improve the quality and coverage of the businesses' TMC service. Trafficlink, the nature of its cost base being primarily fixed, also increased the fixed cost base of the Group.
On a Group basis, continuing profit before taxation was £4.79m (2007: £3.67m). Trafficlink contributed £0.19m profit before taxation post its acquisition. During the year a deferred tax asset of £1.49m was released, which created a taxation debit of £1.49m (2007: credit of £1.49m) in the profit and loss account.
Basic and diluted earnings per share from continuing operations were 3.2p (2007: 5.2p). Continuing basic and diluted earnings per share were up 29.7% to 4.8p (2007: 3.7p), before the effects of tax.
On 7 December 2007, ITIS purchased Trafficlink Limited for £2.18m and repaid certain loans within Trafficlink of £8.32m. Purchased with Trafficlink were approximately £10m tax losses which are available for Trafficlink to use against its future trading profits. This cash outflow on Trafficlink, the purchase and fit out of the data centre and the payment of a maiden dividend of £1.42m in February 2008 all contributed to reducing the year end cash balance to £1.96m (2007: £11.57m).
Following the High Court approval given on 23 January 2008 of the resolution passed at the Company's extraordinary general meeting on 22 November 2007 for the elimination of an accumulated deficit on its profit and loss account of £33,520,972 by the cancellation of the whole of the amount standing to the credit of its share premium account, a dividend of 1.5p per share was paid on 29 February 2008 in respect of the 2006/7 year.
The Board of ITIS will declare a final dividend each year. The Board will recommend to shareholders at the Company's forthcoming AGM that a final dividend for the year ended 31 March 2008 of 1.5p per will be paid on 29 September 2008 to the members on the register at the close of business on 5 September 2008.
The Board would like to thank all of the management and staff for their huge contribution to this year's results and for their hard work, especially the extensive travelling undertaken by the international development team. We would like to welcome too, the staff of Trafficlink and we are confident that together both businesses will be able to offer exciting new services to our customers.
UK BUSINESS
For the year in review, the UK market generated the majority of our revenues and profits, which grew substantially by £3.72m (of which Trafficlink contributed £1.43m) and £0.68m (of which Trafficlink contributed £0.19m) respectively. We continue to work closely with our customers in the UK and are finding ways to introduce new products and applications using both our real time and historic data. In the last few months we have renewed important RDS-TMC contracts with Jaguar, Land Rover, Renault and Nissan.
Contracts with General Motors and the DfT were not renewed. Whilst progress has been made in replacing the revenue and profit from these lost contracts and we do expect growth from existing customers, these contract losses will impact on the performance in the UK in this current financial year.
It is too early in the year to comment on whether the crisis in the credit market will affect our revenues from new car sales and the personal navigation device (PND) market, though penetration of navigation systems in the car, which is still our largest market, is less than 10% of all new vehicles sold. We are seeing evidence of our traffic service becoming bundled as standard on more PND devices, and we continue to win new customers, notably Garmin and Nokia. ITIS has been selected as the UK data provider for Nokia's delivery of real time traffic reports to their mobile handsets with built in GPS. This contract is part of a European wide solution via Arc Transistance. ARC Transistance was founded in 1991 by the 8 major automobile clubs in Europe, including the UK.
Revenues from our IVR (Interactive Voice Response) business were flat this year which we believe to be partly attributable to lack of significant promotion from the mobile networks and the dramatic increase in navigation systems equipped with RDS-TMC which provide high quality information to the driver. However we are working on introducing some new services and content to users which takes advantage of the Trafficlink data and broadcast facility. We expect the first of these to be available next month.
ITIS is extending its association with Mobile Commerce, a leading mobile content aggregator and distributor, enabling companies to deliver content to mobile users via Mobile Commerce's best of breed mobile content delivery platform. The latest development will bring ITIS's content to AA mobile users. In addition, ITIS has recently developed bespoke IVR telephone services delivering real time traffic content, enhanced by live studio additional broadcast bulletins, for both Mobile Commerce and BSKYB. This follows on previous and ongoing IVR associations with both ClearChannel (The Hound brand) and the RBS Group (Tracker brand).
ITIS continues to provide several UK Local Government authorities with both live and historic traffic speed and journey time information to be used as part of their local transport planning. Our data set has now been enhanced by incident data from Trafficlink and this will help in providing higher quality predictive journey time information. Additionally, various expert traffic consultants including JourneyDynamics, Kingswood MapMechanics and Faber Maunsell have been provided with ITIS's floating vehicle data (FVD®) for use in traffic planning, logistic and traffic congestion monitoring applications. The public sector is under considerable cost pressure and we therefore expect that sales made to local Government will generate only modest revenues.
Working with Global Traffic Network's new European subsidiary, ITIS and Trafficlink will be delivering content to the Highways Agency radio station. Global Traffic Network are the leading provider of custom traffic and news reports to radio and television stations in Canada and Australia.
ITIS continues to develop products for Government and industry using the historic dataset now including information from Trafficlink. This combined database is unique and we are having considerable success in selling information to those who wish to provide better predictions on journey times and to create their own products where the combination of historic and real time information provides a superior experience for the customer.
We continue to attract new visitors and members to our own traffic website, www.keepmoving.co.uk. One particularly successful new service has been the availability of live cameras on the site so that users can look at both speed and flow data and live pictures side by side.
TRAFFICLINK
ITIS acquired Trafficlink on 6th December 2007. Trafficlink is the UK's leading distributor of traffic incident and travel information to broadcasters, business and Government. Key customers include the BBC, the Highways Agency and through an exclusive agreement with UBC Media, 185 commercial radio stations.
Trafficlink gathers, edits and broadcasts traffic and travel information from a network of seven regional offices (London, Bristol, Birmingham, Cardiff, Manchester, Middlesbrough, Edinburgh) that operate 24 hours per day, 7 days a week. REGIS, Trafficlink's data aggregation tool, covers the entire UK road network as well as all forms of public transport and aggregates real-time traffic and travel information from over 5,000 CCTV cameras, police forces, government agencies, local councils and other sources.
The acquisition enables ITIS to expand its strong presence within the UK market, adding value to existing services and enriching both companies' content offerings to customers. Whilst the previous arrangements between ITIS and Trafficlink have been commercially successful for both parties, ITIS believes that the pace of development and increasingly competitive environment made it the right time to control end to end data quality and extend its business model.
Shortly prior to the acquisition, Trafficlink's contract with the BBC was renewed for three years to provide traffic and travel information to all local and national BBC stations. Trafficlink is the contracted supplier of Traffic and Travel news to the BBC. The service includes streaming of live data to BBCi and Ceefax. Information and editorial support to BBC TV, BBC Radios 2 and Five Live and BBC Local Radio. Live bulletins to BBC Local Radio and BBC Wales and recorded audio for BBCi. Trafficlink also works with the BBC on new and innovative ways to bring up to the minute travel news to the BBC audience across a variety of platforms. Trafficlink has been a supplier of Traffic news to the BBC since November 1998, and the current contract runs until 2011.
A further major contract for which the company was bidding did not materialise and therefore it is now unlikely that there will be any payment of deferred consideration.
Our customers have reacted well to our acquisition of Trafficlink and we are working actively with a number of them to find ways of using the unique combination of high quality incident data with speed and flow information to add value to what is provided already. In particular with the increased focus on green motoring and multi-modal travel, Trafficlink is in a very strong position to fuse road traffic and public transport information to create a complete journey management dataset.
INTERNATIONAL
We are extremely pleased with the momentum we are now achieving with our international business and we have partnerships developing throughout the world which leads us to believe that revenues will grow significantly year on year. Since we first started deploying our Cellular Floating Vehicle Data (CFVD®) platform awareness of this technology has become more widespread leading to greater knowledge from the mobile operators and in turn more willingness from them to work with companies like ITIS.
Our business model is to find licencees or develop joint ventures in order to minimise risk and have strong local representation. We also need to work closely with mobile operators in each country and consequently the Company has to make certain investments in order to bring the technology to market and generate revenues within an acceptable timescale. The upside of this is that once the system becomes fully operational, the model becomes profitable.
In Israel, our technology centre is responsible for the development and installation of CFVD® Since acquiring this technology in 2003 we have continued to invest in the team there and believe that access to highly skilled people in the areas of Geographical Information Systems, Wireless Networks and GPS has enabled us uniquely to roll out nationwide systems quickly and reliably.
In July last year Dr Gary Gates was promoted to the board as International Development Director and Gary has successfully built a strong team around him with responsibility for business development and partner support.
Europe, Middle East and Africa (EMEA)
Our business model in this region has produced a profit for the first time mainly from the Belgian market and the pilot in Spain. Our second nationwide CFVD® system (the first being in Israel) is now fully operational in Belgium and Be-mobile, our licensee, is generating on-going revenues through a wide range of contracts with the media, mobile operators and navigation system vendors. A major share holder in Be-mobile is Touring (Belgium's largest motoring club) whilst cellular data is provided through an exclusive 5 year deal with Proximus, the largest mobile operator in Belgium.
In Spain we successfully completed a pilot project using data from the Telefonica mobile network which was showcased at 3GSM, the largest mobile event in the world and we are exploring this market further with potential local partners. In the Republic of Ireland our licensee, iTraffic, is working with O2 Telefonica Ireland and will be launching a fully commercial service early next year. In Israel our business continues to develop strongly and we are supplying traffic information on IVR to the two largest mobile operators, Orange IL and Cellcom, and to Telmap, a leading provider of navigation solutions. In the Czech Republic we have successfully completed a pilot with our local partner CEDA using network data from T-mobile and commercial discussions are underway for the next phase of this project.
In Russia we have appointed a licensee and have already started to identify suitable customers and a mobile operator. Moscow suffers from very bad traffic congestion and this coupled with the recent boom in navigation systems there gives us confidence that this will be an important market for our technology.
In South Africa we have formed a joint venture with Altech Netstar, the leading stolen vehicle tracking and fleet management company in Africa. We are currently rolling out our technologies and a range of services which will closely replicate our UK services.
Americas
As previously announced, a new contract with revised milestones has now been signed between Delcan, our partner in America, and Missouri Department of Transportation (MoDOT) to enable ITIS to supply Statewide real time traffic information. We expect the financial contribution to be modest and there is no guarantee that MoDOT will commit to the full extent of the contract.
Whilst the roll-out of technology in the US has been slower then we have hoped we have identified several projects in Canada and South America and we are currently in the process of working with mobile operators and potential licensees to work out the business case and timescales for deployment in these countries.
Asia Pacific
We are particularly excited by the business we are generating in Asia Pacific region. In Australia our licensee Traffic Intelligence, in conjunction with major partners, has commenced the design stage of a national traffic service which will be launched in the second quarter of the financial year ending 31 March 2009 and will cover approximately 70,000km of roadway. The service will use a combination of data sources including the ITIS CFVD® technology. Intelematics, our RDS-TMC licensee in Australia, successfully launched a commercial RDS-TMC service this year. In Singapore, we are pleased to collaborate with SingTel on their latest Live Traffic Services, which enables customers to view real-time traffic information. The service also provides estimated travelling time and costs for customers' easy reference. The services will be demonstrated at CommunicAsia2008. SingTel is Asia's leading communications group providing a portfolio of services including voice and data services over fixed, wireless and Internet platforms. It has a network of 37 offices in 19 countries and territories throughout Asia Pacific, Europe and the United States. Together with its regional partners, SingTel is Asia's largest multi-market mobile operator, serving more than 185 million mobile customers in eight markets.
CURRENT TRADING AND PROSPECTS
We are encouraged by the rate of growth of our International business and ITIS's position as a world leader in the traffic information market. The Board views with great confidence the profitable expansion of ITIS into new markets.
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ITIS Holdings plc
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Preliminary announcement of results for the year ended 31 March 2008
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Consolidated income statement
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2008
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2007
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|
|
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£
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|
£
|
|
Continuing operations
|
|
|
|
|
|
Revenue
|
|
18,322,831
|
|
14,171,896
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|
Cost of sales
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(6,342,440)
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|
(4,910,605)
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|
|
|
__________
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|
__________
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|
Gross profit
|
|
11,980,391
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|
9,261,291
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|
|
|
|
|
|
|
Operating costs
|
|
(7,672,342)
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|
(5,902,548)
|
|
|
|
__________
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|
__________
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|
Operating profit
|
|
4,308,049
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|
3,358,743
|
|
|
|
|
|
|
|
Interest receivable and similar income
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|
493,620
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|
312,127
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|
Interest payable and similar charges
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|
(8,986)
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(707)
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|
|
|
__________
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|
__________
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|
Profit before tax
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|
4,792,683
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|
3,670,163
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|
|
|
|
|
|
|
Current tax on ordinary activities
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|
(106,680)
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|
(5,737)
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|
Deferred tax (charge) credit
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|
(1,486,544)
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|
1,491,830
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|
|
|
__________
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__________
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Total tax on profit on ordinary activities
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|
(1,593,224)
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|
1,486,093
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|
|
__________
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|
__________
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Profit for the financial year from continuing operations
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|
3,199,459
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|
5,156,256
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|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
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|
|
|
|
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Profit for the financial year from discontinued operations
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|
-
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|
4,289,589
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|
|
|
__________
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|
__________
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Profit for the financial year
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|
3,199,459
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|
9,445,845
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|
|
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__________
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__________
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|
|
|
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Basic and diluted earnings per share from continuing operations (pence)
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3.2 |
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5.2 |
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Basic and diluted earnings per share from continuing and discontinued operations (pence)
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|
3.2
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|
9.6
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|
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__________
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__________
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Consolidated statement of recognised income and expense
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2008
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2007
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|
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£
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£
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Profit for the financial year
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3,199,459
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9,445,845
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Currency translation difference
|
527
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(1,649)
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__________
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__________
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Total recognised income and expense for the financial year
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3,199,986
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9,444,196
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|
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__________
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__________
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Attributable to:
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Equity holders of the parent
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3,199,986
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9,444,196
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__________
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__________
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Consolidated balance sheet at 31 March 2008
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2008
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2007
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£
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£
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Non-current assets
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|
|
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Goodwill
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9,315,548
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-
|
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Other intangible assets
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2,288,700
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684,838
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Property, plant and equipment
|
1,885,005
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932,997
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|
Deferred tax asset
|
5,286
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1,491,830
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|
Other receivables
|
552,854
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98,337
|
|
|
__________
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__________
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|
|
14,047,393
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3,208,002
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|
|
__________
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__________
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Current assets
|
|
|
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Trade and other receivables
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6,322,318
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4,690,805
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Cash and cash equivalents
|
1,964,522
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11,571,102
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|
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__________
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__________
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|
|
8,286,840
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16,261,907
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|
|
__________
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__________
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Total assets
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22,334,233
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19,469,909
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|
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__________
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__________
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Current liabilities
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Trade and other payables
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(4,193,130)
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(3,291,283)
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__________
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__________
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Net current assets
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4,093,710
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12,970,624
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|
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__________
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__________
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Non-current liabilities
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|
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Other payables
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(69,039)
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(61,396)
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|
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__________
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__________
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Total liabilities
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(4,262,169)
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(3,352,679)
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|
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__________
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__________
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Net assets
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18,072,064
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16,117,230
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|
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__________
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__________
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Equity
|
|
|
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Called-up share capital
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5,230,270
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5,230,270
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Share premium account
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-
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38,070,740
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Retained earnings
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12,413,527
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(27,440,187)
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Other reserve
|
428,267
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256,407
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|
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__________
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__________
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Equity attributable to equity holders of the parent
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18,072,064
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16,117,230
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|
|
__________
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__________
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Total equity
|
18,072,064
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16,117,230
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|
|
__________
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__________
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2008
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2007
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|
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Note
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£
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£
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Net cash from operating activities
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2
|
3,874,611
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4,790,792
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|
|
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__________
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__________
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|
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|
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|
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Investing activities
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|
|
|
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Interest received
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|
493,620
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312,127
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Proceeds on sale of subsidiary
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|
-
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3
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Costs of disposal
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|
-
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(164,484)
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Net cash balances disposed of with subsidiary undertaking
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|
-
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(4,153)
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Repayment of loans owed by subsidiary
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-
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2,199,997
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Proceeds on disposal of property plant and equipment
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|
136,627
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17,749
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Purchases of property plant and equipment
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(1,347,812)
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(894,958)
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Purchase of intangible assets
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|
(16,795)
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(381,820)
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Acquisition of subsidiary
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|
(3,010,346)
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-
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|
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__________
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__________
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Net cash (used in) from investing activities
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|
(3,744,706)
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1,084,461
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__________
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__________
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Financing activities
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|
|
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Dividends paid
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|
(1,417,012)
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-
|
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Repayment of borrowings
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|
(8,320,000)
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-
|
|
|
|
__________
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__________
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Net cash used in financing activities
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|
(9,737,012)
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-
|
|
|
|
__________
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__________
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|
|
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|
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Net (decrease) increase in cash and cash equivalents
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|
(9,607,107)
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5,875,253
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|
Cash and cash equivalents at beginning of year
|
|
11,571,102
|
5,697,498
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|
Effect of foreign exchange rate changes
|
|
527
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(1,649)
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|
|
|
__________
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__________
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Cash and cash equivalents at end of year
|
|
1,964,522
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11,571,102
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|
|
|
__________
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__________
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Statement of changes in equity for the year ended 31 March 2008
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|
|
|
|
|
|
|
|
2008
|
2007
|
|
|
£
|
£
|
|
Profit for the financial year
|
3,199,459
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9,445,845
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|
Other recognised gains and losses relating to the year
|
527
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(1,649)
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IFRS 2 share option charge
|
171,860
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82,815
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Dividends paid
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(1,417,012)
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-
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|
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__________
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_________
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Net addition to Group shareholders’ funds
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1,954,834
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9,527,011
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Opening shareholders’ funds
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16,117,230
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6,590,219
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|
|
__________
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_________
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Closing shareholders’ funds
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18,072,064
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16,117,230
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|
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__________
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_________
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Notes
1. Basis of preparation
The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the years ended 31 March 2007 or 2008, but is derived from those accounts. Statutory accounts for the year ended 31 March 2007 have been delivered to the Registrar of Companies.
The auditors have reported on the accounts for the years ended 31 March 2008 and 2007: their reports were unqualified and did not contain a statement under section 273 (2) or (3) of the Companies Act 1985.
The Group adopted International Financial Reporting Standards in the current year as stated in its interim statement for the six months ended 30 September 2007. This preliminary announcement has been prepared on the basis of accounting policies consistent with those set out in the interim statement.
A copy of the annual report and accounts for the year ended 31 March 2008 will be circulated to all shareholders of the company shortly and copies will also be available for members of the public upon application to the registered office at Fifth Floor, Station House, Stamford New Road, Altrincham WA14 1EP and on the website www.itisholdings.com.
2. Reconciliation of operating profit to net cash inflow from operating activities
|
|
2008
|
2007
|
|
|
£
|
£
|
|
Profit for the year
|
3,199,459
|
9,445,845
|
|
Adjustments for:
|
|
|
|
Depreciation of property, plant and equipment
|
533,955
|
534,428
|
|
Amortisation of intangible assets
|
393,138
|
305,595
|
|
Interest income
|
(493,620)
|
(312,127)
|
|
Share-based payment expense
|
171,860
|
82,815
|
|
Finance costs
|
8,986
|
707
|
|
Income tax expense
|
106,680
|
5,737
|
|
Deferred tax charge (credit)
|
1,486,544
|
(1,491,830)
|
|
Gain on disposal of discontinued operations
|
-
|
(4,056,923)
|
|
Gain on disposal of property, plant and equipment
|
(22,370)
|
(998)
|
|
Decrease in provisions
|
-
|
(54,459)
|
|
|
__________
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__________
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Operating cash flows before movements in working capital
|
5,384,632
|
4,458,790
|
|
|
|
|
|
Decrease in inventories
|
-
|
55,190
|
|
Increase in receivables
|
(833,643)
|
(1,228,628)
|
|
(Decrease)/increase in payables
|
(672,267)
|
1,500,496
|
|
|
__________
|
__________
|
|
Cash generated by operations
|
3,878,722
|
4,785,848
|
|
|
__________
|
__________
|
|
|
|
|
|
Interest paid
|
(8,986)
|
(707)
|
|
Foreign tax paid
|
-
|
(18,205)
|
|
Research and development tax credit
|
4,875
|
23,856
|
|
|
__________
|
__________
|
|
Net cash from operating activities
|
3,874,611
|
4,790,792
|
|
|
__________
|
__________
|
|
|
|
|
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