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2009-09-25 07:01
Evolve Capital PLC - Half Yearly Report |
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RNS Number : 6607Z Evolve Capital PLC 25 September 2009
Evolve Capital Plc
INTERIM CONDENSED FINANCIAL STATEMENTS for the six months ended 30 June 2009 Evolve Capital Plc today announces its interim results for the six months ended 30 June 2009 which incorporate the results for its principal operating subsidiary, Astaire Group Plc. Highlights
Oliver Vaughan, Chairman, commented: "The acquisition of Astaire Group has transformed Evolve into a broad based financial services business. With leading advisory positions on the PLUS and AIM markets and a strong private client stockbroking network across the south and west of England, we have established a strong base in the small and mid cap quoted sector, from which we aim to expand further." Enquiries
Edward Vandyk
Jeremy Porter
Neil Bennett George Hudson Tom Roberts Chairman's Statement I am pleased to present the results for the six month period ended 30 June 2009. These results are the first the Company has prepared since acquiring a majority stake in Astaire Group Plc ("Astaire"). The Group now comprises financial services businesses incorporating:
Results Following the acquisition of Astaire, Evolve is now required to report under International Financial Reporting Standards and the results for the period reflect the impact of this changed reporting basis and are explained in greater detail in the Financial Review. The enlarged Group, incorporating Astaire, generated an underlying loss before tax for the six months ended 30 June 2009 of £2,419,000 (30 June 2008: £4,000 loss) and had net assets per share at 30 June 2009 of 8.84 pence (30 June 2008: 9.47 pence). An explanation of the difference between headline profit and underlying loss is set out in the Financial Review. Astaire Group Plc (formerly Blue Oar Plc) During the period the Directors have, as expected, been heavily focussed on completing the process of assuming executive control of Astaire, implementing Board changes and conducting a strategic review of the business. The recommendations from the strategic review, which were fully supported by the Evolve Board, have resulted in a rationalisation of the activities of Astaire. This included an exit from wholesale asset management, an exit from trading in Australia, and the reshaping of the London based institutional business. Alongside this the executive were mandated to seek economies of scale through selective acquisitions of businesses with corporate clients and specialist staff, with the intention of building a more robust business servicing its corporate and institutional clients. Since the end of the period Astaire acquired Dowgate Capital Plc (with its two regulated subsidiaries) and Ruegg and Co Limited, adding retained corporate clients and staff to the Group. These additions put Astaire Securities, as an AIM Nominated Adviser, into the top three by number of retained corporate clients. Rowan Dartington & Co Limited The strategic review also covered Rowan Dartington, Astaire's private client stockbroking and asset management business. The Board of Astaire, again fully supported by the Evolve Board, resolved to continue to invest in, and develop this business, and this is ongoing. In the document setting out the Offer by Evolve for Astaire, reference was made to the possibility of distributing shares in Rowan Dartington within the next three (now two and a half) years. The Board has subsequently concluded that there is a strong rationale for retaining ownership of Rowan Dartington and building a consolidated financial services group. St Helens Capital Partners LLP On 14 September 2009 Evolve acquired Whim Gully Capital LLP which had itself just acquired the PLUS advisory business of St Helen's Capital Plc. The combined business has now been renamed St Helens Capital Partners LLP. The Evolve Group now owns the largest PLUS corporate adviser. It is expected that this business will continue to grow the number of retained corporate clients organically and expand its advisory activities and revenues over the next few months and years. Evolve principal investment The Company has continued its investing activities, including providing capital to 3D Diagnostic Imaging Plc which was subsequently admitted to the PLUS quoted market. At 30 June 2009, our holding was valued at £2,072,000, an uplift of £1,544,000. During the period Evolve also purchased shares in WH Ireland Group Plc issuing new Evolve shares as consideration. This holding in WH Ireland was subsequently sold for cash realising a profit of £418,000. 2009 continues to be a year of considerable activity for the Group, restructuring and building a sound base to maintain and develop a significant presence in the small and mid cap quoted sectors in the UK. Oliver Vaughan Chairman 25th September 2009 Financial Review Adoption of International Financial Reporting Standards As mentioned in the Chairman's statement Evolve is adopting, for the first time, international financial accounting rules in the form of International Financial Reporting Standards and International Accounting Standards (collectively "IFRS's"). Details of the ways in which IFRS's have affected the reported performance of the Group are shown in the notes to this Interim Report, including details of the restatement of the 2008 numbers. A full reconciliation of the difference between the original 2008 results, reported under UK Generally Accepted Accounting Practice ("UK GAAP") and the restated 2008 results under IFRS is shown in note 10. Result before tax The result for the first six months of 2009 was a headline profit before tax of £1,809,000, which on an underlying basis (the metric by which the Board now monitors performance on an ongoing basis and which is considered to provide the optimal comparative measure), resulted in a loss before tax of £2,419,000 as detailed below:
ordinary activities before
taxation
Add back:
profit and loss investments
operating costs
intangibles
income
activities before taxation Income statement Trading performance is now reported in the Income Statement, rather than the Profit and Loss account, although much of the presentation is relatively unchanged. The main features of IFRS affecting the "old" stand alone Evolve accounts relate to the basis of valuing investments and how the movements in those valuations are treated. Whereas previously investments would have been included at cost less an estimate of any permanent reduction in value, with that movement being accounted for as an expense, under IFRS all investments are now revalued at each Balance Sheet date and depending on whether they are classified as being "available for sale" or not, the change in valuation, positive or negative, is accounted for through reserves or through the Income Statement. Our investments and their valuations are split, by virtue of the size of holdings, between Available for Sale Investments ("AFS") and Fair Value through Profit and Loss Investments ("FVTPL"), as follows:
The whole of the increase in fair value of £1,544,000 arising on the 3D Diagnostics investment at 30 June 2009, has been included in the 2009 Income statement. Another significant item appearing in the income statement is the £2,919,000 gain arising on the Astaire acquisition. This gain is created because of the requirement to write off negative goodwill arising from the fair value of assets acquired on the Astaire bid being greater than the valuation of the consideration paid by Evolve. In addition the first half of 2009 has benefitted from purchasing and subsequently selling a holding in W H Ireland Group Plc, realising a profit of £418,000, included in the profit on disposal of AFS investments. A credit of £924,000 in respect of share-based payments relates to the cancellation of a large number of options previously issued to staff no longer employed within the Astaire group. Astaire Group results, aggregated with Evolve in these figures included an underlying loss before tax of £2,265,000. As expected the costs of restructuring the businesses within Astaire were significant, and revenues in the first half of the year were limited. Costs have been addressed, and revenues are improving, resulting in the Astaire Group achieving profitability for the month of June, the first monthly profit for fifteen months. Taxation The tax charge for the period reflects a corporation tax provision in respect of the investments profits realised and a deferred tax charge in respect of the tax that would arise if the FVTPL investment gain shown in the income statement had been realised. Loss from discontinued operations This loss relates to Inteq Limited, an Astaire subsidiary that was sold in the period. Earnings per share Basic earnings per share from continuing operations were 1.48 pence per share (2008: 0.01 pence per share loss). As there are no options or other dilutive instruments in issue fully diluted earnings per share are the same as basic earnings per share. Balance sheet The format of the Balance Sheet has changed under IFRS. Included in the notes to these accounts are reconciliations showing the way in which the figures previously published have changed and the effects of re-measuring some categories of assets and liabilities. Other intangible assets are the values the Board are required to attribute to the brand names and customer lists acquired with Astaire. The most significant effect of IFRS has been the revaluation of AFS and FVTPL investments as referred to above. At 30 June 2009 the enlarged group held cash balances of £10.5 million. This figure has fallen since the period end due to acquisitions completed by Astaire and Evolve as well as ongoing working capital requirements. Going concern As part of its regular assessment of the future prospects for the Group, the Board reviews a one year plan and further projections. Group cash balances including those acquired have decreased during 2009, but the Group has significant cash resources and no borrowings. As detailed above, the Group has undertaken a strategic review and cut costs across its operating businesses. As a result of such considerations, the Directors have a reasonable expectation at the time of approving the interim financial statements that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the interim financial statements. Edward Vandyk Chief Executive 25th September 2009 Condensed Consolidated Income Statement for the six months ended 30 June 2009
available-for-sale investments
profit and loss investments
Impairment of goodwill and
other intangibles
intangibles
activities before taxation
continuing operations Discontinued operations
operations
Attributable to
parent
Earnings / (loss) per ordinary share (pence) From continuing operations From continuing and discontinued operations Condensed Consolidated Statement of Comprehensive Income for the six months ended 30 June 2009
Other comprehensive income:
available-for-sale investments
taken to equity, net of tax
translation of foreign
operations
of foreign operations
on sale of
available-for-sale investments
components of other comprehensive income
the period, net of tax
the period
Total comprehensive income
attributable to
parent
Condensed Consolidated Balance Sheet as at 30 June 2009
ASSETS
Non-current assets
Current assets
Fair value through profit &
LIABILITIES
Current liabilities
Non-current liabilities
EQUITY
equity
Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2009
for the period
for the period
capital
for the period
Condensed Consolidated Statement of Cash Flows for the six months ended 30 June 09
2009 2008 2008
Net cash used in operating activities
Investing activities
available-for-sale investments
available-for-sale investments
through profit & loss
investments
and equipment
undertaking
undertaking
undertaking
investing activities
Financing activities
leases repaid
ordinary share capital
financing activities
equivalents
beginning of period
rates
end of period Notes to the Interim Condensed Financial Statements
The Interim Report is unaudited and does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The information for the year ended 31 December 2008 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified, did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The interim condensed financial statements will be circulated to all shareholders by 2 October 2009 and will be available from the Company's registered office at 223a Kensington High Street, London W8 6SG and also in accordance with Rule 20 of the AIM rules, on the Company's website at www.evolvecapital.co.uk. The following accounting policies have been applied in dealing with items which are considered material in relation to the Group's financial statements: a) Basis of preparation The Group has adopted the requirements of International Financial Reporting Standards and International Accounting Standards as endorsed by the EU (collectively "IFRSs") for the first time for the purpose of preparing financial statements for the year ending 31 December 2009. The consolidated financial information contained within these interim condensed financial statements has been prepared in accordance with accounting policies which will be adopted in presenting the full year annual report and accounts. The consolidated financial statements have been prepared under the historical cost convention, with the exception of financial instruments, which are stated in accordance with IAS 39 Financial Instruments: Recognition and Measurement. IAS 1 (revised) requires the presentation of a statement of changes in equity as a primary statement, separate from the income statement and statement of comprehensive income. As a result, a condensed consolidated statement of changes in equity has been included in the primary statements, showing changes in each component of equity for each period presented. b) Going concern As part of its regular assessment of the prospects for the Group, the Board reviews a one year plan and further projections. Group cash balances including those acquired have decreased during 2009, but the Group has significant cash resources and no borrowings. As detailed in the Financial Review, the Group has undertaken a strategic review and cut costs across its operating businesses. As a result of such considerations, the Directors have a reasonable expectation at the time of approving the financial statements that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. c) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Changes in percentage interest (increases and decreases) of a controlled entity that do not result in a change of control are accounted for as transactions with equity holders, and no adjustment is made to goodwill. The difference between the amount paid and the book value of the minority interest eliminated is taken directly to equity. d) Revenue recognition The Group follows the principles of IAS 18, 'Revenue Recognition', in determining appropriate revenue recognition policies. In principle, therefore, revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow into the Group. Corporate Finance: Revenue comprises the value of services supplied by the Group, exclusive of value added tax. Advisory fees are recognised when the relevant transaction is completed and retainer fees are recognised over the length of time of the agreement. Stockbroking: Revenue comprises commission and other fees and is recognised when receivable in accordance with the date of the underlying transaction. Other income includes dividend income on available-for-sale investments. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable. e) Operating segments The Group has adopted International Financial Reporting Standard 8 "Operating Segments" for its financial statements for the year ending 31 December 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. f) Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. As permitted by IFRS 1, the Group has chosen not to restate, under IFRS, business combinations that took place prior to 27 September 2007, the date of transition to IFRS. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. g) Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any impairment. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately and is not subsequently reversed. Any negative goodwill is recognised immediately in the income statement. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently where there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying value of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying value of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date. h) Intangible assets Intangible assets acquired separately are measured, on initial recognition, at cost. Following initial recognition, intangible assets acquired separately are carried at cost less accumulated amortisation and any accumulated impairment. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Intangible assets are amortised over their useful economic lives. The amortisation period and method for an intangible asset are reviewed at least once every financial year. Changes in the expected useful economic 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 and treated as changes in accounting estimates. Amortisation is calculated on a straight line basis to write down the cost of intangible assets to their residual values. i) Property, plant and equipment All property, plant and equipment is shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of items. Depreciation is charged so as to write off the cost of assets over their useful economic lives, using the straight line method, on the following bases: Leasehold improvements period of lease
The assets' residual values and useful lives are reviewed, and if appropriate asset values are written down to their estimated recoverable amounts, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts, and are included in the income statement. j) Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately. k) Trade and other receivables Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. l) Available-for-sale investments Investments previously classified as current and fixed asset investments (excluding investments in associates) have been re-classified as available-for-sale investments, and initially recognised at fair value. Subsequent available-for-sale investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost, including transaction costs. At subsequent reporting dates, available-for-sale investments are measured at fair value. Gains or losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Impairment losses recognised in profit or loss are not subsequently reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised directly in equity. The fair values of available-for-sale investments quoted in active markets are determined by reference to the current quoted bid price. Where independent market prices are not available, fair values may be determined using valuation techniques with reference to observable market data. Available-for-sale investments are disposed of when commercially beneficial to the Group. m) Fair value through profit and loss, and derivative financial instruments Investments acquired where the shareholding is in excess of 20%, but where the Group has neither control nor significant influence are designated as fair value through profit and loss at initial recognition, and all subsequent changes in fair value are recognised in the income statement in the period of change. Derivatives, including share options and warrants, are measured initially at fair value and subsequently re-measured to fair value, through the income statement. Fair values are calculated using industry-standard valuation techniques, including the Black-Scholes model. The valuation inputs include the bid-price of the underlying equity, volatility measurements based on historical equity prices, the expected life of the option and published risk free interest rates. All derivatives are included in assets when their fair value is positive and liabilities when their fair value is negative, unless there is the legal ability and intention to settle net. n) Cash and cash equivalents Cash and cash equivalents comprise cash and demand deposits, and other short-term highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Such investments are normally those with original maturities of three months or less. o) Trade and other payables Trade and other payables are recognised initially at fair value, which is the agreed market price at the time goods or services are provided, and are subsequently measured at amortised cost. The Group accrues for all goods and services consumed but as yet unbilled at amounts representing management's best estimate of fair value. p) Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. q) Dividends Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. r) Pensions Contributions to the personal pension schemes of certain employees are charged to the income statement in the year in which they become payable. s) Share-based payments Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition. When the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period. Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of the goods and services received. t) Taxation The tax expense represents the sum of the tax currently payable and the deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. u) Foreign currencies The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or expense in the period in which the operation is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. v) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Operating lease rentals are charged to the income statement on a straight line basis over the term of the lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. w) Client Money The Group holds money on behalf of clients in accordance with the Clients' Money Rules of the Financial Services Authority. Such monies and the corresponding liabilities to the clients are excluded from the balance sheet and disclosed in the notes. 2. TAXATION The tax charge for the six months to 30 June 2009 reflects all the necessary provisions for current tax, taking into account the availability of losses brought forward, and movements in deferred tax with reference to the adjustments necessary under IFRS. In arriving at the effective tax rate account has been taken of the change in the rate of tax charged, and the disallowance of the cost of share-based payments charged to the income statement. Current income tax expense is recognised in these interim consolidated financial statements based on management's best estimates of the annual income tax liability expected for the full financial year. 3. EARNINGS PER SHARE The calculation of the basic earnings / (loss) per ordinary share is based on profit / (loss) attributable to equity shareholders of the parent on ordinary activities after tax and on the weighted average number of ordinary shares in issue during the period. There are no dilutive options or warrants. Reconciliations of the earnings / (loss) and weighted average number of shares used in the calculations are set out in the table below.
Earnings attributable to
equity shareholders of the
parent
Adjustment to exclude loss from discontinued operations 128 -
Earnings from continuing
operations excluding
discontinued operations
4. DIVIDENDS PAID No dividends were paid or declared in any period. 5. ACQUISITION OF ASTAIRE GROUP PLC Between 29 December 2008 when the offer became unconditional, and 13 January 2009, Astaire Group Plc (formerly Blue Oar Plc) was acquired by the issue of 111,772,658 ordinary shares of 1 pence each, whose fair market value was deemed to be 7.47 pence per share. Costs of the transaction amounted to £1,080,000.
Net assets acquired:
loss investments
Satisfied by:
Net cash inflow arising on
acquisition
acquired
above
acquisition
income 6. ACQUISITION OF DOWGATE CAPITAL PLC On 20 July 2009 the Group announced that having received acceptances for 75.80 percent. of total voting rights, the offer by Astaire Group Plc for Dowgate Capital Plc was declared wholly unconditional. By 28 August 2009 the Group had received acceptances for 93.74 percent. of total voting rights, and announced that the offer was closed and that it intended to acquire compulsorily any remaining shares that had not accepted the offer. The details below are based on the estimated cost of acquiring 100 percent. of Dowgate Capital Plc.
Net assets acquired:
Satisfied by:
Net cash outflow arising on
acquisition
costs
acquired
7. ACQUISITION OF RUEGG & CO LIMITED On 22 July 2009 a wholly owned United Kingdom registered subsidiary, Ruegg & Co Limited, was acquired by the issue of 6.0 million Astaire Group Plc ordinary shares of 0.1 pence each whose fair market value was deemed to be 5.25 pence per share, and the payment of £334,000 in cash.
Net assets acquired:
244 114 358
Satisfied by:
666
Net cash outflow arising on
acquisition
costs
acquired
(171) 8. ACQUISITION OF WHIM GULLY CAPITAL LIMITED LIABILITY PARTNERSHIP On 28 August 2009, Evolve Capital Plc announced that it had entered into an agreement to acquire 100 percent. of the membership interests in Whim Gully Capital LLP ("WGC") for an aggregate cash consideration of £475,000, subject to the fulfilment of certain conditions including the passing of the Resolution. In conjunction with this acquisition WGC and St Helen's Capital Plc contracted to sell the business and assets of St Helen's Capital Plc to WGC for cash consideration of £200,000. On 4 September 2009, the Resolution was duly passed at the Group's Extraordinary General Meeting. WGC changed its name on 16 September 2009, and is now incorporated under the name of St Helens Capital Partners LLP. The Group is in the process of identifying the other intangibles, and of fair valuing the assets acquired. 9. DISPOSAL OF INTEQ LIMITED On 3 June 2009 Astaire Group Plc completed the disposal of Inteq Limited, its Australian corporate finance subsidiary. The disposal was effected as part of the Group's strategy to cut costs and exit loss making areas of the business. The results of the discontinued operations, which have been included in the consolidated income statement, were as follows:
A loss of £619,000 arose on the disposal of Inteq Limited as shown below:
619
Net cash outflow arising on disposal:
(95) 10. IFRS RECONCILIATION (i) Reconciliation of equity at 27 September 2007 (Date of transition to IFRS) (Unaudited) The Company was incorporated on 27 September 2007, which was also the date of transition to IFRS. The balance sheet at transition date consisted solely of two unpaid ordinary shares of 0.1 pence each issued at par and there were no differences between UK GAAP and IFRS. (ii) Reconciliation of equity at 30 June 2008 (Unaudited)
ASSETS
Non-current Assets
Current assets
Fair value through profit &
LIABILITIES
Current liabilities
Creditors: amounts falling
Non-current liabilities
EQUITY
Parent company's
(iii) Reconciliation of equity at 28 December 2008 (Unaudited)
ASSETS
Non-current Assets
Current assets
Fair value through profit &
LIABILITIES
Current liabilities
Creditors: amounts falling
Non-current liabilities
EQUITY
Parent company's
10. IFRS RECONCILIATION (iv) Reconciliation of total comprehensive income for the period ended 30 June 2008 (Unaudited)
Profit on disposal of
Profit on disposal of fixed
Loss on ordinary activities
Loss on ordinary activities
Loss attributable to equity
Other comprehensive income
Gains on revaluation of
Deferred tax relating to components of other comprehensive income - (173) - (173)
Other comprehensive income for
Total comprehensive income for
Total comprehensive income attributable to equity shareholders of the parent (4) 445 - 441 10. IFRS RECONCILIATION (v) Reconciliation of total comprehensive income for the period ended 31 December 2008 (Unaudited)
Profit on disposal of
Profit on disposal of fixed
Loss on ordinary activities
Loss on ordinary activities
Loss attributable to equity
Other comprehensive income
Gains on revaluation of
Deferred tax relating to components of other comprehensive income - (133) - (133)
Other comprehensive income for
Total comprehensive income for
Total comprehensive income attributable to equity shareholders of the parent (116) 341 - 225
NOTES TO RECONCILIATIONS OF EQUITY AND COMPREHENSIVE INCOME a) Property, plant and equipment As a result of the adoption of IAS 16, 'Property, Plant and Equipment', items previously classified as tangible fixed assets have been re-classified as property, plant and equipment. b) Available-for-sale investments Assets previously classified as fixed and current asset investments have been re-classified as available-for sale investments, and recognised at fair value as detailed in the accounting policies. Fair value adjustments to available-for-sale investments are taken directly to the fair value reserve. c) Fair value through profit and loss investments The Group's derivative financial instruments which consist of share options and warrants are not recognised in the UK GAAP financial statements but are included at fair value in the IFRS financial statements. Fair value adjustments to fair value through profit and loss investments are recognised through the income statement. d) Deferred tax assets and liabilities Many of the adjustments referred to in this note have related tax effects, nearly all of which are deferred. This information is provided by RNS The company news service from the London Stock Exchange END
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