TIDMBVM
RNS Number : 4263U
Belgravium Technologies PLC
07 April 2016
Belgravium Technologies plc
Preliminary results for the
year ended 31 December 2015
The Board of Belgravium Technologies plc ((AIM:BVM)
'Belgravium', the 'Company' or 'the Group'), suppliers of mobile
data computing solutions and managed services to a variety of
industrial sectors, is pleased to announce its final results for
the year ended 31 December 2015.
Key Financials:
31 December 31 December
2015 2014
* Revenues GBP8,676,000 GBP9,408,000
* Trading profit before exceptional costs GBP107,000 GBP504,000
* Trading profit before exceptional costs (after tax) GBP299,000 GBP536,000
* Adjusted earnings per share 0.30p 0.53p
* Exceptional costs GBP637,000 GBP27,000
* Goodwill impairment GBP6,000,000 GBPnil
* Operating (loss)/profit GBP(6,530,000) GBP477,000
* (Loss)/profit( after tax) GBP(6,339,000) GBP509,000
* Basic earnings per share (6.28)p 0.50p
* Cash and cash equivalents GBP242,000 GBP731,000
Commenting today, Ian Martin, Chairman of Belgravium, said:
Last year was a period of consolidation and transformation for
Belgravium. Achieving the primary goals set, has given the business
a coherent structure, lower cost base and a vibrant new energy.
The operations are now more efficient, some costs have been
taken out and there have been substantial changes made to both
senior management and the Board.
The Board has taken the decisive action to write down the
Group's goodwill by GBP6,000,000, reflecting a more reasonable view
of future growth rates.
The Company is now more forward looking, with historic issues
behind it. The management are now focused on future opportunities
and building the business to support organic growth that is both
profitable and sustainable.
For further information please contact:
Belgravium Technologies
plc Ian Martin 01274 741860
Mark Hardy 01274 741860
WH Ireland - Nominated Mike Coe/Ed 0117 945
Adviser Allsopp 3472
WH Ireland - Investor 0113 394
Relations Jessica Metcalf 6623
Information on Belgravium Technologies plc can be seen at:
www.belgravium-technologies.com
CHAIRMAN'S STATEMENT 2015
In my first statement to you, at the interim stage last year, I
recognised that in business there are periods for growth and
periods for consolidation. Last year was a period of consolidation
and transformation for Belgravium. Achieving the primary goals set,
has given the business a coherent structure, lower cost base and a
vibrant new energy.
The Company is now becoming more forward looking, with historic
issues behind it. The management is now focused on future
opportunities and building the business to support organic growth,
that is both profitable and sustainable. Whether we succeed or not,
only time will tell, but we have every chance with a stronger
foundation in place. I am confident that, over time, not only will
we create a business of increased value, but also one of which we
can be proud.
The financial results for the year ended 31 December 2015, at
face value and relative to the prior year, appear disappointing.
That said trading results are slightly better than our
expectations. Within the financial reports are significant factors
that impact the results; firstly, there were substantial
exceptional costs from the restructuring and reorganisation of the
business. These were essential actions which have temporarily
eroded profitability and cash resources. Secondly, we took the
decision to write-down some slow moving stock which had a further
impact on our operating profit. And finally, having carefully
considered the carrying value of goodwill and the revenue
projections that supported that value, we have taken what the Board
considers to reflect a more reasonable view of future growth rates
and booked an impairment.
Financial Results
Revenue for the year ended 31 December 2015 was GBP8,676,000
(2014: GBP9,408,000). Belgravium operates in a competitive market
but our core markets are stable. Some of the decline in revenue can
be attributed to management resource being diverted onto the
restructuring of the business as well as the need for additional
products to be added to the portfolio.
Trading profits prior to any exceptional items were GBP107,000
(2014: GBP504,000) with adjusted profits after tax of GBP299,000
(2014: GBP536,000). The Company is reporting an overall operating
loss for the year of GBP6,530,000 (2014: profit of GBP477,000). The
non-recurring costs relate to goodwill impairment of GBP6,000,000
and GBP637,000 of exceptional costs relating to the restructuring
of the business; the largest items within this total being the
restructuring of the Board and payments relating to headcount
reduction.
Taxation continues to be positive due to the Group's R&D
programme where a super-deduction of 225% is available to SMEs on
their R&D activities. In addition cash back is available to a
loss making SMEs of up to 32.6% of qualifying expenditure. The
Company is anticipating a tax credit of GBP175,000 as a result of
our R&D activities for the year ended 31 December 2015 (2014:
GBP60,000 was provided with GBP79,000 actually awarded).
The adjusted earnings per share is 0.30p compared to 0.53p in
2014.
Basic earnings per share is (6.28)p (2014: 0.50p).
The underlying cash generative nature of the Group was
demonstrated again, even though we increased investment in product
development, ramped up marketing support and paid considerable
monies to exiting employees, our cash balances have only declined
by GBP173,000 since the interim stage. As at 31 December 2015 the
Company had no debt and cash of GBP242,000 in the bank (2014:
GBP731,000). The prior year amount, as reported at the time,
included a substantial pre-payment from one customer. As the Board
has previously indicated there will be no dividend.
The Board
I am delighted to welcome John Christmas (ACA) to the Board as
an independent Non Executive Director. He brings a wealth of
experience, skill and energy to the Board. John is currently the
CFO of Avesco Group plc, a very successful AIM quoted business. In
the short time John has been involved with Belgravium his guidance
and talent have had a real impact. The high professional standards
he sets will have a positive influence on the business. John is
Chairman of the Audit Committee.
Achievements
Clearly prior to my appointment the Company was at a watershed,
and continuing in its present form was not an option. Upon joining
I fostered the need for change and, with the hard work of everyone
in the business, I am pleased to say we have come a long way in a
short period of time. The operations are now more efficient, some
costs have been taken out of the business and there have been
substantial changes made to both senior management and the Board.
We are migrating the entire Group to one accounting and operating
system, which will bring real efficiency and improve the flow of
information; allowing us to make more informed decisions. A new
cloud based IT backbone has been installed making it easier to
function and allowing the business to be more productive and
agile.
Funding has been made available for investment into our next
generation of software and hardware products. Although this may
reduce short term profitability it is essential we continually
adapt to our customers' needs and demands and keep our products and
services relevant. We have increased marketing spend to support our
sales team and all the businesses now trade under the 'Touchstar'
brand, with a consistent and common theme - 'Specialists in real
time data capture and mobile computing'. The powerful and visual
impact of this marketing improvement is clearly seen on our trading
web site www.touchstar.co.uk.
I am also pleased to report we have put in place an enhanced
overdraft facility of GBP1m with Barclays Bank plc and I would like
to thank them for their support to the business over many years -
it is appreciated. The cost of this arrangement is GBP10,000 p.a.
with a rate of 2.75% over Barclay's base rate. This greatly helps,
and gives the flexibility the business needs as we move into a more
growth oriented phase for the company. This facility was not drawn
down at the year end.
Annual General Meeting and General Meeting
The Annual General Meeting of the Company is expected to be held
on 24 May 2016 at the Company's offices, Touchstar Technologies
Limited 7 Commerce Way, Trafford Park, Manchester M17 1HW.
Immediately following the Annual General Meeting the Company
intends to hold a general meeting to consider certain matter of
special business. This will include proposals to; change the name
of the Company, undertake a capital reorganisation and to adopt
electronic communications. The Board believes these measures, if
adopted, will reinforce the changes that have already been made and
support the Company in its new direction. A summary of the
proposals is set out below. Full details of these proposals and a
notice convening the meeting will be sent to shareholders in due
course, but in summary below:
(MORE TO FOLLOW) Dow Jones Newswires
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To reflect the new direction and reinforce the new branding of
the operating companies, the Board is proposing changing the name
of the Company to Touchstar plc (new AIM ticker TST).
The Companies Act 2006 facilitated the greater use of
e-communications when sending documents to shareholders. In order
to implement e-communications the company requires individual
shareholder approval. The Board asks for your support in this
matter as it will bring considerable cost savings, from which we
all benefit.
In addition, the company is seeking to obtain the relevant
authority via a shareholder resolution to use its website to make
documents available to those shareholders who agree and to those
shareholders who fail to reply. The Company will still be required
to notify the recipient of the presence of the document or
information on the website along with details of the website
address and how to access it.
The Board is proposing to consolidate the Company shares and
undertake a capital reorganisation.
The principal purpose of the consolidation will be to reduce the
size of the share register, allowing shareholders with uneconomic
small holdings to realise their investment free of dealing charges.
In addition, it will reduce the costs of servicing the register for
the company. The Board is recommending a consolidation (before the
below described Sub Division) which will remove shareholders whose
shareholding is below 4,000 shares (less than GBP150 in value at
current market value). Shareholders should note that Chelverton
Asset Management and I have indicated a willingness to underwrite
and buy these shares.
The nominal value of each ordinary share is 5p. Under the
Companies Act a company is prohibited from issuing its shares at a
value below the nominal value. Therefore, the principal purpose of
the subdivision will be to reduce the nominal value of the ordinary
shares to below the market value of the shares
Current Trading and Outlook for 2016
We have made a reasonable start to the year. Our new marketing
and sales focus has become noticed in our market place and while at
present it is too early to be sure when this will translate into
orders, it is nevertheless encouraging. The environment is not easy
but we are determined, and are fighting hard for each sale.
Over the next 18 months we will be introducing several new
products and services, some are already in the latter stages of
development with launch customers. Ultimately the fortunes of the
business will be directly linked to our ability to design,
implement and deliver products, services and solutions that meet
our customers' demands and that bring the functionality and
productivity enhancement they require.
Thank you for your support and I hope your trust will be
rewarded.
I Martin
Executive Chairman
6 April 2016
Consolidated income statement for the year ended 31 December
2015
2015 2014
Continuing operations GBP'000 GBP'000
---------------------------------------------------------------------- ------------- ---------------
Revenue 8,676 9,408
Cost of sales (4,544) (4,680)
---------------------------------------------------------------------- ------------ ---------------
Gross profit 4,132 4,728
Distribution costs (88) (81)
Administration expenses (10,574) (4,170)
---------------------------------------------------------------------- ------------ ---------------
Operating profit before exceptional items and goodwill impairment 107 504
Goodwill impairment included in administration expenses (6,000) -
Exceptional costs included in administration expenses (637) (27)
---------------------------------------------------------------------- ------------ ---------------
Operating (loss)/profit (6,530) 477
Finance income - 1
Finance costs (1) (3)
---------------------------------------------------------------------- ------------ ---------------
(Loss)/profit before income tax (6,531) 475
Income tax credit 192 34
---------------------------------------------------------------------- ------------ ---------------
(Loss)/profit for the year attributable to the owners of the parent (6,339) 509
------------ ---------------
(Losses)/earnings per ordinary share (pence) attributable to owners of the parent during
the year:
2015 2014
Basic (6.28)p 0.50p
Adjusted 0.30p 0.53p
There is no other comprehensive income or expense in the current
year or prior year and consequently no statement of other
comprehensive income or expense has been presented.
Consolidated statement of changes in equity for the year ended
31 December 2015
Share Capital Profit
Share premium redemption and loss Total
capital account reserve account equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- --------- ------------ ---------- --------
Balance at 1
January 2014 5,047 2,932 2,100 1,170 11,249
Profit for the
year - - - 509 509
Dividend - - - (101) (101)
Balance at 31
December 2014 5,047 2,932 2,100 1,578 11,657
Loss for the
year - - - (6,339) (6,339)
Dividend - - - - -
Balance at 31
December 2015 5,047 2,932 2,100 (4,761) 5,318
---------------- --------- --------- ------------ ---------- --------
Balance sheet as at 31 December 2015
2015 2014
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Non-current assets
----------------------------------------------------------- -------- --------
Goodwill 3,824 9,824
Development expenditure 820 716
------------------------------------------------------------ -------- --------
Total intangible assets 4,644 10,540
Investments - -
Property, plant and equipment EQUIPMENTEQUIPMENTEQUIPMENT
EQUIPMENTequipment 182 217
Deferred tax assets 67 67
------------------------------------------------------------ -------- --------
4,893 10,824
----------------------------------------------------------- -------- --------
Current assets
Inventories 1,490 1,435
Trade and other receivables 2,367 3,177
Current tax recoverable 175 103
Cash and cash equivalents 242 731
------------------------------------------------------------ -------- --------
4,274 5,446
----------------------------------------------------------- -------- --------
Total assets 9,167 16,270
------------------------------------------------------------ -------- --------
Current liabilities
Trade and other payables 3,514 4,027
Borrowings 8 18
3,522 4,045
----------------------------------------------------------- -------- --------
Non-current liabilities
Deferred tax liabilities 75 75
Deferred income 252 480
Borrowings - 13
------------------------------------------------------------ -------- --------
Total liabilities 3,849 4,613
------------------------------------------------------------ -------- --------
Capital and reserves attributable
to owners of the parent
Share capital 5,047 5,047
Share premium account 2,932 2,932
Capital redemption reserve 2,100 2,100
(MORE TO FOLLOW) Dow Jones Newswires
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Profit and loss account (4,761) 1,578
------------------------------------ -------- -------
Total equity 5,318 11,657
------------------------------------ -------- -------
Total equity and liabilities 9,167 16,270
------------------------------------ -------- -------
Consolidated cash flow statement for the year ended 31 December
2015
2015 2014
GBP'000 GBP'000
--------------------------------------- --------- ---------
Cash flows from operating
activities
Operating (loss)/profit (6,530) 477
Depreciation 117 122
Amortisation 320 316
Goodwill impairment 6,000 -
Movement in:
Provisions - (7)
Inventories (55) 361
Trade and other receivables 810 (431)
Trade and other payables (741) 653
---------------------------------------- --------- ---------
Cash (used in)/generated from
operations (79) 1,491
Interest received - 1
Interest paid (1) (3)
Corporation tax received 120 9
---------------------------------------- --------- ---------
Net cash generated from operating
activities 40 1,498
---------------------------------------- --------- ---------
Cash flows from investing
activities
Acquisition of subsidiary
undertakings (net of cash
acquired) - (296)
Purchase of intangible assets (424) (476)
Purchase of property, plant
and equipment (82) (100)
---------------------------------------- --------- ---------
Net cash used in investing
activities (506) (872)
---------------------------------------- --------- ---------
Cash flows from financing
activities
Repayments of finance lease
contracts (23) (13)
Equity dividends paid to shareholders - (101)
---------------------------------------- --------- ---------
Net cash used in financing
activities (23) (114)
---------------------------------------- --------- ---------
Net (decrease)/increase in
cash and cash equivalents (489) 512
Cash and cash equivalents
at start of the year 731 219
---------------------------------------- --------- ---------
Cash and cash equivalents
at end of the year 242 731
---------------------------------------- --------- ---------
1. General information
Belgravium Technologies plc is a public company limited by share
capital incorporated and domiciled in the United Kingdom. The
Company has its listing on AIM. The address of its registered
office is 1 George Square, Glasgow, G2 1AL.
2. Basis of preparation
The preliminary results for the year ended 31 December 2015 have
been prepared in accordance with the accounting policies set out in
the annual report and the accounts for the year ended 31 December
2014.
There have been no changes in accounting policies in the
year.
The Group Financial Statements have been prepared in accordance
with the International Financial Reporting Standards ('IFRS') as
adopted by the European Union, IFRS IC interpretations and the
Companies Act 2006.
The Group Financial Statements have been prepared under the
historical cost convention, except that they have been modified to
include the revaluation of certain non-current liabilities at fair
value through profit and loss.
While the financial information included in this preliminary
announcement has been computed in accordance with IFRS, this
announcement does not itself contain sufficient information to
comply with IFRS. The accounting policies used in preparation of
this preliminary announcement have remained unchanged from those
set out in the Group's 2014 statutory financial statements. They
are also consistent with those in the Group's statutory financial
statements for the year ended 31 December 2015 which have yet to be
published. The preliminary results for the year ended 31 December
2015 were approved by the Board of Directors on 6 April 2016.
The financial information set out in this preliminary
announcement does not constitute the Group's statutory financial
statements for the year ended 31 December 2015 but is derived from
those financial statements which were approved by the Board of
Directors on 6 April 2016. The Auditors have reported on the
Group's statutory financial statements and the report was
unqualified and did not contain a statement under section 498 (2)
or 498 (3) Companies Act 2006. The statutory financial statements
for the year ended 31 December 2015 have not yet been delivered to
the Registrar of Companies and will be delivered following the
Company's Annual General Meeting.
The comparative figures are derived from the Group's statutory
financial statements for the year ended 31 December 2014 which
carried an unqualified audit report, did not contain a statements
under section 498 (2) or 498 (3) Companies Act 2006 and have been
filed with the Registrar of Companies.
Non - GAAP financial measures
For the purposes of this preliminary announcement and annual
report and accounts, the Group uses alternative non-Generally
Accepted Accounting Practice ('non-GAAP') financial measures which
are not defined within IFRS. The Directors use the measures in
order to assess the underlying operational performance of the Group
and as such, these measures are important and should be considered
alongside the IFRS measures.
The following non-GAAP measure referred to in the preliminary
announcement relates to Trading profit.
'Trading profit' is separately disclosed, being defined as
operating (loss)/profit adjusted to exclude goodwill impairment,
restructuring costs and compensation for loss of office along with
other non-recurring costs. These exceptional costs relate to items
which the management believe do not accurately reflect the
underlying trading performance of the business in the period. The
Directors believe that the trading profit is an important measure
of the underlying performance of the Group.
3. Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
(a) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy. The
recoverable amounts of cash-generating units have been determined
based on value-in-use calculations. These calculations require the
use of estimates, both in arriving at the expected future cash
flows and the application of a suitable discount rate in order to
calculate the present value of these flows.
It is the opinion of the Directors, whilst taking a more
conservative view of future growth rates, an impairment of goodwill
has taken place of GBP6,000,000.
(b) Development expenditure
The Group recognises costs incurred on development projects as
an intangible asset which satisfy the requirements of IAS 38. The
calculation of the costs incurred includes the percentage of time
spent by certain employees on the development project. The decision
whether to capitalise and how to determine the period of economic
benefit of a development project requires an assessment of the
commercial viability of the project and the prospect of selling the
project to new or existing customers.
4. Income tax credit
2015 2014
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Corporation tax:
Current tax (175) (60)
Adjustments in respect of prior years (17) (45)
------------------------------------------------ --------- ---------
Total current tax (192) (105)
------------------------------------------------ --------- ---------
Deferred taxation:
Origination and reversal of timing differences - 42
Effect of change in tax rate - (4)
Adjustments in respect of prior years - 33
------------------------------------------------ --------- ---------
Total deferred tax - 71
------------------------------------------------ --------- ---------
Income tax credit (192) (34)
------------------------------------------------ --------- ---------
Corporation tax is calculated at 20.25% (2014: 21.50%) of the
estimated assessable profit for the year. This is the weighted
average tax rate applicable for the year.
5. Factors affecting the tax charge for the year
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The tax charge for the year is different from the standard rate
of corporation tax in the UK of 20.25% (2014: 21.50%). The
differences are explained below:
2015 2014
GBP'000 GBP'000
--------------------------------------------------------------------------------------- --------- ---------
(Loss)/profit before income tax (6,531) 475
--------------------------------------------------------------------------------------- --------- ---------
Multiplied by the standard rate of corporation tax in the UK of 20.25% (2014: 21.50%) (1,322) 102
Effects of:
Items not deductible for tax purposes 1,261 8
Enhanced research and development deduction (284) (145)
Adjustments in respect of prior years (17) (12)
Impact of change in rate of tax - (3)
Losses surrendered through R&D tax credit 123 35
(Gains)/losses not set up as an asset - (22)
Utilisation/(recognition) of previously unrecognised deferred tax - 3
Utilisation of tax losses (16) -
Capital allowances in excess of depreciation (8) -
Tax losses carried forward 71 -
Tax credit for the year (192) (34)
--------------------------------------------------------------------------------------- --------- ---------
Factors affecting the future tax charge
The standard rate of corporation tax in the UK changed from 21%
to 20% with effect from 1 April 2015. Accordingly, the group's
profit chargeable to corporation tax for the prior accounting year
was taxed at the effective rate of 21.50% and at 20.25% in the
current accounting year.
The change in the corporation tax rate from 21% to 20%
(effective from 1 April 2015), was enacted in the Finance Act 2013
and, as a result, UK deferred tax balances in 2015 were measured at
the enacted rate of 20%.
The effective tax charge in future years is expected to be lower
than the main corporation tax rate due to the availability of
enhanced research and development tax credits.
A change to the UK corporation tax rate was announced in the
Chancellor's Budget on 16 March. The change announced is to reduce
the main rate to 17% from 1 April 2020. Changes to reduce the UK
corporation tax rate to 19% from 1 April 2017 and to 18% from 1
April 2020 had already been substantively enacted on 26 October
2015.
As the change to 17% had not been substantively enacted at the
balance sheet date, its effects are not included in these financial
statements.
6. (Losses)/ Earnings per share
(Losses)/earnings per ordinary share (pence) attributable to owners of the parent during the
year:
2015 2014
Basic (6.28)p 0.50p
Adjusted 0.30p 0.53p
Reconciliations of the earnings and weighted average number of
shares used in the calculation are set out below:
2015 2014
Earnings Weighted average number of Earnings Weighted average number of
GBP'000 shares (in thousands) GBP'000 shares (in thousands)
-------------------------------- --------- ------------------------------ --------- ------------------------------
Basic EPS
Earnings attributable to owners
of the parent (6,339) 100,937 509 100,937
Exceptional items comprising of the
following:
Restructuring costs 637 -
Goodwill impairment 6,000 -
Deal costs - 27
-------------------------------- --------- ---------
6,637 27
-------------------------------- --------- ---------
The above exceptional items consists of goodwill impairment,
restructuring costs and compensation for loss of office along with
other non-recurring costs.
Basic earnings per share have been calculated by dividing
profit/loss for the period by the weighted average of ordinary
shares in issue during the period.
7. Intangible assets
Goodwill Development expenditure Total
GBP'000 GBP'000 GBP'000
----------------------------- ------------ ------------------------ ---------
Cost
At 1 January 2014 9,575 1,572 11,147
Additions 329 476 805
At 31 December 2014 9,904 2,048 11,952
Additions - 424 424
At 31 December 2015 9,904 2,472 12,376
----------------------------- ------------ ------------------------ ---------
Accumulated amortisation and impairment
At 1 January 2014 80 1,016 1,096
Amortisation charge - 316 316
----------------------------- ------------ ------------------------ ---------
At 31 December 2014 80 1,332 1,412
Impairment 6,000 - 6,000
Amortisation charge - 320 320
----------------------------- ------------ ------------------------ ---------
At 31 December 2015 6,080 1,652 1,732
----------------------------- ------------ ------------------------ ---------
Net book value
At 1 January 2014 9,495 556 10,051
----------------------------- ------------ ------------------------ ---------
At 31 December 2014 9,824 716 10,540
----------------------------- ------------ ------------------------ ---------
At 31 December 2015 3,824 820 4,644
----------------------------- ------------ ------------------------ ---------
Amortisation of GBP320,000 (2014: GBP316,000) is included within
administration expenses in the income statement.
(a) Impairment tests for goodwill
Goodwill arose in relation to the Group's acquisition of
Touchstar Technologies Limited, Access Fire & Security Limited
and Feedback Data Limited. An impairment test has been performed on
the carrying value of goodwill based on value-in-use
calculations.
The carrying amount of the goodwill held in regard to Touchstar
Technologies Limited has been reduced by GBP6,000,000 to its
recoverable amount. This loss has been included in 'administrative
expenses' in the income statement. The impairment charge arose
following a review and introduction of a more reasonable view of
future growth rates.
The value-in-use calculations have used pre-tax cash flow
projections based on the financial budgets approved by management
covering a five year period. Revenue growth for 2016 is benchmarked
against 2015 actuals with growth up to 2020 forecast. Cash flows
beyond the five year period are extrapolated using a growth rate of
3% (2014: 2.5%) which does not exceed the long term average growth
rate for the business. The other key assumptions used in the value
in use calculations are the discount rate, which has been
determined at 11% (2014: 10.2%) and an annualised sales growth of
3% (2014: 3%), over the five year period.
If the budgeted gross margin used in the value-in-use
calculation for Touchstar Technologies Limited had been 5% lower
than management's estimates at 31 December 2015 (for example, 64%
instead of 69%), the group would have recognised a further
impairment of goodwill by GBP3,106,000.
If the estimated cost of capital used in determining the pre-tax
discount rate for Touchstar Technologies Limited had been 1% higher
than management's estimates
(for example, 12% instead of 11%), the group would have
recognised a further impairment against goodwill of GBP824,000.
For Access Fire & Security Limited and Feedback Data
Limited, no reasonably possible changes in any assumptions would be
expected to give rise to an impairment of the goodwill at 31
December 2015.
(b) Development expenditure
The calculation of the costs incurred includes the percentage of
time spent by certain employees on the development project. The
decision whether to capitalise and how to determine the period of
economic benefit of a development project requires an assessment of
the commercial viability of the project and the prospect of selling
the project to new or existing customers
(MORE TO FOLLOW) Dow Jones Newswires
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Management determined budgeted sales growth based on historic
performance and its expectations of market development. The
discount rates are pre-tax and reflect the specific risks relating
to the business.
These calculations did not result in impairment. The following
sensitivity analysis was performed:
-- Increase the discount rate by 1.5%; and
-- Reduce the growth rate by 1% beyond the first five years.
In each of these scenarios no impairment was identified.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFSRSLIRIIR
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