Final Results -5-
04 Februar 2011 - 8:00AM
UK Regulatory
The calculation of the basic and diluted earnings per share is
shown below.
2010 2009
GBP'000 GBP'000
(Loss) / profit after tax (19,923) 1,002
--------- -------
Weighted average number of shares (No in 000's) 163,981 119,474
Weighted average number of share options 18,515 10,676
Shares to be issued - 24,559
Weighted average number of shares (No 000's)
used for diluted earnings per share 182,496 154,709
Basic (loss)/earnings per share (in pence) (12.1p) 0.8p
--------- -------
Diluted (loss)/earnings per share (in pence) (12.1p) 0.6p
========= =======
5 goodwill
Goodwill
on consolidation
GBP'000
Cost
At 1 October 2008 22,494
Fair value adjustment to additions
in prior year 191
Additional deferred consideration
payable 1,276
Deferred consideration not payable (657)
Disposals (339)
Foreign exchange 1,163
-----------------
At 1 October 2009 24,128
Additions 56
Deferred consideration not payable (7)
Foreign exchange 245
At 30 September 2010 24,422
Impairment
At 1 October 2008 13,340
Charge for the year 109
Disposals (339)
-----------------
At 1 October 2009 13,110
Charge for the year 8,390
At 30 September 2010 21,500
=================
Net book amount at 30 September 2010 2,922
=================
Net book amount at 30 September 2009 11,018
=================
Goodwill impairment
.At 30 September the net book amount of goodwill by acquisition
comprised the following
2010 2009
Cash generating units (CGU's) GBP'000 GBP'000
Croco Worldwide Sourcing Limited 379 379
Green and Dunne Limited - -
Phoenix Investments Global Limited - 2,232
Lushy Assets Limited 2,491 8,407
Qin Wang 52 -
Net book amount at 30 September 2,922 11,018
======== ========
The Directors have tested for impairment the goodwill relating
to all cash generating units in accordance with the Group's
accounting policy.
Phoenix Investments Global Limited
Following the significant decline in profitability in the
Phoenix Investments Global Limited business and forecast continued
lack of profitability going forward, the Directors consider that
the goodwill attributed to this cash generating unit is impaired to
nil.
Lushy Assets Limited
The Directors, in assessing the recoverable amount of the
goodwill relating to Lushy Assets Limited have produced a series of
sensitised ten year cashflow forecasts to determine its value in
use. The base cash flow forecast has been discounted at a discount
rate of 11%, which the Directors believe fairly reflects the
Group's weighted average cost of capital. The other key assumptions
with regard to the base sales and profitability forecasts of Lushy
Assets limited are as follows:
- revenues in the first year are received from an online game
that has launched since the year end and an online game due to
launch later in 2011
- sales from the online games will increase at a growth rate of
5% for each year from 30 September 2011
- no sales have been recognised for the smartphone applications
expected to launch in the year ending 30 September 2011 due to the
uncertainty of the level and timing of these revenues
These forecasts have been sensitised and an impairment charge of
GBP6 143,305 has been provided based on a 20% reduction in the
revenues from the online games in the first year and a growth rate
of 5% applied to those reduced revenues. This has been applied due
to the uncertainty of the market in which the business operates and
current economic conditions that prevail in China and the UK.
The Croco and Qin Wang business units have also been reviewed
for impairment and this review concluded that the recoverable
amount based on value in use exceeded the book value. The
impairment charge in 2009 related to the Greene and Dunne business
which has ceased trading.
6 intangible assets
Intellectual
property
rights Trademarks Website Licences Software Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October
2008 2,193 56 18 458 226 718 3,669
Transfer from
work in
progress 2,160 - - - - - 2,160
Additions - 15 - - 61 43 119
Disposals (92) - - - - - (92)
Foreign
Exchange - - - - 3 - 3
------------ ---------- ------- -------- -------- ------- -------
At 30
September
2009 4,261 71 18 458 290 761 5,859
Transfer from
work in
progress 1,401 - - - - - 1,401
Additions 1,973 11 5 - - - 1,989
Foreign
Exchange - - - - 9 - 9
------------ ---------- ------- -------- -------- ------- -------
At 30
September
2010 7,635 82 23 458 299 761 9,258
============ ========== ======= ======== ======== ======= =======
Impairment
At 1 October
2008 - - - - - - -
Provided
during the
year - - - - - - -
At 30
September
2009 - - - - - - -
Provided
during the
year 5,773 - - 291 127 343 6,534
At 30
September
2010 5,773 - - 291 127 343 6,534
============ ========== ======= ======== ======== ======= =======
Amortisation
At 1 October
2008 604 12 9 87 45 116 873
Provided
during the
year 355 7 4 40 53 164 623
Disposals (92) - - - - - (92)
Foreign
Exchange - - - - - - -
------------ ---------- ------- -------- -------- ------- -------
At 30
September
2009 867 19 13 127 98 280 1,404
Provided
during the
year 563 7 4 40 72 117 803
Disposals - - - - - - -
Foreign
Exchange - - - - 2 - 2
At 30
September
2010 1,430 26 17 167 172 397 2,209
============ ========== ======= ======== ======== ======= =======
Net book
amount at 30
September
2010 432 56 6 - - 21 515
============ ========== ======= ======== ======== ======= =======
Net book
amount at 30
September
2009 3,394 52 5 331 192 481 4,455
============ ========== ======= ======== ======== ======= =======
Other intangible assets relate to those intangible assets
acquired with the Phoenix and Lushy acquisitions and include
customer lists, brand names and non compete agreements.
Following the impairment of the goodwill arising on Lushy Assets
Limited and Phoenix Investments Global Limited and the losses
incurred by these entities in the year ended 30 September 2010, the
Directors have reviewed the carrying value of these assets in
accordance with the Group's accounting policy. This review has
resulted in the assets being fully impaired as they are no longer
deemed to be used by the business going forward to generate future
revenues. This in part follows the change in direction of the
business as reported within the Chairman's and Chief Executive's
statements.
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