RNS Number:7622B
Tolent PLC
08 August 2007
Tolent PLC
8 August 2007
Unaudited Interim Results for the six months ended 30 June 2007
Chairman's Statement
Results
As we noted in our Annual General Meeting statement made on 26 June 2007,
trading in the first half has been satisfactory, albeit slower than for the
comparable period last year. Due to a number of large contracts suffering
delays in commencement in the first half of 2007 Group turnover, excluding
Tolent's share of joint venture turnover, of #76.2 million was down on the
comparable six months last year of #84.2 million.
Operating profit for the first half of 2007 of #1.173 million (2006: #1.857
million) was also down. This result is after making a #0.4 million provision,
against the balance of amounts due under a contract for the construction of
apartments in Huddersfield following the development company being placed into
administration.
Interest receivable remained static at #358,000, but interest payable reduced
from #44,000 to #2,000 following the repayment of the mortgages on investment
properties during the course of 2006.
Profit before taxation of #1.529 million (2006: #2.171 million) was down and
earnings per share at 8.2 pence reduced from 11.8p per share over the first half
of 2006.
The financial statements are somewhat lengthier than in previous years due to
the requirement for the Group to report under International Financial Reporting
Standards ("IFRS") from 1 January 2007. The adjustments between UK GAAP and
IFRS for the period relate mainly to deferred taxation on the properties owned
by the Group and a full reconciliation is shown in the attached notes.
Dividend
The Directors intend to pay a dividend of 5 pence per share on 5 October 2007 to
shareholders on the register on 3 September 2007.
The Group has previously operated a policy of making payments based on the
results achieved for each half year with no recognition of the likely result for
the full year. It is the intention to move to a more conventional dividend
policy whereby the dividend attributable to the full year is broken down
approximately as to one third payable at the interim stage and two thirds at the
final.
Liquidity and Capital Resources
The Group had net funds in hand at 30 June 2007 of #13.206 million, slightly up
on the #13.040 million at 30 June 2006, but down on the #18.6 million at 31
December 2006. This figure fluctuates according to circumstances but as
reflected in the interest earned we have had significant credit balances for the
whole of the first half of the year. Shareholders funds stand at #10.31
million.
Prospects
A number of the contracts noted above as having been delayed have now been
secured and will make significant contributions to the level of activity in the
second half of the year. The outlook for the rest of the year remains
encouraging and the Board looks forward to reporting a satisfactory outcome for
the year as a whole.
Mike Speakman
8 August 2007
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
Condensed consolidated interim income statement (unaudited)
Six months Six months Twelve
to 30th to 30th months to
June 2007 June 2006 31st
December
2006
#000s #000s #000s
Group Revenue 76,167 84,191 168,265
Raw materials and consumables (5,253) (5,578) (10,394)
Other external charges (57,174) (65,359) (130,040)
Group Profit 13,740 13,254 27,831
Staff costs (10,428) (9,611) (19,997)
Depreciation (149) (136) (296)
Other operating charges (1,989) (1,636) (3,198)
1,174 1,871 4,340
Share of post tax (loss)/profit in joint ventures (1) (14) 185
and associates
Operating Profit 1,173 1,857 4,525
Finance income 358 358 735
Finance cost (2) (44) (40)
Profit before taxation 1,529 2,171 5,220
Taxation (512) (698) (1,630)
Profit after taxation 1,017 1,473 3,590
Basic and diluted earnings per share 8.2 p 11.8 p 28.8 p
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
Condensed consolidated interim balance sheet (unaudited)
30th June 30th June 31st December
2007 2006 2006
#000s #000s #000s
Assets
Non-Current Assets
Property, plant and equipment 3,435 3,455 3,537
Investment properties 6,388 6,388 6,388
Investments in associates and joint ventures 1,070 238 440
Available-for-sale investments 10 0 0
10,903 10,081 10,365
Current assets
Amounts recoverable on contracts 15,564 15,464 8,665
Trade and other receivables 23,840 25,550 20,823
Cash and cash equivalents 13,206 13,040 18,635
52,610 54,054 48,123
Total assets 63,513 64,135 58,488
Liabilities
Non-current liabilities
Deferred tax liabilities 1,634 1,634 1,634
1,634 1,634 1,634
Current liabilities
Trade and other payables 51,015 52,072 45,193
Current tax payable 554 335 909
51,569 52,407 46,102
Total liabilities 53,203 54,041 47,736
Net Assets 10,310 10,094 10,752
Equity
Share capital 1,283 1,283 1,283
Other reserve (256) (256) (256)
Profit and loss account 9,283 9,067 9,725
Total Equity 10,310 10,094 10,752
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
Condensed consolidated interim statement of changes in equity (unaudited)
Profit
Share Other and Loss Total
Capital Reserve Account Equity
#000s #000s #000s #000s
Balance at 1 January 2006 1,283 (256) 8,373 9,400
Profit after taxation for the 0 0 1,473 1,473
period
Dividends 0 0 (779) (779)
Balance at 30 June 2006 1,283 (256) 9,067 10,094
Balance at 1 July 2006 1,283 (256) 9,067 10,094
Profit after taxation for the 0 0 2,117 2,117
period
Dividends 0 0 (1,459) (1,459)
Balance at 31 December 2006 1,283 (256) 9,725 10,752
Balance at 1 January 2007 1,283 (256) 9,725 10,752
Profit after taxation for the 0 0 1,017 1,017
period
Dividends 0 0 (1,459) (1,459)
Balance at 30 June 2007 1,283 (256) 9,283 10,310
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
Condensed consolidated interim cash flow statement (unaudited)
Six months Six months Twelve months
to 30th June to 30th June to 31st December
2007 2006 2006
#000s #000s #000s
Cash flows from operating activities
Profit after taxation 1,017 1,473 3,590
Depreciation on property, plant and equipment 149 136 296
Taxation expense recognised in income statement 512 698 1,630
Interest expense (356) (314) (695)
(Increase)/decrease in trade and other receivables (3,017) (3,471) 1,256
Increase in amounts recoverable on contracts (6,899) (7,461) (627)
Increase in trade and other payables 4,363 12,861 6,795
Share of (loss)/profit after tax from joint ventures and 1 14 (185)
associates
Increase in investment in joint venture and associates (631) 0 (3)
Cash generated from operations (4,861) 3,936 12,057
Interest paid (2) (44) (40)
Tax paid (867) (1,040) (1,396)
Net cash from operating activities (5,730) 2,852 10,621
Cash flows from investing activities
Purchase of property, plant and equipment (47) (907) (1,149)
Purchase of ready for sale investments (10) 0 0
Interest received 358 358 735
Net cash used in investing activities 301 (549) (414)
Cash flows from financing activities
Dividends paid 0 0 (2,238)
Repayment of borrowings 0 (1,269) (1,340)
Net cash used in financing activities 0 (1,269) (3,578)
Net increase in cash and cash equivalents (5,429) 1,034 6,629
Cash and cash equivalents at beginning of period 18,635 12,006 12,006
Cash and cash equivalents at end of period 13,206 13,040 18,635
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
1 General information
The financial information set out in this condensed interim report for the six months ended 30th June 2007 and
the comparative figures for the six months ended 30th June 2006 and the year ended 31 December 2006 are
unaudited. This financial information does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The Group's statutory financial statements for the year ended 31st December 2006, prepared
under UK GAAP, received an unqualified audit report, did not contain statements under section 237(2) of the
Companies Act 1985 and have been filed with the Registrar of Companies.
2 Basis of preparation
These June 2007 interim consolidated financial statements of Tolent PLC are for the six months ended 30 June
2007. They have been prepared taking into account the requirements of IAS 34, Interim Financial Reporting, and
the requirements of IFRS1, First-time Adoption of IFRS, because they are part of the period covered by the
Group's first IFRS financial statements for the year ended 31 December 2007. They do not include all of the
information required for full annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 31 December 2006. These condensed
consolidated interim financial statements (the interim financial statements) have been prepared in accordance
with the accounting policies set out below which are based on the recognition and measurement principles of
IFRS in issue as adopted by the European Union (EU) and are effective at 31 December 2007 or are expected to be
adopted and effective at 31 December 2007, our first annual reporting date at which we are required to use IFRS
accounting standards adopted by the EU.
Tolent PLC's consolidated financial statements were prepared in accordance with applicable United Kingdom
Generally Accepted Accounting Principles (UK GAAP) until 31 December 2006. The date of transition was 1
January 2006. UK GAAP differs in some areas from IFRS. In preparing Tolent PLC's 2007 consolidated interim
financial statements, management has amended certain accounting, valuation and consolidation methods applied in
the UK GAAP financial statements to comply with IFRS. The comparative figures in respect of 2006 were restated
to reflect these adjustments.
Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the Group's equity and
its net income and cash flows are provided in Note 7.
These consolidated interim financial statements have been prepared under the historical cost convention, as
modified by the revaluation of available for sale financial assets, and financial assets and financial
liabilities at fair value and by the revaluation at the transition date to IFRS of certain property, plant and
equipment and investment properties. The revalued amount of property, plant and equipment is accounted for
thereafter as deemed cost.
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise judgement in the process of applying the Group's accounting policies.
3 Summary of significant accounting policies
a Basis of Consolidation
The Group's consolidated interim financial statements incorporate the financial statements of the parent
company and all of its subsidiaries. Subsidiaries are consolidated from the date on which control transfers to
the Group and are included until the date on which the Group ceases to control them. Transactions between
group companies are eliminated on consolidation.
Business combinations prior to 1 January 2006 have not been restated onto an IFRS basis due to the application
of an exemption under IFRS1.
(i) Subsidiaries
Subsidiaries are entities over which the group has power to control the financial and operating policies so as
to obtain benefits from its activities.
Investments in subsidiary undertakings are accounted for using the purchase method of accounting. The cost of
an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair
value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the Group's share of the net assets of the subsidiary acquired, the
difference is recognised directly in the income statement.
ii) Associates
Associates are entities over which the group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for by the equity method of accounting and are initially recognised at
cost.
The Group's share of its associates' post-acquisition profits or losses is recognised in the income statement,
and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative
post-acquisition movements are adjusted against the carrying value of the investment. When the Group's share
of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associate.
(iii) Joint Ventures
Joint ventures are entities over which the group holds a contractual share of joint control.
The Group incorporates joint ventures under the equity method of accounting supplemented by additional
disclosures for joint ventures. The condensed consolidated interim balance sheet shows the investment in joint
ventures at cost less amounts written off for permanent diminution in value where necessary.
The Group's share of the profits less losses of joint ventures are included in the Group income statement. The
Group balance sheet includes the investment in joint ventures as the Group's share of net assets.
b Revenue recognition
Revenue, in all cases excluding value added tax, represents:
- in the case of contracting, see note e below;
- in the case of property development sales revenue is recognised when title passes to a buyer, upon
completion;
- in the case of rental income, revenue is recognised (net of any incentives given to lessees) is recognised
on a straight-line basis over the lease term.
c Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provisions for impairment.
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal
proceeds and the carrying amount of the asset and is recognised in the income statement. The gain or loss
arising from the sale of held for sale assets is included in "other income" or "other expense" in the income
statement.
Depreciation is calculated to write off the cost of the assets (other than investment properties) less
estimated residual value in equal instalments over their expected useful lives. Depreciation is provided at
the following rates:
Long leasehold properties 4%
Plant and equipment 25% - 50%
Material residual value estimates are updated as required, but at least annually.
The carrying values of property, plant and equipment are reviewed for impairment when there is an indication
that they may be impaired.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually
for impairment and some are tested at cash generating unit level.
All individual assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market
conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All
assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer
exist.
d Investment Properties
In accordance with IAS40, Investment Property, certain of the Group's properties are held for long term
investment and are included in the balance sheet at their fair values. No depreciation is provided on these
amounts. Gains and losses arising from changes in the asset's fair value are recognised in the income
statement.
e Construction contracts
Contract revenue reflects the contract activity during the year and is measured at the fair value of
consideration received or receivable. When the outcome can be assessed reliably, contract revenue and
associated costs are recognised as revenue and expenses respectively by reference to the stage of completion of
the contract activity at the balance sheet date. The stage of completion of the contract at the balance sheet
date is assessed by reference to the value of work remaining as a proportion of the total contract value.
Where the outcome of a long term contract cannot be estimated reliably revenue is recognised only to the extent
of contract costs incurred that it is probable will be recoverable, and contract costs are recognised as an
expense in the period in which they are incurred.
Variations are only recognised as revenue when they have been agreed with the customer. Claims are not
recognised until they have been fully settled.
In the case of a fixed price contract, the outcome of a construction contract is deemed to be estimated
reliably when all the following conditions are satisfied:
- total contract revenue can be measured reliably
- it is probable that economic benefits associated with the contract will flow to the
group
- both the contract costs to complete the contract and the stage of completion at the balance sheet date can be
measured reliably, and
- the contract costs attributable to the contract can be clearly identified and measured reliably so that
actual contract costs incurred can be compared with prior estimates.
In the case of a cost plus contract, the outcome of a construction contract can be estimated reliably when it
is probable that the economic benefits associated with the contract will flow to the group, and the contract
costs attributable to the contract, whether or not specifically reimbursable, can be clearly identified and
measured reliably.
The gross amount due from customers for contract work (amounts recoverable on contracts) is presented as an
asset for all contracts in progress for which costs incurred plus recognised profits (less recognised losses)
exceeds progress billings. The gross amount due to customers for contract work is presented as a liability for
all contracts in progress for which billings exceed costs incurred plus recognised profits (less losses).
Full provision is made for losses on all contracts in the year in which the loss is first foreseen.
f Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred taxation is calculated using the liability method on temporary differences. Deferred tax is generally
provided on the difference between the carrying amounts of assets and liabilities and their tax bases.
However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business combination or affects tax or accounting
profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not
provided if reversal of these temporary differences can be controlled by the group and it is probable that
reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as
well as other income tax credits to the group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the
extent that it is probable that the underlying deductible temporary differences will be able to be offset
against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income
statement, except where they relate to items that are charged or credited directly to equity (such as the
revaluation of land) in which case the related deferred tax is also charged or credited directly to equity.
The interim tax charge on underlying business performance is calculated by reference to the estimated effective
rate for the full year. Tax on disposals and other exceptional items is based on the expected tax impact of
each item.
g Employee Benefits
The Group operates a defined contribution pension scheme.
Pension costs for the defined contribution scheme represents the amount of contributions payable in respect of
the accounting period.
h Leases
(i) The group is the lessee
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as
operating leases. Operating lease costs are charged to the income statement on a straight-line basis over the
lease term.
(ii) The group is the lessor
Assets leased to third parties under operating leases are included in property, plant and equipment in the
balance sheet. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis
over the lease term.
I Financial Assets
Financial assets are divided into the following categories: loans and receivables and available-for-sale
financial assets. Financial assets are assigned to the different categories by management on initial
recognition, depending on the purpose for which they were acquired. The designation of financial assets is
re-evaluated at every reporting date at which a choice of classification or accounting treatment is available.
All financial assets are recognised when the group becomes a party to the contractual provisions of the
instrument. Financial assets are recognised at fair value plus transaction costs.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Trade receivables are classified as loans and receivables. Loans and receivables
are measured subsequent to initial recognition at amortised cost using the effective interest method, less
provision for impairment. Any change in their value through impairment or reversal of impairment is recognised
in the income statement.
Provision against trade receivables is made when there is objective evidence that the group will not be able to
collect all amounts due to it in accordance with the original terms of those receivables. The amount of the
write-down is determined as the difference between the asset's carrying amount and the present value of
estimated future cash flows.
Available-for-sale financial assets include non-derivative financial assets that are either designated as such
or do not qualify for inclusion in any of the other categories of financial assets. All financial assets
within this category are measured subsequently at fair value, with changes in value recognised in equity,
through the statement of changes in equity. Gains and losses arising from investments classified as
available-for-sale are recognised in the income statement when they are sold or when the investment is
impaired.
In the case of impairment of available-for-sale assets, any loss previously recognised in equity is transferred
to the income statement. Impairment losses recognised in the income statement on equity instruments are not
reversed through the income statement. Impairment losses recognised previously on debt securities are reversed
through the income statement when the increase can be related objectively to an event occurring after the
impairment loss was recognised in the income statement.
An assessment for impairment is undertaken at least at each balance sheet date.
A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or
the financial asset is transferred and that transfer qualifies for derecognition. A financial asset is
transferred if the contractual rights to receive the cash flows of the asset have been transferred or the group
retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to
pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for
derecognition if the group transfers substantially all the risks and rewards of ownership of the asset, or if
the group neither retains nor transfers substantially all the risks and rewards if ownership but does transfer
control of that asset.
j Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the group
becomes a party to the contractual provisions of the instrument. Financial liabilities categorised as at fair
value through profit or loss are recorded initially at fair value, all transaction costs are recognised
immediately in the income statement. All other financial liabilities are recorded initially at fair value, net
of direct issue costs.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is
discharged or cancelled or expires.
k Borrowing costs
The group currently incurs borrowing costs within its joint venture companies only. These borrowing costs are
directly attributable to development contracts undertaken by the joint ventures and as such are capitalised as
part of the construction contract balances within the joint venture companies.
l Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
m Employee Share Ownership Plan
The Group's Employee Share Ownership Plan ("ESOP") is a separately administered trust. The assets of the ESOP
comprise shares in the company and cash. The assets, liabilities, income and costs of the ESOP have been
included in the financial statements in accordance with SIC 12, Consolidation - Special purpose entities and
IAS 32 - Financial Instruments: Disclosure and Presentation. The shares in the company are included at cost to
the ESOP and deducted from shareholders' funds and dividend income is excluded in arriving at profit before tax
and deducted from the aggregate of dividends paid and proposed. When calculating earnings per share these
shares are treated as if they were cancelled.
n Dividends
Dividend distributions payable to equity shareholders are included in "other short term financial liabilities"
when the dividends are approved in a general meeting prior to the balance sheet date.
o Equity
Equity comprises the following:
- "Share capital" represents the nominal value of equity shares.
- "Other reserve" represents the purchase cost of shares held within the Employee Share Ownership Plan (ESOP)
- "Profit and loss reserve" represents retained profits.
4 Segment analysis
The Group's primary reporting format is business segment and its secondary format is geographical segment by
origin of revenue.
Tolent operates two main business segments, building and construction activities and property investment. All
revenue originates from the United Kingdom. The revenues and net result generated by each of the business
segments are summarised as follows:
6 months to 30 June 2007
Building Property Other Consolidation Group
Activities Investment
#'000 #'000 #'000 #'000 #'000
Group Revenue 75,969 363 0 (165) 76,167
Operating result 1,006 189 (21) 0 1,174
6 months to 30 June 2006
Building Property Other Consolidation Group
Activities Investment
#'000 #'000 #'000 #'000 #'000
Group Revenue 84,836 370 0 (1,015) 84,191
Operating result 1,663 238 (30) 0 1,871
Year to 31 December 2006
Building Property Other Consolidation Group
Activities Investment
#'000 #'000 #'000 #'000 #'000
Group Revenue 168,856 726 0 (1,317) 168,265
Operating result 3,984 425 (69) 0 4,340
5 Earnings per share
Earnings per share, which is both basic and diluted, is calculated on the basis of profit for the period after
tax, divided by 12,467,626 (June and December 2006 - 12,467,626) fully paid ordinary shares, being the weighted
average number of ordinary shares in issue in the period, after adjusting for own shares held by the Employee
Share Ownership Plan of 365,000 (June and December 2006 - 365,000). There are no options or potential ordinary
shares in issue.
6 Dividends
During the first six months of 2007 the proposed dividend of #1,459,000 (11.7p per ordinary share - 2006
#779,000 at 6.25p per ordinary share) was approved for payment at the Annual General Meeting on 26th June 2007.
7 Transition to IFRS
As stated in the Basis of Preparation, these are the Group's first condensed consolidated interim financial
statements for part of the period covered by the first IFRS annual consolidated financial statements prepared
in accordance with IFRS.
IFRS1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements
of IFRS in the transition period. These condensed consolidated interim financial statements have been prepared
on the basis of taking the following exemptions:
i) Business combinations prior to 1 January 2006, the Group's date of transition to IFRS, have not been
restated to comply with IFRS 3 "Business Combinations".
ii) The Group has elected to measure certain items of property, plant and equipment as at 1 January 2006 that
had previously been revalued and to take these as their deemed cost. The property, plant and equipment were
revalued in December 2005 by Gavin Black & Partners, qualified chartered surveyors.
The following reconciliations provide a quantification of the effect of the transition to IFRS. The first
reconciliation provides an overview of the impact on equity of the transition at 1 January 2006, 30 June 2006
and 31 December 2006 followed by reconciliations of equity and net income.
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
7.1 Summary of Equity
01/01/2006 30/06/2006 31/12/2006
#'000 #'000 #'000
Total equity under UK GAAP 10,432 11,117 11,766
Deferred tax adjustment -
accelerated
capital allowances discounted (138) (129) (120)
under
UK GAAP
Deferred tax adjustment -
revaluation
of property and investment (894) (894) (894)
property
Total equity under IFRS 9,400 10,094 10,752
7.2 Reconciliation of equity at 1st January 2006
UK GAAP Effect of transition to IFRS IFRS
#'000 #'000 #'000 #'000 #'000 #'000
Note a Note b Note c Note d
Assets
Non - Current assets
Property, plant and equipment 3,928 0 0 0 0 3,928
Investment properties 5,144 0 0 0 0 5,144
Investments in joint ventures 252 0 0 0 0 252
9,324 0 0 0 0 9,324
Current assets
Amounts receivable on contracts 8,003 0 0 0 0 8,003
Trade and other receivables 22,105 0 0 0 (26) 22,079
Cash and cash equivalents 12,082 0 0 0 (76) 12,006
42,190 0 0 0 (102) 42,088
Total assets 51,514 0 0 0 (102) 51,412
Liabilities
Non-current liabilities
Borrowings 1,283 0 0 0 0 1,283
Deferred tax liabilities 602 0 894 138 0 1,634
1,885 0 894 138 0 2,917
Current liabilities
Trade and other payables 38,522 0 0 0 (102) 38,420
Current tax liabilities 675 0 0 0 0 675
39,197 0 0 0 (102) 39,095
Total Liabilities 41,082 0 894 138 (102) 42,012
Net Assets 10,432 0 (894) (138) 0 9,400
Equity
Capital and reserves attributable
to equity holders
Share capital 1,283 0 0 0 0 1,283
Property revaluation reserve 2,980 (2,980) 0 0 0 0
Other reserve (256) 0 0 0 0 (256)
Retained earnings 6,425 2,980 (894) (138) 0 8,373
Total Equity 10,432 0 (894) (138) 0 9,400
7.3 Reconciliation of equity 30th June 2006
UK GAAP Effect of transition to IFRS IFRS
#'000 #'000 #'000 #'000 #'000 #'000
Note a Note b Note c Note d
Assets
Non - Current assets
Property, plant and equipment 3,455 0 0 0 0 3,455
Investment properties 6,388 0 0 0 0 6,388
Investments in joint ventures 238 0 0 0 0 238
10,081 0 0 0 0 10,081
Current assets
Amounts receivable on contracts 15,464 0 0 0 0 15,464
Trade and other receivables 25,554 0 0 0 (4) 25,550
Cash and cash equivalents 13,101 0 0 0 (61) 13,040
54,119 0 0 0 (65) 54,054
Total assets 64,200 0 0 0 (65) 64,135
Liabilities
Non-current liabilities
Deferred tax liabilities 611 0 894 129 0 1,634
Current liabilities
Trade and other payables 52,137 0 0 0 (65) 52,072
Current tax liabilities 335 0 0 0 0 335
52,472 0 0 0 (65) 52,407
Total Liabilities 53,083 0 894 129 (65) 54,041
Net Assets 11,117 0 (894) (129) 0 10,094
Equity
Capital and reserves attributable
to equity holders
Share capital 1,283 0 0 0 0 1,283
Property revaluation reserve 2,980 (2,980) 0 0 0 0
Other reserve (256) 0 0 0 0 (256)
Retained earnings 7,110 2,980 (894) (129) 0 9,067
Total Equity 11,117 0 (894) (129) 0 10,094
7.4 Reconciliation of equity 31 December 2006
UK GAAP Effect of transition to IFRS IFRS
#'000 #'000 #'000 #'000 #'000 #'000
Note a Note b Note c Note d
Assets
Non - Current assets
Property, plant and equipment 3,537 0 0 0 0 3,537
Investment properties 6,388 0 0 0 0 6,388
Investments in joint ventures 440 0 0 0 0 440
10,365 0 0 0 0 10,365
Current assets
Amounts receivable on contracts 8,665 0 0 0 0 8,665
Trade and other receivables 20,828 0 0 0 (5) 20,823
Cash and cash equivalents 18,697 0 0 0 (62) 18,635
48,190 0 0 0 (67) 48,123
Total assets 58,555 0 0 0 (67) 58,488
Liabilities
Non-current liabilities
Deferred tax liabilities 620 0 894 120 0 1,634
Current liabilities
Trade and other payables 45,260 0 0 0 (67) 45,193
Current tax liabilities 909 0 0 0 0 909
46,169 0 0 0 (67) 46,102
Total Liabilities 46,789 0 894 120 (67) 47,736
Net Assets 11,766 0 (894) (120) 0 10,752
Equity
Capital and reserves attributable
to equity holders
Share capital 1,283 0 0 0 0 1,283
Property revaluation reserve 2,980 (2,980) 0 0 0 0
Other reserve (256) 0 0 0 0 (256)
Retained earnings 7,759 2,980 (894) (120) 0 9,725
Total Equity 11,766 0 (894) (120) 0 10,752
7.5 Reconciliation of net income
Six months to June 2006 UK GAAP Effect of transition to IFRS IFRS
#'000 #'000 #'000 #'000 #'000 #'000
Note a Note b Note c Note d
Group Revenue 84,191 0 0 0 0 84,191
Group operating profit 1,856 0 0 0 1 1,857
Finance income 359 0 0 0 (1) 358
Finance cost (44) 0 0 0 0 (44)
2,171 0 0 0 0 2,171
Taxation on ordinary activities (707) 0 0 9 0 (698)
1,464 0 0 9 0 1,473
Year to December 2006
UK GAAP Effect of transition to IFRS IFRS
#'000 #'000 #'000 #'000 #'000 #'000
Note a Note b Note c Note d
Group Revenue 168,265 0 0 0 0 168,265
Group operating profit 4,519 0 0 0 6 4,525
Finance income 741 0 0 0 (6) 735
Finance cost (40) 0 0 0 0 (40)
5,220 0 0 0 0 5,220
Taxation on ordinary activities (1,648) 0 0 18 0 (1,630)
3,572 0 0 18 0 3,590
7.6 Notes to the reconciliation
Note a
Under UK GAAP movements in the fair value of investment properties were recognised through the statement of
total recognised gains and losses and the revaluation reserve. Under IFRS changes in the open market value of
investment property are recorded in the income statement. This has had the effect of increasing the retained
earnings by #2,043,000 and reducing the revaluation reserve by a corresponding #2,043,000 at 1 January 2006.
As at 1 January 2006 the group has elected to measure certain items of property, plant and equipment that had
previously been revalued as their deemed cost. This related revaluation reserve of #937,000 has been
transferred to retained earnings.
Note b
Under FRS 19 no provision for deferred tax was made on the gains recognised on revaluing the long leasehold
and investment properties to their market value. Under IFRS this deferred tax is recognised. This had the
effect of increasing the deferred tax liability at 1 January 2006 by #894,000 relating as to #281,000 on
leasehold properties and #613,000 on investment properties both adjusted against retained earnings.
Note c
Under UK GAAP deferred tax was provided on accelerated capital allowances claimed on properties held for
investment. These properties are not expected to be sold in the foreseeable future and are expected to be
held until after the time when any such liability could arise. FRS 19 allowed this liability to be discounted.
IFRS does not allow discounting which had the effect of increasing the liability at 1 January 2006 by
#138,000, at 30 June 2006 by #129,000 and at 31 December 2006 by #120,000. The movements in the liability
during the periods have the effect of reducing the tax charge in the income statement by #9,000 in the period
to 30 June 2006 and #18,000 in the period to 31 December 2006.
Note d
IAS 31 identifies three types of joint ventures, namely jointly controlled 'entities', jointly controlled
operations and jointly controlled assets. Under FRS 9 jointly controlled operations fell within joint
arrangements that are not entities (JANE's) and as such were consolidated using proportionate consolidation.
By reclassifying the JANE's as joint ventures and equity accounting for them a number of adjustments are
required in the income statement and the balance sheet.
7.7 Explanation of material adjustments to the cash flow statement
The definition of cash is narrower under UK GAAP than under IAS 7 "Cash Flow Statements". Under IFRS highly
liquid investments, readily convertible to a known amount of cash and with an insignificant risk of changes in
value, are regarded as cash equivalents. The cash flow statement in the last UK GAAP financial statements
reported movements in cash. The cash flow statement in these IFRS condensed consolidated interim financial
statements reports movements in cash and cash equivalents.
Cash and cash equivalents under IFRS include some investments that were recorded as liquid investments under
UK GAAP. Cash and cash equivalents includes amounts of #10,162,000 at 31 December 2006 which were accounted
for as liquid resources under UK GAAP.
Application of IFRS has resulted in reclassification of certain items in the cash flow statement as follows:
(i) under UK GAAP, payments to acquire property, plant and equipment were classified as part of 'Capital
expenditure and financial investment'. Under IFRS, payments to acquire property, plant and equipment have
been classified as part of 'Investing activities'.
(ii) income taxes paid during 2006 are classified as operating cash flows under IFRS, but were included in a
separate category of 'Taxation' cash flows under UK GAAP.
(iii) dividends paid during 2006 are classified as cash flows from financing activities under IFRS, but were
included in a separate category of 'Equity dividends paid' in cash flows under UK GAAP.
(iv) interest paid and interest received during 2006 are classified as cash flows from operating activities
and cash flows from investing activities respectively under IFRS, but were included in the 'Returns on
investments and servicing of finance' category in cash flows under UK GAAP.
There are no other material differences between the cash flow statement presented under IFRS and the cash flow
statement presented under UK GAAP.
Tolent plc Condensed Consolidated Interim Financial Statements for the period ended 30th June 2007
Dealings permitted on Alternative Investment Market (AIM) of the London Stock Exchange.
Directors and Company Secretary
M.R. Speakman - Non Executive Chairman A. D. Clark - Financial Director and Company Secretary
J.G. Wood - Chief Executive P. K. Hems - Non Executive Director
T. Phillipson - Operations Director
Registered Office Registrar and Main Transfer Office
Amco House, Cedar Court Office Park Capita Registrars
Denby Dale Road, Wakefield, WF4 3QZ Northern House
e-mail: info@tolent.plc.uk, web: www.tolent.co.uk Woodsome Park, Fenay Bridge
Huddersfield, HD8 0LA
Nominated Advisor and Nominated Broker Solicitors to the Company
Brewin Dolphin Securities Limited Dickinson Dees - Newcastle
34 Lisbon Street
Leeds, LS1 4LX
Banker Auditors
National Westminster Bank Plc, Sheffield Grant Thornton UK LLP, Leicester
Interim results will be circulated to shareholders and copies of the announcement will be available from the
Company's registered office. Registered in England and Wales, Company number 3819314.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EVLFBDVBLBBE
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