1、Annual Report and Accounts 2007Judges Capital plcDirectorsThe Hon.Alexander Robert Hambro(Non-Executive Chairman)David Elie Cicurel(Chief Executive)Ralph Leslie Cohen(Finance Director)Ralph Julian Elman(Non-Executive Director)Glynn Carl Reece(Non-Executive Director)Company SecretaryRalph Leslie Cohe
2、nRegistered OfficeUnit 19,Charlwoods RoadEast GrinsteadWest Sussex RH19 2HLRegistrarCapita RegistrarsNorthern HouseWoodsome ParkFenay BridgeHuddersfieldWest Yorkshire HD8 0LANominated AdviserShore Capital and Corporate LtdBond Street House14 Clifford StreetLondon W1S 4JUStockbrokerShore Capital Stoc
3、kbrokers LtdBond Street House14 Clifford StreetLondon W1S 4JUAuditorGrant Thornton UK LLPRegistered AuditorChartered Accountants8 West WalkLeicester LE1 7NHPrincipal BankersBank of Scotland55 Temple RowBirmingham B2 5LSSolicitorsFaegre&Benson LLP7 Pilgrim StreetLondon EC4V 6LBRegistered in England a
4、nd Wales,Company No.4597315Company InformationPageConsolidated financial statementsChairmans statement1 2Directors report3 6Report of the independent auditor7Consolidated income statement8Consolidated balance sheet9Consolidated statement of changes in equity10Consolidated cash flow statement11Notes
5、to the consolidated financial statements12 31Parent company financial statementsReport of the independent auditor32Parent company balance sheet33Notes to the parent company financial statements34 36Notice of Annual General MeetingForm of ProxyContentsAfter gains and amortisation,pre tax profit total
6、led 858,000(2006:281,000).This equates to fully diluted earnings per share of13.3p(2006:4.8p)and basic earnings per share of 15.5p(2006:5.4p).IFRSWith effect from 1 January 2007,the company is required to present itsconsolidated financial statements in accordance with InternationalFinancial Reportin
7、g Standards(IFRS).The financial information inthese financial statements has been prepared in accordance withaccounting policies which are based on IFRS and comparativeshave been restated accordingly.Constitution of the GroupAll Group subsidiaries were owned throughout the financialyear to 31 Decemb
8、er 2007.The accounts for the previous yearincluded a 10-month contribution from UHV Design and afour-month contribution from Aitchee.TradingAll our operations traded strongly during the year andachieved increases in sales and EBIT.Activity provedparticularly buoyant towards the end of the year,amome
9、ntum that enabled the Group to enter 2008 withan order book almost double the level in hand at theonset of 2007.I am delighted to report that your Company achieved record results for2007.Revenue advanced from 5.2 million in 2006 to 6.2 million andgenerated profit of 836,000 before tax,gains on the d
10、isposal ofsecurities and amortisation,compared with 516,000 in the previousyear.Earnings per share,similarly adjusted,rose from 8.6p to 12.9p(fully diluted)and from 9.9p to 15.0p(basic).1Chairmans StatementDespite the relative strength of sterling,the robust performance of theGroup in terms of sales
11、,margins and orders is testament to our acquiredcompanies solid niche positioning in their respective world markets.Financial PerformanceFavourable trading contributed to a satisfactory increase in our year-endcash balances which stood at 910,000(2006:824,000)and to thereduction in net debt from 2.4
12、 million to 2.0 million.A significantproportion of our debt is denominated in foreign currency to alleviate theimpact of exchange fluctuations on export activity.During the year our last significant investment in securities was sold:anoffer for Poole Investments became unconditional in August,adevel
13、opment which resulted in cash proceeds of 342,000 and a pre-taxgain of 142,000.DividendsYour Board is pleased to recommend a final dividend of 2.2p(2006:2p)which,subject to approval at the forthcoming Annual General Meeting on22 May 2008,would make a total distribution of 3.3p for the year(2006:3p).
14、The level of cover by adjusted basic earnings per share has risenfrom 3 times to 4 times,notwithstanding the proposed 10 per centincrease.2The proposed dividend will be payable on Friday 4 July 2008 toshareholders on the register on 6 June 2008 and the shares will go ex-dividend on 4 June 2008.Curre
15、nt trading and prospectsBenefiting from a strong order book,the Group experienced a favourablestart to 2008 and,in the opinion of your Directors,enjoys good visibilityfor the first half of the year.Your Directors are optimistic about theprospects for 2008,always bearing in mind the uncertain macro-e
16、conomic climate currently pertaining in global markets and the highproportion of the Groups turnover which is derived from overseas.Since the year-end,the Company has contracted to purchase a freeholdproperty that adjoins the FTT factory for 490,000.This will enableAitchee to be relocated into large
17、r,more suitable premises and will serveto enhance the ongoing cooperation between Aitchee and FTT.Your Board is progressing with the whitewash resolution referred to inlast Januarys trading statement,in order to enable the Company topurchase its own shares without an obligation being incurred by cer
18、tainshareholders to make an offer for the entire share capital.Such a proposalto shareholders forms part of the Boards efforts to improve the liquidityof the Companys shares.Consolidation has been the hallmark of 2007 and,in the wake of anexcellent trading performance reflected in record sales and p
19、rofits,yourBoard is conscious of the benefits to be derived from a significantexpansion in the scale of the Group.To this end your Directors areworking hard to convert an encouraging pipeline of prospective deals intotangible and value enhancing transactions.I would like to take this opportunity to
20、convey the Boards thanks andappreciation to all our employees for their invaluable contributions to afirst class trading result.Alex HambroChairmanDate:27 March 2008The directors present their report and financial statements for the yearended 31 December 2007.Principal activities The company is the
21、parent of a trading group involved in the designand manufacture of scientific instruments.Business reviewThe companys business model calls for a steady increase in the scopeof its operations,achieved through acquisitions of companies operatingin its chosen fields of activity and through the ongoing
22、performance ofits established subsidiaries.In addition to the dilution of head officecosts that results from acquisitions,the company closely monitors thereturn it derives on the capital invested in its subsidiaries.The annualrate of return on total invested capital(“ROTIC”)is computed monthly,both
23、overall and in respect of each subsidiary,by comparingattributable earnings before interest,tax and amortisation(“EBITA”)withthe investment in fixed and net current assets(excluding surplus cash).In 2007,the overall return computed in this manner amounted to24.6%,before taking account of parent comp
24、any costs(2006:21.5%).Acquisitions:although no acquisitions were made during 2007,the directors actively investigated a number of opportunities thatcame to the attention of the directors and there is a pipeline ofinteresting prospects that remain under investigation.It is regardedas paramount that a
25、cquisitions are completed only when the directorsare satisfied that the target business has sound long-term strength.Ongoing performance:the directors regard the trend ofadjusted diluted earnings per share and the companys ability to paydividends to its shareholders as key indicators of overall grou
26、pperformance.These indicators are monitored closely and bothshowed strong gains in the year,with the former rising from 8.6p pershare in 2006 to 12.9p in 2007.Dividend cover remained constantover the 2 years at a factor of 5,despite the dividend in 2006 beingonly the maiden interim payment of 1p per
27、 share,compared withpayments totalling 3.1p per share in 2007.In addition to these trends and the above ROTIC measure for therate of return on investments,the company measures theperformance of its individual subsidiaries in a number of ways:Sales trends:(a)sales at Fire Testing Technology(“FTT”)ros
28、e by 5%in 2007compared with 2006.Order intake rose more significantly in theclosing stages of 2007,with the result that the order backlog atthe end of the year was 900,000 compared with less than400,000 at 31 December 2006.Sales at Aitchee EngineeringLimited,though slightly below budget,remained at
29、a high levelcompared with recent years averages;(b)sales at PE.fiberoptics(“PFO”)rose by almost one third in 2007as the company continued to establish a strong position in itsslowly re-emerging market.The year-end order backlog was 80%up on the previous year-end;(c)sales at UHV Design(“UHV”)were 12%
30、above the annualisedrate for the previous accounting period,building further on the42%gain of the previous year.The year-end order backlog was38%up on the previous year-end.Earnings:Rising sales on a relatively fixed cost base enabled the group to posta 16.9%EBITA margin(excluding the gain arising o
31、n the disposal ofavailable-for-sale investments),compared with 13.7%on acomparable basis in 2006.Cash generation and management:Consolidated gross cash flow from operating activities amounted to859,000(2006:614,000)after a net investment in working capitalof 283,000(2006:142,000).The proceeds of 342
32、,000 receivedon the sale of the groups last significant available-for-saleinvestment added materially to the groups cash flow.Commercial risks and uncertainties:An important element of the groups business model is developmentthrough acquisition;the group is exposed to the risk of aninsufficient flow
33、 of target companies of requisite quality.As regardsthe groups existing businesses,activities are concentrated in nichemarkets,serving a worldwide customer base.The principal drivers ofthe individual businesses within the group are as follows:FTT is the worlds major producer of instruments designed
34、tomeasure the reaction of materials to fire;the long-term growth ofthe business is supported by the development of related safetyregulations internationally and by the globalisation of trade.Theactivity is supported through the in-house production ofengineering parts following the acquisition of Ait
35、cheeEngineering Associates in 2006.3Directors Report4PFO is a significant provider to the telecoms industry ofequipment to test the properties of fibre optic and fibre opticnetworks.Trading is strongly influenced by the cyclical nature ofthis sector.UHV designs and manufactures instruments to create
36、 motion,heating and cooling within ultra high vacuum chambers.It isbenefiting from the buoyancy of the high-tech markets which itserves and their requirements for ultra high vacuum products.The directors consider that there is scope to improve thecompanys output and market share through technical in
37、novationand increased production capability.Across all the groups activities lies the exposure to human resourceshortages.This reflects the small niche-serving nature of the groupsbusinesses and the impracticality at this stage of the groupsdevelopment of providing significant back-up support in res
38、pect ofkey roles.Financial risk management objectives and policies:the group utilises financial instruments,other than derivatives,comprising borrowings,cash and cash equivalents and various otheritems such as trade receivables and payables that arise directly fromits operations.The main purpose of
39、these financial instruments is toraise finance for the groups operations.The main risks arising fromthe groups financial instruments relate to interest rates,liquidity,credit and foreign currency exposure.The directors review and agreepolicies for managing each of these risks,which are described and
40、evaluated in more detail in note 31 to the consolidated financialstatements and which are summarised below.The policies haveremained unchanged from previous periods.Interest rate riskThe group finances its operations through a mixture of bank and hirepurchase borrowings(predominantly at floating rat
41、es),equity andretained profits.With net debt of 2 million at 31 December 2007,exposure to interest rate fluctuations is not considered to be a majorthreat to the group.Liquidity riskThe group seeks to manage liquidity risk by ensuring sufficient fundsare available to meet foreseeable needs and to in
42、vest cash assetssafely and profitably.Primarily this is achieved through loansarranged at group level.Short term flexibility is achieved through theavailability of overdraft facilities and through the significant cashbalances available since the group adopted its new strategy as anindustrial enterpr
43、ise in 2005.Credit riskThe group reviews the credit risk relating to its customers byensuring wherever possible that it deals with long established tradingpartners,agents and government/university backed bodies,wherethe risk of default is considered low.Where considered appropriate,the group insists
44、 on up-front payment and requires letters of creditfacilities to be provided.Currency riskWith exports representing a significant proportion of its sales,themain risk area to which the group is exposed is that of foreigncurrencies(principally US$and Euros).The group adopts a strategyto hedge against
45、 this risk in whole or in part by maintaining aproportion of its bank loans in these currencies.The directors reviewthe value of this hedge on a regular basis.There remains,nevertheless,an ongoing threat to the groups competitive position ininternational markets from any sustained period of Sterling
46、 strength.Results and dividendsThe results for the financial year to 31 December 2007 are set out inthe income statement.The company paid an interim dividend of 1.1pper Ordinary share on 2 November 2007.At the forthcoming AnnualGeneral Meeting,the directors will recommend payment of a finaldividend
47、for the year of 2.2p per Ordinary share to be paid on Friday 4 July 2008 to shareholders on the register on Friday 6 June2008.The shares will go ex-dividend on Wednesday 4 June 2008.DirectorsThe following directors have held office during the year:Hon AR Hambro1-non-executiveMr DE CicurelMr RL Cohen
48、Mr RJ Elman1-non-executiveMr GC Reece1-non-executive1Member of the audit and remuneration committeesDirectors interestsThe directors interests in the Ordinary shares of the company were asstated below:Ordinary of 5p each31 December 20071 January 2007Shares OptionsSharesOptionsHon AR Hambro25,000-25,
49、000-Mr DE Cicurel*526,356-526,356-Mr RL Cohen10,00047,000-37,000Mr RJ Elman45,791-20,000-Mr GC Reece3,000-*Held through David Cicurel Securities Limited,except for 40 sharesheld directly.Details of share options are set out in note 26 to the financial statements.In addition to the above holdings of
50、Ordinary shares,the directors hadthe following interests in the Convertible Redeemable share capital ofthe company:Convertible Redeemable of 1p each(quarter-paid)31 December 20071 January 2007SharesSharesHon AR Hambro416,667416,667Mr DE Cicurel*4,166,6674,166,667Mr RL Cohen-Mr RJ Elman208,333208,333
51、Mr GC Reece208,333208,333*Held through David Cicurel Securities Limited.The conversion terms of the Convertible Redeemable shares aredetailed in note 27 to the financial statements.Following a fullconversion of the Convertible Redeemable shares to Ordinary shares,the directors interests in the enlar
52、ged share capital of the company asat 31 December 2007 would have been as follows:Ordinary SharesHon AR Hambro65,465Mr DE Cicurel931,001Mr RL Cohen10,000Mr RJ Elman66,023Mr GC Reece23,232Payment policyThe groups policy is to agree terms and conditions with suppliersbefore business takes place and to
53、 pay agreed invoices in accordancewith the terms of payment.Trade creditor days of the company at theend of the year represented 20 days(2006:34 days).Directors responsibilitiesThe directors are responsible for preparing the Annual Report and thefinancial statements in accordance with applicable law
54、 and regulations.Company law requires the directors to prepare financial statements foreach financial year.Under that law the directors have elected to preparethe parent company financial statements in accordance with UnitedKingdom Accounting Standards(United Kingdom Generally AcceptedAccounting Pra
55、ctice)and the consolidated financial statements inaccordance with International Financial Reporting Standards as adoptedby the European Union.The financial statements are required by law togive a true and fair view of the state of affairs of the group and parentcompany and of the profit or loss of t
56、he group and parent company forthat period.In preparing these financial statements,the directors arerequired to:select suitable accounting policies and then apply them consistently;make judgements and estimates that are reasonable and prudent;state whether applicable UK Accounting Standards and Inte
57、rnationalFinancial Reporting Standards as adopted by the European Unionhave been followed,subject to any material departures disclosed andexplained in the financial statements;and prepare the financial statements on the going concern basis unless itis inappropriate to presume that the group and the
58、parent companywill continue in business.The directors are responsible for keeping proper accounting recordsthat disclose with reasonable accuracy at any time the financial positionof the group and parent company and enable them to ensure that thefinancial statements comply with the Companies Act 198
59、5.They arealso responsible for safeguarding the assets of both the group andparent company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.In so far as the directors are aware:there is no relevant audit information of which the companys auditor
60、is unaware;and the directors have taken all steps that they ought to have taken tomake themselves aware of any relevant audit information and toestablish that the companys auditor is aware of that information.56The maintenance and integrity of the corporate and financial informationincluded on the J
61、udges Capital website is the responsibility of thedirectors:the work carried out by the auditor does not involveconsideration of these matters and,accordingly,the auditor accepts noresponsibility for any changes that may have occurred to the financialstatements since they were initially presented on
62、 the website.Legislation in the United Kingdom governing the preparation anddissemination of the financial statements may differ from legislation inother jurisdictions.Corporate governanceThe directors have established an audit committee and a remunerationcommittee with formally delegated duties and
63、 responsibilities.Themembers of both committees are the non-executive directors.The audit committee determines the terms of engagement of thecompanys auditor and,in consultation with the companys auditor,thescope of the audit.The audit committee has unrestricted access to thecompanys auditor.The rem
64、uneration committee reviews the scale andstructure of the executive directors remuneration and the terms of theirservice contracts.The remuneration of the non-executive directors isdetermined by the board as a whole.No directors participate in settingtheir own pay.Post balance sheet eventOn 20 March
65、 2008,the parent company exchanged contracts for thepurchase for 490,000 of a freehold property at Unit 18,CharlwoodsRoad,East Grinstead,West Sussex.This site comprises a factory unitwith ancillary offices and is located adjacent to the parent companyshead office and premises of its principal subsid
66、iary,FTT.The activitiesof FTTs subsidiary,Aitchee Engineering Limited,will be relocated intoUnit 18.AuditorGrant Thornton UK LLP offer themselves for reappointment as auditor inaccordance with section 385 of the Companies Act 1985.On behalf of the boardRL CohenDirector and Company Secretary27 March
67、2008We have audited the consolidated financial statements of Judges Capitalplc for the year ended 31 December 2007 which comprise theconsolidated income statement,the consolidated balance sheet,theconsolidated statement of changes in equity,the consolidated cash flowstatement and notes 1 to 35.These
68、 consolidated financial statementshave been prepared under the accounting policies set out therein.We have reported separately on the parent company financial statementsof Judges Capital plc for the year ended 31 December 2007.This report is made solely to the companys members,as a body,inaccordance
69、 with Section 235 of the Companies Act 1985.Our auditwork has been undertaken so that we might state to the companysmembers those matters we are required to state to them in an auditorsreport and for no other purpose.To the fullest extent permitted by law,we do not accept or assume responsibility to
70、 anyone other than thecompany and the companys members as a body,for our audit work,forthis report,or for the opinions we have formed.Respective responsibilities of directors and auditorsThe directors responsibilities for preparing the Annual Report and theconsolidated financial statements in accord
71、ance with United Kingdomlaw and International Financial Reporting Standards(IFRSs)as adopted by the European Union are set out in the Statement ofDirectors Responsibilities.Our responsibility is to audit the consolidated financial statements inaccordance with relevant legal and regulatory requiremen
72、ts andInternational Standards on Auditing(UK and Ireland).We report to you our opinion as to whether the consolidated financialstatements give a true and fair view and whether the consolidatedfinancial statements have been properly prepared in accordance with theCompanies Act 1985.We also report to
73、you whether in our opinion theinformation given in the directors report is consistent with theconsolidated financial statements.In addition we report to you if,in our opinion,we have not received allthe information and explanations we require for our audit,or ifinformation specified by law regarding
74、 directors remuneration andother transactions is not disclosed.We read other information contained in the Annual Report and considerwhether it is consistent with the audited consolidated financialstatements.The other information comprises only the directors reportand the Chairmans statement.We consi
75、der the implications for ourreport if we become aware of any apparent misstatements or materialinconsistencies with the consolidated financial statements.Ourresponsibilities do not extend to any other information.Basis of audit opinionWe conducted our audit in accordance with International Standards
76、 onAuditing(UK and Ireland)issued by the Auditing Practices Board.Anaudit includes examination,on a test basis,of evidence relevant to theamounts and disclosures in the consolidated financial statements.Italso includes an assessment of the significant estimates andjudgements made by the directors in
77、 the preparation of the consolidatedfinancial statements,and of whether the accounting policies areappropriate to the groups circumstances,consistently applied andadequately disclosed.We planned and performed our audit so as to obtain all the informationand explanations which we considered necessary
78、 in order to provide uswith sufficient evidence to give reasonable assurance that theconsolidated financial statements are free from material misstatement,whether caused by fraud or other irregularity or error.In forming ouropinion we also evaluated the overall adequacy of the presentation ofinforma
79、tion in the consolidated financial statements.OpinionIn our opinion:the consolidated financial statements give a true and fair view,inaccordance with IFRSs as adopted by the European Union,of thestate of the groups affairs as at 31 December 2007 and of its profitfor the year then ended;the consolida
80、ted financial statements have been properly prepared inaccordance with the Companies Act 1985;and the information given in the directors report is consistent with theconsolidated financial statements.Grant Thornton UK LLPRegistered AuditorChartered AccountantsLeicester27 March 20087Report of the Ind
81、ependent Auditor2007-2006-Notes-Revenue76,191,965-5,195,325-Operating costs8(5,267,084)(4,712,635)Operating profit9924,881-482,690-Profit/(loss)on disposal of available-for-sale investments10142,217-(6,145)Interest receivable1132,987-32,041-Interest payable11(241,772)(227,418)Profit before tax858,31
82、3-281,168-Taxation12(231,496)(84,653)Profit for the year626,817-196,515-Attributable to:Equity holders of the parent company552,468-190,105-Minority interest74,349-6,410-Earnings per share total and continuingBasic1415.5p5.4pDiluted1413.3p4.8pThe accompanying notes form an integral part of these con
83、solidated financial statements.8Consolidated Income StatementConsolidated Balance Sheet92007-2006-Note-ASSETSNon-current assetsProperty,plant and equipment15274,626-295,468-Goodwill164,383,347-4,389,963-Other intangible assets1775,909-195,924-Available-for-sale investments1820,000-210,950-4,753,882-
84、5,092,305-Current assetsInventories19553,311-402,941-Trade and other receivables201,543,011-1,249,039-Cash and cash equivalents910,366-824,156-3,006,688-2,476,136-Total assets7,760,570-7,568,441-LIABILITIESCurrent liabilitiesTrade and other payables21(877,226)(779,708)Current portion of long-term bo
85、rrowings22(527,008)(421,813)Current tax payable(299,771)(261,718)(1,704,005)(1,463,239)Non-current liabilitiesLong-term borrowings23(2,335,751)(2,835,940)Deferred tax liabilities25(35,934)(89,505)(2,371,685)(2,925,445)Total liabilities(4,075,690)(4,388,684)Net assets3,684,880-3,179,757-EQUITYShare c
86、apital26178,044-178,044-Share premium account2,501,430-2,501,430-Merger reserve475,074-475,074-Retained earnings408,452-(33,629)Revaluation reserve450-(5,743)Equity attributable to equity holders of the parent company3,563,450-3,115,176-Minority interest121,430-64,581-Total equity3,684,880-3,179,757
87、-The accompanying notes form an integral part of these consolidated financial statements.The financial statements were approved by the board on 27 March 2008D.E.CicurelR.L.CohenDirectorDirectorShare capitalShare premiumMerger reserveRetained earnings-Revaluation reserve-Total*-Minority interest-Tota
88、l equity-Note-1 January 2006173,1182,501,430380,000(188,109)(58,510)2,807,929-58,171-2,866,100-Changes in equity for 2006Gains/(losses)on revaluation of available-for-sale investments-19,950-19,950-19,950-Tax on revaluation gains/(losses)taken directly to equity-(5,985)(5,985)-(5,985)Transferred to
89、profit or loss on disposal of available-for-sale investments-38,802-38,802-38,802-Net income recognised directly in equity-52,767-52,767-52,767-Profit for the year-190,105-190,105-6,410-196,515-Total recognised income and expense for the year-190,105-52,767-242,872-6,410-249,282-Dividends13-(35,625)
90、-(35,625)-(35,625)Issue of share capital4,926-95,074-100,000-100,000-Balance at 31 December 2006178,0442,501,430475,074(33,629)(5,743)3,115,176-64,581-3,179,757-Changes in equity for 2007Transferred to profit or loss on disposal of available-for-sale investments-6,193-6,193-6,193-Net income recognis
91、ed directly in equity-6,193-6,193-6,193-Profit for the year-552,468-552,468-74,349-626,817-Total recognised income and expense for the year-552,468-6,193-558,661-74,349-633,010-Dividends13-(110,387)-(110,387)(17,500)(127,887)Balance at 31 December 2007178,0442,501,430475,074408,452-450-3,563,450-121
92、,430-3,684,880-*-Total represents amounts attributable to equity holders of the parent company.The accompanying notes form an integral part of these consolidated financial statements.Consolidated Statement of Changes in Equity102007-2006-Cash flows from operating activitiesProfit after tax626,817-19
93、6,515-Adjustments for:Depreciation70,289-53,644-Amortisation of intangible assets120,015-228,783-Profit on disposal of property,plant and equipment(611)(2,078)(Profit)/loss on disposal of available-for-sale investments(142,217)6,145-Foreign exchange losses/(gains)on foreign currency loans27,443-(7,3
94、35)Interest receivable(32,987)(32,041)Interest payable241,772-227,418-Tax expense recognised in income statement231,496-84,653-(Increase)/decrease in inventories(150,370)104,775-Increase in trade and other receivables(293,972)(364,429)Increase in trade and other payables161,518-117,929-Cash generate
95、d from operations859,193-613,979-Interest paid(242,399)(227,418)Tax paid(249,651)(294,693)Net cash from operating activities367,143-91,868-Cash flows from investing activitiesAcquisition of subsidiaries,net of cash acquired(57,384)(1,036,223)Purchase of property,plant and equipment(57,032)(31,336)Pr
96、oceeds from disposal of equipment8,196-15,655-Proceeds from disposal of available-for-sale investments342,000-202,611-Interest received32,987-32,041-Net cash generated/(used)in investing activities268,767-(817,252)Cash flows from financing activitiesProceeds from drawdown of long-term borrowings-700
97、,000-Repayments of borrowings(including hire purchase contracts)(421,813)(263,454)Dividends paid(127,887)(35,625)Net cash(used in)/from financing activities(549,700)400,921-Net increase/(decrease)in cash and cash equivalents86,210-(324,463)Cash and cash equivalents at beginning of period824,156-1,14
98、8,619-Cash and cash equivalents at end of period910,366-824,156-The accompanying notes form an integral part of these consolidated financial statements.11Consolidated Cash Flow Statement1.General informationJudges Capital plc is the ultimate parent company of the group,whose principal activities com
99、prise the design,manufacture andsale of scientific instruments.These are used in the measurementof the reaction of materials to fire,in the testing of the propertiesof fibre optic and fibre optic networks and in the creation ofmovement,heating and cooling of objects within ultra highvacuum chambers.
100、2.Registered officeThe address of the registered office and principal place ofbusiness of Judges Capital plc is Unit 19,Charlwoods Road,EastGrinstead,West Sussex RH19 2HL.3.Basis of accountingThe consolidated financial statements have been prepared underthe historical cost convention except for cert
101、ain financialinstruments which are carried at fair value.The groups financial statements up to and including those for theyear ended 31 December 2006 were prepared in accordance withUnited Kingdom Accounting Standards(United KingdomGenerally Accepted Accounting Practice).With effect from 1January 20
102、07,the company,being listed on the AlternativeInvestment Market of the London Stock Exchange,is required topresent its consolidated financial statements in accordance withInternational Financial Reporting Standards(IFRS)as adopted bythe European Union.Accordingly,these financial statements havebeen
103、prepared in accordance with the accounting policies set outbelow which are based on the IFRS in issue as adopted by theEuropean Union(EU)and in effect at 31 December 2007.Comparatives have been restated in compliance with theprinciples of IFRS.Reconciliations of shareholders equity underUK Generally
104、 Accepted Accounting Practice(UK GAAP)to thatunder IFRS at 1 January and 31 December 2006 and of the profitfor the year ended 31 December 2006,together with anexplanation of material adjustments to the cash flow statement,aregiven in notes 33 and 34.The disclosures required by IFRS 1concerning the t
105、ransition from UK GAAP to IFRS are given in thereconciliation schedules presented in note 33.4.Use of accounting estimates and judgementsMany of the amounts included in the consolidated financialstatements involve the use of judgement and/or estimation.Thesejudgements and estimates are based on mana
106、gements bestknowledge of the relevant facts and circumstances,having regardto prior experience,but actual results may differ from the amountsincluded in the consolidated financial statements.Informationabout such judgements and estimation is contained in theaccounting policies and/or the notes to th
107、e consolidated financialstatements and the key areas are summarised below:Judgements in applying accounting policies:the directors must judge whether all of the conditions requiredfor revenues to be recognised in the income statement of thefinancial year,as set out in Note 6.4 below,have been met;th
108、e classification of financial assets as available for salerequires judgements concerning the likelihood and timing ofrealisation of sale;the directors must judge whether future profitability is likely in making the decision whether or not to create a deferred tax asset.Sources of estimation uncertai
109、nty:depreciation rates are based on estimates of the useful lives andresidual values of the assets involved;estimates of future profitability are required for the decisionwhether or not to create a deferred tax asset;estimates are required as to asset carrying values andimpairment charges.These are
110、assessed by reference tobudgeted profits and cash flows for future periods for therelevant income generating units and an estimate of their valuesin use.5.Change in accounting policies5.1 Standards,amendments and Interpretations toexisting Standards that are not yet effectiveAt the date of authorisa
111、tion of these consolidated financialstatements,certain new Standards,amendments andInterpretations to existing standards have been published but arenot yet effective.The group has not early-adopted any of thesepronouncements.The new Standards,amendments andInterpretations that are expected to be rel
112、evant to the groupsconsolidated financial statements are as follows:Amendment to IAS 1 Presentation of FinancialStatements(effective from 1 January 2009,ie forreporting periods beginning on or after this date)This amendment affects the presentation of owner changes inequity and introduces a statemen
113、t of comprehensive income.Preparers will have the option of presenting items of income andexpense and components of other comprehensive income either ina single statement of comprehensive income with subtotals,or intwo separate statements(a separate income statement followed by12Notes to the Consoli
114、dated Financial Statementsa statement of other comprehensive income).This amendmentdoes not affect the financial position or results of the group butwill give rise to additional disclosures.Management are currentlyassessing the detailed impact of this amendment on the groupsfinancial statements.IFRS
115、 8 Operating Segments(effective from 1 January 2009)This IFRS specifies how an entity should report information aboutits operating segments in its consolidated financial statements.Generally,financial information is required to be reported on thesame basis as is used internally for evaluating operat
116、ing segmentperformance and deciding how to allocate resources to operatingsegments.Implementation of this Standard is not expected toincrease the number of reportable segments but will alter themanner in which these are reported to be consistent with theinternal reporting provided to the chief opera
117、ting decision-maker.All the above pronouncements will be adopted in the groupsfinancial statements for the period beginning 1 January 2009.IFRS 3 Business Combinations(revised 2008)and IAS 27 Consolidated and Separate FinancialStatements(revised 2008)effective from 1 July 2009The revised Standards i
118、ntroduced major changes to theaccounting requirements for business combinations,transactionswith non-controlling interests(a new term for“minority interests”)and a loss of control of a subsidiary.Management are currentlyassessing the detailed impact of this amendment on the groupsfinancial statement
119、s.The revised Standards will be adopted in the groups financialstatements for the period beginning 1 January 2010.Other new Standards and Interpretations have been issued but arenot expected to have a material impact on the groups financialstatements.6.Accounting policies6.1 Basis of consolidationTh
120、e consolidated financial statements include those of the parentcompany and its subsidiaries,all drawn up to 31 December 2007.Subsidiaries are entities over which the group has the power tocontrol the financial and operating policies so as to obtainbenefits from their activities.The group obtains and
121、 exercisescontrol through voting rights.Income,expenditure,unrealisedgains and intra-group balances arising from transactions withinthe group are eliminated.Unrealised losses are also eliminatedunless the transaction provides evidence of an impairment of theasset transferred.Amounts reported in the
122、financial statements ofsubsidiaries have been adjusted where necessary to ensureconsistency with the accounting policies adopted by the group.Acquisitions of subsidiaries are dealt with by the purchasemethod.The purchase method involves the recognition at fairvalue of all identifiable assets and lia
123、bilities,including contingentliabilities of the subsidiary,at the acquisition date,regardless ofwhether or not they were recorded in the financial statements ofthe subsidiary prior to acquisition.In the case of acquisitions after31 December 2005,goodwill is stated after separating outidentifiable in
124、tangible assets.Goodwill represents the excess ofacquisition cost over the fair value of the groups share of theidentifiable net assets of the acquired subsidiary at the date ofacquisition.The parent company is entitled to the merger relief offered bysection 131 of the Companies Act 1985 in respect
125、of the fair valueof the consideration received in excess of the nominal value of theequity shares issued in connection with the acquisition of FireTesting Technology Limited and UHV Design Limited.6.2 Business combinations completed prior to thedate of transition to IFRSThe group has elected not to
126、apply IFRS 3 BusinessCombinations retrospectively to business combinations prior tothe date of transition to IFRS on 1 January 2006.Accordingly theclassification of the combination(acquisition,reverse acquisitionor merger)remains unchanged from that used under UK GAAP.Assets and liabilities are reco
127、gnised at the date of transition if theywould be recognised under IFRS,and are measured using theirUK GAAP carrying amounts immediately post-acquisition asdeemed cost under IFRS,unless IFRS requires fair valuemeasurement.Amounts recorded as goodwill under UK GAAPhave not been re-assessed to identify
128、 intangible assets.Deferredtax and minority interest are adjusted for the impact of anyconsequential adjustments after taking advantage of thetransitional provisions.6.3 GoodwillGoodwill,representing the excess of the cost of acquisition overthe fair value of the groups share of the identifiable net
129、 assetsacquired,is capitalised and reviewed annually for impairment.Goodwill is carried at cost less accumulated impairment losses.13Negative goodwill is recognised immediately after acquisition inthe income statement.The carrying value of negative goodwill at the date of transitionhas been credited
130、 to reserves.There is no re-instatement ofgoodwill or negative goodwill that was amortised prior totransition to IFRS.6.4 RevenueRevenue from the sale of goods is measured by reference to thefair value of consideration received or receivable by the group forgoods supplied,excluding Value Added Tax,a
131、nd is recognisedwhen all the following conditions have been satisfied:the group has transferred to the buyer the significant risks andrewards of ownership of the goods and effective control overthem;the amount of revenue and the costs incurred or to be incurredin respect of the transaction can be me
132、asured reliably;and it is probable that the economic benefits associated with thetransaction will flow to the group.Installation revenues are deferred and held on the balance sheetwithin trade and other payables pending recognition as revenueon completion of installation.Interest income is recognise
133、d usingthe effective interest method which calculates the amortised costof a financial asset and allocates the interest income over therelevant period.Dividend income is recognised when theshareholders right to receive payment is established.6.5 Intangible assets acquired as part of a businesscombin
134、ationIn accordance with IFRS 3 Business Combinations,an intangibleasset acquired in a business combination is deemed to have acost to the group of its fair value at the acquisition date.The fairvalue of the intangible asset reflects market expectations about theprobability that the future economic b
135、enefits embodied in theasset will flow to the group.Amortisation begins when the intangible asset is first available foruse and is provided at rates calculated to write off the cost of eachintangible asset over its expected useful life,ranging from a fewweeks in the case of sales order backlogs to f
136、ive years in the caseof non-competition agreements.Amortisation charges areincluded in operating costs in the income statement.Subsequent to initial recognition,intangible assets are stated at deemed cost less accumulated amortisation andimpairment charges.6.6 Property,plant and equipmentProperty,pl
137、ant and equipment is stated at cost,net of depreciationand any provision for impairment.Disposal of assets:the gain or loss arising on the disposal of anasset is determined as the difference between the disposalproceeds and the carrying amount of the asset and is recognisedin the income statement.De
138、preciation:Depreciation is provided at annual rates calculatedto write off the cost less residual value of each asset over itsexpected useful life,within the following ranges:Plant and machinery:15%on written down value to 20%straight-line on cost Fixtures,fittings and equipment:15%on written down v
139、alue to 33%straight-line on cost Motor vehicles:25%on written down value to 25%straight-line on cost Building improvements:20%straight-line on costMaterial residual value estimates are updated as required but atleast annually.6.7 Impairment testing of goodwill,other intangibleassets and property,pla
140、nt and equipmentFor the purposes of assessing impairment,assets are grouped atthe lowest levels for which there are largely independent cashinflows(cash-generating units).As a result,some assets aretested individually for impairment and some are tested at cash-generating unit level.Goodwill is alloc
141、ated to those cash-generating units that are expected to benefit from synergies of therelated business combination and represent the lowest level withinthe group at which management monitors goodwill.Cash-generating units to which goodwill has been allocated aretested for impairment at least annuall
142、y.All other individual assets or cash-generating units are tested whenever events orchanges in circumstances indicate that the carrying amount maynot be recoverable.An impairment loss is recognised for the amount by which theassets or cash-generating units carrying amount exceeds itsrecoverable amou
143、nt.The recoverable amount is the higher of fairvalue,reflecting market conditions less costs to sell,and value in14use based on estimated future cash flows from each cash-generating unit,abated at a suitable discount rate in order tocalculate the present value of those cash flows.The data used forim
144、pairment testing procedures is directly linked to the groupslatest approved budgets,adjusted as necessary to exclude anyfuture restructuring to which the group is not yet committed.Discount rates are determined individually for each cash-generating unit and reflect their respective risk profiles asa
145、ssessed by the directors.Impairment losses for cash-generating units reduce first thecarrying amount of any goodwill allocated to that cash-generatingunit.Any remaining impairment loss is charged pro rata to theother assets in the cash-generating unit.With the exception ofgoodwill,all assets are sub
146、sequently reassessed for indicationsthat an impairment loss previously recognised may no longerexist.Impairment charges are included in operating costs in theincome statement.An impairment charge that has beenrecognised is reversed if the cash-generating units recoverableamount exceeds its carrying
147、amount.6.8 LeasesIn accordance with IAS 17,the economic ownership of a leasedasset is transferred to the lessee if the lessee bears substantiallyall the risks and rewards related to the ownership of the leasedasset.The related asset is recognised as an asset in the balancesheet at the time of incept
148、ion of the lease at the fair value of theleased asset or,if lower,the present value of the minimum leasepayments plus incidental payments,if any,to be borne by thelessee.A corresponding amount is recognised as a financeleasing liability.The interest element of leasing payments represents a constantp
149、roportion of the capital balance outstanding and is charged tothe income statement over the period of the lease.All other leases are regarded as operating leases and thepayments made under them are charged to the income statementon a straight line basis over the period of the lease term.Leaseincenti
150、ves are spread over the term of the lease.6.9 InventoriesInventories are stated at the lower of cost and net realisable value.Costs of ordinarily interchangeable items are assigned using thefirst-in,first-out cost formula.Cost includes materials,directlabour and an attributable proportion of manufac
151、turing overheadsbased on normal levels of activity.6.10TaxationCurrent tax is the tax currently payable based on taxable profit for the year.Deferred taxes are calculated using the liability method ontemporary differences.Deferred tax is generally provided on thedifference between the carrying amoun
152、ts of assets and liabilitiesand their tax bases.However,deferred tax is not provided on theinitial recognition of goodwill,nor on the initial recognition of anasset or liability unless the related transaction is a businesscombination or affects tax or accounting profit.Deferred tax ontemporary diffe
153、rences associated with shares in subsidiaries is notprovided if reversal of those temporary differences can becontrolled by the group and it is probable that reversal will notoccur in the foreseeable future.In addition,tax losses available tobe carried forward as well as other income tax credits to
154、the groupare 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 probablethat the underlying deductible temporary differences will be ableto be offset against future taxable inco
155、me.Current and deferredtax assets and liabilities are calculated at tax rates that areexpected to apply to their respective period of realisation,provided they are enacted or substantively enacted at the balancesheet date.Changes in deferred tax assets or liabilities are recognised as acomponent of
156、tax expense in the income statement,except wherethey relate to items that are charged or credited directly to equityin which case the related deferred tax is also charged or crediteddirectly to equity.6.11Share-based paymentsIFRS 2 has been applied,in accordance with IFRS 1 and wherethe effect is ma
157、terial,to equity-settled share options granted on orafter 7 November 2002 and not vested prior to 1 January 2006.All goods and services received in exchange for the grant of anyshare-based payment are measured at their fair values.Whereemployees are rewarded using share-based payments,the fairvalues
158、 of employees services are determined indirectly byreference to the fair value of the instrument granted to theemployee.This fair value is appraised at the grant date andexcludes the impact of non-market vesting conditions.All equity-settled share-based payments are ultimately recognised15as an expe
159、nse in the income statement,with a correspondingcredit to“other reserve”.If vesting periods or other non-market vesting conditions apply,the expense is allocated over the vesting period,based on the bestavailable estimate of the number of share options expected tovest.Estimates are subsequently revi
160、sed if there is any indicationthat the number of share options expected to vest differs fromprevious estimates.Any cumulative adjustment prior to vesting isrecognised in the current period.The impact of the revision of theoriginal estimates,if any,is recognised in the income statementover the remain
161、ing vesting period,with a correspondingadjustment to the appropriate reserve.No adjustment is made toany expense recognised in prior periods if share optionsultimately exercised are different to that estimated on vesting.Upon exercise of share options the proceeds received net ofattributable transac
162、tion costs are credited to share capital,andwhere appropriate share premium.6.12Financial assetsFinancial assets are divided into the following categories:loansand receivables and available-for-sale financial assets.Financialassets are assigned to the different categories by management oninitial rec
163、ognition,depending on the purpose for which they wereacquired.The designation of financial assets is re-evaluated atevery reporting date at which a choice of classification oraccounting treatment is available.All financial assets are recognised when the group becomes aparty to the contractual provis
164、ions of the instrument.Financialassets are recognised at fair value plus transaction costs.Loans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in an activemarket.Trade receivables are classified as loans and receivables.Loans and receivabl
165、es are measured subsequent to initialrecognition at amortised cost using the effective interest method,less provision for impairment.Any change in their value throughimpairment or reversal of impairment is recognised in operatingcosts in the income statement.Provision against trade receivables is ma
166、de when there isobjective evidence that the group will not be able to collect allamounts due to it in accordance with the original terms of thosereceivables.The amount of the write-down is determined as thedifference between the assets carrying amount and the presentvalue of estimated future cash fl
167、ows.Available-for-sale financial assets include non-derivative financialassets that are either designated as such or do not qualify forinclusion in any of the other categories of financial assets.Allfinancial assets within this category are measured subsequently atfair value,with changes in value re
168、cognised in equity,through thestatement of changes in equity.Gains and losses arising frominvestments classified as available-for-sale are recognised in theincome statement when they are sold or when the investment is impaired.In the case of impairment of available-for-sale assets,any losspreviously
169、 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.An assessment for impairment is undertaken at least at eachbalance sheet date.A financial asset is derecognised only w
170、here the contractual rightsto the cash flows from the asset expire or the financial asset istransferred and that transfer qualifies for derecognition.A financialasset is transferred if the contractual rights to receive the cashflows of the asset have been transferred or the group retains thecontract
171、ual rights to receive the cash flows of the asset butassumes a contractual obligation to pay the cash flows to one ormore recipients.A financial asset that is transferred qualifies forderecognition if the group transfers substantially all the risks andrewards of ownership of the asset,or if the grou
172、p neither retainsnor transfers substantially all the risks and rewards of ownershipbut does transfer control of that asset.6.13Financial liabilitiesFinancial liabilities are obligations to pay cash or other financialassets and are recognised when the group becomes a party to thecontractual provision
173、s of the instrument.All financial liabilities arerecorded initially at fair value net of direct issue costs.All financial liabilities with the exception of ConvertibleRedeemable shares(see paragraph 6.19)are recorded atamortised cost using the effective interest method,with interest-related charges
174、recognised as an expense in finance cost in theincome statement.These financial liabilities include trade and1617other payables,current tax payable and borrowings,includingbank loans,subordinated loan notes and hire purchasecommitments.Finance charges,including premiums payable onsettlement or redem
175、ption and direct issue costs,are charged tothe income statement on an accruals basis using the effectiveinterest method and are added to the carrying amount of theinstrument to the extent that they are not settled in the period inwhich they arise.A financial liability is derecognised only when the o
176、bligation isextinguished,that is,when the obligation is discharged orcancelled or expires.6.14Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demanddeposits,together with other short-term,highly liquid investmentsthat are readily convertible into known amounts of cash an
177、d whichare subject to an insignificant risk of changes in value.6.15PensionsCompanies in the group operate defined contribution pensionschemes for employees and directors.The assets of the schemesare held by investment managers separately from those of thecompany and group.The pension costs charged
178、against profitsare the contributions payable to the schemes in respect of theaccounting period.6.16Foreign currenciesTransactions in foreign currencies are translated at the exchangerate ruling at the date of the transaction.Monetary assets andliabilities in foreign currencies are translated at the
179、rates ofexchange ruling at the balance sheet date.Exchange differencesarising on the settlement of monetary items or on translatingmonetary items at rates different from those at which they wereinitially recorded are recognised in the income statement in theperiod in which they arise.6.17DividendsDi
180、vidend distributions payable to equity shareholders are includedin trade and other payables when the dividends are approved ingeneral meeting but not paid prior to the balance sheet date.6.18EquityEquity comprises the following:“Share capital”represents the nominal value of equity shares.“Share prem
181、ium”represents the excess over nominal value ofthe fair value of consideration received for equity shares,net ofexpenses of the share issue.“Merger reserve”represents the fair value of the considerationreceived in excess of the nominal value of equity shares issuedin connection with acquisitions whe
182、re the company hasexercised entitlement to the merger relief offered by section 131of the Companies Act 1985.“Profit and loss reserve”represents retained profits.“Revaluation reserve”represents gains and losses due to therevaluation of certain financial assets.“Minority interest”represents retained
183、profits and lossesattributable to minority shareholders in subsidiary companies.6.19Convertible Redeemable sharesIn accordance with IAS 32,the Convertible Redeemable shareshave been recorded as a liability at the net proceeds received andthe future conversion into Ordinary shares has not been taken
184、intoaccount.7.Segmental reportingThe groups primary reporting format is business segment and itssecondary format is geographical segment by origin of revenue.Business segment analysis:all of the groups operationsare in the field of design and manufacture of scientificinstruments.The financial perfor
185、mance of each of the businesssegments is summarised below.There are no material salesbetween business segments.All assets reside in the UK.18Year ended/at 31 December 2007Fire testingFibre opticUltra high vacuumCentral costs-Group equipmenttesting equipmentmanipulation and consolidation-consolidated
186、equipment-Revenue3,650,0411,036,2791,505,645-6,191,965Operating profit636,341215,602312,980(240,042)924,881Assets1,771,520494,803840,1124,654,135-7,760,570Liabilities951,840247,472347,7072,528,671-4,075,690Total capital employed819,680247,331492,4052,125,464-3,684,880Goodwill3,871,161-512,186-4,383,
187、347Other intangible assets33,666-42,243-75,909Capital expenditure15,047-41,985-57,032Depreciation76,19711,50436,925(54,337)70,289Amortisation of intangible assets32,667-87,348-120,015Year ended/at 31 December 2006Fire testingFibre opticUltra high vacuumCentral costs-Group equipmenttesting equipmentm
188、anipulation and consolidation-consolidatedequipment-Revenue3,247,979787,8171,159,529-5,195,325Operating profit495,49995,763282,839(391,411)482,690Assets2,037,890278,635840,3554,411,561-7,568,441Liabilities1,141,002172,531421,1432,654,008-4,388,684Total capital employed896,888106,104419,2121,757,553-
189、3,179,757Goodwill3,877,777-512,186-4,389,963Other intangible assets66,333-129,591-195,924Capital expenditure11,742-76,144-87,886Depreciation68,83714,39724,746(54,336)53,644Amortisation of intangible assets14,667-214,116-228,783Geographical analysis:all the groups design,manufacturingand sales activi
190、ties are located in the United Kingdom.Sales bygeographical destination are as follows:20072006United Kingdom988,451710,496Europe2,501,7241,731,933United States/Canada1,053,6381,075,996Rest of the World1,648,1521,676,900Total6,191,9655,195,3258.Operating costs20072006Raw materials and consumables1,7
191、03,0621,619,220Other external charges1,231,2891,138,553Staff costs2,142,4291,672,435Depreciation70,28953,644Amortisation of intangible assets120,015228,7835,267,0844,712,63513.Dividends20072006p/sharep/shareFinal dividend for the previous year2.071,217-Interim dividend for the current year1.139,1701
192、.035,6253.1 110,3871.035,625The directors will propose a final dividend of 2.2p per share,amounting to78,339,for payment on 4 July 2008.As this remains conditional onshareholders approval,provision has not been made in these consolidatedfinancial statements.14.Earnings per shareOptions and warrants
193、over Ordinary shares and rights ofconversion of the Convertible Redeemable shares are described innotes 26 and 27.Year to 31 December 2007Earnings attributable-Weighted Earningsto equity holders of-averageper sharethe parent company-number of shares-No.penceProfit after tax for calculation of basic
194、earnings per share552,468-Notional taxed interest income accruing on dilution22,230-Profit after tax for calculation of diluted earnings per share574,698-Add-back:amortisation of intangible assets,net of tax82,492-Less:profit on disposal of available-for-sale investments,net of tax(99,552)Adjusted d
195、iluted profit before amortisation of intangible assets557,638-Number of shares for calculation of basic earnings per share3,560,878Dilutive effect of potential shares769,944Number of shares for calculation of diluted earnings per share4,330,822Basic earnings per share15.5Diluted earnings per share13
196、.3Adjusted basic earnings per share15.0Adjusted diluted earnings per share12.9199.Operating profit2007-2006-Operating profit is stated after charging/(crediting):Profit on disposal of property,plant and equipment(610)(2,078)Fees payable to the companys auditorfor the audit of the companys annual acc
197、ounts24,353-12,400-Fees payable to the companys auditor for other services:for the audit of the companys subsidiaries,pursuant to legislation39,850-18,320-for tax services7,750-7,450-for all other services8,000-800-Depreciation70,289-53,644-Amortisation of intangible assets120,015-228,783-Operating
198、lease rentals-land and property164,700-162,068-In addition fees were paid to the auditor in 2006 in respect of corporate finance transaction work undertaken in connection with the acquisition of UHVDesign Limited.The costs of 28,727 plus VAT were charged to investments in subsidiaries.10.Profit/(los
199、s)on disposal of available-for-saleinvestmentsDuring the year,the parent company disposed of its 3%holdingin Poole Investments plc,realising 342,000 in cash and a profitbefore tax of 142,217.During 2006,the parent companydisposed of its holding in Dickinson Legg plc and received a finaldistribution
200、on the liquidation of Lionheart plc,realising inaggregate 202,611 in cash and a loss before tax of 6,145.11.Interest receivable and payable2007-2006-Interest receivable short-term bank deposits32,987-32,041-Interest payable-bank and hire purchase loans(202,836)(194,219)-bank overdrafts and other sho
201、rt-term-borrowings(1,282)-Interest payable-loan notes(37,654)(33,199)(241,772)(227,418)Net interest payable208,785-195,377-12.Taxation2007-2006-UK corporation tax at 30%(2006:30%)-current year288,968-160,305-prior years(1,264)852-287,704-161,157-Deferred tax-origination and reversal of temporary dif
202、ferences:Current year(48,227)(77,474)Prior years(7,981)970-(56,208)(76,504)Tax on profit for the year -current year240,741-82,831-prior years(9,245)1,822-231,496-84,653-Factors affecting the tax charge for the year:Profit before tax858,313-281,168-Profit before tax multiplied by standard rate of UK
203、corporation tax of 30%257,494-84,350-Tax relief available on purchased goodwill(19,682)(6,855)Provisions and expenditure not deductible for tax purposes6,555-8,223-Marginal relief(1,747)(10,559)Variances between capital allowances and depreciation679-7,672-Change in the rate of deferred tax(2,558)-T
204、ax on profit for the year -current year240,741-82,831-prior years(9,245)1,822-Total net taxation charge231,496-84,653-16.Goodwill-Cost1 January 20063,734,535-Acquisitions of subsidiary companies655,428-31 December 20064,389,963-Adjustment in 2007 to purchase price of prior year acquisition(6,616)31
205、December 20074,383,347-An analysis of goodwill by business segment is given in Note 7.The adjustment in 2007 to the purchase price of a prior year acquisition arises from the payment of an earn-out instalment in a lesser amount than hadbeen provided.There have been no impairment charges in either 20
206、06 or 2007.Goodwill istested annually for impairment by reference to the value in use of the relevantcash generating units.This is calculated on the basis of projected cash flows forthe following five years derived from detailed budgets for the ensuing year,withsubsequent years including modest nomi
207、nal rates of sales and cost growthranging from zero to 7.5%per annum and steady gross margins.These cashflows are adjusted to present day values at a discount rate based on a weightedaverage cost of capital of 10.88%per annum.The residual value at the end ofthe five years,computed by reference to pr
208、ojected year six cash flows anddiscounted,is also included.There was no requirement for any impairmentprovision at 31 December 2007.15.Property,plant and equipmentPlant&-Fixtures,-Motor-BuildingTotal-machinery-fittings&-vehicles-improve-equipment-ments-Cost/deemed cost1 January 200671,736-127,928-31
209、,739-29,367260,770-Additions through businesscombinations181,143-18,369-19,450-25,125244,087-Additions72,880-12,706-2,300-87,886-Disposals(26,000)-(14,550)-(40,550)31 December 2006 299,759-159,003-38,939-54,492552,193-Additions7,950-19,092-29,990-57,032-Disposals-(18,950)-(18,950)31 December 2007 30
210、7,709-178,095-49,979-54,492590,275-Depreciation1 January 200650,039-39,017-28,011-29,367146,434-Additions through business combinations61,634-6,805-7,911-7,27083,620-Charge36,759-9,169-3,406-4,31053,644-Disposals(13,840)-(13,133)-(26,973)31 December 2006134,592-54,991-26,195-40,947256,725-Charge46,1
211、79-14,132-5,696-4,28270,289-Disposals-(11,365)-(11,365)31 December 2007180,771-69,123-20,526-45,229315,649-Net book value-31 December 2007126,938-108,972-29,453-9,263274,626-Net book value-31 December 2006165,167-104,012-12,744-13,545295,468-Included above are plant&machinery assets held under hire
212、purchase contractswith a net book value at 31 December 2007 of 57,378(2006:68,110).Thedepreciation charge in the year on these assets was 10,732(2006:3,440).Year to 31 December 2006Earnings attributable Weighted Earningsto equity holders of averageper sharethe parent company number of sharesNo.pence
213、Profit after tax for calculation of basicearnings per share190,105 Notional taxed interest income accruing on dilution16,685Profit after tax for calculation of dilutedearnings per share206,790Add-back:amortisation of intangible assets,net of tax160,148Adjusted diluted profit before amortisation of i
214、ntangible assets366,938Number of shares for calculation of basic earnings per share3,544,953Dilutive effect of potential shares718,852Number of shares for calculation of diluted earnings per share4,263,805Basic earnings per share5.4Diluted earnings per share4.8Adjusted basic earnings per share9.9Adj
215、usted diluted earnings per share8.62017.Other intangible assetsAdvertising DistributionSales CustomerNon-Totalagreementsorder relation-competitionbacklogshipsagreementCost1 January 2006-Acquisitions5,60098,00091,000207,60222,505 424,70731 December2006 and 20075,60098,00091,000207,60222,505 424,707 A
216、mortisation1 January 2006-Charge for theyear 20063,11281,66791,00049,2543,750 228,78331 December 20063,11281,66791,00049,2543,750 228,783Charge for theyear 20072,48816,333-96,6934,501 120,01531 December 20075,60098,00091,000145,9478,251 348,798Net book value31 December 2007-61,65514,25475,90931 Dece
217、mber 20062,48816,333-158,34818,755 195,924An analysis of other intangible assets by business segment is given in Note 7.18.Available-for-sale investments31 December 2007 Period end valueHistoricalMarket-DirectorsTotal-costvaluation-valuationvaluation-At 31 December 2007 unquoted investment19,373-20,
218、00020,000-Net unrealised gain at31 December 2007-627627-Period end value31 December 2006HistoricalMarket-DirectorsTotal-costvaluation-valuationvaluation-Unquoted investments19,373-20,00020,000-Quoted investments199,782190,950-190,950-At 31 December 2006219,155190,950-20,000210,950-Net unrealised(los
219、s)/gain at31 December 2006-(8,832)627(8,205)Investments held at 31 December 2007 comprise 800,100 shares(representing1.68%)in Fortress Holdings plc(in members voluntary liquidation thedirectors valuation is their estimate of the final distribution from the liquidator).During the year,the quoted inve
220、stment held on 31 December 2006,comprising5,700,000 shares in Poole Investments plc was disposed of for a considerationof 342,000.19.Inventories20072006Raw materials420,251288,839Work in progress105,993100,646Finished goods27,06713,456553,311402,941In 2007,a total of 1,703,062 of inventories was inc
221、luded in the incomestatement as an expense(2006:1,619,220).This includes an amount of 3,352(2006:nil)resulting from write-downs of inventories.There were no reversalsof previous write-downs that were recognised in the income statement in either2007 or 2006.All group inventories form part of the asse
222、ts pledged as securityin respect of bank loans.20.Trade and other receivables20072006Trade receivables1,384,7071,137,693Prepayments and accrued income75,72565,666Other receivables82,57945,6801,543,0111,249,039The carrying value of receivables,all of which are short-term,is considered areasonable app
223、roximation of fair value.All trade and other receivables havebeen reviewed for impairment and a provision of 876(2006:nil)has beenmade relating to the groups fire testing equipment market.In addition,some of the unimpaired trade receivables were past due at thebalance sheet date as follows:20072006N
224、ot more than 3 months532,734687,794More than 3 months but not more than 6 months72,5074,262More than 6 months but not more than 1 year5,727973610,968693,02921A proportion of the groups bank loans is drawn in foreign currencies to providea hedge against assets denominated in those currencies.The Ster
225、ling equivalentat 31 December 2007 of loans denominated in US$was 492,730(2006:144,436)and in Euros was 529,699(2006:148,229).These amounts areincluded in the figures above for bank loans,repayable in years 2 to 5.The components of the hire purchase debt are as follows:.2007-2006-Future payments38,1
226、37-58,939-Less:interest component of future payments1,972-4,961-Carrying amount 31 December36,165-53,978-25.Deferred tax liabilities2007-2006-1 January 200789,505-7,972-Acquisitions-inherited deferred tax balance-8,011-deferred tax on intangible assets acquired-127,412-Credit to income statement in
227、the year(56,208)(76,504)Charge against revaluation reserve2,637-22,614-31 December 200735,934-89,505-Deferred tax balances relate to temporary differences as follows:Accelerated capital allowances28,988-43,676-Provisions allowable for tax in subsequent period(7,770)-Goodwill and other intangible ass
228、ets28,732-69,788-Fair value adjustment arising on acquisition of FTT(14,192)(21,497)Available-for-sale investments176-(2,462)35,934-89,505-Amounts provided in respect of deferred tax are computed at 28%(2006:30%).The effect of the change in the rate of tax from 30%to 28%was a reduction indeferred ta
229、x at 31 December 2007 of 2,570,of which 2,558 was credited againstprofits for the year and 12 was credited in revaluation reserve.The group has unrelieved tax losses at 31 December 2007 of 431,000(2006:325,000).The group has not recognised a deferred tax asset(2007:120,000,2006:97,000)in respect of
230、these losses as the timing and extent of recovery isinsufficiently certain.These losses are available to be offset against future profits of the parent company.24.Maturity of borrowings and net debt31 December 2007Bank loanSubor-HireTotal-dinatedpurchaseloan notes-Repayable in less than 6 months254,
231、000-9,350263,350-Repayable in months 7 to 12254,000-9,658263,658-Current portion of long-term borrowings508,000-19,008527,008-Repayable in years 1 to 2608,000-17,157625,157-Repayable in years 2 to 51,210,594500,000-1,710,594-Long-term borrowings1,818,594500,00017,157 2,335,751-Total borrowings2,326,
232、594500,00036,165 2,862,759-Cash and cash equivalents(910,366)Total net debt1,952,393-31 December 2006Bank loanSubor-HireTotal-dinatedpurchaseloan notes-Repayable in less than 6 months202,000-8,761210,761-Repayable in months 7 to 12202,000-9,052211,052-Current portion of long-term borrowings404,000-1
233、7,813421,813-Repayable in years 1 to 2508,000-19,009527,009-Repayable in years 2 to 51,791,775500,00017,156 2,308,931-Long-term borrowings2,299,775500,00036,165 2,835,940-Total borrowings2,703,775500,00053,978 3,257,753-Cash and cash equivalents(824,156)Total net debt2,433,597-21.Trade and other pay
234、ables20072006Trade payables288,134339,377Accruals and deferred income432,486298,036Social security and other taxes78,196101,795Other payables78,41040,500877,226779,708All amounts are short-term and their carrying values are considered reasonableapproximations of fair value.Other payables include 12,
235、500 of non equityshares classed as financial liabilities(see note 27).22.Current portion of long-term borrowings20072006Bank loan508,000404,000Net obligations under hire purchase contracts19,00817,813527,008421,813All amounts are short-term and their carrying values are considered reasonableapproxim
236、ations of fair value.23.Long-term borrowings20072006Bank loan1,818,5942,299,775Subordinated loan notes500,000500,000Net obligations under hire purchase contracts17,15736,1652,335,7512,835,940The bank loan is secured on assets of the group,is repayable in quarterlyinstalments over a six year period e
237、nding 31 March 2011 and bears interest at21/4%above LIBOR-related rates.The subordinated loan notes are unsecured,repayable on 23 May 2010 and bear interest at Bank of Scotland base rate plus2%.The hire purchase obligations are secured on the related assets.Therepayment profile of borrowings is as s
238、et out below.2226.Share capital20072006Authorised10,000,000 Ordinary shares of 5p each500,000500,000Allotted,called up and fully paid3,560,878(2006:3,560,878)Ordinary shares of 5p each178,044178,044Equity share options and warrantsAt 31 December 2007 and at the date of this report,options havebeen g
239、ranted and remain outstanding in respect of 160,000Ordinary shares in the company,all priced by reference to themid-market price of the shares on the date of grant,all exercisablebetween the third and tenth anniversaries of grant and noneexercisable at 31 December 2006 or 2007,as below:20072006Numbe
240、r Weighted Number Weightedaverage averageexercise exercisepricepricep/sharep/share2005 Approved PlanOutstanding at 1 January28,000103.5-Granted in year62,00099.428,000103.5Outstanding at 31 December 90,000100.728,000103.52005 Unapproved PlanOutstanding at 1 January56,000102.042,000101.5Granted in ye
241、ar14,00094.014,000103.5Outstanding at 31 December 70,000100.456,000102.0TotalOutstanding at 1 January84,000102.542,000101.5Granted in year76,00098.442,000103.5Outstanding at 31 December 160,000100.684,000102.5Exercise prices at 31 December 2007 ranged from 94p/share to106.5p/share(2006:101.5p/share
242、to 103.5p/share),with a weightedaverage remaining contractual life of 8.77 years(2006:9.04 years).Certain of the options were conditional upon the achievement ofearnings targets,all of which had been met by 31 December 2007.Options have been granted to a director(Mr R.L.Cohen)amountingto 37,000 shar
243、es at 101.5p/share on 20 October 2005 and 10,000shares at 94p/share on 24 September 2007.The market price of the companys Ordinary shares on 31 December2007 was 0.91,the highest price during 2007 was 1.08 between23 March and 6 May,the lowest price during 2007 was 0.90between 22 August and 20 Septemb
244、er and the price on 20 March2008 was 1.165.In accordance with IFRS 2,a Black Scholes valuation model hasbeen used.This has indicated that no material expense is requiredto be charged for the years ended 31 December 2007 and 31 December 2006.As such,no adjustment has been made toeither the consolidat
245、ed or parent company financial statements.Warrants to subscribeUnder an agreement dated 22 October 2004,Invex Capital LLP wasgranted unquoted warrants to subscribe for Ordinary shares in thecompany in connection with the acquisition of Fire TestingTechnology Limited.This warrant has an exercise pric
246、e of 1 pershare,expires on 23 May 2010 and relates to 133,564 shares.Convertible Redeemable sharesThe conversion rights set out in note 27 would have resulted in theissue of 485,574 Ordinary shares if conversion of all the ConvertibleRedeemable shares had taken place on 31 December 2007.27.Shares cl
247、assed as financial liabilities20072006Authorised5,000,000 Convertible Redeemable shares of 1p each50,00050,000Allotted,called up and fully paid5,000,000 Convertible Redeemable shares of 1p each quarter paid12,50012,500In accordance with IAS 32,Financial Instruments:Presentation,the Convertible Redee
248、mable shares are classified as financialliabilities and included in other payables less than one year(see note 21).The principal terms of the Convertible Redeemable shares are as follows:There is no right to participate in the profits of the company.On a winding up or other return of capital the sur
249、plus assetsremaining after payment of liabilities shall be applied:i)First in repaying the capital paid up on the Ordinary shares;ii)Secondly in repaying the capital paid up on the Convertible Redeemable shares;andiii)Thirdly distributed amongst the holders of the Ordinary shares according to the am
250、ounts paid up.The holders of the Convertible Redeemable shares are notentitled to attend or vote at General Meetings of the companyunless the meeting considers a resolution for winding up the company.23 On payment to the company of the aggregate of(i)a sum equalto any amount which has not been calle
251、d or which is otherwiseunpaid in respect of all of the Convertible Redeemable shares tobe converted and(ii)a further sum equal to 95 pence multipliedby the number of Ordinary shares to be issued as a result of theconversion less the amount paid up or deemed paid up(including the amount referred to i
252、n(i)above)in respect of theConvertible Redeemable shares to be converted(ConversionPrice),each holder of Convertible Redeemable shares shall beentitled to convert all or any of his Convertible Redeemableshares into such number of fully paid Ordinary shares whichrepresents 0.24 per cent of the number
253、 of Ordinary shares inissue,assuming that all the Convertible Redeemable sharesremaining capable of being convertible into Ordinary shares atthe date of which the conversion takes place had beenconverted at the time,for every 100,000 ConvertibleRedeemable shares so converted and in proportion for an
254、ygreater or lesser number of Convertible Redeemable shares(“Conversion Rate”).The holders of Convertible Redeemable shares shall(subject tothe provisions of the Companies Act)be entitled at any time toredeem all or any of the Convertible Redeemable sharesoutstanding out of any profits or monies of t
255、he company whichmay lawfully be applied for that purpose.28.Emoluments of directors and key management personnel 20072006Total directors emoluments:Emoluments 201,601178,660Defined contribution pension scheme contributions3,7083,792205,309182,452Emoluments of the highest paid director:Emoluments 92,
256、44373,898Defined contribution pension scheme contributions3,7083,79296,15177,690During the year one director participated in a defined contribution pension scheme(2006:one)Compensation of key management personnelShort-term benefits437,239373,090Key management personnel comprise directors of the pare
257、nt company and themanaging directors of the principal operating companies.The compensation ofthe non-executive directors of the parent company is determined by the Board ofdirectors as a whole,that of the executive directors of the parent company isdetermined by the Remuneration Committee of the Boa
258、rd(comprising the non-executive directors)and that of the managing directors of the principal operatingcompanies is determined by the group Chief Executive.29.Employees20072006no.no.Number of employeesBy function-manufacturing3525-sales and administration25266051By business segment-fire testing equi
259、pment3126-fibre optic test equipment88-ultra high vacuum manipulation equipment1512-head office65605120072006Employment costsWages and salaries1,900,3791,471,845Social security costs194,719166,021Pension costs47,33134,5692,142,4291,672,43530.Financial instrumentsThe groups policies on treasury manag
260、ement and financialinstruments are given in the directors report.Financial assetsThe groups financial assets(which are summarised in note 31 credit risk)comprise available-for-sale investments,cashand cash equivalents and trade and other receivables.The amounts derived from these assets and included
261、 as interestincome in the income statement are 32,987(2006:32,041).24 Cash and cash equivalents are principally denominated insterling and earn interest at floating rates.There is no difference between the book and fair values of thefinancial assets.At 31 December 2007 the group had trade receivable
262、sdenominated in foreign currency as follows:Euros-236,708(2006:197,558)and US Dollars-357,779(2006:294,228).Financial liabilitiesThe groups principal financial liabilities are bank loans,subordinated loan notes issued in connection with the acquisitionof Fire Testing Technology Limited in 2005,net o
263、bligations underhire purchase contracts,trade and other payables and ConvertibleRedeemable shares classed as financial liabilities,as follows:20072006Bank loans 2,326,5942,703,775Subordinated loan notes500,000500,000Net obligations under hire purchase contracts36,16553,978Trade and other payables877
264、,226779,708Convertible Redeemable shares classed as financial liabilities12,50012,5003,752,4854,049,961 The costs attributable to these liabilities and included asinterest expense in the income statement amounted to 241,772(2006:227,418),as analysed in note 11.Foreign exchangelosses attributable to
265、bank loans(see below)and included asoperating costs in the income statement amounted to 27,443(2006:7,335 gain).A proportion of the bank loans are denominated in foreigncurrencies to provide a hedge against currency risk on groupassets,as described in note 24.Fair value of financial instrumentsFinan
266、cial instruments include the borrowings above.All financialinstruments denominated in foreign currencies are translated intosterling at market prices at balance sheet dates.The directorsbelieve that there is no material difference between the book valueand fair value of such financial instruments.Bo
267、rrowing facilitiesThe group had an undrawn committed overdraft facility of500,000 at 31 December 2007(2006:500,000).31.Risk management objectives and policiesThe group is exposed to market risks,arising predominantly fromcurrency exposure resulting from its export activities,interest ratefluctuation
268、 on its loans and deposits and credit and liquidity risks.Risk management strategies are co-ordinated by the board ofdirectors of the parent company.Foreign currency sensitivityThe group exports a substantial proportion of its sales,frequentlydenominated in foreign currencies(principally in US$and E
269、uros).Exposure to currency rate fluctuations exists from the moment asales order is confirmed through to the time when the relatedremittance is converted into Sterling.This exposure is computedmonthly(along with offsetting exposure on purchases,generallyof minimal amounts)and counter-balanced by the
270、 conversion of aproportion of the groups bank loans into equivalent foreigncurrencies.The net exposure to risk is therefore substantiallyreduced.Residual exposure is the difference between the netexposure and the converted bank loans,both translated intoSterling at each date of measurement.31 Decemb
271、er 2007Sterling Sterling equivalent equivalentof US$of Sterling loans denominated in foreign currencies at year-end493,000530,000Residual exposure at year-end89,00082,000Impact on pre-tax profits of a 5%variation in exchange rate on year-end residual exposure4,4534,114Impact on equity of a 5%variati
272、on in exchange rate on year-end residual exposure3,1172,88031 December 2006Sterling Sterling equivalent equivalentof US$of Sterling loans denominated in foreign currencies at year-end144,436148,229Residual exposure at year-end340,000184,000Impact on pre-tax profits of a 5%variation in exchange rate
273、on year-end residual exposure17,00092,000Impact on equity of a 5%variation in exchange rate on year-end residual exposure11,90064,400Interest rate sensitivityThe groups interest rate exposure arises in respect of its bankloans,which are LIBOR-linked for interest rate purposes,itssubordinated loan no
274、tes and its surplus funds,both of which arebank base-rate-linked.The groups sensitivity to interest ratechanges is as follows:25Group companies generally trade through overseas agents and creditexposure to an individual agent can be significant at times.No singlecounterparty owed more than 10%of the
275、 groups total trade and otherreceivables at 31 December 2007.At 31 December 2006,the USA andChina agents of Fire Testing Technology Limited owed 15%and 11%respectively of the groups total trade and other receivables at that date.The credit risk for liquid funds and other short-term financial assets
276、isconsidered negligible since the counterparties are reputable bankswith high-quality external credit ratings.Liquidity riskThe groups longer-term financing needs,principally in respect ofbusiness acquisitions,are satisfied by bank loans,with the objectiveof servicing repayments from the cash flow a
277、rising from thebusinesses acquired.For short and medium term financial needs,thegroup regularly compares its projected requirements with availablecash and borrowing facilities;the directors continue to augmentexisting cash surpluses with a 500,000 borrowing facility from thegroups bank to provide an
278、 additional margin of liquidity.The periods of maturity of the groups borrowings are set out in note 24.32.Operating lease commitments20072006Operating lease payments expensed during the year:Land and property164,700162,068Minimum operating lease commitments falling due:Within 1 year152,750153,450Be
279、tween 1 and 5 years164,208298,008Total commitment316,958451,45833.Explanation of transition to IFRSThe consolidated financial statements for the year ended 31December 2007 are the first full year figures to be presented underIFRS.In accordance with the provisions of IFRS 1,“First timeadoption of Int
280、ernational Financial Reporting Standards”,thegroups transition date for adoption of IFRS was 1 January 2006.Comparative figures in respect of 2006 have been restated inthese consolidated financial statements to reflect changes inaccounting policies as a result of the adoption of IFRS.The lastconsoli
281、dated financial statements to be prepared under UK GAAPwere those for the year ended 31 December 2006.IFRS 1 permits companies adopting IFRS for the first time to takecertain exemptions from the full requirements of IFRS in thetransition period.These consolidated financial statements havebeen prepar
282、ed on the basis of taking the following exemptions:business combinations prior to 1 January 2006,the groupsdate of transition to IFRS,have not been restated to complywith IFRS 3 Business Combinations.Goodwill arising fromthese business combinations of 3,762,324(net of amortisationto 31 December 2005
283、)has not been restated other than as setout in note d below.negative goodwill arising on business combinations prior to 1 January 2006 of 124,265(net of amortisation to 31 December 2005)has been transferred to reserves as at thedate of transition.IFRS 2 has been applied,in accordance with IFRS 1,to
284、equity-settled share options granted on or after 7 November2002 and not vested at 1 January 2006.20072006Bank loans outstanding at year-end2,326,5942,703,775Impact on pre-tax profits of a 1%change in LIBOR23,26627,038Impact on equity of a 1%change in LIBOR16,28618,927Surplus funds less subordinated
285、loan notes at year-end 410,366324,156Impact on pre-tax profits of a 1%change in bank base rates4,1043,242Impact on equity of a 1%change in bank base rates2,8732,269Credit riskThe groups exposure to credit risk is limited to the carryingamounts of financial assets recognised at the balance sheet date
286、,as follows:20072006Available-for-sale investments20,000210,950Cash and cash equivalents910,366824,156Trade and other receivables1,543,0111,249,0392,473,3772,284,145The group reviews the credit risk relating to its customers byensuring wherever possible that it deals with long established tradingpar
287、tners,and agents and government/university backed bodies,where the risk of default is considered low.Where consideredappropriate,the group insists on up-front payment and requiresletters of credit facilities to be provided.The directors consider that allthe groups financial assets that are not impai
288、red at each of thereporting dates under review are of good credit quality,includingthose that are past due(see note 20).None of the financial assets aresecured by collateral or other credit enhancements.26Reconciliation of equity at 1 January 2006UK-IFRS adjustments 1 January 2006IFRS-GAAP-Eliminate
289、-State equity-Deferred tax-negative-investments-on FTT-goodwill-at market value-fair value-adjustment-Note33a-33e-33f-Non-current assetsProperty,plant and equipment114,336-114,336-Goodwill3,762,324-(27,789)3,734,535-Negative goodwill(124,265)124,265-Available-for-sale investments427,911-(83,586)344,
290、325-Current assetsInventories413,130-413,130-Trade and other receivables692,350-692,350-Cash and cash equivalents1,148,619-1,148,619-Current liabilitiesTrade and other payables(472,466)(472,466)Current portion of long-term borrowings(256,000)(256,000)Current tax payable(315,798)(315,798)Non-current
291、liabilitiesLong-term borrowings(2,528,959)(2,528,959)Deferred tax(23,557)(37,280)25,076-27,789-(7,972)Net assets2,837,625-86,985-(58,510)-2,866,100-EquityShare capital(173,118)(173,118)Share premium(2,501,430)(2,501,430)Merger reserve(380,000)(380,000)Retained earnings232,471-(44,362)188,109-Revalua
292、tion reserve-58,510-58,510-Minority interests(15,548)(42,623)(58,171)Total equity(2,837,625)(86,985)58,510-(2,866,100)27Reconciliation of equity at 31 December 2006UK-IFRS adjustments 31 December 2006IFRS-GAAP-Eliminate-Eliminate-Business-Amortisation-State equity-Deferred-negative-goodwill-combinat
293、ions-of intangibles-investments-tax on-goodwill-amortisation-at market-FTT fair-values-value adj-Note33a-33d(iii)-33d(i)-33d(iii)-33e-33f-Non-current assetsProperty,plant and equipment 295,468-295,468-Goodwill4,467,528-247,519-(297,295)(27,789)4,389,963-Negative goodwill(36,702)36,702-Other intangib
294、le assets-424,707-(228,783)195,924-Available-for-sale investments219,155-(8,205)210,950-Current assetsInventories402,941-402,941-Trade and other receivables1,249,039-1,249,039-Cash and cash equivalents824,156-824,156-Current liabilitiesTrade and other payables(779,708)(779,708)Current portion of lon
295、g-term borrowings(421,813)(421,813)Current tax payable(261,718)(261,718)Non-current liabilitiesLong-term borrowings(2,835,940)(2,835,940)Deferred tax(43,676)(11,011)(127,412)68,635-2,462-21,497-(89,505)Net assets3,078,730-25,691-247,519-(160,148)(5,743)(6,292)3,179,757-EquityShare capital(178,044)(1
296、78,044)Share premium(2,501,430)(2,501,430)Merger reserve(475,074)(475,074)Retained earnings127,810-(13,102)(247,519)160,148-6,292-33,629-Revaluation reserve-5,743-5,743-Minority interests(51,992)(12,589)(64,581)Total equity(3,078,730)(25,691)(247,519)-160,148-5,743-6,292-(3,179,757)28Reconciliation
297、of profit for the year ended 31 December 2006UK-IFRS adjustments 31 December 2006IFRS-GAAP-Eliminate-Eliminate-Amortisation-State equity-Deferrednegative-goodwill-of-investments-tax ongoodwill-amortisation-intangibles-at market-FTT fairvalues-value adjNote33b-33d(iii)-33d(iii)-33e-33f-Revenue(contin
298、uing and acquisitions)5,195,325-5,195,325-Operating costs(4,483,852)(4,483,852)Goodwill amortisation-positive(247,519)247,519-Goodwill amortisation-negative87,563-(87,563)-Amortisation of intangibles-(228,783)(228,783)Total operating costs(4,643,808)(87,563)247,519-(228,783)(4,712,635)Operating prof
299、it/(loss)551,517-(87,563)247,519-(228,783)482,690-Profit/(loss)on disposal and changes in market values of investments(6,145)(6,145)Interest receivable32,041-32,041-Interest(payable)(227,418)(227,418)Profit on ordinary activities before taxation349,995-(87,563)247,519-(228,783)281,168-Tax on profit
300、on ordinary activities(173,265)26,269-68,635-(6,292)(84,653)Profit on ordinary activities after taxation176,730-(61,294)247,519-(160,148)(6,292)196,515-Minority interests(36,440)30,030-(6,410)Profit attributable to equity holders of the parent company140,290-(31,264)247,519-(160,148)-(6,292)190,105-
301、29Notes to the reconciliationsa)The group acquired 51%of the issued share capital ofPE.fiberoptics Limited(“PFO”)on 2 September 2005.PFOacquired the goodwill and certain assets of a businesspreviously carried on by PerkinElmer(UK)Limited.Under UKGAAP,negative goodwill arising in connection with this
302、acquisition was capitalised within the accounts of PFO.UnderIFRS,the amount of negative goodwill as at the date oftransition was transferred to reserves.The result of thisadjustment is to decrease negative goodwill by 124,265 as atthe date of transition to IFRS and to increase deferred tax,minority
303、interest and reserves by the same amount inaggregate.The value of the reduction in negative goodwill at 31December 2006 was 36,702.b)Negative goodwill recognised by the group on the aboveacquisition under UK GAAP was written back to profit and lossto match the consumption of the non-monetary assets
304、acquired.Under IFRS,with the balance of negative goodwill as at the dateof transition having been transferred to reserves,noamortisation or write-back is required.The result of theseadjustments is to eliminate the amortisation credit of 87,563in the income statement for the year ended 31 December 20
305、06.After 30%corporation tax and 49%minority interest,the netprofit reduction in that year is 31,264.c)The group acquired UHV Design Limited on 21 February 2006and the goodwill and certain trading assets of AitcheeEngineering Associates on 4 September 2006.Goodwillrecognised by the group on these acq
306、uisitions under UK GAAPwas amortised over a period of 20 years in the case of UHVDesign Limited and 3 years in the case of the Aitchee business.Under IFRS goodwill is not amortised but tested annually forimpairment and therefore the amortisation charge recognised inaccordance with UK GAAP in 2006 ha
307、s been written back.However,intangible assets identified on business combinationsin accordance with IFRS as described above are amortised inaccordance with the accounting policy explained above.Application of IFRS 3 to these business combinations resultedin identification of a number of intangible a
308、ssets,includingcustomer relationships,distribution agreements and sales orderbacklogs.Under IFRS these have been recognised separatelyin the balance sheet at their fair values at the dates of thecombinations,along with the associated deferred tax.UnderUK GAAP these intangible assets were subsumed wi
309、thingoodwill and amortised in accordance with the groupsaccounting policy above.d)The result of these changes is:(i)To decrease goodwill by 240,595 and increase intangible assets by 343,707(with deferred tax of 103,112)as at the date of the combination in the case of UHV Design Limited and to decrea
310、se goodwill by 56,700 and increase intangible assets by 81,000(with deferred tax of 24,300)in the case of Aitchee Engineering Associates.(ii)At 31 December 2006 the value of these intangible assets,net of amortisation,was 195,924.(iii)The goodwill amortisation charge in respect of these acquisitions
311、 and that of Fire Testing Technology Limited(FTT acquired prior to the date of transition to IFRS)in the year ended 31 December 2006 was reduced in aggregate by 247,519.The equivalent intangible assets amortisation charge was increased by 228,783,stated prior to a 30%reduction to reflect the release
312、 of deferred taxation.e)Under UK GAAP,available-for-sale investments were stated atthe lower of cost and the directors estimates of near-term netrealisable value.Under IFRS,such investments are stated atopen market values,with changes in value being transferreddirectly into equity,net of applicable
313、taxation.Amountsaccumulated in equity are transferred to the income statementwhen an available-for-sale investment is sold.This has had theeffect of reducing the carrying value of such investments by83,586 to 344,325 at 31 December 2005 and by 8,205 to210,950 at 31 December 2006,with consequential c
314、hanges todeferred tax and in equity.f)Under UK GAAP,no deferred tax was recognised in respect offair value adjustments arising on the acquisition of FTT.Notwithstanding that the date of the FTT acquisition was priorto the groups IFRS transition date,IFRS requires that deferredtax be recognised in re
315、spect of such fair value adjustments.Accordingly a deferred tax liability of 27,789 has beenrecognised at the transition date,with a reversal of theprovision of 6,292 in the year ended 31 December 2006.3034.Explanation of material adjustments to the cashflow statementApplication of IFRS has resulted
316、 in the reclassification of certainitems in the cash flow statement as follows:(i)Under UK GAAP,payments to acquire property,plant andequipment were classified as part of Capital expenditure andfinancial investment.Under IFRS,payments to acquireproperty,plant and equipment have been classified as pa
317、rt ofInvesting activities.(ii)Income taxes are classified as operating cash flows underIFRS,but were included in a separate category of tax cashflows under UK GAAP.(iii)Interest paid and interest received are classified as cashflows from investing activities under IFRS,but were includedin the Return
318、s on investments and servicing of financecategory in cash flows under UK GAAP.(iv)Equity dividends paid are classified as financing cash flowsunder IFRS,but were included in a separate category ofdividend cash flows under UK GAAP.There are no other material differences between the cash flowstatement
319、 presented under IFRS and that presented under UK GAAP.35.Post balance sheet eventOn 20 March 2008,the parent company exchanged contracts forthe purchase for 490,000 of a freehold property at Unit 18,Charlwoods Road,East Grinstead,West Sussex.This sitecomprises a factory unit with ancillary offices
320、and is locatedadjacent to the parent companys head office and premises of itsprincipal subsidiary,FTT.The activities of FTTs subsidiary,Aitchee Engineering Limited,will be relocated into Unit 18.31Report of the Independent AuditorWe have audited the parent company financial statements ofJudges Capit
321、al plc for the year ended 31 December 2007 whichcomprise the company balance sheet and notes 1 to 12.Theseparent company financial statements have been prepared underthe accounting policies set out therein.We have reported separately on the consolidated financialstatements of Judges Capital plc for
322、the year ended 31 December 2007.This report is made solely to the companys members,as a body,in accordance with Section 235 of the Companies Act 1985.Ouraudit work has been undertaken so that we might state to thecompanys members those matters we are required to state tothem in an auditors report an
323、d for no other purpose.To the fullestextent permitted by law,we do not accept or assume responsibilityto anyone other than the company and the companys members asa body,for our audit work,for this report,or for the opinions wehave formed.Respective responsibilities of directors and auditorsThe direc
324、tors responsibilities for preparing the Annual Report andthe parent company financial statements in accordance withUnited Kingdom law and Accounting Standards(United KingdomGenerally Accepted Accounting Practice)are set out in theStatement of Directors Responsibilities.Our responsibility is to audit
325、 the parent company financial statementsin accordance with relevant legal and regulatory requirements andInternational Standards on Auditing(UK and Ireland).We report to you our opinion as to whether the parent companyfinancial statements give a true and fair view and whether theparent company finan
326、cial statements have been properly preparedin accordance with the Companies Act 1985.We also report toyou whether in our opinion the information given in the directorsreport is consistent with the parent company financial statements.In addition we report to you if,in our opinion,the parent companyha
327、s not kept proper accounting records,if we have not received allthe information and explanations we require for our audit,or ifinformation specified by law regarding directors remunerationand other transactions is not disclosed.We read other information contained in the Annual Report andconsider whe
328、ther it is consistent with the audited parent companyfinancial statements.The other information comprises only thedirectors report and the Chairmans statement.We consider theimplications for our report if we become aware of any apparentmisstatements or material inconsistencies with the parentcompany
329、 financial statements.Our responsibilities do not extendto any other information.Basis of audit opinionWe conducted our audit in accordance with InternationalStandards on Auditing(UK and Ireland)issued by the AuditingPractices Board.An audit includes examination,on a test basis,ofevidence relevant t
330、o the amounts and disclosures in the parentcompany financial statements.It also includes an assessment ofthe significant estimates and judgements made by the directors inthe preparation of the parent company financial statements,and ofwhether the accounting policies are appropriate to the parentcomp
331、anys circumstances,consistently applied and adequately disclosed.We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonableassurance that the parent company financial statement
332、s are freefrom material misstatement,whether caused by fraud or otherirregularity or error.In forming our opinion we also evaluated theoverall adequacy of the presentation of information in the parentcompany financial statements.OpinionIn our opinion:the parent company financial statements give a tr
333、ue and fair view,in accordance with United Kingdom Generally AcceptedAccounting Practice,of the state of the companys affairs as at31 December 2007;the parent company financial statements have been properlyprepared in accordance with the Companies Act 1985;and the information given in the directors report is consistent withthe parent company financial statements.Grant Thornton UK LLPRegistered Aud
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