RNS Number:0747J
Redknee Solutions Inc.
04 December 2007
Immediate Release 4 December 2007
Redknee Solutions Inc.
Part 2
Consolidated Financial Statements
September 30, 2007
(expressed in Canadian dollars)
Redknee Solutions Inc. 2007 2006
Consolidated Balance Sheet $ $
As at September 30, 2007
(expressed in Canadian dollars)
Assets
Current assets
Cash and cash equivalents 8,927,770 2,902,706
Short-term investments 14,763,046 535,456
Accounts receivable 5,992,035 7,386,951
Unbilled revenue 3,925,232 3,060,896
Investment tax credits and income taxes receivable 400,000 936,330
Prepaid expenses 1,064,183 786,560
Goods in transit 146,308 201,916
--------- ---------
35,218,574 15,810,815
Restricted cash (notes 2 and 16(b)) - 51,465
Deferred financing costs (note 7) - 651,341
Deferred organization costs (note 3) - 84,958
Property and equipment (note 4) 250,020 501,336
Other assets (note 13) 90,004 246,210
--------- ---------
35,558,598 17,346,125
--------- ---------
Liabilities
Current liabilities
Accounts payable 1,598,436 1,408,176
Accrued liabilities 5,045,954 5,507,450
Income taxes payable 2,444,196 1,785,140
Deferred revenue 3,403,246 2,606,653
Notes payable (note 6) - 581,896
Current portion of long-term debt (note 7) - 3,703,548
Current portion of obligations under capital leases
(note 8) 49,371 57,410
--------- ---------
12,541,203 15,650,273
Obligations under capital leases (note 8) - 49,371
Notes payable to related parties (note 5(a)) - 774,239
Long-term debt (note 7) - 3,444,724
--------- ---------
12,541,203 19,918,607
--------- ---------
Shareholders' Equity (Deficiency)
Share capital (note 9(a)) 39,768,298 3,872,010
Contributed surplus 3,520,838 2,943,004
Deficit (20,060,782) (9,002,010)
Accumulated other comprehensive loss, net of income
taxes (note 1(p)) (210,959) (385,486)
--------- ---------
23,017,395 (2,572,482)
--------- ---------
35,558,598 17,346,125
--------- ---------
Commitments, guarantees and contingencies (note 16)
Redknee Solutions Inc. 2007 2006
Consolidated $ $
Statement of Operations
For the year ended September 30, 2007
(expressed in Canadian dollars)
Revenue
Software, services and other 27,189,249 28,166,296
Support 11,427,116 8,805,441
--------- ---------
38,616,365 36,971,737
Cost of revenue 12,232,480 10,800,216
--------- ---------
Gross profit 26,383,885 26,171,521
--------- ---------
Operating expenses
Sales and marketing 11,356,653 9,744,589
General and administrative 11,341,784 9,022,741
Research and development (note 11) 10,019,669 10,422,115
Writeoff of investment tax credits (note 11) - 3,201,324
Amortization of property and equipment 286,720 508,618
Amortization of deferred financing costs - 322,944
Foreign exchange loss (gain) 1,897,087 (285,490)
--------- ---------
34,901,913 32,936,841
--------- ---------
Loss from operations (8,518,028) (6,765,320)
Interest income 657,554 172,143
Interest expense (1,665,072) (2,336,729)
--------- ---------
Loss before income taxes (9,525,546) (8,929,906)
--------- ---------
Income taxes (note 12)
Current 881,885 1,650,170
Future - 1,716,930
--------- ---------
881,885 3,367,100
--------- ---------
Loss for the year (10,407,431) (12,297,006)
--------- ---------
Loss per common share (note 9(b))
Basic (0.20) (0.33)
Diluted (0.20) (0.33)
Weighted average number of common shares
Basic 51,898,144 37,441,882
Diluted 51,898,144 37,441,882
Redknee Solutions Inc. 2007 2006
Consolidated $ $
Statement of Comprehensive Loss
For the year ended September 30, 2007
(expressed in Canadian dollars)
Loss for the year (10,407,431) (12,297,006)
Other comprehensive income, net of income taxes
Foreign currency translation adjustment 174,527 22,979
--------- ---------
Comprehensive loss for the year (10,232,904) (12,274,027)
--------- ---------
Redknee Solutions Class A voting Class B Common shares Total share capital
Inc. common shares non-voting
Consolidated common shares
Statement of ------------
Shareholders'Equity
(Deficiency)
For the year ended
September 30, 2007
(expressed in Canadian dollars)
Number Amount Number Amount Number Amount Number Amount
$ $ $ $
Balance - October 1,
2005 10 2 37,333,798 3,406,050 - - 37,333,808 3,406,052
Issued on
exercise of
options - - 581,820 465,958 - - 581,820 465,958
Stock-based
compensation - - - - - - - -
Loss for the
year - - - - - - - -
Other
comprehensive
income - - - - - - - -
Balance -
September 30,
2006 10 2 37,915,618 3,872,008 - - 37,915,628 3,872,010
Changes in
accounting
policy (note
1(p)(i)) - - - - - - - -
Issued
pursuant to
share
purchase
plan
(note
9(c)) - - 215,653 267,410 - - 215,653 267,410
Issued on
exercise of
options
pursuant to
share
purchase
plan
(note
9(c)) - - 3,226,445 1,458,461 - - 3,226,445 1,458,461
Issued on
exercise of
options (note
10) - - 38,438 21,443 - - 38,438 21,443
Issue of
restricted
share units
(note 9(d)) - - 966,250 100,750 - - 966,250 100,750
Restricted
share units
held in
treasury by
trust (note
9(d)) (885,000) - - - (885,000) -
Redemption of
shares (note
9(e)) - - (75,000) (7,659) - - (75,000) (7,659)
Exchange of
shares
(note
9(f)) (10) (2) (41,402,404) (5,712,413) 41,402,414 5,712,415 - -
Issued on
initial
public
offering
(note
9(g)) - - - - 16,700,000 39,893,878 16,700,000 39,893,878
Organization
costs related
to IPO (note
9(g)) - - - - - (5,147,747) - (5,147,747)
Issued on
exercise of
options (note
10) - - - - 248,212 205,283 248,212 205,283
Stock-based
compensation - - - - - - - -
Loss for the
year - - - - - - - -
Employee
loans
(note 9(c)) - - - - - (895,531) - (895,531)
Other
comprehensive
income (note
1(p)(i)) - - - - - - - -
Balance -
September 30,
2007 - - - - 58,350,626 39,768,298 58,350,626 39,768,298
----- ------ ------- ------- ------ ------ ------- ------
Redknee Solutions Retained Accumulated Total
Inc.
Consolidated other shareholders'
Statement of.../
Schedule of...
...continued
For the year ended
September 30,
2007
(expressed in
Canadian dollars)
Contributed earnings comprehensive equity
surplus (deficit) income (loss) (deficiency)
$ $ $ $
Balance - October 1,
2005 2,019,542 3,294,996 (408,465) 8,312,125
Issued on exercise
of options (121,070) - - 344,888
Stock-based
compensation 1,044,532 - - 1,044,532
Loss for the year - (12,297,006) - (12,297,006)
Other comprehensive
income - - 22,979 22,979
------- -- ------- -------- --------
Balance - September
30, 2006 2,943,004 (9,002,010) (385,486) (2,572,482)
Changes in
accounting policy
(note 1(p)(i)) - (651,341) - (651,341)
Issued pursuant to
share purchase plan
(note 9(c)) - - - 267,410
Issued on exercise
of options pursuant
to share purchase
plan
(note 9(c)) (358,293) - - 1,100,168
Issued on exercise
of options (note 10) - - - 21,443
Issue of restricted
share units
(note
9(d)) (100,750) - - -
Restricted share units - - - -
held in treasury by
trust (note9(d))
Redemption of shares
(note9(e)) (85,341) - - (93,000)
Exchange of shares - - - -
(note 9(f))
Issued on initial
public offering
(note 9(g)) - - - 39,893,878
Organization costs
related to IPO (note
9(g)) - - - (5,147,747)
Issued on exercise
of options (note
10) - - - 205,283
Stock-based
compensation 1,122,218 - - 1,122,218
Loss for the year - (10,407,431) - (10,407,431)
Employee loans (note
9(c)) - - (895,531)
Other comprehensive
income (note
1(p)(i)) - - 174,527 174,527
------- -- ------- -------- --------
Balance - September
30, 2007 3,520,838 (20,060,782) (210,959) 23,017,395
------- -- ------- -------- --------
Redknee Solutions Inc. 2007 2006
Consolidated Statement of Cash Flows $ $
For the year ended September 30, 2007
(expressed in Canadian dollars)
Cash provided by (used in)
Operating activities
Loss for the year (10,407,431) (12,297,006)
Items not involving cash
Amortization of property and equipment 286,720 508,618
Amortization of deferred financing costs - 322,944
Unrealized foreign exchange loss (gain) 449,954 (347,231)
Stock-based compensation 1,210,050 1,044,532
Debt accretion 818,750 874,825
Future income taxes - 1,716,930
Change in non-cash operating working capital (note 2,029,307 5,055,157
14) --------- ---------
(5,612,650) (3,121,231)
--------- ---------
Financing activities
Proceeds from notes payable (note 6) - 581,896
Repayment of notes payable (note 6) (581,896) (941,164)
Repayment of notes payable to related parties (note (774,239) -
5)
Proceeds from issuance of common shares (note 9) 577,458 -
Proceeds from exercise of stock options - 344,888
Proceeds from the IPO, net of costs (note 9) 34,794,519
Share buyback (93,000) -
Repayment of long-term debt (note 7) (8,275,792) (3,325,244)
Deferred financing costs - (84,958)
Repayment of obligations under capital leases (57,410) (32,712)
--------- ---------
25,589,640 (3,457,294)
--------- ---------
Investing activities
Purchase of short-term investments (14,227,590) (535,456)
Purchase of property and equipment (35,403) (434,503)
Decrease (increase) in other assets 156,206 (228,596)
Decrease in restricted cash 51,465 695,723
--------- ---------
(14,055,322) (502,832)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents 103,396 48,368
--------- ---------
Increase (decrease) in cash and cash equivalents
during the year 6,025,064 (7,032,989)
Cash and cash equivalents - Beginning of year 2,902,706 9,935,695
--------- ---------
Cash and cash equivalents - End of year 8,927,770 2,902,706
--------- ---------
Supplemental cash flow information
Interest paid 1,653,068 1,461,394
Interest received 667,884 197,296
Cash taxes/investment tax credits received, net of
income taxes paid 1,393,246 360,092
Supplemental disclosure of non-cash financing and
investing activities
Property and equipment financed by capital leases - 20,000
Redknee Solutions Inc.
Notes to Consolidated Financial Statements
September 30, 2007
(expressed in Canadian dollars, except as otherwise indicated)
Nature of operations
Redknee Solutions Inc. (the Company) was incorporated in Canada on November 1,
2006. Pursuant to an amalgamation agreement dated February 15, 2007 (the
Amalgamation Agreement) among the Company; Redknee Inc. (Redknee), a company
under common control with the Company, and 2117580 Ontario Inc., a wholly owned;
subsidiary of the Company, Redknee and 2117580 Ontario Inc. were amalgamated to
form a successor company, Redknee Inc., as a wholly owned subsidiary of the
Company. The above transaction is considered to be among companies under common
control and the consolidated financial statements of the Company reflect the
amalgamation as if the companies had always been amalgamated.
The Company's software products allow its wireless telecommunications network
operator customers to extend and enhance their capabilities and service
offerings, enabling them to introduce new revenue through the introduction of
network-based services, including call and subscriber management, multimedia
messaging information services and location aware services. In addition, the
Company's software products also manage and analyze, in real-time, complex and
critical network operations, such as service provisioning, network management
and customer care, as well as provide real-time rating, charging and billing.
1 Summary of significant accounting policies
a) Basis of presentation
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles (GAAP).
b) Principle of consolidation
The consolidated financial statements include the financial statements of the
Company, Redknee and its wholly owned subsidiary companies, of which the
principal subsidiaries are Redknee (Ireland) Ltd., Redknee (Germany) GmbH,
Redknee (UK) Ltd., Redknee (ME) FZ-LLC (Dubai) and Redknee (India) Technologies
Pvt. Ltd. All significant intercompany balances and transactions have been
eliminated on consolidation. The Company does not have any entities to be
consolidated under Accounting Guideline 15 "Consolidation of Variable Interest
Entities."
c) Revenue recognition
General
The Company's revenue is derived primarily from licensing of software products
under non-cancellable licence agreements, the provision of related professional
services (including installation, integration, and training) post-contract
customer support (PCS), and subscription revenue which represents the right to
receive future unspecified software upgrades. In certain cases, the Company also
provides customers with hardware in conjunction with its software offerings.
The Company recognizes revenue in accordance with Canadian GAAP which, in the
Company's circumstances, is consistent with the provisions of the American
Institute of Certified Public Accountants' Statement of Position No. 97-2,
"Software Revenue Recognition and Related Provisions" (SOP 97-2). Revenue is not
recognized unless persuasive evidence of an arrangement exists, delivery has
occurred, the price is fixed or determinable and collectibility is reasonably
assured.
Multiple element arrangements
The Company enters into multiple element revenue arrangements, which may include
any combination of software, service, support and/or hardware.
A multiple element arrangement is separated into more than one unit of
accounting if all of the following criteria are met:
i) reliable and objective evidence of fair value exists for all
undelivered elements (for software related deliverables, fair value is
established through VSOE;
ii) undelivered elements are not considered essential to the
functionality of delivered elements;
iii) the delivered elements have stand-alone value to the customers;
iv) delivery or performance of the undelivered elements is considered
probable and substantially in the control of the Company; and
v) fees related to delivered elements are not subject to refund,
forfeiture or other concession, if undelivered elements are not delivered.
If these criteria are not met, the arrangement is accounted for as one unit of
accounting which would result in revenue being deferred until the earlier of
when such criteria are met or when the last undelivered element is delivered.
If these criteria are met for each element and there is objective and reliable
evidence of fair value for all units of accounting in an arrangement, the
arrangement consideration is allocated to the separate units of accounting based
on each unit's relative fair value. There may be cases, however, in which there
is objective and reliable evidence of fair value of the undelivered elements but
no such evidence for the delivered elements. In those cases, the residual method
is used to allocate the arrangement consideration. Under the residual method,
the amount of consideration allocated to the delivered elements equals the total
arrangement consideration less the aggregate fair value of the undelivered
elements. The revenue policies below are then applied to each unit of
accounting, as applicable.
Software
If services are not deemed essential to the functionality of the licensed
software, revenue from licensed software is recognized at the later of delivery
or the inception of the license term in accordance with SOP 97-2. When the fair
value of a delivered element has not been established, the Company uses the
residual method to recognize revenue if the fair value of the undelivered
elements are determinable.
If services are deemed essential to the functionality of the licensed software
(which is the frequent arrangement), the licensed software and service revenues
are recognized using contract accounting following the percentage-of-completion
method. The Company uses either the ratio of incurred costs to estimated total
costs or the completion of applicable milestones, as appropriate, as the measure
of its progress to completion on each contract. If a loss on a contract is
considered probable, the loss is recognized at the date determinable.
Services
If services are deemed essential to the functionality of the licensed software,
the license and service revenues are recognized under contract accounting as
described above.
If services are not deemed essential to the functionality of the software, the
service revenue is recognized as the services are delivered to the customer. The
Company has established VSOE for service elements based on the normal pricing
and discounting practices for those elements when they are sold separately.
Support
PCS revenue is recognized rateably over the term of the support agreement, which
is typically one year. We have established VSOE of PCS based on the PCS rates
(percentage of licence fees). Absent a stated PCS rate or when there is a low
contracted PCS rate, a rate which represents the price when PCS is sold
separately based on PCS renewals is used.
Subscription
Subscription revenue is recognized rateably over the subscription term. If the
subscription agreement states a maximum number of unspecified upgrades on a when
and if available basis, revenue is recognized at the earlier of when the
unspecified upgrades are delivered and the expiration of the term. We have
established VSOE based on the prices charged when the subscription is sold
separately.
Hardware
Hardware revenue is recognized as hardware is delivered to the customer, when
the risks and rewards of ownership have been transferred. The fair value of
hardware is established based on the prices charged when hardware is sold
separately.
Unbilled and deferred revenue
Amounts are generally billable on reaching certain performance milestones, as
defined by individual contracts. Revenue in excess of contract billings is
recorded as unbilled revenue. Cash proceeds received in advance of performance
under contracts are recorded as deferred revenue.
d) Earnings (loss) per common share
The Company computes earnings (loss) per common share whereby, basic earnings
(loss) per common share are computed by dividing net income (loss) attributable
to all classes of common shareholders by the weighted average number of shares
outstanding during the applicable period. Diluted earnings (loss) per common
share are determined in the same manner as basic earnings per share, except that
the number of shares is increased to assume the exercise of potentially dilutive
stock options, using the treasury stock method, unless the effect of such an
increase would be anti-dilutive. For 2007 and 2006, all stock options are
anti-dilutive; therefore, diluted earnings (loss) per common share is equal to
basic earnings (loss) per common share.
e) Cash and cash equivalents
Cash equivalents include highly liquid instruments with an original maturity of
less than 90 days at issuance. The carrying amounts of cash equivalents are
stated at cost, which approximates fair value.
f) Goods in transit
Goods in transit are recorded at the lower of cost or net realizable value.
g) Property and equipment
Property and equipment are stated at cost, net of accumulated amortization, and
are amortized on a straight-line basis over their estimated useful lives as
follows:
Computer software 1-3 years
Computer equipment 3 years or term
of lease
Furniture and fixtures 3 years
Leasehold improvements term of lease
Computer equipment and software under capital lease are initially recorded at
the present value of the minimum lease payments at the inception of the lease.
The Company reviews the carrying amounts of its capital assets for impairment on
a regular basis or whenever events or circumstances indicate that the carrying
amounts may not be recoverable. If the carrying value exceeds the amount
recoverable, based on undiscounted estimated future cash flows from its use and
disposal, an impairment, measured by the amount by which the carrying value of
the asset exceeds its fair value, is charged to the consolidated statement of
operations. To date, the Company has not recorded an impairment charge on its
capital assets.
h) Research and development costs
Costs related to research, design and development of software products, net of
investment tax credits, are initially charged to research and development
expenses as incurred, unless the criteria for deferral are met. Software
development costs are capitalized beginning when a product's technological
feasibility has been established. This generally occurs on completion of a
working model and ends when a product is available for general release to
customers. To date, completion of a working model of the Company's product and
the general release of the product have substantially coincided. As a result,
the Company has not capitalized any software development costs.
i) Stock-based compensation
The Company has stock-based compensation plans, which are described in notes 9
and 10. The Company estimates the fair value of stock-based compensation to
employees and directors and expenses the fair value over the estimated vesting
period of the stock options. An expense with respect to stock-based compensation
and incremental charge for modification of certain stock options in the amount
of $1,210,050 for the fiscal year ended September 30, 2007 (2006 - $1,044,532)
was recorded. Any consideration paid by employees or directors on the exercise
of stock options or purchase of stock is credited to share capital together with
any previously recognized compensation expense. If shares or stock options are
repurchased from employees or directors, the excess of the consideration paid
over the carrying amount of the shares or stock options cancelled is charged to
deficit.
j) Income taxes
The Company uses the asset and liability method of accounting for income taxes.
Under this method, future tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying values of existing assets and liabilities and their
respective tax bases. Future tax assets and liabilities are measured using
enacted or substantively enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered
or settled. The effect on future tax assets and liabilities of a change in tax
rates is recognized in the consolidated statement of operations in the year that
includes the enactment or substantive enactment date.
In assessing the valuation of future tax assets, management considers whether
a valuation allowance is required for any of the Company's future income tax
assets based on whether it is more likely than not that the future tax assets
will be realized.
The ultimate realization of future tax assets is dependent on the generation of
future taxable income during the years in which those temporary differences
become deductible. Management considers projected future taxable income,
uncertainties related to the industry in which the Company operates and tax
planning strategies in making this assessment.
k) Investment tax credits
The Company is entitled to certain Canadian investment tax credits for
qualifying research and development activities performed in Canada. These
credits can be applied against future income tax liabilities and are subject to
a 20-year carry-forward period or in some cases are refundable. The realized
investment tax credits have been accounted for as a reduction of the related
expenditures for items expensed in the consolidated statement of operations or a
reduction of the related asset's cost for items capitalized on the consolidated
balance sheet.
l) Use of estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported amounts of revenue and
expenses in preparing these consolidated financial statements. Actual results
could differ from those estimates.
Significant estimates in these consolidated financial statements include the
valuation of accounts receivable, future income taxes, estimation of useful
lives of its capital assets and assessment of impairment of its long-lived
assets, valuation of investment tax credit receivable, valuation of common
shares of the Company used in the computation of stock-based compensation, the
bifurcation of the long-term debt to its equity and liability components, and
the determination of the amount and timing of revenue to be recognized. In its
determination of the valuation of accounts receivable, including the allowance
for doubtful accounts, management relies on current customer information and its
planned course of action, as well as assumptions about future business and
economic conditions. The method used to estimate the valuation allowance
required for future income taxes is described in note 1(j). The method used to
estimate the value of investment tax credits receivable is described in note 1
(k). In its determination of the amount and timing of revenue to be recognized,
management relies on assumptions supporting its revenue recognition policy.
Estimates of the percentage of completion for customer projects are based upon
contractual terms and current actual and forecasted information. VSOE
established by management on the Company's licence and service elements is based
on the prices charged when the Company sells specific elements to customers
separately or contractually stated renewal prices. Changes in the Company's
business practices or sales arrangements may impact its ability to establish
VSOE on current or newly offered elements, thereby changing the amount and
timing of revenue recognized.
m) Foreign currency translation
Translation of financial statements
The Company's foreign subsidiaries are considered to be integrated operations
for accounting purposes. On February 28, 2007, Redknee (Ireland) Ltd., formerly
self-sustaining, was deemed to be an integrated operation for accounting
purposes. The Company uses the temporal method to translate the foreign currency
accounts for its integrated operations and the current rate method for its
self-sustaining operations.
Under the temporal method, monetary items denominated in foreign currencies are
translated into Canadian dollars at exchange rates in effect at the consolidated
balance sheet date and non-monetary items are translated at rates of exchange in
effect when the assets were acquired or obligations incurred. Revenue and
expenses are translated at rates of exchange in effect at the time of the
transactions, except to the extent they relate to items translated at historical
rates, in which case, historical rates are applied. Foreign exchange gains and
losses from the translation of the financial statements of integrated foreign
operations are included in the consolidated statement of operations as an
unrealized gain/loss.
Under the current rate method, assets and liabilities denominated in foreign
currencies of the self-sustaining operations are translated into Canadian
dollars at the rate of exchange in effect at the consolidated balance sheet
date. Revenue and expenses, including depreciation and amortization, are
translated into Canadian dollars at the rates of exchange in effect on the dates
on which such items are recognized in the consolidated statement of operations
during the year. Exchange gains and losses from the translation of the financial
statements of self-sustaining foreign operations are deferred and included in a
separate component of shareholders' equity (deficiency) referred to as
accumulated other comprehensive loss as a foreign currency translation
adjustment.
Translation of transactions
The Company and its subsidiaries have assets and liabilities denominated in
foreign currencies as at the consolidated balance sheet date. These assets and
liabilities have been translated using the temporal method to the entities'
reporting currency and the associated gain/loss has been recorded as an
unrealized gain/loss in the consolidated statement of operations.
n) Concentration of credit risk
Financial instruments potentially exposing the Company to a concentration of
credit risk consist principally of cash and cash equivalents and accounts
receivable.
Cash and short-term investments consist of highly liquid instruments, such as
deposits with major commercial banks and commercial paper, the maturities of
which are less than six months from the date of purchase.
The Company sells its products directly to end-users and indirectly via agents.
The Company performs periodic credit evaluations of the financial condition of
its customers and typically does not require collateral from them. As at
September 30, 2007, one customer represented 21% of the balance of accounts
receivable (2006 - four customers represented 19%, 17%, 11% and 11%).
o) Allocations of costs
All facility, communication and IT costs are allocated to: cost of sales, sales
and marketing, research and development, and general and administrative costs.
This allocation has been based on the average headcount per function.
p) Adoption of new accounting pronouncements
i) Financial instruments
Effective October 1, 2006, the Company adopted, prospectively without
restatement, the new recommendations of The Canadian Institute of Chartered
Accountants' (CICA) Handbook Section 1530, "Comprehensive Income"; Section 3251,
"Equity"; Section 3855, "Financial Instruments - Recognition and Measurement";
and Section 3865, "Hedges". These new Handbook Sections provide requirements for
the recognition and measurement of financial instruments and on the use of hedge
accounting.
Section 1530 establishes standards for reporting and presenting comprehensive
income, which is defined as the change in equity from transactions and other
events from non-owner sources. Other comprehensive income refers to items
recognized in comprehensive income that are excluded from net income calculated
in accordance with GAAP. Under the new standards, policies followed for periods
prior to the effective date generally are not reversed and, therefore, the
comparative figures have not been adjusted. The adoption of this Handbook
Section had no impact on the Company's opening deficit as of October 1, 2006
other than to characterize the foreign currency translation adjustment as
accumulated other comprehensive loss. The Company's other comprehensive income
amount consists of foreign currency translation gains and losses on net
investment in self-sustaining operations (the Irish entity was self-sustaining
until February 28, 2007, at which point, the entity was considered integrated)
and net movements of available-for-sale financial instruments.
Under Section 3855, financial instruments must be classified into one of these
five categories: held-for-trading, held-to-maturity, loans and receivables,
available-for-sale financial assets or other financial liabilities. All
financial instruments, including derivatives, are measured in the balance sheet
initially at fair value. Subsequent measurement and changes in fair value will
depend on their initial classification, as follows: held-for-trading are
measured at fair value and changes in fair value are recognized in net income;
held-to-maturity are measured at amortized costs; loans and receivables are
measured at amortized cost; available-for-sale are measured at fair value, with
changes in fair value recorded in other comprehensive income until the
investment is derecognized or impaired, at which time, the amounts would be
recorded in net income; other financial instruments are measured at amortized
cost.
Upon adoption of these new standards, the Company designated its cash, cash
equivalents and restricted cash as held-for-trading. Short-term investments are
designated as available-for-sale. Accounts receivable and investment tax credits
and income taxes receivable are classified as loans and receivables. Accounts
payable, accrued liabilities, income taxes payable and notes payable are
classified as other financial liabilities.
Effective October 1, 2006, the Company has elected to record all transaction
costs in respect of financial assets and liabilities in income as incurred. The
Company had previously deferred these costs and amortized them over the term of
the related debt. The carrying value of the transaction costs as at September
30, 2006 of $651,341, net of income taxes of $nil, was charged to opening
deficit as of October 1, 2006.
As a result of the application of these standards, the Company was required to
separate the early repayment option related to the Company's long-term debt. The
assessment of its fair value was not deemed to be significant due to the terms
associated with the underlying option. Accordingly, there was no separate value
allocated and recorded on the adoption, as of October 1, 2006. There was no
remaining long-term debt outstanding as at September 30, 2007.
As at September 30, 2007, the short-term investments, which are designated as
available-for-sale, were measured at fair value and the change from the recorded
cost did not result in a significant change and, hence, no revaluation gain or
loss was recorded in the period.
Upon the adoption of Section 3865, "Hedges," there was no impact to the
consolidated financial statements on transition or for the fiscal year ended
September 30, 2007.
In 2006, the CICA issued Handbook Section 3862, "Financial Instruments -
Disclosures," and Handbook Section 3863, "Financial Instruments - Presentation."
These new standards will become effective for the Company beginning on October
1, 2007. The Company is currently assessing the impact of these two new
standards.
The Company enters into transactions in multiple currencies (primarily US
dollars, Canadian dollars and Euros) and is, therefore, subject to gains and
losses due to fluctuations between these currencies. The Company does not enter
into derivative financial instruments for trading or speculative purposes. There
were no forward exchange contracts entered into during the years ended September
30, 2007 and 2006 or outstanding as at September 30, 2007 and 2006.
ii) Non-monetary transactions
Effective October 1, 2006, the Company adopted the new recommendations of CICA
Handbook Section 3831, "Non-monetary Transactions," prospectively. This standard
requires all non-monetary transactions be measured at fair value unless they
meet one of four criteria. Commercial substance replaces culmination of the
earnings process as the test for fair value measurement. A transaction has
commercial substance if it causes an identifiable and measurable change in the
economic circumstances of the entity. The adoption of this standard had no
significant impact on the Company's consolidated financial statements.
iii) Stock-based compensation for employees eligible to retire before the
vesting date
Effective October 1, 2006, the Company adopted the provisions of Emerging Issues
Committee (EIC) Abstract 162, "Stock-based Compensation for Employees Eligible
to Retire Before the Vesting Date." Adoption of this standard did not have a
significant impact on the Company's consolidated financial statements.
2 Restricted cash
The Company had used short-term bank term deposits as security for outstanding
letters of credit (note 16(b)). The average rate of return during the year ended
September 30, 2006 was 4.5%.
3 Deferred organization costs
In fiscal year 2006, the Company had deferred certain costs incurred in
association with its initial public offering (IPO). These costs were recognized
as a reduction in share capital in fiscal year 2007.
4 Property and equipment
2007
Cost Accumulated Net
$ amortization $
$
Computer software 1,496,498 1,391,094 105,404
Computer equipment 780,381 734,155 46,226
Furniture and fixtures 810,434 780,888 29,546
Computer software under capital lease 169,500 128,750 40,750
Leasehold improvements 106,514 78,420 28,094
----------- ----------- -----------
3,363,327 3,113,307 250,020
----------- ----------- -----------
2006
----------- ----------- -----------
Cost Accumulated Net
$ amortization $
$
Computer software 1,588,815 1,339,803 249,012
Computer equipment 760,965 687,522 73,443
Furniture and fixtures 700,646 656,309 44,337
Computer software under capital lease 169,500 68,561 100,939
Leasehold improvements 100,258 66,653 33,605
----------- ----------- -----------
3,320,184 2,818,848 501,336
----------- ----------- -----------
Amortization of computer equipment and computer software under capital lease
amounted to $60,189 (2006 - $59,563).
5 Related party transactions
a) On December 16, 2002, certain shareholders and a party related to a
shareholder loaned a total of $875,000 to Redknee to fund working capital
requirements. The notes bore interest at 6.5% per annum, payable annually. In
February 2007, Redknee repaid its outstanding shareholder loans of $774,239.
b) On February 9, 2006, an executive of Redknee received an interest-free,
unsecured loan from Redknee of $10,000 to be repaid upon the earlier of demand
or April 30, 2007. The loan was fully repaid in September 2006.
c) There are employee shareholder loans described in note 9.
6 Notes payable
Redknee had an employee profit-sharing plan (EPSP), in which generally all
employees with six months or more of continuous service were eligible to
participate. The purpose of the EPSP was the retention and motivation of
employees and management of the Company. Contributions, which are determined and
approved by the Board of Directors each year, amounted to $nil in 2007 (2006 -
$nil).
In the 2006 fiscal year, Redknee paid the outstanding balance of the EPSP from
September 30, 2005 to a trust. The trust then loaned the same amount back to the
Company resulting in notes payable of $581,896. In the 2007 fiscal year, Redknee
repaid the notes of $581,896 in December 2006. The trust then paid the
remaining amounts to the beneficiaries and was subsequently wound up.
7 Long-term debt
On June 22, 2005, Redknee entered into a debt agreement with two external third
parties for US$10 million. The term of the agreement was 39 months, with a fixed
interest rate of 13.45% per annum and the debt was secured by all the assets of
Redknee. The monthly repayment terms included the first three payments of
interest only and the remaining payments of US$339,111 per month were a
combination of interest and principal.
In addition to the debt, Redknee also issued the lenders in total 700,000
Redknee Class B non-voting common shares. The proceeds of the financing were
allocated to the debt and equity components. The equity component of this
instrument was calculated using a discounted cash flow valuation of the Redknee
Class B non-voting common shares at the time of issue, being $3.03, multiplied
by 700,000 Redknee Class B non-voting common shares issued ($2,121,000). The
residual, being the debt component, was recorded as debt ($10,132,400).
Accretion, determined using the effective interest method, and interest expenses
to September 30, 2007 amounted to $1,297,136 (2006 - $2,221,175) and are
included as interest expense in the consolidated statement of operations.
Redknee allocated the financing costs of $1,267,116 between debt financing costs
($1,052,977) and share issue costs ($214,139), based on the allocated amounts of
liability and equity portions. The financing costs were capitalized as deferred
financing costs and were being amortized on a straight-line basis over the term
of the debt. The writeoff of deferred financing costs for the year ended
September 30, 2007 amounted to $651,341 to opening deficit (note 1) (2006 -
$322,944 to the consolidated statement of operations) and the unamortized
balance of deferred financing costs as at September 30, 2007 is $nil (2006 -
$651,341). The share issue costs of $241,139 were recorded as a reduction in
share capital.
On March 1, 2007, the Company repaid all of its outstanding long-term debt,
which included a prepayment penalty of $367,936. This penalty has been included
as an interest expense in the consolidated statement of operations.
8 Obligations under capital leases
The Company has financed certain computer hardware/software by entering into
capital leasing arrangements. The following are the future minimum lease
payments under non-cancellable capital leases:
2007 2006
$ $
2007 - 63,577
2008 50,488 50,488
2009 623 623
--------- ---------
Total minimum capital lease payments 51,111 114,688
Less: Imputed interest at rates averaging 7.63% (2006 -
7.63%) 1,740 7,907
--------- ---------
Present value of capital lease payments 49,371 106,781
Less: Current portion 49,371 57,410
--------- ---------
Long-term obligation - 49,371
--------- ---------
Interest expense on obligations under capital leases amounted to $6,167 (2006 -
$9,863).
9 Share capital
a) Authorized
Unlimited voting common shares
Unlimited preferred shares
b) Loss per common share
As a result of the loss for the years ended September 30, 2007 and 2006, all
potential dilutive securities, being stock options, unvested restricted share
units and shares issued under the share purchase plan for which loans were given
totalling 5,010,677 (2006 - 3,781,953), were considered anti-dilutive.
c) Share purchase plans
For the period from November 1, 2006 to November 8, 2006, Redknee allowed
employees to acquire up to 1,125,000 Class B common shares in Redknee at a value
of $1.24 per share, which was fair value on that date. Each employee was limited
to a maximum purchase of 3,750 shares with a minimum purchase of 500 shares. As
part of this program, employees were eligible to receive a loan to acquire the
first 500 shares, up to a maximum of $620 per employee. These loans are
unsecured, repayable in two years and non-interest-bearing. The total number of
shares purchased under this program was 215,653, of which 63,500 shares were
purchased using the loan offered by the Company. The total amount of the loans
issued under this program was $78,740 and the balance outstanding as at
September 30, 2007 aggregated $69,430.
The shares issued under this plan of 215,653 have been recorded in share capital
as an increase in the number of shares issued and outstanding with the
corresponding value of $267,410 assigned.
During the period from November 1, 2006 to November 8, 2006, Redknee allowed its
employees to exercise their vested options and acquire Class B common shares in
Redknee. Redknee offered loans to all of its existing employees holding vested
options based on their tenure ranging from $5,000 to $160,000. These loans are
secured by the shares acquired upon exercise of the options. The loans are
non-interest-bearing and are repayable in three years or in proportion to any
sale of shares by the employee. The total number of options that were exercised
under this program was 3,226,445 and employees used a combination of cash and
loans to exercise the options. Redknee accounted for the share purchase loans as
a modification of an outstanding stock option and determined that the
incremental value associated with the modification is insignificant.
The 3,226,445 options exercised under this plan have been recorded in share
capital as an increase in the number of shares issued and outstanding with their
corresponding value of $1,559,211 assigned, which includes $459,043
reclassification from contributed surplus relating to prior compensation expense
recognized on these options.
The total amount of loans issued under this program was $1,016,846 and the
balance outstanding as at September 30, 2007 aggregated $895,531. The loans used
to acquire these shares have been recorded as a reduction in share capital. The
number of shares outstanding relating to loans outstanding has been excluded in
the calculation of the basic earnings per share. As loans are repaid, an offset
to share capital will be reduced accordingly.
Employees are eligible to a cash bonus annually equal to 10% of the outstanding
loan amount provided they remain an employee of the Company as of the
anniversary date. The Company recorded $87,832 as stock-based compensation
expense for the year ended September 30, 2007.
d) Restricted share plan
On November 10, 2006, the Company established a restricted share plan (RSP) for
the purpose of providing additional compensation for certain employees and
directors that is reflective of the responsibility, commitment and risk
accompanying their role. Eligible employees are any employees or directors of
the Company that the Board of Directors designates as eligible to participate in
the plan. The number of shares which may be issued under the plan is limited to
1,125,000. Shares granted under the RSP are subject to vesting from the grant
date, which can be a time-based or performance-based, vesting at the Board of
Directors' discretion.
Vesting of shares issued to directors, unless otherwise noted, is deemed to be
immediately upon being granted but subject to resale restrictions, such that no
vested shares can be sold until the earlier of the one year anniversary date of
the grant date and the director's date of death. The vesting period for all
other participants, provided that the participants are actively employed by the
Company on the applicable date, is: 50% of the shares granted will be vested on
the second anniversary of the grant date; 25% of the shares granted shall be
vested on the third anniversary of the grant date; and 25% of the shares granted
shall become vested on the fourth anniversary of the grant date.
On November 10, 2006, in addition to establishing the RSP, the Board of
Directors approved and the Company granted 966,250 restricted shares units at a
price of $1.24 per share with 81,250 of these being granted to directors and the
remaining 885,000 being granted to other participants. These shares are placed
in a trust until the shares vest, at which time, they are issued to the
beneficiary. The Company has reflected 885,000 shares as being held in treasury,
as 81,250 of these shares have been issued to the beneficiaries. The associated
stock-based compensation expense of $1,198,150 is amortized over the appropriate
vesting period. In the current year, the Company expensed approximately $359,000
relating to these restricted share units.
e) Share redemption
On November 10, 2006, the Company received a notice of dissent from one of its
shareholders holding 75,000 common shares along with a demand for payment, based
on the fair value of the Company's common shares. These shares were redeemed for
$93,000.
f) Amalgamation
Pursuant to the Amalgamation Agreement, each Class A share of Redknee was
exchanged for 2.5 common shares of the Company, and each Class B share of
Redknee and restricted Class B share was exchanged for 2.5 common shares of the
Company. On February 22, 2007, Class A shares of the Company were automatically
converted to common shares of the Company on a 1:1 basis. The share continuity
schedule reflects the share exchange retroactively.
g) Initial public offering
On February 21, 2007, the Company completed its IPO on the Alternative
Investment Market of the London Stock Exchange and issued 16,700,000 common
shares for gross proceeds of $39,893,878 (GBP17,535,000). Certain costs
aggregating $5,147,747 were incurred in association with the Company's IPO have
been recognized as a reduction to share capital.
10 Stock option plan
The Company's stock option plan (the plan) was implemented to encourage
ownership of the Company by directors, officers, employees and consultants of
the Company. The maximum number of common shares that may be set aside for
issuance under the plan is 3,000,000 shares. In accordance with the plan, the
exercise price of each option is based on the Board of Directors' determination
of fair value of the Company's common shares on the date of grant. An option's
term is determined at the discretion of the Board of Directors but its maximum
term cannot exceed ten years.
Pursuant to the Amalgamation Agreement described above, the Company agreed to
assume the obligation of Redknee under the Redknee Stock Option Plan whereby the
Company agreed to issue its common shares upon the exercise of options issued
and outstanding under the Redknee Stock Option Plan and Redknee agreed to remit
payment as set out in such options for such issues shares to the Company.
a) Stock options
Options are non-transferable. Options vest as to 25% at the end of the first
year from date of grant and an additional 25% on each of the second, third and
fourth anniversaries of grant. Options are priced in GBP, US dollars or Canadian
dollars.
Number of Weighted
options average
outstanding exercise price
per share
US dollar options US$
Outstanding -
September 30,
2005 3,801,030 0.19
Exercised (355,625) 0.18
Cancelled (299,375) 0.48
---------
Outstanding -
September 30,
2006 3,146,030 0.18
Exercised (2,791,030) 0.14
Cancelled (137,500) 0.15
---------
Outstanding -
September 30,
2007 217,500 0.76
---------
Canadian dollar options Number of Weighted
options average
outstanding exercise price
per share
CA$
Outstanding -
September 30,
2005 7,209,103 1.28
Granted 787,250 1.21
Exercised (226,195) 1.21
Cancelled (1,336,305) 1.22
---------
Outstanding -
September 30,
2006 6,433,853 1.22
Granted 158,125 1.56
Exercised (722,078) 1.21
Cancelled (872,348) 1.26
---------
Outstanding -
September 30,
2007 4,997,552 1.22
---------
GBP options Number of options Weighted average exercise price
outstanding per share
GBP
Outstanding -
September 30,
2006 - 0.00
Granted 417,875 0.84
Exercised - 0.00
---------
Outstanding -
September 30,
2007 417,875 0.84
---------
Summary information about stock options outstanding and exercisable as at
September 30, 2007 is as follows:
Options Options
outstanding exercisable
------------------- -------------------
Number Weighted Number Weighted
outstanding average outstanding average
remaining remaining
contractual contractual
life life
(years) (years)
US$0.14 92,500 4.0 92,500 4.0
US$1.09 50,000 6.1 37,500 4.6
US$1.31 75,000 5.5 75,000 5.5
CA$1.21 4,868,177 7.1 3,359,480 4.7
CA$1.24 74,375 9.1 - 0.0
CA$1.97 25,000 6.0 25,000 6.0
CA$2.16 30,000 9.3 - 0.0
GBP0.59 110,500 10.0 - 0.0
GBP0.93 307,375 9.7 - 0.0
--------- ---------
5,632,927 7.3 3,589,480 4.3
--------- ---------
b) Fair values and compensation expense
The fair value of option grants made to employees and directors prior to the IPO
was estimated using the minimum value method under the Black-Scholes option
pricing model, with the following assumptions: risk-free interest rate of 4.3%
for the fiscal period up to the IPO (2006 - 3.9%); dividend yield of nil; and
volatility of zero and expected lives of options of seven years for all periods
presented. The fair value of the options is expensed over the vesting period of
the options.
Subsequent to the IPO, the fair value of option grants made to employees and
directors continued to be estimated using the Black-Scholes option pricing model
with the following modified assumptions: risk-free interest rate between 5.5%
and 5.8%; and volatility of 56.9%. The fair value of the options continues to be
expensed over the vesting period of the options.
Options granted during the year ended September 30, 2007 had a weighted average
grant date fair value of $1.02 (2006 - $0.74). During 2007, the Company recorded
a stock-based compensation expense of $763,000 related to options granted under
this plan.
11 Research and development expenses
2007 2006
$ $
Gross research and development expenses 11,076,295 10,622,115
Less: Investment tax credits recognized 1,056,626 200,000
--------- ---------
10,019,669 10,422,115
--------- ---------
In 2006 and 2007, the Company continued to earn investment tax credits related
to research and development expenses. However, due to the Company's past taxable
losses the majority of the credits were not afforded asset recognition on the
consolidated balance sheet and unused credits from prior years were also written
off for accounting purposes (note 12).
12 Income taxes
The Company's effective income tax rate differs from the statutory rate that
would be obtained by applying the combined Canadian basic federal and provincial
income tax rate to loss before income taxes. These differences result from the
following items:
2007 2006
$ $
Loss before income taxes (9,525,546) (8,929,906)
--------- ---------
Effective income tax rate 36.12% 36.12%
--------- ---------
Expected income taxes (recovery) based on loss
before income taxes (3,440,627) (3,225,482)
Increase (decrease) in income taxes resulting from
Non-deductible items 792,230 953,919
Benefit of federal investment tax credits not
taxable in Ontario (119,928) 448,185
Differences due to lower tax rates for foreign
subsidiaries (552,761) (122,256)
Change in substantively enacted tax rates 529,383 382,790
Change in valuation allowance 4,732,732 4,107,534
Change in tax reserve 611,247 -
Ontario minimum tax - 383,517
Cost (benefit) of previously unrecorded tax
assets/liabilities (2,012,201) 432,919
Other items 341,810 5,974
--------- ---------
Actual income taxes 881,885 3,367,100
--------- ---------
The income tax effects of temporary differences that give rise to significant
portions of future income tax assets and liabilities are as follows:
2007 2006
$ $
Future income tax assets
SRED/non-capital loss carry-forwards 8,932,166 3,866,313
Property and equipment 268,878 60,518
Financing costs and long-term debt 1,485,927 180,703
--------- ---------
10,686,971 4,107,534
Less: Valuation allowance 10,686,971 4,107,534
--------- ---------
Net future income tax asset (liability) - -
--------- ---------
As at September 30, 2007, the Company has approximately $28,100,000 (2006 -
$14,800,000) of federal non-capital losses and scientific research and
experimental development (SRED) pools for income tax purposes that will begin to
expire in 2015, which are available to reduce future years' income for income
tax purposes.
The Company has $6,500,000 (2006 - $5,100,000) of unrecorded income tax credits,
which are tax effected and can be also used to reduce future federal income
taxes. These credits have a life of ten to 20 years and will not begin to expire
until 2014.
13 Other assets
As at September 30, 2007, the Company has $67,559 (2006 - $66,210) for deposits
on various rental properties, service contracts and support costs on software.
The rental deposits are collectible at the end of the rental terms, which vary
in length. This account also includes $22,445 (2006 - $180,000) in support costs
related to software used by the Company, which are amortized over the period to
which the support is applicable.
14 Change in non-cash operating working capital
2007 2006
$ $
Accounts receivable 1,394,916 399,082
Unbilled revenue (864,336) 1,835,277
Investment tax credits and income taxes receivable 536,330 4,255,777
Prepaid expenses (277,623) (490,390)
Accounts payable 190,260 519,785
Accrued liabilities (461,496) 957,679
Accrued profit-sharing plan - (570,625)
Deferred revenue 796,593 (2,550,977)
Goods in transit 55,607 -
Income taxes payable 659,056 699,549
--------- ---------
2,029,307 5,055,157
--------- ---------
15 Segmented reporting
The Company reviewed its operations and determined that it operates in a single
reportable operating segment, the telecommunications software market. The single
reportable operating segment derives its revenue from the sale of software
products and related services and hardware. The following information provides
the required enterprise-wide disclosures.
The Company's revenue by geographic area is as follows:
2007 2006
$ $
Europe, Middle East and Africa 14,957,268 13,272,301
North America, Latin America and Caribbean 17,371,821 21,173,731
Asia and Pacific Rim 6,287,276 2,525,705
--------- ---------
38,616,365 36,971,737
--------- ---------
Revenue is attributed to geographic locations based on the location of the
external customer. Sales related to Canadian customers were $3,271,218 and
$3,739,414 for each of 2007 and 2006, respectively.
2007 2006
$ $
Revenue by type
Software and services 23,791,301 26,206,096
Third party software and hardware 3,397,948 1,960,200
Support 11,427,116 8,805,441
--------- ---------
38,616,365 36,971,737
--------- ---------
The Company's property and equipment by geographic area are as follows:
2007 2006
$ $
Canada 187,074 388,887
Ireland 41,831 68,458
India 20,469 38,334
Other 646 5,657
--------- ---------
250,020 501,336
--------- ---------
In the year ended September 30, 2007, no customer accounted for more than 10% of
revenue. (2006 - four customers accounted for 14%, 12%, 10% and 10%).
16 Commitments, guarantees and contingencies
a) Lease commitments
Future minimum lease payments for premises and equipment under non-cancellable
operating leases are as follows:
$
2008 2,443,823
2009 2,081,627
2010 1,730,463
2011 1,172,575
2012 847,755
Thereafter 1,835,078
Rent expense for the year ended September 30, 2007 was $1,034,523 (2006 -
$903,444). The Company is also responsible for certain common area costs and
realty taxes of its leased premises.
b) Letters of credit
As at September 30, 2007, the Company had no outstanding letters of credit (2006
- $51,465) relating to customer contracts, which are reflected as restricted
cash on the consolidated balance sheet.
c) Guarantees
The Company has provided routine indemnifications to its customers against
liability if the Company's products infringe on a third party's intellectual
property rights. The maximum exposure from these indemnifications cannot be
reasonably estimated. In some cases, the Company has recourse against other
parties to mitigate its risk of loss from these guarantees. The Company has
never been called to perform its obligations under these indemnifications and
the Company is not subject to any pending litigation in these matters.
d) Litigation and claims
The Company is involved in certain claims and litigation arising out of the
ordinary course and conduct of business. Management assesses such claims and, if
considered likely to result in a loss and, when the amount of the loss is
quantifiable, provisions for loss are made, based on management's assessment of
the most likely outcome. Management does not provide claims for which the
outcome is not determinable or claims where the amount of the loss cannot be
reasonably estimated. Any settlements or awards under such claims are provided
for when reasonably determinable.
17 Subsequent event
On November 16, 2007, the Company advanced the sum of US$500,000 by way of loan
to an unconnected third party company. The loan, which is secured, bears
interest at a rate of 11% per annum. For reasons of confidentiality, the
identity of the borrower cannot be disclosed as at the date of these accounts.
18 Comparative figures
The Company has reclassified certain prior period information to conform with
the current year's presentation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FSFFADSWSESE
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