notes to the consolidated financial statements
General information
Telecity Group plc is a company incorporated, and domiciled, in the United Kingdom and has Sterling as its presentation and functional currency. Telecity Group plc and its subsidiaries operate in the internet infrastructure facilities and associated services industry within Europe. The operating companies of the Group are disclosed within note 12.
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented.
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with EU Endorsed International Financial Reporting Standards (‘IFRS’), IFRIC interpretations and the Companies Act 1985 (the ‘Act’) applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities (including derivative instruments) at fair value through the income statement.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below.
The separate financial statements of the Company are presented as required by the Act. As permitted by the Act, the separate financial statements have been prepared in accordance with IFRS. The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented.
Standards, amendment and interpretations effective in 2007
IFRS 7, ‘Financial instruments: Disclosures’, and the complementary amendment to IAS 1, ‘Presentation of financial statements – capital disclosures’, introduces new disclosures relating to financial instruments and does not have any impact on the classification and valuation of the Group or Company’s financial instruments, or the disclosures relating to taxation and trade and other payables.
IFRIC 8, ‘Scope of IFRS 2’, requires consideration of transactions involving the issuance of equity instruments, where the identifiable consideration received is less than the fair value of the equity instruments issued in order to establish whether or not they fall within the scope of IFRS 2. This standard does not have any impact on the Group or Company’s financial statements.
IFRIC 10, ‘Interim financial reporting and impairment’, prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This standard does not have any impact on the Group or Company’s financial statements.
Interpretation early adopted by the Group and Company
IFRIC 11, ‘IFRS 2, Group and treasury share transactions’, was early adopted in 2007. IFRIC 11 provides guidance on whether share‑based transactions involving treasury shares or involving group entities (for example, options over a parent’s shares) should be accounted for as equity‑settled or cash‑settled share‑based payment transactions in the stand‑alone accounts of the parent and group companies. The financial effect of this was to increase the investments balance and other reserves in the Company by £628,000 (2006: £321,000). There was no impact on the income statement in the current or previous year.
Standards, amendments and interpretations effective in 2007 but not relevant
The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2007 but they are not relevant to the Group or Company’s operations:
- IFRS 4, ‘Insurance contracts’;
- IFRIC 7, ‘Applying the restatement approach under IAS 29: Financial reporting in hyper‑inflationary economies’; and
- IFRIC 9, ‘Re‑assessment of embedded derivatives’.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group and Company
The following standards have been published and are mandatory for the Group’s future accounting periods but the Group and Company have not early adopted them:
- IFRS 8, ‘Operating segments’. IFRS 8 replaces IAS 14. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The Group will apply IFRS 8 from 1 January 2009, subject to endorsement by the EU. The expected impact on the segmental disclosures given by the Group is still being assessed in detail by management.
- IFRS 3 (revised), ‘Business combinations and amendments to IAS 27 Consolidated and separate ‘financial statements’. The IASB has published a revised IFRS 3, ‘Business Combinations’ and related revisions to IAS 27, ‘Consolidated and separate financial statements’. There are also consequential, amendments to other standards, most notably IAS 28, ‘Investments in associates’ and IAS 31, ‘Interests in joint ventures’. The revised standards must be applied prospectively for transactions in accounting periods beginning on or after 1 July 2009. Under the revised standard, the acquisition costs are to be expensed as incurred and contingent consideration to be measured at fair value with changes recognised in the income statement. The expected impact of this revision is currently being assessed by management.
Interpretations to existing standards that are not yet effective and not relevant for the Group and Company’s operations
The following interpretations to existing standards have been published and are mandatory for the Group and Company’s accounting periods beginning on or after 1 January 2008 or later periods but are not relevant for the Group’s operations:
- IFRIC 12, ‘Service concession arrangements’ (effective from 1 January 2008). IFRIC 12 applies to contractual arrangements whereby a private sector operator participates in the development, financing, operation and maintenance of infrastructure for public sector services. IFRIC 12 is not relevant to the Group or Company’s operations because none of the Group’s companies provide public sector services.
- IFRIC 13, ‘Customer loyalty programmes’ (effective from 1 July 2008). IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple‑element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. IFRIC 13 is not relevant to the Group or Company’s operations because none of the Group’s companies operate any loyalty programmes.
- IFRIC 14, ‘IAS 19, The limit on a defined benefit asset, minimum funding requirements and their interaction’ (effective from 1 January 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. As the Group does not have any defined benefit pension schemes this interpretation is not expected to have any impact on the Group or Company’s accounts.
- IAS 23 (amendment), ‘Borrowing costs’ (effective from 1 January 2009). The amendment to the standard is still subject to endorsement by the European Union. It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The Group will apply IAS 23 (amended) from 1 January 2009, subject to endorsement by the EU. This is not expected to have an impact on the Group as interest is already capitalised in respect of major capital projects when the relevant conditions are met.
First‑time adoption of IFRS
These financial statements are covered by IFRS 1, ‘First‑time adoption of International Financial Reporting Standards’, as they are the Company’s first full set of IFRS financial statements. The date of transition and adoption to IFRS for Telecity Group plc is 1 January 2006. The Group has taken the following exemption available to first‑time adopters:
- to apply IFRS 2, ‘Share‑based payment’, retrospectively only to awards made after 7 November 2002 that had not vested at 1 January 2005.
Basis of consolidation
Subsidiaries are entities that are directly or indirectly controlled by the Group. Control exists where the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The acquired identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter‑company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is recorded as an intangible asset. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash‑generating units for the purpose of impairment testing. The allocation is made to those cash‑generating units or groups of cash‑generating units that are expected to benefit from the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in each country in which it operates.
Goodwill is tested for impairment annually, the main assumptions used when performing the impairment test are set out in note 10. Determining whether goodwill is impaired requires an estimation of the value in use of the cash‑generating units to which goodwill has been allocated. The value in use calculation requires an estimation of future cash flows expected to arise from the cash‑generating unit and a suitable discount rate in order to calculate the present value.
Intangible assets
Intangible assets, other than goodwill, represent customer contracts acquired during business combinations. The customer contracts are initially recognised at fair value, in the currency in which the related cash flows are expected to be denominated, and amortised over estimated useful economic lives of between 10 and 20 years. The fair value is calculated by estimating the future cash flows expected to arise from the intangible asset and applying a suitable discount rate.
Revenue
Revenue represents the value of goods and services supplied to customers during the year, excluding value added tax and other sales related taxes. Where invoices are raised in advance for contracted services, the revenue is spread over the period of the service and deferred income is recognised on the balance sheet.
Colocation revenues arise from the leasing of the Group’s infrastructure assets and are recognised on a straight‑line basis over the period of the contract. When fit‑out services are required before the colocation services can be provided, revenue from fit‑out contracts is bundled with the related colocation services revenues and the entire amount recognised over the course of the contracts as the services are provided.
Property, plant and equipment
The cost of property, plant and equipment comprises their purchase cost, together with the incidental costs of installation and commissioning. These costs include external consultancy fees and internal costs which are directly and exclusively related to the underlying assets.
Depreciation is calculated from the date an asset becomes available for use, so as to write off the cost of the asset over its expected useful economic life. The principal periods used for this purpose are:
| Leasehold improvements | 12 years straight‑line |
| Plant and machinery | 12 years straight‑line |
| Office equipment | 3 years straight‑line |
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
Reinstatement costs
At the inception of the lease, the Directors assess the cost of restoring leasehold premises to their original condition at the end of the lease and the likelihood of such costs actually being incurred. If the likelihood of this liability arising is judged to be probable, the discounted cost of the liability is included in leasehold improvements and is depreciated over the duration of the lease. The discount arising on the provision is amortised in future years through interest. If the likelihood of this liability arising is judged to be possible, rather than probable, it is disclosed as a contingent liability. When assessing the likely duration of the lease and the likelihood of this liability arising, the Directors take into account their contractual and statutory rights to renew or extend the lease terms.
Finance and operating leases
Leasing agreements which transfer to the Group substantially all the benefits and risks of ownership of an asset are classified as a finance lease and treated as if the asset had been purchased outright. The assets are included in property, plant and equipment and the capital element of the leasing commitments is shown within obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged against profit in proportion to the reducing capital element outstanding.
Leases that are not classified as finance leases are treated as operating leases. Costs in respect of operating leases are charged on a straight‑line basis over the term of the lease. Benefits received by the Group as an incentive to sign the lease are spread on a straight‑line basis over the lease term, or to the first break if sooner.
Share‑based payments
The Group issues equity‑settled share‑based payments to certain employees under the terms of the Long‑Term Incentive Plans. Equity‑settled share‑based payments are measured at fair value at the date of grant. The fair value determined, using the Black Scholes model, at the grant date of equity‑settled share‑based payments is expensed on a straight‑line basis over the vesting period, based on an estimate of the number of shares that will ultimately vest.
Non‑market vesting conditions, which for the Group mainly relate to the continual employment of the employee during the vesting period, are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Any market vesting conditions are factored into the fair value of the options granted. The options granted to date do not contain any market based vesting condition. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period. Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received.
To the extent that share options are granted to employees of the Group’s subsidiaries, the share option charge is capitalised as part of the cost of investment in subsidiaries.
Pensions
The Group operates a defined contribution group personal pension arrangement for all employees. Contributions are made in accordance with the scheme rules and are expensed to the income statement as incurred.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Foreign currencies
Transactions in currencies other than the Group’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated at the rates ruling at that date. These translation differences are disclosed in the income statement.
Non‑monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non‑monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the retranslation of non‑monetary items carried at fair value are included in the income statement for the period except for differences arising on the retranslation of non‑monetary items in respect of which gains and losses are recognised directly in equity. For such non‑monetary items, any exchange component of that gain or loss is also recognised directly in equity.
The balance sheets of foreign subsidiaries are translated into pounds sterling at the closing rates of exchange. The results are translated at an average rate, recalculated for each month between that month’s closing rate and the equivalent for the preceding month.
Foreign exchange differences arising from the translation of opening net investments in foreign subsidiaries at the closing rate, including long‑term inter‑company loans, are taken directly to reserves. In addition, foreign exchange differences arising from retranslation of the foreign subsidiaries’ results from monthly average rate to closing rate are also taken directly to the Group’s cumulative translation reserve. Such translation differences are recognised in the income statement in the financial year in which the operations are disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Financial assets
Financial assets are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are classified into the following categories: loans and receivables, cash and cash equivalents, and available for sale investments. The classification is determined by management upon initial recognition, and it is based on the purpose for which the financial assets were acquired.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest basis for all debt instruments within the Group.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held on call with banks, other short‑term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the Cash Flow Statement.
Finance income
Finance income arising from bank deposits is recognised in the income statement on an accruals basis.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
Objective evidence of impairment could include:
- significant financial difficulty of the issuer or counterparty; or
- default or delinquency in interest or principal payments; or
- it becoming probable that the borrower will enter bankruptcy or financial re‑organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. A specific provision will also be raised for trade receivables when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of a provision account. When a trade receivable is considered uncollectible, it is written off against the provision account. Subsequent recoveries of amounts previously written off are credited against the provision account. Changes in the carrying amount of the provision account are recognised in the income statement.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments issued by the Group
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Shares held in the employee benefit trust (‘EBT’) over which the Group has direct or indirect control are deducted from the reserves of the Group.
Borrowings
Interest‑bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Finance costs
Finance costs of debt are recognised in the income statement over the term of such instruments at a constant rate on the carrying amount.
Finance costs which are directly attributable to the construction of property, plant and equipment are capitalised as part of the cost of those assets. The commencement of capitalisation begins when both finance costs and expenditures for the asset are being incurred, and activities that are necessary to get the asset ready for use are in progress. Capitalisation ceases when substantially all the activities that are necessary to get the asset ready for use are complete.
Trade payables
Trade payables are recognised initially at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Other financial liabilities
Other financial liabilities, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
Derivative financial instruments
Interest rate derivatives are recognised initially at fair value and subsequent to initial recognition are revalued at each reporting date. Amounts payable and receivable on interest rate derivatives are recognised in the period to which they relate. Where the instrument meets the definition for hedge accounting, movements in fair value of the interest rate swap are taken to reserves. In all other cases movements are charged or credited to the income statement.
Segment reporting
A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns which are different from those of segments operating in other economic environments. A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. The Group has chosen to present its primary segment with reference to geographical location as this is best felt to describe the different risks and rates of return that the Group is subject to.
Impairment of non‑financial assets
The entity assesses at each reporting date whether an asset may be impaired. If any such indicator exists, the entity tests for impairment by estimating the recoverable amount. If the recoverable amount is less than the carrying value of an asset an impairment loss is required.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre‑tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Exceptional items
Exceptional items are those significant items which are separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Group’s financial performance.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Although these estimates made by management based on the best available evidence, due to events or actions, actual results ultimately may differ from those estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
- Property, plant and equipment depreciation – estimated remaining useful lives and residual values are reviewed annually. The carrying values of property, plant and equipment are also reviewed for impairment where there has been a trigger event by assessing the present value of estimated future cash flows and net realisable value compared with net book value. The calculation of estimated future cash flows and residual values is based on the Directors’ best estimates of future prices, output and costs and is therefore subjective;
- intangibles amortisation – estimated remaining useful lives are reviewed annually. The carrying values of intangibles are also reviewed for impairment where there has been a trigger event by assessing the present value of estimated future cash flows and net realisable value compared with net book value. The calculation of estimated future cash flows and residual values is based on the Directors’ best estimates of future income from customer contracts and is therefore subjective;
- dilapidations provisions – liabilities in respect of obligations to restore premises to their original condition are estimated at the commencement of the lease and are reviewed every six months. The actual cost of these may be different depending upon whether the Group renews the lease;
- onerous lease provisions – liabilities in respect of onerous leases are reviewed and updated, where necessary, to reflect current conditions and intentions. The actual cost of these may be different depending upon whether the Group is successful in assigning the lease;
- deferred taxation – full provision is made for deferred taxation, as required under IAS 12, ‘Income taxes’, at the rates of tax prevailing at the period end dates unless different future rates have been substantively enacted. Deferred tax assets are recognised where it is probable that they will be recovered; and
- derivatives – IAS 39 requires derivative financial instruments to be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in earnings unless specific hedge accounting criteria are met. The fair values of derivative instruments are determined using forward price curves. Forward price curves represent the Group’s estimates of the prices at which a buyer or seller could contract today for delivery or settlement of a commodity at future dates. The Group generally bases its forward price curves upon readily obtainable market price quotations, as the Group’s commodity contracts do not generally extend beyond the actively traded portion of the curve. However, the forward price curves used are only an estimate of how future prices will move and are therefore subjective.
1. Segmental information
(a) Primary reporting format – geographic segments
At 31 December 2007, the Group is organised into two main geographic segments: the United Kingdom (‘UK’) and Ireland
and the Rest of Europe. The segment results are as follows:
| Year ended 31 December 2007 | Year ended 31 December 2006* | ||||||
|---|---|---|---|---|---|---|---|
UK and |
Rest of |
UK and |
Rest of |
||||
Ireland |
Europe |
Total |
Ireland |
Europe |
Total |
||
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
||
| Revenue | 63,364 |
34,552 |
97,916 |
40,576 |
28,317 |
68,893 |
|
| Cost of sales | (37,308) |
(20,529) |
(57,837) |
(27,751) |
(18,787) |
(46,538) |
|
| Gross profit | 26,056 |
14,023 |
40,079 |
12,825 |
9,530 |
22,355 |
|
| Depreciation and amortisation | (9,460) |
(9,074) |
(18,534) |
(6,851) |
(8,526) |
(15,377) |
|
| Operational exceptional items | (869) |
(408) |
(1,277) |
(432) |
(2,532) |
(2,964) |
|
| Other operating expenses | (10,395) |
(6,332) |
(16,727) |
(5,686) |
(5,661) |
(11,347) |
|
| Operating profit/(loss) | 5,332 |
(1,791) |
3,541 |
(144) |
(7,189) |
(7,333) |
|
| Unallocated exceptional items | (3,439) |
(4,769) |
|||||
| Finance income | 523 |
617 |
|||||
| Exceptional finance costs | (2,127) |
– |
|||||
| Other finance costs | (6,256) |
(4,286) |
|||||
| Loss before tax | (7,758) |
(15,771) |
|||||
| Income tax | (66) |
3 |
|||||
| Loss for the period | (7,824) |
(15,768) |
|||||
| Segment assets | 126,724 |
98,148 |
224,872 |
112,853 |
71,071 |
183,924 |
|
| Unallocated assets | 1,696 |
1,018 |
|||||
| Total assets | 226,568 |
184,942 |
|||||
| Segment liabilities | (19,985) |
(20,868) |
(40,853) |
(27,200) |
(14,473) |
(41,673) |
|
| Unallocated liabilities | (35,359) |
(60,559) |
|||||
| Total liabilities | (76,212) |
(102,232) |
|||||
| Capital expenditure | 9,808 |
7,122 |
16,930 |
3,237 |
3,343 |
6,580 |
|
* The comparative information has been re‑presented to allocate central costs between UK and Ireland and Rest of Europe. Previously, such costs had been allocated entirely to UK and Ireland. The information in respect of the current year has been presented on this basis.
Segment assets consist primarily of property, plant and equipment, intangible assets, trade and other receivables and cash and cash equivalents. Segment liabilities comprise trade and other payables and provisions for other liabilities and charges. Unallocated amounts comprise items such as Group borrowings and derivative financial instruments.
(b) Secondary reporting format – business segments
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
| Revenue | £’000 |
£’000 |
| Colocation | 70,409 |
50,446 |
| Value Added Services | 27,507 |
18,447 |
97,916 |
68,893 |
Colocation and Value Added Services utilise the same asset base, as such it is not practicable to allocate total assets and capital expenditure between these two segments.
2. Directors’ emoluments and key management compensation
The Directors’ emoluments are disclosed within the Directors’ Remuneration Report. Key management compensation, which includes that of the Directors, is as follows:
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Salaries and benefits | 821 |
453 |
| Post‑employment benefits | 32 |
18 |
| Share‑based payments | 31 |
68 |
884 |
539 |
3. Employee information
The average monthly number of persons employed by the Group during the year was:
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
number |
number |
|
| By activity: | ||
| Operations | 260 |
229 |
| Sales and marketing | 35 |
30 |
| Administration | 51 |
49 |
346 |
308 |
|
£’000 |
£’000 |
|
| Staff costs (for the above persons) including redundancy costs: | £'000 |
£'000 |
| Wages and salaries | 15,462 |
12,521 |
| Social security costs | 2,537 |
2,096 |
| Other pension costs | 397 |
367 |
| Share‑based payments | 307 |
321 |
18,703 |
15,305 |
4. Finance income
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Bank and other interest | 246 |
264 |
| Foreign exchange gains on financing items | 251 |
— |
| Fair value gains on financial instruments | — |
353 |
| Other | 26 |
— |
523 |
617 |
5. Other finance costs
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Interest payable on bank overdrafts and other loans | 13 |
41 |
| Interest payable on finance leases | 75 |
74 |
| Interest payable on long‑term loans | 5,160 |
4,171 |
| Foreign exchange losses on financing items | 169 |
— |
| Fair value losses on financial instruments | 469 |
— |
| Other | 370 |
— |
6,256 |
4,286 |
6. Operating profit/(loss)
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Operating profit/(loss) is stated after charging: | ||
| Depreciation charge for the year | 17,414 |
14,555 |
| Intangible asset amortisation | 1,120 |
822 |
| Auditors’ remuneration for: | ||
| – fees payable to Company auditor for the audit of Group accounts | 250 |
180 |
| – the auditing of accounts of subsidiaries of the Company | 40 |
43 |
| – services relating to taxation | 246 |
35 |
| – transaction services | 1,440(1) |
— |
| Operating lease payments: | ||
| – property | 13,473 |
12,008 |
| – plant and machinery | 7 |
43 |
| – other | 105 |
129 |
| Operating exceptional items (see below) | 4,716 |
7,733 |
(1) £810,000 of this amount has been charged directly to the share premium account as it related to the issuing of shares.
Exceptional items
Exceptional items comprise:
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
| Operating exceptional items | £’000 |
£’000 |
| Costs in respect of new builds | 685 |
— |
| Transaction‑related expenses | 2,877 |
— |
| Integration costs | 1,430 |
1,956 |
| (Release of provisions)/provisions for onerous leases | (276) |
2,532 |
| Debt restructuring costs | — |
4,179 |
| Profit on sale of property | — |
(934) |
4,716 |
7,733 |
|
| Exceptional finance cost | 2,127 |
— |
The costs in respect of new builds comprise rents, rates and other overhead costs in respect of the Group’s two data centre projects, Powergate and Amsterdam 4. Such costs are classified as exceptional during the build phase. The transaction related expenses arose during the Group’s Initial Public Offering and relate mainly to legal and professional fees. Integration costs, including redundancy costs, were incurred following the acquisitions of Redbus Interhouse plc and Globix Holdings (UK) Limited. The release of provisions for onerous leases relate to a lease over a property in Munich and a property in London. During the year, the estimate of the discounted future amounts payable on these properties was reduced.
In the prior year, the debt restructuring costs include professional fees in respect of investigating, negotiating and arranging additional finance for the Group and early termination fees in respect of the re‑financed facilities. The profit on sale of property relates to a property that was sold for £2,230,000. The property had a carrying value of £1,296,000 on the date of sale.
The exceptional finance costs relates to the write‑off of capitalised loan issue costs in respect of debt that was refinanced during the year.
7. Expenses by nature
| Year ended 31 December 2007 | Year ended 31 December 2006* | ||||||
|---|---|---|---|---|---|---|---|
Adjusted* |
Exceptional |
Total |
Adjusted* |
Exceptional |
Total |
||
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
||
| Property costs | 20,805 |
685 |
21,490 |
16,578 |
2,532 |
19,110 |
|
| Electricity | 16,478 |
— |
16,478 |
12,606 |
— |
12,606 |
|
| Depreciation and amortisation | 18,534 |
— |
18,534 |
15,377 |
— |
15,377 |
|
| Payroll | 19,861 |
609 |
20,470 |
14,968 |
337 |
15,305 |
|
| Other | 17,420 |
3,422 |
20,842 |
13,733 |
4,864 |
18,597 |
|
93,098 |
4,716 |
97,814 |
73,262 |
7,733 |
80,995 |
||
*adjusted for exceptional items.
8. Tax on loss on ordinary activities
Factors affecting the current year charge/(credit) are as follows:
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Loss before tax | (7,758) |
(15,771) |
| At statutory rate of UK corporation tax of 30% | (2,327) |
(4,731) |
| Effect of different tax rates in non‑UK jurisdictions | 14 |
63 |
| Depreciation in excess of capital allowances | 2,717 |
2,892 |
| Items not taken into account for tax purposes and other timing differences | 3,713 |
454 |
| Losses carried forward | (4,051) |
1,319 |
66 |
(3) |
At 31 December 2007 the Group has a net deferred tax asset of approximately £35.1m (2006: £37.0m) primarily relating to unrelieved trading losses. Following the change in the corporation tax rate announced in the 2007 budget, the UK element of the deferred tax asset at 31 December 2007 has been calculated using a tax rate of 28%. Previous periods’ deferred tax assets have been calculated using a UK tax rate of 30%. Part of the deferred tax asset has been used to off‑set deferred tax liabilities arising from claimed capital allowances and on the recognition of the intangible fixed assets relating to customer contracts. Such off‑setting has only been applied when the deferred tax asset and liability arise in the same tax jurisdiction, the amounts are expect to reverse in similar periods and the amounts would be available for off‑set. The gross amounts that have been off‑set are shown below:
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Deferred tax liabilities | (29,901) |
(41,601) |
| Deferred tax assets | 29,901 |
41,601 |
— |
— |
9. Loss per share – basic and diluted
Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of Ordinary shares in issue during the year.
Year ended |
Year ended |
|
|---|---|---|
31 December |
31 December |
|
2007 |
2006** |
|
| Loss attributable to equity holders of the Company (£’000) | (7,824) |
(15,768) |
| Weighted average number of shares in issue (’000) | 167,426 |
154,100 |
| Basic and diluted* loss per share (p) | (4.67) |
(10.23) |
The adjusted loss per share is presented as the Directors consider it provides an additional indication of the underlying performance of the Group. Adjusted loss per share is calculated by adding back the exceptional items (note 6) to the retained loss for the year as shown below:
31 December |
31 December |
|
2007 |
2006** |
|
£’000 |
£’000 |
|
| Loss attributable to equity holders of the Company | (7,824) |
(15,768) |
| Add back exceptional items | 6,843 |
7,733 |
| Tax effect of exceptional items | — |
— |
| Adjusted loss attributable to equity holders of the Company | (981) |
(8,035) |
* The weighted average diluted number of shares is equal to the weighted average number of shares due to the losses in the year.
** The comparative information has been re‑stated following the capital restructure described in note 20.
10. Intangible fixed assets
Goodwill |
|||
arising on |
Customer |
||
consolidation |
contracts |
Total |
|
| Group | £’000 |
£’000 |
£’000 |
| Cost | |||
| At 1 January 2006 | 6,732 |
11,423 |
18,155 |
| Additions | 22,733 |
7,174 |
29,907 |
| At 1 January 2007 | 29,465 |
18,597 |
48,062 |
| Foreign exchange movements | 530 |
345 |
875 |
| At 31 December 2007 | 29,995 |
18,942 |
48,937 |
| Amortisation | |||
| At 1 January 2006 | — |
95 |
95 |
| Charge for the year | — |
822 |
822 |
| At 1 January 2007 | — |
917 |
917 |
| Charge for the year | — |
1,120 |
1,120 |
| Foreign exchange movements | — |
32 |
32 |
| At 31 December 2007 | — |
2,069 |
2,069 |
| Net book value | |||
| At 31 December 2007 | 29,995 |
16,873 |
46,868 |
| At 31 December 2006 | 29,465 |
17,680 |
47,145 |
The intangible assets arising in 2006 relate to the acquisitions of Redbus Interhouse plc and Globix Holdings (UK) Limited, the customer contracts are being amortised over an average period of approximately 17 years.
Impairment test for goodwill
Goodwill is allocated to the Group’s cash generating units (‘CGUs’) identified according to country of operation.
A segmental‑level summary of goodwill allocation is presented below:
| Year ended 31 December 2007 | Year ended 31 December 2006* | ||||||
|---|---|---|---|---|---|---|---|
UK and |
Rest of |
UK and |
Rest of |
||||
Ireland |
Europe |
Total |
Ireland |
Europe |
Total |
||
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
||
| Goodwill | 23,889 |
6,106 |
29,995 |
23,894 |
5,571 |
29,465 |
|
The recoverable amount of a CGU is determined based on value‑in‑use calculations. These calculations use pre‑tax cash flow projections based on financial budgets approved by management covering a three‑year period. Cash flows beyond the three‑year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long‑term average growth rate for the country in which the CGU operates.
The key assumptions used for value‑in‑use calculations are as follows:
UK and |
Rest of |
|
Ireland |
Europe |
|
| Growth rate | 3% |
3% |
| Discount rate | 10% |
10% |
These assumptions have been used for the analysis of each CGU.
The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre‑tax and reflect specific risks relating to the relevant segments.
11. Property, plant and equipment
Leasehold |
Plant and |
Office |
||
improvements |
machinery |
equipment |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
|
| Cost | ||||
| At 1 January 2006 | 60,820 |
37,942 |
3,642 |
102,404 |
| On acquisition | 10,791 |
52,773 |
1,343 |
64,907 |
| Exchange differences | (175) |
(1,391) |
(52) |
(1,618) |
| Additions | 2,487 |
3,140 |
953 |
6,580 |
| Disposals | (1,318) |
(149) |
— |
(1,467) |
| At 1 January 2007 | 72,605 |
92,315 |
5,886 |
170,806 |
| Exchange differences | 7,682 |
1,399 |
259 |
9,340 |
| Additions | 13,378 |
2,304 |
1,248 |
16,930 |
| Disposals | (9) |
— |
(6) |
(15) |
| At 31 December 2007 | 93,656 |
96,018 |
7,387 |
197,061 |
| Depreciation | ||||
| At 1 January 2006 | 33,099 |
21,901 |
3,154 |
58,154 |
| Exchange differences | 563 |
(1,205) |
(38) |
(680) |
| Charge for the year | 4,109 |
9,929 |
517 |
14,555 |
| Disposals | 121 |
(143) |
— |
(22) |
| At 1 January 2007 | 37,892 |
30,482 |
3,633 |
72,007 |
| Exchange differences | 3,759 |
733 |
147 |
4,639 |
| Charge for the year | 12,773 |
3,509 |
1,132 |
17,414 |
| Disposals | (1) |
— |
(6) |
(7) |
| At 31 December 2007 | 54,423 |
34,724 |
4,906 |
94,053 |
| Net book value | ||||
| At 31 December 2007 | 39,233 |
61,294 |
2,481 |
103,008 |
| At 1 January 2007 | 34,713 |
61,833 |
2,253 |
98,799 |
| At 1 January 2006 | 27,721 |
16,041 |
488 |
44,250 |
The net book value of assets held under finance lease at 31 December 2007 is £1,014,000 (2006: £1,275,000).
The Company does not hold any property, plant and equipment.
12. Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost.
31 December |
31 December |
|
2007 |
2006 |
|
| Company | £’000 |
£’000 |
| At 1 January | 58,496 |
58,175 |
| Additions | 307 |
321 |
| At 31 December | 58,803 |
58,496 |
The additions relate to capitalised share‑based payment expenses in accordance with IFRIC 11. The comparative information has been restated following the issue of this interpretation.
The subsidiary undertakings of the Company and their principal activities are set out below:
Proportion of |
||||
nominal value |
||||
Country of |
Description of |
of shares held |
||
| Name of undertaking | incorporation |
shares held |
% |
Principal activity |
| Inhoco 3213 Limited | GB |
‘A’ and ‘B’ |
100 |
Intermediate holding company |
| TelecityGroup Investments Limited | GB |
‘A’ and ‘B’ |
100 |
Intermediate holding company |
| TelecityGroup International Limited | GB |
Ordinary |
100 |
Intermediate holding company |
| TelecityGroup Holdings Limited | GB |
Ordinary |
100 |
Intermediate holding company |
| TeleCity Limited | GB |
Ordinary |
100 |
Intermediate holding company |
| TeleCity UK Limited | GB |
Ordinary and Preference |
100 |
Intermediate holding company |
| TeleCity Group Scandinavia AB | Sweden |
Ordinary |
100 |
Internet infrastructure |
| TeleCity Group Ireland Limited | Ireland |
Ordinary |
100 |
Internet infrastructure |
| TelecityGroup UK Limited | GB |
Ordinary |
100 |
Internet infrastructure |
| TelecityGroup France S.A. | France |
Ordinary |
100 |
Internet infrastructure |
| TelecityGroup Italia S.p.A. | Italy |
Ordinary |
100 |
Internet infrastructure |
| TelecityGroup Germany GmbH | Germany |
Ordinary |
100 |
Internet infrastructure |
| TelecityGroup Netherlands B.V. | Netherlands |
Ordinary |
100 |
Internet infrastructure |
| TelecityGroup Spain S.A. | Spain |
Ordinary |
100 |
Internet infrastructure |
| TeleCity Finance Limited | GB |
Ordinary |
100 |
Non‑trading |
| TeleCity Investments Limited | GB |
Ordinary |
100 |
Non‑trading |
| TeleCity Holdings Limited | GB |
Ordinary |
100 |
Non‑trading |
| PLC Properties LLP | USA |
Ordinary |
100 |
Non‑trading |
| TC HSA Limited | GB |
Ordinary |
100 |
Non‑trading |
| Amercoeur Anthracite Limited | GB |
Ordinary |
100 |
Non‑trading |
| TC MNR Limited | GB |
Ordinary |
100 |
Non‑trading |
| TC BGM Limited | GB |
Ordinary |
100 |
Non‑trading |
| Globix Holdings (UK) Limited | GB |
Ordinary |
100 |
Non‑trading |
| Globix Limited | GB |
Ordinary |
100 |
Non‑trading |
| GLX Leasing Limited | GB |
Ordinary |
100 |
Non‑trading |
| Interhouse Limited | GB |
Ordinary |
100 |
Non‑trading |
Other than Inhoco 3213 Limited, which is owned directly by Telecity Group plc, these companies are owned by intermediate holding companies.
13. Derivative financial instruments
Interest rate swaps
The Group uses interest rate swaps to manage its exposure to interest rate movements on its bank borrowings. At the year
end the Group had the following contracts outstanding:
| Nominal value | ||
| £’000 | Maturity date |
|
| 53,000 | 30 September 2009 |
|
| 4,000 | 30 September 2010 |
|
| 2,950 | 30 September 2010
|
The fixed interest payments are at an average rate of 5.24% and have floating rate interest receipts at LIBOR. The nominal value of the interest rate swaps exceed the year end borrowings due to the higher than expected proportion of primary, when compared to secondary, proceeds from the Initial Public Offering. Due to the capital projects that the Group has planned it is expected that the borrowings will exceed the nominal value of the interest rate swaps in the near future.
The fair value of the interest rate swaps is shown below. The fair value is based on the market values of equivalent instruments at the balance sheet date. The interest rate swaps’ fair value movement was recorded in the income statement (note 5).
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Interest rate swaps: current | (39) |
141 |
| Interest rate swaps: non‑current | (77) |
212 |
(116) |
353 |
14. Trade and other receivables
Group |
Company |
||||
31 December |
31 December |
31 December |
31 December |
||
2007 |
2006 |
2007 |
2006 |
||
£’000 |
£’000 |
£’000 |
£’000 |
||
| Current | |||||
| Trade receivables – gross | 16,697 |
21,720 |
— |
— |
|
| Impairments | (1,962) |
(3,240) |
— |
— |
|
| Trade receivables – net | 14,735 |
18,480 |
— |
— |
|
| Amounts due from fellow Group companies | — |
— |
118,858 |
44,492 |
|
| Other receivables | 3,053 |
250 |
— |
— |
|
| Prepayments and accrued income | 18,951 |
6,027 |
— |
— |
|
36,739 |
24,757 |
118,858 |
44,492 |
||
| Non‑current | |||||
| Rental deposits | 2,992 |
3,731 |
— |
— |
|
The Directors consider the carrying values of these assets to approximate to their fair values due to their short maturity period.
Included within trade receivables is an amount of £10,063,000 (2006: £11,958,000) in respect of amounts which are past their due date. These relate to a number of independent customers for whom there is considered to be little risk of default and therefore such amounts have not been impaired. The ageing analysis of these amounts is shown below:
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Up to three months | 7,684 |
8,022 |
| Three to six months | 2,053 |
2,713 |
| More than six months | 326 |
1,223 |
10,063 |
11,958 |
The impairment balance above relates to receivables with a gross value of £1,965,000 (2006: £3,561,000). The individually impaired receivables mainly relate to customers, which are in unexpectedly difficult economic situations. Any impairment is assessed on a customer by customer basis following a detailed review of the particular circumstances. To the extent they have not been specifically provided against, the trade debtors are considered to be of sound credit rating. The ageing analysis of these amounts is shown below:
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Up to three months | 541 |
684 |
| Three to six months | 850 |
1,601 |
| More than six months | 574 |
1,276 |
1,965 |
3,561 |
Movements on the Group provision for impairment of trade receivables are as follows:
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| At 1 January | 3,240 |
2,945 |
| Increase in provision for receivables impairment | 1,760 |
575 |
| Receivables written off during the year as uncollectible | (3,045) |
(293) |
| Unused amounts reversed | (48) |
— |
| Foreign exchange movement | 55 |
13 |
| At 31 December | 1,962 |
3,240 |
The Group holds deposits of £2,712,000 as security against the trade receivables.
The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Sterling | 19,899 |
20,576 |
| Euro | 18,571 |
6,803 |
| Swedish Krona | 1,261 |
1,109 |
39,731 |
28,488 |
15. Cash and cash equivalents
31 December |
31 December |
|
2007 |
2006 |
|
£’000 |
£’000 |
|
| Cash at bank and on hand | 21,961 |
10,157 |
| Short‑term bank deposits | 15,000 |
— |
36,961 |
10,157 |
Short‑term bank deposits represent a one‑month bank deposit. The Directors consider the carrying value of these assets to approximate to their fair value due to their short maturity periods and the interest rates that they earn.
16. Trade and other payables
Group |
Company |
||||
31 December |
31 December |
31 December |
31 December |
||
2007</ | |||||