FFastFill (LSE: FFA), the leading provider of Software as a Service (“SaaS”) solutions to the global derivatives community is pleased to announce robust final results for the financial year ended 31 March 2009.

Financial Highlights

Operational Highlights

Commenting on the results Keith Todd, Executive Chairman of FFastFill said:

“I am pleased to announce these results which show a robust performance from FFastFill in spite of what has been a very difficult set of market conditions. We continue to navigate these challenges, moving now from a phase of ‘development’ into a period more focused on exploiting our extensive product suite and resources to further strengthen our sales pipeline and profitability.”

“Our business has never been as strong competitively as it is today. As I said at the time of our interim results in November, the pace of growth in our sector and our markets remains difficult to predict in the short term as the consequences of the financial crisis unwind. However, in spite of this recent market turbulence, the Board remains confident that the medium and long term fundamentals of our target markets are strong and that our company is well placed to continue to grow its market share.”

For further information please contact:

FFastFill plc +44 (0)20 7665 8900
Keith Todd, Executive Chairman
Hamish Purdey, Chief Executive Officer

Financial Dynamics +44 (0)20 7831 3113
James Melville-Ross / Matt Dixon / Emma Appleton

KBC Peel Hunt +44 (0)20 7418 8900
Jonathan Marren / Richard Kauffer

Chairman’s Statement

Introduction

I am pleased to be able to report a robust performance for the year ended 31 March 2009, achieved in spite of a very difficult market environment. We have recently reached the end of what I have termed our ‘development phase’, where we established our SaaS and STP credentials and laid the foundation for our multi-asset trading technologies. We are now prioritising attention on exploiting these assets and to deploying our resources in a way that will further strengthen our sales pipeline and profitability.

Market

The last twelve months has seen stability and confidence in very short supply within the financial services industry, which has led in some cases to some of our large customers deferring or delaying their business strategies and associated purchasing decisions.

However, this turbulence has also led to opportunities for our company and we are seeing early signs of the emergence of more boutique trading operations moving out from the big banks. US regulators are also leading a push for the industry to switch from “Over-The-Counter” (“OTC”) to centrally cleared trading. If the regulators are successful in achieving this change, this will create a fundamental shift in the shape of the financial services industry and lead to an increase in the volume of exchange cleared and exchange traded securities. We are also seeing an emergence in demand for multi-asset trading solutions as traders and brokers look to differentiate their offerings and improve profitability: all of which fits well with our strategy.

Financial Overview

We achieved record full year revenue of £14.4m (FY 07/08: £11.4m), a growth of 27% during the year. Organic growth at 18.8%, while strong compared to our competitors, was lower than the previous year’s organic growth of 30% due to the turbulent market conditions that resulted in some delay in contract signings. However, several of these delayed contracts have now been signed and will contribute to income in the current financial year. SaaS revenue was up by 42% during the period to £9.1m (FY 07/08: £6.4m) and now accounts for 63.6% of our total revenue.

EBITDA for the period was up 13% at £1.7m (FY 07/08: £1.5m) and we delivered an operating profit of £0.3m (FY 07/08: £0.2m).

The full benefits of the £1.5m per annum cost reduction programme that we announced in March will be realised in the second half of this financial year. The savings will offset some cost increases necessary to support our Asia Pacific expansion as well as improve underlying profitability.

The order book for the next twelve months now stands at £14.2m (FY 07/08: £11.5m), representing a growth of 23% over the prior year. This order book figure includes a purely SaaS order book of £10.3m (FY07/08: £7.3m), itself an improvement of 41% over the previous financial year. Cash at the year end stood at £2.2m (FY 07/08: £2.4m).

Asia Pacific Expansion

During the year we embarked on our Asia Pacific expansion strategy. As part of this strategy, in July 2008 we acquired Exchange Technology Pty Limited in Australia, bringing us an experienced middle office development team, regional exchange connectivity and 12 customers in the region. In November, we announced a Placing to raise approximately £1.0m to fund the next stage of our plans in the region.

We have also invested in our technology infrastructure in the region and plan to establish a Singapore business development base in August. Securing the global middle office business in February of a Tier 1 financial institution in this region was also a significant milestone in our efforts to expand into Asia Pacific and an endorsement of our middle office strategy.

Management Team Changes

I was delighted to announce the appointment of Hamish Purdey as Chief Executive Officer in April 2009 and to welcome him to the Board of Directors. Hamish has worked at FFastFill for the past eight years in various roles in the UK, US and Asia and has now assumed full responsibility for the day-to-day running of the Group. At the same time, we announced that Nigel Hartnell would become a Non-Executive Director and that Dr John Elmore would retire from his role as Chief Technology Officer. I would like to express my sincere thanks to them both for the enormous contribution they have made to the Group over the years in their executive roles.

Our People

I would like to take this opportunity to thank our staff for their commitment and dedication during the year. Without them, FFastFill could not have achieved the financial performance it has during the year. We have a highly committed and motivated team around the globe, all of whom share a single-minded determination to achieve success for the Company.

Distributable Reserves
It is the Board’s intention, at the Annual General Meeting to be held in July, to seek Shareholder approval for the cancellation of the Company’s Share Premium Account. The effect of this cancellation, were it to be approved, would be to create distributable reserves in the Company which would give it the flexibility to pay dividends or to purchase its own shares in the market to be held in treasury or cancelled, should this be considered to be in the best interests of the Company and its shareholders.

Strategy and Outlook

We have spent the last six years building a business which is capable of delivering long term shareholder value. These characteristics are very much in evidence today in our business model, especially in relation to our SaaS strategy, which provides a solid stream of recurring revenue, a highly scalable business and a model which can generate higher margins over the longer term. The model is now further strengthened by the breadth of our offering, both in terms of the multiple asset class functionality that we are able to offer and our ability to provide solutions from the back to the front office. Having a modern flexible technology platform in the current climate is critical in terms of maintaining and winning customers.

In the coming year we will begin to gradually shift our attention and our resources away from technology development to further strengthening and developing our sales pipeline. We will also continue our investment, building our infrastructure in Asia and continuing to develop business for ourselves in that region. The resilience of our platform and our technology offering will remain important, and we will focus on further developing our global middle office software offering through a convergence of ET Seals and FFastFill’s existing SaaS offering and also on developing a global multi-asset SaaS platform for the back office.

The Board believes the business has never been as strong competitively as it is today. As we said at the time of our interim results in November, the pace of growth in our sector and our markets remains difficult to predict in the short term as the consequences of the financial crisis unwind. However, in spite of this recent market turbulence, the Board remains confident that the medium and long term fundamentals of our target markets are strong and that our company is well placed to continue to grow its market share.

Keith Todd
Executive Chairman

Chief Executive Officer’s Review

Introduction

I am delighted to present this, my first statement as FFastFill Chief Executive Officer. 2008/09 has been a milestone year in the development of our company and I am energised by the task ahead as we drive forward from what we have termed our ‘development phase’ into a phase that will see us exploit our assets in order to maximise our growth and profitability.

Contract Wins during the Year

During the financial year, FFastFill continued to win a series of new client mandates and renew existing business. This was largely due to the success and leverage of the SaaS model and was in spite of the tough economic circumstances. We have also invested heavily in the development of the platform and now offer a true front through middle to back office trading platform, which facilitates improved risk management and lower technology costs.

Wins in the year in the front office business included converting MF Global FX technology to our 21st century New Generation (NG) platform, also signing Mint Equities, Mizuho, ICAP and re-signing Futures Betting after their acquisition by London Capital Group. The middle office saw Skandinaviska Enskilda Banken AB (“SEB”) implement our SaaS solution as well as conversions from the previous software platform, Viewpoint. The Eclipse suite of products in the back office continues to thrive. Renewal licences during the period include Banca IMI and AMT Futures. We were also successful during the year in winning and implementing NYSE Euronext Liffe’s eFills system within our data centres.

Offerings – Developing our End-to-End offer

The product offerings from front through middle and back continue to progress in terms of functionality and scalability. The combination of the NG platform and the Eclipse back office platform lays a solid groundwork for future growth using best of breed technology in both areas to deliver customer requirements.

Front Office
In the front office, we continue to lead as a SaaS-delivered, readily deployable multi asset class trading and order management system. The addition of FX and cash bonds to the platform, as well as the continued development of futures trading functionality and scalability have further strengthened the SaaS platform. We continue to lead in London Metals Exchange (“LME”) exchange connectivity with one third of Category 1 & 2 members using our services. The significant functional requirements of the users of the LME raise the barrier to entry for new vendors. In addition, we have enhanced NG to run as a truly global SaaS system raising the prospect of local execution with centralised order book and risk management for global firms.

Middle Office
The development of the SEALS NG platform through FY 08/9 and into FY 09/10 is an important development of the period. The Company is very well placed to compete for and win business in the global middle office market; a position further enhanced by the ‘go live’ during summer 2008 of the NG-based platform derived from the previous Viewpoint software and the integration of the Exchange Technology acquisition. The SEALS workflow interface will be released during July 2009 and the Asian gateways will follow.

Back Office
The back office has continued to grow in terms of market coverage and functionality. The year has seen significant development in additional asset classes including spread betting, Credit Default Swaps (“CDS”) and in the emerging power/freight exchanges IDEX, IMAREX and Nordpool. Enhanced regulatory reporting requirements were also key deliverables during the period. The migration of Eclipse to Linux also represents a key milestone for the year.

Risk
The integration of our RiskPro offerings with front, middle and back office platforms offering real time P&L and intraday SPAN margin calculations has been a significant development during the year. Being able to take trade information in real or near real time from either the front, middle or back office and then perform risk management calculations on this data is a unique selling point for our RiskPro system. Eclipse Risk was released as a component piece of this and is providing the final piece of the front through back integration.

Partnerships

FFastFill has worked hard during 2008/09 on strengthening the partnerships we have with our key suppliers. We have achieved and maintained Microsoft Gold Partnership during the year. Our front and middle office technology is based on the Microsoft suite of operating system and database technologies and we are very pleased with the scaling and the capacity we are achieving especially after the implementation of Windows 64 bit technology. We also continue to work with Citrix on our SaaS deployment technologies and are expanding our relationship with Object Trading Pty Ltd in the provision of data and trade execution connectivity in the Asia Pacific region.

We have also reconfirmed our Oracle Partner status and are working with Oracle to continue to leverage that relationship. During the year we have moved the back office platform to Oracle on Intel based Linux and this has provided increased levels of scalability and cost efficiency for FFastFill and improved service delivery for our customers.

During the period we have also worked closely with Progress Apama to ensure best of breed algorithmic functionality. This year we have extended our relationship with Progress Apama to host their technology and to offer it to customers on a SaaS-delivered basis.

Service and Quality

We have continued to innovate in our service management methodologies and technologies. One of the core benefits of the SaaS model is that we have been able to build a management and monitoring infrastructure which allows us to monitor the service delivery from the network all the way into the application. This allows us to be significantly more responsive and to proactively diagnose issues as and when they arise. We leverage the Microsoft suite of monitoring tools and are migrating to the SCOM platform during 2009.

We continue to succeed in providing cost efficient solutions to customers, maximising return from our data centre investments. We have also refined our analysis of the use of power within our data centres, and the use of blades and 64 bit Windows has ensured we can achieve more with the power we have today. In addition, we now understand down to the level of specific processes which services are consuming the most power and this will be crucial to the continued cost-effectiveness of FFastFill’s services in the future.

The infrastructure platform is delivering millisecond sensitive trading and risk management as well as heavy duty computing power to the overnight processes in the back office. We are continually optimising the way in which services are delivered and testing and re-testing the resilience and failover capabilities within the solution. The addition of the Asian infrastructure, due to go live in Q2 2009, will further extend the global service platform.

Internal Process

Alongside customer infrastructure we have invested in internal processes during the year. We have implemented an integrated financial and customer management system as well as moved to a VOIP enabled phone network. Both will contribute to the enhanced productivity of staff and increased efficiency.

Operational Priorities

Priorities for FY 09/10 include the continued integration of the SEALS middle office functionality within the NG architecture as well as final deployment of the remainder of the Asian solution alongside continued efficiency and optimisation of the service delivery platform. We will also be focused on developing a back office global multi-asset SaaS platform.

I look forward with energy to the year ahead and to continuing to drive this business forward as we enter a new phase in our market place.

Hamish Purdey
Chief Executive Officer

Financial Review

Full year revenue grew 27% to £14.4m (FY 07/08: £11.4m) including SaaS revenues of £9.1m (FY 07/08: £6.4m), a rise of 42%.

The pro-forma organic growth of the FFastFill business, excluding the effect of acquisitions, was 18.8%. Whilst strong compared to our competitors, this figure was lower than the previous year’s organic growth of 30% due to the turbulent market conditions that resulted in some delay in contract signings. Several of these contracts have now been signed and will contribute to revenue in the current financial year. This year’s double-digit revenue growth has been achieved by increasing the average income generated from our top 20 customers to £0.561m (FY 07/08: £0.438m), a growth of 28%, reflecting our efforts to increase the numbers of services we are providing to our clients and winning new business.

The order book for the next twelve months now stands at £14.2m (FY 07/08: £11.5m). Within this, our SaaS order book has grown by 41% to £10.3m. (FY 07/08: £7.3m).

The increase in revenue and improvement in total gross margin, offset by operating cost increases related to our investment in expansion, led to an EBITDA of £1.7m compared to £1.5m in FY 07/08. Operating profit of £0.3m (FY 07/08: £0.2m) was achieved during the year.

In April we announced some cost reduction measures that resulted from the end of what we termed our ‘development phase’ and the advances that have been made in software and operational processes over the past few years have delivered productivity gains. These savings have been achieved chiefly through some staff reductions and through the consolidation of office buildings and data centre operations. The savings are expected to total approximately £1.5m per annum when fully delivered and it is expected that the full benefits will be realised in the second half of this current financial year. The savings will offset some cost increases necessary to support our Asia Pacific expansion as well as improve underlying profitability. As mentioned in our Trading Update of 2 March 2009, included in the FY 08/09 accounts is an exceptional item of £0.6m to facilitate these cost reductions.

In the period, the group’s total operating expenses grew by £3.0m from £11.1m in 2008 to £14.1m. This increase was due to:

Primarily through the increase in revenue, third party license fees have increased by £0.3m.

               The effect of acquisitions (£1.2m)

Exchange Systems Technologies Limited (now known as FFastFill Post-trade Processing, or “PTP”) was only included in the accounts for FY 08/09 for nine months starting from 1 July 2007). Exchange Technology Pty Limited was included in the accounts for FY 08/09from 1 July 2008.

This includes the implementation of improved communication links to some exchanges and linking our US and UK data centres with two transatlantic links. This will improve customers’ trading experience and as a result help accelerate future growth. We have also increased our Asia Pacific sales coverage and software test facilities.

A significant part of our development team is based in Prague and the exchange rate £: CZ Koruna has moved on average between the periods by 18% (FY 07/08: 38 Koruna per £ / FY 08/09: 31 Koruna per £). This has increased the operating expense charge to the income statement by £0.16m.

Third party costs increased by £0.4m in the period. This includes London infrastructure cost increases of £0.3m owing to London data centre cost increases. Our previous contracts had protected us through the last financial year from the substantial rise in London costs.

Executive directors’ salaries had been waived in the first half year. These are now being paid in line with executive directors’ contracts. In addition there was an increased group accrual during the period for share-based payments and additional investment in investor relations activity.

Amortization and depreciation at £1.4m for the period (FY 07/08: £1.3m) represents an increase of £0.1m on the prior year.

Overall the Company reported a Loss before Tax of £0.4m for the period (FY 07/08: Loss before Tax £0.1m) includes exceptional costs related to the cost reduction programme of £0.64m.

The Company reported a Loss after Tax for the period of £0.4m (FY 07/08: Profit after Tax £0.92m). In FY 07/08 we had the benefit of including £1.0m of deferred tax asset which has been included in the income statement. In addition the Company has a further £18.0m of tax losses that are still regarded as a contingent asset.

Cash inflow from operations was £0.9m (FY 07/08: cash inflow £2.2m). A customer payment of £0.7m was received on the 1 April 2009 and was not included within the cash inflow for the year ended 31 March 2009. This, and some changes to customer payment cycles, accounted substantially for the decrease in cash inflow from operations when compared to last year.

Capital expenditure on tangible fixed assets was £0.5m (FY 07/08: £0.6m), namely for equipment required for customer signings during the financial year and the replacement of some core infrastructure equipment. In addition, the Company invested £1.7m (FY 07/08: £1.0m) in product development in the Trade Execution Services, PTP and middle office areas.

During the year we embarked on our Asia Pacific expansion strategy and as part of our strategy in July we acquired Exchange Technology Pty Limited in Australia, bringing us an experienced middle office development team, regional exchange connectivity and 12 customers in the region for £1.2m. This was followed in November, with the announcement of a Placing to raise approximately £1.0m to fund our plans in this region in particular to support our infrastructure role out. Cash at 31 March 2009 was £2.2m (FY 07/08: £2.4m).

The Board does not intend to pay a dividend. However it is the Board’s intention, at the Annual General Meeting to be held in July, to seek Shareholder approval for the cancellation of the Company’s Share Premium Account. The effect of this cancellation, were it to be approved, would be to create distributable reserves in the Company which would give it the flexibility to pay dividends or to purchase its own shares in the market to be held in treasury or cancelled, should this be considered to be in the best interests of the Company and its shareholders.

CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2009

CONSOLIDATED BALANCE SHEET as at 31 March 2009

COMPANY BALANCE SHEET as at 31 March 2009

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY – attributable to the shareholders of the company

COMPANY STATEMENT OF CHANGES IN EQUITY – attributable to the shareholders of the company

The company has taken advantage of s230 Companies Act 1985 in not publishing its own income statement.

The loss for the year was £111,000 (2008: Loss £2,868,000).

CASH FLOW STATEMENTS for the year ended 31 March 2009

NOTES TO THE CASH FLOW STATEMENTS for the year ended 31 March 2009

1. Reconciliation of profit/(loss) after taxation to net cash flows from operating activities

FFastFill Plc is incorporated and domiciled in the United Kingdom under the Companies Act 1985 and is listed on the AIM market.

These accounts are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates. Foreign operations are included in accordance with the policies set out in note 2.

At the date of issue of these accounts the following Standards and interpretations which have not been applied in these accounts were in issue but not yet effective:-

IFRS 1 Revised IFRS 1 First-time adoption of IFRS
IFRS 2 Share based payments – Amendment, vesting conditions and cancellations
IFRS 3 Business Combinations – Comprehensive revision on applying the acquisition method
IFRS 7 Financial Instruments: Disclosures – Amendment; Reclassification of Financial Assets
IFRS 8 Operating segments
IAS 1 Presentation of Financial Statements – comprehensive revision including requiring a statement of comprehensive income
IAS 23 Borrowing costs – Comprehensive revision to prohibit immediate expensing
IAS 27 Consolidated and Separate Financial Statements – Amendments arising from IFRS 3
IAS 27 Consolidated and Separate Financial Statements – Amendment, cost of an investment in a subsidiary, jointly controlled entity or associate
IAS 28 Investment in Associates – Consequential amendments arising from IFRS 3
IAS 39 Financial Instruments: Recognition and Measurement – Amendment; Reclassification of Financial Assets
IAS 39 Financial Instruments: Recognition and Measurement – Amendment; Eligible hedged items

The directors anticipate that the adoption of these Standards and Interpretations in future years will have no material impact on the accounts of the Group.

2 Accounting policies

Basis of preparation

The accounts have been prepared in accordance with International Financial Reporting Standards, adopted by the European Union (“IFRS”).

The accounts have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Going concern
During the year the group made a loss of £0.407 million (2008: profit of £0.924 million) and had net assets at 31 March 2009 of £11.5 million (2008: £10.4 million).

As a result of winning a number of significant new customers during the year, the group’s order book of recurring and run-rate revenue at the end of March 2009 was over £14.2 million. This has already increased further in the period since the end of the year and the group has a strong pipeline of further business from both current and new customers.

On this basis, the directors have prepared the accounts on the going concern basis. The accounts do not include any adjustments that would arise if this basis were inappropriate.

NOTES TO THE ACCOUNTS for the year ended 31 March 2009

Accounting policies (continued)

Basis of consolidation

The consolidated accounts incorporate the accounts of the company and entities controlled by the company (its subsidiaries) made up to 31 March each year. Control is achieved where the company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the accounts of subsidiaries to bring the accounting policies used into line with those by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations
The acquisition of subsidiaries is accounted for using the purchase method, with the exception of the original business combination involving FFastFill Plc and FFastFill Europe Limited which was, accounted for using the pooling of interests method. The cost of the acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business combinations are recognised at their fair value at the acquisition date. The group has taken advantage of the transitional exemption in IFRS 3 from restating goodwill on acquisitions prior to 1 April 2005.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. The group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might be impaired.

Goodwill is allocated to cash generating units that are expected to benefit from the business combination in which the goodwill arose, for the purpose of impairment testing.

The recoverable amount of the cash generating unit is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating unit. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following five years based on an estimated growth rate which does not exceed the average long-term growth rate for the relevant markets.

The rate used to discount the forecast cash flows from the cash generating unit is 2.5%.

Property, plant and equipment
Property, plant and equipment are recognised initially at cost. Depreciation is provided on cost in equal annual instalments over the estimated useful lives of the assets concerned. The following annual rates are used.

Computer hardware - 33%
Office equipment - 25%
Short leasehold improvements - 33%
Computer software - 33%

NOTES TO THE ACCOUNTS for the year ended 31 March 2009 (continued)

Accounting policies (continued)

Investments

Investments in subsidiaries are stated at cost less provision for impairment.

Internally generated intangible assets – software development expenditure
Costs associated with maintaining computer software are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognised as intangible assets when the following criteria are met:

Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. Research expenditure is expensed as incurred.

Developed software development expenditure is stated at cost less accumulated amortisation and impairment losses. The expenditure capitalised includes the cost of materials and direct labour. Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of the products concerned.

The amortisation period for development costs incurred on the group’s development is five years.

Impairment of assets (excluding goodwill)
At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

NOTES TO THE ACCOUNTS for the year ended 31 March 2009 (continued)

Accounting policies (continued)

Deferred taxation
Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Temporary differences are differences between the group’s taxable profits and its results as stated in the financial statements.

Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recoverable against suitable taxable profits in the future. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

The company recognises deferred tax in respect of the profits of overseas subsidiaries except where the timing of the receipt of these profits is controlled by group and it is not probable that the profits will be distributed in the foreseeable future.

Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease.

Foreign currency translation
The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pound sterling, which is the functional currency of the company, and the presentation currency for the consolidated financial statements.

In preparing the accounts of each company, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rate of exchange prevailing on the date of transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. 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 settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss 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.

For the purpose of presenting consolidated accounts, the assets and liabilities of the group’s foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is 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, except goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRSs as sterling denominated assets and liabilities.

Revenue
Revenue, which excludes value added tax, represents the value of goods and services supplied. Where income relates to future services or there are associated ongoing costs the income is spread over the life of the provision of the service. All other revenue is recognised on delivery.

Share-based payments
The group operates two share options schemes; the Enterprise Management Incentive Scheme and the 2003 Share Option Scheme (HM Revenue & Customs unapproved). The fair value of options is recognised as an employee benefit expense with a corresponding increase in reserves over the vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Share option and warrants granted prior to 7 November 2002 and unvested at the date of transition to IFRS have been excluded from the share-based payment calculation, as permitted by IFRS 2 Share-based payment.

Research and development tax credits
Research and development tax credits are recognised when receipt is virtually certain.

Exceptional items
Items that are material in size, unusual and non-recurring in nature are presented as exceptional items in the income statement. The directors are of opinion that the separate recording of non-recurring costs provides helpful information about the group’s underlying performance.

3 Critical accounting judgements and key sources of estimation uncertainty

The preparation of accounts 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 revenues and expenses during the reported period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. The key sources of estimation uncertainty at the balance sheet date derives from management assumptions in relation to the capitalisation and amortisation of internally generated software assets, revenue recognition, goodwill impairment reviews and share-based payments. The accounting policies in relation to these items are disclosed in note 2 above.

4 Financial information

The financial information set out in this statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 March 2008, prepared under IFRS as adopted by the European Union have been delivered to the Registrar of Companies and carry an audit report that is unqualified and did not contain any statement under s237(2) of (3) of the Companies Act 1985. Statutory accounts for the year ended 31 March 2009 have been audited and will be delivered to the Registrar of Companies following their publication.

5 Basic earnings per share and fully diluted earnings per share

Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders for each year amounting to £407,000 (2008: profit £924,000) for the year ended 31 March 2009 by 383,998,302 (2008: 350,698,541), being the weighted average number of ordinary shares in issue during each year.

Diluted earnings per share share

Share options were non-dilutive for the year ended 31 March 2009 as the group incurred a loss.

6 Dividend
The directors are not declaring a dividend.