19 June 2009 – Final audited results for the year ended 31 December 2008

1.2 Basis of consolidation

The consolidated financial statements incorporate the results of the parent company and each of its subsidiaries for the financial year ended 31 December 2008. Subsidiaries are entities controlled by the Group. Control is deemed to exist when the Group has the power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries are included in the consolidated financial statements from the date the control commences until the date that control ceases.

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. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination 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.

Consolidation of the subsidiary company accounts within the Group is done on a line by line basis. The accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by Group. Intra-group balances and transactions are eliminated on consolidation.

Reserves attributable to the minority interest are presented separately.

1.3 Foreign currency translation

a) Functional and presentation currency

Items included in the financial statement of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in UK Pounds, which is the Company’s functional and Group’s presentation currency.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of such transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

c) 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.

d) Group companies

The results and financial position of Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

i) assets and liabilities are translated at the closing rate at the date of the balance sheet;

ii) income and expenses are translated at the average exchange rate over the period; and

iii) all resulting exchange differences are recognised as a separate component of equity (foreign currency translation reserve (FCTR)).

1.4 Property, plant and equipment

Property, plant and equipment (PPE) is stated at cost less accumulated depreciation. Cost comprises the purchase price of property, plant and equipment together with any incidental costs of acquisition.

Subsequent costs are included in the asset’s carrying value or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All repairs and maintenance expenditure is charged to the income statement as incurred.

Depreciation on PPE is calculated to write their cost down to their residual values over their remaining useful economic lives by annual equal instalments, as follows:

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within administrative expenses in the income statement.

1.5 Intangible assets

a) 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 included in intangible assets. Goodwill is tested annually for impairment by reference to the relevant cash-generating units (CGU’s) and is 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.

b) Computer software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their useful economic lives estimated at 3 years.

c) Customer contracts and relationships

In accordance with IFRS 3, “Business Combinations”, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects a valuation at the acquisition date of the future economic benefits embodied in the asset that are expected to flow to the Group.

Intangible assets identified at acquisition date for the nxt:MOVE Corporation, Andrew Irving Associates Limited, Report International Limited and eq group Limited acquisitions related to customer contracts and relationships. Customer contracts and relationships acquired through a business combination are deemed to have a finite life, being either the contracted period (1 to 18 months), or an estimate of the tenure of the relationship at acquisition date (up to 8 years depending on nature).

The fair value attributed at acquisition date is amortised on a straight line basis over the finite life to which the value is attributed.

The Group has elected not to restate business combinations that occurred prior to 1 January 2006, the date of transition to IFRS, and accordingly, no customer contracts and relationships have been recognised in relation to business combinations prior to transition.

d) Development expenditure

Development expenditure on an individual project is recognised as an intangible asset only when the Group can demonstrate the technical feasibility of completing the project so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during development. Following initial recognition of development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised on a straight-line basis over the period of expected future benefit. During the period of development, the asset is tested annually for impairment.

1.6 Impairment of non-financial assets

Assets that have an indefinite useful life, for example, goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

1.7 Financial assets

The Group only has one category of financial assets, loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group’s loans and receivables comprise “trade and other receivables” and “cash and cash equivalents” in the balance sheet.

Loans and receivables are carried at amortised cost using the effective interest rate method.

The Group assesses, at each balance sheet date, whether there is objective evidence that a financial asset or a group of financial assets is impaired.

1.8 Derivative financial instruments

The Group uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its risks associated with foreign currency and interest rate fluctuations. Derivatives are initially measured at fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value. As the derivative financial instruments used by the Group do not qualify for hedge accounting, changes in the fair value of any derivative instruments are recognised immediately in the income statement within other gains/(losses) and are shown net.

1.9 Inventories

The only category of inventories held by the Group is work in progress. Work in progress is stated at the lower of cost and net realisable value and represents external costs directly attributable to projects. The cost of work in progress comprises external direct cost of sales. Net realisable value is the estimated selling price in the ordinary course of business, less costs to complete.

1.10 Trade receivables

Trade receivables are recognised at fair value, 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. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of a doubtful debt provision, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade receivable is uncollectible, it is written off against the doubtful debt provision. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the income statement.

1.10 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits on call with banks, other short term highly liquid investments with maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

1.11 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.12 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs. Subsequent measurement is based on amortised cost and any difference between the proceeds (net of transaction of costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

1.13 Current and deferred income tax

The charge or credit for current tax is based on the results for the year adjusted for items that are either not subject to taxation or for expenditure which cannot be deducted in computing the tax charge or credit. The tax charge or credit is calculated using taxation rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax is not discounted as the effects are not material.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

1.14 Provisions

A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, it is probable than an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Provisions for deferred consideration on acquisitions are made based upon management’s expectation as to the outcome of the determining factors. As deferred consideration is part of the consideration for the acquisition the amount provided for in the accounts has led to a resultant increase in the goodwill associated with that acquisition. Any revisions to the amount of deferred consideration provided for are similarly reflected by a revision to goodwill.

1.15 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

1.16 Net debt

Net debt comprises cash and cash equivalents, bank and other loans, finance lease liabilities and derivative financial instruments.

1.17 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

1.18 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group’s activities. Revenue is shown net of value added tax and discounts and after eliminating sales within the Group.

Revenue is recognised as follows:

a) Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction, assessed on the basis of the actual service provided as a proportion of the total services to be provided.

b) Interest is recognised on an accruals basis.

1.19 Segment Reporting

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. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.

1.20 Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group’s financial performance. Transactions which may give rise to exceptional items are principally gains or losses on disposal of investments and subsidiaries or impairments of assets, as well as the reversal of such impairments.

1.21 Employee benefits

a) Pension obligations

Group companies contribute to various defined contribution pension schemes. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a third party entity. The Group has no further payment obligations once the contributions have been paid. Contributions payable to these schemes are charged to the period in which the obligation arises.

b) Share option scheme

The Group operates equity settled executive and employee share option arrangements and all share based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to shareholders funds. Upon exercise of the share options fulfilled by the issue of new shares, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares are allocated to share capital with any excess being recorded as share premium.

All share based payment arrangements granted after 7 November 2002 are recognised in the financial statements, with the exception of those vesting before 1 January 2006.

The fair value of the options is measured using a Black Scholes valuation model of options with non-market performance conditions. Changes in vesting period and non market vesting conditions are assessed on an annual basis.

1.22 Leases

a) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

b) Finance leases

Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the Group.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges are included in borrowings. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The assets acquired under finance leases are included in property, plant and equipment and are depreciated over the shorter of the useful economic life of the asset and the lease term.

2 Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Group’s accounting policies. The nature of estimation means that actual outcomes could 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 with the next financial year are discussed below.

Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill is tested annually for impairment and at other times when such indicators exist. Other non financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Deferred tax assets

Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits.

3 Financial risk management

The Group’s activities expose it to some financial risks, the main ones being foreign exchange risk and interest rate risk. The Group is also exposed to credit risk and liquidity risk but these are considered to be of lesser significance. Risk management is carried out by the Board of directors and senior management. The Group does not enter into derivative contracts for speculative purposes.

a) Foreign exchange risk

The Group operates internationally and also invoices customers in a number of foreign currencies. It is therefore exposed to foreign exchange risk arising from exchange rate movements, primarily between the US dollar, the Euro and the UK pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

Management reviews the foreign currency exposure on a regular basis and, when appropriate, enters into forward contracts to manage the foreign exchange currency risk. At 31 December 2008 no forward contracts were outstanding. In February 2009 management entered into 3 forward contracts to mitigate the risk on the future US dollar receipts.

b) Interest rate risk

The Group’s interest risk arises from bank borrowings which are at variable rates and expose the Group to cash flow risk. Management review the interest rate risk on a periodic basis. Short-term interest rate swaps to fix the interest rate for a period of time are undertaken when considered appropriate to manage the cash flow risk arising from the interest rate exposure. The bank borrowings interest payable is based on the London Inter Bank Offer Rate (LIBOR). An increase in the LIBOR rate of 0.25% would result in an increase in interest payable of approximately £10,000 per annum.

c) Credit risk

The Group’s credit risk arises from outstanding receivables with customers and cash deposits with banks. Credit risk is managed by each individual operating unit, monitored regularly on a Group basis. Due to the nature of the Group’s business, credit risk is assessed on a customer by customer basis prior to entering into contractual arrangements. Credit risk is mitigated by the invoicing in advance of 50% of the agreed project fee.

d) Liquidity risk

The Group is subject to the risk that it will not have sufficient borrowing facilities, in the form of a bank overdraft facility and bank loans, to meet the Group’s cash requirements. The Group manages this risk with weekly cash flow forecasts which extend to 31 December 2010. Funding adequacy throughout this period is demonstrated by the calculation of the headroom that the Group is forecasting to have against the overdraft facility limit at the end of each week. The Group’s bank facilities, comprising its bank overdraft and bank loans, are subject to quarterly covenant tests. The Group forecasts its position against these covenant tests throughout the period to the end of the facility agreement in November 2010 to mitigate the risk of non-compliance.

4 Capital risk management

The Group is subject to the risk that its capital structure will not be sufficient to support the future operations of the business. The Group’s objectives when managing capital (capital being defined as the Ordinary share capital, the share premium account, the merger reserve, the foreign currency translation reserve and the retained earnings) are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, purchase its own shares or sell assets to reduce debt.

The Group monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total equity. The level of gearing at 31 December 2008 is 31% (2007: 29%) which the Board considers appropriate at this time.

5 Segmental information

a) Primary reporting format – business segments

The directors regard the Group as operating in one primary segment, that being marketing consultancy.

b) Secondary reporting format – geographical segments

The Group’s businesses are based in the UK, with the exception of nxtMOVE which is based in the US and KAE Asia which is based in Singapore. All of the Group’s businesses have customers based around the world, but the main areas where revenue is generated are the UK, the rest of Europe and the US.

Revenue is allocated based on the country in which the customer is located.

Total assets are allocated based on where the assets are located.

Capital expenditure is allocated based on where the assets are located.

6 Finance income

7 Finance costs