EX-99.2 3 dex992.txt FINANCIAL STATEMENTS Exhibit 99.2 1 May 2002 HLM DESIGN INTERNATIONAL LIMITED (formerly HLM Architects Limited) REPORT AND ACCOUNTS 31 DECEMBER 2001 HLM DESIGN INTERNATIONAL LIMITED Directors: C D Liddle - Chairman R C Fraser - Chief Executive C J Buckingham - Managing Director L H Welch J R Ferguson D M Cafferty N J Beecroft K S Mosley R P I Parsons J M Harris V B Brannon W Aeberhard Secretary: K S Mosley Company Number: 2424914 Registered Office: Lyme House Studios 30-31 Lyme Street London NW1 OEE Auditors: Chantrey Vellacott DFK Chartered Accountants Russell Square House 10-12 Russell Square London WC1B 5LF CONTENTS Pages Report of the directors 2 Report of the auditors 3 Consolidated profit and loss account 4 Consolidated balance sheet 5 Balance sheet 6 Cash flow statement 7 Notes to the accounts 8 - 15 HLM DESIGN INTERNATIONAL LIMITED REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2001 The directors present their report, together with the audited accounts of the group, for the year ended 31 December 2001. The name of the company was changed from HLM Architects Limited on 15 April 2002. REVIEW OF ACTIVITIES The company acted as a holding company to the HLM group and acted as Principal Architect on PFI and other major projects tendered for by the group during the year. On 1 January 2002 the trading activities of the group were transferred to the company. The result for the year was disappointing. The group has won new work both at the end of the year and subsequently. The directors are optimistic for the future. On 22 February 2002 the company became a subsidiary of HLM Design Inc, a company incorporated in the United States of America. RESULTS AND DIVIDENDS The loss for the year after taxation was (Pounds)177,911. The directors do not recommend the payment of a dividend for the year. DIRECTORS' RESPONSIBILITIES The directors are required by company law to prepare accounts for each financial year which give a true and fair view of the state of affairs of the group at the end of the financial year and of the profit or loss for that period. In preparing the accounts, suitable accounting policies have been used and applied consistently, and reasonable and prudent judgements have been made. The directors are also responsible for maintaining adequate accounting records, for safeguarding the assets of the group, and for preventing and detecting fraud and other irregularities. The directors are satisfied that the business is a going concern. DIRECTORS AND THEIR INTERESTS The directors at 31 December 2001 and their interests in the share capital of the company are as set out below. Ordinary shares of 25p each 31 December 2001 1 January 2001 C D Liddle 160,000 160,000 R C Fraser 160,000 160,000 L H Welch 160,000 160,000 J R Ferguson 60,000 60,000 D M Cafferty 60,000 60,000 The directors resigned on 22 February 2002, and were reappointed on that date together with W Aeberhard, V B Brannon and J M Harris. On 10 April 2002 C J Buckingham, N J Beecroft, K S Mosley and R P I Parsons were appointed directors of the company. The directors had no interests in the share capital of the subsidiary companies. Approved by the Board of Directors on 10 May 2002 and signed on their behalf by: K S MOSLEY Secretary INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF HLM DESIGN INTERNATIONAL LIMITED We have audited the financial statements of HLM Design International Limited for the year ended 31 December 2001 which are set out on pages 3 to 14. These financial statements have been prepared under the historical cost convention and the accounting policies set out therein. Respective responsibilities of directors and auditors As described in the Statement of Directors' Responsibilities the company's directors are responsible for the preparation of the financial statements in accordance with applicable law and United Kingdom Accounting Standards. Our responsibility is to audit the financial statements in accordance with the relevant legal and regulatory requirements and United Kingdom Auditing Standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the company is not disclosed. We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it. Basis of opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of affairs of the company and of the group as at 31 December 2001 and of the results of the group for the year then ended and have been properly prepared in accordance with the Companies Act 1985. United Kingdom Accounting Standards vary in certain respects from accounting principles generally accepted in the United States of America. Application of accounting principles generally accepted in the United States of America would have affected shareholders' equity as at 31 December 2000 and 2001 and profit (loss) after taxation for the years ended 31 December 2000 and 2001 to the extent summarised in note 20 to the financial statements. /s/ CHANTREY VELLACOTT DFK Chartered Accountants Registered Auditors London 13 May 2002 3 HLM DESIGN INTERNATIONAL LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2001
Notes 2001 2000 FEES RECEIVABLE 6,112,318 7,109,377 Change in work in progress and fees received in advance 947,552 916,336 ----------- ----------- NET FEES EARNED 7,059,870 8,025,713 OPERATING COSTS External charges 474,366 694,075 Staff costs 2 4,600,311 4,200,836 Depreciation and amortisation 3 220,342 196,014 Other operating charges 1,979,400 1,979,067 ----------- ----------- 7,274,419 7,069,992 ----------- ----------- OPERATING (LOSS) PROFIT 4 (214,549) 955,721 Interest receivable and similar income 5 18,103 352,703 ----------- ----------- (LOSS) PROFIT on ordinary activities before taxation (196,446) 1,308,424 Taxation credit (charge) on (loss) profit on ordinary activities 6 18,535 (424,736) ----------- ----------- (LOSS) PROFIT on ordinary activities after taxation (177,911) 883,688 Dividends paid and proposed 7 - 900,000 ----------- ----------- RETAINED DEFICIT FOR THE YEAR (177,911) (16,312) Retained profit brought forward 234,527 250,839 ----------- ----------- RETAINED PROFIT CARRIED FORWARD (Pounds) 56,616 (Pounds) 234,527 =========== ===========
All the above amounts relate to continuing activities. All recognised gains and losses are included in the above profit and loss account. 4 HLM DESIGN INTERNATIONAL LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2001
Notes 2001 2000 FIXED ASSETS Intangible assets 8 30,150 40,200 Tangible assets 9 364,104 356,143 ----------- ----------- 394,254 396,343 CURRENT ASSETS Debtors 10 1,807,685 2,747,149 Cash at bank and in hand 88,067 626,065 ----------- ----------- 1,895,752 3,373,214 CREDITORS: amounts falling due within one year 11 1,983,390 3,285,030 ----------- ----------- NET CURRENT (LIABILITIES) ASSETS (87,638) 88,184 ----------- ----------- TOTAL ASSETS LESS CURRENT LIABILITIES (Pounds) 306,616 (PoundS) 484,527 =========== =========== CAPITAL AND RESERVES Called up share capital 12 152,000 152,000 Share premium account 98,000 98,000 Profit and loss account 56,616 234,527 ----------- ----------- EQUITY SHAREHOLDERS' FUNDS 14 (Pounds) 306,616 (Pounds) 484,527 =========== ===========
5 HLM DESIGN INTERNATIONAL LIMITED BALANCE SHEET AS AT 31 DECEMBER 2001
Notes 2001 2000 FIXED ASSETS Investment in subsidiary undertakings 15 180,150 190,200 CURRENT ASSETS Debtors 10 986,619 1,563,124 Cash at bank 75,312 705,558 --------- --------- 1,061,931 2,268,682 CREDITORS: amounts falling due within one year 11 892,105 1,914,228 --------- --------- NET CURRENT ASSETS 169,826 354,454 ------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES (Pounds) 349,976 (Pounds) 544,654 ======= ======= CAPITAL AND RESERVES Called up share capital 12 152,000 152,000 Share premium account 98,000 98,000 Profit and loss account 99,976 294,654 ------- ------- EQUITY SHAREHOLDERS' FUNDS 14 (Pounds) 349,976 (Pounds) 544,654 ======= =======
Approved by the Board of Directors on 10 May 2002 and signed on their behalf by: V B BRANNON R C FRASER 6 HLM DESIGN INTERNATIONAL LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2001
2001 2000 OPERATING (LOSS) PROFIT (214,549) 955,721 Depreciation and amortisation charge 223,031 198,169 Profit on sale of assets (2,689) (2,155) Change in: Income in advance (947,552) (916,336) Debtors 955,600 (649,384) Creditors 281,244 127,408 --------- --------- 509,634 (1,242,298) -------- ---------- Net cash inflow (outflow) from operating activities 295,085 (286,577) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 20,286 86,937 Dividends received - 7,234 Interest payable (2,183) - --------- --------- 18,103 94,171 TAXATION Corporation tax paid (232,933) (706,395) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Sale of investment - 479,470 Purchase of tangible assets (234,863) (202,120) Sale of tangible assets 16,610 7,625 Purchase of intangible asset - (50,250) --------- --------- Net cash (outflow) inflow from investing activities (218,253) 234,725 DIVIDENDS PAID TO EQUITY SHAREHOLDERS (400,000) (1,000,000) -------- ---------- Net cash (outflow) before management of liquid resources and financing (537,998) (1,664,076) Issue of share capital - 100,000 -------- ---------- (Decrease) in cash at bank (Pounds)(537,998) (Pounds)1,564,076) ======== ==========
ANALYSIS OF NET FUNDS Net funds Net funds Net funds 1 January 31 December 31 December 2000 Cashflow 2000 Cashflow 2001 Cash at bank (Pounds)2,190,141 (Pounds)(1,564,076) (Pounds)626,065 (Pounds)(537,998) (Pounds)88,067 ========= ========== ======= ======== ======
7 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001 1. ACCOUNTING POLICIES The accounts have been prepared under the historical cost convention as modified by the revaluation of certain tangible assets using the following accounting policies. a) Basis of consolidation The consolidated accounts include the accounts of the company and its subsidiaries made up to 31 December 2001. Intercompany transactions have been eliminated. b) Depreciation and amortisation Depreciation is provided on all tangible assets at rates calculated to write off the cost or valuation less estimated residual value of each asset over its expected useful life. The expected useful lives are as follows: Computers and other equipment : 3 years Furniture : 5 years Motor vehicles : 4 years Goodwill arising on consolidation of World Wide Architecture Limited is being amortised over 5 years, which is considered to be its useful life. c) Revenue recognition Revenue is recognised on the percentage-of-completion method at estimated collectable rates. The extent of the performance is measured by the ratio of direct labour cost incurred to date to estimated total direct labour costs for each contract. A major portion of the Company's revenue is from participating in tenders for construction projects under the Private Finance Initiative in the healthcare, custodial and defence sectors for the United Kingdom Government. The Company participates in a tender as part of a group of service providers (i.e. architectural, construction, property, maintenance, financial) to design, finance, construct and maintain the property and several other groups will participate in the initial phases of these projects until a group is selected to complete the project (the "Financial Close"). The Company is compensated, and recognises revenue, at a discounted rate for services provided in the phases prior to the Financial Close and their services may be terminated at any time without notice or penalty. At the end of each initial phase and at the Financial Close, the Company may receive additional payments ("Bullet payments"), which are recognised as revenue when received. Post financial close revenue is billed and recognised on the percentage-of-completion method at full rates. Provisions for estimated losses on uncompleted projects are made in the period in which such losses are first subject to reasonable estimation. Unanticipated changes in project performance, project conditions and estimated profitability result in revisions to costs and income and are recognised in the period in which the revisions are determined. Billings in excess of revenues recognised are included in creditors as "income in advance". d) Operating leases Rentals under operating lease contracts are charged to the profit and loss account as they fall due. e) Deferred taxation Provision is made for timing differences between the treatment of certain items for taxation and accounting purposes, except that no provision is made where it can be reasonably foreseen that such deferred taxation will not be payable in the foreseeable future. 8 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001 1. ACCOUNTING POLICIES f) Investments Investments in subsidiary undertakings and other investments are stated at cost, less provisions for diminution in value.
2. STAFF COSTS 2001 2000 Staff costs during the year amounted to: Wages and salaries 4,088,127 3,718,786 Social security costs 406,762 384,476 Other pension costs 105,422 97,574 --------- --------- (Pound) 4,600,311 (Pound) 4,200,836 --------- ---------
The average number of employees during the year was made up as follows: No. No. Architects 121 119 Administration 29 30 ---------- --------- 150 149 ---------- --------- 3. DEPRECIATION 2001 2000 Depreciation of owned assets 212,981 188,119 Amortisation of goodwill 10,050 10,050 Profit on sale of assets (2,689) (2,155) ---------- --------- (Pound) 220,342 (Pound) 196,014 ---------- --------- 4. OPERATING (LOSS) PROFIT Operating (loss) profit is stated after charging: 2001 2000 (Pound) (Pound) Directors' remuneration 628,314 569,888 Auditors' remuneration 18,000 18,000 ========== ========= Directors' remuneration comprises: Aggregate emoluments 588,077 527,233 Company contributions to money purchase pension schemes 40,237 42,655 ---------- --------- (Pound) 628,314 (Pound) 569,888 ========== =========
Pension contributions were paid in respect of four directors (2000 : four). The highest paid director received(pound)169,713 (2000:(pound)151,872). No pension contributions were paid in respect of the highest paid director (2000 : nil). A professional practice charged (pound)26,250 for the services of Mr R C Fraser during 2000. HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001
5. INTEREST RECEIVABLE AND SIMILAR INCOME 2001 2000 Profit on sale of listed investment - 258,532 Interest receivable 20,286 86,937 Dividends receivable - 7,234 Interest payable (2,183) - -------------- --------------- (Pounds)18,103 (Pounds)352,703 ============== =============== 6. TAXATION CREDIT (CHARGE) ON (LOSS) PROFIT ON ORDINARY ACTIVITIES 2001 2000 The taxation is based on the (loss) profit for the year and is made up as follows: UK Corporation tax at 30% (2000 : 30%) 25,000 (430,000) Adjustment of prior year (6,465) 5,264 -------------- --------------- (Pounds)18,535 (Pounds)424,736) ============== =============== 7. DIVIDENDS PAID AND PROPOSED 2001 2000 To equity shareholders Interim dividends paid - 500,000 Interim dividend proposed - 300,000 Proposed final dividend - 100,000 -------------- --------------- (Pounds) - (Pounds)900,000 ============== =============== 8. INTANGIBLE ASSETS Goodwill Cost At 1 January and 31 December 2001 50,250 --------------- Amortisation At 1 January 2001 10,050 Charge for the year 10,050 --------------- At 31 December 2001 20,100 --------------- Net book value At 31 December 2001 (Pounds) 30,150 =============== At 31 December 2000 (Pounds) 40,200 ===============
10 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001
9. TANGIBLE ASSETS Furniture & Motor equipment vehicles Total Cost or valuation: 1 January 2001 962,689 16,338 979,027 Additions 224,583 10,280 234,863 Disposals (8,962) (9,956) (18,918) --------------- --------------- ---------------- 31 December 2001 1,178,310 16,662 1,194,972 --------------- --------------- ---------------- Depreciation: 1 January 2001 619,497 3,387 622,884 Charge for the year 208,837 4,144 212,981 On disposals (2,717) (2,280) (4,997) --------------- --------------- ---------------- 31 December 2001 825,617 5,251 830,868 --------------- --------------- ---------------- Net book value: 31 December 2001 (Pounds)352,693 (Pounds) 11,411 (Pounds) 364,104 =============== =============== ================ 31 December 2000 (Pounds)343,192 (Pounds) 12,951 (Pounds) 356,143 =============== =============== ================
All tangible fixed assets are held by HLM Design Limited. Cost or valuation of furniture and equipment include (Pounds)144,000 revalued by the directors as at 1 January 1995 based on a detailed physical inventory of the assets. These assets are now fully depreciated. The group had authorised capital expenditure of(Pounds)Nil at 31 December 2001 (2000:(Pounds)64,000).
Group Company 10. DEBTORS 2001 2000 2001 2000 Trade debtors 1,552,246 2,277,934 967,838 1,225,187 Taxation recoverable 16,136 - 16,136 - Other debtors 29,025 369,119 2,645 316,668 Prepayments and accrued income 210,278 100,096 - 21,269 ----------------- ----------------- --------------- ----------------- (Pounds)1,807,685 (Pounds)2,747,149 (Pounds)986,619 (Pounds)1,563,124 ================= ================= =============== =================
11 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001
Group Company 11. CREDITORS: amounts falling due within one year 2001 2000 2001 2000 Fees receivable in advance 470,000 1,417,552 200,000 418,000 Trade creditors 449,548 406,567 - - Amount payable to subsidiary undertaking - - 550,808 780,273 Corporation tax - 235,332 - 235,332 Taxation and social security 522,072 354,317 - 33,498 Other creditors and accruals 541,770 471,262 141,297 47,125 Proposed dividends - 400,000 - 400,000 ----------------- ----------------- ------------------ ----------------- (Pounds)1,983,390 (Pounds)3,285,030 (Pounds)892,105 (Pounds)1,914,228 ================= ================= ================== =================
12. CALLED UP SHARE CAPITAL
2001 2000 Authorised 4,000,000 ordinary shares of 25p each (Pounds)1,000,000 (Pounds)1,000,000 ================== ================= Allotted, issued and fully paid 608,000 ordinary shares of 25p each (Pounds) 152,000 (Pounds) 152,000 ================== =================
13. PARENT COMPANY PROFIT AND LOSS ACCOUNT As allowed by s230 of the Companies Act 1985 the profit and loss account of the company is not presented. The loss dealt with in the accounts of the company was (Pounds)194,678 (2000 : profit: (Pounds)944,299).
14. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Group Company 2001 2000 2001 2000 (Loss) profit on ordinary activities after taxation (177,911) 883,688 (194,678) 944,299 Dividends paid and proposed - (900,000) - (900,000) Issue of share capital - 100,000 - 100,000 ----------------- ----------------- ------------------ ----------------- Net (reduction) addition to equity shareholders' funds (177,911) 83,688 (194,678) 144,299 Opening equity shareholders' funds 484,527 400,839 544,654 400,355 ----------------- ----------------- ------------------ ----------------- Closing equity shareholders' funds (Pounds) 306,616 (Pounds)484,527 (Pounds)349,976 (Pounds)544,654 ================= ================= ================== =================
12 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001 15. INVESTMENT IN SUBSIDIARY UNDERTAKINGS Shares at cost: 1 January 2001 and at 31 December 2001 200,250 ------- Provision for diminution in value: At 1 January 2001 10,050 Charge in year 10,050 ------- At 31 December 2001 20,100 ------- Net book value: 31 December 2001 (Pounds) 180,150 ======= 31 December 2000 (Pounds) 190,200 ======= The company owns the whole of the issued share capital of HLM Design Limited a company registered in England. Additionally the company owns the whole of the issued share capital of the following dormant companies which are registered in England. HLM Landscape Limited* HLM Planning Limited* World Wide Architecture Limited HLM Architects Limited (formerly Top of the League Limited) Rock Archimedia Limited *via HLM Design Limited 16. CONTINGENT LIABILITIES There were no contingent liabilities at 31 December 2001. At 31 December 2000, HLM Design Limited had given guarantees secured in part by a debenture on the assets and undertakings of that company in respect of the mortgage loans of a former fellow subsidiary. The liability at 31 December 2000 was (Pounds)1,817,785. Following the sale of the relevant properties and the repayment of the mortgage loans by the former fellow subsidiary on 8 June 2001, the guarantees were released. 13 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001 17. OPERATING LEASES The group's commitments for rental payments under operating leases payable during the year to 31 December 2002 are as follows: Operating leases: Office Premises Expiring within one year 49,522 Expiring between two and five years 29,500 Expiring after more than 5 years 434,628 ------- (Pounds) 513,650 ======= Other operating leases are not material. 18. RELATED PARTY TRANSACTIONS a) The directors of the company are substantial shareholders of Melbourne Property Holdings Limited and C D Liddle and R C Fraser are directors of that company. At the beginning of the year the group rented certain office premises from Melbourne Properties Limited, a subsidiary of Melbourne Property Holdings Limited. The annual rental payable in respect of the properties amounted to (Pounds)399,328. Additionally, the group had given guarantees in respect of the mortgage loans of Melbourne Properties Limited, which at 31 December 2000 amounted to (Pounds)1,817,785. Following the sale of the properties by Melbourne Properties Limited to third parties, repayment of the mortgage loans and release of the guarantee, there are no continuing related party transactions. At 31 December 2001 no amounts were due to Melbourne Property Holdings Limited. b) R C Fraser and C D Liddle, directors of the company, are directors and the sole shareholders of 2020 Investments PLC. During the year the group maintained a current account with 2020 Investments PLC, and paid for and received amounts on behalf of that company. At 31 December 2001 no amounts were due from 2020 Investments PLC. 19. POST BALANCE SHEET EVENTS On 22 February 2002 the shareholders of the company entered into an agreement with HLM Design Inc., a company incorporated in the United States of America, whereby, GA Design International (Holdings) Limited, a wholly owned subsidiary of that company, purchased the whole of the issued share capital of the company. With effect from that date the company is a wholly owned subsidiary of HLM Design Inc. The cash part of the consideration for the acquisition was provided by a bank loan to GA Design International (Holdings) Limited, which is secured on the assets and undertaking of HLM Design International Limited. 14 HLM DESIGN INTERNATIONAL LIMITED NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2001 20. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The following table presents the material differences between United Kingdom and United States of America generally accepted accounting principles ("GAAP"). Reconciliation of net (loss) profit after taxation from UK GAAP to US GAAP
Years ending 31 December 2001 2000 (Pounds) (Pounds) Net (loss) profit after taxation as reported under UK GAAP (177,911) 883,688 Deferred tax 6,197 (2,200) -------- -------- (171,714) 881,488 ======== ========
Under UK GAAP, applicable at the date of these financial statements, Statement of Standard Accounting Practice No 15 - "accounting for deferred tax", deferred tax net debit balances are not carried forward as assets, except to the extent that they are expected to be recoverable without replacement by equivalent debit balances. Under US GAAP, deferred tax assets for temporary differences using enacted tax rates in effect at period end, are recognised in accordance with Financial Accounting Standard No. 109 ("FAS 109") "accounting for Income Taxes" Under FAS 109, deferred tax assets are recognised in full. Such amounts are reduced by a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be realised. 15