HERTFORD INTERNATIONAL GROUP PLC - INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

CHAIRMAN'S STATEMENT

The last six months was a very exciting and busy period for the Hertford International Group Plc ("Hertford" or "Group"). Many important decisions were made to ensure Hertford's long term prosperity and maximise the potential for our future growth. Some decisions were very hard to make, one such example being the decision not to actively market the present product range, nor to bring any of the new products to market, rather to further invest in the range of new products being developed. In order to put Hertford in this strong position for growth during 2009, we have remained inactive in terms of trading during the period under review and this is reflected in the financial statements.

In addition to further exploring new technologies and value added services specifically targeted to enhance our new product range, two significant developments have occurred during the period. The first of these is the identification and subsequent appointment of a new pre-paid card program manager, providing us with the ability to further enhance our products from those currently available and of equal importance, to reduce the reliance on a single processing platform. The second, is the proposed acquisition of a profitable, nationwide cheque cashing and money remittance business, bringing with it a substantial distribution network via agent retail outlets. The full details of the proposed acquisition are available on the Company website and in the Admission Document posted to shareholders on 26 November 2008.

Whilst the decision to delay bringing any new products to market has been frustrating, it is the firm belief of the Directors that it is important to ensure the products are right for the client, in terms of functionality, availability and pricing and right for the business, in terms of a low cost method of distribution and increased profitability per client. The investment of time, effort and resource has resulted in the development of a new pre-paid card product, providing a near 100% acceptance of UK residence applicants, compared to a current high rate of on-line rejection of our main target demographic, due to a lack of electronic footprint. It is the belief of the Directors that this new product, which will be brought to market in the first quarter of 2009, will further enhance the opportunity for both up-selling and cross-selling and that the additional time taken to concentrate on these important aspects of the business will only help to ensure the longevity and success of our suite of products once they are bought to market.

The Directors continue to believe that the potential of the pre-debit card market is increasingly being recognised. This coupled with our diversified buy and build strategy, presents the Group with a considerable opportunity for growth.

At the time of our admission to AIM on 24 December 2007, the Directors stated their belief that the admission to trading would provide Hertford International with a greater profile and may give the Company access to further development capital in the future and the ability to make complimentary acquisitions. It is the Directors belief that this has been fully demonstrated in the recent securing of funding and exchange of contracts in relation to the proposed acquisition, which was approved by shareholder's at the Annual General Meeting held 22 December 2008. Your Directors remain committed to evaluating value enhancing acquisitions and will continue to explore additional suitable opportunities as they arise.

I would like to thank all of the staff for their efforts during the period and our shareholders for their support. I believe that we will be able to show that we have made useful progress in the development of our business in the early part of next year.

Paul Marks, Chairman

24 December 2008

 

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CONSOLIDATED INCOME STATEMENT FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2008

	Notes	6 months to 30 September 2008	14 months to 30 September 2007
		Unaudited	Audited
		£	£
Continuing operations
Revenue		53,552	-
Cost of sales		(99,147)	-
Gross profit		(45,595)	-
Administrative expenses		(1,077,893)	-
Exceptional costs		(115,452)	-
Operating loss		(1,238,940)	-
Investment income		11,453	-
Finance costs		(25,119)	-
Loss on ordinary activities before tax		(1,252,606)	-
Taxation		-	-
Loss for the period		(1,252,606)	-
Loss per share - basic		(2.9p)	-

CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2008

	As at 30 September 2008	As at 30 September 2007
	Unaudited	Audited
	£	£
Non current assets
Property, plant and equipment	89,644	-
Goodwill	1,354,419	-
	1,444,063	-
Current assets
Inventories	79,968	-
Trade receivables	2,776	-
Other current assets	38,494	0.02
Cash and cash equivalents	140,518	-
	261,756	0.02
Current liabilities
Trade and other payables	(549,404)	-
Net current assets	(287,648)	-
Non-current liabilities
Non-current borrowings	(684,141)	-
Net assets	472,274	0.02
Equity
Share capital	426,750	0.02
Share premium	1,902,850	-
Retained earnings	(1,857,326)	-
Equity attributable to equity holders of the parent	472,274	0.02

CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

			6 months to 30 September 2008	14 months to 30 September 2007
			Unaudited	Audited
			£	£
Cash flows from operating activities
Loss before taxation			(1,252,606)	-
Adjustments for :
Depreciation			15,800	-
Profit on disposal of fixed assets			(25,410)
Investment income			(11,453)	-
Interest expense			25,119	-
Share based payment			86,274	-
Decrease in trade and other receivables			75,677	-
Decrease in inventories			1,473	-
Increase in trade and other payables			249,462	-
Cash used in operations			(835,664)	-
Interest paid			(25,119)	-
Net cash used in operating activities			(860,783)	-
Cash flows from investing activities
Interest received			11,453	-
Purchase of property, plant and equipment			(1,383)	-
Proceeds from sale of property, plant and equipment			25,410	-
Net cash from investing activities			35,480	-
Cash flows from financing activities
Convertible loans repaid			(151,634)	-
Net cash used in financing activities			(151,634)	-
Net increase in cash and cash equivalents			(976,937)	-
Cash and cash equivalents at beginning of period			1,117,455	-
Cash and cash equivalents at end of period			140,518	-

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 SEPTEMBER 2008

	Share capital	Share premium	Retained earnings	Total
	£	£	£	£
6 months ended 31 March 2008:
As at 1 October 2007	0.02	-	-	0.02
Ordinary sharess issued in the period	426,749.98	1,902,850.00	-	2,329,599.98
Loss for the period	-	-	(734,118.00)	(734,118.00)
Credit arising on share based payment	-	-	43,124.00	43,124.00
As at 31 March 2008	426,750.00	1,902,850.00	(690,994.00)	1,638,606.00
6 months ended 30 September 2008:
As at 1 April 2008	426,750.00	1,902,850.00	(690,994.00)	1,638,606.00
Loss for the period	-	-	(1,252,606.00)	(1,252,606.00)
Credit arising on share based payment	-	-	86,274.00	86,274.00
As at 30 September 2008	426,750.00	1,902,850.00	(1,857,326.00)	472,274.00

NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

Basis of preparation:

The interim financial information for the six months ended 30 September 2008 has been prepared in accordance with the accounting policies that will apply for the period ended 31 December 2008 which will follow International Financial Reporting Standards (IFRS) and interpretations as endorsed by the European Union.

The interim financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparatives for the period ended 30 September 2007 are not the company's full statutory accounts for that period. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under Section 237 (2)-(3) of the Companies Act 1985.

IFRS transition:

The group's results for the six months ended 30 September 2008 fall within the first period to be reported under IFRS. The group's date of transition to IFRS is 12 July 2006 and the adoption date is 1 October 2007.

Basis of consolidation:

The consolidated financial statements incorporate the results of the company and its subsidiary undertakings as at 30 September 2008 and exclude all intra-group transactions and balances. The results of subsidiary undertakings are included from the date of acquisition. The results of subsidiary undertakings disposed of are included up to the date of disposal.

Goodwill:

Goodwill represents any excess of the cost of acquisition over the fair value of the identifiable assets and liabilities acquired. Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses.

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost, less an estimated residual value, of the assets over their estimated useful lives at the following rates:

Web site development 25% straight line

Office equipment 25% straight line

Motor vehicles 25% straight line

Inventories

Stocks are valued at the lower of cost and net realisable value.

Leased assets

Rentals under operating leases are charged to the income statement on a straight-line basis over the lease term. All of the group's current leases are operating leases.

Foreign currency

Foreign currency transactions are recorded at the rate of exchange at the time of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand. Bank overdrafts are included within current liabilities unless there is a right of offset with cash balances.

Share based payments

Share options awarded to employees are measured at fair value at grant date using the Black-Scholes model. The fair value is expensed on a straight-line basis over the vesting period, based on an estimate of the number of options that will eventually vest. Cash-settled share based payment transactions result in the recognition of a liability at its current fair value.

	6 months to 30 September 2008	14 months to 30 September 2007
	Unaudited	Audited
	£	£
Loss before taxation	(1,252,606)	-
Weighted average number of shares in issue in the period	42,675,000	2
Basic loss per share	(2.9p)	-

There is no dilution per share in respect of the current period as the group has made a loss.

3. Share capital

Issued share capital:	No.	£
Ordinary shares of 1p at 1 April 2008 and 30 September 2008	42,675,000	426,750

4. Transition to IFRS

Analysis of the financial statements for the period ended 30 September 2007, which were prepared under UK GAAP, shows that no adjustments are required to equity or profit as a result of the transition to IFRS.