RNS Number:6499G
Universal Salvage PLC
25 July 2006
Universal Salvage plc
UVS.L
UNIVERSAL SALVAGE PLC
Preliminary Results for the 52 weeks to 29 April 2006
Highlights
* Business returned to profit
* Turnover increased by 13% to #56.4m (2005: #49.7m)
* Operating profit, before exceptional items, of #0.9m contrasts last
year's loss of #0.9m
* Profit before exceptional items and tax of #0.5m - a turnaround of #2.0m
on last year's loss before exceptional items and tax of #1.5m
* Profit before tax of #0.2m against last year's loss before tax of #1.1m
* Basic earnings per share improved to 2.4p against last year's loss of
5.8p per share
* Net assets increased by 7% to #15.8m against #14.8m last year
* Net debt reduced to #4.2m (2005: #5.9m) and gearing decreased to 27%
(2005: 40%)
* Continued good progress in executing business turnaround:
- rationalisation of branch network largely completed
- senior management team strengthened
- further cost savings achieved worth #1.0m on annualised basis
* Focus on business development:
- sales and marketing functions strengthened
- two significant contract wins including exclusive national contract
* Post year-end, contract secured with Highway Insurance Company
* Outlook remains encouraging
Alexander Foster, Chairman, commented,
"I am pleased to report that the Company has returned to profit.
Over the new financial year we expect to improve profitability, although the
rate of growth will depend on vehicle volumes and auction results remaining
firm. Our strategy remains a twofold approach of continuing the process of
developing our existing business and at the same time broadening out into other
related areas. We have the people to drive Universal forward with vision and
vigour in the year ahead."
Enquiries:
Universal Salvage Avril Palmer-Baunack, Chief Executive T: 020 7448 1000 (today)
Andrew Somerville, Finance Director Thereafter: 01234 762283
Biddicks Katie Tzouliadis T: 020 7448 1000
CHAIRMAN'S STATEMENT
Results
I am pleased to report that the Company has returned to profit.
For the 52 weeks to 29 April 2006, the Group made an operating profit, before
exceptional items, of #0.9 million this year which is a considerable improvement
on the operating loss, before exceptional items, of #0.9 million last year.
Statutory operating profit of #0.7 million was achieved during the year (2005:
loss of #0.1 million). Profit before exceptional items and tax at #0.5 million
showed an improvement of #2.0 million on last year (2005: loss before
exceptional items and tax of #1.5 million). Profit before tax was #0.2 million
(2005: loss of #1.1 million). Revenue rose by 13% to #56.4 million from #49.7
million last year. These results were supported by a 10% reduction in
administrative costs before exceptional items, to #9.9 million from #11.0
million and an improvement in gross profit of 7% to #10.8 million from #10.1
million last year. Basic earnings per share improved to 2.4 pence (2005: loss
per share of 5.8 pence). The Board is not recommending a dividend in line with
last year. In the last financial year, we achieved our target of reducing
operating costs by #2.0 million on an annualised basis. Over this year, we have
made further cost reductions, equating to a further #1.0 million on an
annualised basis. At the year-end, net assets increased to #15.8 million (2005:
#14.8 million). Net debt decreased to #4.2 million compared to #5.9 million last
year. Gearing has been reduced to 27%, a comfortable level (2005: 40%).
Results have been issued under the new International Financial Reporting
Standards ('IFRS') and comparative figures have been restated from those
previously reported under UK GAAP.
Business Turnaround
The year under review is the second year of our original three year Business
Turnaround Plan. Over the last twelve months, we have made substantial progress
in re-establishing Universal within the insurance marketplace. Our new salvage
contracts demonstrate we have gone a long way to rejuvenating the business.
We have now largely completed the rationalisation of the branch network. In
April, we sold our Paddock Wood site in Kent for #0.8 million and, after the
year-end, in May, we disposed of our Staughton Moor branch in Cambridgeshire for
#0.25 million. These sales follow last year's surplus property disposals and
leave the Group operating comfortably from seven sites. An eighth site is not
operational and leased to a third party.
We have also completed the major changes to strengthen our senior management
team. Two key appointments were made in the first quarter of the year when we
created the new position of Chief Operating Officer and recruited a new Sales
Director. We also strengthened our sales and marketing functions and brought in
people with experience in the accident management industry to support our
planned move into a broader range of outsourced support services for the motor
insurance and fleet marketplaces.
We continue to work hard on building our relationships with our core customer
base in the UK motor insurance sector. There has been considerable consolidation
within the insurance industry and the insurance salvage market remains highly
competitive. However, we were pleased to secure two significant contracts last
year when we signed an agreement with Admiral Insurance Services Limited,
covering the South of England and in September won an exclusive national
contract with Co-operative Insurance Society Limited. In May this year, we were
appointed as joint supplier by Highway Insurance Company Limited, the benefit of
which will be felt in the current financial year.
We have been in discussions with some of our insurance clients about moving from
the traditional model of acting as principal, when buying vehicle salvage, to
providing a fee-based service where we act only as a disposal agent. Two major
accounts now trade on this basis and the change will help to stabilise our
income streams going forward.
As I reported in my statement at the half year, we believe that there is good
scope to broaden our customer base. Target markets we have identified are
corporate fleets, car rental companies and accident management companies and we
have been actively building relationships within each sector. I am pleased to
report that we signed a number of small accounts with fleet operators, including
Europcar and Bankstone. Volumes in these markets are typically lower than in our
traditional insurance marketplace, however the quality of salvage is attractive.
Board Changes
I am delighted to welcome two new Non-executive Directors; Nigel Stead, joined
in March and Richard Mead, in April. Nigel is Managing Director of Lloyds TSB
Autolease, the fleet management and financing specialist, and has over thirty
years experience in the automotive industry. Richard Mead, a chartered
accountant, has spent over twenty years in corporate finance and has wide
ranging business experience. Richard chairs the Audit Committee. After serving
seven years as a Non-executive Director, Edmund Bruegger stepped down from the
Group in January this year. I would like to thank him for his contribution
during his time on the Board.
Staff
The Group's return to profitability this year is a result of the dedication and
effort of everyone in the business. On behalf of the Board, I would like to
thank all the staff for helping to move Universal forward.
Prospects
Over the new financial year we expect to improve profitability, although the
rate of growth will depend on vehicle volumes and auction results remaining
firm. I am convinced there are good opportunities to use our market knowledge
and skills in handling auto salvage to develop new income streams. Our strategy
remains a twofold approach of continuing the process of developing our existing
business and at the same time broadening out into other related areas. We have
the people to drive Universal forward with vision and vigour in the year ahead.
Alexander N Foster
Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
I am very pleased with the progress we have made in the second year of our
Business Turnaround Plan. On a trading level, we secured a good level of new
contracts and on the operational side, we have improved efficiency. Most
importantly, I am delighted with the fact that we have returned the Group to
profit.
Business Development
The first year of our Business Turnaround Plan was focused on securing the
Group's financial position and addressing the cost base, which was too high in
relation to the throughput of vehicles. In the second year, we have been
concentrating on business development. The most important issue for the business
is growing turnover. This has meant revitalising our sales and marketing
activities and re-building our credibility within our core insurance market as
well as turning our attention to considering how we develop new income streams
outside this core market.
In mid June, we appointed a new Sales Director who took on the responsibility of
strengthening our sales and marketing efforts and pursuing tender opportunities.
Since the consolidation in the UK motor insurance marketplace, there has been a
general trend downwards in the frequency of tenders. Nevertheless, in June 2005
we were pleased to be appointed as a supplier to Admiral Insurance Services
Limited, covering the South of England and we have subsequently been reappointed
for a further term. Also in the first half of the year, in September, we signed
a national agreement with Co-operative Insurance Society Limited ('CIS'). This
major contract is for a two year period and we are the sole supplier. CIS is
also using our on-line salvage management system, which enables insurance claims
and vehicles to be processed more efficiently. More recently after the year-end,
we secured a contract from Highway Insurance Company Limited, which started on 1
May 2006.
We are achieving good returns at our auctions, with firm demand from vehicle
repairers and dismantlers and steady bid prices. We have optimised returns
through a series of specialist sales, including 'classic' cars, light commercial
vehicles and motor cycles. As well as taking on-line absentee bids, we are also
making more use of on-line auctions, with our sites at Denny in Stirlingshire,
Westbury in Wiltshire and Chester in Flintshire selling their vehicles only
through the Internet rather than through auctions at the site. This is working
very well.
Historically, vehicle salvage operators have acted as principal when selling
salvage vehicles from motor insurers. However, there is some movement away from
this traditional model and we have been talking to some of our key insurance
customers about providing the service as agents, acting on a fee basis rather
than as principal buying the vehicle salvage from them. Two major accounts are
now trading like this and the change will help to reduce our risk exposure, and
create more stable income streams.
Income from our non-salvage fee-based business (principally low value,
part-exchange cars) suffered from the failure of a major customer, Yes Car
Credit, which was closed by its parent, Provident Financial PLC in December
2005. As a result, volumes fell by approximately 16,000 units per annum.
As an authorised treatment facility ('ATF') for the disposal of End-of-Life
Vehicles ('ELVs'), we have joined the network of ATFs created by a consortium of
industrial vehicle shredders, who have created the free 'Cartakeback' service
for motor manufacturers. This is in readiness for next year when, from January
2007 motor manufacturers will be responsible for the free take back of their own
marque ELVs. It is difficult to predict the volumes of vehicles that we will
handle but the current strong steel prices make joining the Cartakeback network
an interesting option for us.
We have been pursuing opportunities to offer our salvage services to a wider
range of customers, targeting corporate fleets, accident management companies
and car rental providers. This initiative is working well and we have secured a
number of small accounts with fleet operators. The quality of salvage should be
good, given the typical age profile of these vehicles.
Operations
We created the new role of Chief Operating Officer in July 2005, in order to
strengthen the operations side of the business. We believed that there was scope
to introduce new core competencies and drive cultural change that would improve
efficiencies and reduce unit disposal costs.
We have now implemented new processes and other initiatives, which are working
well and I am pleased to see the benefits in increased productivity.
Our site rationalisation programme was substantially completed just after the
year-end in May when we sold our property at Staughton Moor in Cambridgeshire.
During the year, we also sold our Paddock Wood site in Kent. The gross cash
proceeds from the two sales were #1.05 million. These disposals leave us with
eight sites, at Denny in Scotland, Sandtoft, Chester, Westbury, Sandy, Sandwich,
Wootton and Corby. We have sub-let our Corby site, which is surplus to our
current requirements and our remaining seven sites leave us with good
operational capacity, having some 150 acres of vehicle storage space.
With the changes we have made this year, the restructuring of the cost base has
been largely completed. We anticipate annualised cost savings of #1.0 million
going forward. Any future reductions in the cost base are likely to be
relatively small by comparison.
Our major capital expenditure this year related to the acquisition of four new
car transporters at a total cost of #0.3 million. This forms part of our fleet
replacement programme. Otherwise we contained costs very tightly.
Staff
I would like to thank all the staff for supporting the business through the
Business Turnaround Plan.
Due to the difficult trading situation over the last three years, we were unable
to provide the staff with a pay increase; however, the Board and I were very
pleased to be able to reinstate the annual pay review in June 2006.
Outlook
We are pleased to have returned the business to profitability and improved
operating cash generation. This was aided by stable auction results and strong
scrap prices particularly in the second half of the financial year, which is our
busier period because it includes the winter and spring months. Our results also
benefited from our new contract wins although the actual vehicle volumes that
came through were a little behind insurers' initial predictions.
Conditions in the insurance salvage market remain competitive but we are
continuing to pursue all tender opportunities. At the same time, we are pleased
with the progress we are making in diversifying the business base. The business
has good growth potential and we are confident of delivering improved results
over the year.
Avril Palmer-Baunack
Chief Executive
GROUP INCOME STATEMENT
For the 52 weeks to 29 April 2006
2006 2006 2006 2005 2005 2005
Before Exceptional Before Exceptional
exceptional items exceptional items
items Total items Total
Note #m's #m's #m's #m's #m's #m's
-------------------------------------------------------------------------------------------------
Revenue 56.4 - 56.4 49.7 - 49.7
Cost of sales (45.6) - (45.6) (39.6) - (39.6)
-------------------------------------------------------------------------------------------------
Gross profit 10.8 - 10.8 10.1 - 10.1
Administrative expenses (9.9) (0.2) (10.1) (11.0) 0.8 (10.2)
-------------------------------------------------------------------------------------------------
Operating profit/(loss) 0.9 (0.2) 0.7 (0.9) 0.8 (0.1)
Interest receivable - - - 0.1 - 0.1
Interest payable and
similar charges (0.4) (0.1) (0.5) (0.7) (0.4) (1.1)
-------------------------------------------------------------------------------------------------
Profit/(loss) before
taxation 2 0.5 (0.3) 0.2 (1.5) 0.4 (1.1)
Taxation 0.6 (0.1) 0.5 - (0.5) (0.5)
-------------------------------------------------------------------------------------------------
Profit/(loss) after
taxation 1.1 (0.4) 0.7 (1.5) (0.1) (1.6)
-------------------------------------------------------------------------------------------------
Earnings/(loss) per
Ordinary share
- basic 3 2.4p (5.8)p
- diluted 3 2.3p (5.8)p
-------------------------------------------------------------------------------------------------
All operations of the Group are continuing throughout both periods and no material operations were
acquired or discontinued.
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the 52 weeks to 29 April 2006
2006 2005
#m's #m's
------------------------------------------------------------------------------------
Profit/(loss) after taxation for the period 0.7 (1.6)
------------------------------------------------------------------------------------
Total recognised income/(expense) since the last annual report 0.7 (1.6)
------------------------------------------------------------------------------------
GROUP BALANCE SHEET
At 29 April 2006
2006 2005
Note #m's #m's
---------------------------------------------------------------------
ASSETS
Non current assets
Property, plant and equipment 4 21.2 22.7
Intangible assets 0.1 0.2
---------------------------------------------------------------------
21.3 22.9
---------------------------------------------------------------------
Current assets
Inventories 3.3 2.8
Trade and other receivables 2.8 3.5
Cash and cash equivalents 1.8 -
---------------------------------------------------------------------
7.9 6.3
LIABILITIES
Current liabilities
Financial liabilities (0.1) -
Trade and other payables (6.0) (6.2)
Current tax liabilities (0.2) (0.7)
Provisions 5 (0.1) -
---------------------------------------------------------------------
(6.4) (6.9)
---------------------------------------------------------------------
Net current assets/(liabilities) 1.5 (0.6)
---------------------------------------------------------------------
Total assets less current
liabilities 22.8 22.3
Non current assets
Trade and other receivables 0.1 0.1
Non current liabilities
Financial liabilities (5.9) (5.9)
Deferred tax liabilities (1.0) (1.7)
Other non current liabilities (0.2) -
---------------------------------------------------------------------
(7.1) (7.6)
---------------------------------------------------------------------
Net assets 15.8 14.8
---------------------------------------------------------------------
Shareholders' equity
Ordinary shares 2.8 2.8
Share premium account 1.3 1.2
Other reserves 3.0 3.1
Retained earnings 8.7 7.7
---------------------------------------------------------------------
Total equity 6 15.8 14.8
---------------------------------------------------------------------
GROUP CASH FLOW STATEMENT
For the 52 weeks to 29 April 2006
2006 2005
Note #m's #m's
----------------------------------------------------------------------
Cash flows from operating activities
Cash generated from operations 7 2.5 (1.3)
Interest received - 0.1
Interest paid (0.4) (0.6)
Bank facility fees paid (0.1) (0.2)
Corporation tax (paid)/received (0.7) 0.3
----------------------------------------------------------------------
Net cash from operating activities 1.3 (1.7)
----------------------------------------------------------------------
Cash flows from investing activities
Purchase of property, plant and
equipment (0.6) (0.6)
Receipt for potential sale of site 0.2 -
Proceeds from sale of property, plant
and equipment 1.0 6.8
----------------------------------------------------------------------
Net cash from investing activities 0.6 6.2
----------------------------------------------------------------------
Cash flows from financing activities
Net proceeds from issue of ordinary
share capital 0.1 -
Repayment of borrowings (0.2) (4.5)
----------------------------------------------------------------------
Net cash used in financing activities (0.1) (4.5)
----------------------------------------------------------------------
Net increase in cash and cash
equivalents 1.8 -
Opening cash and cash equivalents - -
----------------------------------------------------------------------
Closing cash and cash equivalents 1.8 -
----------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
These financial statements have been prepared in accordance with IFRS and
International Financial Reporting Interpretations Committee ('IFRIC')
interpretations as adopted by the European Union and with those parts of the
Companies Act 1985 applicable to companies reporting under IFRS.
2. Profit/(loss) before taxation
52 weeks to 52 weeks to
29 April 30 April
2006 2005
#m's #m's
------------------------------------------------------------------------
The following items have been included in
arriving at the profit/(loss) before taxation:
Staff costs 8.8 8.7
Cost of inventories recognised as an expense 36.8 31.1
(included in cost of sales)
Repairs and maintenance expenditure on
property, plant and equipment 1.2 1.0
Trade receivables impairment - 0.1
Depreciation of owned property, plant and
equipment 1.6 1.7
Amortisation of intangibles 0.1 0.4
Operating lease rentals 0.2 0.2
- land and buildings
- plant, machinery and motor vehicles - 0.1
Exceptional items:
Staff costs of reorganising continuing 0.4 0.5
operations
Third party costs of reorganising continuing 0.1 0.5
operations
Profit on disposal of property, plant and
equipment (0.3) (1.8)
------------------------------------------------------------------------
Net exceptional costs/(income) 0.2 (0.8)
------------------------------------------------------------------------
Rental receivable under operating leases 0.2 0.3
------------------------------------------------------------------------
3. Earnings/(loss) per share
Earnings/(loss) per share has been calculated by dividing the earnings
attributable to Ordinary shareholders by the weighted average number of Ordinary
shares, excluding shares held by the Universal Salvage plc 2000 Employees' Share
Trust which have been treated as cancelled.
For diluted earnings per share, the weighted average number of Ordinary shares
in issue is adjusted to assume conversion of all dilutive potential Ordinary
shares. The Group has three classes of dilutive potential Ordinary shares: those
share options granted to employees where the exercise price is less than the
average market price of the Company's Ordinary shares during the year ('SAYE'),
the contingently issuable shares under the Group's executive share option plans,
and the warrant granted to The Royal Bank of Scotland plc in July 2004.
2006 2005
Weighted Per Weighted Per
average share average share
Earnings number amount Earnings number amount
#'000 of (pence) #'000 of (pence)
shares shares
-----------------------------------------------------------------------------------
Basic earnings/(loss) per share
Earnings/(loss) attributable to
Ordinary shareholders 679 28,051 2.4 (1,624) 28,008 (5.8)
Effect of dilutive securities
Executive/SAYE options - 367 - - - -
The Royal Bank of Scotland plc
warrant - 998 (0.1) - - -
-----------------------------------------------------------------------------------
Diluted earnings/(loss) per share
Adjusted earnings/(loss) 679 29,416 2.3 (1,624) 28,008 (5.8)
-----------------------------------------------------------------------------------
4. Property, plant and equipment
All freehold and leasehold land and buildings were valued by DTZ Debenham Tie
Leung, a firm of independent Chartered Surveyors, at 1 May 2004 based on a fair
value basis. In the main, the values were based on active market prices.
No interest was capitalised into property, plant and equipment in the 52 weeks
to 29 April 2006 (2005: #nil). The total amount of finance costs included in the
cost of property, plant and equipment is #0.1m (2005: #0.1m).
The Group received a grant in prior years as a contribution towards the
development of operating land. The total amount of grant deducted from the cost
of land and buildings is #0.6m (2005: #0.6m).
5. Provisions
Restructuring
#m's
----------------------------------------------------------------------
At 30 April 2005 -
Charged/(credited) in the period 0.4
Utilised in the period (0.3)
----------------------------------------------------------------------
At 29 April 2006 0.1
----------------------------------------------------------------------
6. Reconciliation of movement in shareholders' equity
52 weeks to 52 weeks to
29 April 30 April
2006 2005
#m's #m's
------------------------------------------------------------------------
Opening shareholders' equity 14.8 15.3
Share options - value of employee services - 0.1
Share options - proceeds from issued shares 0.1 -
Deferred tax on revalued land and buildings 0.1 1.0
Cash flow hedges - fair value gains in period 0.1 -
Profit/(loss) after taxation 0.7 (1.6)
------------------------------------------------------------------------
Closing shareholders' equity 15.8 14.8
------------------------------------------------------------------------
7. Reconciliation of operating profit/(loss) to cash generated from operations
52 weeks to 52 weeks to
29 April 30 April
2006 2005
#m's #m's
--------------------------------------------------------------------------
Operating profit/(loss) 0.7 (0.1)
Depreciation of property, plant and equipment 1.6 1.7
Amortisation of intangibles 0.1 0.4
Profit on disposal of property, plant and
equipment (0.3) (1.8)
Changes in working capital:
Increase in inventories (0.4) (0.6)
Decrease/(increase) in receivables 0.7 (0.3)
Increase/(decrease) in payables due within one year 0.1 (0.6)
--------------------------------------------------------------------------
Cash generated from operations 2.5 (1.3)
--------------------------------------------------------------------------
8. Reconciliation of net assets and profit under UK GAAP to IFRS
In the prior year, Universal Salvage plc reported under UK GAAP for the 52 weeks
to 30 April 2005. The analysis below shows a reconciliation of net assets and
profit as reported under UK GAAP as at 30 April 2005 to the revised net assets
and profit under IFRS as reported in these financial statements. In addition,
there is a reconciliation of net assets under UK GAAP to IFRS at the transition
date for the Group, being 2 May 2004.
2005
Note #m's
Reconciliation of profit/(loss) before interest
-------------------------------------------------------------------------
Profit before interest as reported under UK GAAP 2.5
Property, plant and equipment - depreciation effects due
to introduction of residual values (f) 0.1
Property, plant and equipment - depreciation effects due
to application of fair values (e) 0.1
Share based payments (d) (0.1)
Profit on disposal of property, plant and equipment (e) (2.7)
-------------------------------------------------------------------------
Loss before interest as reported under IFRS (0.1)
-------------------------------------------------------------------------
2005
Note #m's
Reconciliation of profit/(loss) after taxation
-------------------------------------------------------------------------
Profit for the year as reported under UK GAAP 1.0
Property, plant and equipment - depreciation effects due
to introduction of residual values (f) 0.1
Property, plant and equipment - depreciation effects due
to application of fair values (e) 0.1
Share based payments (d) (0.1)
Profit on disposal of property, plant and equipment (e) (2.7)
-------------------------------------------------------------------------
Loss after tax as reported under IFRS (1.6)
-------------------------------------------------------------------------
UK Effect of
GAAP Transition IFRS
Note #m's #m's #m's
Reconciliation of profit/(loss) for the 52
weeks to 30 April 2005
--------------------------------------------------------------------------------
Revenue 49.7 - 49.7
Cost of sales (f) (39.7) 0.1 (39.6)
-------------------------------------------------------------------------------
Gross profit 10.0 0.1 10.1
Administrative costs - before exceptional items (11.0) - (11.0)
- exceptional items (e) 3.5 (2.7) 0.8
-------------------------------------------------------------------------------
Operating profit/(loss) 2.5 (2.6) (0.1)
-------------------------------------------------------------------------------
Finance costs - net (1.0) - (1.0)
Taxation (0.5) - (0.5)
-------------------------------------------------------------------------------
Net profit/(loss) 1.0 (2.6) (1.6)
-------------------------------------------------------------------------------
UK Effect of
GAAP Transition IFRS
Note #m's #m's #m's
Reconciliation of equity at date of transition
- 2 May 2004
-------------------------------------------------------------------------------
Property, plant and equipment (c)(e)(f) 26.3 2.6 28.9
Intangibles (g) - 0.5 0.5
-------------------------------------------------------------------------------
Total non current assets 26.3 3.1 29.4
-------------------------------------------------------------------------------
Inventories 2.1 - 2.1
Trade and other receivables 3.6 - 3.6
-------------------------------------------------------------------------------
Total current assets 5.7 - 5.7
-------------------------------------------------------------------------------
Total assets 32.0 3.1 35.1
-------------------------------------------------------------------------------
Financial liabilities (c) (10.3) (0.1) (10.4)
Trade and other payables (b)(h) (6.2) (0.1) (6.3)
Provisions (0.4) - (0.4)
Deferred tax liabilities (a) - (2.7) (2.7)
-------------------------------------------------------------------------------
Total liabilities (16.9) (2.9) (19.8)
-------------------------------------------------------------------------------
Total assets less total liabilities 15.1 0.2 15.3
-------------------------------------------------------------------------------
Share capital 2.8 - 2.8
Share premium 1.2 - 1.2
Other reserves (b) 5.0 0.3 5.3
Retained earnings (d) 6.1 (0.1) 6.0
-------------------------------------------------------------------------------
Total shareholders' equity 15.1 0.2 15.3
-------------------------------------------------------------------------------
UK Effect of
GAAP Transition IFRS
Note #m's #m's #m's
Reconciliation of equity at 30 April 2005
-------------------------------------------------------------------------------
Property, plant and equipment (c)(e)(f) 22.3 0.4 22.7
Intangibles (g) - 0.2 0.2
-------------------------------------------------------------------------------
Total non current assets 22.3 0.6 22.9
-------------------------------------------------------------------------------
Inventories 2.8 - 2.8
Trade and other receivables 3.5 - 3.5
-------------------------------------------------------------------------------
Total current assets 6.3 - 6.3
-------------------------------------------------------------------------------
Non current assets
Trade and other receivables 0.1 - 0.1
Total assets 28.7 0.6 29.3
-------------------------------------------------------------------------------
Financial liabilities (5.9) - (5.9)
Trade and other payables (b)(h) (6.0) (0.2) (6.2)
Current tax liabilities (0.7) - (0.7)
Deferred tax liabilities (a) - (1.7) (1.7)
-------------------------------------------------------------------------------
Total liabilities (12.6) (1.9) (14.5)
-------------------------------------------------------------------------------
Total assets less total liabilities 16.1 (1.3) 14.8
-------------------------------------------------------------------------------
Share capital 2.8 - 2.8
Share premium 1.2 - 1.2
Other reserves (b) 4.3 (1.2) 3.1
Retained earnings (d) 7.8 (0.1) 7.7
-------------------------------------------------------------------------------
Total shareholders' equity 16.1 (1.3) 14.8
-------------------------------------------------------------------------------
Explanation of reconciling items between UK GAAP and IFRS
(a) In accordance with IAS12, provision has been made for deferred tax on
revalued assets. This was not permitted under UK GAAP unless there was a binding
commitment to sell the asset.
(b) In accordance with IAS39, derivatives held by the entity have to be carried
at fair value with movements in the fair value being taken to the income
statement or currency reserves dependent on instrument classification. In the
case of the Group, the only derivative it held at 2 May 2004 and 30 April 2005
was a cash flow hedge and hence any movement in fair value was taken to the
hedging reserve.
(c) The Group has identified one lease, which was classified as an operating
lease for land and buildings under UK GAAP, which under IAS requires
reclassification as a finance lease (in respect of the building element of the
lease). The reclassification of this operating lease to a finance lease resulted
in the recognition of buildings with a net book value of #nil at 2 May 2004. At
the same date a finance lease liability of #0.1m was recognised.
(d) Under IFRS2, a charge is required for all share based payments including
share options. The charge in the income statement is based on the fair value of
the options at grant date. Under UK GAAP, the income statement charge, if any,
is based on the difference between the exercise price and the market price on
the date of issue. In the 52 weeks to 30 April 2005, a charge of #0.1m (#0.1m
after taxation) was required under IFRS2. There is no impact on net assets.
(e) In accordance with IAS16, where entities have adopted a policy of
revaluation for certain classes of assets, there is a requirement to value these
assets on a fair value basis. The Group periodically revalues its freehold and
leasehold land and buildings and was therefore required to employ the services
of a firm of independent Chartered Surveyors to value this class of assets on a
fair value basis. This resulted in an increase in the net book amount at 2 May
2004 of #3.0m and at 30 April 2005 of #0.4m. As a result of the increased
valuation of these assets under IFRS, the net book amount of land and buildings
disposed during the 52 weeks to 30 April 2005 was higher and therefore the
profit recognised on these disposals was reduced by #2.7m.
(f) Under IAS16, entities are required to consider residual values when applying
depreciation policy. The effect of applying this standard was to increase the
net book amount of property, plant and equipment at 2 May 2004 by #0.1m and at
30 April 2005 by #0.1m. Depreciation charges were reduced in the 52 weeks to 30
April 2005 by #0.1m.
(g) Intangible assets were classified under Office and Computer Equipment within
the fixed assets note under UK GAAP. These have now been reclassified as
Intangible Assets. #0.5m was reclassified at 2 May 2004 (#0.2m at 30 April
2005).
(h) In accordance with IAS19, a liability for holiday pay has been recognised at
2 May 2004 of less than #0.1m and at 30 April 2005 of #0.1m.
9. Report and accounts preliminary announcement
The Board of Directors approved the report and accounts and this preliminary
announcement on 24 July 2006. The auditors have completed their audit for the 52
weeks to 29 April 2006 and the preliminary announcement represents an extract
from these audited accounts, upon which the auditors have issued an unqualified
opinion. The report and accounts will be posted to shareholders in September
2006. Further copies can be obtained from the Company's registered office at
Acrey Fields, Woburn Road, Wootton, Bedfordshire MK43 9EJ.
This information is provided by RNS
The company news service from the London Stock Exchange
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