RNS Number:6778E
Inveresk PLC
28 September 2007
Inveresk PLC
Interim Results for the six months ended 30 June 2007
Highlights
*Operating loss of #974,000 (2006 #838,000 as restated under IFRS) arising
out of the continuing operations at St Cuthberts Mill in Somerset, before
net finance income and gains of #4,281,000 from discontinued operations.
*Profits after tax and real estate sales were #3,454,000 (2006 loss of
#1,567,000).
*Restructuring costs at St Cuthberts reduced to #62,000 (2006 #394,000) as
the mill operated closer to full capacity utilisation.
*Margins continue to be under pressure as a result of raw material price
increases and competitive pressures on sales prices.
*Successful introduction of Somerset Photo to a receptive photographic and
computer market for top of the range inkjet papers.
*Significant increase in volume of pre-impregnated resin based papers
passed through the mill albeit at reduced margins.
*Potential development of a new product innovation has led to active
discussions with international partners keen to assist with the
commercialisation and production on a global basis.
*Sale of land, buildings and related equipment completed for #11,000,000
yielding a net gain of #4,895,000 after taking into account decommissioning
and sales costs.
*Changes to the Scottish Executive, following parliamentary elections in
May 2007 has resulted in a delay to the approval of the Fife Council
Structure Plan which is again out for consultation in respect of the
redevelopment around Inverkeithing Bay on the shores of the River Forth
opposite Edinburgh.
Alan Walker, Chief Executive, commented:
"The paper industry has changed little during the period under review and is
characterised by margin pressures and over capacity against a background of flat
customer demand. We remain on the fringes of a struggling industry through the
niche sectors in which we operate, namely, furniture and artist/inkjet papers,
and continue to seek out strategic international partnerships for the future.
The sale of our land assets at Denny in Scotland in accordance with our stated
asset realisation programme has reduced our bank borrowings in the second half
of the year to under #6,000,000 from #12,757,000 at 31 December 2006, with
shareholders' funds rising to #10,713,000 from #6,600,000 at 31 December 2006
(restated under IFRS). We remain focused on our future major real estate
projects".
For further information contact:
Alan Walker Chief Executive Officer 0207 240 1234 (Mobile 07900 445623)
CHAIRMAN'S STATEMENT
Results
The first six months of 2007 have seen very little change in the fortunes of the
European paper industry. Market conditions remain depressed and are
characterised by margin pressures, weak demand and over capacity. Your company
is no longer a major participant within the paper industry as our continuing
businesses are confined to specialist niches within the decor/furniture industry
and the manufacture of quality branded artist/inkjet papers, whereas real estate
plays a more significant role in terms of profit and cash generation.
For the first time our interim results are stated adopting the International
Financial Reporting Standards (IFRS). As a result comparative figures for the
six months ended 30 June 2006 and the year ended 31 December 2006 have been
restated under IFRS. Explanations of the transition and detailed reconciliation
between IFRS and UK GAAP are included at the end of the interim report.
Turnover in value terms for the six months to 30 June 2007 declined by 5.7% to
#6,826,000 (2006 #7,243,000) with an operating loss of #974,000 (2006 #838,000)
and is regarded as disappointing particularly as volumes of business put through
the mill have increased in line with our objectives. In years gone by margins
within the pre-impregnated resin based papers were amongst the best in the
industry but competitive pressures allied to over capacity have increasingly
commoditised these products which are used by the European furniture industry
where intense competition has driven prices lower on a global basis.
Notwithstanding the difficulties faced by our paper interests, a net gain of
#4,895,000 was realised from the sale of our land and property interests in the
Carrongrove site in Denny after accounting for decommissioning, planning and
selling costs. As a result profits for the period after tax and discontinued
operations amounted to #3,454,000 (2006 loss of #1,567,000). Completion of the
Denny land and property transaction took place on 26 June 2007, with the sales
proceeds received on 10 July 2007, and has had a highly positive impact on the
Balance Sheet with interest bearing debt falling below #6,000,000. It remains
your Board's foremost objective to eliminate all borrowings from the Company as
a matter of priority.
Core Business
For the six months ended 30 June 2007 the Company's principal activities
included:
* Manufacture and sale of foil and decor based paper products produced at
St Cuthberts Mill in Somerset for application within the furniture and decor
markets.
* Manufacture and sale of specialist papers used by artists and inkjet
computer/photographic products produced at St Cuthberts Mill in Somerset and
distributed under a service of renowned brands through an increasing number
of worldwide distributions who in future will be supported by sales activity
via the internet.
* The redevelopment of our brown-field sites within the Company's land
portfolio.
St Cuthberts
Our PIP/decor based sales have again experienced very challenging market
conditions. Volume sales have progressed in line with expectations but margins
have remained depressed throughout the period due to rising raw material prices
and the highly competitive nature of the market which continues to suffer from
over capacity. The initiatives which were introduced last year to increase
average batch sizes have produced greater levels of efficiency almost all of
which is counter balanced by weakness in selling prices. The industry is moving
in the direction of pricing its products on a commodity basis.
Sales of artist/inkjet papers have remained resilient over the period in what is
a highly conservative and stable market. Margin levels have remained both
sensible and satisfactory. The sales initiative introduced last year is
beginning to bear fruit and the Far East will soon be a major market for the
Company's products behind the UK and the United States of America. In order to
support our network of distributors and reach further distant markets as yet not
penetrated the Company is about to commence selling a wide range of consumer
based products via a dedicated internet site specifically designed for the
purpose. There remains considerable scope to further develop our worldwide sales
of brands which are easily recognised and which are synonymous with the quality
for which St Cuthberts has become renowned.
A recent addition to our portfolio of brands is Somerset Photo which we have
launched with wide acclaim to a receptive market both in Europe and North
America. This top of the range product has been created with photographers in
mind, using our traditional mould machine. This is an authentic photographic and
artist paper, capable of producing outstanding results on a good inkjet printer.
Land for Development
Carrongrove
The successful sale of land, buildings and related equipment at Carrongrove
realised #11,000,000 together with a carried interest into the future in respect
of further planning gains which materialise over the next ten years. This
project has been delivered in conjunction with Falkirk Council together with our
professional advisers in a relatively short period of time. The benefits to the
local community and to the town of Denny will be demonstrable over the next few
years by the creation of residential housing in a pleasant and picturesque rural
setting.
Inverkeithing
The changes in the Scottish Parliament following elections in May 2007 has
caused further delay to the redevelopment scheme for Inverkeithing Bay. Prior to
the election the Fife Structure Plan awaited ratification from the Scottish
Executive. Since the election considerable debate about housing allocation
within the Kingdom of Fife has resulted in the Plan being once again put out to
consultation with the intention of reducing the number of houses around the Bay
from 900 to 400.
It was always your Board's view that this project would take time to deliver and
nothing that has happened in the recent past seems to detract from that. Our
site remains a priority for redevelopment within the Structure Plan of Fife
Council and as soon as the consultation period is concluded we intend to play
our part in the transformation of the local infrastructure which is not only
long overdue but which is so necessary for the town of Inverkeithing. The
availability of our land and buildings was the original catalyst for change at
Inverkeithing Bay and we very much look forward to working with like minded
developers in the future in order to improve the local amenities for the entire
community.
Finance
Following the sale of our land assets at Carrongrove Mill in Denny and its
impact on shareholders' funds, your Company's Balance Sheet remains in sound
health at this time. Completion of the transaction on 26 June 2007 has, as
mentioned earlier in this Statement, enabled bank debt to be greatly reduced and
your Board has plans to further reduce this in the near future. The failure on
the part of Tullis Russell to deliver the Additional Consideration as part of
their obligations under the Asset Sale Agreement dated 9 June 2005 has resulted
in proceedings being issued in the Commercial Court of the Court of Session in
Edinburgh and we anticipate resolution of this matter over time together with
interest and costs.
Interest charges have fallen significantly since the start of the second half of
the year. This is in line with your Board's strategy of moving into cash just as
soon as practicable. Recent volatility in finance/banking markets suggests that
this strategic ambition is soundly based and in the best interests of your
Company as a whole.
Outlook and Shareholder Value
We are now peripheral players within the paper industry which as an industry has
major problems in terms of a lack of profitability, flat product demand and over
capacity. It is inevitable that further consolidation will take place in the
industry. In our own small way we expect to be able to play some part in the
moves towards production integration/consolidation and will continue to engage
in active discussions on an international basis until we find a strategic
alliance which delivers your Board's stated objectives.
As ever shareholder value lies within our real estate portfolio where we
anticipate that returns to shareholders will be far greater than those available
within the beleaguered paper industry.
Jan Bernander
Chairman
27 September 2007
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
6 months to 6 months to Year ended
30 June 30 June 31 December
2007 2006 2006
Note #'000 #'000 #'000
------------------------- ------ --------- ---------- ----------
Revenue 2 6,826 7,243 13,304
Cost of sales (6,393) (6,614) (12,925)
------------------------- ------ --------- ---------- ----------
Gross profit 433 629 379
Distribution expenses (414) (459) (856)
Administrative expenses (931) (614) (1,525)
Restructuring costs (62) (394) (594)
------------------------- ------ --------- ---------- ----------
Operating loss (974) (838) (2,596)
Other finance income 250 109 216
Finance income 9 4 10
Finance expenses (141) (18) (119)
------------------------- ------ --------- ---------- ----------
Net finance income 118 95 107
------------------------- ------ --------- ---------- ----------
Loss before tax (856) (743) (2,489)
Tax 9 29 24 817
------------------------- ------ --------- ---------- ----------
Loss for the period from
continuing operations (827) (719) (1,672)
Discontinued operations
Gain/(loss) for the period from
discontinued
operations, net of tax 2 4,281 (848) (1,214)
------------------------- ------ --------- ---------- ----------
Profit/(loss) for the period
after tax and
discontinued operations 9 3,454 (1,567) (2,886)
------------------------- ------ --------- ---------- ----------
Attributable to:
Equity holders of the parent 3,454 (1,567) (2,886)
------------------------- ------ --------- ---------- ----------
Profit/(loss) for the period
after tax and
discontinued operations 3,454 (1,567) (2,886)
------------------------- ------ --------- ---------- ----------
From continuing and discontinued
operations
Basic earnings per share 6 2.6p (1.2)p (2.1)p
Diluted earnings per share 6 2.5p (1.1)p (2.1)p
From continuing operations
Basic earnings per share 6 (0.6)p (0.6)p (1.2)p
Diluted earnings per share 6 (0.6)p (0.5)p (1.2)p
------------------------- ------ --------- ---------- ----------
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at As at As at
30 June 30 June 31 December
2007 2006 2006
Note #'000 #'000 #'000
------------------------- ------ --------- ---------- ----------
Assets
Property, plant and equipment 4 7,373 7,856 7,583
------------------------- ------ --------- ---------- ----------
Total non-current assets 7,373 7,856 7,583
Inventories 3,129 2,743 2,619
Trade and other receivables 14,346 3,444 3,231
Retirement benefit assets 1,197 3,007 1,410
Cash and cash equivalents 8 12 4
Assets held for sale 3 6,114 12,309 12,130
------------------------- ------ --------- ---------- ----------
Total current assets 24,794 21,515 19,394
------------------------- ------ --------- ---------- ----------
Total assets 9 32,167 29,371 26,977
------------------------- ------ --------- ---------- ----------
Equity
Issued capital 1,438 1,438 1,438
Retained earnings 5, 9 9,275 8,196 5,162
------------------------- ------ --------- ---------- ----------
Total equity 10,713 9,634 6,600
------------------------- ------ --------- ---------- ----------
Liabilities
Interest bearing loans and 3,692 4,923 4,308
borrowings
Retirement benefit obligations 7 1,432 2,983 2,791
Deferred tax liability 9 1,018 1,224 1,160
------------------------- ------ --------- ---------- ----------
Total non-current liabilities 6,142 9,130 8,259
Bank overdraft 10,281 4,700 7,218
Interest bearing loans and 1,231 1,231 1,231
borrowings
Trade and other payables 3,437 4,138 3,229
Provisions 363 538 440
------------------------- ------ --------- ---------- ----------
Total current liabilities 15,312 10,607 12,118
------------------------- ------ --------- ---------- ----------
Total liabilities 21,454 19,737 20,377
------------------------- ------ --------- ---------- ----------
Total equity and liabilities 9 32,167 29,371 26,977
------------------------- ------ --------- ---------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
6 months to 6 months to Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
------------------------ --------- ---------- ----------
Cash flows from operating activities
Profit for the period 3,454 (1,567) (2,886)
Adjustment for:
Depreciation 268 265 715
Interest expense 299 269 644
Gain on sale of assets - discontinued
operations (4,948) (100) (100)
Equity settled share based payment
expense - - 23
Amortisation of government grants - - (2)
Income tax expense (142) (66) (1,277)
------------------------ --------- ---------- ----------
Operating loss before changes in
working (1,069) (1,199) (2,883)
capital and provisions
Pension service charge net of
contributions (258) (274) (569)
(Increase)/decrease in Inventory (510) 246 370
(Increase)/decrease in Debtors (11,115) 2,016 2,231
Increase/(decrease) in Creditors 217 (1,921) (1,693)
Decrease in Provisions (77) (37) (135)
------------------------ --------- ---------- ----------
Cash generated from operations (12,812) (1,169) (2,679)
Interest paid (547) (317) (726)
Interest received 9 4 10
------------------------ --------- ---------- ----------
Net cash from operating activities (13,350) (1,482) (3,395)
------------------------ --------- ---------- ----------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 10,965 123 126
Acquisition of property, plant and
equipment (58) (38) (39)
------------------------ --------- ---------- ----------
Net cash inflow from investing
activities 10,907 85 87
------------------------ --------- ---------- ----------
Cash flows from financing activities
Repayment of borrowings (616) (615) (1,230)
------------------------ --------- ---------- ----------
Net cash outflow from financing
activities (616) (615) (1,230)
------------------------ --------- ---------- ----------
Net decrease in cash and cash
equivalents (3,059) (2,012) (4,538)
Cash and cash equivalents at start of
period (7,214) (2,676) (2,676)
------------------------ --------- ---------- ----------
Cash and cash equivalents at end of
period (10,273) (4,688) (7,214)
------------------------ --------- ---------- ----------
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED)
6 months to 6 months to Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
------------------------- --------- ---------- ----------
Foreign exchange translation
differences - (1) (1)
Actuarial gains/(losses) recognised
in pension schemes 659 1,289 (449)
------------------------- --------- ---------- ----------
Income and expense recognised
directly in equity 659 1,288 (450)
Profit/(loss) for the period 3,454 (1,567) (2,886)
------------------------- --------- ---------- ----------
Total recognised income and expense
for the period 4,113 (279) (3,336)
------------------------- --------- ---------- ----------
Attributable to:
Equity holders of the parent 4,113 (279) (3,336)
------------------------- --------- ---------- ----------
Total recognised income and expense
for the period 4,113 (279) (3,336)
------------------------- --------- ---------- ----------
NOTES TO THE CONSOLIDATED INTERIM REPORT
1. SIGNIFICANT ACCOUNTING POLICIES
Inveresk PLC is a company domiciled in the United Kingdom. The consolidated
interim report of the company for the six months ended 30 June 2007 comprise the
company and its subsidiaries (together referred to as the "Group").
The consolidated interim report was approved for issue by the Board of Directors
on 27 September 2007.
1.1 Statement of compliance
The consolidated interim report is for the six months ended 30 June 2007. It has
been prepared in accordance with International Financial Reporting Standards
(IFRSs) adopted for interim financial statements and IFRS1 'First time Adoption
of International Financial Reporting Standards' has been applied as it covers
part of the period covered by the Group's first annual financial statements for
the year ending 31 December 2007 under adopted IFRSs.
Reconciliations and descriptions of the effect of the transition from UK GAAP to
the adopted IFRSs on the Group's equity and its net income and cash flows are
provided in note 9.
1.2 Basis of Preparation
The AIM Rules require that the next annual consolidated financial statements of
the company, for the year ending 31 December 2007, be prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the EU
("adopted IFRSs").
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 30 June 2007
that are effective (or available for early adoption) at 31 December 2007, the
Group's first annual reporting date at which it is required to use adopted
IFRSs. Based on these adopted IFRSs, the directors have applied the accounting
policies, as set out below, which they expect to apply when the first annual
IFRS financial statements are prepared for the year ending 31 December 2007.
However, the adopted IFRSs that will be effective (or available for early
adoption) in the annual financial statements for the year ending 31 December
2007 are still subject to change and to additional interpretations and therefore
cannot be determined with certainty. Accordingly, the accounting policies for
that annual period will be determined finally only when the annual financial
statements are prepared for the year ending 31 December 2007.
The comparative figures for the financial year ended 31 December 2006 are not
the company's statutory accounts for that financial year. Those accounts, which
were prepared under UK GAAP, have been reported on by the company's auditors and
delivered to the Registrar of Companies. The report of the auditors was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 237 (2) or (3) of the Companies
Act 1985.
The consolidated interim report has been prepared under the historical cost
convention, except for certain items of property, plant and equipment held at
deemed cost and assets held for sale held at the lower of carrying value or fair
value under the transition rules of the adopted IFRSs.
The accounting policies set out below have been applied consistently to all
periods presented in the consolidated interim report. They also have been
applied in preparing an opening balance sheet at 1 January 2006 for the purpose
of the transition to the adopted IFRSs, as required by IFRS1. The impact of the
transition from previous UK GAAP to the adopted IFRSs is explained in note 9.
1.3 Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) which are
controlled by the Company. Control exists when the Company has the power,
directly or indirectly, to govern the financial and operating policies of the
entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable or convertible are taken
into account. The financial statements of subsidiaries are included in the
consolidated interim report from the date that control commences until the date
that control ceases.
(b) Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the
consolidated interim report. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of
impairment.
1.4 Foreign currency translation
For the purpose of the consolidated interim report, the results and financial
position of each group company are expressed in pounds sterling, which is the
functional currency of the Company, and the presentation currency for the
consolidated financial statements.
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
sterling at the rate of exchange ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement.
The assets and liability of foreign operations (none of which has the currency
of a hyperinflationary economy), are translated at foreign exchange rates ruling
at the balance sheet date. The income and expenses of foreign operations are
translated at rates approximating to the foreign exchange rates ruling at the
dates of the transactions. The resulting exchange differences are taken to
equity reserves.
1.5 Property, plant and equipment
Items of property, plant and equipment are stated at cost or deemed cost less
accumulated depreciation and impairment losses. Subsequent measurement of
tangible assets is on a cost model basis.
The Group recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits embodied within the item
will flow to the Group and the cost of the item can be measured reliably. All
other costs are recognised in the income statement as an expense as incurred.
Depreciation is charged to the income statement to write off cost on a
straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The estimated useful
lives are as follows:
Buildings 30 - 50 years
Plant, machinery and equipment 3 - 20 years
1.6 Intangible assets
All business combinations are accounted for by applying the purchase method.
In respect of business acquisitions that have occurred since 1 January 2006,
goodwill represents the difference between the cost of the acquired subsidiary
and the fair value of the net identifiable assets and contingent liabilities
acquired.
In respect of acquisitions prior to this date goodwill is included on the basis
of its deemed cost, which represents the amount recorded under previous GAAP.
The classification and accounting treatment of business combinations that
occurred prior to 1 January 2006 has not been reconsidered in preparing the
Group's opening IFRS balance sheet at
1 January 2006.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is tested annually for impairment.
Negative goodwill arising on an acquisition is recognised directly in profit or
loss.
Intangible assets other than goodwill that are acquired by the Group are stated
at cost less accumulated amortisation and impairment losses.
1.7 Inventories
Inventories are stated at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses. Cost in
the case of work in progress and finished goods includes an appropriate
proportion of production overheads.
1.8 Trade Receivables
Trade and other receivables are stated at their cost less an appropriate
allowance for irrecoverable receivables.
1.9 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash and cash equivalents for the purpose of the statement of
cash flows.
1.10 Impairment
The carrying amounts of the Group's assets, other than inventories (accounting
policy 1.7), employee benefit assets (accounting policy 1.13) and deferred tax
assets (accounting policy 1.18), are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If any such indication
exists, the asset's recoverable amount is estimated.
For goodwill and other intangible assets that have an indefinite useful life and
intangible assets that are not yet available for use, the recoverable amount is
estimated at each annual balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
(a) Calculation of recoverable amount
The recoverable amount of assets is the greater of their fair value less costs
to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the assets. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
Trade receivables with a short duration are not discounted.
(b) Reversal of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
1.11 Share Capital
Ordinary shares are classified as equity.
When share capital recognised as equity is repurchased, the amount of the
consideration paid, including directly attributable costs, is recognised as a
change in equity. Repurchased shares that are not subsequently cancelled are
classified as treasury shares and presented as a deduction from total equity.
1.12 Borrowings
Interest bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest
bearing borrowings are stated at amortised cost with any difference between cost
and redemption value being recognised in the income statement over the period of
the borrowings on an effective interest basis.
1.13 Employee benefits
(a) Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in the income statement as incurred. The assets of the
schemes are held separately from those of the Group in an independently
administered fund.
(b) Defined benefit plan
The asset or liability recognised in the balance sheet in respect of defined
benefit pension plans is the present value of the defined benefit obligation at
the balance sheet date less the fair value of plan assets, together with
adjustments for unrecognised actuarial gains or losses and past service costs.
The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using
interest rates of high-quality corporate bonds that are denominated in the
currency in which benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension liability.
All actuarial gains and losses at 1 January 2006, on the date of transition to
adopted IFRSs, were recognised. Subsequently all actuarial gains and losses are
recognised directly in the consolidated statement of recognised income and
expense as they arise.
When the calculation results in plan assets exceeding liabilities to the Group,
the recognised asset is limited to the net total of past service costs and the
present value of any currently available future refunds from the plan or
reductions in future contributions to the plan.
(c) Share-based payment transactions
The fair value of options granted after 7 November 2002 and those not yet vested
as at 1 January 2006 is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at the grant date and spread over
the period during which the employees become unconditionally entitled to the
options. The fair value of the options granted is measured using an option
pricing model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to reflect
the actual number of share options that vest except where forfeiture is only due
to share prices not achieving the threshold for vesting. A corresponding credit
is made to equity.
Share options granted after 7 November 2002, which have vested before 1 January
2006, have been ignored for restatement in line with the transitional provisions
of IFRS1.
1.14 Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
A provision for restructuring is recognised when the Group has approved a
detailed and formal restructuring plan, and the restructuring either has
commenced or has been announced publicly. Future operating costs are not
provided for.
A provision for onerous contracts is recognised when the expected benefits to be
derived by the Group from a contract are lower than the unavoidable cost of
meeting its obligations under the contract.
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, when appropriate, the risks specific to the
liability.
1.15 Trade and other payables
Trade and other payables are stated at cost.
1.16 Revenue
Revenue comprises the fair value of the sale of goods and services, net of
value-added tax, rebates and discounts and after eliminating sales within the
Group. Revenue is recognised as follows:
(a) Sale of goods
Sales of goods are recognised when a Group entity has delivered products to a
customer, the customer has accepted the products and collectability of the
related receivables is reasonably assured.
(b) Government grants
Government grants are recognised in the balance sheet initially as deferred
income when there is reasonable assurance that they will be received and that
the Group will comply with the conditions attaching to them.
Grants that compensate the Group for expenses incurred are recognised as revenue
in the income statement on a systematic basis in the same periods in which the
expenses are incurred. Grants that compensate the Group for the cost of an asset
are recognised in the income statement as other operating income on a systematic
basis over the useful economic life of the asset.
1.17 Expenses
(a) Operating lease payments
Payments made under operating leases are recognised in the income statement on a
straight line basis over the term of the lease.
(b) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
(c) Finance income and expense
Finance income comprises interest receivable on funds invested and is recognised
in the income statement as it accrues using the effective interest method.
Finance expense comprises interest payable on borrowings calculated using the
effective interest rate method.
Other finance income includes the expected return on pension scheme assets and
interest on pension scheme liabilities for the defined benefit schemes operated
by the Group.
1.18 Income tax
Income tax on the profit or loss for the periods presented comprises current and
deferred tax. Income tax is recognised in the income statement except to the
extent that it relates to items recognised directly in equity, in which case it
is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantially enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
1.19 Segment Reporting
A segment is a distinguishable component of the Group that is engaged in
providing products or services (business segment) or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
1.20 Assets held for sale
Assets (and disposal groups) classified as held for sale are measured at the
lower of carrying amount and fair value less costs to sell.
Assets and disposal groups are held for sale if their carrying amount will be
recovered through a sale transaction rather than through continuing use. The
condition is regarded as met only when the sale is highly probable and the asset
(or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
1.21 Discontinued operations
A discontinued operation is a component of the Group's business that represents
a separate major line of business.
Classification as a discontinued operation occurs upon disposal or when the
operation meets the criteria to be classified as held for sale, if earlier.
2. SEGMENT REPORTING AND DISCONTINUED OPERATIONS
(a) Primary reporting format - business segments
Following the sale of the "Gemini" paperboard business in June 2005 there is
only one business segment in the Group represented by the sole operational
papermill, St Cuthberts, which together with the associated head office
functions represent the continuing operations of the Group. Therefore the
accounts' disclosures in total, excluding those disclosed separately as
representing discontinued operations, reflect the sole primary business segment
of the Group.
Continuing Discontinued
operations - operations
St Cuthberts
Mill
Revenue Interim Interim Y/E Interim Interim Y/e
30 June 30 June 31 Dec 2006 30 June 30 June 31 Dec 2006
2007 2006 2007 2006
# '000 #'000 #'000 #'000 #'000 #'000
Segment 6,826 7,243 13,304 - - -
Revenue
Consolidated
Revenue Interim Interim Y/e
30 June 30 June 2006 31 Dec 2006
2007 #'000 #'000
#'000
Segment Revenue 6,826 7,243 13,304
Continuing operations - St Cuthberts Mill
Results Year
Interim Interim ended
30 June 2007 30 June 2006 31 December '06
#'000 #'000 #'000
Segment results (521) (949) (2,313)
Unallocated corporate (expense)/income
Operating loss
Net finance income
Less before tax
Tax
Gain/(loss) on sale of discontinued
operations, net of tax - note 2(c)
Profit/(loss after tax and
discontinued operations
Consolidated
Results Interim Interim Year ended
30 June 2007 30 June 2006 31 December
2006
#'000 #'000 #'000
Segment results (521) (949) (2,313)
Unallocated corporate
(expense)/income (453) 111 (283)
Operating loss (974) (838) (2,596)
Net finance income 118 95 107
Less before tax (856) (743) (2,489)
Tax 29 24 817
Gain/(loss) on sale of
discontinued operations, net
of tax - note 2 (c) 4,281 (848) (1,214)
Profit/(loss) after tax and
discontinued operations 3,454 (1,567) (2,886)
(b) Secondary reporting format - geographical segments
The Group's sales are mainly in countries within the eurozone and the UK.
Revenue Interim Interim Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
UK 1,326 1,366 2,417
Europe 4,493 4,922 9,068
Africa 7 7 24
Far East 88 84 217
Rest of World 912 864 1,578
6,826 7,243 13,304
All revenue for the above reporting periods relates to the sole primary business
segment of St Cuthberts papermill.
(c) Discontinued operations
In October 2002 and June 2005 the Group sold its fine paper division and the
"Gemini" paperboard business respectively, each representing a separate business
segment. Both of these segments were subsequently reported as discontinued
businesses under UK GAAP and continue to be presented as discontinued operations
at the date of transition to adopted IFRSs and for all subsequent reporting
periods under adopted IFRSs.
Revenue
The revenue for each of the two discontinued business segments was #nil for the
six months ended 30 June 2007 (six months ended 30 June 2006: #nil, year ended
31 December 2006: #nil).
2. SEGMENT REPORTING AND DISCONTINUED OPERATIONS (continued)
Discontinued operations
----------------
------------ ------------ --------
Results Interim Interim Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
---------------- ------------ ------------ --------
Other gains/(losses)
- restructuring costs (363) (540) (1,055)
- reversal of provisions - 14 158
- impairment of assets - - (257)
- gain on sale of assets held for sale 4,948 - 231
---------------- ------------ ------------ --------
Operating profit/(loss) of discontinued 4,585 (526) (923)
operations
Net finance costs (417) (364) (751)
---------------- ------------ ------------ --------
Gain/(loss) before tax of discontinued 4,168 (890) (1,674)
operations
Tax 113 42 460
---------------- ------------ ------------ --------
Gain/(loss) on sale of discontinued
operations, net of tax 4,281 (848) (1,214)
---------------- ------------ ------------ --------
3. ASSETS HELD FOR SALE
The following assets are held for sale which relate entirely to the discontinued
operations of the two businesses, the fine papers division and the "Gemini"
paperboard business, which were both closed prior to 1 January 2006.
-------------------- -------- ------------ --------
Interim Interim Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
-------------------- -------- ------------ --------
Plant, machinery and equipment 123 2,304 2,125
Land and buildings 5,991 10,005 10,005
-------------------- -------- ------------ --------
Total assets held for sale 6,114 12,309 12,130
-------------------- -------- ------------ --------
During the six months ended 30 June 2006 and the twelve months ending 31
December 2006, assets held for sale were sold resulting in a net gain of
#100,000.
On 26 June 2007, assets relating to the "Gemini" paperboard business and the
Carrongrove site were sold for the net amount of #10,912,000 resulting in a net
gain to the income statement of #4,895,000 for the first six months of 2007.
4. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2007 the Group acquired assets with a cost
of #58,000, all relating to continuing operations (six months ending 30 June
2006: #38,000, year ending 31 December 2006: #39,000).
Assets with a net book value #6,016,000 were disposed of during the six months
ended 30 June 2007, which all related to assets held for sale and discontinued
operations, resulting in a gain on disposal of #4,948,000.
5. CAPITAL AND RESERVES
At the date of transition to adopted IFRSs the balance on the revaluation
reserve is transferred to retained earnings as this balance relates to tangible
assets and assets held for sale which were previously revalued under UK GAAP and
which have been revalued at deemed cost under adopted IFRSs.
The balance on the revaluation reserve under UK GAAP at 31 December 2005 was
#11,220,000 and has been restated at 1 January 2006 to a #nil balance and
remains as a #nil balance for all subsequent reporting periods. The balance on
the retained earnings reserve at 1 January 2006, 30 June 2006 and 31 December
2006 was increased by #11,220,000 as a result of restating the revaluation
reserve to #nil.
6. EARNINGS PER SHARE
---------------- -------- -------- -------- --------- -------- --------
6 months ended 6 months ended 12 months ended 6 months ended 6 months ended 12 months ended
30 June 30 June 31 December 30 June 30 June 31 December
2007 2006 2006 2007 2006 2006
Earnings/(loss)
Earnings/(loss) Earnings/(loss) Earnings/(loss) pence per share Earnings/(loss) Earnings/(loss)
#'000 #'000 #'000 pence per share pence per share
---------------- -------- -------- -------- --------- -------- --------
Basic -
continuing
operations (827) (719) (1,672) (0.6) (0.6) (1.2)
Basic -
discontinued
operations 4,281 (848) (1,214) 3.2 (0.6) (0.9)
---------------- -------- -------- -------- --------- -------- --------
Basic - Total 3,454 (1,567) (2,886) 2.6 (1.2) (2.1)
---------------- -------- -------- -------- --------- -------- --------
Diluted -
continuing
operations (827) (719) (1,672) (0.6) (0.5) (1.2)
Diluted -
discontinued
operations 4,281 (848) (1,214) 3.1 (0.6) (0.9)
---------------- -------- -------- -------- --------- -------- --------
Diluted - Total 3,454 (1,567) (2,886) 2.5 (1.1) (2.1)
---------------- -------- -------- -------- --------- -------- --------
Earnings per share are calculated for the issued shares excluding those
registered in the name of The Inveresk ESOP Trustee Company Limited and those
held as Treasury shares.
The weighted average number of shares used in each calculation is as follows:
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2007 2006 2006
Number of Number of Number of
Shares
Shares Shares
(000s) (000s) (000s)
------------------------------ ---------- --------- ----------
Average of shares in issue
during the financial
period 135,055 135,055 135,055
Adjustment for the
dilutive effect of
employee and director
share options 1,562 2,044 1,660
------------------------------ ---------- --------- ----------
Average of shares in issue
during the financial
period diluted 136,617 137,099 136,715
------------------------------ ---------- --------- ----------
7. EMPLOYEE BENEFITS
Pension plans
The Group provides employee benefits under various arrangements, including
through defined benefit and defined contribution pension plans, the details of
which are disclosed in the most recent annual financial statements
(UK GAAP).
The Group operates two defined benefit schemes which are reported in the balance
sheet under IAS 19 in these interim accounts, details of which are shown below:
Defined benefit scheme with net assets recognised in the consolidated balance
sheet
As at 30 June 2007
-------------------------- --------- ---------- -----------
Interim Interim Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
-------------------------- --------- ---------- -----------
Present value of funded obligations (30,314) (32,163) (31,320)
Fair value of plan assets 37,987 37,066 38,454
-------------------------- --------- ---------- -----------
Surplus in scheme - pension asset 7,673 4,903 7,134
Non-recoverable surplus (6,476) (1,896) (5,724)
-------------------------- --------- ---------- -----------
Net pension asset 1,197 3,007 1,410
-------------------------- --------- ---------- -----------
Defined benefit scheme with net obligations recognised in the consolidated
balance sheet
As at 30 June 2007
-------------------------- --------- ---------- -----------
Interim Interim Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
-------------------------- --------- ---------- -----------
Present value of funded obligations (24,596) (25,175) (26,330)
Fair value of plan assets 23,164 22,192 23,539
-------------------------- --------- ---------- -----------
Deficit in scheme - net pension obligations (1,432) (2,983) (2,791)
-------------------------- --------- ---------- -----------
All actuarial gains and losses are recognised fully through the Statement of
Recognised Income and Expense as they arise.
Expense/income recognised in the consolidated income statement - defined benefit
schemes
The expense or income recognised in the consolidated income statement consists
of the current service costs, interest on the obligation for employee benefits
and the expected return on plan assets. For the six months ended 30 June 2007,
the Group recognised a net income of #146,000 (six months ended 30 June 2006:
expense #26,000, year ended 31 December 2006: expense #38,000).
Actuarial assumptions
The principal actuarial assumptions at the balance sheet dates (expressed as
weighted averages) are shown in the following table:
------------------ ------- ------- ------- -------- -------- --------
Weir Scheme Weir Scheme Weir Scheme Inveresk Scheme Inveresk Scheme Inveresk Scheme
30 June 30 June 31 December 30 June 30 June 31 December
2007 2006 2006 2007 2006 2006
% % % % % %
------------------ ------- ------- ------- -------- -------- --------
Rate of
increase in
salaries n/a n/a n/a 3.1 2.8 2.8
Rate of
increase in
deferred
pensions 3.1 2.8 2.8 3.1 3.0 3.0
Rate of
increase in
pensions in
payment 3.1 3.0 3.0 3.1 3.0 3.0
Discount rate 5.9 5.4 5.3 5.9 5.4 5.3
Inflation
assumption 3.1 2.8 2.8 3.1 2.8 2.8
Expected
return on plan
assets 5.7 5.3 5.3 5.6 5.0 5.0
------------------ ------- ------- ------- -------- -------- --------
8. MOVEMENT IN NET DEBT
Interim Interim Year ended
30 June 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
--------------------------- --------- --------- -----------
Decrease in cash (3,059) (2,012) (4,538)
Cash outflow from debt financing 616 615 1,230
--------------------------- --------- --------- -----------
Increase in net debt in period (2,443) (1,397) (3,308)
Net debt at beginning of period (12,753) (9,445) (9,445)
--------------------------- --------- --------- -----------
Net debt at end of period (15,196) (10,842) (12,753)
--------------------------- --------- --------- -----------
9. EXPLANATION OF TRANSITION TO ADOPTED IFRSs
As stated in note 1, this is the Group's first consolidated interim financial
information for part of the period covered by the first annual consolidated
financial statements to be prepared in accordance with adopted IFRSs.
The accounting policies in note 1 have been applied in preparing the
consolidated interim financial information for the six months ended 30 June
2007, the comparative information for the six months ended 30 June 2006, the
financial statements for the year ended 31 December 2006 and the preparation of
an opening balance sheet at 1 January 2006 (not disclosed) under adopted IFRSs,
the Group's date of transition.
In preparing its opening balance sheet under adopted IFRSs, comparative
information for the six months ended 30 June 2006 and financial statements for
the year ended 31 December 2006, the Group has adjusted amounts reported
previously in financial statements prepared in accordance with previous GAAP.
IFRS1 allows first time adopters certain exemptions from the general
requirements to retrospectively apply the adopted IFRSs as effective for the 31
December 2005 year end. The optional exemptions taken by the Group are as
follows:
Fixed Asset revaluation as deemed cost
Revaluation of property under previous UK GAAP has been used as deemed cost on
transition to IFRS.
Employee benefits
The Group has elected to recognise all cumulative actuarial gains and losses
from employee benefit schemes at the date of transition.
Business Combinations
The Group has elected not to apply IFRS3 "Business Combinations" retrospectively
to transactions that took place prior to the translation date.
Foreign currency translation
Cumulative translation differences in respect of foreign operations have been
deemed to be nil at the date of transition.
An explanation of how the transition from previous GAAP to the adopted IFRSs has
affected the Group's financial position, financial performance and cash flows is
set out in the following tables and the notes that accompany the tables.
RECONCILIATION OF EQUITY AT 1 JANUARY 2006, 30 JUNE 2006 AND 31 DECEMBER 2006
Previous GAAP Effect of transition to IFRS
IFRS
Note 1 January 2006
Assets
Property, plant and
equipment a 10,410 (2,326) 8,084
Total non-current
assets 10,410 (2,326) 8,084
Inventories 2,989 - 2,989
Trade and other
receivables 5,462 - 5,462
Retirement benefit
assets c 2,173 931 3,104
Cash and cash
equivalents 16 - 16
Assets held for sale a 10,005 2,326 12,331
Total current assets 20,645 3,257 23,902
Total assets 31,055 931 31,986
Equity
Issued capital 1,438 - 1,438
Reserves b 11,220 (11,220) -
Retained earnings b,c,d (1,455) 9,930 8,475
Total equity c 11,203 (1,290) 9,913
Liabilities
Interest bearing
loans and borrowings 5,538 - 5,538
Retirement benefit
obligations c 3,768 931 4,699
Deferred tax
liability d - 1,290 1,290
Total non-current
liabilities c 9,306 2,221 11,527
Bank overdraft 2,692 - 2,692
Interest bearing
loans and borrowings 1,231 - 1,231
Trade and other
payables 6,048 - 6,048
Provisions 575 - 575
Total current
liabilities 10,546 - 10,546
Total liabilities c 19,852 2,221 22,073
Total equity and
liabilities 31,055 931 31,986
Previous GAAP Effect of transition to IFRS IFRS
Note 30 June 2006
Assets
Property, plant and
equipment a 10,160 (2,304) 7,856
Total non-current
assets 10,160 (2,304) 7,856
Inventories 2,743 - 2,743
Trade and other
receivables 3,444 - 3,444
Retirement benefit
assets c 2,105 902 3,007
Cash and cash
equivalents 12 - 12
Assets held for sale a 10,005 2,304 12,309
Total current assets 18,309 3,206 21,515
Total assets 28,469 902 29,371
Equity
Issued capital 1,438 - 1,438
Reserves b 11,197 (11,197) -
Retained earnings b,c,d (1,784) 9,980 8,196
Total equity c 10,851 (1,217) 9,634
Liabilities
Interest bearing
loans and borrowings 4,923 - 4,923
Retirement benefit
obligations c 2,088 895 2,983
Deferred tax
liability d - 1,224 1,224
Total non-current
liabilities 7,011 2,119 9,130
Bank overdraft 4,700 - 4,700
Interest bearing
loans and borrowings 1,231 - 1,231
Trade and other
payables 4,138 - 4,138
Provisions 538 - 538
Total current
liabilities 10,607 - 10,607
Total liabilities c 17,618 2,119 19,737
Total equity and
liabilities 28,469 902 29,371
Previous GAAP Effect of transition to IFRS
IFRS
Note 31 December 2006
Assets
Property, plant and
equipment 9,708 (2,125) 7,583
Total non-current
assets 9,708 (2,125) 7,583
Inventories 2,619 - 2,619
Trade and other
receivables 3,231 - 3,231
Retirement benefit
assets 987 423 1,410
Cash and cash
equivalents 4 - 4
Assets held for 10,005 2,125 12,130
sale
Total current 16,846 2,548 19,394
assets
Total assets 26,554 423 26,977
Equity
Issued capital 1,438 - 1,438
Reserves 11,170 (11,170) -
Retained earnings (4,848) 10,010 5,162
Total equity 7,760 (1,160) 6,600
Liabilities
Interest bearing
loans and 4,308 - 4,308
borrowings
Retirement benefit
obligations 2,368 423 2,791
Deferred tax
liability - 1,160 1,160
Total non-current
liabilities 6,676 1,583 8,259
Bank overdraft 7,218 - 7,218
Interest bearing
loans and 1,231 - 1,231
borrowings
Trade and other
payables 3,229 - 3,229
Provisions 440 - 440
Total current
liabilities 12,118 - 12,118
Total liabilities 18,794 1,583 20,377
Total equity and
liabilities 26,554 423 26,977
Notes to the reconciliation of equity
(a) Plant, machinery and equipment associated with the discontinued operations
of the fine papers division and the "Gemini" paperboard business have been
reclassified as "current assets held for sale".
(b) The revaluation reserve containing the increases and decreases in
revaluations prior to 1 January 2006 under UK GAAP, has been transferred to
equity following the valuation of assets at the transition date on the basis of
either deemed cost or the lower of carrying amount or fair value less costs to
sell. Subsequent measurement of assets is on the basis of a cost model.
(c) Deferred tax previously netted off within defined benefit schemes with
assets and liabilities is now excluded from the pension scheme assets and
liabilities and is eliminated against unrecognised deferred tax assets which the
directors do not consider appropriate to recognise.
(d) A deferred tax liability is recognised on adoption of IAS12 "Income taxes"
which requires deferred tax to be accounted for on temporary differences
including assets which have been revalued. At the date of transition the
deferred tax liability on the previous revaluation of assets has been estimated
as #1,290,000 with the effect of increasing the balance sheet liabilities at 31
December 2005 by #1,290,000 (30 June 2006: #1,224,000, 31 December 2006:
#1,160,000) and decreasing equity by the same amount at the respective balance
sheet dates.
RECONCILIATION OF PROFIT FOR THE SIX MONTHS TO 30 JUNE 2006 AND THE YEAR ENDED
31 DECEMBER 2006
Previous GAAP Effect of IFRS Previous GAAP Effect of IFRS
transition to transition to
IFRS IFRS
For the six months ended For the year ended
#'000 Note 30 June 2006 31 December 2006
---------------------- ------ --------------- ---------------
------ ------ ------- ------
Revenue 7,243 - 7,243 13,304 - 13,304
Cost of Sales (6,614) - (6,614) (12,925) - (12,925)
---------------------- ------ ------ ------- ------ ------ ------- ------
Gross Profit 629 - 629 379 - 379
Distribution
expenses (459) - (459) (856) - (856)
Administration
expenses (614) - (614) (1,525) - (1,525)
Restructuring
costs (394) - (394) (594) - (594)
---------------------- ------ ------ ------- ------ ------ ------- ------
Operating loss (838) - (838) (2,596) - (2,596)
Other finance
income a 109 - 109 117 99 216
Finance income 4 - 4 10 - 10
Finance
expenses (18) - (18) (119) - (119)
---------------------- ------ ------ ------- ------ ------ ------- ------
Net finance
income 95 - 95 8 99 107
---------------------- ------ ------ ------- ------ ------ ------- ------
(Loss)/profit
before tax (743) - (743) (2,588) 99 (2,489)
Tax b - 24 24 769 48 817
---------------------- ------ ------ ------- ------ ------ ------- ------
(Loss)/profit
for the period
from
continuing
operations (743) 24 (719) (1,819) 147 (1,672)
Discontinued operations
(Loss)/gain
for the period
from
discontinued
operations a,b (890) 42 (848) (1,311) 97 (1,214)
---------------------- ------ ------ ------- ------ ------ ------- ------
(Loss)/profit
for the period
after tax and
discontinued
operations (1,633) 66 (1,567) (3,130) 244 (2,886)
------------------------- ------ ------- ------ ------ ------- ------
Notes to the reconciliation of profit
(a) Under UK GAAP a restriction was put on the expected rate of return from a
defined benefit pension scheme which is not applied under IAS19 "Employee
benefits". The effect of this adjustment is to reduce the loss for the twelve
months ending 31 December 2006 by #114,000. This adjustment is allocated on the
basis of #99,000 to continuing operations and #15,000 to discontinued
operations. There is no effect on the asset or liability recognised for the
pension scheme as there is an equal and opposite actuarial loss recognised in
the consolidated statement of recognised income and expense.
(b) On adoption of IAS12 "Income taxes" changes to the calculation of deferred
tax have resulted in a gain to the income statement for the six months ending 30
June 2006 of #66,000, #24,000 allocated to continuing operations and #48,000 to
discontinued operations (year ending 31 December 2006: gain #130,000, #48,000
allocated to continuing operations, #82,000 allocated to discontinued
operations).
There are no material adjustments to the cash flow statement arising from the
transition to, and adoption of, International Financial Reporting Standards.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FGGZLNNDGNZM
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