RNS Number:4714B
Stanley Gibbons Group Limited
03 August 2007
THE STANLEY GIBBONS GROUP LIMITED
3 August 2007
THE STANLEY GIBBONS GROUP LIMITED
INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2007
The Company today announces its Interim Results for the six months to 30 June
2007. Highlights include:
* Profit before tax up 25% at #1,704,000 (2006: #1,361,000)
* Earnings per share up 30% to 5.16p (2006: 3.97p)
* Sales up 16% to #8,819,000 (2006: #7,623,000)
* Autograph and memorabilia sales increased by 52% with a greater
appreciation by investors of the potential returns from the market in
autographs and memorabilia
* Interim dividend declared of 1.75p net per Ordinary Share (2006: 1.5p
net per Ordinary Share), representing an increase of 17%, payable on 17
September 2007 to all holders on the Register at the close of business on 17
August 2007
* Sales of #1,077,000 (12.2%) made to customers recruited from our
websites compared to #766,000 (10%) of sales in the prior period
Commenting on current trading, Paul Fraser, Chairman said:
"This is our 13th consecutive increase in profits that we have announced to the
market since our demerger in 2000 from Flying Brands. We have increased our
levels of premium grade material in both stamps and autographs in the first half
in order to supply the ever increasing demand. We intend focusing resources into
stock and the necessary expertise to prepare for the next level of growth and to
fully implement our plans.
These are exciting times for collectibles and Stanley Gibbons is now in the
forefront of the market, although we still represent less than 1%. So we look
forward to the second half and the implementation of further initiatives that we
have planned that should continue to help us to outperform."
For further information, contact:
The Stanley Gibbons Group Limited
Michael Hall, Chief Executive 020 7836 8444
Seymour Pierce Limited
Jonathan Wright 020 7107 8000
Chairman's Statement
Financials
I am very pleased to report yet another record result for The Stanley Gibbons
Group Limited. Profit before tax for the period was #1,704,000 (2006:
#1,361,000), representing an increase of 25.2% on what was an exceptionally
strong half year performance in the prior year. Turnover increased by 15.7% to
#8,819,000 (2006: #7,623,000).
Earnings per Ordinary Share for the six months ended 30 June 2007 were 5.16p
(2006: 3.97p) representing an increase of 30%, which benefit further from
profits attributable to new business in Guernsey being taxable at the lower rate
of 20%.
Dividend
The Company paid a final dividend of 2.5p net per Ordinary Share, in respect of
the year ended 31 December 2006, on 23 April 2007. Your Board is pleased to
declare an interim dividend of 1.75p (2006: 1.5p) net per Ordinary Share,
representing an increase of 16.7%, payable on 17 September 2007 to holders of
Ordinary Shares on the Register at the close of business on the record date of
17 August 2007. The proposed dividend of 1.75p net per Ordinary share is
expected to result in a distribution to shareholders of #440,000 (2006:
#376,000).
Outlook
Premium quality and rarity in collectibles is now being appreciated in a way
that was never envisaged by most, but carefully followed by a few astute
collectors and investors. The difference in appreciation and pricing between
grades at the higher level is now much greater than a consistent percentage step
that was applied in the past. In the United States, grading of coins, stamps and
autographs is gaining pace and the uplift in the pricing model reflects the new
grades, the transparency of the pricing accorded to those grades, and gives
collectors and investors greater comfort in knowing the true authenticity and
price of each individual item and hence creating a more liquid market.
This bodes well for Stanley Gibbons as we have always restricted ourselves to
the higher grade of material available and we have suffered from competitors
grading their material at the supposed same level, when clearly it was not.
This should give us yet another competitive edge in the market and, by our
involvement in this grading process in the United Kingdom, give us access to a
greater pool of expertise and pricing knowledge and strengthen our brand by
association. This is a very exciting development for Stanley Gibbons and should
deskill to a certain degree the process of buying and selling, making it more
transparent to all, and something that can be relied upon as a guarantee to
collectors and investors alike. We have always believed, as part of our
strategy, that prices should rise and there should be some reduction in margins
but there should be a huge increase in sales and Stanley Gibbons should
accelerate its increase in market share, which is still well below 1% of the
annual global market.
We maintain that the key factor is buying the right stock, at the right price,
and keeping up with the quantity needed to satisfy the increasing demand. We
have clients' wants lists of over #15 million and a business need for a further
#10+ million per year.
I am pleased to report that our stock levels are higher at the half year,
especially at the top end, and we are on course in reducing stocks of middle and
lower price items. It has been an excellent performance in all areas of the
Group in the first half and we are focusing resources on the high growth areas
that we have identified, particularly rare stamps and autographs, and developing
our auction business. We are also looking for the right acquisitions and
strategic partnerships as part of our long-term plan.
Stakeholders
I would like to thank all my colleagues for their endeavours and their
contribution to keeping the strategy fully on track.
Paul Fraser
Chairman
2 August 2007
Operating Review
6 months 6 months 6 months 6 months Year Year
to 30 to 30 to 30 to 30 ended 31 ended 31
June 2007 June 2007 June 2006 June 2006 December December
2006 2006
Sales Profit Sales Profit Sales Profit
#000 #000 #000 #000 #000 #000
Philatelic
trading and
retail
operations 6,327 1,509 5,634 1,373 12,194 3,231
Publishing and
philatelic
accessories 1,297 310 1,201 270 2,787 814
Dealing in
autographs,
records and
related
memorabilia 1,172 545 773 350 1,664 793
------------------ ------ ------ ------ ------ ------ ------
8,796 2,364 7,608 1,993 16,645 4,838
Corporate
overheads (707) (691) (1,228)
New business
development 23 (25) 15 (24) 39 (40)
Interest and
similar
income/charges 72 83 176
------------------ ------ ------ ------ ------ ------ ------
Group total
sales and
profit before
tax 8,819 1,704 7,623 1,361 16,684 3,746
------------------ ------ ------ ------ ------ ------ ------
Sales
Overall group turnover increased by #1,196,000 (15.7%) compared to the same
period last year. Sales growth was driven by a stronger investment in our
stockholding of high value rarities in line with our strategy, which has enabled
us to increase trading at the top end of the market. As a result, average order
values have increased by 36% compared to the same period last year.
Philatelic trading and retail sales increased by 12.3% against the same period
last year. We have made significant progress in our strategy towards broadening
the supply chain to build our stockholding in key rarities. As a result of our
increased investment in stock, sales to collectors of stamps from Great Britain
showed exceptional growth in the period, increasing by 67.8%. The higher value
and improved quality of our current stockholding puts us in a stronger position
to achieve further growth in the second half.
Sales to investment clients increased by 11.9% compared to the prior period
despite a 12.9% reduction in the sale of guaranteed minimum return investment
contracts. The sale of investment portfolios under interest free credit options
has proved very popular and we are now beginning to develop successfully our
active management investment portfolio service. Neither of these investment
products offer any guarantee on the value of re-purchase prices. The development
of the sale of autographs to investors has been particularly successful and
represented 23.8% of total investment sales in the period compared to 15.5% in
the prior period. We have recently launched a new style of communication to
current and potential investment clients through our weekly newsletter service
with responses to date exceeding our own expectations. This low cost form of
communication to all our clients is expected to, going forward, become the most
effective marketing medium for the entire Group.
Sales from our auction department were 21.1% lower than the same period last
year. The prior period result was however exceptional in that it included an
additional auction sale and the current decline in sales is more of a timing
issue rather than an indication of a long term trend. The development of our
auction business still represents a key element of our strategy and we intend to
accelerate the development of opportunities in this area either by organic
growth or through acquisition.
Publishing and philatelic accessory sales increased by 8% from the same period
last year. Sales growth has been achieved through an improved publishing
schedule for the first half this year together with expansion of our range of
third party stamp albums and accessory products. The strength and popularity of
our internet site enables us to offer a wider range of products to collectors
online with minimal stockholding and order processing costs.
Operating Review
Autographs and memorabilia sales were 51.6% higher than in the same period last
year. The improved performance is mainly the result of a greater appreciation by
investors of the potential returns from the market in autographs and
memorabilia. Retail sales of autographs were 46.2% improved on the prior period
benefiting from the improved quality of our stockholding in key rarities.
Gross Margins
The gross margin for the six months ended 30 June 2007 was 46.8% compared to
48.2% for the same period last year. Cost of sales includes a provision of
#51,000 made in the period against guaranteed minimum return investment
contracts. The reduction in the gross margin percentage is in line with our
expectations and is attributable mainly to lower margins on philatelic dealing
and investment sales as the margin available on the sale of high value stamps
and autographs is lower.
Profitability
The profit before tax for the period of #1,704,000 compares to a profit for the
same period last year of #1,361,000, representing an increase of 25.2% on what
was an exceptionally strong half year performance in the prior year. Profit
growth has been facilitated by the continued growth in sales.
Group overheads were 4% higher than in the same period last year mainly as a
result of increased salary and marketing costs to support the areas of sales
growth and our future plans.
Salary overhead was up 2.8% in the period. Salaries represented 15.5% of sales
compared to 17.4% for the same period last year demonstrating an improved return
on staff.
Other overheads were #60,000 higher than in the prior period and include #44,000
costs associated with the running of our offices in Guernsey. Marketing costs
were #33,000 higher than in the prior period mainly to support growth with the
history of information we now have on marketing responses enabling us to
increase our spend in areas which have proved to provide the highest returns in
the past.
New Business Development
In the six months ended 30 June 2007, #1,077,000 (12.2%) of sales were made to
customers recruited from our websites compared to #766,000 (10%) of sales in the
prior period. Our websites received 1,900,000 visitors in the first six months
of 2007 compared to 1,400,000 in the prior period, representing an increase of
35.7%.
Corporate Overheads
Corporate overheads were #16,000 (2.3%) higher than the same period last year.
Costs for the period include the new Finance Director from February and
Executive Director responsible for our business development within North America
from May.
Cashflow
The net cash outflow from operating activities of #612,000 during the period
included an increase in the cost of our stockholding of #1,226,000 as a
consequence of greater investment into the purchase of high value philatelic and
autograph rarities to support future sales growth. The high levels of trade
experienced during the month of June, including our public auction, resulted in
higher trade debtor balances at the period end.
International Financial Reporting Standards (IFRS)
The 2006 Annual Report highlighted the requirement for the Group to prepare its
results in accordance with International Financial Reporting Standards (IFRS).
The interim results are the first set to be reported under these new rules. The
appropriate restatements under IFRS and reconciliations to previously reported
figures under UK GAAP for June 2006 and December 2006 have been included in the
supporting notes.
Consolidated Income Statement
6 months to 6 months to Year ended
30 June 30 June 31 December
2007 2006 2006
Notes #'000 #'000 #'000
---------- -------- --------
Revenue 8,819 7,623 16,684
Cost of sales (4,691) (3,946) (8,448)
--------------------- ------ ---------- -------- --------
Gross Profit 4,128 3,677 8,236
Administrative expenses (884) (845) (1,569)
Distribution costs (1,612) (1,554) (3,097)
--------------------- ------ ---------- -------- --------
Operating Profit 1,632 1,278 3,570
Finance income 74 83 176
Finance costs (2) - -
--------------------- ------ ---------- -------- --------
Profit before tax 1,704 1,361 3,746
Taxation (408) (369) (972)
--------------------- ------ ---------- -------- --------
Profit for the financial 1,296 992 2,774
period
--------------------- ------ ---------- -------- --------
Earnings per Ordinary Share 2 5.16p 3.97p 11.07p
Diluted earnings per Ordinary
Share 2 5.14p 3.96p 11.06p
Consolidated Statement of Recognised Income & Expense
6 months to 6 months to Year ended
30 June 2007 30 June 2006 31 December 2006
#'000 #'000 #'000
Profit for the financial
period 1,296 992 2,774
Surplus on revaluation of
assets - - 47
Deferred tax attributable to
revaluation of assets - - (14)
Actuarial gains recognised in
the pension scheme - - 348
Deferred tax attributable to
actuarial gains - - (105)
----------------------- -------- -------- ----------
Total recognised income for
the period 1,296 992 3,050
----------------------- -------- -------- ----------
Consolidated Balance Sheet
30 June 30 June 31 December
2007 2006 2006
Notes #'000 #'000 #'000
--------- -------- --------
Non-current assets
Intangible assets 59 96 83
Property, plant and equipment 1,018 980 1,034
Deferred tax asset 33 119 25
Trade and other receivables 1,427 - 610
---------------------- ------ --------- -------- --------
2,537 1,195 1,752
---------------------- ------ --------- -------- --------
Current Assets
Inventories 7,261 5,882 6,035
Trade and other receivables 4,277 2,382 3,254
Cash and cash equivalents 1,460 3,386 3,083
---------------------- ------ --------- -------- --------
12,998 11,650 12,372
Total assets 15,535 12,845 14,124
---------------------- ------ --------- -------- --------
Current liabilities
Trade and other payables 2,495 2,187 1,894
Current tax payable 580 409 513
---------------------- ------ --------- -------- --------
3,075 2,596 2,407
Non-current liabilities
Retirement benefit obligations 110 397 84
Other provisions for liabilities and
charges 437 323 400
---------------------- ------ --------- -------- --------
547 720 484
------ --------- -------- --------
Total liabilities 3,622 3,316 2,891
---------------------- ------ --------- -------- --------
Net assets 11,913 9,529 11,233
---------------------- ------ --------- -------- --------
Equity
Called up share capital 251 251 251
Share premium account 5,148 5,134 5,148
Capital redemption reserve 38 38 38
Revaluation reserve 177 144 177
Retained earnings 6,299 3,962 5,619
---------------------- ------ --------- -------- --------
Equity shareholders' funds 4 11,913 9,529 11,233
---------------------- ------ --------- -------- --------
Consolidated Cash Flow Statement
6 months to 6 months to Year ended
30 June 30 June 31 December
2007 2006 2006
Notes #'000 #'000 #'000
-------- -------- ---------
Cash (used in)/ generated from
operations 3 (612) 1,698 2,293
Interest paid (2) - -
Taxes paid (361) (472) (978)
--------------------- ------ -------- -------- ---------
Net cash (used in)/generated
from operating activities (975) 1,226 1,315
--------------------- ------ -------- -------- ---------
Investing activities
Purchase of property, plant and
equipment (57) (48) (120)
Purchase of intangible assets (4) (6) (25)
Interest received 41 49 110
--------------------- ------ -------- -------- ---------
Net cash used in investing
activities (20) (5) (35)
--------------------- ------ -------- -------- ---------
Financing activities
Dividends paid to company
shareholders (628) (501) (877)
Net proceeds from issue of
ordinary share capital - 81 95
--------------------- ------ -------- -------- ---------
Net cash used in financing
activities (628) (420) (782)
--------------------- ------ -------- -------- ---------
--------------------- ------ -------- -------- ---------
Net (decrease) / increase in
cash and cash equivalents (1,623) 801 498
--------------------- ------ -------- -------- ---------
Cash and cash equivalents at
start of period 3,083 2,585 2,585
--------------------- ------ -------- -------- ---------
Cash and cash equivalents at
end of period 1,460 3,386 3,083
--------------------- ------ -------- -------- ---------
Notes to the unaudited interim report
1 Accounting policies and presentation
Adoption of International Financial Reporting Standards (IFRS)
For all periods up to and including 31 December 2006 The Stanley Gibbons Group
Limited has prepared its financial statements in accordance with UK Generally
Accepted Accounting Practice (UK GAAP). AIM Rules require that the annual
consolidated financial statements of The Stanley Gibbons Group Limited for the
year ended 31 December 2007 be prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the EU.
Accordingly, these interim financial statements which are for the six months
ending 30 June 2007 have been prepared for the first time in accordance with
International Financial Reporting Standards and are covered by IFRS1, First-time
Adoption of IFRS.
These interim financial statements were approved by the Board on 2 August 2007.
The financial information for the year ended 31 December 2006 set out in this
interim report does not comprise the Groups statutory accounts as defined by
Companies (Jersey) Law 1991. The statutory accounts, which were prepared under
UK Generally Accepted Accounting Practice (UK GAAP), on which the auditors gave
an unqualified report, have been delivered to the Jersey Registrar of Companies.
The financial information for the six months ended 30 June 2007 and 30 June 2006
is unaudited.
The information presented within these interim financial statements is in
compliance with IAS 34 "Interim Financial Reporting".
In preparing these interim financial statements the comparative figures
previously reported under UK GAAP have been restated for the transition to IFRS.
The disclosures required by IFRS 1 regarding the transition for the relevant
periods are given in note 7. Except where noted in the policies below, the same
accounting policies and methods of computation have been followed in the interim
financial statements as compared to the most recent annual financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its wholly owned subsidiary Companies. Intra-Group sales and
profits are eliminated on consolidation, and all sales and profit figures relate
to external transactions only.
Intangible Assets
Computer Software
As per IAS 38, purchased computer software that will generate economic benefit
beyond one year is capitalised as an intangible asset and amortised over its
expected useful economic life of four years on a straight-line basis.
Property, plant and equipment and depreciation
Tangible fixed assets, other than the reference collection, are stated at their
purchase price, including any incidental expenses of acquisition. Fixed assets
include a reference collection of certain stamps held on a long term basis.
Additions to the collection are depreciated by 50% immediately on acquisition to
provide for the usage of such items. No further depreciation is charged
thereafter because in the opinion of the Directors the residual value is
expected to exceed net book value for the foreseeable future.
The reference collection is stated at the revalued amount, being its fair value
at the date of the revaluation less any accumulated depreciation and any
subsequent impairment loss. A full valuation is undertaken every five years by a
qualified external valuer, an interim valuation is carried out in year three by
the Group's expert stamp dealers.
Depreciation is calculated to write down the net book value of tangible fixed
assets less their residual value on a straight-line basis, over the expected
useful economic lives of the assets concerned. The principal annual rates used
for this purpose are:
Freehold buildings 2%
Vehicles, plant and machinery 16 - 25%
Fixtures, fittings, tools and equipment 7 - 25%
Leasehold improvements Over period of lease
Inventories
Inventories are valued at the lower of cost and net realisable value after
making allowance for obsolete and slow moving items. In the case of stamp
inventories it is not always practicable to ascertain individual costs. The cost
of parcels of high value stamps is apportioned between the items purchased on
the basis of the expert opinion of the Group's stamp dealers. Lower value stamp
inventories are valued as a proportion of their anticipated realisable value, as
a best estimate of cost, based on the expert opinion of the Group's stamp
dealers.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred
tax.
The tax currently payable is based on the estimated taxable profit for the year.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates that have
been enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Foreign currencies
Transactions denominated in foreign currencies are translated into sterling at
the exchange rate ruling when the transaction was entered into. Foreign currency
monetary assets and liabilities are translated into sterling at the exchange
rate ruling at the balance sheet date. Exchange gains or losses are included in
operating profit.
Leased Assets
Rentals payable under operating leases are charged to the income statement on a
straight line basis over the lease term.
Retirement benefits
The Group operates a defined benefit pension scheme. The assets of the scheme
are held and managed separately from those of the Group. In accordance with IAS
19 for defined benefit schemes, the liability in the balance sheet represents
the present value of the defined benefit obligations at that date less the fair
value of plan assets. The defined benefit obligation is calculated periodically
by an independent actuary.
Current service costs are recognised in operating costs in the income statement.
Interest costs on plan liabilities and the expected return on plan assets are
recognised in finance costs. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to the
consolidated Statement of Recognised Income and Expense.
Pension scheme assets are measured at their market value and liabilities are
measured on an actuarial basis using the projected unit method and discounted at
a rate equivalent to the current rate of return on a high quality corporate bond
or equivalent currency and term to the scheme liabilities. The actuarial
valuations are performed by a qualified actuary on a triennial basis and are
updated at each balance sheet date. The resulting defined benefit asset or
liability is presented separately as a non-current asset or liability on the
face of the balance sheet.
Under IAS 19 the retirement benefit obligation is recognised gross of deferred
tax.
Share options
The fair value of share options granted to certain employees and Directors is
recognised as an expense. The total amount to be apportioned over the vesting
period of the benefit is determined by reference to the fair value of the
options determined at the grant date. The non-market vesting conditions are
included in assumptions about the number of options that are expected to become
exercisable. The estimate is revised at each balance sheet date and the
difference is charged or credited to the profit and loss account, with the
corresponding adjustment to equity. The proceeds received on exercise of the
options are credited to equity.
Revenue
Revenue represents amounts invoiced by the Group in respect of goods sold and
services provided during the period excluding any applicable value added tax. In
respect of auctions held by the Group, revenue represents amounts invoiced in
respect of vendors' commissions and buyers' premiums, excluding value added tax.
In respect of all other transactions revenue is recognised at point of sale.
2 Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the weighted
average number of shares in issue during the period.
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 only one category of dilutive 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 period. Also in
existence at the period end were 173,718 options issued under the Company's 2007
Long-Term Incentive Plan (LTIP). These options were not dilutive at the period
end.
6 months to 6 months to Year ended
30 June 2007 30 June 2006 31 December 2006
Weighted average number of
ordinary shares in issue 25,137,443 24,975,737 25,051,638
Dilutive potential ordinary
shares: Employee share options 72,892 46,754 21,257
Profit after tax (#) 1,296,000 992,000 2,774,000
Basic earnings per share -
pence per share (p) 5.16p 3.97p 11.07p
----------------------- --------- --------- ----------
Diluted earnings per share -
pence per share (p) 5.14p 3.96p 11.06p
----------------------- --------- --------- ----------
3 Cash (used in)/generated from operations
6 months to 6 months to Year ended
30 June 2007 30 June 2006 31 December 2006
#'000 #'000 #'000
Operating profit 1,632 1,278 3,570
Depreciation 101 95 192
Increase in provisions 108 198 324
Cost of share options 12 10 18
(Increase)/decrease in
inventories (1,226) 67 (86)
(Increase)/decrease in trade
and other receivables (1,840) 567 (915)
Increase/(decrease) in trade
and other payables 601 (517) (810)
----------------------- --------- --------- ----------
Cash (used in)/generated from
operations (612) 1,698 2,293
----------------------- --------- --------- ----------
4 Reconciliation of movement in shareholders' equity
6 months to 6 months to Year ended
30 June 2007 30 June 2006 31 December 2006
#'000 #'000 #'000
Profit for the financial period 1,296 992 2,774
Dividends (628) (501) (877)
Employees share option scheme
-value of employee services 12 10 18
-proceeds from shares issued - 81 95
Surplus on revaluation of
assets net of tax - - 33
Actuarial gains in pension
scheme net of tax - - 243
----------------------- -------- -------- ----------
Net increase in shareholders'
equity 680 582 2,286
Equity at the start of the period 11,233 8,947 8,947
----------------------- -------- -------- ----------
Equity at the end of the period 11,913 9,529 11,233
----------------------- -------- -------- ----------
5 Dividends
6 months to 6 months Year ended
30 June to 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
Amounts recognised as distribution to equity
holders in period:
Dividend paid 628 501 877
Dividend paid per share 2.5p 2p 3.5p
Dividend proposed but not paid 440 376 628
Dividend proposed per share 1.75p 1.5p 2.5p
6 Further copies of this statement
Copies of this statement are being sent to shareholders. Further copies are
available on request from: The Company Secretary, The Stanley Gibbons Group
Limited, 399 Strand, London, WC2R 0LX.
7 Transition from UK GAAP to IFRS
As required under IFRS 1, the equity reconciliations at 1 January 2006 (the
transition date for IFRS) and at 31 December 2006 (date of last UK GAAP
financial statements) are set out below. For comparative purposes, the equity
reconciliation at 30 June 2006 is also included to enable a comparison of the
2007 published interim figures. There are no reconciling adjustments to the
income statement for any of these periods.
The net effect of adopting IFRS rather than UK GAAP for the year ending 31
December 2006 is to reduce net assets from #11,309,000 to #11,233,000,
principally due to the changes in reserves as explained below. The changes have
no impact on the profit on ordinary activities before tax or the cashflows
previously reported, but has lead to a change in the format of the cash flow
statement.
The most significant change for the Group in its financial statements for the
year ending 31 December 2006 was a reduction of the revaluation reserve due to
the provision of deferred tax on the revaluation element of the reference
collection. The net impact on assets as at 1 January 2006 and 30 June 2006 was a
decrease of #62,000, and as at 31 December 2006 was a decrease of #76,000.
In addition, there are other presentational changes on the balance sheet arising
from the transition to IFRS. These are:
a) The reclassification of capitalised software costs to intangible assets
from property plant and equipment.
b) The creation of a deferred tax asset as the deferred tax attributable
to the pension deficit is no longer netted off against retirement benefit
obligations in the balance sheet.
Reconciliation of UK GAAP equity to IFRS equity
31 December 2006 30 June 2006 1 January 2006
#'000 #'000 #'000
Capital and Reserves
according to UK GAAP 11,309 9,591 9,009
Effect of adopting:
IAS 12 - Income Taxes (76) (62) (62)
----------------------- ---------- ------- ---------
Equity according to IFRS 11,233 9,529 8,947
----------------------- ---------- ------- ---------
Reconciliation of UK GAAP balance sheet to IFRS balance sheets
As at 31 December 2006 As at 30 June 2006 As at 1 January 2006
As As As
previously As previously As previously As
reported restated reported restated reported restated
under Effect of Under under Effect of Under under Effect of Under
UK GAAP transition IFRS UK GAAP transition IFRS UK GAAP transition IFRS
Non-current
assets
Intangible
assets - 83 83 - 96 96 - 122 122
Property,
plant and
equipment 1,117 (83) 1,034 1,076 (96) 980 1,117 (122) 995
Deferred tax
asset - 25 25 - 119 119 - 111 111
Trade and
other
receivables - 610 610 - - - - - -
1,117 635 1,752 1,076 119 1,195 1,117 111 1,228
Current Assets
Inventories 6,035 - 6,035 5,882 - 5,882 5,949 - 5,949
Trade and other
receivables
due after
more than one year 610 (610) - - - - - - -
Trade and other
receivables 3,254 - 3,254 2,382 - 2,382 2,949 - 2,949
Cash and cash
equivalents 3,083 - 3,083 3,386 - 3,386 2,585 - 2,585
12,982 (610) 12,372 11,650 - 11,650 11,483 - 11,483
Total assets 14,099 25 14,124 12,726 119 12,845 12,600 111 12,711
Current
liabilities
Trade and
other payables 1,894 - 1,894 2,187 - 2,187 2,704 - 2,704
Current tax
payable 513 - 513 409 - 409 496 - 496
2,407 - 2,407 2,596 - 2,596 3,200 - 3,200
Non-current
liabilities
Retirement
benefit
obligations 59 25 84 278 119 397 258 111 369
Other
provisions for
liabilities
and charges 324 76 400 261 62 323 133 62 195
383 101 484 539 181 720 391 173 564
Total
liabilities 2,790 101 2,891 3,135 181 3,316 3,591 173 3,764
Net assets 11,309 (76) 11,233 9,591 (62) 9,529 9,009 (62) 8,947
Equity
Called up
share capital 251 - 251 251 - 251 248 - 248
Share premium
account 5,148 - 5,148 5,134 - 5,134 5,056 - 5,056
Capital
redemption
reserve 38 - 38 38 - 38 38 - 38
Revaluation
reserve 253 (76) 177 206 (62) 144 206 (62) 144
Retained
earnings 5,619 - 5,619 3,962 - 3,962 3,461 - 3,461
Equity
shareholders'
funds 11,309 (76) 11,233 9,591 (62) 9,529 9,009 (62) 8,947
This information is provided by RNS
The company news service from the London Stock Exchange
END
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