27th Feb 2008 07:01
Stadium Group PLC27 February 2008 Stadium Group plc ("Stadium") Unaudited preliminary results for the year ended 31 December 2007 Stadium Group plc, the AIM listed provider of Electronic Manufacturing Services,announces a 23% increase in profit before taxation and sale of property to£2.66m (2006: £2.16m) for the year ended 31 December 2007. The principal activity of Stadium is the production of electronic products andassemblies for original equipment manufacturers from its manufacturingfacilities in China and the UK. Stadium serves customers worldwide, primarily inthe Consumer, Industrial, Medical and personal care and Automotive sectors. Highlights • Sales up 6% to £40.76m (2006: £38.55m) • Gross margin improved by 1.6% to 23.6% (2006: 22.0%) • Operating profit up 22% to £2.96m (2006: £2.42m) • Earnings per share (before sale of property) up by 17% to 7.4p (2006: 6.3p) • Net cash inflow from trading activities of £4.84m (2006: £1.94m) • Net bank borrowings reduced to £0.50m (2006: £4.38m) • Integration of Ferrus Power, acquired June 2007, progressing well • Final dividend increased by 4% to 2.55p (2006: 2.45p) Nick Brayshaw, Chairman of Stadium Group plc, said, I am pleased to report solid results for the year ended 31 December 2007, withsales and margins showing continued progress. Cash conversion was excellent,resulting in a strong closing balance sheet, and there has been a satisfactorystart to 2008. We continue to focus on developing long term trading partnerships with selectedcustomers, many of whom are leaders in high growth markets. We continue todevelop our own capabilities such that we offer design, engineering, supplychain and other added value activities in addition to manufacturing services. Following recent acquisitions, Stadium Power has gained critical mass and haspotential to deliver sustained profitable organic growth and a platform forfurther corporate activity. For further information please contact: Stadium Group plc Tel: 01429 852520Nigel Rogers, Chief Executive Mob: 07767 603 362 Parkgreen Communications Tel: 020 7479 7933Paul McManus Mob: 07980 541 893 Email: [email protected] Brewin Dolphin Investment Banking Tel: 0845 2708611Andrew Emmott Mob: 07713 646334 Copies of the audited financial statements will be sent to all shareholdersshortly STADIUM GROUP PLCCHAIRMAN'S STATEMENT Covering the year ended 31 December 2007 Introduction I am pleased to report solid results for the year ended 31 December 2007, withsales and margins showing continued progress. Cash conversion was excellent,resulting in a strong closing balance sheet, and there has been a satisfactorystart to 2008. The acquisition of Ferrus in June 2007 has provided critical mass in the design,manufacture and distribution of power conversion products under the StadiumPower brand. We expect to deliver significant organic growth of this businessin the future, and seek further acquisitions and alliances to accelerate thisdevelopment. Results Profit before taxation and sale of property increased by 23% to £2.66m (2006:£2.16m) on sales of £40.76m (2006: 38.55m). Earnings (excluding the effect of property sales) of 7.4p were slightly ahead ofmarket expectation, and up by 17% compared with 2006 (6.3p). Reported earnings,which reflect the profit on sale of freehold property, were 7.8p (2006: 7.5p). Net cash inflow from operating activities was £3.68m, representing some 124% ofoperating profit. This excellent performance, coupled with the sale of surplusfreehold property at Hartlepool, resulted in year end net debt of £0.50m (2006:£4.38m) and gearing of 6% (2006: 55%). Dividends The Board proposes a final dividend of 2.55 pence per share (2006: 2.45 pence)to be paid on 6 May 2008 to shareholders on the register on 11 April 2008. Thisbrings the total dividends for the year to 3.75 pence per share, an increase of4% over the prior year (3.6 pence per share), which is covered by earnings 2.1times (2006: 2.1 times). Board appointment On 13 February 2008 we announced the appointment of Colin Wilson ACA to theBoard as Finance Director. Colin joined Stadium from ICI Uniqema in April 2006,and was appointed Company Secretary in December 2006. His appointment furtherstrengthens our senior management team, and will provide additional resourcesfor future corporate activity. Prospects We continue to focus on developing long term trading partnerships with selectedcustomers, many of whom are leaders in high growth markets. We continue todevelop our own capabilities such that we offer design, engineering, supplychain and other added value activities in addition to manufacturing services. Following recent acquisitions, Stadium Power has gained critical mass and haspotential to deliver sustained profitable organic growth and a platform forfurther corporate activity. Nick BrayshawChairman27 February 2008 STADIUM GROUP PLCCHIEF EXECUTIVE'S REVIEWCovering the year ended 31 December 2007 Overview We are pleased to report upon a year of significant progress. The trading andfinancial performance of the business showed growth ahead of marketexpectations, significant sales were achieved in the medical and personal caresector, and the development of Stadium Power passed new milestones. Year end borrowings were at an all time low, providing a platform for furtherinvestment in new capabilities, and development of the business by acquisition. Financial results Turnover increased by 6% to £40.76m (2006: £38.55m), and gross margin improvedto 23.6% (2006: 22.0%). Operating profit increased 22% to £2.96m (2006: £2.42m)at an operating margin of 7.3% of sales (2006: 6.3%). Profit before tax and sale of property amounted to £2.66m; an increase of 23%over the £2.16m achieved in 2006 and the highest level reported by the companysince 1999. Net working capital showed a reduction of £1.01m to £4.62m, and cash conversionfrom operating activities was 124% of operating profit at £3.68m (2006: 19% at£0.46m). The resulting net year end gearing of 6% leaves substantial headroomfor future investment. Electronics 2007 2006 £m £mSales by source Asia 21.07 21.26 UK 8.34 6.70 Total 29.41 27.96 EMS 25.31 24.62 Power 4.10 3.34 Total 29.41 27.96 Operating profit 2.46 1.87Operating margin 8.4% 6.7% Electronic Manufacturing Services ("EMS") Turnover increased by 10% at constant rates of foreign exchange, and by 3% insterling terms. During 2007 there was a sharp ramp up of new contracts in the medical andpersonal care sector. This followed significant investment in the early part ofthe year in engineering, approvals, and the development of clean room andtechnical plastics facilities in our Asia operations. This strong growth more than offset the reduction in sales experienced as twomajor customers, based in the USA, held back orders to reduce inventoryexposure. This process was completed by the end of the year. We continue to focus sales and marketing activities towards securing long termpartnerships with selected key customers, for whom quality, reliability andproduct engineering are priorities as much as cost. We are committed to the health and welfare of all our employees regardless oflocation. Recent regulatory changes in China have had an adverse effect onoperating costs, however we do not anticipate any deterioration in competitiveadvantage as our own voluntary ethical standards are already compared favourablywith common local practices. Our UK operations have benefited from introduction of a lean manufacturingprogramme, and further initiatives are planned for 2008. Stadium Power Stadium Power offers the design and manufacture of custom power solutions andthe distribution of a range of standard power supplies which are bothmanufactured and factored from selected partners. Sales exited the year at an annualised level of approximately £5m per annum, andwe expect to experience further growth in the coming year. Following the integration of recent acquisitions, focus is now on the launch ofadditional standard products and the further development of key customer andsupplier relationships. We consider that this business offers exciting potential, with the combinationof design and engineering excellence, exposure to high growth market sectors,and access to low cost manufacturing at Stadium Asia. Branded Plastics 2007 2006 £m £mSales Babycare 5.02 4.95 Building Products 6.33 5.65Total 11.35 10.60 Operating profit 0.80 0.85Operating margin 7.1% 8.0% Sales and profits held up quite well in an increasingly challenging tradingenvironment. Growth in sales of building products was achieved by securing additional shareof a competitive market, including retail multiples as well as merchant outlets. Despite 7% of sales growth overall, however, profits were down by 6% to £0.80mas increased raw material and energy costs were not fully recovered in sellingprice increases. Balance sheet and cash flow Cash flow from trading activities amounted to £4.84m, stated before meetingpension deficit funding contributions of £1.05m and taxation of £0.11m (2006:net inflow of £1.94m before pension contributions of £1.09m and taxation of£0.39m). Net cash inflow on fixed assets of £2.26m included the sale of surplus freeholdproperty at Hartlepool announced on 24 December 2007. A further £0.52m ofconsideration on this transaction was deferred for up to three years. There wasfurther investment in manufacturing plant and equipment in Asia and the UKtotaling £0.59m, slightly less than the corresponding depreciation charge. The acquisition of Ferrus Power Limited was completed on 15 June 2007 at a totalnet cost of £0.67m. Net bank borrowings at 31 December 2007 were £0.50m (2006: £4.38m) and gearingwas 6% (2006: 55%), the lowest level for many years. Pensions The market value of the pension scheme assets increased by 5% during the year toexceed £23.5m. The net pension liability, measured on a basis consistent withthat used in the prior year, would have reduced from £4.45m to approximately£2.0m. The directors, in consultation with the scheme actuary, have once againrecognised the most recent guidance on expected mortality rates. The effect ofthis new guidance has resulted in a 10% increase to the scheme liabilitiesbefore deferred tax amounting to approximately £3.0m, and a net pensionliability of £4.12m. The next triennial valuation of the scheme is due as at April 2008. Current trading and outlook Trading in the early part of 2008 is encouraging, with sales well ahead of thecorresponding period last year. We are mindful that economic forecasts in ourkey geographical markets indicate weaker consumer demand, and accordingly arecautiously optimistic of prospects for the year ahead. The current economic environment, and especially the tightening of global creditmarkets, leads us to expect that opportunities for acquisition will arise atmore realistic valuations than those prevailing over recent years. Nigel RogersChief Executive 27 February 2008 Stadium Group plc Consolidated income statement (unaudited) for the year ended 31 December 2007 31 Dec 31 Dec 2007 2006 Note £000's £000's (Restated note 12) Revenue 2 40,756 38,552Cost of sales (31,145) (30,059)Gross profit 9,611 8,493Other income 439 429Operating expenses (7,093) (6,499)Operating profit 2 2,957 2,423Finance costs 3 (294) (262)Profit before tax and sale of property 2,663 2,161Profit on sale of property 97 340Profit before tax 2,760 2,501Taxation (521) (341)Profit for the year 2 2,239 2,160 Basic earnings per share 5 7.8p 7.5p Diluted earnings per share 5 7.8p 7.5p Consolidated statement of recognised income and expense(unaudited)for the year ended 31 December 2007Actuarial loss in pension scheme net of deferred tax (444) (298)Net expense recognised directly in equity (444) (298)Profit for the year 2,239 2,160 Total recognised income and expense for the year 7 1,795 1,862 STADIUM GROUP PLCConsolidated balance sheet (unaudited)at 31 December 2007 31 Dec 31 Dec 2007 2006 Note £000's £000's (Restated note 12)AssetsNon-current assetsProperty, plant and equipment 6,654 10,102Goodwill 1,524 1,020Deferred tax assets 1,769 1,907Other receivables 524 - 10,471 13,029 Current assetsInventories 5,176 5,872Trade and other receivables 8,271 7,571Cash and cash equivalents 862 296 14,309 13,739Total assets 24,780 26,768 EquityEquity share capital 10 1,440 1,440Share premium 10 4,233 4,233Capital redemption reserve 10 88 88Translation reserve 10 (928) (885)Retained earnings 7, 10 3,859 3,046Total equity 10 8,692 7,922 Non-current liabilitiesLong-term borrowings 6 720 2,713Net pension liability 5,896 6,356Total non-current liabilities 6,616 9,069 Current liabilitiesBank overdrafts 401 1,434Current portion of long-term borrowings 239 532Trade payables 5,563 4,899Current tax payable 318 188Other payables 2,951 2,724Total current liabilities 9,472 9,777Total liabilities 16,088 18,846Total equity and liabilities 24,780 26,768 STADIUM GROUP PLCConsolidated cash flow statement (unaudited)for the year ended 31 December 2007 31 Dec 31 Dec 2007 2006 Note £000's £000's (Restated note 12) Net cash flow from operating activities 8 3,684 461 Investing activities Purchase of property, plant and equipment (589) (1,683)Sale of property, plant and equipment 2,846 686Acquisition of subsidiary net of cash acquired (667) (569) Cash flows from investing activities 1,590 (1,566) Financing activitiesEquity share capital subscribed - 58Interest paid (337) (250)(Decrease)/increase in bank loans (2,286) 2,703Dividends paid on ordinary shares 4 (1,052) (1,022) Cash flows from financing activities (3.675) 1,489Net increase in cash and cash equivalents 1,599 384Cash and cash equivalents at start of year (1,138) (1,522) Cash and cash equivalents at end of year 461 (1,138) STADIUM GROUP PLC NOTES: 1. Basis of preparation The consolidated financial statements of Stadium Group plc for the year ending31 December 2007 have been prepared in accordance with International FinancialReporting Standards (IFRS) issued by the International Accounting StandardsBoard (IASB), as adopted for use by the European Union (EU) effective at 31December 2007. The Company has elected to prepare its parent company accountsunder UK Generally Accepted Accounting Principles (UK GAAP). This is the first year in which the Group has prepared its consolidatedfinancial statements under IFRS and the comparatives have been restated from UKGAAP to comply with IFRS. An explanation of the transition from UK GAAP to IFRSand the reconciliations from the previously published UK GAAP financialstatements to IFRS are summarised in note 12. The Group has applied the following optional exemptions granted by IFRS 1First-time Adoption of International Financial Reporting Standards from fullretrospective application of IFRS accounting policies: - Business combinations - the provisions of IFRS 3 have been applied from 1 January 2006. The net carrying value of goodwill at 31 December 2005 under the previous accounting policies has been deemed to be the cost at 1 January 2006;- Cumulative translation differences arising on consolidation of overseas subsidiaries are required to be held in a separate reserve. This reserve has been deemed to be nil on 1 January 2006. The Group's IFRS accounting policies, set out below, have been consistentlyapplied to all the periods presented. The information has been prepared underthe historical cost convention except where IFRS require an alternativetreatment. The principal variations from the historical cost convention relateto pensions (IAS 19), monetary items (IAS 21), financial instruments (IAS 39)and share based payments (IFRS 2). The accounting policies have been appliedconsistently by Group entities. The comparative figures for the year ended 31 December 2006 do not constitutestatutory accounts for the purposes of s240 of the Companies Act 1985. A copy ofthe statutory accounts for the year ended 31 December 2006, prepared under UKGAAP, has been delivered to the Registrar of Companies and contained anunqualified auditors' report in accordance with s235 of the Companies Act 1985. Basis of consolidation The Group financial information consolidates that of the company and itssubsidiaries. Businesses acquired or disposed of during the period areconsolidated from the effective date of acquisition or until the effective dateof disposal. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Goodwill Goodwill arising on consolidation consists of the excess of the fair value ofthe consideration over the fair value of the Group's interest in theidentifiable tangible and intangible assets net of liabilities includingcontingencies of the business acquired at the date of acquisition. Goodwill is recognised as an asset at cost less any recognised impairmentlosses. It is reviewed for impairment at least annually and any impairment isrecognised immediately in the Income Statement. Goodwill arising on acquisitions prior to 1 January 2006 has been retained atthe previous UK GAAP amounts subject to being tested for impairment at thatdate. Goodwill written off to reserves under UK GAAP prior to 1 January 2006 hasnot been reinstated and is not included in determining any subsequent profit orloss on disposal. Revenue recognition Revenue is measured at the fair value of goods and services provided tocustomers net of returns, discounts, value added tax and other sales taxes.Revenue is recognised when goods are despatched and title has passed to thecustomer and the collectability of the revenue is reasonably assured. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciationand any recognised impairment losses. Depreciation is charged at rates calculated to write down the cost of assets(excluding freehold land) over their estimated useful lives by equal instalmentsat the following rates: Freehold buildings 2%Plant and machinery 10% - 25%Fixtures and equipment 10% - 25% The gain or loss arising on disposal or retirement of an asset is determined asthe difference between the sale proceeds and the carrying amount of the assetand is recognised in income. Inventories Inventories are stated at the lower of cost and estimated net realisable value.Cost is determined on a first-in-first-out basis including transport andhandling costs and, in the case of manufactured products, includes all directexpenditure and production overheads based on normal levels of activity. Deferred taxation Deferred taxation is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. A deferredtax asset is regarded as recoverable and therefore recognised only when, on thebasis of all available evidence, it can be regarded as more likely than not thatthere will be suitable taxable surpluses from which the future reversal of theunderlying timing differences can be deducted. Pension costs Defined benefit scheme Assets and liabilities arising from retirement benefit obligations and therelated funding are reflected at fair value in the financial statements, andoperating and finance costs are recognised in the financial periods in whichthey arise. Gains and losses arising from actuarial experience during theaccounting period are recognised in the consolidated statement of recognisedincome and expense. Defined contribution schemes Contributions payable are charged to the income statement in the accountingperiod in which they are incurred. Foreign currencies Transactions denominated in foreign currencies are recorded at the prevailingrate on the date of the transaction. Trading assets and liabilities denominated in foreign currencies are translatedinto sterling at the rate prevailing at the period end. Gains and losses arisingon the translation of foreign currencies are dealt with as part of operatingprofit. The assets and liabilities of foreign subsidiary undertakings are translatedinto sterling at the period end exchange rate. The income and expenditure offoreign subsidiary undertakings are translated into sterling at the averageexchange rate prevailing during the period. Exchange differences arising onretranslation of opening assets and liabilities, long term financing denominatedin foreign currency and the trading of foreign subsidiary undertakings are takendirectly to the translation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreignentity are treated as assets and liabilities of the foreign entity andtranslated at the closing rate. The Group has elected to treat goodwill and fairvalue adjustments arising on acquisitions before than date of transition to IFRSas sterling denominated assets and liabilities (see note 13). As permitted byIFRS1, the Group elected to deem cumulative currency translation differences tobe £nil as at 31 December 2005. Financial Instruments The Group's financial instruments comprise borrowings, some cash and liquidresources and items such as trade debtors and trade creditors that arisedirectly from its operations. The main purpose of these financial instruments isto manage the finance of the Group's operations. Financial assets and financial liabilities are recognised in the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Trade receivables: Trade receivables do not carry any interest and are stated at their nominalvalue less appropriate allowances for estimated irrecoverable amounts. Bank borrowings: Interest bearing bank loans and overdrafts are recorded at the proceeds receivednet of direct issue costs. Finance charges, including premiums payable onsettlement or redemption and direct issue costs, are accounted for on anaccruals basis to the Income Statement and are added to the carrying amount ofthe instruments to the extent that they are not settled in the period in whichthey arise. Trade payables: Trade payables do not carry any interest and are stated at their nominal value. Equity instruments: Equity instruments issued by the Group are recorded at the proceeds received netof direct issue costs. It has been, throughout the period under review, the Group's policy that notrading in financial instruments shall be undertaken. The Group does notconsider that it has any obligations or rights under derivative financialinstruments. The main risks arising from the Group's financial instruments are interest raterisk, liquidity risk and foreign currency risk. The Board reviews and agreespolicies for managing each of these risks and these policies are summarisedbelow. Interest rate risk: The Group finances its operations through a mixture of retained profits and bankborrowings. The Group holds cash and borrowings in various currencies atfloating rates of interest. Liquidity risk: As regards liquidity, the Group's policy is to maintain undrawn overdraftborrowing facilities in order to provide flexibility in the management of theGroup's liquidity. Foreign currency risk: The Group has transactional currency exposures. Such exposures arise from salesor purchases by operating units in currencies other than Sterling, being theGroup's functional currency. The Group matches payments and receipts to minimiseexposure, and buys the currency when the liability falls due. 2. Segmental analysis By business segment December 2007 Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Revenue - external customers 29,408 11,348 - 40,756 Operating profit 2,460 800 (303) 2,957 Interest payable (296)Interest receivable 2 Profit on sale of freehold property 97 Taxation (521) Profit for the year 2,239 December 2006 (Restated) Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Revenue - external customers 27,955 10,597 - 38,552 Operating profit 1,873 848 (298) 2,423 Interest payable (264)Interest receivable 2 Profit on sale of freehold property 340 Taxation (341) Profit for the year 2,160 December 2007 Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Segment assets 14,305 5,831 4,644 24,780Segment liabilities (6,734) (1,448) (7,906) (16,088)Segment net assets 7,571 4,383 (3,262) 8,692 Expenditure on property, plant and equipment 345 219 25 589 Depreciation and amortisation 497 271 12 780 December 2006 (Restated) Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Segment assets 14,531 5,888 6,349 26,768Segment liabilities (5,763) (1,403) (11,680) (18,846)Segment net assets 8,768 4,485 (5,331) 7,922 Expenditure on property, plant and equipment 1,302 367 14 1,683 Depreciation and amortisation 526 218 120 864 By geographic location December 2007 Revenue - external customers Net by assets Capital location by expenditure of location by location customer of assets of assets £000's £000's £000's UK 24,457 5,103 386 Europe 7,191 - - Asia 2,569 3,589 203 Americas 3,597 - - Other 2,942 - - 40,756 8,692 589 December 2006 (Restated) Revenue - external customers Net by assets Capital location by expenditure of location by location customer of assets of assets £000's £000's £000's UK 24,217 3,405 492 Europe 2,650 - - Asia 4,220 4,517 1,191 Americas 4,767 - - Other 2,698 - - 38,552 7,922 1,683 3. Finance costs comprises: Year ended Year ended 31 December 31 December 2006 2007 £000's £000'sInterest receivable 2 2Interest payable on bank loan and overdrafts (339) (252)Other finance costs 43 (12) (294) (262) 4. Dividends Year ended Year ended 31 December 31 December 2007 2006 £000's £000'sOrdinary dividends:Final dividend 2006 of 2.45p (2005 : 2.40p) 706 691Interim dividend 2007 of 1.20p (2006 : 1.15p) 346 331 1,052 1,022 A final dividend of 2.55 pence per share amounting to £735,000 will be paid on 6May 2008, to shareholders on the register on 11 April 2008. 5. Earnings per share Year ended 31 December 2007 2007 2006 2006 Earnings EPS Earnings EPS (Restated (Restated) note 12) £000's Pence £000's Pence Profit before sale of property 2,142 7.4 1,820 6.3 Profit on sale of property 97 0.4 340 1.2Basic and fully diluted earnings per share 2,239 7.8 2,160 7.5 The calculation of basic earnings per share is based on the profit for the yearand the weighted average number of ordinary shares in issue of 28,804,698 shares(2006: 28,755,369 shares). Fully diluted earnings per share reflect dilutive options granted resulting inweighted average number of shares of 28,890,270 ordinary shares (2006:28,755,369 shares). 6. Payables : amounts due after more than one year 31 December 31 December 2007 2006 £000's £000's Bank loans (secured) 720 2,713 720 2,713 7. Profit and loss account The movement on profit and loss account for the year is as follows: Year ended Year ended 31 December 31 December 2007 2006 (Restated note 12) £000's £000'sBalance at beginning of year 3,046 2,136Total net gains recognised 1,795 1,862Share option costs recognised 70 70Dividends paid (Note 4) (1,052) (1,022)Balance at end of year 3,859 3,046 8. Net cash inflow from operating activities Year ended Year ended 31 31 December December 2007 2006 (Restated note 12) £000's £000's Operating profit 2,957 2,423Share option costs 70 70Depreciation 780 864Decrease in inventories 843 169(Increase) in trade and other (489) (715)receivablesIncrease/(decrease) in trade and other 686 (872)payablesNet cash inflow from trading activities 4,847 1,939Difference between pension charge and cash (1,050) (1,092)contributionsTax paid (113) (386)Net cash inflow from operating 3,684 461activities 9. Analysis of changes in net debt 31 Dec 2006 Cashflow 31 Dec 2007 £000's £000's £000's Cash 296 566 862Overdrafts (1,434) 1,033 (401)Loans due within one year (532) 293 (239)Loans due after one year (2,713) 1,993 (720)Net debt (4,383) 3,885 (498) 10. Shareholders funds Capital Share Share redemption Translation P&L capital premium reserve reserve account Total £000's £000's £000's £000's £000's £000's At 31 December 2005 as previously 1,432 4,184 88 - 2,136 7,840reportedShares issued to satisfy options 8 49 - - - 57exercisedReclassification of exchange - - - (885) 885 -differences on overseas subsidiaryRetained profit to 31 December - - - - 25 252006 (under IFRS)At 31 December 2006 (under IFRS - 1,440 4,233 88 (885) 3,046 7,922unaudited)Exchange differences on overseas - - - (43) - (43)subsidiaryRetained profit to 31 Dec 2007 - - - - 813 813(under IFRS)At 31 December 2007 (under IFRS - 1,440 4,233 88 (928) 3,859 8,692unaudited) 11. Acquisition of Ferrus Power Limited ("Ferrus") On 15 June 2007 the Company acquired 100% of the issued share capital of Ferrus,a company registered in England and Wales that designs and manufactures custompower supplies, for cash consideration. The assets of Ferrus at the date of acquisition were as follows: Book Fair value Fair value adjustment value £000's £000's £000's Property, plant and equipment 43 - 43Inventories 165 (18) 147Receivables 206 - 206Payables (due in < 1 year) (150) (83) (233)Net trading assets 264 (101) 163 Consideration - paid and payable (920) - acquisition costs (22) - total cash outflow (942) - cash balance acquired 275 (667)Goodwill arising on acquisition 504 12. Explanation of transition to IFRS The Group did not identify a need to restate profit or equity for periodspreceding 1 January 2006 as a result of adopting IFRS. Consequently, the Grouphas not presented a reconciliation of equity at 1 January 2006. Reconciliation of equity at 31 December 2006 Effect of transition Note UK GAAP to IFRS IFRS £000's £000's £000'sAssetsNon-current assetsProperty, plant and equipment 10,102 - 10,102Goodwill a 872 148 1,020Deferred tax assets b - 1,907 1,907 10,974 2,055 13,029Current assetsInventories 5,872 - 5,872Trade and other receivables 7,571 - 7,571Cash and cash equivalents 296 - 296 13,739 - 13,739Non-current assets classified as held for sale - - - 13,739 - 13,739Total assets 24,713 2,055 26,768 EquityEquity share capital 1,440 - 1,440Share premium 4,233 - 4,233Capital redemption reserve 88 - 88Translation reserve c - (885) (885)Retained earnings a, c 2,013 1,033 3,046 Total equity 7,774 148 7,922Non-current liabilitiesLong-term borrowings 2,713 - 2,713Deferred tax liabilities - - -Net pension liability b 4,449 1,907 6,356Total non-current liabilities 7,162 1,907 9,069Current liabilitiesBank overdrafts 1,434 - 1,434Current portion of long-term borrowings 532 - 532Trade payables 4,899 - 4,899Current tax payable 188 - 188Other payables 2,724 - 2,724 Total current liabilities 9,777 - 9,777 Total liabilities 16,939 1,907 18,846 Total equity and liabilities 24,713 2,055 26,768 Reconciliation of profit for the year ended 31 December 2006 Effect of transition Note UK GAAP to IFRS IFRS £000's £000's £000's Revenue 38,552 - 38,552Cost of sales (30,059) - (30,059)Gross profit 8,493 - 8,493Other income 429 - 429Operating expenses a (6,647) 148 (6,499)Operating profit 2,275 148 2,423Profit on sale of property 340 - 340Finance costs (262) - (262)Profit before tax 2,353 148 2,501Taxation (341) - (341)Profit for the period 2,012 148 2,160 a. IFRS 3 'Business Combinations' requires goodwill to be measured at cost less accumulated impairmentlosses. The goodwill was frozen on the date of transition to IFRS (1 January 2006), therefore the charge of£148,000 for the year to 31 December 2006 is no longer recognised under IFRS. b. Under UK GAAP the defined benefit pension scheme liability was reflected in the financial statements netof deferred taxation. On transition to IFRS this has been shown in the accounts as a deferred tax asset. c. The translation reserve historically under UK GAAP has been included in retained earnings, not disclosedseparately. IFRS requires that the translation reserve is disclosed separately. The exemption offered byIFRS1 on first time adoption of IFRS was applied, as detailed in the accounting policies note, and thereserve was created during 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Stadium Group PLC