5th Mar 2008 07:00
Devro PLC05 March 2008 5 March 2008 DEVRO PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 Results 2007 2006(Continuing operations*)Revenue £156.3m £152.8mOperating profit before exceptional items £18.3m £20.0mExceptional items £0.7m £(1.0)mProfit before tax £16.2m £16.9mEarnings per share 7.4p 7.7pEarnings per share before exceptional items 7.2p 8.1pDividend per share 4.45p 4.45pNet debt £27.3m £27.0m * On 28 December 2007, BioFilm Limited, a subsidiary specialising in themanufacture and sale of thin films, was sold to Tate & Lyle Ventures LP andScottish Enterprise's Scottish Venture Fund. See consolidated income statementand note 1. Pat Barrett, Chairman of Devro, commented: "After a number of challenges in the first half of 2007, Devro finished the yearstrongly with significant progress made in the second half, particularly in thefinal quarter. "Peter Page, our new Chief Executive, along with a revitalised management team,has identified a number of exciting areas for growth and performance improvementwhich will be focused on enhancing shareholder value. Our new management team iscommitted to increasing revenues and improving margins. They will focus oninnovative product development and strengthening our commercial resources andactivities, while pursuing a range of specific growth opportunities for both newand existing products. "The year has started well, with good demand in most of our markets." Enquiries: Peter Page Chief Executive 020 7404 5959 on 5 March 2008John Neilson Finance Director 01236 879191 thereafterAnita Scott / Mark Antelme Brunswick 020 7404 5959 There will be a presentation today at 9.30am for investment analysts. This willbe held at 16 Lincoln's Inn Fields, London, WC2A 3ED. A live audio feed will beavailable to those unable to attend this meeting in person. To access thisfacility, please call +44 (0) 1452 561 263 conference ID 36141330. CHAIRMAN'S STATEMENT After a number of challenges in the first half of 2007, Devro finished the yearstrongly. In the first six months, demand in our more mature markets was soft, amajor change in the supply relationship with our biggest customer in the UnitedStates developed and we were experiencing manufacturing problems in our Scottishoperations. However, I am now glad to report that significant progress was madein the second half, particularly in the final quarter. Demand strengthenedacross all areas of our business to the extent that, at year end, we hadachieved volume growth of more than 5% compared with prior year. Our Americanbusiness team managed the changed relationships in their market verysuccessfully, and US-manufactured product was introduced into the fast-growingmarket in China. Manufacturing stability was restored in Scotland and, supportedby a range of new product initiatives developed over the past two years, therewere significant improvements in UK sales. Most importantly, Peter Page, our newChief Executive, along with a revitalised management team, has identified anumber of exciting areas for growth and performance improvement which will befocused on enhancing shareholder value. The improved performance of our business was reflected in the cash generated inthe second half, which enabled us to reduce net debt levels from £36.7 million,reported on 30 June 2007, to £27.3 million at 31 December 2007. Results------- The operating profit for continuing operations before exceptional items was£18.3 million compared with £20.0 million in 2006. The profit before tax forcontinuing operations was £16.2 million compared with £16.9 million in 2006. Net exceptional income of £0.7 million for 2007 resulted from an additional £1.0million received in respect of the land at Moodiesburn sold in 2005, partiallyoffset by costs of £0.3 million associated with the unsolicited bid approachwhich Devro received in the early part of the year. In 2006, an exceptionalcharge of £1.0 million was incurred relating to restructuring costs in Scotland. The loss before tax on the discontinued operation of £0.7 million (2006: £0.7million) relates to BioFilm Limited, the thin-film business based at Hamilton,near Glasgow. As previously announced, this business was sold on 28 December2007. Basic earnings per share from continuing operations before exceptional items was7.2 pence compared with 8.1 pence in 2006. After exceptional items, basicearnings per share from continuing operations was 7.4 pence compared with 7.7pence in 2006. Operational highlights---------------------- Sales from continuing operations in 2007 were £156.3 million, an increase of2.3% compared to £152.8 million in 2006. Sales volumes were 5.6% ahead of prioryear. This gain, however, was partially offset by an adverse price/mix impact of2.4%, which resulted from a combination of unfavourable movements in market mix,adverse transactional exchange and higher volume discounts. In addition, thetranslational impact of foreign exchange had a negative impact of 0.9%. In Europe, UK sales recovered strongly after a weak first half, due in part tonew and improved products recently developed in our Scottish operation. Althoughfull year revenues were slightly behind last year, sales in the second half werevery encouraging, particularly in the last quarter. Sales in the Americas were lower than prior year, with edible casing salesvolumes in the US down by just over 20%. This was due principally to theincreased use of co-extrusion technology in the US, which is mainly focused onthe low-priced portion of the beefstick sector. While we have consequentlygained additional sales of collagen gel, this only partially compensates for theloss in volume of collagen casings. In the Asia/Pacific region, volumes have increased significantly. This majorgrowth has been driven by the fast-developing Chinese market, as Western-stylesausage becomes increasingly popular in that part of the world. Currency movements had a major adverse impact on operating profit, with Cutisinalone experiencing an adverse transactional effect of £1.0 million. In the past5 years, the Czech koruna has strengthened by 40% and 15% against the US dollarand the euro respectively. In total, foreign exchange movements in 2007 had anegative impact of £1.3 million on group profitability. In manufacturing, the introduction of new products into the Scottish operationpresented a number of technical challenges, which resulted in increasedproduction downtime and lower yields in the first half of the year costingapproximately £1.0 million. This situation was addressed and the manufacturingprocess in the Scottish plants has now been stabilised. Further capacity was installed in our Australian plant in the second half of2007 and additional volume is now available from this strategically importantlocation. Major investment in the Czech Republic over the last few years has positionedCutisin as a modern and highly efficient collagen casing manufacturer. This hasbeen largely focused on our Jilemnice facility where the manufacture of allCutisin's high-margin edible collagen casings is now based. Net debt-------- Net debt at the end of the year was £27.3 million (2006: £27.0 million). Despitea major investment programme in our manufacturing facilities over the last fewyears, our balance sheet remains strong, with a gearing level of 28.7% at 31December 2007 (2006: 36.9%). Sale of BioFilm Limited----------------------- The sale of BioFilm Limited, a subsidiary company specialising in themanufacture and sale of thin films, was announced on 28 December 2007. Thebusiness has been sold to BioFilm Holdings Limited, a new company backed by Tate& Lyle Ventures LP and Scottish Enterprise's Scottish Venture Fund, for anominal initial consideration plus a sum in respect of working capital. Theagreement provides for a potential further payment to Devro of up to £3.6million in the event of a subsequent sale of the business. Dividend-------- The Board is proposing a final dividend of 3.025 pence (2006: 3.025 pence),bringing the total for the year to 4.45 pence (2006: 4.45 pence). This will bepaid on 14 May 2008 to shareholders on the register as of 18 April 2008. In thelonger term, our policy remains to provide sustainable yet progressive dividendgrowth consistent with underlying company performance. Board changes------------- As previously announced, Graeme Alexander, who had been Chief Executive Officersince 1993, retired on 4 September 2007. Graeme was a central figure in thegrowth of the business and I am most grateful for his contribution throughouthis time with the company. Peter Page was appointed Chief Executive Officer on 1June 2007. Trevor Morgan, our Business Development Director, resigned from the Board on 28December 2007 to join BioFilm Holdings Limited. Trevor has made a significantcontribution to Devro since joining the company over 25 years ago. On behalf ofthe Board, I would like to wish Trevor well in the future with his new ventureand to thank him for his work over the years. As announced last September, John Neilson, our Finance Director, has decided toretire in 2008. John has been with Devro for over 30 years and has been FinanceDirector for almost 17 years. He has been integral to the development of ourbusiness throughout this time and retires with our gratitude and good wishes. We announced in January that Peter Williams would be joining the company asFinance Director on 1 May 2008. Peter is currently Chief Financial Officer ofCermaq ASA, the Oslo-listed industrial aquaculture feed manufacturer and salmonfarming company. Employees--------- Our most significant asset is the quality and dedication of our peopleworldwide. On behalf of the Board I would like to thank them for their effortsduring 2007. Prospects--------- The year has started well, with good demand in most of our markets and renewedstability in Scotland's manufacturing base. We have strong market positions in most areas of our business, with thestability of a worldwide presence. We have invested significant amounts ofcapital expenditure in ensuring our plants are modern and efficient and complywith the latest health and safety requirements. We have a solid foundation forearnings growth and a robust balance sheet. Our new management team is committed to increasing revenues and improvingmargins. They will focus on innovative product development and strengthening ourcommercial resources and activities, while pursuing a range of specific growthopportunities for both new and existing products. I am, therefore, confident in the future prospects for your business. OPERATING REVIEW In the first half of 2007, sales and volumes were lower than expected. In thesame period, management time was also being devoted to the unsolicited bidapproach, which required much attention and resource. In the second half of theyear sales and margins improved, helping to generate a positive cash flow. China saw significant growth in volumes when compared with 2006. This growth waslinked to large investments by customers in efficient, high volume manufacturingplants, vertically integrated from abattoir to retail packing. It is in thistype of situation that Devro's collagen casings give customers a measurablebenefit in productivity and profit. Whilst the volume growth has been large whencompared to prior years, the total volume sold to China is still less than inDevro's established markets. Supplying the expected future growth in Chinapresents challenges in pricing, capacity and technical support: we are reviewingthese issues in 2008. Other Asian markets, including Japan, Thailand, Korea and Indonesia, werecomparable to 2006 in volume, although the Foot and Mouth incident in Englanddid cause some interruptions to supply from the Scottish factories which aresubject to United Kingdom Export Documentation. We are working with the UKGovernment to establish a better understanding about health certificaterequirements for Devro products exported to key third-country (non-EU)destinations. Our sales volumes in Australia were restricted by a lower level of promotionalactivity by retailers when compared to previous years. This was mainly due tothe long-running sale and purchase of one of the largest supermarket groups inAustralia. There have also been some changes among the manufacturing customers,including acquisitions and plant changes, which should settle down during 2008.Compared to prior year, New Zealand reported good volume growth. Volumes in Latin America were higher than 2006, with this growth coming from anumber of countries including Colombia and Venezuela. Brazil is by far thelargest opportunity in Latin America, by volume, with an extremely sophisticatedand well-managed meat industry. Our business in the US and Canada was affected by one account investing inco-extrusion technology, thereby reducing the demand for collagen casings. Devrohas gained a large share of the increased demand for collagen gel which,combined with use of the available casings capacity for emerging markets, hasled to a broadly neutral effect on earnings. Western European markets showed little change from 2006. The UK is Devro'slargest market in this region, but volumes were slow in the first nine months,with lower levels of promotional activity and a continuing development of"premium grade" sausages which use gut casing. During 2007, acquisitions amongUK customers have resulted in further consolidation in the industry. In Eastern Europe and Russia, Cutisin saw further volume growth as theapplication of collagen casings in new processing plants continued to givecustomers enhanced productivity and profitability. To support the growing marketin Russia, we are in the process of recruiting a local sales manager with goodtechnical and industry experience who will assume greater responsibility during2008. In our manufacturing operations, Cutisin continued to reap the benefits ofrecent investments in new edible collagen capacity, with further increases inthroughput. During 2007, Cutisin also prepared for the transition of its Korenovplant to manufacturing only non-edible products, in line with EU Food HygieneRegulations which will be effective in 2008. As a result of this change, therewill be a slight reduction in our overall capacity. A new production lineinstalled in the Australian plant is now fully operational. Manufacturing issues affected the Scottish operations during 2007 in the firsthalf, as was reported in the interim results. By the end of the year there wasgreater stability in the Scottish manufacturing plants, but there is still muchwork to do in increasing the overall profitability here, and we are committingboth internal and external resources to supporting this. At the end of 2007 we completed the sale of BioFilm Limited, the specialistthin-films business. Meanwhile, sales of biomedical collagen continued at asimilar level to 2006, with several new enquiries being received for thishigh-value product. During the second half of the year we made some management changes to helpaddress the priorities for the next three years. Most significant was theestablishment, from existing resources, of a Technical Marketing team, headed upby a Group Technology Director, to lead new product developments and theapplication of technology that will give Devro competitive advantages in areasof importance to existing and potential customers. Throughout the latter part of 2007, the whole management team worked hard toretain business with key accounts and to develop the foundations for amarket-led approach to our business in the future. With changing consumptionpatterns, customer consolidation, and ever greater demands from consumers andretailers, it is a priority for Devro to reflect the demands of the global foodindustry, to improve our customers' profitability by supporting their increasingproductivity and product safety, and to seek internal efficiencies which willenable us to grow our margins and profitability. FINANCIAL REVIEW Sales from continuing operations for 2007 were £156.3 million against a prioryear figure of £152.8 million, an increase of 2.3%. Sales volumes were ahead ofprior year by 5.6%, with a particularly strong performance being recorded byCutisin. Average selling prices fell by 2.4% due to a combination ofunfavourable movements in market mix, adverse transactional exchange and highervolume discounts. The translation of local currencies into sterling had anegative impact of 0.9% on group revenue. Operating profit for continuing operations before exceptional items was £18.3million, which compares with £20.0 million in 2006. Net exceptional income of£0.7 million for 2007 resulted from an additional £1.0 million received inrespect of the land at Moodiesburn sold in 2005, partially offset by costs of£0.3 million associated with the unsolicited bid approach received early in2007. An exceptional charge of £1.0 million was incurred in 2006 relating torestructuring costs in Scotland. The loss before tax on discontinued operations of £0.7 million (2006: £0.7million) relates to BioFilm Limited, the thin-film business based at Hamilton,near Glasgow. As previously announced, this business was sold on 28 December2007. The reduction in average selling prices adversely affected operating profits by£3.7 million. Higher volume discounts, particularly in the UK, were a factor,while a significant increase in sales to emerging markets also had a negativeimpact on average prices. As has been the case in the last few years, thestrength of the Czech koruna compared with the euro and the US dollar resultedin a significant reduction in the effective selling prices of Cutisin's exports.Offsetting these factors, sales volume growth benefited operating profit in 2007by £3.2 million. The substantial increase in edible collagen casing volume wasdriven by particularly strong growth in the emerging markets of China andRussia. As previously reported, the introduction of the new product range into theScottish operation presented a number of technical challenges, with increasedproduction downtime and lower yields costing £1.0 million in the first half of2007. The manufacturing performance improved in the second half of the year,ensuring a solid platform for further progress in 2008. Our US operationcurtailed production throughput in 2007 as demand in its domestic market slowed,with a major customer converting to co-extrusion technology. This reduction inoutput had an adverse impact on unit manufacturing costs. Additional Cutisincapacity was installed in the second half of 2006 and operated very effectivelythroughout 2007. Further capacity was also installed in our Australian operationin the latter part of 2007. The recent trend of increasing utility prices was reversed in 2007, with energycosts down £0.3 million compared with prior year. However, we anticipate areturn to higher prices, with increased charges expected in Australia and theCzech Republic in 2008. Increased collagen raw material prices in the US cost £0.8 million in 2007while, in the latter part of the year, we also experienced significant increasesin glycerol prices. A number of measures are in place to reduce raw materialcosts in 2008. Net operating expenses for continuing operations increased by £0.9 million, inpart due to costs associated with changes at Board and Senior Management level. Pension charges of £1.4 million (2006: £2.0 million) were significantly lowerthan last year as a result of supplementary pension payments and higher discountrates. Considerable resources continue to be invested in product and processdevelopment, resulting in research and development expenditure in 2007 totalling£4.4 million, being 2.8% of sales (2006: £4.2 million, 2.8% of sales). Net interest expense totalled £2.7 million in 2007 (2006: £2.0 million). Theaverage level of debt in 2007 was higher than prior year, while interest rateshave also increased. Net interest cover was 6.5 times. Net debt at 31 December 2007 amounted to £27.3 million, comprising gross debt of£36.9 million and cash of £9.6 million. Gearing was reduced to 28.7% (2006:36.9%). In January 2007, a new five-year borrowing facility totalling £60million was agreed with our banks. The financial impact of exchange rate fluctuations is minimised as far aspossible by a policy of hedging foreign exchange risk. All hedging is undertakencentrally by the Corporate Treasury function, based in Moodiesburn, inaccordance with Board-approved policies and authorities. Specifically, policiespermit forward transaction hedging to a maximum level of 75% of anticipatedcurrency flows for up to one year ahead. The group's effective tax rate for continuing operations in 2007 of 25.9% (2006:26.6%) is lower than prior year, principally as a result of a deferred taxadjustment relating to the recently announced reduction in tax rates in theCzech Republic. Cash generated from continuing operations of £23.4 million (2006: £23.0 million)was ahead of last year despite reduced operating profits and increased pensionpayments. The impact of working capital movements was more favourable than in2006. Capital expenditure of £11.1 million (2006: £16.7 million) includes theinvestment in new capacity in Australia totalling £1.1 million. Earnings attributable to shareholders have decreased to £11.4 million from £11.6million in 2006. Unadjusted earnings per share was 7.0 pence (2006: 7.2p).Excluding the net exceptional credit after tax of £0.4 million, earningsattributable to shareholders were £11.0 million, giving earnings per sharebefore exceptional items of 6.8 pence (2006: 7.6 pence). A final dividend of 3.025 pence per share is proposed. This, together with theinterim dividend of 1.425 pence paid in October, gives a total of 4.45 pence(2006: 4.45 pence). CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2007 2007 2006 £'000 £'000Continuing operations: Revenue 156,252 152,779 --------- ---------Operating profit 18,928 18,975 -------- ---------Analysed as:Operating profit before exceptional items 18,277 19,985Exceptional items 651 (1,010) -------- --------Operating profit 18,928 18,975 -------- --------- Finance income 338 312Finance expense (3,048) (2,343) -------- --------Profit before tax 16,218 16,944Taxation (4,200) (4,501) -------- --------Profit for the year - continuing operations 12,018 12,443 ======== ========Discontinued operation:Loss before tax (734) (691)Taxation 159 (131) -------- --------Loss for the year - discontinued operation (575) (822) ======== ========Profit for the year 11,443 11,621 ======== ========Earnings per share - continuing and discontinuedoperations- Basic 7.0p 7.2p- Diluted 7.0p 7.1p- Basic before exceptional items 6.8p 7.6p Earnings per share - continuing operations- Basic 7.4p 7.7p- Diluted 7.4p 7.6p- Basic before exceptional items 7.2p 8.1p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 31 December 2007 2007 2006 £000 £000 Cash flow hedges:- net fair value gains, net of tax 428 209- reclassified and reported in operating profit, net of tax (219) (281)Actuarial gain recognised in the group pension schemes 12,040 11,586Actuarial gain recognised in US post-retirement benefitobligations 146 109Movement in deferred tax on retirement benefitobligations (4,018) (1,933)Net exchange adjustments 9,289 (2,421) -------- --------Net income recognised directly in equity 17,666 7,269Profit for the year 11,443 11,621 -------- --------Total recognised income for the year 29,109 18,890 ======== ======== CONSOLIDATED BALANCE SHEETat 31 December 2007 2007 2006 £'000 £'000ASSETSNon-current assetsGoodwill - 177Other intangible assets 1,562 1,542Property, plant and equipment 115,076 106,470Deferred tax assets 5,349 10,573Other receivables 99 131 --------- --------- 122,086 118,893 --------- ---------Current assetsInventories 22,311 19,579Current tax assets 32 708Trade and other receivables 22,872 22,596Financial assets 746 159Cash and cash equivalents 9,635 8,790 -------- -------- 55,596 51,832 -------- --------LIABILITIESCurrent liabilitiesFinancial liabilities- Borrowings 768 6,367- Derivative financial instruments 214 73Trade and other payables 21,620 19,733Current tax liabilities 4,064 3,345 -------- -------- 26,666 29,518 -------- --------Net current assets 28,930 22,314 -------- --------Non-current liabilitiesFinancial liabilities- Borrowings 36,119 29,402Deferred tax liabilities 10,892 12,168Retirement benefit obligations 8,772 26,325Other non-current liabilities 173 138 -------- -------- 55,956 68,033 -------- --------Net assets 95,060 73,174 ======== ========EQUITYCapital and reserves attributable to equity holdersOrdinary shares 16,287 16,283Share premium 6,097 6,070Other reserves 57,836 48,347Retained earnings 14,840 2,474 -------- --------Total equity 95,060 73,174 ======== ======== CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2007 2007 2006Continuing operations: £'000 £'000Cash flows from operating activitiesCash generated from operations 23,435 22,995Interest received 325 316Interest paid (3,075) (2,316)Tax paid (3,845) (5,182) --------- ---------Net cash from operating activities 16,840 15,813 --------- ---------Cash flows from investing activitiesPurchase of property, plant and equipment (10,469) (17,299)Proceeds from sale of property, plant and equipment 30 86Purchase of intangible assets (298) (935)Payments to former minority shareholders of Cutisin (3) (7)a.s.Increase in investment in subsidiary undertakings - -Dividends received from subsidiary undertakings - - -------- --------Net cash used in investing activities (10,740) (18,155) -------- --------Cash flows from financing activitiesProceeds from the issue of ordinary share capital 31 706Net borrowing under the loan facilities 689 6,746Payments under finance leases - (18)Dividends paid to shareholders (7,245) (7,201) -------- --------Net cash (used in)/from financing activities (6,525) 233 -------- --------Net decrease in cash and cash equivalents - continuingoperations (425) (2,109) ======== ========Discontinued operation:Cash flows from operating activitiesCash used in operations (412) (392)Tax received 123 126 ------ ------Net cash used in operating activities (289) (266) ------ ------Cash flows from investing activitiesPurchase of property, plant and equipment - (12) ------ ------Net cash used in investing activities - (12) ------ ------Net decrease in cash and cash equivalents -discontinued operation (289) (278) ======== ======== Net decrease in cash and cash equivalents (714) (2,387)Cash and cash equivalents at beginning of year 8,232 11,243Exchange gains/(losses) on cash and cash equivalents 1,977 (624)Cash and cash equivalents 9,635 8,790Bank overdrafts (140) (558) ------- --------Net cash and cash equivalents at end of year 9,495 8,232 ======= ======== NOTES TO THE PRELIMINARY ANNOUNCEMENT OF THE FINAL RESULTSfor the year ended 31 December 2007 (1) Analysis of operating profit 2007 2006 £'000 £'000Continuing operations Revenue 156,252 152,779Cost of sales 111,532 107,204 ______ ______Gross profit 44,720 45,575 ______ ______Selling and distribution costs 11,528 11,252Administrative expenses 10,291 9,918Research and development expenditure 4,328 4,195Other expenses 537 972 ______ ______ 26,684 26,337Less: other operating income 241 747 _____ _____Net operating expenses 26,443 25,590 _____ _____Operating profit before exceptional items 18,277 19,985 ====== ====== 2007 2006 £'000 £'000Discontinued operation Revenue 706 721Expenses (1,214) (1,412) ______ ______Operating loss (508) (691)Loss on disposal of net assets (226) - ______ ______Loss before tax (734) (691)Taxation 159 (131) ______ ______Loss for the year on discontinued operation (575) (822) ====== ====== The discontinued operation relates to the disposal on 28 December 2007 ofBioFilm Limited ("BioFilm"), a subsidiary undertaking specialising in themanufacture and sale of thin films. BioFilm was sold to a new company backed byTate & Lyle Ventures LP and Scottish Enterprise's Scottish Venture Fund for anominal initial consideration plus a sum in respect of working capital. Theconsideration was received in February 2008. The agreement provides for apotential further payment of up to £3.6 million in the event of a subsequentsale of the business. BioFilm contributed £706,000 (2006: £721,000) to revenue and incurred a lossbefore tax of £734,000 (2006: loss before tax of £691,000) and net cash outflowof £289,000 (2006: outflow of £278,000). The loss on disposal of net assetsincludes a goodwill write off of £177,000. The taxation credit of £159,000(2006: charge of £131,000) relates to tax on the operating loss of BioFilm,resulting in a post-tax loss of £575,000 (2006: £822,000). (2) Analysis of net debt 2007 2006 £'000 £'000 Cash and cash equivalents 9,635 8,790Bank overdraft (140) (558) -------- -------- 9,495 8,232Borrowings less bank overdraft (36,747) (35,211) --------- --------- (27,252) (26,979) ========= ========= (3) Statutory Accounts The financial information set out in this announcement does not constitute thecompany's statutory financial statements for the years ended 31 December 2007 or2006 for the purposes of section 240 of the Companies Act 1985. The financialinformation for the year ended 31 December 2006 is derived from the statutoryfinancial statements for that year which have been delivered to the Registrar ofCompanies. The auditors reported on those financial statements; their report wasunqualified and did not contain a statement under sections 237 (2) or (3)Companies Act 1985. The statutory financial statements for the year ended 31December 2007 will be finalised on the basis of the financial informationpresented by the directors in this preliminary announcement and will bedelivered to the Registrar of Companies following the company's Annual GeneralMeeting. While the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards("IFRSs"), this announcement does not itself contain sufficient information tocomply with IFRSs. The company expects to publish full financial statements thatcomply with IFRSs in March 2008. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DVO.L