22nd Jan 2007 07:01
Beale PLC22 January 2007 Monday, 22 January 2007 PRELIMINARY RESULTS Beale PLC, the specialist department store operator, announces PreliminaryResults for the 52 weeks ended 28 October 2006. Key Points * Operating profit for the year was maintained at £0.43m despite gross sales* being down 1.6% to £107.0m (2005: £108.7m). NB: Prior year included property profit of £0.41m. * Revenue for the year was £59.9m (2005: £61.9m) due to increased value of concession sales in the year, which are excluded from the revenue calculation. * The overall fall in sales reflects: - The closure of the Walton store in January 2006 (12 week contribution to sales) - The opening of the Horsham store in August 2006 (10 week contribution to sales) * Consequently, like for like gross sales* for the period decreased by only 0.1% * Gross margin improved from 53.6% to 54.9% * Profit before tax increased 27.6% to £0.32m (2005: £0.25m) * Earnings per share of 0.19p (2005: 0.69p) reflects the significant impact of deferred tax provisioning * Recommended final dividend of 1.10p per share, making a total for the year of 2.20p per share (2005: 2.20p) * Like for like gross sales for the first 11 weeks of the new financial year (to 13 January 2007) were 4.3% down on the previous year. Sales in the previous year had been boosted in the Bournemouth and Poole stores by the local Castlepoint shopping centre being closed during the key sales months of December 2005 and January 2006. Also the Group sales benefited last year from the closing down sale at the Walton store. Allan Allkins, Chief Executive commented: "In what was a difficult year I ampleased that we have made progress in a number of areas. However, it continuesto be disappointing that, given the harsh retail climate, our results do notfully reflect the significant improvements we have made over the recent years.Whilst I am confident we will benefit from our most recent acquisition, it islikely that 2006/7 will be another challenging year for retail." Mike Killingley, Chairman added: "Following the opening of our store in Horsham,we are continuing to look for possible acquisitions in other towns, thedemographics of which are best suited to our skills and product assortment. There is no evidence that the trading environment will improve materially duringthe remainder of the year particularly following this month's increase ininterest rates. We believe, however, that our trading strategy, supported by theinvestments that we have made in the last year, should provide an opportunity torecover the ground lost over the past few weeks." For further information: Beale PLC Tavistock Communications Corporate SynergyAllan Allkins, Chief Executive Lulu Bridges Barrie NewtonKen Owst, Finance Director Polly Hutchinson Tel: 01225 424666Tel: 020 7920 3150 (23 Jan) Tel: 020 7920 3150 Tel: 01202 552022 (thereafter) * Gross sales include the full value of concession sales and VAT and provide a more realistic indication of customers' spending patterns than revenue. Beale PLC Preliminary Results for the 52 weeks ended 28 October 2006 Results Improved gross margins and tight cost control during the 52 weeks ended 28October 2006 enabled the Group to increase its underlying profitabilitysignificantly despite a slight decline in total sales. Like for like salesdecreased by 0.1%. I am pleased to report that operating profit for the year was maintained at£0.43 million (2005: £0.43 million) despite gross sales being down 1.6% to£107.0 million (2005: £108.7 million). Gross sales include concession sales andVAT. However, the Group's underlying profitability improved significantly, fortwo principal reasons. Firstly, last year's operating profit had been flatteredby the inclusion of a £0.41 million profit on the disposal of investmentproperties. Secondly this year's second half profit was reduced by costsincurred as part of our investment in the Group's future. These investments werethe pre-opening costs at our new Horsham store and the disruption to tradingwhile we refurbished the ground floor at Bournemouth to introduce the mostcomprehensive cosmetics offering on the south coast, and while we replaced theescalators at Poole. Relative to the previous year, our performance in the year under review has thusbeen encouraging in a UK retail environment which continues to be very tough,particularly for fashion retailers. However, we believe that the absolute levelof our profits remains unacceptably low. The revenue for the Group at £59.9 million was 3.4% below previous year (2005:£61.9 million) due to the increased value of concession gross sales in the year,which are excluded from the revenue calculation. Gross profit for the year of£32.9 million (2005: £33.2 million) was achieved at a margin of 54.9% (2005:53.6%), being 1.3% above the previous year. Gross sales, including VAT and concessions at £107.0 million, were 1.6% belowprevious year (2005: £108.7 million). However, in the year to 28 October 2006the Walton store traded for only 12 weeks prior to closure at the end of Januaryand the Horsham store traded for 10 weeks, having opened at the end of August.In comparing the residual eleven stores on a like for like basis, the grosssales are seen to have fallen by only 0.1% compared to the previous year, thoughit should be remembered that the Bournemouth and Poole stores' revenue andprofits benefited from the temporary closure of the Castlepoint shopping centrein Bournemouth for seven weeks during the busy period of December 2005 andJanuary 2006. Administrative expenses of £32.5 million (2005: £33.2 million), were £0.7million below previous year largely due to the fact that this year the Waltonstore costs were only for part of the year. On a like for like basis, Groupcosts have been contained below previous year. The Group benefited in the yearfrom having signed a two year fixed unit price contract for utilities inSeptember 2004. With the expiry of the agreement, Group energy costs arebudgeted to increase in excess of £0.5 million in the current year. The Waltonstore closure sale, in the 12 weeks that it traded, generated the equivalent ofhalf the previous year's revenue. However, the gross profit achieved wasconsiderably below the Group average margin and, combined with, higher operatingand closure costs, resulted in a store trading contribution, pre-head officecosts, of £71,000 compared to the full year benefit in the previous year of£355,000. In addition to this, the lease surrender premium profit in the yearunder review was £315,000 (2005: £82,000). The pre-opening costs incurred forHorsham, and included in Group administrative expenses, amounted to £221,000. Inthe ten weeks of trading the Horsham store incurred trading losses of £72,000pre-head office costs. Net interest payable in the year of £105,000 was £66,000 below previous yearand, as a result, profit on ordinary activities before tax increased to £324,000(2005: £254,000). Our figures this year are presented under International Financial ReportingStandards for the first time, and this has necessitated some minor adjustmentsto the consolidated income statement and balance sheet. These adjustments areexplained in detail in note 7. The improvement in profit before tax is not carried through to earnings, due tothe significant impact of deferred tax provisioning. The profit after taxrepresents earnings per share of 0.19p (2005: 0.69p per share). During the yearthere was no change to the equity structure of the Group. Post year-end trading update Like for like gross sales for the first 11 weeks of our new financial year, to13 January 2007, were 4.3% below the previous year. Total sales, including theWalton-on-Thames and Horsham stores, were 6.7% below last year. Margins were 34basis points higher than the previous year. However, the following factorsshould be taken into account when looking at these comparatives: * the Walton-on-Thames store closed in January 2006 and during the closing down sale of the final two months the store enjoyed high volume sales but at the expense of lower margins; * for the period from 1 December 2006 to 13 January 2007 both Bournemouth and Poole were up against strong comparatives from the previous year when the local Castlepoint shopping centre closed for seven weeks; * as has been reported by other retailers, this year's continuing mild and wet weather has not been conducive to buoyant clothing and footwear sales, which form a major part of our total assortment and revenue. Our strategy The Group Corporate Plan clearly outlines our trading policies which aresupported by strategic objectives for the key areas of the business. The Groupaim is to implement successfully our strategic objectives to ensure sales andprofit growth and the maximisation of shareholder value. We aim to achieve thisby: * Growing the business organically by continuing to improve our product range and concentrating on improving margins, controlling our cost base and increased investment in our stores; * Ensuring each store has a comprehensive assortment that is ranged to suit its customer base; and * Increasing our store portfolio by opening new stores in town centre locations or by acquiring businesses that fit well with our profile and to which we can bring added value. Organic growth In order to ensure that we have an assortment in each store that reflects itsparticular customer base, we have well developed Store Business Plans whichconcentrate upon ensuring the assortment and price structure appeals to eachindividual store's customer profile. This involves both own bought brands andconcession partners, with the key objective of maximising store profitability. Concessions have out performed own bought merchandise in a number of areas. Thisis the result of introducing a total of twelve new partners across a number ofstores to ensure a better range balance and, therefore, an improved customeroffer, which has enabled us to strengthen our own bought ranges ensuring acontinuing point of difference. Whilst in some categories this has reduced ourgross margin, with tight control of markdowns we have ensured a 130 basis pointimprovement in our achieved gross margin for the year. In addition our ownbought margin has improved by 164 basis points. After three years of aggressivestock reduction, our like for like stock levels are 7.5% ahead of last year, butthis does include a 6% reduction in old season stock, stock requirements for thenew store and increased stocks for the cosmetics department of the Bournemouthstore ground floor. Our strategy for own bought merchandise has concentrated upon: * Reviewing our basic stock assortment with the objective of improving stock turn; * Improved supplier funding for marketing; * Re-ranging the assortment in a number of key departments to ensure not only an improved offer but also reduced markdowns; and * Further development of our exclusive label merchandise Harbour View in womenswear and Linens and McNeal in menswear. In addition to new concessions we have introduced new own bought departments ina number of stores, e.g. Haberdashery/Crafts, Lighting, and Jewellery . It is imperative that Group costs are tightly controlled at all levels of thebusiness. This is a continuing key objective. It is pleasing, therefore, toreport that like for like costs are well below the previous year which includesthe impact of rent reviews, the increase in minimum wage and the annual payreview. Much of the sales growth in the high street has been driven by aggressivediscounting from retailers seeking to overcome difficult trading conditions. Wehave discounted where considered necessary but, with a consequent tight controlof markdowns, have managed to reduce our like for like marketing costs, whilstensuring that we have properly promoted the business. We have redesigned ourGroup web site which now includes a trading facility which we plan to extendduring the year. Acquisitions We are very conscious of the fact that much of the sales volume growth in thehigh street is being driven by competitors increasing their selling squarefootage by acquisition or building new stores. That is also the case for Bealesand in the past five trading years we have acquired four new stores, the latestof which was the opening of the store in Horsham in August 2006. Thedemographics of Horsham are particularly suitable for our customer profile. Thestore offers womens and menswear, cosmetics, fragrances, fashion accessories andshoes, childrenswear, gifts/stationery, china and glass, soft furnishings,linens and a restaurant. Early results are encouraging and we are confident thatthe store will make a positive contribution in the current financial year. Theacquisition of additional stores is a key objective. Refurbishment During the past year we have refurbished the Bournemouth ground floor at a costin excess of £1million and introduced new and contemporary cosmetic houses, e.g.Creme de la Mer, Origins, MAC, Molton Brown skincare and Benefit. Both cosmeticsand accessories are now trading from increased square footages and, since thenew departments reopened, sales have increased above the average for the Group.We have also invested in other refurbishments elsewhere across the Group,including works associated with the Disability Discrimination Act. Refurbishmentof the Poole store has started with the introduction of new and replacementescalators during the year. Replacement of our store till systems will becompleted in Spring 2007 and our office management systems will be replaced bythe end of the trading year. Risks and uncertainties The challenge facing retailers has never been more marked. It is against thisvery competitive trading environment that we believe probably the greatest riskto our business is a sustained economic downturn, leading to the requirement forincreased discounting to drive sales and the consequent loss of margin and,therefore, profit. This risk is inextricably linked to the increase in non-foodsales in the supermarkets and the increasing popularity of internet shopping,resulting in a reduced spend elsewhere in the provincial high street. The inexorable rise in some uncontrollable costs, e.g. utility prices, rents,minimum wage, further erodes the ability to increase our margins andprofitability. The Company manages these risks by: * A proactive acquisition policy; * Tight control of expenses; * Implementation of the Group's Corporate Plan and Sales Strategy; * Improvement in our product range, margins, stock and markdown control; and * Regular monitoring of strategic Key Performance Indicators. Dividend As last year, your Board proposes a final dividend of 1.10p per share. Togetherwith the interim dividend of 1.10p per share this maintains the proposeddividend for the year at 2.20p per share. Although the dividend is not covered by the profit for the year, we believe itis justified in light of the group's substantial reserves and the improvement inunderlying trading during the year, despite the downturn over the last fewweeks. Balance sheet and cash flow The closure of the Walton store in January 2006 resulted in negligible write-offof fixed assets, with the store leasehold being surrendered for a net benefit of£397,000, of which £82,000 was taken to profit in 2005. The Horsham store wasacquired at the end of May and opened its doors to the public three monthslater. On acquisition of the leasehold, the premises were already fitted withmany items of fixed plant and the capital cost of the acquisition and fit outfor Horsham was less than £0.7 million. In total the Group capital expenditure in the year was £3.64 million (2005:£0.56 million). In addition to the capital cost of opening Horsham, theBournemouth ground floor refurbishment, new escalators in Poole and the start ofa two year systems upgrade programme were the major projects financed in 2006. Taxation The tax charge for the year was £284,000 (2005: £112,000), representing aheadline rate of 87.6% (2005: 44.1%). The standard rate of corporation tax of30.0% is adversely affected by capital expenditure on assets not qualifying fortax relief and the impact of writing off the Ealing goodwill. There will be nocorporation tax actually payable, with the charge representing movements indeferred tax provisioning. Accounting policies and standards Shareholders will be aware that the Group, in common with all other UK listedcompanies, has adopted International Accounting Standards (IAS) andInternational Financial Reporting Standards (IFRS) as issued by theInternational Accounting Standards Board and endorsed by the European Union.Consequently, the date of transition to IFRS for the Group was 30 October 2004.The interim results issued in June 2006 showed a restatement of the previousyear's results and the detailed policies were shown within the interimstatements. The adoption of IFRS has little effect on the Group's profitperformance. There are more significant impacts on the balance sheet, withproperty revaluations increasing asset values but being offset by increasedprovisioning for deferred tax. Detailed reconciliations of prior year resultsfrom UK GAAP to IFRS are shown in note 7. Group accounts are prepared on a 52 weeks comparative basis, with accountsprepared to the end of the week nearest to the last Saturday in October eachyear. In certain years the Group accounts are prepared over a 53 week period,this will be the case for the year ending 3 November 2007. Pensions The Group offers new employees the opportunity to join the defined contributionpension scheme. The defined benefit pension scheme was closed to new entrants inApril 1997. The valuation of the final pension salary liability under IAS 19 atthe year end saw a reduction in the deficit before deferred tax of £1.9 millionto £5.2 million (2005: £7.1 million). During the year the Group's cashcontributions to the scheme increased by £0.4 million to £1.8 million,reflecting a new schedule of contributions agreed with the Trustees from thestart of 2006. This reduction in deficit largely resulted from increases inpension asset values during the year, though it should be noted that thevaluation of the scheme at this year end has been based on increased mortalityassumptions. The reduction of the pension deficit, after adjusting for therelated deferred tax provision, is the principal reason for Group net assetsincreasing to £20.9 million (2005: £20.8 million). Treasury Treasury activities are governed by procedures and policies approved by theBoard. The Group's policy is to take a conservative stance on treasury mattersand no speculative positions are taken in financial instruments. The treasuryfunction manages the Group's financial resources in the most appropriate andcost-effective manner, minimising the Group's exposure to risk arising frominterest rate and foreign exchange fluctuations. During the year the Group hascontinued to operate within its existing borrowing facilities of two five-yearfixed term loans of £5.0 million each, plus an overdraft facility of £2.5million. The increased capital expenditure, increased pension funding andinvestment in working capital during the year result in increased Groupborrowings at year end of £6.9 million (2005: £3.7 million). Our people Our most important asset is our staff and building an enthusiastic, innovativeteam has been a priority. Employee representatives meet regularly in Head Officeand stores to outline their views which are seen by Board Directors. The Boardencourages all employees to play an active part in the business. Training hasbeen an important part of our Human Resources strategy, with the dual aim ofimproving our service to the customer and developing individuals so that theycan fulfil their potential. I would like to thank my colleagues for theirenthusiasm and hard work throughout the year on behalf of Beales. Summary and outlook In what was a difficult year I am pleased that we have made progress in a numberof areas. However, it continues to be disappointing that, given the harsh retailclimate, our results do not fully reflect the improvements we have made overrecent years. Whilst I am confident we will benefit from our most recentacquisition, it is likely that 2006/7 will be another challenging year forretail. Following the opening of our store in Horsham, we are continuing to look forpossible acquisitions in other towns, the demographics of which are best suitedto our skills and product assortment. There is no evidence that the trading environment will improve materially duringthe remainder of the year, particularly following this month's increase ininterest rates. We believe, however, that our trading strategy, supported by theinvestments we have made in the last year, should provide an opportunity torecover the ground lost over the past few weeks. It should also be rememberedthat the accounts to 3 November 2007 will incorporate an extra trading week. Mike KillingleyChairman22 January 2007 Consolidated Income Statement For the 52 weeks ended 28 October 2006 52 weeks to 52 weeks to 28 October 29 October 2006 2005 Notes £000 £000==========================================================================Gross sales* 2 107,018 108,720--------------------------------------------------------------------------Revenue 2 59,864 61,939Cost of sales (26,964) (28,728)==========================================================================Gross profit 32,900 33,211Administrative expenses (32,471) (33,198)Profit on sale of investment properties - 412--------------------------------------------------------------------------Operating profit 429 425Interest payable (134) (199)Interest receivable 29 28--------------------------------------------------------------------------Profit on ordinary activities before tax 324 254Tax (284) (112)--------------------------------------------------------------------------Profit for the period from continuing operations attributable to equity members 40 142--------------------------------------------------------------------------Basic earnings per share (pence) 6 0.19p 0.69pDividend paid per share 5 2.2p 3.3p========================================================================== * Gross sales reflect revenue from concession sales and VAT from continuedoperations. Consolidated Balance SheetAs at 28 October 2006 28 October 29 October 2006 2005 £000 £000==========================================================================Non-current assets Goodwill 892 1,089Property, plant and equipment 30,698 29,680Financial assets 17 17Deferred tax asset 1,308 1,888-------------------------------------------------------------------------- 32,915 32,674Current assets Inventories 11,560 10,755Trade and other receivables 5,793 6,269Tax asset 126 -Cash and cash equivalents 119 334-------------------------------------------------------------------------- 17,598 17,358Total assets 50,513 50,032--------------------------------------------------------------------------Current liabilities Trade and other payables (10,475) (11,045)Tax liabilities - (286)Bank overdrafts (516) --------------------------------------------------------------------------- (10,991) (11,331)Net current assets 6,607 6,027 Non-current liabilities Bank loan (6,500) (4,000)Retirement benefit obligations (5,199) (7,132)Deferred tax liabilities (5,937) (5,832)Obligations under finance leases (974) (972)-------------------------------------------------------------------------- (18,610) (17,936)Total liabilities (29,601) (29,267)--------------------------------------------------------------------------Net assets 20,912 20,765==========================================================================Equity Share capital 1,026 1,026Share premium account 440 440Revaluation reserve 8,981 9,069Capital redemption reserve 242 242ESOP reserve (56) (48)Retained earnings 10,279 10,036--------------------------------------------------------------------------Total equity 20,912 20,765========================================================================== Consolidated Statement of Recognised Income and Expense 52 weeks to 52 weeks to 28 October 29 October 2006 2005 £000 £000==============================================================================Gain on revaluation of properties - 2,588Deferred tax liability arising on the revaluation of property - (776)Actuarial gain/(loss) on pension scheme 799 (376)Tax on items taken directly to equity (240) 113==============================================================================Net income recognised directly in equity 559 1,549Profit for the period 40 142------------------------------------------------------------------------------Total recognised income and expense for the period 599 1,691============================================================================== Consolidated Reconciliation of Movements in Equity 52 weeks to 52 weeks to 28 October 29 October 2006 2005 Note £000 £000-----------------------------------------------------------------------------Opening equity 20,765 19,751Total recognised income and expense for the period 599 1,691Dividends paid 5 (452) (677)==============================================================================Total movements in equity for the period 147 1,014Closing equity 20,912 20,765============================================================================== Consolidated Cash Flow StatementFor the 52 weeks ended 28 October 2006 52 weeks to 52 weeks to 28 October 29 October 2006 2005 Notes £000 £000==============================================================================Cash flows from operating activities before interest and tax 3 1,190 4,777Interest paid (117) (243)Interest received 29 11Tax paid (251) (80)-----------------------------------------------------------------------------Net cash flow from operating activities 851 4,465----------------------------------------------------------------------------- Cash flows from investing activities Purchase of property, plant and equipment (3,640) (560)Proceeds from sale of financial assets - 18Proceeds from sale of property, plant and equipment 8 592-----------------------------------------------------------------------------Net cash (used in)/ from investing activities (3,632) 50----------------------------------------------------------------------------- Cash flows from financing activities Dividends paid (452) (677)Increase in/(repayment of) loans 4 2,500 (3,000)Net proceeds from obligations under finance leases 2 3-----------------------------------------------------------------------------Net cash generated from/(used in) financing activities 2,050 (3,674)-----------------------------------------------------------------------------Net (decrease)/increase in cash and cash equivalents in the period (731) 841-----------------------------------------------------------------------------Cash and cash equivalents (including overdrafts) at beginning of period 334 (507)-----------------------------------------------------------------------------Cash and cash equivalents (including overdrafts) at end of period (397) 334============================================================================== NOTES 1 Nature of financial information The financial information set out above does not constitute the Company's statutory accounts for the years ended 28 October 2006 or 29 October 2005. The financial information for 2006 and 2005 is derived from the statutory accounts for those years. The statutory accounts for 2005 have been delivered to the Registrar of Companies. The statutory accounts for 2006 will be delivered to the Registrar of Companies following the Company's annual general meeting. The Group auditors, Deloitte & Touche LLP, have reported on the 2005 and 2006 accounts, their reports were unqualified and did not contain a statement under 237(2) or (3) of the Companies Act 1985. While the information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS on 14 February 2007. 2 Revenue All the Group's revenue is derived from retail sales made in the UK. Revenue excludes the non-commission element of sales made by concession outlets. 52 weeks to 52 weeks to 28 October 29 October 2006 2005 £000 £000 ==================================================================================== Gross sales 107,018 108,720 VAT (15,214) (16,093) ------------------------------------------------------------------------------------- Gross sales (exc. VAT) 91,804 92,627 Agency sales less commission (31,940) (30,688) ------------------------------------------------------------------------------------- Revenue 59,864 61,939 ==================================================================================== Revenue includes interest on customer accounts of £681,000 (2005: £779,000). All Group revenue derives from one single business activity. 3 Reconciliation of operating profit to net cash flow from operating activities Group -------------------------------------------------------------------------------- 52 weeks to 52 weeks to 28 October 29 October 2006 2005 £000 £000 ================================================================================ Operating profit/(loss) 429 425 Adjustments for: Depreciation 2,566 2,795 Impairment of goodwill 197 - Profit on disposal of financial assets - (7) Loss/(profit) on fixed asset disposal 48 (4) Profit on property disposal - (412) (Increase)/decrease in inventories (805) 685 Decrease in trade and other receivables 477 333 (Decrease)/increase in trade and other payables (587) 1,668 Other cash movements (1,135) (706) -------------------------------------------------------------------------------- Cash generated from operations 1,190 4,777 -------------------------------------------------------------------------------- 4 Analysis of net debt 30 October 28 October Group 2005 Cash flow 2006 £000 £000 £000 ================================================================================== Cash at bank and in hand 334 (215) 119 Overdraft - (516) (516) ================================================================================== 334 (731) (397) Debt due after one year (4,000) (2,500) (6,500) ================================================================================== (3,666) (3,231) (6,897) ================================================================================== Finance lease* (972) (2) (974) ================================================================================== * Finance lease relates to the long leaseholds. 5 Dividends 52 weeks to 52 weeks to 28 October 29 October 2006 2005 £000 £000 ================================================================================= Amounts recognised as distributions to equity holders in the period Final dividend for 52 weeks ended 29 October 2005 of 1.1p per share (2005: final dividend for 52 weeks ended 30 October 2004 of 2.2p per share). 226 451 Interim dividend for 52 weeks ended 28 October 2006 of 1.1p per share (2005: interim dividend for 52 weeks ended 29 October 2005 of 1.1p per share). 226 226 --------------------------------------------------------------------------------- 452 677 The proposed final dividend for 52 weeks ended 28 October 2006 of 1.1p (2005: 1.1p) per share is payable on 10 April 2007 226 226 ================================================================================= The proposed final dividend has not been included as a liability in these financial results as it is subject to approval at the Annual General Meeting. 6 Earnings per share 52 weeks to 52 weeks to 28 October 29 October 2006 2005 ================================================================================== Weighted average number of shares in issue 20,524,797 20,524,797 Dilution - option schemes - - ---------------------------------------------------------------------------------- Dilutive weighted average number of shares in issue 20,524,797 20,524,797 ================================================================================== £000 £000 ---------------------------------------------------------------------------------- Earnings for basic and diluted earnings per share 40 142 pence pence ---------------------------------------------------------------------------------- Basic earnings per share 0.19p 0.69p Diluted earnings per share 0.19p 0.69p ================================================================================== 7 Reconciliation between amounts reported under previous UK GAAP and IFRS Explanation of transition to IFRS This is the first year that the Group has presented its financial statements under IFRS. The following disclosures are required in the year of transition. The last financial statements under UK GAAP were for the 52 weeks ended 29 October 2005 and the date of transition to IFRS was 30 October 2004. The balance sheet as at 29 October 2005 has been adjusted for the following: a Under IAS 16 freehold properties have been valued on a market value basis rather than existing use, resulting in property values increasing. b Under IAS 17 the long leasehold is treated as a finance lease, resulting in obligations under finance lease appearing on the balance sheet. Under IAS 16 the lease has been revalued at market value. c Under IAS 19 the pension deficit has been increased by showing pension assets at bid price rather than mid market, reducing assets for creditor contribution, and separately identifying the deferred tax asset. d IAS 12 requires a provision to be recognised for nearly all taxable temporary differences and requires deferred tax on property revaluations to be recognised whereas this was not required under UK GAAP. e Under IAS 40 the Group has adopted the cost model for investment properties which has resulted in reducing cost of investment freehold properties. f IAS 38 allowed goodwill to be frozen at the date of transition, 30 October 2004, and subject to review for impairment rather than amortisation. g IAS 10 requires that dividends are only shown in the accounts when they are declared. 7 Reconciliation between amounts reported under previous UK GAAP and IFRS continued Consolidated balance sheet as at 29 October 2005 Notes a b c d e f g UK Freehold Long Deferred Investment GAAP properties leasehold Pensions tax properties Goodwill Dividends IFRS £000 £000 £000 £000 £000 £000 £000 £000 £000------------------------------------------------------------------------------------------------------------------Non-current assets Goodwill 1,024 65 1,089Property, plant and equipment 23,353 1,600 4,740 (13) 29,680Financial assets 17 17Deferred tax asset - 1,888 1,888------------------------------------------------------------------------------------------------------------------- 24,394 1,600 4,740 1,888 (13) 65 32,674-------------------------------------------------------------------------------------------------------------------Current assetsInventories 10,755 10,755Trade and other receivables 6,162 107 6,269Cash and cash equivalents 334 334-------------------------------------------------------------------------------------------------------------------Total current assets 17,251 107 17,358-------------------------------------------------------------------------------------------------------------------Current liabilitiesTrade and other payables (11,272) 227 (11,045)Tax liabilities (286) (286)---------------------------------------------------------------------------------------------------------------------Total current liabilities (11,558) 227 (11,331)---------------------------------------------------------------------------------------------------------------------Net current assets 5,693 107 227 6,027Non-current liabilities Long-term borrowings (4,000) (4,000)Retirement benefit obligation (5,115) (2,017) (7,132)Deferred tax liabilities (422) (5,410) (5,832)Obligations under finance leases - (972) (972)---------------------------------------------------------------------------------------------------------------------Total non-current liabilities (9,537) (972) (2,017) (5,410) (17,936)---------------------------------------------------------------------------------------------------------------------Net assets 20,550 1,600 3,768 (22) (5,410) (13) 65 227 20,765===================================================================================================================== Equity Share capital 1,026 1,026Share premium account 440 440Revaluation reserve 6,629 1,600 4,740 (3,887) (13) 9,069Capital redemption reserve 242 242ESOP reserve (48) (48)Retained earnings 12,261 (972) (22) (1,523) 65 227 10,036---------------------------------------------------------------------------------------------------------------------Total equity 20,550 1,600 3,768 (22) (5,410) (13) 65 227 20,765===================================================================================================================== 7 Reconciliation between amounts reported under previous UK GAAP and IFRS continued The consolidated income statement for the 52 weeks to 29 October 2005 has been adjusted for the following: h Depreciation adjustment results from the change in long lease and freehold valued under IAS 16. i Under IAS 19 there is a reclassification of pension finance cost from interest to administrative expense and a minor change in the charge to profit. j IAS 12 requires a provision to be recognised for nearly all taxable temporary differences and requires deferred tax on property revaluations to be recognised whereas this was not required under UK GAAP. k Under IAS 40 the Group has adopted the cost model for investment properties which has resulted in reducing cost of investment freehold properties. l Under IAS 38 goodwill is no longer amortised but is subject to annual impairment review Consolidated income statement for the 52 weeks ended 29 October 2005 Notes h h i j k l UK GAAP Freehold Long Deferred Investment £000 properties leasehold Pensions tax properties Goodwill IFRS £000 £000 £000 £000 £000 £000 £000-------------------------------------------------------------------------------------------Gross sales* 108,720 108,720===========================================================================================Revenue 61,939 61,939Cost of sales (28,728) (28,728)===========================================================================================Gross profit 33,211 33,211Administrative expenses (32,982) 7 (68) (221) 66 (33,198)Profit on sale of properties 377 35 412-------------------------------------------------------------------------------------------Operating profit 606 7 (68) (221) 35 66 425 Other finance charges (211) 211 -Interest payable (199) (199)Interest receivable 28 28===========================================================================================Profit on ordinary activities before tax 224 7 (68) (10) 35 66 254Tax (198) 34 52 (112)-------------------------------------------------------------------------------------------Profit on ordinary activities after tax 26 7 (68) 24 52 35 66 142------------------------------------------------------------------------------------------- * Gross sales reflect revenue inclusive of concession sales and VAT. 8 Report and Accounts Copies of the Company's Annual Report and Accounts will be sent to shareholders in due course. Further copies may be obtained from the company secretary, Beale PLC, The Granville Chambers, 21 Richmond Hill, Bournemouth BH2 6BJ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BAE.L