17th Dec 2007 08:24
API Group PLC17 December 2007 17 December 2007 API GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2007 • Results in line with announcement on 19 October and reflect difficult trading conditions and underperformance in a number of the Group's businesses • Sales of £47.2 million (six months to 30 September 2006: £50.8 million), reflecting contract losses in Laminates and weak demand in the US, partially offset by growth in European Foils and Holographics • Operating loss before exceptionals of £0.2 million (six months to 30 September 2006: profit £1.0 million) • New China facility now substantially complete, production for export commenced • Appointment of new Chief Executive • Fully underwritten Open Offer of New Ordinary Shares to raise £8.0 million (pre expenses) to restore working capital headroom, reduce debt and ensure continuing support of the Group's main lender • Possible move to AIM Commenting, API's Non-Executive Chairman Richard Wright said: "These results are in line with our previous announcement in October. "A successful conclusion to the Open Offer, announced today, will strengthen theCompany's financial position. This, together with potential new developments,increased availability of foil from the new Chinese factory and the plannedoverhead cost reduction program provide the basis for an improved outlook forthe Group." Enquiries: Andrew Turner, Group Chief Executive Officer, API Group plc 01625 650334 Tim Spratt, Nicola Biles, Financial Dynamics 020 7831 3113 REPORT ON INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2007 Current Trading In line with the Company's announcement of 19 October 2007, results for the sixmonth period to 30 September 2007 were below the Board's expectations and thecomparable period last year reflecting difficult trading conditions andunderperformance in a number of the Group's businesses. Group sales, at £47.2 million, were 7.3 per cent. lower than last year (5.6 percent. at constant exchange rates) due primarily to contract losses in Laminatesand weak demand in the US, partially offset by growth in the European Foils andHolographics businesses. The Group recorded an operating loss, before exceptional items, of £0.2 million,compared with an operating profit of £1.0 million for the same period in 2006and breakeven for the 6 month period ending 31 March 2007. Exceptional items of £0.2 million (2006: £0.4 million) related principally toseverance costs offset by a gain on the sale of the Group's site in Charlotte,US, which was closed in 2006. Net financing costs of £1.0 million (2006: £1.2 million) reflected an increaseof £0.4 million in the Group's interest cost as a result of the higher averagedebt and interest rates compensated by a UK pension plan credit of £0.3 million(2006: £0.3 million charge). The pension deficit, as calculated in accordance with IAS 19, reduced from £11.0million at 31 March 2007 to £6.1 million at 30 September 2007 on the basis ofthe Company's latest actuarial assessment and an improved outlook for long terminvestment returns. Cash Flow and Borrowings Net cash flow from operating activities was £0.6 million (2006: £1.9 million)reflecting lower operating profits. Capital expenditure reduced to £2.7 million(2006: £3.5 million) reflecting lower spending in China as the new facilitynears completion. In addition, the Group received net cash proceeds of £0.7million from the sale of the property in Charlotte. Net borrowings increased to £23.0 million at 30 September 2007 compared with£20.8 million six months earlier and £15.5 million at the end of September 2006.The increase in the latest 6 month period is attributable to interest costs inexcess of operating cash flow and continued investment in China. On 21 September 2007, the Company announced a projected cash shortfall againstits borrowing facilities in the UK and the commencement of discussions with itsmain lender and major shareholders. Concurrent with this Interim Announcement,the Chairman is inviting Shareholders to support an Open Offer of New OrdinaryShares to raise additional funds of £8.0 million (£7.2 million net of costs).This is designed to restore the Group's working capital headroom, reducestructural debt to a sustainable level and ensure the continuing support of theGroup's main lender. Review of Operations Asia Pacific Report sales for Asia Pacific were down by 3 per cent. to £5.3 million (£2006:£5.5 million) but were unchanged before the effects of currency translation. Operating profits declined to £0.2 million (2006: £0.5 million) as a result of achange in sales mix to the Chinese market away from higher added valueholographic foils. Margins on exports from China were also adversely affected bythe Government's implementation of a new VAT regime which came into effect on 1July 2007. The Company is making progress in passing on these cost increases tocustomers in a number of key markets. The new facility in Shanghai is now substantially complete, approximately 50 percent. of machinery has been relocated and production for export has commenced onthe new site. North America Reported sales in North America declined by 15 per cent. to £11.1 million (2006:£13.1 million) and were 8 per cent. lower than last year on a local currencybasis. Weak demand in the graphics, greeting card and metallic ink sectors waspartially compensated by continued growth in labels and coding foils. Operating profits from the region of £0.6 million were in line with the previous6 month period but £0.4 million below 2006. The year on year movement was due tothe lower level of sales, an adverse product mix and the impact of theunfavourable exchange rate movement. Europe Sales in Europe were 5 per cent. below prior year at £30.7 million (2006: £32.3million). In Laminates, turnover fell by 21 per cent. due to a number of contract lossesalthough operating results remained substantially unchanged (just belowbreakeven) on prior year and the previous six month period. The impact of thedecline in volumes was mitigated by improved average margins and cost savingsarising from the restructuring measures implemented in the first quarter of2007. Volumes in the European foils businesses grew strongly although increasedproduction costs, including waste, were significantly higher leading to reducedoperating profits. Sales and profitability in European Foils have continued tobe adversely affected by the shortage of standard foil grades from China pendingthe resolution of technical issues and the increase of capacity at the new sitein Shanghai. The Company's new finishing and distribution facility in Italy made a good startwith sales growth in line with expectations. Discontinued Operations The Company has settled a number of disputes relating to the disposal of theConverted Product Division in January 2005 including the Company's claim againstthe purchaser for deferred consideration of £0.75 million. Legal advicepreviously led the Board to anticipate a favourable outcome to the Company'sclaim, although the £0.75 million was disclosed as a contingent liability in theInterim Report for the period to 31 March 2007. In the light of new claimsbrought by the purchaser in respect of the closing valuation of the Division'snet assets, the Board concluded that Shareholder's interests would be bestserved by an early settlement rather than protracted court proceedings.Consequently, the Group has taken charge of £0.9 million against the profit andloss account comprising of £0.75 million write-off of the deferred considerationand £0.15 million legal and other costs. In the last six month period, the Company has been notified of an additionalclaim relating to warranties given in the course of the same transaction. Further details of these issues are set out in the notes to the accounts. Dividend The Board is not recommending the payment of an interim dividend (2006: none). Outlook The Board was pleased to announce the appointment of Andrew Turner as GroupChief Executive with effect from 15 October 2007. If the Group is successful in gaining the support of Shareholders for theproposed Open Offer, it will emerge with restored cash headroom and asignificantly strengthened balance sheet. With the possible exception of the US, there are no clear indications, at thisstate, that the uncertainty in the banking sector and weakness in consumerconfidence is affecting general market demand for the Group's products. The Group has a number of product innovations in the pipeline, which utilise thecombined technical capabilities of the European businesses. The Directorsbelieve that a successful outcome of one of these developments could have amaterial impact on the Group's overall short-term financial performance. Volumes have recovered somewhat in Laminates and the business is benefiting fromits lower cost base, post restructuring. European foil sales are expected tobenefit from the start-up of export production at the new site in China as wellas continued growth through the new distribution operation in Italy. An overhead cost reduction programme has been launched by the new Groupmanagement which is expected to fully impact results from the beginning of thenext financial year. R C Wright Non-Executive Chairman GROUP INCOME STATEMENTfor the six months ended 30 September 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 Note £'000 £'000 £'000Continuing operationsRevenue 1 47,159 50,861 101,979Cost of sales (38,251) (40,003) (80,656)Gross profit 8,908 10,858 21,323Other operating costs (9,114) (9,841) (20,329)Operating (loss)/profit before exceptional items 1 (206) 1,017 994 Exceptional items 3 (184) (420) (863)Operating (loss)/profit from continuing operations (390) 597 131 Finance revenue 6 34 85Finance costs (1,303) (926) (1,698)Other finance income/(expense) - pensions 325 (323) (311) (972) (1,215) (1,924)Loss on continuing activities before taxation (1,362) (618) (1,793)Taxation -UK 5 (149) 27 (122) -Overseas 5 (196) (321) (613)Loss from continuing operations (1,707) (912) (2,528)Discontinued operationsLoss from discontinued operations 6 (929) (127) (230)Loss for the period (2,636) (1,039) (2,758)Attributable to:Profit attributable to minority equity interests 126 377 695Loss attributable to equity holders of the parent (2,762) (1,416) (3,453)Total loss for the period (2,636) (1,039) (2,758)Earnings per share (pence)Basic loss per share from continuing operations 4 (5.3) (3.7) (9.4)Diluted loss per share from continuing operations 4 (5.3) (3.6) (9.1)Basic loss per share on loss for the period 4 (8.0) (4.1) (10.1)Diluted loss per share on loss for the period 4 (8.0) (4.0) (9.8) GROUP BALANCE SHEETat 30 September 2007 Unaudited Audited Unaudited 30 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000 NoteAssets Non-current assets Property plant and equipment 31,895 30,500 31,856Intangible assets 6,480 6,480 6,480Deferred tax asset on defined benefit pension plan 1,721 3,263 3,311Financial assets 45 - 42 40,141 40,243 41,689Current assetsTrade and other receivables 17,716 20,112 19,386Inventories 11,798 13,195 11,907Cash 2,103 4,909 3,236 31,617 38,216 34,529Total assets 71,758 78,459 76,218LiabilitiesCurrent liabilitiesTrade and other payables 19,483 22,306 20,310Financial liabilities 7,662 1,758 5,431Income tax payable 411 379 370Provisions 5 306 144 27,561 24,749 26,255Non-current liabilitiesFinancial liabilities 17,485 18,674 18,629Deferred tax liabilities 639 659 659Provisions 77 93 88Defined benefit pension plan deficit 6,147 10,879 11,036 24,348 30,305 30,412Total liabilities 51,909 55,054 56,667Net assets 19,849 23,405 19,551EquityCalled up share capital 8,642 8,612 8,612Share premium 294 244 244Capital redemption reserve 549 549 549ESOP reserve (251) (251) (251)Foreign exchange reserve (1,523) (366) (1,229)Retained earnings 6,560 9,179 6,127Total shareholders' equity 7 14,271 17,967 14,052Minority interest in equity 7 5,578 5,438 5,499Total equity 19,849 23,405 19,551 GROUP CASH FLOW STATEMENTfor the six months ended 30 September 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 £'000 £'000 £'000Operating activitiesGroup operating (loss)/profit (390) 597 131Adjustments to reconcile group operating (loss)/profit to netcash flow from operating activitiesOperating loss from discontinued operations - (127) (230)Depreciation and impairment of property, plant and equipment 1,831 1,677 3,457Profit on disposal of property, plant & equipment (258) (11) (22)Share-based payments 161 57 131Difference between pension contributions paid and amounts (484) (403) (835)recognised in the income statementDecrease/(increase) in inventories 12 (143) (870)Decrease/(increase) in trade and other receivables 897 (767) (523)Increase/(decrease) in trade and other payables (685) 1,381 (1,120)Movement in provisions (300) (32) (293)Cash generated from/(used in) operations 784 2,229 (174)Income taxes paid (160) (362) (656)Net cash flow from operating activities 624 1,867 (830)Investing activitiesInterest received 12 34 85Purchase of property, plant and equipment (2,682) (3,459) (6,140)Sale of property, plant and equipment 698 244 244Payments to acquire investments (5) - -Sale of subsidiary undertakings 54Net cash flow from investing activities (1,923) (3,181) (5,811)Financing activitiesInterest paid (1,229) (1,225) (2,047)Dividends paid to minority interests - (487) (487)Proceeds from share issues 80 - 53New borrowings 756 - 1,956Repayment of borrowings - (950)Net cash flow from financing activities (393) (2,662) (525)Decrease in cash and cash equivalents (1,692) (3,976) (7,166)Effect of exchange rates on cash and cash equivalents 160 (4) 116Cash and cash equivalents at the beginning of the period (1,763) 7,326 10,396Cash and cash equivalents at the end of the period (3,295) 3,346 3,346 GROUP STATEMENT OF RECOGNISED INCOME AND EXPENDITURE for the six months ended 30 September 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 £'000 £'000 £'000 Exchange differences on retranslation of foreign (341) (1,345) (972)operationsActuarial gains/(losses) on defined benefit pension 4,454 (2,183) (1,311)plansTax on actuarial gains/(losses) on defined benefit (1,420) 635 393pension plansNet income/(expense) recognised directly in equity 2,693 (2,893) (1,890)Loss for the period (2,636) (1,039) (2,758)Total recognised income and expense relating to the 57 (3,932) (4,648)periodAttributable to:Equity holders of the parent (22) (3,989) (5,176)Minority equity interests 79 57 528 57 (3,932) (4,648) NOTES 1. SEGMENTAL ANALYSIS Primary reporting format - geographic segments: At 30 September 2007, the Groupis organised into three distinct independently managed geographic segments, AsiaPacific, North America and Europe. The following table presents revenue andprofit information for these segments. 6 months to 6 months to 6 months to 6 months to 30 September 30 September 30 September 30 September 2007 2006 2006 2006 £'000 £'000 £'000 £'000 Continuing and Total Continuing Discontinued Total By Geographical segmentTotal revenue by originAsia Pacific 5,894 6,261 - 6,261North America 11,222 13,255 7 13,262Europe 35,601 38,202 - 38,202 52,717 57,718 7 57,725Inter-segmental salesAsia Pacific 569 787 - 787North America 130 160 - 160Europe 4,859 5,910 - 5,910 5,558 6,857 6,857External sales by originAsia Pacific 5,325 5,474 - 5,474North America 11,092 13,095 7 13,102Europe 30,742 32,292 - 32,292 47,159 50,861 7 50,868External sales by destinationUK 15,549 17,345 - 17,345Continental Europe 14,208 13,480 - 13,480Americas 10,358 12,836 7 12,843Asia Pacific 6,196 5,610 - 5,610Rest of World 848 1,590 - 1,590 47,159 50,861 7 50,868Profit/(loss) from operationsAsia Pacific 229 540 - 540 before exceptional itemsexceptional items - - - - 229 540 540North America 610 984 45 1,029 before exceptional itemsexceptional items 258 (242) (172) (414) 868 742 (127) 615Europe 15 490 - 490 before exceptional itemsexceptional items (61) (198) - (198) (46) 292 292Central costs (1,060) (997) - (997) before exceptional itemsexceptional items (381) 20 - 20 (1,441) (977) (977)Total (loss)/profit from operations before (206) 1,017 45 1,062exceptional itemsTotal (loss)/profit from operations (390) 597 (127) 470 2. PRESENTATION OF INTERIM FINANCIAL STATEMENTS Authorisation of financial statements The consolidated financial statements of API Group plc for the six months ended30 September 2007 were authorised for issue in accordance with a resolution ofthe directors on 14 December 2007. API Group plc is a public limited companyincorporated in the United Kingdom whose shares are publicly traded. Basis of preparation These consolidated interim financial statements are presented in sterling andall values are rounded to the nearest thousand (£'000) except when otherwiseindicated. The financial information contained in this interim statement is unaudited anddoes not constitute statutory accounts as defined in section 240 of theCompanies Act 1985 and therefore does not include all the information anddisclosures required in the annual financial statements and should be read inconjunction with the Group's latest annual financial statements as at 30September 2006 which were prepared in accordance with International FinancialReporting Standards as adopted by the EU. The audited annual financialstatements for the year ended 30 September 2006, which represent the statutoryaccounts for that year, and on which the auditors gave an unqualified opinion,have been filed with the Registrar of Companies. Accounting policies The accounting policies adopted are consistent with the annual financialstatements for the year ended 30 September 2006, which were prepared inaccordance with International Financial Reporting Standards as adopted by theEU. 3. EXCEPTIONAL ITEMS 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 £'000 £'000 £'000Exceptional items charged against operating (loss)/profit compriseRedundancy and restructuring costs (442) (239) (651)Charlotte factory closure 258 (242) (242)London office provision release/(closure costs) - 24 (7)Release of provision for vacant property - 37 37 (184) (420) (863) Exceptional items are material items which derive from events or transactionsthat fall within the ordinary activities of the Group and which need to bedisclosed by virtue of their size or incidence. Redundancy and restructuring costs During the period, the group provided for severance costs of £442,000.Comparative figures are in respect of restructuring costs, mainly as a result ofredundancy and relocation of employees in the United Kingdom. Charlotte factory closure During the period the Charlotte factory site was sold, realising a profit of£258,000. The comparative figures relate to the costs associated with theclosure of the factory. 4. EARNINGS PER SHARE 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 £'000 £'000 £'000 Net loss attributable to equity holders of the (1,833) (1,289) (3,223)parent company - continuing operationsLoss attributable to equity holders of the parent (929) (127) (230)company - discontinued operationsNet loss attributable to equity holders of the (2,762) (1,416) (3,453)parent company 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 No No No Basic weighted average number of ordinary 34,412,276 34,391,292 34,359,671sharesDilutive effect of employee share options - 903,820 903,820Diluted weighted average number of ordinary 34,412,276 35,295,112 35,263,491shares 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006Earnings per share pence pence penceContinuing operationsBasic loss per share (5.3) (3.7) (9.4)Diluted loss per share (5.3) (3.6) (9.1)Discontinued operationsBasic loss per share (2.7) (0.4) (0.7)Diluted loss per share (2.7) (0.4) (0.7)TotalBasic loss per share (8.0) (4.1) (10.1)Diluted loss per share (8.0) (4.0) (9.8) The weighted average number of shares excludes the shares owned by the API Groupplc No.2 Employee Benefit Trust. Under IAS 33, the weighted average number of ordinary shares in issue used forcalculating the diluted earnings per share is adjusted by the number of shareoptions which are contingently issuable and which satisfy the conditionsattached to the share options at the balance sheet date. At 30 September 2007,the conditions attached to all share options outstanding at that date have notbeen met, so no adjustment has been made to the weighted average number ofshares. Consequently, the diluted earnings per share for the 6 months ended 30September 2007 are identical to the basic earnings per share. 5. TAXATION 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 £'000 £'000 £'000Current income taxOverseas tax (196) (321) (613)Total current income tax (196) (321) (613)Deferred taxOrigination and reversal of temporary (149) (253) (402)differencesAdjustment to previous year - 280 280Total deferred tax (149) 27 (122)Total charge in the income statement (345) (294) (735) 6. DISCONTINUED OPERATIONS 6 months to 6 months to 12 months to 30 September 30 September 30 September 2007 2006 2006 £'000 £'000 £'000Revenue - 7 129Expenses - (134) (359)Operating loss and loss after tax for the - (127) (230)period for discontinued operationsLoss on disposal of discontinued (929) - -operationsTotal charge in the income statement (929) (127) (230) The loss on disposal of discontinued operations relates to the sale of theConverted Products division in January 2005. Following settlement of a number ofdisputes with the purchaser, deferred consideration of £750,000, previously heldin other debtors, has now been written off and other settlement costs payable tothe purchaser and related legal fees have been provided. Discontinued operations in prior periods represent the results of Chromagem, asubsidiary which ceased trading in 2006. NOTES (continued) 7. CHANGES IN EQUITY Shareholders' Minority Total equity Interest equity £'000 £'000 £'000 Balance at 1 October 2005 22,959 5,460 28,419Total recognised income and expense for the period (1,187) 471 (716)Exercise of employee share options 53 - 53Share based payment 74 - 74Balance at 31 March 2006 21,899 5,931 27,830Total recognised income and expense for the period (3,989) 57 (3,932)Dividends - (550) (550)Share based payment 57 - 57Balance at 30 September 2006 17,967 5,438 23,405Total recognised income and expense for the period (4,001) 61 (3,940)Share based payment 86 - 86Balance at 31 March 2007 14,052 5,499 19,551Total recognised income and expense for the period (22) 79 57Exercise of employee share options 80 - 80Share based payment 161 - 161Balance at 30 September 2007 14,271 5,578 19,849 8. CONTINGENT LIABILITIES In the Interim Report for the 6 months ending 31 March 2007, a contingentliability of £0.75 million was disclosed. This related to deferred considerationarising from the sale of the Converted Products Division in January 2005, whichwas withheld by the purchaser. At the time of announcing the March results, theDirectors were of the opinion, in accordance with legal advice received, that asuccessful recovery of this amount was probable and consequently no provisionwas made against the recoverability of the outstanding deferred consideration. In September 2007 substantial claims were made by the purchaser following anunfavourable outcome to expert determination proceedings relating to the closingvaluation of the Division's net assets. After taking further legal advise and inview of the high level of legal fees required to pursue recovery of the deferredconsideration and disputing the additional claims, the Board concluded that anearly settlement was in the best interests of Shareholders. The terms of thesettlement achieved included agreement by the Company not to pursue its claimfor the deferred consideration in exchange for withdrawal of claims by thepurchaser relating to the net asset position. Accordingly, the deferredconsideration of £0.75 million has now been written off and provision has beenmade for the agreed settlement relating to the completion balance sheet andrelated legal fees. These items have been included in Discontinued Operationswithin the Income Statement for the 6 months ending 30 September 2007 - see Note6. During the 6 months ended 30 September 2007, the Group also received a claim inrespect of alleged breach of warranties from the purchaser of the ConvertedProducts Division. The purchaser has acknowledged that the maximum amount whichit may recover in connection with the material element of the claim is capped at£3.1 million. The Directors consider that any amount which may be recovered bythe purchaser would be substantially lower than the capped amount of this claimand they believe that the Group has a strong basis upon which the claim can bedefended. Accordingly, no provision has been made in the accounts in respect ofthis claim. INDEPENDENT REVIEW REPORT TO API GROUP PLC Introduction We have been engaged by the company to review the condensed set of financialstatements in the interim financial statements for the 6 months ended 30September 2007 which comprises the Group Income Statement, Group Balance Sheet,Group Cash Flow Statement, Group Statement of Recognised Income and Expenditure,and the related notes 1 to 8. We have read the other information contained inthe interim financial statements and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements. This report is made solely to the company in accordance with guidance containedin ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performedby the Independent Auditor of the Entity" issued by the Auditing PracticesBoard. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our work, for this report,or for the conclusions we have formed. Directors' Responsibilities The interim financial statements are the responsibility of, and have beenapproved by, the directors. The Directors are responsible for preparing theinterim financial statements in accordance with the Listing Rules of the UnitedKingdom's Financial Services Authority, which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual financial statements exceptwhere any changes, and the reasons for them, are disclosed. As disclosed in note 2, the annual financial statements of the Group areprepared in accordance with International Financial Reporting Standards asadopted by EU. The financial information included in this interim financialstatement has been prepared in accordance with the Listing Rules of the UnitedKingdom's Financial Services Authority. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the interim financial statement based on ourreview. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the interim financialstatements for the 6 months ended 30 September 2007 is not prepared, in allmaterial respects, in accordance with the accounting policies outlined in Note2, which comply with International Financial Reporting Standards and which thegroup intends to apply in its financial statements for the period ended 31 March2008 and in accordance with the Listing Rules of the United Kingdom's FinancialServices Authority. Ernst & Young LLP Manchester 17 December 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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