3rd Sep 2007 07:00
Stadium Group PLC03 September 2007 3 September 2007 Stadium Group plc ("Stadium") Unaudited interim results for the six months ended 30 June 2007 Stadium Group plc, the AIM listed provider of Electronic Manufacturing Services,announces a 19% increase in profit before taxation and sale of property to£1.24m (2006: £1.04m) for the six months ended 30 June 2007. The principal activity of Stadium is the production of electronic products andassemblies for original equipment manufacturers from its manufacturingfacilities in China and the UK. Stadium serves customers worldwide, primarily inthe Consumer, Industrial, and Automotive sectors. Highlights • Revenue growth 4% (11% at constant currency) to £19.88m (2006: £19.18m) • Gross margin improved by 1.6% to 22.9% (2006: 21.3%) • Operating profit growth 21% (34% at constant currency) to £1.40m (2006: £1.15m) • Earnings per share (before sale of property) up by 16% to 3.6 p (2006: 3.1p) • Interim dividend increased by 4% to 1.20p (2006: 1.15p) • Cash flow from operations (before pension contributions and taxation) £2.00m (2006: £0.57m) • Completed acquisition of Ferrus Power in June 2007 Nick Brayshaw, Chairman of Stadium Group plc, said, "I am pleased to report a significant increase in profits and strong cash flowsduring a period in which underlying trading conditions have been somewhatchallenging. "Customers and products added in the first half are expected to maintain theirstrong performance during the remainder of the year, and there are furtheropportunities in the pipeline. "We continue to invest in new capabilities, and enter higher added valuesectors, and are confident that these initiatives will provide opportunities forfuture growth." For further information please contact: Stadium Group plc Tel: 01429 852520 Nigel Rogers, Chief Executive Mob: 07767 603 362 Parkgreen Communications Tel: 020 7479 7933 Ben Knowles Mob: 07900 346 978 Email: [email protected] Copies of the interim financial statements will be sent to all shareholdersshortly Stadium Group PlcChairman's statementFor the six months ended 30 June 2007 I am pleased to report a significant increase in profits and strong cash flowsduring a period in which underlying trading conditions have been somewhatchallenging. Trading conditions Consumer markets in the UK and US showed evidence of a slowdown and demand fromcustomers in these sectors, and especially automotive, was muted. Industrialmarkets held up rather better, especially in areas where demand is primarilydriven by regulatory or environmental standards. There continues to be a steady rate of enquiries for high quality manufacturingservices from low cost countries, and China remains a key location in thesourcing strategy of most companies. Whilst the continued weakness in the US dollar was helpful to importers,including many of our customers, this had a detrimental effect on thetranslation of revenues and earnings of our Asia operations. Commodity prices began to settle after a period of turbulence during last year,albeit at a higher level. Similarly, operating costs continued to show signs ofmodest inflation and markets were generally more receptive to recognising theseincreases in selling prices. Financial results and dividend Revenues increased by 4% to £19.88m (2006: £19.18m), after allowing for adversecurrency movements of approximately £1.35m. Gross margin increased by 1.6% to22.9% (2006: 21.3%). Operating profits grew by 21% to £1.40m (2006: £1.15m) after allowing foradverse currency movements of approximately £0.14m. Operating margin increasedby 1% to 7.0% (2006: 6.0%). Profit before sale of property and taxation increased by 19% to £1.24m (2006:£1.04m) and earnings per share by 16% to 3.6p (2006: 3.1p). Operating cash flow was particularly strong at £2.00m (before payment of pensioncontributions and taxation) compared with £0.57m in the first half of 2006, and£1.94m in the full year. Net bank borrowings increased by £0.34m to £4.72m reflecting investment in fixedassets and acquisition of £0.92m, and contracts have been exchanged (subjectonly to searches) for the sale of surplus freehold property for net proceeds ofapproximately £3.4m for completion in October 2007. It is proposed to increase the interim dividend by 4% to 1.20 pence per share(2006: 1.15 pence) payable on 5 October 2007. Electronics 2007 2006 £m £mSales by source Asia 10.0 10.7 UK 3.9 3.0 Total 13.9 13.7 EMS 12.0 12.3 Power 1.9 1.4 Total 13.9 13.7 Operating profit 1.0 0.8Operating margin 7.5% 6.1% Electronic Manufacturing Services ("EMS") Sales sourced from Stadium Asia increased by 6% at constant rates of exchange,although down by more than 6% when translated into Sterling. Widespreadreductions in demand from consumer and automotive sectors were more than offsetby the introduction of new customers and products launched in 2007. Sales of UK sourced electronics showed like for like growth (excluding theeffect of acquisitions in the current and prior years) of 8%. Demand fromcustomers, primarily in industrial and commercial markets, remained steadyduring the period. Operating margin improved to 7.5%, reflecting more favourable pricing andproduct mix in Asia and improved operating efficiency across the business. Development of our capabilities in Asia has continued, and in May 2007 the plantwas registered for the production of medical devices by the US Food and DrugAdministration ("FDA"). Investment was also approved by the board to offerenhanced facilities for the in-house production of technical plastic injectionmouldings; a valuable addition to our production base in China and a pre-cursorto obtaining certification under ISO13485 (Quality Management System for medicaldevices) targeted for early 2008. Stadium Power Sales of Stadium Power increased by 34% to £1.86m (2006: £1.39m), mainly as aconsequence of the acquisition of KRP Power Source in August 2006. Thetechnical, design and sales capability of the business was further enhanced bythe acquisition of Ferrus Power in June 2007. Progress has been made in developing a comprehensive range of standard andsemi-standard products for more technically demanding applications inindustrial, communications and, more recently, medical markets. Coupled withour custom design capabilities and access to volume production within StadiumAsia, this represents a valuable service to our customers. KRP has made a significant contribution to the performance of the business inthe first half, and the addition of Ferrus Power is expected to provide asimilar uplift in future. Branded Plastics 2007 2006 £m £mSales Babycare 2.5 2.6 Building Products 3.5 2.9Total 6.0 5.5 Operating profit 0.4 0.5Operating margin 7.4% 8.6% Operating profits reduced by 6% to £0.44m (2006: £0.47m) despite a 9% increasein sales to £6.00m (2006: £5.48m). Whilst sales of baby care products were largely unchanged, Stadium BuildingProducts saw growth of 18% after securing product listings with large retailmultiples in addition to its merchant outlets. The increased volume generated apositive contribution, albeit at lower margins than those achievable in morespecialised markets. Balance sheet and cash flow Cash flow from operations, before pension contributions and taxation, exceeded£2m and represented 143% of operating profit. Net debt increased by £0.34m to£4.72m as a result of fixed assets investment of £0.26m and the acquisition ofFerrus Power in June 2007 for net cash consideration of £0.66m. Contracts have been exchanged (subject only to searches) for the sale of surplusfreehold property, currently let to tenants at Hartlepool, with a net book valueof £3.25m. Completion is expected in October 2007 with net proceeds ofapproximately £3.4m; sufficient to reduce pro-forma net debt to approximately£1.3m and gearing to 16%. This transaction is expected to be neutral to futureearnings, with depreciation, operating cost and interest cost savings offsettingthe lease rental income forgone. The portion of the freehold site currentlyoccupied by Stadium Group plc will be retained for own use. Prospects Sales growth in the second half of the year will continue to be reliant upon themomentum provided by new business. Customers and products added in the firsthalf are expected to maintain their strong performance, and there are furtheropportunities in the pipeline. We continue to invest in new capabilities, and enter higher added value sectors,and are confident that these initiatives will provide opportunities for futuregrowth. Nick BrayshawChairman3 September 2007 Stadium Group plcConsolidated income statement (unaudited)for the six months ended 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Note £000's £000's £000's (Restated (Restated note 13) note 13) Revenue 2 19,875 19,184 38,552Cost of sales (15,327) (15,094) (30,059)Gross profit 4,548 4,090 8,493Other income 219 213 429Operating expenses (3,370) (3,149) (6,499)Operating profit 2 1,397 1,154 2,423Finance costs 3 (155) (109) (262)Profit before tax and sale of property 1,242 1,045 2,161Profit on sale of property - 362 340Profit before tax 1,242 1,407 2,501Taxation (237) (165) (341)Profit for the period 2 1,005 1,242 2,160 Basic earnings per share 5 3.6p 4.4p 7.5p Diluted earnings per share 5 3.6p 4.4p 7.6p Statement of group total recognised income and expenseActuarial loss in pension scheme net of deferred tax - - (298)Net income/(expense) recognised directly in equity - - (298)Profit for the period 1,005 1,242 2,160Total recognised income and expense for the period 7 1,005 1,242 1,862 STADIUM GROUP PLCConsolidated balance sheet (unaudited)at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Note £000's £000's £000's (Restated (Restated note 13) note 13)AssetsNon-current assetsProperty, plant and equipment 6,704 10,262 10,102Goodwill 1,524 536 1,020Deferred tax assets 1,907 2,082 1,907 10,135 12,880 13,029 Current assetsInventories 5,234 6,074 5,872Trade and other receivables 8,142 7,849 7,571Cash and cash equivalents 1,007 20 296 14,383 13,943 13,739Non-current assets classified as held for sale 10 3,247 - - 17,630 13,943 13,739Total assets 27,765 26,823 26,768 EquityEquity share capital 11 1,440 1,439 1,440Share premium 11 4,233 4,225 4,233Capital redemption reserve 11 88 88 88Translation reserve 11 (998) (438) (885)Retained earnings 7, 11 3,380 2,722 3,046Total equity 11 8,143 8,036 7,922 Non-current liabilitiesLong-term borrowings 6 3,815 379 2,713Deferred tax liabilities - 26 -Net pension liability 5,824 6,369 6,356Total non-current liabilities 9,639 6,774 9,069 Current liabilitiesBank overdrafts 1,881 3,317 1,434Current portion of long-term borrowings 32 33 532Trade payables 4,817 5,603 4,899Current tax payable 432 372 188Other payables 2,821 2,688 2,724Total current liabilities 9,983 12,013 9,777Total liabilities 19,622 18,787 18,846Total equity and liabilities 27,765 26,823 26,768 STADIUM GROUP PLCConsolidated cash flow statement (unaudited)for the six months ended 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Note £000's £000's £000's (Restated (Restated note 13) note 13) Net cash flow from operating activities 8 1,434 (263) 461 Investing activitiesPurchase of property, plant and equipment (265) (1,375) (1,683)Sale of property, plant and equipment 12 726 686Acquisition of subsidiary net of cash acquired (666) - (569) Cash flows from investing activities (919) (649) (1,566) Financing activitiesEquity share capital subscribed - 49 58Interest paid (155) (109) (250)Increase/(decrease) in bank loans 610 (112) 2,703Dividends paid on ordinary shares 4 (706) (691) (1,022)Cash flows from financing activities (251) (863) 1,489 Net increase/(decrease) in cash and cash equivalents 264 (1,775) 384Cash and cash equivalents at start of period (1,138) (1,522) (1,522) Cash and cash equivalents at end of period (874) (3,297) (1,138) STADIUM GROUP PLC NOTES: 1. Basis of preparation The annual financial statements of Stadium Group plc for the year ending 31December 2007 will be prepared in accordance with the International FinancialReporting Standards (IFRS) as adopted for use in the EU. Accordingly, theinterim financial report has been prepared using accounting policies consistentwith those which will be adopted by the Group in the financial statements. The Group's IFRS accounting policies, set out below, have been consistentlyapplied to all the periods presented. The information has been prepared underthe historical cost convention. The comparative figures for the year ended 31 December 2006 do not constitutestatutory accounts for the purposes of s240 of the Companies Act 1985. A copy ofthe statutory accounts for the year ended 31 December 2006, prepared under UKGAAP, has been delivered to the Registrar of Companies and contained anunqualified auditors' report in accordance with s235 of the Companies Act 1985. Basis of consolidation The Group financial information consolidates that of the company and itssubsidiaries. Businesses acquired or disposed of during the period areconsolidated from the effective date of acquisition or until the effective dateof disposal. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Goodwill Goodwill arising on consolidation consists of the excess of the fair value ofthe consideration over the fair value of the Group's interest in theidentifiable tangible and intangible assets net of liabilities includingcontingencies of the business acquired at the date of acquisition. Goodwill is recognised as an asset at cost less any recognised impairmentlosses. It is reviewed for impairment at least annually and any impairment isrecognised immediately in the Income Statement. Goodwill arising on acquisitions prior to the date of transition to IFRS hasbeen retained at the previous UK GAAP amounts subject to being tested forimpairment at that date. Goodwill written off to reserves under UK GAAP prior to2005 has not been reinstated and is not included in determining any subsequentprofit or loss on disposal. Revenue recognition Revenue is measured at the fair value of goods and services provided tocustomers net of returns, discounts, value added tax and other sales taxes.Revenue is recognised when goods are despatched and title has passed to thecustomer and the collectability of the revenue is reasonably assured. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciationand any recognised impairment losses. Depreciation is charged at rates calculated to write down the cost of assets(excluding freehold land) over their estimated useful lives by equal instalmentsat the following rates: Freehold buildings 2% Plant and machinery 10% - 25% Fixtures and equipment 10% - 25% The gain or loss arising on disposal or retirement of an asset is determined asthe difference between the sale proceeds and the carrying amount of the assetand is recognised in income. Inventories Inventories are stated at the lower of cost and estimated net realisable value.Cost is determined on a first-in-first-out basis including transport andhandling costs and, in the case of manufactured products, includes all directexpenditure and production overheads based on normal levels of activity. Deferred taxation Deferred taxation is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. A deferredtax asset is regarded as recoverable and therefore recognised only when, on thebasis of all available evidence, it can be regarded as more likely than not thatthere will be suitable taxable surpluses from which the future reversal of theunderlying timing differences can be deducted. Pension costs Defined benefit scheme Assets and liabilities arising from retirement benefit obligations and therelated funding are reflected at fair value in the financial statements, andoperating and finance costs are recognised in the financial periods in whichthey arise. Gains and losses arising from actuarial experience during theaccounting period are recognised in the statement of total recognised gains andlosses. Defined contribution schemes Contributions payable are charged to the Income Statement in the accountingperiod in which they are incurred. Foreign currencies Transactions denominated in foreign currencies are recorded at the prevailingrate on the date of the transaction. Trading assets and liabilities denominated in foreign currencies are translatedinto sterling at the rate prevailing at the period end. Gains and losses arisingon the translation of foreign currencies are dealt with as part of operatingprofit. The assets and liabilities of foreign subsidiary undertakings are translatedinto sterling at the period end exchange rate. The income and expenditure offoreign subsidiary undertakings are translated into sterling at the averageexchange rate prevailing during the period. Exchange differences arising onretranslation of opening assets and liabilities, long term financing denominatedin foreign currency and the trading of foreign subsidiary undertakings are takendirectly to the translation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreignentity are treated as assets and liabilities of the foreign entity andtranslated at the closing rate. The Group has elected to treat goodwill and fairvalue adjustments arising on acquisitions before than date of transition to IFRSas sterling denominated assets and liabilities (see note 13). As permitted byIFRS1, the Group elected to deem cumulative currency translation differences tobe £nil as at 31 December 2005. Financial Instruments The Group's financial instruments comprise borrowings, some cash and liquidresources and items such as trade debtors and trade creditors that arisedirectly from its operations. The main purpose of these financial instruments isto manage the finance of the Group's operations. Financial assets and financial liabilities are recognised in the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Trade receivables: Trade receivables do not carry any interest and are stated at their nominalvalue less appropriate allowances for estimated irrecoverable amounts. Bank borrowings: Interest bearing bank loans and overdrafts are recorded at the proceeds receivednet of direct issue costs. Finance charges, including premiums payable onsettlement or redemption and direct issue costs, are accounted for on anaccruals basis to the Income Statement and are added to the carrying amount ofthe instruments to the extent that they are not settled in the period in whichthey arise. Trade payables: Trade payables do not carry any interest and are stated at their nominal value. Equity instruments: Equity instruments issued by the Group are recorded at the proceeds received netof direct issue costs. It has been, throughout the period under review, the Group's policy that notrading in financial instruments shall be undertaken. The Group does notconsider that it has any obligations or rights under derivative financialinstruments. The main risks arising from the Group's financial instruments are interest raterisk, liquidity risk and foreign currency risk. The Board reviews and agreespolicies for managing each of these risks and these policies are summarisedbelow. Interest rate risk: The Group finances its operations through a mixture of retained profits and bankborrowings. The Group holds cash and borrowings in various currencies atfloating rates of interest. Liquidity risk: As regards liquidity, the Group's policy is to maintain undrawn overdraftborrowing facilities in order to provide flexibility in the management of theGroup's liquidity. Foreign currency risk: The Group has transactional currency exposures. Such exposures arise from salesor purchases by operating units in currencies other than Sterling, being theGroup's functional currency. The Group matches payments and receipts to minimiseexposure, and buys the currency when the liability falls due. 2. Segmental analysis By operation June 2007 Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Revenue - external customers 13,877 5,998 - 19,875 Operating profit 1,040 441 (84) 1,397 Interest payable (156)Interest receivable 1 Taxation (237) Profit on sale of freehold property - Profit for the period 1,005 June 2006 (Restated) Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Revenue - external customers 13,706 5,478 - 19,184 Operating profit 831 472 (149) 1,154 Interest payable (110)Interest receivable 1 Taxation (165) Profit on sale of freehold property 362 Profit for the period 1,242 June 2007 Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Segment assets 13,862 6,375 7,528 27,765Segment liabilities (5,763) (1,529) (12,330) (19,622)Segment net assets 8,099 4,846 (4,802) 8,143 Expenditure on property, plant and equipment 119 141 5 265 Depreciation and amortisation 257 103 35 395 June 2006 (Restated) Branded Unallocated & Electronics Plastics Adjustments Consolidated £000's £000's £000's £000's Segment assets 15,020 6,049 5,754 26,823Segment liabilities (6,135) (1,553) (11,099) (18,787)Segment net assets 8,885 4,496 (5,345) 8,036 Expenditure on property, plant and equipment 1,102 259 14 1,375 Depreciation and amortisation 285 72 87 444 By geographic location June 2007 Revenue - Net assets Capital external by location expenditure by customers by of assets location of location of assets customer £000's £000's £000's UK 13,851 3,882 208 Europe 2,010 - - Asia 1,376 4,261 57 Americas 1,430 - - Other 1,208 - - 19,875 8,143 265 June 2006 (Restated) Revenue - Net assets Capital external by location expenditure by customers by of assets location of location of assets customer £000's £000's £000's UK 11,683 2,871 302 Europe 1,726 - - Asia 2,624 5,165 1,073 Americas 1,776 - - Other 1,375 - - 19,184 8,036 1,375 3. Finance costs comprises: Six months Six months Year ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Interest receivable 1 1 2Interest payable on bank loan and overdrafts (156) (100) (252)Other finance costs - (10) (12) (155) (109) (262) 4. Dividends Six months Six months Year ended 30 June 30 June 31 December 2006 2007 2006 £'000 £'000 £'000Ordinary dividends:Final dividend 2006 of 2.45p (2005 : 2.4p) (706) (691) (691)Interim dividend 2006 of 1.15p - - (331) (706) (691) (1,022) An interim dividend of 1.20 pence per share amounting to £346,000 will be paidon 5 October 2007, to shareholders on the register on 14 September 2007. 5. Earnings per share Six months ended 30 June 2007 2007 2006 2006 Earnings EPS Earnings EPS (Restated note (Restated) 13) £'000 Pence £'000 Pence Profit before sale of property 1,005 3.6 880 3.1 Profit on sale of property - - 362 1.3Basic earnings per share 1,005 3.6 1,242 4.4Share option costs 35 - 35 -Fully diluted earnings per share 1,040 3.6 1,277 4.4 The calculation of basic earnings per share is based on the profit for thefinancial period and the weighted average number of ordinary shares in issue(June 2007 : 28,804,698 shares, June 2006: 28,716,273 shares, December 2006:28,755,369 shares). Fully diluted earnings per share reflect dilutive options granted resulting inweighted average number of shares of 29,671,473 ordinary shares (June 2006:29,356,916 shares, December 2006: 29,383,301 shares). 6. Creditors : amounts due after more than one year 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Bank loans (secured) 3,815 379 2,713 3,815 379 2,713 7. Profit and loss account The movement on profit and loss account for the financial period is as follows: Six months Six months Year ended 30 June 30 June 31 December 2006 2007 2006 (Restated (Restated note 13) note 13) £'000 £'000 £'000 Balance at beginning of period 3,046 2,136 2,136Total net gains recognised 1,005 1,242 1,862Share option costs recognised 35 35 70Dividends paid (Note 4) (706) (691) (1,022)Balance at end of period 3,380 2,722 3,046 8. Net cash inflow from operating activities 30 June 30 June 31 December 2007 2006 2006 £000's £000's £000's (Restated (Restated note 13) note 13) Operating profit 1,397 1,154 2,423Share option costs 35 35 70Depreciation 395 444 864Loss on sale of plant and equipment 3 - -Decrease/(increase) in stocks 803 (131) 169(Increase)/decrease in debtors (365) (1,225) (715)(Decrease)/increase in creditors (265) 291 (872)Net cash inflow from trading activities 2,003 568 1,939Difference between pension charge and cash contributions (533) (570) (1,092)Tax paid (36) (261) (386)Net cash inflow/(outflow) from operating activities 1,434 (263) 461 9. Analysis of changes in net debt 31 Dec Cashflow Exchange 30 June 2006 2007 £'000 £'000 £'000 £'000 Cash 296 711 - 1,007Overdrafts (1,434) (447) - (1,881)Loans due within one year (532) 500 - (32)Loans due after one year (2,713) (1,110) 8 (3,815)Net debt (4,383) (346) 8 (4,721) 10. Non-current assets classified as held for sale The company has marketed property which is currently let to third party tenantson commercial terms. The property comprises factory, warehouse and office spacelocated adjacent to the Electronics division's Hartlepool facility. The propertyhas a carrying value of £3.25 million, which is reported as unallocated in thesegment analysis. The sale is expected to be completed with net proceeds ofapproximately £3.4 million during the current financial year. 11. Shareholders funds Capital Share Share redemption Translation P&L capital premium reserve reserve account Total £000's £000's £000's £000's £000's £000's At 31 December 2005 as previously reported 1,432 4,184 88 - 2,136 7,840Shares issued to satisfy options exercised 7 41 - - - 48Reclassification of exchange differences on overseas subsidiary - - - (438) 438 -Retained profit to 30 June 2006 (under IFRS) - - - - 148 148At 30 June 2006 (under IFRS - unaudited) 1,439 4,225 88 (438) 2,722 8,036Shares issued to satisfy options exercised 1 8 - - - 9Reclassification of exchange differences - - - (447) 447 -on overseas subsidiaryRetained profit to 31 December 2006 (under IFRS) - - - - (123) (123)At 31 December 2006 (under IFRS - unaudited) 1,440 4,233 88 (885) 3,046 7,922Exchange differences on overseas subsidiary - - - (113) - (113)Retained profit to 30 June 2007 (under IFRS) - - - - 334 334At 30 June 2007 (under IFRS - unaudited) 1,440 4,233 88 (998) 3,380 8,143 12. Acquisition of Ferrus Power Limited ("Ferrus") On 15 June 2007 the Company acquired 100% of the issued share capital of Ferrus, a company registered in England and Wales that designs and manufactures custom power supplies, for cash consideration. The assets of Ferrus at the date of acquisition were as follows: Book Fair value Fair value adjustment value £000's £000's £000's Plant, property and equipment 43 - 43Inventories 165 - 165Receivables 206 - 206Payables (due in < 1 year) (150) (101) (251)Net trading assets 264 (101) 163 Consideration - paid and payable (920) - acquisition costs (21) - total cash outflow (941) - cash balance acquired 275 (666)Goodwill arising on acquisition 503 13. Explanation of transition to IFRS The Group did not identify a need to restate profit or equity for periodspreceding 1 January 2006 as a result of adopting IFRS. Consequently, the Grouphas not presented a reconciliation of equity at 1 January 2006. Reconciliation of equity at 30 June 2006 Effect of transition Note UK GAAP to IFRS IFRS £000's £000's £000's AssetsNon-current assetsProperty, plant and equipment 10,262 - 10,262Goodwill a 470 66 536Deferred tax assets b - 2,082 2,082 10,732 2,148 12,880Current assetsInventories 6,074 - 6,074Trade and other receivables 7,849 - 7,849Cash and cash equivalents 20 - 20 13,943 - 13,943Non-current assets classified as held for sale - - - 13,943 - 13,943Total assets 24,675 2,148 26,823 EquityEquity share capital 1,439 - 1,439Share premium 4,225 - 4,225Capital redemption reserve 88 - 88Translation reserve c - (438) (438)Retained earnings a, c 2,218 504 2,722Total equity 7,970 66 8,036Non-current liabilitiesLong-term borrowings 379 - 379Deferred tax liabilities 26 - 26Net pension liability b 4,287 2,082 6,369Total non-current liabilities 4,692 2,082 6,774Current liabilitiesBank overdrafts 3,317 - 3,317Current portion of long-term borrowings 33 - 33Trade payables 5,603 - 5,603Current tax payable 372 - 372Other payables 2,688 - 2,688Total current liabilities 12,013 - 12,013Total liabilities 16,705 2,082 18,787Total equity and liabilities 24,675 2,148 26,823 Reconciliation of profit at 30 June 2006 Effect of transition Note UK GAAP to IFRS IFRS £000's £000's £000's Revenue 19,184 - 19,184Cost of sales (15,094) - (15,094)Gross profit 4,090 - 4,090Other income 213 - 213Operating expenses a (3,215) 66 (3,149)Operating profit 1,088 66 1,154Profit on sale of property 362 - 362Finance costs (109) - (109)Profit before tax 1,341 66 1,407Taxation (165) - (165)Profit for the period 1,176 66 1,242 a. IAS 38 'Intangible Assets' requires goodwill to have an indefinite useful life. The goodwill was frozen on thedate of transition to IFRS (1 January 2006), therefore the charge of £66,000 for the six months to 30 June 2006 is nolonger recognised under IFRS. b. Under UK GAAP the defined benefit pension scheme liability was reflected in the financial statements net of deferredtaxation. On transition to IFRS this has been shown in the accounts as a deferred tax asset. c. The translation reserve historically under UK GAAP has been included in retained earnings, but is required to bedisclosed separately under IFRS. Reconciliation of equity at 31 December 2006 Effect of transition Note UK GAAP to IFRS IFRS £000's £000's £000's AssetsNon-current assetsProperty, plant and equipment 10,102 - 10,102Goodwill a 872 148 1,020Deferred tax assets b - 1,907 1,907 10,974 2,055 13,029Current assetsInventories 5,872 - 5,872Trade and other receivables 7,571 - 7,571Cash and cash equivalents 296 - 296 13,739 - 13,739Non-current assets classified as held for sale - - - 13,739 - 13,739Total assets 24,713 2,055 26,768 EquityEquity share capital 1,440 - 1,440Share premium 4,233 - 4,233Capital redemption reserve 88 - 88Translation reserve c - (885) (885)Retained earnings a, c 2,013 1,033 3,046Total equity 7,774 148 7,922Non-current liabilitiesLong-term borrowings 2,713 - 2,713Deferred tax liabilities - - -Net pension liability b 4,449 1,907 6,356Total non-current liabilities 7,162 1,907 9,069Current liabilitiesBank overdrafts 1,434 - 1,434Current portion of long-term borrowings 532 - 532Trade payables 4,899 - 4,899Current tax payable 188 - 188Other payables 2,724 - 2,724Total current liabilities 9,777 - 9,777Total liabilities 16,939 1,907 18,846Total equity and liabilities 24,713 2,055 26,768 Reconciliation of profit at 31 December 2006 Effect of transition Note UK GAAP to IFRS IFRS £000's £000's £000's Revenue 38,552 - 38,552Cost of sales (30,059) - (30,059)Gross profit 8,493 - 8,493Other income 429 - 429Operating expenses a (6,647) 148 (6,499)Operating profit 2,275 148 2,423Profit on sale of property 340 - 340Finance costs (262) - (262)Profit before tax 2,353 148 2,501Taxation (341) - (341)Profit for the period 2,012 148 2,160 a. IAS 38 'Intangible Assets' requires goodwill to have an indefinite usefullife. The goodwill was frozen on the date of transition to IFRS (1 January2006), therefore the charge of £148,000 for the year to 31 December 2006 is nolonger recognised under IFRS. b. Under UK GAAP the defined benefit pension scheme liability was reflected inthe financial statements net of deferred taxation. On transition to IFRS thishas been shown in the accounts as a deferred tax asset. c. The translation reserve historically under UK GAAP has been included inretained earnings, but is required to be disclosed separately under IFRS. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Stadium Group PLC