26th Jun 2006 07:02
Beale PLC26 June 2006 26 June 2006 Interim Results Beale PLC, the specialised department store operator, announces Interim Resultsfor the 26 weeks ended 29 April 2006. Beale operates 11 department stores acrossthe UK. Key Points * Gross sales* for the period rose by 2.8% to £59.5m (2005: £57.9m) * Profit before tax increased by 86.6% to £2.013m (2005: £1.079m) - Includes £320,000 profit on the surrender of lease of the Walton-on-Thames store (H1 2005: £nil; FY 2005: £82,000) - Includes one-off benefit to sales in Bournemouth and Poole from the closure of the Castlepoint shopping centre over the Christmas / New Year period * Earnings per share improved to 5.89p (2005: 3.18p) * Interim dividend per share of 1.1p (2005: 1.1p) * Gross margin improved reflecting improved buying and stock management * New store in Horsham, West Sussex on schedule to open in September * Net debt fell sharply to £1.93m (29 October 2005: £3.67m; 30 April 2005: £5.45m) * Capital expenditure of £3m in the second half on continuing programme of store refurbishment and new IT systems Mike Killingley, Chairman of Beales commented: "We are confident that theimprovements in our trading performance in the current year should bemaintained. Shareholders should not, however, expect the extent of ouryear-on-year profit improvement in the first half to be repeated in the secondhalf. The results will be adversely affected by pre-opening costs at Horsham,and by the disruption to trading caused by the refurbishment of the ground floorat Bournemouth. Furthermore, we shall not have the benefit either of the profiton disposal of surplus properties or the trading from Walton-on-Thames, whichcontributed to the results for the equivalent period in 2005." "Looking beyond the second half, shareholders will be aware that the UK retailenvironment remains extremely competitive. Despite this, we remain cautiouslyoptimistic that the benefits we are deriving from our new buying team, coupledwith the effect of the new store at Horsham and the refurbished ground floor atBournemouth, will provide further improvements in our trading performance. Weshall continue to seek store acquisitions in towns which reflect our skills andproduct assortment. " * Gross sales includes the full value of concession sales and VAT and provides a more realistic indication of customers' spending patterns than turnover For further information please contact: Beale PLC Tavistock Communications Rowan DartingtonAllan Allkins, Chief Executive Lulu Bridges Barrie NewtonKen Owst, Finance Director Tel: 020 7920 3150 Tel: 0117 925 3377Tel: 020 7920 3150 (26 June only)Tel: 01202 552 022 (thereafter) Chairman's Statement Financial results Your Company's profit before tax for the 26 weeks to 29 April 2006 increased to£2.01 million (2005: £1.08 million). Gross sales from all our stores, including the full value of concession salesand VAT, increased by 2.8% to £59.5 million (2005: £57.9 million); these providea more realistic indication of customers' spending patterns than the turnoverfor the period, which increased by just 0.2% from £34.2 million to £34.3million. Turnover excludes the non-commission element of sales made byconcessions. These figures are not quite on a like for like basis:Walton-on-Thames closed at the end of January 2006, having traded for 12 weeksof the period under review, albeit with the boost to sales from its closing downsale. These results are encouraging, against a background of continuing competitivetrading conditions on the High Street, particularly for clothing. They have beenflattered by the inclusion of a further £320,000 profit on the surrender of thelease of the Walton-on-Thames store (£82,000 was recognised last year), and bythe benefit to our Bournemouth and Poole stores of the temporary closure of theCastlepoint shopping centre, for health and safety reasons, over the Christmas/New Year period. It is pleasing to note that, with the exception of Ealing, sales at all ourstores for the year to date have been greater than, or at least broadly in linewith, those in the previous year. Ealing's sales were about 4% down on lastyear. We continue to pursue strategies to enhance the results of this store, butin the meantime we have, to be prudent, written off our balance sheet thegoodwill of £197,000 attributable to it. Gross margins have improved during the period, reflecting improved buying andstock management. Even after adjusting for the effect of the non-recurring factors describedabove, our results show a significant improvement on those of last year. International Financial Reporting Standards (IFRS) These interim results are the first results that we are presenting under IFRS.Shareholders will notice a number of changes in these financial statements, bothin terms of the presentation and the comparative figures. IFRS are somewhatprescriptive in how they require our financial statements to be presented, butit is mandatory for publicly listed companies to fall into line with these newrules. The changes principally affect our balance sheet rather than our reportedprofits. Note 13 to the interim results sets out a detailed reconciliationbetween the results and balance sheets, as previously presented, and therestated amounts. The principal changes are: * dividends are now only accounted for when declared, so the £226,000 cost of the interim dividend which will be paid in September is excluded from these statements. All dividends, when paid, will be shown in the Consolidated Statement of Changes in Equity, not in the Consolidated Income Statement (which is the new name for the Consolidated Profit and Loss Account); * freehold properties must now be valued at market value rather than on an existing use basis; this has given rise to a £1.60 million increase in the value of these properties as at the last valuation date, 29 October 2005; * we are now permitted to include the value of our long lease at Poole in these statements; net of related liabilities under this lease, this has added a further £3.77 million to net assets, again as at 29 October 2005; and * finally, we are required to provide for the deferred tax liability which would arise were we to dispose of our various properties at their revalued amounts, even though we have no present intention of doing so. The additional deferred tax liability provided in these statements is £5.24 million. In very broad terms, the net effect of these changes on our total net assets isnegligible, in that the fixed asset revaluations are largely offset by theadditional deferred tax provision. We will in future do our best to keep the presentation of our financialstatements to shareholders as straightforward as possible despite the complexnew rules. Review of activities Our Walton-on-Thames store closed on 21 January, following a successful closingdown sale which enabled us to clear surplus merchandise from that and otherstores. We are on schedule to open our new store in Horsham, West Sussex, in September.We announced the acquisition of the lease of this former Allders store in Marchthis year and the opening will take us back to 12 stores following the closureof Walton-non-Thames. Horsham is quintessentially a "Beales town" and, afterpre-opening expenditure this year of about £200,000, we expect the store's33,500 square feet of trading space to make a positive contribution to ourresults from 2006/07 onwards. The ground floor of our Bournemouth store has looked tired and has been overduefor a refurbishment, which is now underway. It is due to be completed in earlyautumn. We have secured a number of new cosmetic houses, including Mac,Prescriptives, Origins, Creme de la Mer and Benefit, and believe that we shallhave the best cosmetics offerings anywhere on the South Coast. The size of thecosmetics department will increase by over 50%. We expect this refurbishment toprovide a substantial boost to our trading from this store. We have started the redevelopment of our Poole store with the replacement of theescalators; this will improve customer flow to all floors. The mainrefurbishment programme at Poole will commence in 2007. We have also recently begun a programme to replace our ageing EPOS andaccounting systems over the next 18 months. While less tangible than thebenefits from the changes to our stores, these improvements should assist us inimproving our performance through enhanced and quicker provision of informationon the operation of our business. Cash management Our net debt at 29 April 2006 fell sharply to £1.93 million (29 October 2005:£3.67 million; 30 April 2005: £5.45 million). We have continued to unlocksignificant amounts of capital from the business, amounting to some £7.2 millionin the past 2 1/2 years. This primarily reflects continued tight control ofstocks (or "inventories", as we are now required to call them under IFRS), whichwere nearly 10% down on those at the same time last year, as well as anhistorically low level of capital expenditure. The capital expenditure on Horsham, Bournemouth, Poole and our new IT systemswill cost us over £3 million during the second half. We continue to trade verycomfortably within our available bank facilities. Dividend An interim dividend of 1.10p per share (2005: 1.10p) will be paid on 29September 2006 to shareholders on the register at the close of business on 8September 2006. The shares will become ex-dividend on 6 September 2006. Outlook In the 7 weeks to 17 June 2006 gross sales, on a like for like basis, were 1.1%below those for the same period last year. In common with many retailers, webelieve that this downturn may be attributable to late May's wet weather,followed by a very hot spell, as well as the football World Cup. We are confident that the improvements in our trading performance in the currentyear should be maintained. Shareholders should not, however, expect the extentof our year-on-year profit improvement in the first half to be repeated in thesecond half. The results will be adversely affected by pre-opening costs atHorsham, and by the disruption to trading caused by the refurbishment of theground floor at Bournemouth. Furthermore, we shall not have the benefit eitherof the profit on disposal of surplus properties or the trading fromWalton-on-Thames, which contributed to the results for the equivalent period in2005. Looking beyond the second half, shareholders will be aware that the UK retailenvironment remains extremely competitive. Despite this, we remain cautiouslyoptimistic that the benefits we are deriving from our new buying team, coupledwith the effect of the new store at Horsham and the refurbished ground floor atBournemouth, will provide further improvements in our trading performance. Weshall continue to seek store acquisitions in towns which reflect our skills andproduct assortment. Mike KillingleyChairman23 June 2006 Independent Review Report to Beale PLC Introduction We have been instructed by the Company to review the financial information forthe twenty-six weeks ended 29 April 2006 which comprises the profit and lossaccount, the balance sheet, the cash flow statement and related notes 1 to 14.We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. International Financial Reporting Standards As disclosed in note 1, the next annual financial statements of the Group willbe prepared in accordance with International Financial Reporting Standards asadopted for use in the EU. Accordingly, the interim report has been prepared inaccordance with the recognition and measurement criteria of IFRS and thedisclosure requirements of the Listing Rules. The accounting policies areconsistent with those that the directors intend to use in the annual financialstatements. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the twenty-sixweeks ended 29 April 2006. Deloitte & Touche LLPChartered AccountantsSouthampton23 June 2006 Consolidated Income StatementUnaudited -------------------------------------------------------------------------------- Notes 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------Gross sales* 3 59,494 57,895 108,720--------------------------------------------------------------------------------Turnover 3 34,304 34,232 61,939Cost of sales (15,801) (16,188) (28,728)--------------------------------------------------------------------------------Gross profit 18,503 18,044 33,211Administrative expenses (16,464) (16,858) (33,198)Profit on sale of investment properties - - 412--------------------------------------------------------------------------------Operating profit 2,039 1,186 425Interest payable (49) (111) (199)Interest receivable 23 4 28--------------------------------------------------------------------------------Profit on ordinaryactivities before tax 2,013 1,079 254Tax 5 (805) (426) (112)--------------------------------------------------------------------------------Profit for the period from continuing operations 1,208 653 142--------------------------------------------------------------------------------Basic earnings per share (pence) 6 5.89p 3.18p 0.69pDividend paid per share 8 1.1p 2.2p 3.3p-------------------------------------------------------------------------------- * Gross sales reflect turnover inclusive of concession sales and VAT from continued operations. Consolidated Balance SheetUnaudited -------------------------------------------------------------------------------- 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------Non-current assetsGoodwill 892 1,089 1,089Property, plant and equipment 29,075 28,423 29,680Financial assets 17 28 17Deferred tax asset 1,888 1,957 1,888-------------------------------------------------------------------------------- 31,872 31,497 32,674Current assetsInventories 8,765 9,637 10,755Trade and other receivables 5,935 6,247 6,269Cash and cash equivalents 107 108 334-------------------------------------------------------------------------------- 14,807 15,992 17,358Total assets 46,679 47,489 50,032--------------------------------------------------------------------------------Current liabilitiesTrade and other payables (7,869) (7,712) (11,045)Tax liabilities (1,107) (661) (286)Bank overdrafts (540) (807) --------------------------------------------------------------------------------- (9,516) (9,180) (11,331)Net current assets 5,291 6,812 6,027Non-current liabilities Bank loan (1,500) (4,750) (4,000)Retirement benefit obligations (7,132) (7,355) (7,132)Deferred tax liabilities (5,643) (5,113) (5,664)Obligations under finance leases (973) (970) (972)-------------------------------------------------------------------------------- (15,248) (18,188) (17,768)Total liabilities (24,764) (27,368) (29,099)--------------------------------------------------------------------------------Net assets 21,915 20,121 20,933--------------------------------------------------------------------------------EquityShare capital 1,026 1,026 1,026Share premium account 440 440 440Revaluation reserve 9,021 7,287 9,069Capital redemption reserve 242 242 242ESOP reserve (54) (61) (48)Retained earnings 11,240 11,187 10,204--------------------------------------------------------------------------------Total equity 21,915 20,121 20,933-------------------------------------------------------------------------------- Consolidated Statement of Recognised Income and ExpenseUnaudited -------------------------------------------------------------------------------- Note 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000-------------------------------------------------------------------------------- Gain on revaluation of properties - - 2,588Deferred tax liability arising on the revaluation of property - - (776)Actuarial loss on pension scheme - - (376)Tax on items taken directly to equity - - 113--------------------------------------------------------------------------------Net income recogniseddirectly in equity - - 1,549Profit for the period 1,208 653 142--------------------------------------------------------------------------------Total recognised income and expense for the period 1,208 653 1,691-------------------------------------------------------------------------------- Consolidated Reconciliation of Movements in EquityUnaudited -------------------------------------------------------------------------------- 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------Opening equity 20,933 19,919 19,919Total recognised income and expense for the period 1,208 653 1,691Dividends paid 8 (226) (451) (677)--------------------------------------------------------------------------------Total movements in equity for the period 982 202 1,014Closing equity 21,915 20,121 20,933-------------------------------------------------------------------------------- Analysis of Consolidated Net DebtUnaudited -------------------------------------------------------------------------------- 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------Cash at bank 107 108 334Bank overdrafts (540) (807) ---------------------------------------------------------------------------------Cash held (including overdrafts) (433) (699) 334Restricted cash - - ---------------------------------------------------------------------------------Cash and cash equivalents (including overdrafts) (433) (699) 334Borrowings:Due within one year - - -Due between two and five years (1,500) (4,750) (4,000)Due after five years - - ---------------------------------------------------------------------------------Total borrowings (1,500) (4,750) (4,000)--------------------------------------------------------------------------------Net debt (1,933) (5,449) (3,666)-------------------------------------------------------------------------------- Consolidated Cash Flow StatementUnaudited -------------------------------------------------------------------------------- Note 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------Cash flows from operatingactivities before interestand tax 9 2,654 2,919 4,777Interest paid (61) (124) (243)Interest received 30 4 11Tax received/(paid) - 23 (80)--------------------------------------------------------------------------------Net cash flow from operating activities 2,623 2,822 4,465--------------------------------------------------------------------------------Cash flows from investing activitiesPurchase of property, plant and equipment (678) (314) (560)Proceeds from sale of financial assets - - 18Proceeds from sale of property, plant and equipment 13 - 592--------------------------------------------------------------------------------Net cash used in investing activities (665) (314) 50--------------------------------------------------------------------------------Cash flows from financing activitiesDividends paid (226) (451) (677)Repayment of loans (2,500) (2,250) (3,000)Net proceeds from obligations under finance leases 1 1 3--------------------------------------------------------------------------------Net cash generated used in financing activities (2,725) (2,700) (3,674)--------------------------------------------------------------------------------Net (decrease)/increase incash and cash equivalents in the period (767) (192) 841Cash and cash equivalents at beginning of period 334 (507) (507)--------------------------------------------------------------------------------Cash and cash equivalents at end of periodBank balances and cash (433) (699) 334-------------------------------------------------------------------------------- Notes to the Consolidated Financial StatementsUnaudited 1. Basis of preparation The Interim Financial Statements for the 26 weeks ended 29 April 2006 have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) for the first time. The disclosures required by IFRS 1 concerning the transition from UK Generally Accepted Accounting Practice (UK GAAP) to IFRS are given in note 13. Reconciliations from UK GAAP to IFRS of the Group's net assets at 30 October 2004, 30 April 2005 and 29 October 2005 and of the Group's net profit and loss for the 26 weeks ended 30 April 2005 and 52 weeks ended 29 October 2005 are set out in note 13. The next annual financial statements of the Group will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. 2. Accounting policies Summary of significant accounting policies under IFRS: a) Basis of accounting The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) for the first time. The disclosures required by IFRS 1 "First-time adoption" concerning the transition from UK GAAP to IFRS are given in note 13. The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and the long leasehold properties. The principal accounting policies are set out below. b) Basis of consolidation The consolidated accounts include the accounts of the Company and its subsidiary undertakings, and are prepared using the equity method. c) Goodwill The assets and liabilities of subsidiary undertakings and businesses acquired are incorporated at their fair value at the date of acquisition. Goodwill arising is held on the balance sheet at cost and is subject to annual impairment reviews. Prior to transition to IFRS goodwill was amortised over 20 years. From 31 October 2004, goodwill has been frozen subject to impairment reviews. d) Turnover Turnover represents the amount receivable by the Group arising from the supply of goods and services to customers net of VAT, discounts and estimated returns and includes the profit contribution earned on agency sales (including concession departments) and interest on customers' accounts. Gross sales reflect revenue inclusive of concession sales and VAT. e) Inventories (stock) Inventories are stated at the lower of cost and net realisable value. Cost comprises purchase price including any rebates and, where applicable, those costs that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price. f) Property, plant and equipment All tangible assets are held at cost or, in the case of freehold and long leasehold property, at market value based on a previous revaluation, less accumulated depreciation and any recognised impairment loss. Revaluations will be carried out on a frequent basis. Depreciation is provided for on the straight line basis so that assets are written down to residual values over their expected useful life Freehold land is not depreciated. Freehold buildings are depreciated at 2% per annum. The rate applied to computers and motor vehicles is 25%. The rate applied to fixtures and fittings and EPOS cash registers is 12.5%. Costs incurred in entering a lease and of leasehold improvements are included in fixed assets and amortised on a straight line basis over the life of the lease. g) Leased assets Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lease. All other leases are classified as operating leases. Finance leases Assets funded through finance leases are capitalised as fixed assets and depreciated on a straight line basis over the shorter of their useful economic life and the lease term. Operating leases Minimum lease payments, incorporating any pre-determined rental increase, are charged to income on a straight line basis over the life of the lease. h) Tax The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax expected to be payable or recoverable on differences at the balance sheet date between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary difference can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, and is not discounted. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. The Group offset deferred tax assets and deferred tax liabilities if, and only if: (a) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and (b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either: (i) the same taxable company; or (ii) different taxable companies which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. i) Retirement benefit costs The Group participates in the Beales pension scheme and the Denners pension scheme which provide members with benefits relating to salary and service. Payments are made into pension trusts, which are financially separate from the Group, in accordance with advice from consulting actuaries in relation to the final salary schemes. The current service cost, being the cost of benefits accrued in the reporting period is recognised in operating expenses. Interest accrued on pension liabilities and the expected return on assets held by the scheme are also charged or credited within operating expenses in the income statement. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised in full in the year in which they occur. They are recognised outside profit or loss and presented in the statement of recognised income and expense. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation reduced by the fair value of scheme assets at the previous year end date. The amount charged against profits in relation to the defined contribution section of the Beales pension scheme represents contributions payable to the scheme for the accounting period. Between 29 October 2005 and 29 April 2006 the assets in the scheme increased in value by approximately £3 million to £29.3 million (since the balance sheet date, asset values have fallen). As in previous years, a full valuation of the scheme has not been undertaken at the interim. Variations in assumptions, asset values and liabilities will affect the total value of the deficit. The directors do not consider it appropriate to undertake a full valuation until year end. 3. Turnover All the Group's turnover is derived from retail sales made in the UK. Turnover excludes the non-commission element of sales made by concession outlets.------------------------------------------------------------------------------ 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000------------------------------------------------------------------------------Gross sales 59,494 57,895 108,720VAT (8,468) (8,247) (16,093)------------------------------------------------------------------------------Gross sales (exc. VAT) 51,026 49,648 92,627Agency sales less commission (16,722) (15,416) (30,688)------------------------------------------------------------------------------Turnover 34,304 34,232 61,939------------------------------------------------------------------------------ 4. Segment information The directors regard the business as one segment. 5. Income tax charge Interim period income tax is accrued based on an estimated effective income tax rate of 40% (6 months ended 30 April 2005: 39%; the actual tax charge for 52 weeks ended 29 October 2005 was calculated at 44%). 6. Earnings per share From continuing operations The calculation of the basic and diluted earnings per share is based on the following data:-------------------------------------------------------------------------------- 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------EarningsEarnings for the purposes of basic and diluted earnings per share 1,208 653 142--------------------------------------------------------------------------------Number of sharesWeighted average number of ordinary shares for the purpose of basic earnings per share and for purposes of diluted earnings per share 20,524,797 20,524,797 20,524,797--------------------------------------------------------------------------------The denominators used are the same as the above for both basic and dilutedearnings per share. 7. Goodwill As at 29 April 2006 the directors carried out an impairment review as required by IAS 38. Having carefully reviewed the Ealing store's trading performance, the board concluded that it was appropriate to write off the total balance sheet value of goodwill relating to the acquisition of the Ealing store. A sum of £197,000 is included in administrative expenses in the income statement for the 26 weeks to 29 April 2006. 8. Dividends Under IFRS the dividends shown in the period are those actually declared. The interim dividend which is referred to in the Chairman's statement will be paid in September 2006 is excluded from these statements. During the first half year, a dividend of 1.1p (2005: 2.2p)per share (29 October 2005: 3.3p) was paid to the shareholders. 9. Reconciliation of operating profit to cash generated from operations -------------------------------------------------------------------------------- 26 weeks to 26 weeks to 52 weeks to 29 April 30 April 29 October 2006 2005 2005 £000 £000 £000--------------------------------------------------------------------------------Operating profit 2,039 1,186 425Adjustments for:Depreciation 1,240 1,394 2,795Impairment of goodwill 197 - -Profit on disposal of financial assets - - (7)Loss/(profit) on fixed asset disposal 25 - (4)Profit on property disposal - - (412)Decrease in inventories 1,990 1,803 685Decrease in trade and other receivables 322 232 333(Decrease)/increase in trade and other payables (3,159) (1,696) 1,668Other non cash movements - - (706)--------------------------------------------------------------------------------Cash generated from operations 2,654 2,919 4,777-------------------------------------------------------------------------------- 10. Freehold and long lease property Under IAS 16 the Group's major freeholds were valued on a market value basis at £15.1 million on 29 October 2005 and at £13.4 million on 30 October 2004. The Poole long leasehold was valued at £5.5 million on 29 October 2005 and £4.75 million on 30 October 2004. Under UK GAAP the Poole long leasehold had a net book value of £760,000 on 29 October 2005 and £772,000 on 30 October 2004. 11. Share capital There were no movements in the share capital of the Company in either the current, the prior interim, or prior 52 week reporting period. 12. Post balance sheet events The Group completed the acquisition of Horsham store leasehold on 31 May 2006. The store will trade from Autumn 2006. Pre-opening costs will be incurred in the second half of the current financial year. It is anticipated that the store will contribute to profits during 2006/7. 13. Reconciliation between amounts reported under previous UK GAAP and IFRS Balance sheets in note 13 have 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. Consolidated balance sheet as at 30 October 2004 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 assetsGoodwill 1,089 1,089Property, plant and equipment 22,955 2,618 3,978 (48) 29,503Financial assets 28 28Deferred tax asset - 1,957 1,957------------------------------------------------------------------------------------------------------------ 24,072 2,618 3,978 1,957 (48) 32,577------------------------------------------------------------------------------------------------------------Current assetsInventories 11,440 11,440Trade and other receivables 6,479 6,479Cash and cash equivalents 113 113------------------------------------------------------------------------------------------------------------Total current assets 18,032 18,032------------------------------------------------------------------------------------------------------------CurrentliabilitiesTrade andother payables (9,872) 451 (9,421)Tax liabilities (135) (135)Bank overdrafts (620) (620)------------------------------------------------------------------------------------------------------------Total current liabilities (10,627) 451 (10,176)------------------------------------------------------------------------------------------------------------Net current assets 7,405 451 7,856Non-current liabilitiesLong-term borrowings (7,000) (7,000)Retirement benefit obligations (5,347) (2,008) (7,355)Deferred tax liabilities (672) (4,518) (5,190)Obligations under finance leases - (969) (969)------------------------------------------------------------------------------------------------------------Total non-current liabilities (13,019) (969) (2,008) (4,518) (20,514)------------------------------------------------------------------------------------------------------------Net assets 18,458 2,618 3,009 (51) (4,518) (48) 451 19,919------------------------------------------------------------------------------------------------------------ EquityShare capital 1,026 1,026Share premium account 440 440Revaluation reserve 3,916 2,618 3,978 (3,139) (48) 7,325Capital redemption reserve 242 242ESOP reserve (54) (54)Retained earnings 12,888 (969) (51) (1,379) 451 10,940------------------------------------------------------------------------------------------------------------Total equity 18,458 2,618 3,009 (51) (4,518) (48) 451 19,919------------------------------------------------------------------------------------------------------------ Consolidated income statement for the 26 weeks ended 30 April 2005 Income statements in note 13 have been adjusted for: 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 Notes h h i j k l-------------------------------------------------------------------------------------------------- UK Freehold Long Deferred Investment GAAP properties leasehold Pensions tax properties Goodwill IFRS £000 £000 £000 £000 £000 £000 £000 £000--------------------------------------------------------------------------------------------------Gross sales* 57,895 57,895--------------------------------------------------------------------------------------------------Turnover 34,232 34,232Cost of sales (16,188) (16,188)--------------------------------------------------------------------------------------------------Gross profit 18,044 18,044Administrative expenses (16,753) 4 (34) (112) 37 (16,858)--------------------------------------------------------------------------------------------------Operating profit 1,291 4 (34) (112) 37 1,186Other finance charges (107) 107 -Interest payable (111) (111)Interest receivable 4 4--------------------------------------------------------------------------------------------------Profit on ordinary activities before tax 1,077 4 (34) (5) 37 1,079Tax (451) 25 (426)--------------------------------------------------------------------------------------------------Profit on ordinary activities after tax 626 4 (34) (5) 25 37 653-------------------------------------------------------------------------------------------------- * Gross sales reflect turnover inclusive of concession sales and VAT. Consolidated balance sheet as at 30 April 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 assetsGoodwill 1,052 37 1,089Property, plant and equipment 21,904 2,622 3,945 (48) 28,423Financial assets 28 28Deferred tax asset - 1,957 1,957----------------------------------------------------------------------------------------------------------- 22,984 2,622 3,945 1,957 (48) 37 31,497-----------------------------------------------------------------------------------------------------------Current assetsInventories 9,637 9,637Trade and other receivables 6,247 6,247Cash and cash equivalents 108 108-----------------------------------------------------------------------------------------------------------Total current assets 15,992 15,992 -----------------------------------------------------------------------------------------------------------Current liabilitiesTrade and other payables (7,938) 226 (7,712)Tax liabilities (661) (661)Bank overdrafts (807) (807) -----------------------------------------------------------------------------------------------------------Total current liabilities (9,406) 226 (9,180) -----------------------------------------------------------------------------------------------------------Net current assets 6,586 226 6,812Non-current liabilitiesLong-term borrowings (4,750) (4,750)Retirement benefit obligation (5,347) (2,008) (7,355)Deferred tax liabilities (622) (4,491) (5,113)Obligations under finance leases - (970) (970) -----------------------------------------------------------------------------------------------------------Total non-current liabilities(10,719) (970) (2,008) (4,491) (18,188)-----------------------------------------------------------------------------------------------------------Net assets 18,851 2,622 2,975 (51) (4,491) (48) 37 226 20,121-----------------------------------------------------------------------------------------------------------Equity Share capital 1,026 1,026Share premium account 440 440Revaluation reserve 3,891 2,622 3,945 (3,123) (48) 7,287Capital redemption reserve 242 242ESOP reserve (61) (61)Retained earnings 13,313 (970) (51) (1,368) 37 226 11,187-----------------------------------------------------------------------------------------------------------Total equity 18,851 2,622 2,975 (51) (4,491) (48) 37 226 20,121----------------------------------------------------------------------------------------------------------- Consolidated income statement for the 52 weeks ended 29 October 2005 Notes h h i j k l---------------------------------------------------------------------------------------------------- UK Freehold Long Deferred Investment GAAP properties leasehold Pensions tax properties Goodwill IFRS £000 £000 £000 £000 £000 £000 £000 £000----------------------------------------------------------------------------------------------------Gross sales* 108,720 108,720----------------------------------------------------------------------------------------------------Turnover 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 425Other 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 turnover inclusive of concession sales and VAT. 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 assetsGoodwill 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 liabilitiesLong-term borrowings (4,000) (4,000)Retirement benefit obligation (5,115) (2,017) (7,132)Deferred tax liabilities (422) (5,242) (5,664)Obligations under finance leases - (972) (972) -------------------------------------------------------------------------------------------------------------Total non-current liabilities (9,537) (972) (2,017) (5,242) (17,768)-------------------------------------------------------------------------------------------------------------Net assets 20,550 1,600 3,768 (22) (5,242) (13) 65 227 20,933-------------------------------------------------------------------------------------------------------------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) (1,355) 65 227 10,204-------------------------------------------------------------------------------------------------------------Total equity 20,550 1,600 3,768 (22) (5,242) (13) 65 227 20,933------------------------------------------------------------------------------------------------------------- 14. Basis of financial information The Interim Financial Statements, approved by the board of directors on 23 June 2006, do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The Interim Report and Accounts will be sent to shareholders. Further copies may be obtained from the Company Secretary, Beale PLC, The Granville Chambers, 21 Richmond Hill, Bournemouth BH2 6BJ. The information included in the Interim Financial Statements for the 52 weeks ended 29 October 2005 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The statutory accounts for the 52 weeks ended 29 October 2005, which were prepared under UK GAAP, have been delivered to the Registrar of Companies. The Auditors' report on these accounts was unqualified and does not contain a statement made under Section 237(2) and Section 237(3) of the Companies Act 1985. 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