7th Aug 2007 11:34
AMCO Corporation PLC07 August 2007 AMCO CORPORATION PLC 7 AUGUST 2007 UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 CHAIRMAN'S STATEMENT INTRODUCTION I am pleased to be writing to you with this my first Chairman's statementfollowing appointment to this role on 1 April 2007. The financial statements aresomewhat lengthier than in previous years due to the requirement for the Groupto report under International Financial Reporting Standards ("IFRS") from 1January 2007. The adjustments between UK GAAP and IFRS for the period are notmaterial and a full reconciliation is shown in the attached notes. RESULTS Total operating profits for the first half of 2007 were £2,284,000 (2006£4,643,000). The turnover figures for the two periods are comparable, but thenature of the Group's operations are such that profits are not generated evenlywhich can give rise to both positive and adverse fluctuations in reportedprofits. The profits for the first half year as reported are in line with theBoard's expectations, as explained below. Profit before taxation was £2,277,000,compared with £4,680,000 for the same period last year. Structural Steel Structural steel activities returned operating profits of £2,378,000, which werebroadly in line with expectations and after a slow start in the early part ofthe year the prospects for the full year are looking positive. Property Property development activities including the joint ventures, showed marginallybetter than break even, this compares with a contribution of £1,952,000 for thecomparable period last year. The profitability of this part of the business isdependent upon the timing of the completion and sale of development projects.The projects currently in hand are anticipated to generate satisfactory profitswithin the next twelve months. Specialist Engineering Specialist engineering operating profits were £637,000 which is an improvementon the figure of £324,000 for the comparable period last year. This division hasbeen substantially reorganised in recent years and is progressingsatisfactorily. Turnover for the period was £33.5m, but the nature of the workis such that overhead costs are proportionately high, meaning that the divisionis generating a low margin contribution towards the Group result. The prospectsfor the second half year are likely to be similar to the first six months. Manufacturing This division has made an operating loss of £451,000, which compares with anoperating profit of £156,000 for the comparable period last year. The resultsfor the Dosco operations are affected by the timing of machinery sales. Theorder book for the second half of the year is such that this division is likelyto show a marked improvement in contribution for the full year. Pension Schemes and Total Recognised Gains There were actuarial gains recognised in the pension schemes of £5,121,000before taxation and £3,583,000 after taxation. Having regard to the profits forthe period of £1,594,000 this resulted in total recognised gains for the firsthalf of 2007 of £5,177,000. Earnings per Share These were 13.7 pence for the period, compared with 28.0 pence for thecorresponding period in 2006 and 53.0 pence for the whole of 2006. It is worthnoting that the figure for the first half of 2005 was 13.7 pence. DIVIDEND I am delighted to announce that the Directors intend to pay a dividend of 3.5ppence per share on 1 October 2007 to shareholders on the register on 31 August2007. The Group has previously operated a policy of making payments based on theresults achieved for each half year with no recognition of the likely result forthe full year. It is my intention to move to a more conventional dividend policywhereby the dividend attributable to the full year is broken down approximatelyas to one third payable at the interim stage and two thirds at the final. LIQUIDITY AND CAPITAL RESOURCES Gearing at 30 June 2007 was 13.9%, compared to nil at 30 June 2006 and 29.6% at31 December 2006. Shareholders' funds increased from £16,077,000 at 1 January2007 to £20,159,000 at 30 June 2007. PROSPECTS As explained above in the commentary for each of the divisions it is anticipatedthat the results for the second half of 2007 will generate a satisfactoryoutcome for the full year. Peter K. Hems 7 August 2007 Condensed consolidated interim income statement(Unaudited) Six months to 30th Six months to 30th Twelve months to 31st June 2007 June 2006 December 2006 £000 £000 £000 Revenue 55,899 53,528 127,898Increase inwork inprogress 11,207 10,702 9,396Total 67,106 64,230 137,294revenueRaw materialandconsumables 21,421 25,230 50,798Otherexternal charges 21,555 16,430 37,472Staff costs 18,519 16,863 36,298Depreciation 1,630 1,290 2,905Otheroperatingcharges 1,697 1,589 3,010 64,822 61,402 130,483 Groupoperatingprofit 2,284 2,828 6,811Share ofprofit injoint 0 1,815 2,039venturesTotaloperatingprofit 2,284 4,643 8,850Finance cost (146) (79) (200)Finance 86 98 201incomeOtherfinance 53 18 24incomeProfit onordinaryactivitiesbeforetaxation 2,277 4,680 8,875Taxation onprofit onordinaryactivities (683) (1,416) (2,689)Profittransferredto 1,594 3,264 6,186reservesEarnings pershare (basicand diluted) 13.7p 28.0p 53.0pDividendsper 3.5p 7.0p 13.0pshare Condensed consolidated interim balance sheet(Unaudited) 30th June 2007 30th June 2006 31st December 2006 £000 £000 £000AssetsNon current assetsProperty, plant andequipment 17,965 16,217 18,735Investments in jointventures 1,153 2,230 1,250Investments held forresale 0 350 0Deferred tax assets 2,956 4,600 4,625Total non currentassets 22,074 23,397 24,610Current assetsInventories and work inprogress 25,207 18,305 21,591Amounts recoverable oncontracts 8,251 4,413 8,230Trade and otherreceivables 11,187 13,389 13,385Cash and cashequivalents 3,732 5,323 3,427Total current assets 48,377 41,430 46,633Total assets 70,451 64,827 71,243LiabilitiesCurrent liabilitiesShort term borrowings 0 0 1,477Current portion of longterm borrowings 2,196 3,480 3,623Trade and otherpayables 35,164 31,939 32,513Current tax payable 328 206 633Total currentliabilities 37,688 35,625 38,246Non current liabilitiesLong term borrowings 4,335 1,761 3,089Deferred taxliabilities 1,556 1,510 1,556Pension liabilities 6,713 11,124 12,275Total non currentliabilities 12,604 14,395 16,920Total liabilities 50,292 50,020 55,166Net assets 20,159 14,807 16,077EquityIssued capital 1,293 1,293 1,293Share premium 1,864 1,864 1,864Capital redemptionreserve 132 132 132Other reserve (1,268) (865) (869)Profit and loss account 18,138 12,383 13,657Shareholders' funds 20,159 14,807 16,077 Condensed consolidated interim statement of recognised income and expense(Unaudited) Six months to Six months to Twelve months to 30th June 2007 30th June 2006 31st December 2006 £000 £000 £000 Actuarial gainrecognised inthe pensionschemes (seenote) 5,121 5,477 4,291Movement ondeferred taxrelating topensionliability (1,669) (2,080) (1,734)Current taxrelating topensionliability 131 437 447Net incomerecogniseddirectly inequity 3,583 3,834 3,004Profit for theperiod 1,594 3,264 6,186Totalrecognisedincome andexpense in theperiodattributableto equityholders 5,177 7,098 9,190NoteActuarial gain/(loss)recognised in the pensionschemesActual returnless expectedreturn onpension schemeassets 683 (59) 2,151Experiencegains andlosses arisingon the schemeliabilities 3 33 (59)Changes inassumptionsunderlying thepresent valueof the schemeliabilities 4,435 5,503 2,199 5,121 5,477 4,291 Condensed consolidated interim cashflow statement(Unaudited) Six months to Six months to Twelve months to 31st 30th June 2007 30th June 2006 December 2006 £000 £000 £000Cashflows fromoperating activitiesGroup profitafter tax 1,594 3,264 6,186Adjustments for:Profits fromjoint ventures 0 (1,815) (2,039)Depreciationon property,plant andequipment 1,630 1,290 2,905Differencebetweenpension chargeand cashcontributions (388) (1,438) (1,467)Profit on saleof property,plant &equipment (46) (136) (470)Taxationexpenserecognised inincomestatement 683 1,416 2,689Taxation paid (759) (537) (1,552)Financecost/income 6 (37) (25)Decrease/(increase) in tradeand otherreceivables 2,177 (3,042) (5,573)Increase ininventoriesand work inprogress (3,616) (6,924) (10,210)Increase intrade andother payables 1,955 5,442 6,016Net cashflowfrom operatingactivities 3,236 (2,517) (3,540)Cashflows frominvesting activitiesDistributionsfrom jointventures 0 700 2,450Net cashflowfrom returnson investmentsand servicingof finance (60) 19 1Purchase ofproperty,plant andequipment (990) (2,542) (6,861)Proceeds fromsale ofproperty,plant andequipment 176 307 805Net cashinflow fromdisposal ofinvestments 0 0 372Net cashflowfrom investingactivities (874) (1,516) (3,233)Cashflows fromfinancing activitiesEquitydividends paid 0 0 (2,100)Proceeds ofbank and otherloans 2,238 1,490 6,357Repayment ofbank and otherloans (2,158) (60) (3,310)Inception ofhire purchasepayments 587 1,078 1,880Capitalelement ofhire purchasepayments (848) (823) (1,771)Employee ShareOwnership Plansharepurchases (410) (96) (104)Employee ShareOwnership Planshare sales 11 29 33Net cashflowfrom financingactivities (580) 1,618 985Net increase/(decrease) incash and cashequivalents 1,782 (2,415) (5,788)Cash and cashequivalents atbeginning ofperiod 1,950 7,738 7,738Cash and cashequivalents atend of period 3,732 5,323 1,950Cash and cashequivalents 3,732 5,323 3,427Bank overdraft 0 0 (1,477) 3,732 5,323 1,950 NOTES Segmental reporting(Unaudited) Six months to Six months to Twelve months to 30th June 30th June 31st December 2007 2006 2006 £000 £000 £000Analysis of revenueStructuralSteel 26,435 28,726 57,188Property 3,332 3,468 12,088SpecialistEngineering 33,530 25,691 54,258Manufacturing 3,381 5,878 12,824Group 428 467 936Consolidatedtotal 67,106 64,230 137,294Analysis of group operating profitbefore joint ventures and financecost/incomeStructuralSteel 2,378 2,628 4,587Property 105 137 557SpecialistEngineering 637 324 1,718Manufacturing (451) 156 757Group (385) (417) (808)Consolidatedtotal 2,284 2,828 6,811 Amco Corporation Plc operates in four segments, Structural Steel, Property,Specialist Engineering and Manufacturing. The Group revenue is largely derivedfrom vehicle lease and management charges to former group companies togetherwith profits on disposal of vehicles. All revenue originates from the United Kingdom. Dividends In the first half of 2007 Amco Corporation Plc declared dividends of £776,000(2006 £1,423,000) to its equity shareholders (including the ESOP), a dividend of6 pence per share (first half of 2006 - 11 pence per share). An interim dividendfor 2006 of £905,000 was paid in the second half of 2006, a payment of 7 penceper share. Condensed consolidated interim statement of changes in equity(Unaudited) Share Share Capital Other Profit Total Capital Premium Redemption Reserve & Loss Equity Account Reserve (ESOP) Account £000 £000 £000 £000 £000 £000 Restated balanceat 1st January2006 under IFRS 1,293 1,864 132 (798) 6,567 9,058Changes in equity forfirst half of 2006Actuarial gain(net) on pensionscheme 0 0 0 0 3,834 3,834Net incomerecogniseddirectly inequity 0 0 0 0 3,834 3,834Profit for thesix months to30th June 2006 0 0 0 0 3,264 3,264Total recognisedincome andexpense in theperiod 0 0 0 0 7,098 7,098Dividends 0 0 0 0 (1,282) (1,282)ESOP movement inperiod 0 0 0 (67) 0 (67)Balance at 30thJune 2006 1,293 1,864 132 (865) 12,383 14,807Changes in equity forsecond half of 2006Actuarial loss(net) on pensionscheme 0 0 0 0 (830) (830)Net incomerecogniseddirectly inequity 0 0 0 0 (830) (830)Profit for thesix months to30th December2006 0 0 0 0 2,922 2,922Total recognisedincome andexpense in theperiod 0 0 0 0 2,092 2,092Dividends 0 0 0 0 (818) (818)ESOP movement inperiod 0 0 0 (4) 0 (4)Balance at 31stDecember 2006 1,293 1,864 132 (869) 13,657 16,077Changes in equity forfirst half of 2007Actuarial gain(net) on pensionscheme 0 0 0 0 3,583 3,583Net incomerecogniseddirectly inequity 0 0 0 0 3,583 3,583Profit for thesix months to30th June 2007 0 0 0 0 1,594 1,594Total recognisedincome andexpense in theperiod 0 0 0 0 5,177 5,177Dividends 0 0 0 0 (696) (696)ESOP movement inperiod 0 0 0 (399) 0 (399)Balance at 30thJune 2007 1,293 1,864 132 (1,268) 18,138 20,159 IFRS Transition notes These are the Group's first condensed consolidated interim financial statementsprepared under IFRS. An explanation of how the transition from UK GAAP to IFRShas affected the Group is set out below. The IFRS accounting policies of theGroup are detailed below. 1) IAS 31 Interests in Joint Ventures Previously under FRS 9 Joint Ventures were accounted for under the gross equitymethod. Under IFRS these are reported under the equity method. Under FRS 9 theGroup's share of the turnover, operating profit before tax, finance cost orincome and taxation charge were reported separately within the profit and lossaccount or notes thereto. Under IFRS Joint Ventures appear as a a single lineitem within the income statement, being the Group's share of the profit or lossafter tax. Within the balance sheet the Group's investment in joint ventures isnow shown as a single line item rather than the share of gross assets and shareof gross liabilities which was previously shown under FRS 9. 2) IAS 12 Income Taxes Under IFRS, deferred tax is to be provided on all revalued assets included inthe balance sheet. Under UK GAAP deferred tax had not been provided on theproperty revaluations. As a result of the application of IFRS the gross amountof the property revaluations (and thus shareholders' funds) has been reduced by£985,000 with a corresponding increase in the deferred tax liability. Inaddition pension liabilities are now stated gross and the related deferred taxasset disclosed within non current assets. 3) Property Revaluation Reserve The revalued amount for property has been accounted for as deemed cost under thetransition to IFRS. As a result the property revaluation reserve previouslydisclosed under UK GAAP is transferred to the profit and loss account reserve. 4) Explanation of material adjustments to the cashflow statement Application of IFRS has resulted in reclassification of certain items in thecashflow statement as follows: Under UK GAAP, payments to acquire property, plant and equipment were classifiedas part of 'Capital expenditure and financial investment'. Under IFRS, paymentsto acquire property, plant and equipment have been classified as part of'Investing activities'. Income taxes are classified as operating cashflows under IFRS, but were includedin a separate category of tax cashflows under previous GAAP. Interest paid and interest received are classified as cashflows from investingactivities under IFRS, but were included in the 'Returns on investments andservicing of finance' category in cashflows under UK GAAP. Equity dividends paid are classified as financing cashflows under IFRS, but wereincluded in a separate category of dividend cashflows under previous GAAP. There are no other material differences between the cashflow statement presentedunder IFRS and the cashflow statement presented under UK GAAP. Reconciliation of profit(Unaudited) Six months Twelve months to 30th to 31st June 2006 December 2006 UK GAAP Adjusts IFRS UK GAAP Adjusts (note 1) IFRS (note 1) £000 £000 £000 £000 £000 £000Totalrevenue(includingshare ofrevenue injoint 58,234 (4,706) 53,528 135,730 (7,832) 127,898ventures)Increase inwork inprogress 10,702 0 10,702 9,396 0 9,396Less: Shareofrevenue in (4,706) 4,706 0 (7,832) 7,832 0jointventuresGroup 64,230 0 64,230 137,294 0 137,294revenueRaw materialandconsumables 25,230 0 25,230 50,798 0 50,798Otherexternal 16,430 0 16,430 37,472 0 37,472chargesStaff costs 16,863 0 16,863 36,298 0 36,298Depreciation 1,290 0 1,290 2,905 0 2,905Otheroperatingcharges 1,589 0 1,589 3,010 0 3,010 61,402 0 61,402 130,483 0 130,483Groupoperatingprofit 2,828 0 2,828 6,811 0 6,811Share ofprofit injoint 1,810 5 1,815 2,092 (53) 2,039venturesTotaloperatingprofit 4,638 5 4,643 8,903 (53) 8,850Finance cost (79) 0 (79) (200) 0 (200)Finance 98 0 98 210 (9) 201incomeOtherfinance 18 0 18 24 0 24incomeProfit onordinaryactivitiesbeforetaxation 4,675 5 4,680 8,937 (62) 8,875Taxation onprofit onordinaryactivities (1,411) (5) (1,416) (2,751) 62 (2,689)Profittransferredto 3,264 0 3,264 6,186 0 6,186reserves Reconciliation of equity(Unaudited) 1st January Investments Deferred Revaluation Reserve 1st January 2006 Tax (note 3) 2006 UK GAAP (note 1) (note 2) IFRS £000 £000 £000 £000 £000AssetsNon currentassetsProperty,plant andequipment 15,136 0 0 0 15,136Investments injoint ventures 0 1,661 0 0 1,661share of grossassets 12,595 (12,595) 0 0 0share of grossliabilities (10,934) 10,934 0 0 0Investmentsheld forresale 350 0 0 0 350Deferred taxassets 1,263 0 5,417 0 6,680Total noncurrent assets 18,410 0 5,417 0 23,827Current assetsInventoriesand work inprogress 11,381 0 0 0 11,381Amountsrecoverable oncontracts 957 0 0 0 957Trade andotherreceivables 15,085 0 0 0 15,085Cash and cashequivalents 7,738 0 0 0 7,738Total currentassets 35,161 0 0 0 35,161Total assets 53,571 0 5,417 0 58,988LiabilitiesCurrentliabilitiesShort termborrowings 0 0 0 0 0Currentportion oflong termborrowings 1,846 0 0 1,846Trade andother payables 26,497 0 0 0 26,497Current taxpayable 310 0 0 0 310Total currentliabilities 28,653 0 0 0 28,653Non currentliabilitiesLong termborrowings 1,710 0 0 0 1,710Deferred taxliabilities 525 0 985 0 1,510Pensionliabilities 12,640 0 5,417 0 18,057Total noncurrentliabilities 14,875 0 6,402 0 21,277Totalliabilities 43,528 0 6,402 0 49,930Net assets 10,043 0 (985) 0 9,058EquityIssued capital 1,293 0 0 0 1,293Share premium 1,864 0 0 0 1,864Capitalredemptionreserve 132 0 0 0 132Propertyrevaluationreserve 3,284 0 (985) (2,299) 0Other reserve (798) 0 0 (798)Profit andloss account 4,268 0 0 2,299 6,567Shareholders'funds 10,043 0 (985) 0 9,058 30th June Investments Deferred Revaluation Reserve 30th June 2006 Tax (note 3) 2006 UK GAAP (note 1) (note 2) IFRS £000 £000 £000 £000 £000AssetsNon currentassetsProperty,plant andequipment 16,217 0 0 0 16,217Investments injoint ventures 0 2,230 0 0 2,230share of grossassets 9,968 (9,968) 0 0 0share of grossliabilities (7,738) 7,738 0 0 0Investmentsheld forresale 350 0 0 0 350Deferred taxassets 1,263 0 3,337 0 4,600Total noncurrent assets 20,060 0 3,337 0 23,397Current assetsInventoriesand work inprogress 18,305 0 0 0 18,305Amountsrecoverable oncontracts 4,413 0 0 0 4,413Trade andotherreceivables 13,389 0 0 0 13,389Cash and cashequivalents 5,323 0 0 0 5,323Total currentassets 41,430 0 0 0 41,430Total assets 61,490 0 3,337 0 64,827LiabilitiesCurrentliabilitiesShort termborrowings 0 0 0 0 0Currentportion oflong termborrowings 3,480 0 0 0 3,480Trade andother payables 31,939 0 0 0 31,939Current taxpayable 206 0 0 0 206Total currentliabilities 35,625 0 0 0 35,625Non currentliabilitiesLong termborrowings 1,761 0 0 0 1,761Deferred taxliabilities 525 0 985 0 1,510Pensionliabilities 7,787 0 3,337 0 11,124Total noncurrentliabilities 10,073 0 4,322 0 14,395Totalliabilities 45,698 0 4,322 0 50,020Net assets 15,792 0 (985) 0 14,807EquityIssued capital 1,293 0 0 0 1,293Share premium 1,864 0 0 0 1,864Capitalredemptionreserve 132 0 0 0 132Propertyrevaluationreserve 3,284 0 (985) (2,299) 0Other reserve (865) 0 0 0 (865)Profit andloss account 10,084 0 0 2,299 12,383Shareholders'funds 15,792 0 (985) 0 14,807 31st Investments Deferred Revaluation 31st December Tax Reserve (note 3) December 2006 2006 UK GAAP (note 1) (note 2) IFRS £000 £000 £000 £000 £000AssetsNon currentassetsProperty,plant andequipment 18,735 0 0 0 18,735Investments injoint ventures 0 1,250 0 0 1,250share of grossassets 4,765 (4,765) 0 0 0share of grossliabilities (3,515) 3,515 0 0 0Deferred taxassets 942 0 3,683 0 4,625Total noncurrent assets 20,927 0 3,683 0 24,610Current assetsInventoriesand work inprogress 21,591 0 0 0 21,591Amountsrecoverable oncontracts 8,230 0 0 0 8,230Trade andotherreceivables 13,385 0 0 0 13,385Cash and cashequivalents 3,427 0 0 0 3,427Total currentassets 46,633 0 0 0 46,633Total assets 67,560 0 3,683 0 71,243LiabilitiesCurrentliabilitiesShort termborrowings 1,477 0 0 0 1,477Currentportion oflong termborrowings 3,623 0 0 0 3,623Trade andother payables 32,513 0 0 0 32,513Current taxpayable 633 0 0 0 633Total currentliabilities 38,246 0 0 0 38,246Non currentliabilitiesLong termborrowings 3,089 0 0 0 3,089Deferred taxliabilities 571 0 985 0 1,556Pensionliabilities 8,592 0 3,683 0 12,275Total noncurrentliabilities 12,252 0 4,668 0 16,920Totalliabilities 50,498 0 4,668 0 55,166Net assets 17,062 0 (985) 0 16,077EquityIssued capital 1,293 0 0 0 1,293Share premium 1,864 0 0 0 1,864Capitalredemptionreserve 132 0 0 0 132Propertyrevaluationreserve 3,284 0 (985) (2,299) 0Other reserve (869) 0 0 0 (869)Profit andloss account 11,358 0 0 2,299 13,657Shareholders'funds 17,062 0 (985) 0 16,077 Notes to the condensed consolidated interim financial statements These condensed consolidated interim financial statements are for the six monthsended 30th June 2007. They have been prepared taking into account therequirements of IAS 34 "Interim Financial Reporting" and the requirements ofIFRS 1 "First Time Adoption of International Financial Reporting Standards"relevant to interim reports because they are part of the period covered by theGroup's first IFRS financial statements for the year ending 31st December 2007.They do not include all of the information required for full financialstatements, and should be read in conjunction with the consolidated financialstatements (under UK GAAP) of the Group for the year ended 31st December 2006. These condensed consolidated interim financial statements (the interim financialstatements) have been prepared in accordance with the accounting policies setout below which are based on the recognition and measurement principles of IFRSin issue as adopted by the European Union (EU) and are effective at 31 December2007 or are expected to be adopted and effective at 31 December 2007, our firstannual reporting date at which we are required to use IFRS accounting standardsadopted by the EU. Amco Corporation Plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31st December 2006. The date of transitionto IFRS was 1st January 2006. The comparative figures in respect of 2006 havebeen restated to reflect changes in accounting policies as a result of theadoption of IFRS. The disclosures required by IFRS 1 concerning the transitionfrom UK GAAP to IFRS are given in the reconciliation schedules attached to thisreport. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these condensed consolidated interim financialstatements. (a) Basis of consolidation The Group financial statements consolidate those of the Company and all of itssubsidiary undertakings. Subsidiaries are entities over which the Group has thepower to control the financial and operating policies so as to obtain benefitsfrom its activities. The Group obtains and exercises control through votingrights. Unrealised gains on transactions between the Group and its subsidiaries areeliminated. Unrealised losses are also eliminated unless the transactionprovides evidence of an impairment of the asset transferred. Amounts reported inthe financial statements of subsidiaries have been adjusted where necessary toensure consistency with the accounting policies adopted by the Group. Acquisitions of subsidiaries are dealt with by the purchase method. The purchasemethod involves the recognition at fair value of all identifiable assets andliabilities, including contingent liabilities of the subsidiary, at theacquisition date, regardless of whether or not they were recorded in thefinancial statements of the subsidiary prior to acquisition. On initialrecognition, the assets and liabilities of the subsidiary are included in theconsolidated balance sheet at their fair values, which are also used as thebases for subsequent measurement in accordance with the Group accountingpolicies. Goodwill is stated after separating out identifiable intangibleassets. Goodwill represents the excess of acquisition cost over the fair valueof the Group's share of the identifiable net assets of the acquired subsidiaryat the date of acquisition. The Group has elected not to apply IFRS 3 Business Combinations retrospectivelyto business combinations prior to 1st January 2006. Accordingly the classification of the combination (acquisition, reverseacquisition or merger) remains unchanged from that used under UK GAAP. Assetsand liabilities are recognised at date of transition if they would be recognisedunder IFRS, and are measured using their UK GAAP carrying amount immediatelypost-acquisition as deemed cost under IFRS, unless IFRS requires fair valuemeasurement. Deferred tax and minority interest are adjusted for the impact ofany consequential adjustments after taking advantage of the transitionalprovisions. The transitional provisions used for past business combinations apply equally topast acquisitions of interests in associates and joint ventures. (b) Revenue In the case of contracts with customers where the contract is essentially forthe provision of labour, materials and plant, revenue represents the value oflabour, material and plant supplied in the period based on rates agreed withcustomers. In the case of contracts with customers which have the characteristics oflong-term contracts, revenue is the total amount receivable in respect of workdone, including certified amounts recoverable on contracts, and is treated asfollows: - the amount by which recorded revenue is in excess of payments on account isclassified as amounts recoverable on contracts and separately disclosed withincurrent assets. - the balance of payments on account in excess of amounts (a) matched withrevenue and (b) offset against long-term contract balances are classified aspayments on account and separately disclosed within trade and other payables. - profits on contracts are taken at the point the outcome of the contract can beestimated reliably. In the case of property development activities, revenue is recognised when theGroup has met all of its contractual obligations and in the directors' opinionthese contracts have become binding. This is deemed to be when contracts reachlegal completion. In all other cases, revenue represents the fair value of consideration receivedor receivable for goods supplied in the period, excluding VAT and otherdiscounts. In accordance with IAS 11 the Group does not recognise the revenue and profitattributable to claims and disputed amounts on contracts until the recovery ofthese amounts is considered probable and when the outcome can be estimatedreliably. (c) Property, plant and equipment Property, plant and equipment is stated at cost, net of depreciation and anyprovision for impairment. The gain or loss arising on the disposal of an asset is determined as thedifference between the disposal proceeds and the carrying amount of the assetand is recognised in the income statement. On first adoption of IFRS the carrying value of land and freehold buildings thathad previously been revalued is shown as deemed cost, and not subsequentlyrevalued. The revaluation surplus that had been previously recognised istransferred to the profit and loss account and realised as distributablereserves on impairment, depreciation or disposal of the relevant properties. Depreciation is calculated to write off the cost of property, plant andequipment (other than freehold land) less estimated residual value by equalannual instalments over their expected useful lives. The rates applicable are: Freehold and long leasehold buildings 2% to 4% Plant and equipment 5% to 33.3% Motor vehicles 10% to 40% Impairment testing of property, plant and equipment For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individually for impairment and someare tested at a cash-generating unit level. Individual assets or cash-generating units are tested for impairment wheneverevents or changes in circumstances indicate that the carrying amount may not berecoverable. An impairment loss is recognised for the amount by which the asset's orcash-generating unit's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of fair value, reflecting market conditionsless costs to sell, and value in use based on an internal discounted cash flowevaluation. All assets are subsequently reassessed for indications that animpairment loss previously recognised may no longer exist. Material residual value estimates are updated as required but at least annually,whether or not the asset is revalued. (d) Inventories and work in progress Inventories and work in progress are valued at the lower of cost, includingapplicable overheads, and net realisable value. Costs of ordinarilyinterchangeable items are assigned using the first in, first out cost formula.Within the property development companies, project related interest is includedin work in progress. Contract work in progress is included in revenue on the basis of independentcertification of value of work done. Unpaid certified work is classified asamounts receivable on contracts. Provision is made for foreseeable losses on all contracts based on the losswhich is currently estimated to arise over the duration of any contract,irrespective of the amount of work carried out at the balance sheet date. (e) Taxation Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. However,deferred tax is not provided on the initial recognition of goodwill, nor on theinitial recognition of an asset or liability unless the related transaction is abusiness combination or affects tax or accounting profit. Deferred tax ontemporary differences associated with shares in subsidiaries and joint venturesis not provided if reversal of these temporary differences can be controlled bythe group and it is probable that reversal will not occur in the foreseeablefuture. In addition, tax losses available to be carried forward as well as otherincome tax credits to the Group are assessed for recognition as deferred taxassets. Deferred tax liabilities are provided in full, with no discounting. Deferred taxassets are recognised to the extent that it is probable that the underlyingdeductible temporary differences will be able to be offset against futuretaxable income. Current and deferred tax assets and liabilities are calculatedat tax rates that are expected to apply to their respective period ofrealisation, provided they are enacted or substantively enacted at the balancesheet date. Changes in deferred tax assets or liabilities are recognised as a component oftax expense in the income statement, except where they relate to items that arecharged or credited directly to equity (such as the revaluation of land) inwhich case the related deferred tax is also charged or credited directly toequity. The interim tax charge on underlying business performance is calculated byreference to the estimated effective tax rate for the full year. Tax ondisposals and other exceptional items is based on the expected tax impact ofeach item. (f) Retirement benefits Defined Contribution pension schemes The pension costs charged against operating profits represent the amount of thecontributions payable to the schemes in respect of the accounting period. Defined Benefit pension schemes Scheme assets are measured at fair values. Scheme liabilities are measured on anactuarial basis using the projected unit method and are discounted atappropriate high quality corporate bond rates that have terms to maturityapproximating to the terms of the related liability. Past service cost isrecognised as an expense on a straight-line basis over the average period untilthe benefits become vested. To the extent that benefits are already vested theGroup recognises past service cost immediately. Actuarial gains and losses are recognised immediately through the statement ofrecognised income and expense (SORIE). The net surplus or deficit is presentedwith other net assets on the balance sheet. The related deferred tax is shownwith other deferred tax balances. A surplus is recognised only to the extentthat it is recoverable by the Group. The current service cost, past service cost and costs from settlements andcurtailments are charged against other operating charges. Interest on the schemeliabilities and the expected return on scheme assets are included in otherfinance income/costs. Post-employment benefits other than pensions are accounted for in the same way. Short-term employee benefits, including holiday entitlement, are included incurrent pension and other employee obligations at the undiscounted amount thatthe Group expects to pay as a result of the unused entitlement. (g) Goodwill Goodwill representing the excess of the cost of acquisition over the fair valueof the Group's share of the identifiable net assets acquired, is capitalised andreviewed annually for impairment. Goodwill is carried at cost less accumulatedimpairment losses. Negative goodwill is recognised immediately after acquisitionin the income statement. Goodwill written off to reserves prior to the date of transition to IFRS remainsin reserves. There is no reinstatement of goodwill that was amortised prior tothe transition to IFRS. Goodwill previously written off to reserves is notwritten back to the income statement on subsequent disposal. (h) Leased assets In accordance with IAS 17, the economic ownership of a leased asset istransferred to the lessee if the lessee bears substantially all the risks andrewards related to the ownership of the leased asset. The related asset isrecognised at the time of inception of the lease at the fair value of the leasedasset or, if lower, the present value of the minimum lease payments plusincidental payments, if any, to be borne by the lessee. A corresponding amountis recognised as a finance leasing liability. Assets held under finance leases and hire purchase contracts are capitalised inthe balance sheet and depreciated over their expected useful lives. The interestelement of leasing payments represents a constant proportion of the capitalbalance outstanding and is charged to the income statement over the period ofthe lease. All other leases are regarded as operating leases and the payments made underthem are charged to the income statement on a straight line basis over theperiod of the lease term. Lease incentives are spread over the term of thelease. (i) Employee Share Ownership Plan The Group's Employee Share Ownership Plan ("ESOP") is a separately administeredtrust. The assets of the ESOP comprise shares in the Company and cash. Theassets, liabilities, income and costs of the ESOP have been included in thefinancial statements in accordance with SIC 12 Consolidation - Special PurposeEntities and IAS 32 Financial Instruments - Disclosure and Presentation. Theshares in the Company are included at cost to the ESOP and deducted fromshareholders' funds and dividend income is excluded in arriving at profit beforetax and deducted from the aggregate of dividends paid and proposed. Whencalculating earnings per share these shares are treated as if they werecancelled. (j) Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Non-monetary items that are measured at fair valuein a foreign currency are translated using the exchange rate at the date whenthe fair value was determined. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. All foreign exchange differences are dealt with through the incomestatement. (k) Joint ventures Joint ventures are entities over which the Group holds a contractual share ofjoint control. The Group financial statements incorporate joint ventures underthe equity method of accounting, supplemented by additional disclosures. The Group's share of the profits, losses, finance income, finance cost andtaxation of joint ventures are included in the Group income statement. The Groupbalance sheet includes the investment in joint ventures at the Group's share ofnet assets. (l) Financial assets Financial assets are divided into the following categories: loans andreceivables; financial assets at fair value through profit or loss;available-for-sale financial assets; and held-to-maturity investments. Financialassets are assigned to the different categories by management on initialrecognition, depending on the purpose for which they were acquired. Thedesignation of financial assets is re-evaluated at every reporting date at whicha choice of classification or accounting treatment is available. All financial assets are recognised when the Group becomes a party to thecontractual provisions of the instrument. Financial assets other than thosecategorised as at fair value through profit or loss are recognised at fair valueplus transaction costs. Financial assets categorised as at fair value throughprofit or loss are recognised initially at fair value with transaction costsexpensed through the income statement. Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. Trade receivablesand other receivables are classified as loans and receivables. Loans andreceivables are measured subsequent to initial recognition at amortised costusing the effective interest method, less provision for impairment. Any changein their value through impairment or reversal of impairment is recognised in theincome statement. Provision against trade receivables is made when there is objective evidencethat the Group will not be able to collect all amounts due to it in accordancewith the original terms of those receivables. The amount of the write-down isdetermined as the difference between the asset's carrying amount and the presentvalue of estimated future cashflows. A financial asset is derecognised only where the contractual rights to thecashflows from the asset expire or the financial asset is transferred and thattransfer qualifies for derecognition. A financial asset is transferred if thecontractual rights to receive the cashflows of the asset have been transferredor the Group retains the contractual rights to receive the cashflows of theasset but assumes a contractual obligation to pay the cashflows to one or morerecipients. A financial asset that is transferred qualifies for derecognition ifthe Group transfers substantially all the risks and rewards of ownership of theasset, or if the Group neither retains nor transfers substantially all the risksand rewards of ownership but does transfer control of that asset. (m) Financial liabilities Financial liabilities are obligations to pay cash or other financial assets andare recognised when the Group becomes a party to the contractual provisions ofthe instrument. Financial liabilities categorised as at fair value throughprofit or loss are recorded initially at fair value. All transaction costs arerecognised immediately in the income statement. All other financial liabilitiesare recorded initially at fair value, net of direct issue costs. Financial liabilities categorised as at fair value through profit or loss areremeasured at each reporting date at fair value, with changes in fair valuebeing recognised in the income statement. All other financial liabilities arerecorded at amortised cost using the effective interest method, withinterest-related charges recognised as an expense in finance cost in the incomestatement. Finance charges, including premiums payable on settlement orredemption and direct issue costs, are charged to the income statement on anaccruals basis using the effective interest method and are added to the carryingamount of the instrument to the extent that they are not settled in the periodin which they arise. A financial liability is derecognised only when the obligation is extinguished,that is, when the obligation is discharged or cancelled or expires. (n) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, togetherwith other short-term, highly liquid investments that are readily convertibleinto known amounts of cash and which are subject to an insignificant risk ofchanges in value. (o) Dividends Dividend distributions payable to equity shareholders are included in "trade andother payables" when the dividends are approved in general meeting prior to thebalance sheet date. (p) Equity Equity comprises the following: "Issued capital" represents the nominal value of equity shares. "Share premium" represents the excess over nominal value of the fair value ofconsideration received for equity shares, net of expenses of the share issue. "Capital redemption reserve" represents the purchase cost of shares repurchasedby the Group in 1998. "Other reserves" represents the purchase cost of the shares held within theEmployee Share Ownership Plan (ESOP). "Profit and loss account" represents retained profits and gains and losses dueto the revaluation of certain property, plant and equipment prior to theimplementation of IFRS. (q) Segmental reporting The Group's primary reporting format is business segment and its secondaryformat is geographical segment by origin of revenue. (r) Timing of revenue and profits Due to their project related nature, property development revenues and profitsmay not arise evenly throughout the year and can therefore have a materialeffect on the interim as opposed to final results for the year. The revenuerecognition policy relating to property development is stated in note (b). Further notes: 1. The financial information for the six months ended 30 June2007 and the comparative figures for the six months ended 30 June 2006 areunaudited and have been prepared on the basis of the accounting policies set outin the notes to this financial information and have been approved by the Board.This financial information does not constitute statutory accounts as defined inSection 240 of the Companies Act 1985. The financial statements for the yearended 31 December 2006, prepared under UK GAAP, received an unqualified auditreport, did not contain statements under section 237(2) of the Companies Act1985 and have been delivered to the Registrar of Companies. 2. Earnings per ordinary share have been calculated on thebasis of the result for the period after tax, divided by the weighted averagenumber of ordinary shares in issue in the period, excluding those held in theESOP Trust, of 11,639,183. The comparatives are calculated by reference to theweighted average number of ordinary shares in issue which were 11,662,508 forthe period to 30 June 2006 and 11,674,408 for the year ended 31 December 2006. 3. This statement is being sent to the shareholders of theCompany and will be available at the Company's Registered Office at Amco House,Cedar Court Office Park, Denby Dale Road, Wakefield, West Yorkshire, WF4 3QZ. ENDS This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Billington