8th Nov 2006 07:02
Sondex PLC08 November 2006 Sondex plc("Sondex" or the "Company") Interim results for the six months ended 31 August 2006 Financial highlights Revenues up 63 per cent to £30.6 million (2005 - £18.8 million)R & D expenditure up 20 per cent to £3.1 million (2005 - £2.6 million) - 10 percent of revenueOperating profit of £5.2 million (2005 - £0.9 million)Profit after tax £2.2 million (2005 - Loss of £0.75 million)Adjusted diluted * earnings per share increased to 7.1p (2005 - 1.2p)Dividend increased by 8 per cent to 0.76p (2005 - 0.7p) Operational highlights Acquisition of the trade and assets of Bluestar ToolsStrong organic year on year growth (revenue up 38 per cent)Organic year on year Wireline Division revenues up by 27 per centOrganic year on year Drilling Division revenues up by 60 per centOrder book at all time high * pre-amortisation of acquired intangible assets, pro-forma tax charge. Iain Paterson Chairman of Sondex commented: "The Company has made significant changes to the business in the last 12 months,carrying out the stated strategy of adding product lines to existing divisionsboth by continued investment in internal development and through acquisitions.The period under review shows continued organic growth and evidence that theacquisitions are showing significant returns. The continuing international marketing effort enabled us to take advantage ofthe on going strong market conditions. The order book remains at an all timehigh and consequently the Board is confident of a successful outcome for thefinancial year." 8 November 2006 For further information, please contact: Sondex Tel: 01252 862 200Martin Perry (Chief Executive)Chris Wilks (Finance Director) Investec Tel: 020 7597 5970James Grace / Patrick Robb College Hill Tel: 020 7457 2020Nick Elwes / Paddy Blewer www.sondex.com Interim statement Introduction The Company has made further significant advances in the six months to 31 August2006. Increased market penetration, the introduction of new products andongoing marketing efforts enabled the Company to take advantage of the strongindustry conditions. At the end of August the Company's order book was atrecord levels and order intake remains strong. The Company's Wireline and Drilling Divisions, combined with building theEastern and Western Hemisphere sales organisations, have continued to provideeach other with opportunities for growth. Organic year on year revenue growthwas achieved by the Wireline Division of 27 per cent and 60 per cent in theDrilling Division. Sales grew particularly strongly for Drilling products inNorth America, reflecting the expansion opportunities that became increasinglyavailable as the Group increased its overall market presence. The acquisition of Applied Electronic Systems Inc. ("AES") in December last yearhas enhanced the Wireline product portfolio and sales have been ahead ofexpectations at the end of the first half. Additionally and in line with theCompany's strategy of adding complementary products to existing Divisions, theCompany announced in July the acquisition of the trade and assets of BluestarTools Inc. ("Bluestar") based in Calgary, Canada for a maximum consideration of£11 million. Bluestar is now known as Sondex Drilling Tools and complementsthe technology offering from the Drilling Division. Since the period end, the Company has completed the acquisition of Ultima LabsInc. ("Ultima"), a technology company which brings additional drilling productsand broad engineering experience to the Group. Additionally a take-over bid waslaunched for Innicor Subsurface Technologies Inc. ("Innicor"), a Canadian basedcompany focused on sub-surface completions technology. Innicor is listed on theToronto Stock Exchange (Symbol: IST CN). A separate announcement has beenreleased today regarding this bid, which is no longer recommended by the SondexBoard. The Company was awarded the Queen's Award for Innovation for 2006 for thecategory of international trade. Results In the six months to 31 August 2006, revenue, including that generated from AES,increased by 63 per cent to £30.6 million compared with £18.8 million in thecorresponding half year in 2005. Research and development expenditure in theperiod was increased by 20 per cent to £3.1 million and sales, marketing,customer support and administrative expenses were up by 22 per cent to £6.3million, reflecting increased investment in global sales and marketing and groupinfrastructure development at the Company's headquarters. The Company achieved an operating profit before financing costs and amortisationof £7.3 million for the period against a first half operating profit of £2.4million in 2005. Profit after tax was £2.2 million compared with a loss aftertaxation of £0.75 million in the first six months of 2005. First half dilutedearnings per share, adjusted for amortisation on acquired intangible assets anda pro-forma tax charge, were increased to 7.1p compared with 1.2p reported inthe first half 2005. Interim Dividend The Board has declared an interim dividend of 0.76 pence per ordinary share (0.7pence in the first half of the previous year), an 8% increase on the previousyear reflecting both the performance of the Company and its growth prospects.The dividend will be payable on 15 December 2006 to those shareholders on theregister of members at the close of business on 10 November 2006. Operations The Company has continued to make strong progress in terms of sales,geographical expansion, increased customer base and range of equipment. The value of sales, including that generated from AES, grew by 63 per cent inthe first half of 2006 while order intake was in excess of 40 per cent greaterthan the corresponding period in 2005. Exports continue to account forapproximately 90 per cent of Group sales. During the same period the Company'sOperating Profit increased from less than £1 million to in excess of £5 million. New Regional Managers have been appointed in China, where the Drilling andWireline operations are now merged together, and in the Middle East where, fromthe duty free zone of Jebel Ali, operations throughout the Middle East, India,North Africa and the former Soviet Union are managed. Order intake in the first half was especially strong in China, Central Americaand Canada. Wireline The Wireline Division achieved organic year on year sales growth of 27 per centin the first half. This notable increase was attributable to the expansion ofbusiness with existing customers, the addition of new customers - some comingthrough collaborative marketing initiatives with the Drilling Division - and theintroduction of new technologies. With the inclusion of AES in the first halfresults for the first time the sales growth was 57 per cent. AES products are now being stocked and actively marketed through the SondexMiddle Eastern operations where a number of sales have been made, and converselythe Lafeyette, Louisiana head quarters of AES has made some significant sales oftraditional Sondex Wireline equipment. A General Manager of AES has beenrecruited and is in place. A development programme, initiated last year, to produce an entirely new productline within the Wireline Division is progressing well. An agreement has beenmade with a strategic partner in North America who has committed to engineeringsponsorship and early field support in order to commercialise these products. Drilling The Drilling Division made a significant contribution to Group revenues in theperiod with organic year on year sales growth of 60 per cent in the first halfof the financial year compared with the same period last year. Of particularnote was the sales performance in Canada, where sales of Drilling products haveincreased from less than £1 million for the period ending 31 August 2005 toapproximately £3.4 million for the period ending 31 August 2006. A new technology has been developed since the formation of the DrillingDivision, enabling efficient transmission of data from below ground to thesurface during drilling, using Electro Magnetic methods. This has completedfield trials and is entering the commercial phase. This product has excellentpotential in North America, and in particular in regions producing coal bedmethane. The addition of Bluestar tools and, subsequent to the period end, Ultima Labs,has added a new generation of product lines to the Drilling Division. Thecomplementary products and technologies will enable the Drilling Division toextend its market penetration into the, typically, land-based vertical drillingmarkets as well to increase formation evaluation capability. Research and development Investment in research and development activity totalled £3.1 million in thefirst half of 2006, continuing to represent about 10 per cent of the Company'srevenue. Further product line enhancements and additional products have been released inboth the Wireline and Drilling Divisions. A production logging tool to assistwith three-phase flow analysis and an advanced Electro Magnetic telemetry systemfor Measurement and Logging While Drilling are close to commercialisation.Investment in product lines which will potentially open up new markets in bothWireline and Drilling has also continued. Good progress is being made. Acquisition of Bluestar Tools Inc. The Company announced on 18 July the acquisition of the trade and assets ofBluestar Tools, based in Calgary, Canada. Bluestar is a fast growing supplierof specialist technology and equipment used in drilling oil and gas wells whichis used to reduce drilling time and improve productivity. Bluestar supplies arange of Measurement and Logging While Drilling tools which are complementary tothe existing Drilling Division and includes tools to assist, when desired, inkeeping wells vertical and straight during drilling. Sondex has paid £2.7 million for the trade and assets of the business, and afurther £3.6 million in shares with an additional £4.8 million payable providedcertain conditions are met. The funding for this acquisition has been throughan increased banking facility of £6.7 million. Management and Staff During the first half of 2006 the Company has continued to invest in thebusiness and has recruited the necessary skills across all functions as requiredto ensure that the business continues to grow with the necessary infrastructureto optimise and support that growth. With the Bluestar team the Company currently has more than 450 employees. Staffturn-over remains low and all staff deserve praise for their excellent effortsin continuing to respond to increased demands and on-going change. Financial commentary The Company is presenting its interim results for the six months ended 31 August2006 with comparative information for the six months to 31 August 2005. Theseinterim results are prepared in accordance with International FinancialReporting Standards ("IFRS") as adopted by the EU. The level of working capital employed by the Company has increased to supportthe growth in revenues in the period. At the end of August 2006, inventoriesstood at £16.0 million, an increase of 52 per cent on August 2005, and tradereceivables stood at £23.8 million, increased by 22 per cent compared to August2005, but showing a fall since the year end reflecting actions taken to ensuresustained success in credit control. The increase in inventories also reflectsthe manufacturing activity to support the on-going business growth. Trade payables have increased by 32 per cent, reflecting the increased tradeactivity whilst maintaining the Company's policy of prompt payment of itssuppliers. The US$ has strengthened considerably throughout the six months ended 31 August2006. Our continued policy to achieve a natural hedge through denominating ourbank loan in US$ has helped to mitigate the impact of the strengthening US$, sothat the foreign exchange loss recognised in the income statement for the sixmonths ended 31 August 2006 is £0.2 million. In accordance with past practice an adjusted earnings per share calculation hasbeen presented. The adjustments made have been to add back to earnings theamortisation of acquired intangible assets and to replace the actual tax chargewith a pro-forma tax charge of 30 per cent in order to reduce the volatilitywhich can arise out of the deferred tax provisions of IFRS. Acquisition of Ultima Labs Inc. On 29 September 2006 the Company announced that it had acquired Ultima LabsInc., a private Houston based technology development company with a range of IPand products related to Logging While Drilling ("LWD") and Wireline applicationsfor the oilfield service industry, for a consideration of up to US$9.225 million(£4.855 million), including sales related earn-out. Outlook The Company continues to develop the business in order to take advantage of thepositive oil industry environment and the long term demand for increasinghydrocarbon production from ageing reserves. Growth is being achieved throughcontinuing to broaden the range of products on offer and by increasinginternational marketing reach - especially in areas such as China, Russia,Northern and Central America - organically and also through selectiveacquisitions. The Drilling and Wireline Divisions are achieving success in their own spheresof operations while helping each other to capture a bigger share of the marketfor technical downhole equipment. The Company is improving and extending itstechnology both through on-going research and development programmes and throughtargeted acquisitions. Given these strengths, and the talent and commitment ofthe staff, the Board is confident of further success in the current financialyear and beyond. Iain PatersonChairman Martin PerryChief Executive 8 November 2006 Consolidated income statementFor the six months ended 31 August 2006 Unaudited Unaudited Audited year half year half year ended 31 Aug 06 31 Aug 05 28 Feb 06 Note £'000 £'000 £'000 Revenue 2 30,592 18,783 51,449Cost of sales (14,426) (9,111) (22,341) 16,166 9,672 29,108Gross profit 52.8% 51.5% 56.6% Other operating income - - 136Research and development expenses 3 (2,612) (2,174) (4,249)Sales, marketing & customer support expenses (3,202) (2,652) (5,952)Administration expenses excluding amortisation of (3,059) (2,470) (6,551)acquired intangible assets Operating profit before amortisation of acquired 7,293 2,376 12,492intangible assets Amortisation of acquired intangible assets (2,117) (1,445) (2,803) Operating Profit 5,176 931 9,689 Financial income 257 173 450Financial costs (1,764) (1,584) (2,653) Profit / (loss) before taxation 3,669 (480) 7,486 Taxation 4 (1,460) (271) (2,398) Profit / (loss) attributable to shareholders 2,209 (751) 5,088 Dividends 5 (798) (715) (1,106) Earnings per share 6Basic 4.0 p (1.4) p 9.3 pDiluted 3.8 p (1.3) p 9.0 pAdjusted diluted 7.1 p 1.2 p 12.7 p Consolidated balance sheetAt 31 August 2006 Unaudited Unaudited Audited year half year half year ended 31 Aug 06 31 Aug 05 28 Feb 06 £'000 £'000 £'000 Non current assetsGoodwill 43,108 38,100 42,757Other intangible assets 25,611 16,807 17,590Property plant & equipment 7,224 4,966 5,535Financial assets - derivatives 85 45 111Investments in associates 108 112 42 76,136 60,030 66,035 Current assetsInventories 15,980 10,479 14,796Trade & other receivables 23,813 19,548 24,759Cash & cash equivalents 3,310 (4,456) 2,099 43,103 25,571 41,654 Current liabilitiesFinancial liabilities - borrowings (4,644) (3,950) (5,395)Trade & other payables (9,073) (6,850) (9,798)Current tax (2,379) (1,556) (3,599) (16,096) (12,356) (18,792) Non-current liabilitiesFinancial liabilities - borrowings (29,809) (16,020) (25,142)Financial liabilities - derivatives - (249) (32)Deferred tax liabilities (3,639) (4,643) (3,801)Long Term Liabilities (6,485) - -Provisions - (67) - (39,933) (20,979) (28,975) Net assets 63,210 52,266 59,922 Shareholders' equityShare capital 5,668 5,504 5,585Share premium 42,625 41,020 42,565Other reserves 7,306 5,273 5,739Retained earnings 7,611 469 6,033 Total equity 63,210 52,266 59,922 Consolidated statement of changes to equityFor the six months ended 31 August 2006 Unaudited Unaudited Audited half year half year year ended 31 Aug 06 31 Aug 05 28 Feb 06 £'000 £'000 £'000 Total equity at start of period 59,922 53,214 53,214 Profit / (Loss) for the period attributable to 2,209 (751) 5,088shareholders Items of income and expense recognised directly inequityNet foreign exchange differences (635) 11 90Deferred tax on items not recognised in the income 167 138 218statement (468) 149 308 Total income and expense for the year 1,741 (602) 5,396 Transactions with equity holdersDividends paid (798) (715) (1,106)Shares issued (net of expenses) 143 4 1,630Shares to be issued (deferred consideration) 1,729 - -Share based payments 473 365 788 Total equity at end of period 63,210 52,266 59,922 Consolidated cash flow statementFor the six months ended 31 August 2006 Unaudited half Unaudited Audited year year half year ended 31 Aug 06 31 Aug 05 28 Feb 06 £'000 £'000 £'000Cash flows from operating activitiesOperating profit before amortisation of acquired 7,293 2,376 12,492intangible assetsDepreciation of property, plant and equipment 464 295 1,268Amortisation of capitalised development expenditure 765 424 1,052Amortisation of other intangible assets 40 - 154Charge for share based payment 473 366 788(Increase)/decrease in trade and other receivables 1,319 (656) (5,190)(Increase)/decrease in inventories (1,799) (2,464) (5,868)Increase/(decrease) in trade and other payables (1,251) 286 2,996 Cash generated from operations 7,304 627 7,692 Tax (paid)/received (2,903) 117 (1,258)Net cash from operating activities 4,401 744 6,434 Cash flows from investing activitiesInterest received 257 173 339Acquisition of trade and assets / subsidiaries (2,724) - (6,094)Purchase of property, plant and equipment (1,262) (418) (2,301)Purchase of investments - (20) -Development expenditure (1,299) (868) (1,471)Proceeds from the sale of property, plant and equipment 231 - 790Net cash used in investing activities (4,797) (1,133) (8,737) Cash flows from financing activitiesInterest paid (1,326) (940) (2,015)Proceeds from the issue of share capital 143 4 -Loan capital received 6,745 - 5,729Repayment of loans - (2,287) (3,494)Dividends paid (798) (715) (1,106))Net cash used in financing activities 4,764 (3,938) (886) Net increase/(decrease) in cash and cash equivalents 4,368 (4,327) (3,189) Cash and cash equivalents at the beginning of the period (3,296) (1,410) (1,410)Cash acquired with acquisition of subsidiaries - - 116Effect of exchange rate changes (2,406) 1,281 1,187 Cash and cash equivalents at the end of the period (1,334) (4,456) (3,296) NOTES TO THE INTERIM REPORT Basis of preparation The interim financial information for the six months ended 31 August 2006 hasbeen reviewed by the auditors in accordance with APB Bulletin 1999/4, but hasnot been audited and it does not constitute statutory accounts within themeaning of Section 240 of the Companies' Act 1985. The financial information for the year ended 28 February 2006 is based on thestatutory accounts for the financial year ended 28 February 2006. Thoseaccounts, upon which the auditors issued an unqualified opinion, have beendelivered to the registrar of companies. The interim financial information for the six months ended 31 August 2006,including the comparative figures for the six months ended 31 August 2005 andthe year ended 28 February 2006, has been prepared under the historical costconvention and on the basis of the accounting policies and exemptions presentedin the full annual accounts for the Group for the year ended 28 February 2006. Segmental analysis Primary reporting format - business segments The following tables present revenue and result information regarding theGroup's business segments for the half years ended 31 August 2006 and 31 August2005 and for the year ended 28 February 2006. Wire- Dril- Elimin- Consol- line ling ations idated Unau- Unau- Aud- Unau- Unau- Aud- Unau- Unau- Aud- Unau- Unau- Aud- dited dited ited dited dited ited dited dited ited dited dited ited half half Year half half Year half half Year half half Year Year Year end Year Year end Year Year end Year Year end 31 Aug 31 Aug 28 Feb 31 Aug 31 Aug 28 Feb 31 Aug 31 Aug 28 Feb 31 Aug 31 Aug 28 Feb 06 05 06 06 05 06 06 05 06 06 05 06 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000RevenueExternal 19,998 12,749 35,276 10,594 6,034 16,173 - - - 30,592 18,783 51,449salesInter-segment - - - - - - - - - - - -revenueSegment 19,998 12,749 35,276 10,594 6,034 16,173 - - - 30,592 18,783 51,449Revenue ResultSegment 5,254 1,960 10,928 3,121 1,082 4,323 - - - 8,375 3,042 15,251result beforeamortisationof acquiredintangibleassetsAmortisation (262) - (109) (1,855) (1,445) (2,694) - - - (2,117) (1,445) (2,803)of acquiredintangibleassets Segment 4,992 1,960 10,819 1,266 (363) 1,629 - - - 6,258 1,597 12,448result Unallocated (1,082) (666) (2,759)expenses Operating 5,176 931 9,689profit Financial 257 173 450incomeFinancial (1,764) (1,584) (2,653)costs Profit before 3,669 (480) 7,486taxation Taxation (1,460) (271) (2,398) Profitattributableto 2,209 (751) 5,088shareholders Secondary reporting format - geographic segments Unaudited Unaudited Audited year half year half year ended 31 Aug 06 31 Aug 05 28 Feb 06Sales by destination £'000 £'000 £'000 USA and South America 9,018 5,799 13,103Canada 6,376 2,221 6,781Europe 6,622 2,787 7,509Middle East 1,099 2,441 7,334China 4,840 989 3,718Russia 759 1,801 4,840Africa 612 1,832 3,024Rest of World 1,266 913 5,140 Total 30,592 18,783 51,449 3. Research & development expenditure The charge in respect of research & development is analysed below: Unaudited Unaudited Audited year half year half year ended 31 Aug 06 31 Aug 05 28 Feb 06 £'000 £'000 £'000 Expenditure in the period (3,146) (2,618) (4,668)Development costs capitalised 1,299 868 1,471Amortisation of capitalised development costs (765) (424) (1,052) Charge in income statement (2,612) (2,174) (4,249) 4. Taxation Unaudited Unaudited Audited half year half year year ended 31 Aug 06 31 Aug 05 28 Feb 06 £'000 £'000 £'000Current tax expenseCurrent year - UK tax charge 520 89 2,337Current year - overseas tax charge 1,099 320 1,738 1,619 409 4,075 Adjustments in respect of prior years - UK - - 5Adjustments in respect of prior years - Overseas - - (207) - - (202) Deferred tax (credit) /expenseOrigination and reversal of temporary differences (159) (138) (1,534)Adjustments in respect of prior year - - 59 (159) (138) (1,475) Total taxation expense recognised in the income statement 1,460 271 2,398 5. Dividends Unaudited Unaudited Audited year half year half year ended 31 Aug 06 31 Aug 05 28 Feb 06 Dividend Dividend Dividend per share per share per share £'000 Pence £'000 Pence £'000 PenceEquity dividends on ordinaryshares: February 2005 final dividend - - 715 1.3 715 1.3 February 2006 interim dividend - - - - 391 0.7 February 2006 final dividend 798 1.4 - - - - Total recognised 798 - 715 - 1,106 - The directors are proposing aninterim dividend of 0.76 pence pershare, to be paid on 15 December2006This has not been accrued in thebalance sheet at 31 August 2006. 6. Earnings per share Unaudited half Unaudited Audited year half year year ended 31 Aug 06 31 Aug 05 28 Feb 06Basic earnings per shareBasic undiluted (pence) 4.0 (1.4) 9.3Basic diluted (pence) 3.8 (1.3) 9.0 £'000 £'000 £'000Profit attributable to shareholders 2,209 (751) 5,088 Weighted average number of shares (thousands)Undiluted 55,423 54,539 54,578Dilutive share options 3,368 2,798 3,012Market price adjustment to dilutive share options (1,396) (1,293) (1,091) Diluted 57,395 56,044 56,499 Adjusted earnings per shareAdjusted diluted (pence) 7.1 1.2 12.7Adjusted basic (pence) 7.3 1.2 13.2 £'000 £'000 £'000Adjusted earnings per share is presented on thefollowing basis:Profit attributable to shareholders 2,209 (751) 5,088Add: amortisation of acquired intangible assets 2,117 1,445 2,803Less: adjustment to taxation (276) (19) (689) Adjusted earnings 4,050 675 7,202 Diluted weighted average number of shares 57,395 56,044 56,499 The adjustment to taxation brings the charge to taxation to 30 per cent of profit before amortisation and tax. Post Balance Sheet Events Acquisition of Innicor Subsurface Technologies Inc ("Innicor") On 12 October 2006 the Company announced that it had made a formal offer toacquire all of the common shares of Innicor for C$3.75 cash for each commonshare. Innicor designs, manufactures and sells subsurface equipment utilised in thecompletions and work-over of oil and gas wells. The proposed acquisition is subject to the approval of shareholders at anExtraordinary General Meeting to be held on 16 November 2006. The board ofdirectors of Sondex has determined to amend its recommendation and now stronglyadvises that shareholders vote against all the resolutions to be proposed at theextraordinary general meeting on 16 November 2006. In the event that the acquisition is not approved at the Extraordinary GeneralMeeting the associated costs incurred would be about £1.5 million. In order to finance the proposed acquisition, if approved, the Company proposesto raise approximately £40 million (net of expenses of the Innicor offer and theNew Issue) by the issue of 15,679,803 New Ordinary Shares at 280 pence pershare. Acquisition of Ultima Labs Inc ("Ultima") On 29 September 2006 the Company announced the acquisition of Ultima Labs Inc ("Ultima Labs"), a private Houston based technology development company with arange of IP and products related to Logging While Drilling ("LWD") and Wirelineapplications for the oilfield service industry, for a consideration of up toUS$9.225 million (£4.855 million), including sales related earn-out. INDEPENDENT REVIEW REPORT TO SONDEX PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 31 August 2006 which comprises the Consolidated IncomeStatement, Consolidated Balance Sheet, Consolidated Cash Flow Statement,Consolidated Statement of Changes in Equity, and the related notes 1 to 7. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have 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 should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards 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 six monthsended 31 August 2006. Ernst & Young LLPReading This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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