11th Aug 2005 06:00
Countrywide plcPress Release embargoed until 7.00 a.m. 11 August 2005INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005Operating profit ‚£2.0m (2004: ‚£41.5m*), profit before tax ‚£3.5m (2004: ‚£30.7m*)EPS 1.82p (2004: 12.20p*)Average house price ‚£176,000 (2004: ‚£167,200)Total Shareholder Return maintainedBranches owned at 30 June 1,072 (2004: 804) plus 109 Franchised offices (2004:89)Improved pipeline of sales awaiting exchange of ‚£76.3m (2004: ‚£71.1m)Successful integration of BBEA into existing business, raising commission ratesand reducing costsCountrywide Residential Lettings now managing 51,000 propertiesConversions of house sales into mortgage business by the pre-acquisitionFinancial Services sales force increased to 66.8% (2004: 60.4%)Continued investment in Surveying and Valuation division in preparation for theintroduction of HIPs in 2007* Comparative numbers have been restated for IFRS and include the Life Businessdemerged in May 2004.Christopher Sporborg, Chairman of Countrywide plc, said:"The results for the first half of this year, as we predicted in our April AGMtrading statement, are materially below last year. The results incorporate thefirst full six months results from the businesses we acquired from Bradford &Bingley Group last October and thus comparison with the 2004 results isdifficult.Whilst the housing market has shown some seasonal uplift, completedtransactions recorded by the Land Registry in the sixmonths to June are nearly 33% below the same period last year, and, takingaccount of the time-lag in recording these figures, this accords with our ownexperience. The market appears to be stable at this lower level, at which thegroup can, excluding special circumstances, operate profitably. However, publicconfidence in the housing markets, whilst improved from the nadir of last Autumn, could easily be knocked off course by external events, and we remain careful to keep our costs at a level appropriate to the market, whilst continuing to invest for thefuture. In the absence of any deterioration in the market, our estate agencyand financial services businesses should return to profitability in the secondhalf, not least because the number of house sales in the pipeline is nearly7,500 higher than at the start of the year."For further information please contact:Countrywide plc Christopher Sporborg, Chairman Tel: 07836 204 449 Harry Hill, Group Managing Director Tel: 01376 533 700 Conference call 3.00pm London Tel: + 44 (0)20 8609 0795 PIN no.: 902449# SUMMARY 6 Months 6 Months 2005 2004 Change Operating Profits ‚£2.0m ‚£41.5m -95% Profit before tax ‚£3.5m ‚£30.7m -89% Earnings per share 1.82p 12.20p -85% Interim dividend per share 1.0p 4.50p -7.8% House sales exchanged 40,641 42,941 -5% Mortgages arranged 21,280 24,562 -13% Valuations and survey instructions 319,424 313,832 2% Conveyances completed 12,597 17,314 -27% Life policies arranged 13,472 16,855 -20% BUSINESS REVIEW The results for the first half of this year, as we predicted in our April AGMtrading statement, are materially below last year. The results incorporate thefirst full six months results from the businesses we acquired from Bradford &Bingley Group last October and thus comparison with the 2004 results isdifficult.Whilst the housing market has shown some seasonal uplift, completedtransactions recorded by the Lane Registry in the sixmonths to June are nearly 33% below the same period last year and, takingaccount of the time-lag in recording these figures, this accords with our ownexperience. Against this background, and as a result of the historically lowpipeline of transactions in progress brought forward from last year, the estateagency division has recorded an operating loss - the first since 1995 - and thefinancial services division and transactional conveyancing business have beensimilarly affected.We have made good progress in assimilating the businesses we bought fromBradford & Bingley Group in October 2004, being particularly successful inraising commission rates and reducing costs. Nevertheless, we estimate that theacquired businesses made a negative contribution of ‚£2.7m in the first sixmonths of 2005.In the April trading update, we explained that the surveying and valuationdivision, whilst suffering reduced volumes of instructions, has continued toinvest to retain our capacity in anticipation of the introduction of HIPs in2007. In our update, we also stated that computer software problems, in ourtransaction conveyancing business, have led to delays in its implementation.This has reduced our capacity and their pipelines below expectations, which hashad the effect of increasing the operating loss by an estimated ‚£2m in this sixmonth period.The comparative results for last year included both the contribution from thedemerged life business, and the costs of the demerger and return of capital.Operating cash flow suffered as a result of the poor trading conditions andtaking account of this and given the continuing financing requirements of theacquisitions the Board authorised a placing of shares equal to 5% of existingissued share capital in March, raising ‚£28.5m (net). In addition, we havecommenced a programme of the disposal of recently acquired freehold properties,and also have limited our capital expenditure only to major strategicinvestment and essential renewals. These actions, together with cost savingmeasures introduced into all divisions reduced the net debt position of ‚£55.9mat the year end to ‚£48.5m at the end of June.The Board remains committed to returning capital to shareholders whereverpossible. However, during the last 12 months, many of our shares have beenacquired by offshore based institutions, to whom traditional dividends from theUK are less attractive as they suffer withholding tax deductions. Accordingly,we have decided to reduce the interim dividend to 1p (2204: 4.5p) butsimultaneously commit that, at management's complete discretion in regard tothe timing, ‚£6.3 million (equivalent to 3.5p dividend) will be used before 31December 2005 to buy back shares for cancellation. This decision has beenreached after extensive discussions with major shareholders in both the UK andUS-and will be reviewed by the Board regularly.The group is presenting its consolidated financial results for the first timeprepared under International Financial Reporting Standards (IFRS), which becamemandatory for all EU listed companies on 1 January 2005. The impact on theseresults, and the comparatives, is relatively small. Additional details areshown later in this statement. Estate Agency Division 6 Months 6 Months 2005 2004 Change Turnover - UK ‚£117.9m ‚£125.3m -6% - Lettings ‚£19.0m ‚£13.9m 37% - Overseas ‚£1.3m ‚£1.0m 30% Operating (loss)/profit - UK Estate Agency ‚£(6.4)m ‚£22.3m -129% - UK Lettings ‚£2.7m ‚£2.1m 29% Operating loss - Overseas ‚£(0.4)m ‚£(1.4)m 71% Branches at 30 June - owned 1,072 804 33% - franchised 109 89 22% House sales exchanged - owned 38,965 40,643 -4% - franchised 1,676 2,298 -27% Average commission 1.63% 1.74% Average house price ‚£176,600 ‚£167,200 6% Headcount (average FTE) 6,973 5,586 25% Average employees per branch 5.02 5.46 -8% Closing pipeline ‚£76.3m ‚£71.1m 7% Closing pipeline (no. of offers) 42,030 23,340 3% UK estate agencyWe have now fully integrated the ex Bradford & Bingley estate agency officesinto our existing business, and thus comparison with prior periods isdifficult. However, on a per office measure, new sales arranged were 23.7%below the first six months of 2004, whilst exchanges were 29.1% lower, as aresult of the very weak trading conditions experienced in the final quarter of2004 which substantially depleted our pipeline of business carried into 2005.Commission rates have improved, both in the original and acquired offices. InOctober 2004, the blended average commission rate on exchanges was 1.58%, thishad increased to 1.65% by June 2005. The stock of homes we have for sale hasincreased by 48% since the beginning of the year, resulting in greater choicefor buyers, in turn leading to a reduction in the rate of increase in averagehouse prices. However, prices in many of the ex Bradford & Bingley estateagency offices have experienced above average increases, due partially to mixand partially to regional factors. This has boosted the overall group averagehouse price increase beyond that being experienced in the market. Prompt action was taken to mitigate the reduced level of income with theclosure of 33 branches, a 9% reduction in staff numbers through natural staffturnover, and careful management of operating costs, which for thepre-acquisition group reduced costs by a further 4%. Also, through acombination of group arrangements and cost saving initiatives by the localmanagement, we have been able to bring the operating costs of the ex-BBEAoffices in line with our existing businesses and have reduced annual costs byat least ‚£8.5m. Following the acquisition, it was considered appropriate toallocate the senior estate agency management overheads to the estate agencydivision. These had previously been accounted for in central costs. This hasincreased costs for the division by ‚£1.3m over last year's comparative.Our property auctions business continues to grow - instructions were 57% higherthan last year - giving rise to a useful contribution to divisional profits.Despite the difficult market conditions we continue to invest for the futurewhere appropriate - for example, John D Wood, our upmarket London business, hasopened a new office in South Kensington, which is already showing excellentresults. FranchisingDespite the difficult housing market conditions, 22 new franchised officessigned up in the six months to June, and 11 new offices began trading. Aftersome closures and terminations, there were 109 offices trading at the end ofJune, compared to 89 a year earlier. With the lower volumes of transactions,some franchisees were unable to afford a full time financial servicesconsultant, and we therefore opened a telesales operation to service theirclients. Initial indications from this new operation are encouraging. LettingsOur provincial lettings business, Countrywide Residential Lettings, has had anexcellent start to the year, buoyed by the additional outlets acquired with theBradford & Bingley estate agency business, where productivity has shownmeasurable improvement following its successful integration. The company nowmanages a portfolio of over 51,000 houses, flats and commercial properties.Meanwhile our London lettings business, which trades as John D Wood & CoLettings, has opened two new branches to take advantage of the active renewalsmarket, although these are not expected to be profitable this year. OverseasAt the beginning of 2005 we restructured our operating model in Spain toreflect the reduced demand in Southern Spain arising largely from the slower UKmarket. Through collaboration with other reputable operators we are nowoffering a greater choice of properties and locations to our customers. As aresult of these actions, losses have been reduced by ‚£1m in the six months toJune.Financial Services Division 6 Months 6 Months 2005 2004 Change Turnover ‚£32.6m ‚£34.1m -4% Operating profit ‚£4.3m ‚£7.3m -41% Total mortgages arranged 21,280 24,562 -13% Panel mortgages arranged 83% 97.0% - value ‚£1.8bn ‚£2.3bn -22% Life protection policies arranged 13,472 16,855 -20% General insurance policies arranged 17,765 21,595 -18% Conversion rate - mortgages 54.6% 60.4% - life policies 34.6% 41.5% - general insurance 45.6% 53.1% Headcount (average FTE) 1,368 1,360 - We have continued to operate the former BBEA financial services businessseparately from our original financial services sales force. This businessexperiences lower conversion rates across all product lines, which contributedto its ‚£600,000 loss for the six months to June. However, we plan to fullyintegrate these businesses by the end of 2005, ensuring that operatingefficiencies are achieved and that our panel lenders and insurance providersbenefit from increased distribution as a result of this merger.Both businesses suffered from the impact of the reduction in the volume ofhouse exchanges. However, the conversion of house sales into mortgage businessand general insurance sales in the original group improved to 66.8% and 60.4%.Life protection policy sales continued to be difficult, due to issues ofaffordability, and the conversion rate was held at 41.3%. Although businessvolumes have dropped, the continued rise in house prices has ensured thataverage fees earned for mortgages have, to some extent, offset the volumeshortfall.Productivity within our mortgage administration unit increased by 13% as aresult of the rationalisation in late 2004.Surveying and Valuation Division 6 Months 6 Months 2005 2004 Change Turnover ‚£53.6m ‚£55.9m -1% Operating profit ‚£8.0m ‚£16.2m -51% Valuations and survey instructions completed 319,424 313,832 2% Headcount (average FTE) 1,735 1,254 38% Countrywide SurveyorsThe fortunes of our surveying and valuation division are closely linked to thenumber of mortgages approved by our lender clients. Figures published by theBank of England show that the total approvals for housing transactions in thesix months to the end of June was 23.9% down on last year, whilst the number ofremortgage approvals was down 10.4%. Approximately half Countrywide Surveyorswork is comprised of remortgage surveys and valuations. As a result of themarket down turn, we have reduced the volume of work panelled to third partysurveyors to the minimum required by our clients, the lenders, although we areourselves experiencing a reduction in the volume of work we receive from banksand building societies with in-house capabilities and other panel managers,which has led to a slight reduction in market share. Securemove Property ServicesThis business, acquired in October 2004, contributed ‚£739,000 in the six monthsto June 2005. It too has suffered from depressed market conditions, and itsresults have also been impacted by a disproportionately higher cost base. Sincewe acquired the business we have achieved cost savings of some ‚£2.7m throughthe integration of most back office processes, and we now plan furtherintegration of much of the operational management into the CountrywideSurveyors structure, while continuing to maintain a separate identity for itscustomers. This process should be completed by the third quarter of 2005. Thismove should facilitate the future roll out of our technology to the acquiredoffices and also achieve further marginal cost savings . With the reduction involumes across the division we are operating well below optimum productivitylevels.With the reduction in volumes across the surveying division we are operatingwell below optimum productivity levels. However, in anticipation of theintroduction of Home Information Packs, planned for 2007, we consider itessential to maintain our team of surveyors at its current level, despite thenot inconsiderable short-term effect on profitability. Conveyancing Division 6 Months 6 Months 2005 2004 Change Turnover ‚£9.3m ‚£10.4m -11% Operating loss ‚£(4.7)m ‚£(1.6)m -194% Completions 20,490 17,314 18% Headcount (average FTE) 608 539 13% Countrywide Property LawyersThis business continues to be constrained by a lack of capacity. Despite thelower level of housing transactions in the market, by our estate agency officesgenerated a total of 41,400 instructions, which represented a 10% increase overthe first six months of 2004, although 46% of these were passed on to panellawyers, double the level in 2004. We currently panel instructions to 25 lawfirms.Unfortunately, as we explained in April, the software underpinning the newcomputer system, which was developed to increase our capacity and the number ofconveyancing transactions that the business can handle, has proven incapable ofdealing with the increase in matters being processed. Consequently, we havesuspended the rollout of the technology and reverted to processing new businesson the existing system, with its in built capacity constraints. This has causedthe level of business in the pipeline to fall below previous years. We havecommissioned external consultants to conduct a detailed review of the systemsoptions available which would be able to create the capacity needed to supportthe level of instructions created by our estate agency business. The outcome ofthis review, which is expected in the third quarter, may be the abandonment ofthe new system. Should this be the case, we will need to write-off the ‚£3.5mnet book value of the new development. We will be seeking to recover ourlosses from the supplier of the software. As a result of these difficulties,losses in this business increased by ‚£2.1m in the half year, and whilst we cananticipate an increase in the level of the pipeline in the coming months, andsome reduction in costs, we are not optimistic for the results of this businessfor the remainder of the year. Remortgage Conveyancing MattersThe growth prospects for this subsidiary have been encouraging since its launchin December 2004.The business combines the innovative use of technology andBusiness Process Outsourcing in India to offer lenders a service which ishighly cost effective, quick, and efficient.Business volumes have built steadily, reflecting both the desire of lenders toprudently test the service before adoption, and the timing for expiration ofcontractual arrangements they have with existing suppliers. Nevertheless we arealready processing work for two of the country's top five mortgage lenders. Thecost of running the business for the half year was ‚£1.1m.TitleAbsoluteThe Group acquired this conveyancing panel management business at the beginningof 2005 with a view to offering this service to lenders and other institutions.A major high street lender has already appointed the business as a panelmanager to provide conveyancing services to its clients, and the rollout of oursystem to this lender's branches has been successfully completed. We anticipateincreasing levels of instructions from this source and other such contracts.The business processed 8,130 completions in the six months to June 2005, ofwhich 4,581 were instructed by Countrywide Property Lawyers, and contributed ‚£174,000 to operating profit.rightmove.co.uk (30% Ownership) Rightmove continues to go from strength to strength; our share of turnover roseto ‚£2.3m (2004: ‚£1.1m) for the half year and it made a contribution to groupprofits before tax of ‚£900,000 (2004: ‚£228,000). In the six months to June1,241 estate agency offices were added to the internet property portal,bringing the total number of offices, displaying over 550,000 properties, onthe site to 7,802. In addition, it has 1,675 lettings outlets and 1,426 newhomes developments advertising on the site. It continues to enhance itsoffering to clients whilst developing several exciting new products andservices. In June, it announced the appointment of Scott Forbes as chairman,with the task of reviewing the prospects for a flotation of the business in duecourse. TM Holdings (47% Ownership) TM has seen a considerable improvement in performance since it increased itsproduct line in 2004. Turnover increased by 22% in the six months to June andit made a small contribution to group profits before tax of, ‚£147,000 (2004:loss ‚£113,000). It continues to explore new products and clients to enhanceits profits. Along with other group businesses it should benefit from theintroduction of HIPs, in particular since the Government has a stated aim, inadvance of HIP's, to increase the number of local authorities providingelectronic searches thus enabling TM to expand sales of its core product. Central costs In the first half of 2004 we reported Central costs of ‚£6.1m, excluding costsarising from the demerger and return of capital; this comparative has beenreduced under IFRS by the net impact of the reversal of the SSAP24 amortisationcharge for the pension deficit ‚£0.5m, a credit for lease incentives of ‚£55,000and a charge for share based payments of ‚£146,000 resulting in a restated netcost for 2004 of ‚£5.7m. This cost also included a non-recurring cost relatedto the write off of computer software of ‚£1m and a cost related to shareoptions held in the employee benefit trust and National Insurance of ‚£1.2m.Excluding these charges, the underlying cost base in 2004 was therefore ‚£3.5m.In 2005, Central costs in 2005 were ‚£1.4m but have benefited from a dividend of‚£1m from the insurance cell and a recharge of costs to the Estate Agencydivision of ‚£1.3m. Underlying Central costs for the six months to 30 June weretherefore ‚£2.4m.Cash Flow and Balance Sheet Working capital management has been a key focus in a very difficult market andconsequently the reduction in operating cash flow of ‚£35.0m, broadly reflectsthe reduction in operating profit of ‚£39.5m. Reduced levels of capitalexpenditure, taxation and dividends, coupled with cash raised from the rightsissue ‚£28.5m; freehold property sales ‚£5m; and dividends from investments ‚£1.5m; resulted in a reduction in the net debt position of ‚£7.4m over theperiod. International Financial Reporting Standards The main changes resulting from the adoption of IFRS are as follows:Accounting for share based payments relating to share options.Accounting for employee benefits arising from the defined benefit pensionscheme. The group has chosen to adopt early the amendment to IAS 19, whichallows actuarial gains and losses on defined benefit pension schemes to berecognised in full through the statement of recognised income and expense.The cessation of goodwill amortisation and the reinstatement of goodwillimpairment.The requirement not to accrue proposed dividends.The valuation of intangible assets on acquisition of a business. This isparticularly significant since the pipeline of business acquired with estateagency operations unwinds over a short period of time which resulted in theasset acquired with the business bought from Bradford & Bingley and FreemanForman being written off in full in 2004.All comparative figures have been restated under IFRS.The following table summarises the impact of IFRS. 6 months ended 30 June 2004 Year ended 31 December 2004 UK GAAP IFRS UK GAAP IFRS Profit before taxation ‚£30.2m ‚£30.7m ‚£42.7m ‚£42.1m Taxation ‚£(10.8)m ‚£(10.6)m ‚£(14.5)m ‚£(15.0)m Profit after taxation ‚£19.4m ‚£20.1m ‚£28.1m ‚£27.1m Net liabilities ‚£15.5m ‚£17.7m ‚£12.3m ‚£16.7 Basic earnings per share 11.73p 12.20p 16.84p 16.26p Full details of the transition to IFRS and reconciliations are given in pages21 to 27.The balance sheet has been restated for IFRS resulting in shareholderliabilities increasing from ‚£12.3m at the year end to ‚£16.7m. The principaladjustments were the inclusion of the deficit in the defined benefit pensionplan of ‚£12.8m; and an adjustment in relation to the final dividend accrued atthe year end of ‚£7.6m. Developments We have referred to our difficulties with the developments software atCountrywide Property Lawyers, but it is pleasing to report that we have madegood progress with other IT systems in other group companies. We have rolledout our estate agency software to the majority of the acquired branches; wehave completed the pilot of our new surveyor's system, and are commencing theroll-out in earnest - we now have over 50 surveyors successfully using the newsoftware and equipment; on a smaller scale, but no less important, both ourlettings businesses are undergoing systems changes designed to improve theirback office processes, not least to improve the links between accounting andoperational systems, thus considerably improving the service to clients;finally, there is a continual need to update our point of sale system and ourremortgage conveyancing system.We are continuing to develop the group strategy in anticipation of theintroduction of HIPs, which we believe will be positive both for the homebuying process and many of our divisions. We were pleased to see the recentGovernment announcement confirming that the timetable for the introduction ofHIPs in early 2007 is still on track. This greater degree of certainty iswelcome as we will need to incur considerable costs in order to ensure that ouremployees are fully trained, and that we have available the additional capacityrequired to meet the anticipated demand.We have recently defended a High Court action brought by the purchasers of aformer subsidiary in 1996, the total claim under the action is ‚£3.4m. Judgementis not expected until the Autumn and, in the meantime, acting on the advice ofour lawyers, we are holding a suitable provision based on their expectations ofa successful outcome for Countrywide.Outlook As mentioned earlier, this year the housing market has experienced a fairlynormal seasonal pattern, albeit at levels well below previous years. The marketappears to be stable at this lower level, at which the group can, excludingspecial circumstances, operate profitably. However, public confidence in the housing market, whilst improved from the nadir of last Autumn, could easily be knocked off course by external events, and we remain careful to keep our costs at a level appropriateto the market, whilst continuing to invest for the future. In the absence ofany deterioration in the market, our estate agency and financial servicesbusinesses should return to profitability in the second half, not least becausethe number of house sales in the pipeline is nearly 7,500 higher than at thestart of the year. C H SporborgChairmanDate 10 August 2005 Unaudited condensed consolidated interim income statementFor the six months ended 30 June 2005 6 months 12 months Note 2005 2004 2004 Dis- Continuing Discon-tinued Continuing continued Total* operations operations Total operations operations Total ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Revenue 2 236,219 239,949 59,350 299,299 474,186 59,350 533,536 Other income 8,484 3,823 - 3,823 9,614 - 9,614 Employee 7 (151,915) (128,640) (3,352) (131,992) (269,284) (3,352) (272,636)benefit costs Depreciation (5,805) (4,382) (174) (4,556) (9,782) (174) (9,956)and impairment Administrative (84,942) (71,664) (53,450) (125,114) (152,618) (53,450) (206,068)expenses .......................................................................... Operating 2 2,041 39,086 2,374 41,460 52,116 2,374 54,490profit Interest 1,040 507 - 507 2,219 - 2,219receivable Financing (3,134) (405) - (405) (3,380) (3,380)costs payable Profit/(loss) 2,807 (2,207) - (2,207) (1,909) - (1,909)on disposal of properties Cost of group - (8,700) - (8,700) (9,424) - (9,424)restructuring Share of 160 (115) - (115) (287) - (287)profit of associates Share of profit of joint ventures 545 157 - 157 376 - 376 Profit before 3,459 28,323 2,374 30,697 39,711 2,374 42,085tax ........................................................................... Income tax 4 (279) (9,617) (955) (10,572) (13,989) (955) (14,944)expense ........................................................................... Profit for the 3,180 18,706 1,419 20,125 25,722 1,419 27.141period ......................................................................... ......................................................................... Basic earnings 6 1.82p 11.33p 0.86p 12.20p 15.41p 0.85p 16.26pper share ......................................................................... ........................................................................ Diluted 6 1.81p 11.23p 0.85p 12.09p 15.33p 0.85p 16.17pearnings per share ......................................................................... ......................................................................... * In 2005, all activities are derived from continuing operationsUnaudited condensed consolidated interim statement of recognised income andexpenseFor the six months ended 30 June 2005 12 6 months months 31 Dec 30 Jun 30 Jun 2005 2004 2004 ‚£000 ‚£000 ‚£000 Foreign exchange translation differences (2) 142 217 Actuarial gain/(losses) arising in the pension scheme - 1,801 510 Deferred tax adjustment arising on the pension scheme - (540) (153)assets and liabilities ............................ Income and expense recognised directly in equity (2) 1,403 574 Profit for the period 3,180 20,125 27,141 Total income and expense recognised for the period 3,178 21,528 27,715 ............................ Unaudited condensed consolidated interim balance sheetAt 30 June 2005 30 Jun 30 Jun 31 Dec 2005 2004 2004 Note ‚£000 ‚£000 ‚£000 Assets Property, plant and equipment 33,757 31,943 40,728 Goodwill 37,607 16,745 34,660 Intangible assets 1,238 - 1,238 Investment property - 22,038 - Investments in joint ventures 1,005 1,391 1,959 Investments in associates 2,611 2,626 2,456 Other investments 1,248 1,867 1,217 Other receivables 2,294 - 2,294 Deferred tax 8,008 8,065 7,713 Non-current assets held for sale 1,496 - - ...........................Total non-current assets 89,264 84,675 92,265 ............................ Trade and other receivables 78,483 66,346 55,596 Prepayments 16,995 6,789 16,536 Cash and cash equivalents 12,280 11,143 21,398 ............................Total current assets 107,758 84,278 93,530 ............................ Total assets 197,022 168,953 185,795 ............................ Equity Issued Capital 5 8,938 8,456 8,515 Reserves 8 (402,669) (432,501) (430,742) Retained earnings 8 401,317 406,340 405,572 Total equity attributable to equity ...............................holders of the parent 7,586 (17,705) (16,655) .............................. Liabilities Interest-bearing loans and borrowings 60,000 45,000 75,000 Employee benefits 7 13,889 11,870 13,481 Provisions 14,500 8,507 14,226 Deferred income 20,519 20,618 19,618 Deferred tax liabilities 201 345 201 ............................Total non-current liabilities 109,109 86,340 122,526 ............................ Bank overdraft 1,050 2,051 2,297 Interest-bearing loans and borrowings 60,000 45,000 75,000 Trade and other payables 79,277 82,667 77,627 ............................Total current liabilities 80,327 100,318 79,924 ............................Total liabilities 189,436 186,658 202,450 ............................Total equity and liabilities 197,022 168,953 185,795 ............................ Unaudited condensed consolidated interim statement of cash flowsFor the six months ended 30 June 2005 6 months 6 months 12 months 30 Jun 2005 30 Jun 2004 31 Dec 2004 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Cash flows from operating activities Net profit before tax 3,459 30,697 42,085 Adjustments for: Depreciation 5,805 4,556 9,956 Amortisation of intangible asset - - 199 Share based payments 190 290 687 Write down of investments - 2,207 1,909 Income from associates (705) (42) (89) Movement on provisions 266 (1,537) 3,163 Unrealised gains - 288 288 Profit/loss on sales of fixed assets and investments (2,847) (92) (427) Profit on technical account - (2,967) (2,967) Group restructuring charge - 8,700 9,424 Net finance expense 2,094 (102) 1,161 .......................................... Operating profit before working capital changes 8,262 41,998 65,389 (Increase)/decrease in trade and other receivables (24,593) (10,488) 17,502 Decrease/(increase) in trade and other payables 3,774 (188) (8,876) .......................................... Cash generated from operations (12,557) 31,322 74,015 Interest paid (2,661) - (2,479) Income taxes paid (2,796) (14,344) (22,020) ........................................... Net cash from operating activities (18,014) 16,978 49,516 Cash from investing activities Acquisition of subsidiaries net of cash acquired (985) - (48,479) Purchase of investments (31) - (11) Demerger of subsidiary - (1,043) (1,043) Net portfolio - Life Business shareholder investments - (8,337) (8,337) Purchase of property, plant and equipment (2,950) (7,156) (14,585) Proceeds from sale of property, plant and equipment 5,695 49 22,730 Dividends received 1,500 - - Interest received 1,040 514 2,180 ................................................. Net cash used in investing activities 4,269 (15,973) (47,545) Cash flows from financing activitiesRelated Shares:
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