17th Oct 2007 07:00
Tandem Group PLC17 October 2007 The Group made a profit before tax of £335,000 for the six months ended 31 July2007, compared to a loss of £373,000 in the same period last year. Group salesrevenue increased by 11.8% from £16,143,000 to £18,052,000. This was anencouraging result despite the bad weather in the second quarter. No dividend isproposed. CYCLES The number of bicycles sold was 7.7% up on the same period last year. Theaverage selling price was down, with lower sales of the higher priced models,resulting in sales revenue for our cycle businesses being 1.0% lower. Withimproved margins and a tight control of costs the operating profit, beforeexceptional items, increased by £246,000 compared to the first half last year. We continue to design and develop new bicycles to provide our customers withinnovative and exciting products. SPORTS, LEISURE AND TOYS Turnover in our sports, leisure and toys business increased by 32.4% over thesame period last year. Traditionally the first half of the year for thisbusiness has been loss making, but improved sales revenue from our Hedstromoutdoor play equipment and new licences for Transformers and C'Mons have turnedthe half year into profit. We continue to increase sales of our Ben Sayers golfequipment through product development and a wider distribution. New licences should generate further sales revenue in the second half of theyear. SUMMARY I highlighted the situation with the Group's pension schemes in my statementwith the results for the year ended 31 January 2007. The deficit has reduced by£680,000 since 31 January 2007 and work is continuing on ways to furtherdecrease or eliminate the shortfall. The Group is now in a position to explore ways to enhance shareholder value anda number of options are being considered for 2008. So far this year the Group has enjoyed an improving sales trend which shouldcontinue for the rest of the year. The management teams of our individualbusinesses are clearly focused on their products, sales and operations and wetherefore remain optimistic about the prospects for the current financial year. Graham WaldronChairman 17 October 2007 For further information contact: Tandem Group plc Mervyn Keene 01733 211399 KBC Peel Hunt (Nominated adviser and broker) Nick Maslen 0121 633 8330 6 months 6 months Year ended ended ended 31 July 31 July 31 January 2007 2006 2007 Unaudited Unaudited Unaudited Note £'000 £'000 £'000Continuing operations Revenue 18,052 16,143 33,785 Cost of sales (12,586) (11,651) (23,169) Gross profit 5,466 4,492 10,616 Distribution expenses (3,338) (2,859) (4,890) Administrative expenses (1,622) (1,876) (4,806) Operating profit/(loss) 506 (243) 920 Finance costs (171) (130) (271) Profit/(loss) before taxation 335 (373) 649 Tax (expense)/income (1) 78 297 Profit/(loss) for the period 334 (295) 946 Pence Pence PenceEarnings/(loss) per shareBasic 5 0.89 (0.78) 2.52 Diluted 5 0.89 (0.78) 2.52 At 31 At 31 July At 31 July January 2007 2006 2007 Unaudited Unaudited Unaudited £'000 £'000 £'000 Non current assetsGoodwill 2,677 2,677 2,677Property, plant and equipment 522 480 403Deferred taxation 1,167 633 1,354 4,366 3,790 4,434 Current assetsInventories 5,994 5,577 5,676Trade and other receivables 7,929 7,372 5,435Cash and cash equivalents 2,357 1,421 551 16,280 14,370 11,662 Total assets 20,646 18,160 16,096 Current liabilitiesTrade and other payables (8,829) (8,845) (6,076)Financial liabilities (4,194) (3,497) (2,456)Current tax liabilities (352) (213) (365) (13,375) (12,555) (8,897)Non current liabilitiesPension schemes' deficits (1,457) (2,940) (2,137) Total liabilities (14,832) (15,495) (11,034) Net assets 5,814 2,665 5,062 EquityShare capital 1,503 1,503 1,503Share premium 5,258 5,258 5,258Other reserves 2,455 2,523 2,431Profit and loss account (3,402) (6,619) (4,130)Total equity 5,814 2,665 5,062 6 months 6 months Year ended ended ended 31 July 31 July 31 January 2007 2006 2007 Unaudited Unaudited Unaudited £'000 £'000 £'000 Foreign exchange differences on translation of 24 22 (70)overseas subsidiariesActuarial gain on pension schemes 595 - 1,221Movement in pension schemes' deferred tax (204) - -provisionNet income recognised directly in equity 415 22 1,151 Net profit/(loss) for the period 334 (295) 946 Total recognised income and expense 749 (273) 2,097 6 months 6 months Year ended ended ended 31 July 31 July 31 January 2007 2006 2007 Unaudited Unaudited Unaudited £'000 £'000 £'000Cash flows from operating activitiesProfit/(loss) for the period 334 (295) 946Adjustments:Depreciation of property, plant and equipment 59 83 173Loss on sale of property, plant and equipment 1 4 48Finance costs 171 130 271Taxation expense/(income) 1 (78) (297)Share based payments 3 - 27Fair value adjustments of forward contracts 78 259 37Adjustment for pension funding (86) (97) (118) Net cash inflow from operating activities 561 6 1,087before movements in working capital (Increase)/decrease in inventories (318) 87 (12)Increase in trade and other receivables (2,511) (2,201) (681)Increase/(decrease) in trade and other 2,723 1,106 (1,048)payablesCash generated/(utilised) from operations 455 (1,002) (654) Interest paid (154) (113) (276)Taxation paid - - (85)Net cash inflow/(outflow) from operating 301 (1,115) (1,015)activities Cash flows from investing activitiesPurchases of property, plant and equipment (180) (34) (94)Sale of property, plant and equipment 1 30 31Net cash used in investing activities (179) (4) (63) Financing activitiesIncrease/(decrease) in invoice financing 1,659 92 (726)Capital element of finance lease rentals - - (1) Net cash from/(used in) financing 1,659 92 (727)activities Net increase/(decrease) in cash and cash 1,781 (1,027) (1,805)equivalentsCash and cash equivalents at beginning of 551 2,426 2,426periodEffect of foreign exchange rate changes 25 22 (70)Cash and cash equivalents at end of period 2,357 1,421 551 1 GENERAL INFORMATION Tandem Group plc is a public limited company incorporated and domiciled in theUnited Kingdom with its shares listed on the Alternative Investment Market ofthe London Stock Exchange. The principal activity of the Group is the manufacture and distribution ofsports and leisure equipment. The ultimate parent company of the Group is Tandem Group plc whose principalplace of business and registered office address is 9a South Street, Crowland,Peterborough, PE6 0AH. The interim financial statements for the period ended 31 July 2007 (includingthe comparatives for the periods ended 31 July 2006 and 31 January 2007) wereapproved by the board of directors on 17 October 2007. Under the SecurityRegulations Act of the European Union ("EU"), amendments to the financialstatements are not permitted after they have been approved. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 January 2007,prepared under the United Kingdom Generally Accepted Accounting Principles("UK GAAP"), have been filed with the Registrar of Companies. The auditor'sreport on those financial statements was unqualified and did not containstatements under Section 237(2) of the Companies Act 1985. 2 ACCOUNTING POLICIES Basis of preparation The interim financial report has been prepared under the historical costconvention and in accordance with International Accounting Standard 34 InterimFinancial Reporting and the requirements of International Financial ReportingStandard 1 First Time Adoption of International Reporting Standards relevant tointerim reports. It does not include all of the information required for fullannual financial statements, and should be read in conjunction with theconsolidated financial statements of the Group for the year ended 31 January2007. The Group has adopted International Financial Reporting Standards ("IFRS") forthe first time in its consolidated financial statements. The transition to IFRSreporting has resulted in a change in the reported financial statements, notesthereto and accounting principles compared to the previous annual report. Note 3provides further details on the transition from UK GAAP to IFRS. These consolidated interim financial statements have been prepared in accordancewith the accounting policies set out below which are based on the recognitionand measurement principles of IFRS in issue as adopted by the EU and areeffective at 31 January 2008 or are expected to be adopted and effective at31 January 2008, our first annual reporting date at which we are required to useIFRS accounting standards adopted by the EU. The principal accounting policies of the Group are set out below. Consolidation and investments in subsidiaries The Group has elected not to apply IFRS 3 Business Combinations retrospectivelyto business combinations prior to 1 February 2006. Subsidiaries are all entities over which the Group has the power to control thefinancial and operating policies. The Group obtains and exercises controlthrough voting rights. The consolidated financial statements of the Groupincorporate the financial statements of the parent company as well as thoseentities controlled by the Group by full consolidation. In addition, acquired subsidiaries are subject to application of the purchasemethod. This involves the revaluation at fair value of all identifiable assetsand liabilities, 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 revalued amounts, which are also used as thebases for subsequent measurement in accordance with the Group accountingpolicies. 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. Material intra-group balances and transactions, and any unrealised gains orlosses arising from intra-group transactions, are eliminated in preparing theconsolidated financial statements. Income recognition Revenue is measured by reference to the fair value of consideration received orreceivable by the Group for goods supplied and services provided, excluding VATand trade discounts. Revenue is recognised upon the performance of services ortransfer of risk to the customer. Revenue from the sale of goods is recognised when all the following conditionshave been satisfied: • the Group has transferred to the buyer the significant risks and rewards of ownership of the goods which is generally when they are received by the customer at the agreed place of delivery • the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold • the amount of revenue can be measured reliably • it is probable that the economic benefits associated with the transaction will flow to the Group, and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Goodwill Goodwill is tested annually for impairment and carried at cost less accumulatedimpairment losses. Impairment The Group's goodwill and property, plant and equipment are subject to impairmenttesting. 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 cash-generating unit level. Goodwill is allocated to thosecash-generating units that are expected to benefit from synergies of the relatedbusiness combination and represent the lowest level within the Group at whichmanagement controls the related cash flows. Individual intangible assets or cash-generating units that include goodwill withan indefinite useful life are tested for impairment at least annually. All otherindividual 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. Impairment losses recognised for cash-generating units, to whichgoodwill has been allocated, are credited initially to the carrying amount ofgoodwill. Any remaining impairment loss is charged pro rata to the other assetsin the cash-generating unit. With the exception of goodwill, all assets aresubsequently reassessed for indications that an impairment loss previouslyrecognised may no longer exist. Property, plant and equipment Computer equipment, fixtures and fittings, vehicles and short leasehold land andbuildings are carried at acquisition cost less subsequent depreciation andimpairment losses. Depreciation is charged on these assets on a straight linebasis over the estimated useful economic life of each asset. The useful lives of property, plant and equipment can be summarised as follows: Computer equipment 3 yearsFixtures and fittings 3 yearsVehicles 3 - 4 yearsShort leasehold land and buildings Over term of lease Material residual value estimates are updated as required, but at leastannually, whether or not the asset is revalued. Leases In accordance with IAS 17 (revised 2003), the economic ownership of a leasedasset is transferred to the lessee if the lessee bears substantially all therisks and rewards related to the ownership of the leased asset. The relatedasset is recognised at the time of inception of the lease at the fair value ofthe leased asset or, if lower, the present value of the lease payments plusincidental payments, if any, to be borne by the lessee. A corresponding amountis recognised as a finance leasing liability. Subsequent accounting for assets held under finance lease agreements, i.e.depreciation methods and useful lives, correspond to those applied to comparableacquired assets. The corresponding finance leasing liability is reduced by leasepayments less finance charges, which are expensed to finance costs. Financecharges represent a constant periodic rate of interest on the outstandingbalance of the finance lease liability. All other leases are treated as operating leases. Payments on operating leaseagreements are recognised as an expense on a straight-line basis. Associatedcosts, such as maintenance and insurance, are expensed as incurred. The Groupdoes not act as a lessor. Taxation Current income tax assets and/or liabilities comprise those obligations to, orclaims from, fiscal authorities relating to the current or prior reportingperiod, that are unpaid at the balance sheet date. They are calculated accordingto the tax rates and tax laws applicable to the fiscal periods to which theyrelate, based on the taxable profit for the year. Deferred income taxes are calculated using the liability method on temporarydifferences. This involves the comparison of the carrying amounts of assets andliabilities in the consolidated financial statements with their respective taxbases. However, in accordance with the rules set out in IAS 12, no deferredtaxes are recognised in conjunction with goodwill. This applies also totemporary differences associated with shares in subsidiaries if reversal ofthese temporary differences can be controlled by the Group and it is probablethat reversal will not occur in the foreseeable future. In addition, tax lossesavailable to be carried forward as well as other income tax credits to the Groupare assessed for recognition as deferred tax assets. Deferred tax liabilities are always provided for in full. Deferred tax assetsare recognised to the extent that it is probable that they will be able to beoffset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply totheir respective period of realisation, provided they are enacted orsubstantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a componentof tax expense in the income statement. Only changes in deferred tax assets orliabilities that relate to a change in value of assets or liabilities that ischarged directly to equity are charged or credited directly to equity. Employee benefits Defined contribution pension schemes Pensions to employees are provided through contributions to individual personalpension plans. A defined contribution plan is a pension plan under which theGroup pays fixed contributions into an independent entity. The Group has nolegal or constructive obligations to pay further contributions after payment ofthe fixed contribution. The contributions recognised in respect of personal pension plans are expensedas they fall due. Liabilities and assets may be recognised if underpayment orprepayment has occurred and are included in current liabilities or currentassets as they are normally of a short term nature. Defined benefit pension schemes Assets are measured at fair values. Liabilities are measured on an actuarialbasis using the projected unit method and are discounted at appropriate highquality corporate bond rates that have terms to maturity approximating to theterms of the related liability. Appropriate adjustments are made forunrecognized actuarial gains or losses and past service costs. Past service costis recognised as an expense on a straight-line basis over the average perioduntil the benefits become vested. To the extent that benefits are already vestedthe Group recognizes past service cost immediately. Actuarial gains and losses are recognized immediately in the statement ofrecognised income and expense. The net surplus or deficit is presented withother net assets on the balance sheet. The related deferred tax is shown withother deferred tax balances. A surplus is recognized only to the extent that itis recoverable by the Group. The current service cost, past service cost and costs from settlements andcurtailments are charged to distribution and administrative expenses. Intereston the scheme liabilities and the expected return on scheme assets are includedin other finance costs. Post-employment benefits other than pensions areaccounted 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. Other long-termemployee benefit obligations are accounted for at the net of the present valueof the defined benefit obligation and the fair value of plan assets at thebalance sheet date. Inventories Inventories are stated at the lower of cost and net realisable value. Costs ofordinarily interchangeable items are assigned using the first in, first out costformula. Cost includes materials, direct labour and an attributable proportionof manufacturing overheads based on normal levels of activity. Financial assets The Group's financial assets include cash and trade receivables. All financial assets are recognised on their settlement date. All financialassets are initially recognised at fair value, plus transaction costs. Interest and other cash flows resulting from holding financial assets arerecognised in profit or loss when receivable, regardless of how the relatedcarrying amount of financial assets is measured. Trade receivables are provided against when objective evidence is received thatthe Group will not be able to collect all amounts due to it in accordance withthe original terms of the receivables. The amount of the write-down isdetermined as the difference between the assets' carrying amount and the presentvalue of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents include cash at bank and in hand. Equity Share capital is determined using the nominal value of shares that have beenissued. The share premium account represents premiums received on the initial issuing ofthe share capital. Any transaction costs associated with the issuing of sharesare deducted from share premium, net of any related income tax benefits. Other reserves comprise of merger reserve, capital reserve and foreign currencyreserve. Retained earnings include all current and prior period results as disclosed inthe income statement. Share based employee remuneration All share based payment arrangements granted after 7 November 2002 that had notvested prior to 1 February 2006 are recognised in the consolidated financialstatements. The Group operates equity-settled share based remuneration plans forremuneration of its employees. All employee services received in exchange for the grant of any share basedremuneration are measured at their fair values. These are indirectly determinedby reference to the fair value of the share options awarded. Their value isappraised at the grant date and excludes the impact of any non-market vestingconditions (for example, profitability and sales growth targets). All share based remuneration is ultimately recognised as an expense in profit orloss with a corresponding credit to retained earnings, net of deferred tax whereapplicable. If vesting periods or other vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of thenumber of share options expected to vest. Non-market vesting conditions areincluded in assumptions about the number of options that are expected to becomeexercisable. Estimates are subsequently revised, if there is any indication thatthe number of share options expected to vest differs from previous estimates. Noadjustment is made to the expense recognised in prior periods if a differentnumber of share options ultimately are exercised than originally estimated. Upon exercise of share options, the proceeds received net of any directlyattributable transaction costs up to the nominal value of the shares issued areallocated to share capital with any excess being recorded as share premium. Financial liabilities The Group's financial liabilities include bank overdrafts, an invoice financingloan and trade and other payables. Financial liabilities are recognised when the Group becomes a party to thecontractual agreements of the instrument. All interest related charges arerecognised as an expense in the finance cost in the income statement. Trade payables are recognised initially at their nominal value and subsequentlymeasured at amortised cost less settlement payments. Other provisions, contingent liabilities and contingent assets Other provisions are recognised when present obligations will probably lead toan outflow of economic resources from the Group and they can be estimatedreliably. Timing or amount of the outflow may still be uncertain. A presentobligation arises from the presence of a legal or constructive commitment thathas resulted from past events, for example, legal disputes or onerous contracts. Provisions are measured at the estimated expenditure required to settle thepresent obligation, based on the most reliable evidence available at the balancesheet date, including the risks and uncertainties associated with the presentobligation. Any reimbursement expected to be received in the course ofsettlement of the present obligation is recognised, if virtually certain as aseparate asset, not exceeding the amount of the related provision. Where thereare a number of similar obligations, the likelihood that an outflow will berequired in settlement is determined by considering the class of obligations asa whole. In addition, long-term provisions are discounted to their presentvalues, where time value of money is material. All provisions are reviewed ateach balance sheet date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resource as a result ofpresent obligations is considered improbable or remote, or the amount to beprovided for cannot be measured reliably, no liability is recognised in theconsolidated balance sheet. Probable inflows of economic benefits to the Group that do not yet meet therecognition criteria of an asset are considered contingent assets and thereforenot recognised. Foreign currencies Transactions in foreign currencies are translated at the exchange rates rulingat the date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. Non-monetary items that are measured at historical cost in a foreigncurrency are translated at the exchange rate at the date of the transaction.Non-monetary items that are measured at fair value in a foreign currency aretranslated using the exchange rates at the date when the fair value wasdetermined. Any exchange differences arising on the settlement of monetary items or ontranslating monetary items at rates different from those at which they wereinitially recorded are recognised in the profit or loss in the period in whichthey arise. Exchange differences on non-monetary items are recognised in thestatement of recognised income and expenses to the extent that they relate to again or loss on that non-monetary item taken to the statement of recognisedincome and expenses, otherwise such gains and losses are recognised in theincome statement. The assets and liabilities in the financial statements of foreign subsidiariesare translated at the rate of exchange ruling at the balance sheet date. Incomeand expenses are translated at the actual rate. The exchange differences arisingfrom the retranslation of the opening net investment in subsidiaries are takendirectly to the "Foreign currency reserve" in equity. On disposal of a foreignoperation the cumulative translation differences are transferred to the incomestatement as part of the gain or loss on disposal. The Group has taken advantage of the exemption in IFRS 1 and has deemedcumulative translation differences for all foreign operations to be nil at thedate of transition to IFRS. The gain or loss on disposal of these operationsexcludes translation differences that arose before the date of transition toIFRS and includes later translation differences. 3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS The transition from previous UK GAAP to IFRS has been made in accordance withIFRS 1, First-time Adoption of International Financial Reporting Standards. TheGroup's interim financial statements for the six months ended 31 July 2007 andthe comparatives presented for the periods ended 31 July 2006 and 31 January2007 comply with all presentation recognition and measurement requirements ofIFRS applicable for accounting periods ending on 31 January 2008. The following reconciliations and explanatory notes thereto describe the effectsof the transition for the financial periods ended 31 July 2006 and 31 January2007. All explanations should be read in conjunction with the IFRS accountingpolicies of Tandem Group plc. The reconciliation of the Group's profit and loss reported under previous UKGAAP to its profit and loss under IFRS for the periods ended 31 July 2006 and 31January 2007 may be summarised as follows: Reconciliation for the period ended 31 July 2006 £'000 Loss for the period transferred to reserves previously (207)reported under UK GAAP Reversal of goodwill amortisation 92Accounting for forward contracts at fair value (258)Related deferred tax on forward contracts 78Net loss for the period as restated under IFRS (295) Reconciliation for the year ended 31 January 2007 £'000 Profit for the year transferred to reserves previously 796reported under UK GAAPReversal of goodwill amortisation 175Accounting for forward contracts at fair value (37)Related deferred tax on forward contracts 12Net profit for the year as restated under IFRS 946 The reconciliation of the Group's equity reported under previous UK GAAP to itsequity under IFRS as at 31 January 2006, 31 July 2006 and at 31 January 2007 maybe summarised as follows: 31 January 31 July 31 January 2006 2006 2007 £'000 £'000 £'000 Reversal of goodwill amortisation - 92 175Accounting for prior year forward contracts at - (4) (4)fair valueAccounting for forward contracts at fair value (4) (258) (37)Related deferred tax on forward contracts - 78 12Total adjustment to equity (4) (92) 146UK GAAP equity shareholders' funds 2,941 2,757 4,916IFRS equity shareholders' funds 2,937 2,665 5,062 The re-measurement of balance sheet items as at 31 January 2006, 31 July 2006and at 31 January 2007 may be summarised as follows: Reconciliation as at 31 January 2006 Effect of UK GAAP transition IFRS £'000 £'000 £'000 Deferred tax provision 354 198 552Financial liabilities (3,141) (5) (3,146)Pension schemes' deficits (2,003) (198) (2,201)Other reserves (2,462) (38) (2,500)Profit and loss account 6,281 43 6,324 Reconciliation as at 31 July 2006 Effect of UK GAAP transition IFRS £'000 £'000 £'000 Goodwill 2,585 92 2,677Deferred tax provision 356 277 633Financial liabilities (3,227) (270) (3,497)Pension schemes' deficits (2,742) (198) (2,940)Other reserves (2,462) (61) (2,523)Profit and loss account 6,459 160 6,619 Reconciliation as at 31 January 2007 Effect of UK GAAP transition IFRS £'000 £'000 £'000 Goodwill 2,502 175 2,677Deferred tax provision 700 654 1,354Financial liabilities (2,414) (42) (2,456)Pension schemes' deficits (1,496) (641) (2,137)Other reserves (2,489) 58 (2,431)Profit and loss account 4,334 (204) 4,130 Profit and loss reported under UK GAAP for the periods ended 31 July 2006 and 31January 2007 is reconciled to IFRS as follows: Reconciliation for the period ended 31 July 2006 Effect of UK GAAP transition IFRS £'000 £'000 £'000 Revenue 16,143 - 16,143Cost of sales (11,393) (258) (11,651)Gross profit 4,750 (258) 4,492Operating expenses (4,735) - (4,735)Amortisation of goodwill and intangibles (92) 92 -Operating result (77) (166) (243)Finance costs (130) - (130)Result for the period before taxation (207) (166) (373)Tax income - 78 78Net result for the period (207) (88) (295) Reconciliation for the year ended 31 January 2007 Effect of UK GAAP transition IFRS £'000 £'000 £'000 Revenue 33,785 - 33,785Cost of sales (23,132) (37) (23,169)Gross profit 10,653 (37) 10,616Operating expenses (9,696) - (9,696)Amortisation of goodwill and intangibles (175) 175 -Operating result 782 138 920Finance costs (271) - (271)Result for the period before taxation 511 138 649Tax income 285 12 297Net result for the year 796 150 946 The Group has modified its former balance sheet and income statement structureon transition to IFRS. The main changes may be summarised as follows: . the elimination of amortisation of goodwill charged under UK GAAP. Goodwill is now subject to an annual impairment test. The effect of this adjustment was to add back amortisation of £175,000 as at 31 January 2007 and £92,000 at 31 July 2006. . forward foreign currency contracts are accounted for at fair value under IFRS resulting in a loss through the profit and loss account in the 6 months to 31 July 2007 of £78,000 and a loss in the year to 31 January 2007 of £37,000. The balance sheet values of the related financial instrument liabilities were £120,000 at 31 July 2007, £42,000 at 31 January 2007 and £264,000 at 31 July 2006. . the deferred tax asset in relation to defined benefit pension schemes is now shown as part of the deferred tax asset balance within non-current assets. Under UK GAAP this asset was netted off the pension scheme liability in the balance sheet. Explanation of material adjustments to the cash flow statement Application of IFRS has resulted in reclassification of certain items in thecash flow statement as follows: . under UK GAAP, payments to acquire property, plant and equipment were classified as part of 'Capital expenditure and financial investment'. Under IFRS, payments to acquire property, plant and equipment have been classified as part of 'Investing activities'. . income taxes paid during the period ended 31 July 2007 are classified as operating cash flows under IFRS, but were included in a separate category of tax cash flows under previous GAAP. There are no other material differences between the cash flow statementpresented under IFRS and the cash flow statement presented under UK GAAP. 4 SEGMENTAL REPORTING For management purposes the Group is organised into two operating segments. Therevenues and net results for these segments are shown below. Sports, Bicycles and leisure and accessories toys Total £'000 £'000 £'000 6 months to 31 July 2006Restated Revenue 9,957 6,186 16,143 Segment result 118 (359) (241) Unallocated corporate expenses (2)Operating profit (243)Finance costs (130)Result for the period before taxation (373)Tax income 78Net result for the period (295) Year ended 31 January 2007Restated Revenue 19,852 13,933 33,785 Segment result 1,260 147 1,407 Unallocated corporate expenses (487)Operating profit 920Finance costs (271)Result for the period before taxation 649Tax income 297Net result for the period 946 6 months to 31 July 2007 Revenue 9,859 8,193 18,052 Segment result 562 126 688 Unallocated corporate expenses (182)Operating profit 506Finance costs (171)Result for the period before taxation 335Tax expense (1)Net result for the period 334 5 EARNINGS PER SHARE The calculation of earnings/(loss) per share is based on the net result andordinary shares in issue during the period as follows: 6 months 6 months Year ended ended ended 31 July 31 July 31 January 2007 2006 2007 £'000 £'000 £'000 Net result for the period 334 (295) 946 Weighted average shares in issue used for 37,584,412 37,584,412 37,584,412basic earnings per shareWeighted average dilutive shares under option 460,000 88,219 -Number of shares that would have been issued (402,450) (79,120) -at fair valueAverage number of shares used for diluted 37,641,962 37,593,511 37,584,412earnings per share Pence Pence PenceBasic earnings/(loss) per share 0.89 (0.78) 2.52Diluted earnings/(loss) per share 0.89 (0.78) 2.52 6 RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES Share Profit Share premium Other and loss capital account reserves account Total £'000 £'000 £'000 £'000 £'000 At 1 February 2006 1,503 5,258 2,501 (6,324) 2,938Total recognised income and - - 22 (295) (273)expenseAt 31 July 2006 1,503 5,258 2,523 (6,619) 2,665 Total recognised income and - - (92) 2,462 2,370expenseShare based payments - - - 27 27At 31 January 2007 1,503 5,258 2,431 (4,130) 5,062 Total recognised income and - - 24 725 749expenseShare based payments - - - 3 3At 31 July 2007 1,503 5,258 2,455 (3,402) 5,814 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tandem Group