3rd Aug 2007 07:00
Stanley Gibbons Group Limited03 August 2007 THE STANLEY GIBBONS GROUP LIMITED 3 August 2007 THE STANLEY GIBBONS GROUP LIMITED INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2007 The Company today announces its Interim Results for the six months to 30 June2007. Highlights include: • Profit before tax up 25% at £1,704,000 (2006: £1,361,000) • Earnings per share up 30% to 5.16p (2006: 3.97p) • Sales up 16% to £8,819,000 (2006: £7,623,000) • Autograph and memorabilia sales increased by 52% with a greater appreciation by investors of the potential returns from the market in autographs and memorabilia • Interim dividend declared of 1.75p net per Ordinary Share (2006: 1.5p net per Ordinary Share), representing an increase of 17%, payable on 17 September 2007 to all holders on the Register at the close of business on 17 August 2007 • Sales of £1,077,000 (12.2%) made to customers recruited from our websites compared to £766,000 (10%) of sales in the prior period Commenting on current trading, Paul Fraser, Chairman said: "This is our 13th consecutive increase in profits that we have announced to themarket since our demerger in 2000 from Flying Brands. We have increased ourlevels of premium grade material in both stamps and autographs in the first halfin order to supply the ever increasing demand. We intend focusing resources intostock and the necessary expertise to prepare for the next level of growth and tofully implement our plans. These are exciting times for collectibles and Stanley Gibbons is now in theforefront of the market, although we still represent less than 1%. So we lookforward to the second half and the implementation of further initiatives that wehave planned that should continue to help us to outperform." For further information, contact: The Stanley Gibbons Group LimitedMichael Hall, Chief Executive 020 7836 8444 Seymour Pierce Limited Jonathan Wright 020 7107 8000 Chairman's Statement Financials I am very pleased to report yet another record result for The Stanley GibbonsGroup Limited. Profit before tax for the period was £1,704,000 (2006:£1,361,000), representing an increase of 25.2% on what was an exceptionallystrong half year performance in the prior year. Turnover increased by 15.7% to£8,819,000 (2006: £7,623,000). Earnings per Ordinary Share for the six months ended 30 June 2007 were 5.16p(2006: 3.97p) representing an increase of 30%, which benefit further fromprofits attributable to new business in Guernsey being taxable at the lower rateof 20%. Dividend The Company paid a final dividend of 2.5p net per Ordinary Share, in respect ofthe year ended 31 December 2006, on 23 April 2007. Your Board is pleased todeclare an interim dividend of 1.75p (2006: 1.5p) net per Ordinary Share,representing an increase of 16.7%, payable on 17 September 2007 to holders ofOrdinary Shares on the Register at the close of business on the record date of17 August 2007. The proposed dividend of 1.75p net per Ordinary share isexpected to result in a distribution to shareholders of £440,000 (2006:£376,000). Outlook Premium quality and rarity in collectibles is now being appreciated in a waythat was never envisaged by most, but carefully followed by a few astutecollectors and investors. The difference in appreciation and pricing betweengrades at the higher level is now much greater than a consistent percentage stepthat was applied in the past. In the United States, grading of coins, stamps andautographs is gaining pace and the uplift in the pricing model reflects the newgrades, the transparency of the pricing accorded to those grades, and givescollectors and investors greater comfort in knowing the true authenticity andprice of each individual item and hence creating a more liquid market. This bodes well for Stanley Gibbons as we have always restricted ourselves tothe higher grade of material available and we have suffered from competitorsgrading their material at the supposed same level, when clearly it was not. This should give us yet another competitive edge in the market and, by ourinvolvement in this grading process in the United Kingdom, give us access to agreater pool of expertise and pricing knowledge and strengthen our brand byassociation. This is a very exciting development for Stanley Gibbons and shoulddeskill to a certain degree the process of buying and selling, making it moretransparent to all, and something that can be relied upon as a guarantee tocollectors and investors alike. We have always believed, as part of ourstrategy, that prices should rise and there should be some reduction in marginsbut there should be a huge increase in sales and Stanley Gibbons shouldaccelerate its increase in market share, which is still well below 1% of theannual global market. We maintain that the key factor is buying the right stock, at the right price,and keeping up with the quantity needed to satisfy the increasing demand. Wehave clients' wants lists of over £15 million and a business need for a further£10+ million per year. I am pleased to report that our stock levels are higher at the half year,especially at the top end, and we are on course in reducing stocks of middle andlower price items. It has been an excellent performance in all areas of theGroup in the first half and we are focusing resources on the high growth areasthat we have identified, particularly rare stamps and autographs, and developingour auction business. We are also looking for the right acquisitions andstrategic partnerships as part of our long-term plan. Stakeholders I would like to thank all my colleagues for their endeavours and theircontribution to keeping the strategy fully on track. Paul Fraser Chairman 2 August 2007 Operating Review 6 months 6 months 6 months 6 months Year Year to 30 to 30 to 30 to 30 ended 31 ended 31 June 2007 June 2007 June 2006 June 2006 December December 2006 2006 Sales Profit Sales Profit Sales Profit £000 £000 £000 £000 £000 £000Philatelictrading andretailoperations 6,327 1,509 5,634 1,373 12,194 3,231Publishing andphilatelicaccessories 1,297 310 1,201 270 2,787 814Dealing inautographs,records and relatedmemorabilia 1,172 545 773 350 1,664 793 ------------------ ------ ------ ------ ------ ------ ------ 8,796 2,364 7,608 1,993 16,645 4,838Corporateoverheads (707) (691) (1,228)New businessdevelopment 23 (25) 15 (24) 39 (40)Interest andsimilarincome/charges 72 83 176------------------ ------ ------ ------ ------ ------ ------ Group totalsales andprofit beforetax 8,819 1,704 7,623 1,361 16,684 3,746------------------ ------ ------ ------ ------ ------ ------ Sales Overall group turnover increased by £1,196,000 (15.7%) compared to the sameperiod last year. Sales growth was driven by a stronger investment in ourstockholding of high value rarities in line with our strategy, which has enabledus to increase trading at the top end of the market. As a result, average ordervalues have increased by 36% compared to the same period last year. Philatelic trading and retail sales increased by 12.3% against the same periodlast year. We have made significant progress in our strategy towards broadeningthe supply chain to build our stockholding in key rarities. As a result of ourincreased investment in stock, sales to collectors of stamps from Great Britainshowed exceptional growth in the period, increasing by 67.8%. The higher valueand improved quality of our current stockholding puts us in a stronger positionto achieve further growth in the second half. Sales to investment clients increased by 11.9% compared to the prior perioddespite a 12.9% reduction in the sale of guaranteed minimum return investmentcontracts. The sale of investment portfolios under interest free credit optionshas proved very popular and we are now beginning to develop successfully ouractive management investment portfolio service. Neither of these investmentproducts offer any guarantee on the value of re-purchase prices. The developmentof the sale of autographs to investors has been particularly successful andrepresented 23.8% of total investment sales in the period compared to 15.5% inthe prior period. We have recently launched a new style of communication tocurrent and potential investment clients through our weekly newsletter servicewith responses to date exceeding our own expectations. This low cost form ofcommunication to all our clients is expected to, going forward, become the mosteffective marketing medium for the entire Group. Sales from our auction department were 21.1% lower than the same period lastyear. The prior period result was however exceptional in that it included anadditional auction sale and the current decline in sales is more of a timingissue rather than an indication of a long term trend. The development of ourauction business still represents a key element of our strategy and we intend toaccelerate the development of opportunities in this area either by organicgrowth or through acquisition. Publishing and philatelic accessory sales increased by 8% from the same periodlast year. Sales growth has been achieved through an improved publishingschedule for the first half this year together with expansion of our range ofthird party stamp albums and accessory products. The strength and popularity ofour internet site enables us to offer a wider range of products to collectorsonline with minimal stockholding and order processing costs. Operating Review Autographs and memorabilia sales were 51.6% higher than in the same period lastyear. The improved performance is mainly the result of a greater appreciation byinvestors of the potential returns from the market in autographs andmemorabilia. Retail sales of autographs were 46.2% improved on the prior periodbenefiting from the improved quality of our stockholding in key rarities. Gross Margins The gross margin for the six months ended 30 June 2007 was 46.8% compared to48.2% for the same period last year. Cost of sales includes a provision of£51,000 made in the period against guaranteed minimum return investmentcontracts. The reduction in the gross margin percentage is in line with ourexpectations and is attributable mainly to lower margins on philatelic dealingand investment sales as the margin available on the sale of high value stampsand autographs is lower. Profitability The profit before tax for the period of £1,704,000 compares to a profit for thesame period last year of £1,361,000, representing an increase of 25.2% on whatwas an exceptionally strong half year performance in the prior year. Profitgrowth has been facilitated by the continued growth in sales. Group overheads were 4% higher than in the same period last year mainly as aresult of increased salary and marketing costs to support the areas of salesgrowth and our future plans. Salary overhead was up 2.8% in the period. Salaries represented 15.5% of salescompared to 17.4% for the same period last year demonstrating an improved returnon staff. Other overheads were £60,000 higher than in the prior period and include £44,000costs associated with the running of our offices in Guernsey. Marketing costswere £33,000 higher than in the prior period mainly to support growth with thehistory of information we now have on marketing responses enabling us toincrease our spend in areas which have proved to provide the highest returns inthe past. New Business Development In the six months ended 30 June 2007, £1,077,000 (12.2%) of sales were made tocustomers recruited from our websites compared to £766,000 (10%) of sales in theprior period. Our websites received 1,900,000 visitors in the first six monthsof 2007 compared to 1,400,000 in the prior period, representing an increase of35.7%. Corporate Overheads Corporate overheads were £16,000 (2.3%) higher than the same period last year.Costs for the period include the new Finance Director from February andExecutive Director responsible for our business development within North Americafrom May. CashflowThe net cash outflow from operating activities of £612,000 during the periodincluded an increase in the cost of our stockholding of £1,226,000 as aconsequence of greater investment into the purchase of high value philatelic andautograph rarities to support future sales growth. The high levels of tradeexperienced during the month of June, including our public auction, resulted inhigher trade debtor balances at the period end. International Financial Reporting Standards (IFRS)The 2006 Annual Report highlighted the requirement for the Group to prepare itsresults in accordance with International Financial Reporting Standards (IFRS).The interim results are the first set to be reported under these new rules. Theappropriate restatements under IFRS and reconciliations to previously reportedfigures under UK GAAP for June 2006 and December 2006 have been included in thesupporting notes. Consolidated Income Statement 6 months to 6 months to Year ended 30 June 30 June 31 December 2007 2006 2006 Notes £'000 £'000 £'000 ---------- -------- -------- Revenue 8,819 7,623 16,684Cost of sales (4,691) (3,946) (8,448)--------------------- ------ ---------- -------- -------- Gross Profit 4,128 3,677 8,236 Administrative expenses (884) (845) (1,569)Distribution costs (1,612) (1,554) (3,097)--------------------- ------ ---------- -------- -------- Operating Profit 1,632 1,278 3,570Finance income 74 83 176Finance costs (2) - ---------------------- ------ ---------- -------- -------- Profit before tax 1,704 1,361 3,746Taxation (408) (369) (972)--------------------- ------ ---------- -------- -------- Profit for the financial 1,296 992 2,774period --------------------- ------ ---------- -------- -------- Earnings per Ordinary Share 2 5.16p 3.97p 11.07pDiluted earnings per OrdinaryShare 2 5.14p 3.96p 11.06p Consolidated Statement of Recognised Income & Expense 6 months to 6 months to Year ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Profit for the financialperiod 1,296 992 2,774Surplus on revaluation ofassets - - 47Deferred tax attributable torevaluation of assets - - (14)Actuarial gains recognised inthe pension scheme - - 348Deferred tax attributable toactuarial gains - - (105)----------------------- -------- -------- ---------- Total recognised income forthe period 1,296 992 3,050----------------------- -------- -------- ---------- Consolidated Balance Sheet 30 June 30 June 31 December 2007 2006 2006 Notes £'000 £'000 £'000 --------- -------- -------- Non-current assetsIntangible assets 59 96 83Property, plant and equipment 1,018 980 1,034Deferred tax asset 33 119 25Trade and other receivables 1,427 - 610---------------------- ------ --------- -------- -------- 2,537 1,195 1,752---------------------- ------ --------- -------- -------- Current AssetsInventories 7,261 5,882 6,035Trade and other receivables 4,277 2,382 3,254Cash and cash equivalents 1,460 3,386 3,083---------------------- ------ --------- -------- -------- 12,998 11,650 12,372 Total assets 15,535 12,845 14,124---------------------- ------ --------- -------- -------- Current liabilitiesTrade and other payables 2,495 2,187 1,894Current tax payable 580 409 513---------------------- ------ --------- -------- -------- 3,075 2,596 2,407 Non-current liabilitiesRetirement benefit obligations 110 397 84Other provisions for liabilities andcharges 437 323 400---------------------- ------ --------- -------- -------- 547 720 484 ------ --------- -------- -------- Total liabilities 3,622 3,316 2,891---------------------- ------ --------- -------- -------- Net assets 11,913 9,529 11,233---------------------- ------ --------- -------- -------- EquityCalled up share capital 251 251 251Share premium account 5,148 5,134 5,148Capital redemption reserve 38 38 38Revaluation reserve 177 144 177Retained earnings 6,299 3,962 5,619---------------------- ------ --------- -------- -------- Equity shareholders' funds 4 11,913 9,529 11,233---------------------- ------ --------- -------- -------- Consolidated Cash Flow Statement 6 months to 6 months to Year ended 30 June 30 June 31 December 2007 2006 2006 Notes £'000 £'000 £'000 -------- -------- --------- Cash (used in)/ generated fromoperations 3 (612) 1,698 2,293Interest paid (2) - -Taxes paid (361) (472) (978)--------------------- ------ -------- -------- --------- Net cash (used in)/generatedfrom operating activities (975) 1,226 1,315--------------------- ------ -------- -------- --------- Investing activitiesPurchase of property, plant andequipment (57) (48) (120)Purchase of intangible assets (4) (6) (25)Interest received 41 49 110--------------------- ------ -------- -------- --------- Net cash used in investingactivities (20) (5) (35)--------------------- ------ -------- -------- --------- Financing activitiesDividends paid to companyshareholders (628) (501) (877)Net proceeds from issue ofordinary share capital - 81 95--------------------- ------ -------- -------- --------- Net cash used in financingactivities (628) (420) (782)--------------------- ------ -------- -------- --------- --------------------- ------ -------- -------- --------- Net (decrease) / increase incash and cash equivalents (1,623) 801 498--------------------- ------ -------- -------- --------- Cash and cash equivalents atstart of period 3,083 2,585 2,585--------------------- ------ -------- -------- --------- Cash and cash equivalents atend of period 1,460 3,386 3,083--------------------- ------ -------- -------- --------- Notes to the unaudited interim report 1 Accounting policies and presentation Adoption of International Financial Reporting Standards (IFRS)For all periods up to and including 31 December 2006 The Stanley Gibbons GroupLimited has prepared its financial statements in accordance with UK GenerallyAccepted Accounting Practice (UK GAAP). AIM Rules require that the annualconsolidated financial statements of The Stanley Gibbons Group Limited for theyear ended 31 December 2007 be prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted for use in the EU. Accordingly, these interim financial statements which are for the six monthsending 30 June 2007 have been prepared for the first time in accordance withInternational Financial Reporting Standards and are covered by IFRS1, First-timeAdoption of IFRS. These interim financial statements were approved by the Board on 2 August 2007.The financial information for the year ended 31 December 2006 set out in thisinterim report does not comprise the Groups statutory accounts as defined byCompanies (Jersey) Law 1991. The statutory accounts, which were prepared underUK Generally Accepted Accounting Practice (UK GAAP), on which the auditors gavean unqualified report, have been delivered to the Jersey Registrar of Companies.The financial information for the six months ended 30 June 2007 and 30 June 2006is unaudited. The information presented within these interim financial statements is incompliance with IAS 34 "Interim Financial Reporting". In preparing these interim financial statements the comparative figurespreviously reported under UK GAAP have been restated for the transition to IFRS.The disclosures required by IFRS 1 regarding the transition for the relevantperiods are given in note 7. Except where noted in the policies below, the sameaccounting policies and methods of computation have been followed in the interimfinancial statements as compared to the most recent annual financial statements. Basis of consolidationThe consolidated financial statements incorporate the financial statements ofthe Company and its wholly owned subsidiary Companies. Intra-Group sales andprofits are eliminated on consolidation, and all sales and profit figures relateto external transactions only. Intangible AssetsComputer SoftwareAs per IAS 38, purchased computer software that will generate economic benefitbeyond one year is capitalised as an intangible asset and amortised over itsexpected useful economic life of four years on a straight-line basis. Property, plant and equipment and depreciationTangible fixed assets, other than the reference collection, are stated at theirpurchase price, including any incidental expenses of acquisition. Fixed assetsinclude a reference collection of certain stamps held on a long term basis.Additions to the collection are depreciated by 50% immediately on acquisition toprovide for the usage of such items. No further depreciation is chargedthereafter because in the opinion of the Directors the residual value is expected to exceed net book value for the foreseeable future. The reference collection is stated at the revalued amount, being its fair valueat the date of the revaluation less any accumulated depreciation and anysubsequent impairment loss. A full valuation is undertaken every five years by aqualified external valuer, an interim valuation is carried out in year three bythe Group's expert stamp dealers. Depreciation is calculated to write down the net book value of tangible fixedassets less their residual value on a straight-line basis, over the expecteduseful economic lives of the assets concerned. The principal annual rates usedfor this purpose are: Freehold buildings 2%Vehicles, plant and machinery 16 - 25%Fixtures, fittings, tools and equipment 7 - 25%Leasehold improvements Over period of lease InventoriesInventories are valued at the lower of cost and net realisable value aftermaking allowance for obsolete and slow moving items. In the case of stampinventories it is not always practicable to ascertain individual costs. The costof parcels of high value stamps is apportioned between the items purchased onthe basis of the expert opinion of the Group's stamp dealers. Lower value stampinventories are valued as a proportion of their anticipated realisable value, asa best estimate of cost, based on the expert opinion of the Group's stampdealers. TaxationThe tax expense represents the sum of the tax currently payable and any deferredtax. The tax currently payable is based on the estimated taxable profit for the year.Taxable profit differs from net profit as reported in the income statementbecause it excludes items of income or expense that are taxable or deductible inother years and it further excludes items that are never taxable or deductible.The Group's liability for current tax is calculated using tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset realised. Deferred tax ischarged or credited to profit or loss, except when it relates to items chargedor credited directly to equity, in which case the deferred tax is also dealtwith in equity. Foreign currenciesTransactions denominated in foreign currencies are translated into sterling atthe exchange rate ruling when the transaction was entered into. Foreign currencymonetary assets and liabilities are translated into sterling at the exchangerate ruling at the balance sheet date. Exchange gains or losses are included inoperating profit. Leased AssetsRentals payable under operating leases are charged to the income statement on astraight line basis over the lease term. Retirement benefitsThe Group operates a defined benefit pension scheme. The assets of the schemeare held and managed separately from those of the Group. In accordance with IAS19 for defined benefit schemes, the liability in the balance sheet representsthe present value of the defined benefit obligations at that date less the fairvalue of plan assets. The defined benefit obligation is calculated periodicallyby an independent actuary. Current service costs are recognised in operating costs in the income statement.Interest costs on plan liabilities and the expected return on plan assets arerecognised in finance costs. Actuarial gains and losses arising from experienceadjustments and changes in actuarial assumptions are charged or credited to theconsolidated Statement of Recognised Income and Expense. Pension scheme assets are measured at their market value and liabilities aremeasured on an actuarial basis using the projected unit method and discounted ata rate equivalent to the current rate of return on a high quality corporate bondor equivalent currency and term to the scheme liabilities. The actuarialvaluations are performed by a qualified actuary on a triennial basis and areupdated at each balance sheet date. The resulting defined benefit asset orliability is presented separately as a non-current asset or liability on theface of the balance sheet. Under IAS 19 the retirement benefit obligation is recognised gross of deferredtax. Share optionsThe fair value of share options granted to certain employees and Directors isrecognised as an expense. The total amount to be apportioned over the vestingperiod of the benefit is determined by reference to the fair value of theoptions determined at the grant date. The non-market vesting conditions areincluded in assumptions about the number of options that are expected to becomeexercisable. The estimate is revised at each balance sheet date and thedifference is charged or credited to the profit and loss account, with thecorresponding adjustment to equity. The proceeds received on exercise of theoptions are credited to equity. RevenueRevenue represents amounts invoiced by the Group in respect of goods sold andservices provided during the period excluding any applicable value added tax. Inrespect of auctions held by the Group, revenue represents amounts invoiced inrespect of vendors' commissions and buyers' premiums, excluding value added tax.In respect of all other transactions revenue is recognised at point of sale. 2 Earnings per ordinary share The calculation of basic earnings per ordinary share is based on the weightedaverage number of shares in issue during the period. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Group has only one category of dilutive ordinary shares: those shareoptions granted to employees where the exercise price is less than the averagemarket price of the Company's ordinary shares during the period. Also inexistence at the period end were 173,718 options issued under the Company's 2007Long-Term Incentive Plan (LTIP). These options were not dilutive at the periodend. 6 months to 6 months to Year ended 30 June 2007 30 June 2006 31 December 2006 Weighted average number ofordinary shares in issue 25,137,443 24,975,737 25,051,638Dilutive potential ordinaryshares: Employee share options 72,892 46,754 21,257Profit after tax (£) 1,296,000 992,000 2,774,000 Basic earnings per share -pence per share (p) 5.16p 3.97p 11.07p----------------------- --------- --------- ---------- Diluted earnings per share -pence per share (p) 5.14p 3.96p 11.06p----------------------- --------- --------- ---------- 3 Cash (used in)/generated from operations 6 months to 6 months to Year ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Operating profit 1,632 1,278 3,570Depreciation 101 95 192Increase in provisions 108 198 324Cost of share options 12 10 18(Increase)/decrease ininventories (1,226) 67 (86)(Increase)/decrease in tradeand other receivables (1,840) 567 (915)Increase/(decrease) in tradeand other payables 601 (517) (810)----------------------- --------- --------- ---------- Cash (used in)/generated fromoperations (612) 1,698 2,293----------------------- --------- --------- ---------- 4 Reconciliation of movement in shareholders' equity 6 months to 6 months to Year ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Profit for the financial period 1,296 992 2,774Dividends (628) (501) (877)Employees share option scheme-value of employee services 12 10 18-proceeds from shares issued - 81 95Surplus on revaluation ofassets net of tax - - 33Actuarial gains in pensionscheme net of tax - - 243----------------------- -------- -------- ---------- Net increase in shareholders' equity 680 582 2,286Equity at the start of the period 11,233 8,947 8,947----------------------- -------- -------- ---------- Equity at the end of the period 11,913 9,529 11,233----------------------- -------- -------- ---------- 5 Dividends 6 months to 6 months Year ended 30 June to 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Amounts recognised as distribution to equityholders in period: Dividend paid 628 501 877 Dividend paid per share 2.5p 2p 3.5p Dividend proposed but not paid 440 376 628 Dividend proposed per share 1.75p 1.5p 2.5p 6 Further copies of this statement Copies of this statement are being sent to shareholders. Further copies areavailable on request from: The Company Secretary, The Stanley Gibbons GroupLimited, 399 Strand, London, WC2R 0LX. 7 Transition from UK GAAP to IFRS As required under IFRS 1, the equity reconciliations at 1 January 2006 (thetransition date for IFRS) and at 31 December 2006 (date of last UK GAAPfinancial statements) are set out below. For comparative purposes, the equityreconciliation at 30 June 2006 is also included to enable a comparison of the2007 published interim figures. There are no reconciling adjustments to theincome statement for any of these periods. The net effect of adopting IFRS rather than UK GAAP for the year ending 31December 2006 is to reduce net assets from £11,309,000 to £11,233,000,principally due to the changes in reserves as explained below. The changes haveno impact on the profit on ordinary activities before tax or the cashflowspreviously reported, but has lead to a change in the format of the cash flowstatement. The most significant change for the Group in its financial statements for theyear ending 31 December 2006 was a reduction of the revaluation reserve due tothe provision of deferred tax on the revaluation element of the referencecollection. The net impact on assets as at 1 January 2006 and 30 June 2006 was adecrease of £62,000, and as at 31 December 2006 was a decrease of £76,000. In addition, there are other presentational changes on the balance sheet arisingfrom the transition to IFRS. These are: a) The reclassification of capitalised software costs to intangible assets from property plant and equipment. b) The creation of a deferred tax asset as the deferred tax attributable to the pension deficit is no longer netted off against retirement benefit obligations in the balance sheet. Reconciliation of UK GAAP equity to IFRS equity 31 December 2006 30 June 2006 1 January 2006 £'000 £'000 £'000 Capital and Reservesaccording to UK GAAP 11,309 9,591 9,009Effect of adopting:IAS 12 - Income Taxes (76) (62) (62)----------------------- ---------- ------- --------- Equity according to IFRS 11,233 9,529 8,947----------------------- ---------- ------- --------- Reconciliation of UK GAAP balance sheet to IFRS balance sheets As at 31 December 2006 As at 30 June 2006 As at 1 January 2006 As As As previously As previously As previously As reported restated reported restated reported restated under Effect of Under under Effect of Under under Effect of Under UK GAAP transition IFRS UK GAAP transition IFRS UK GAAP transition IFRS Non-current assets Intangible assets - 83 83 - 96 96 - 122 122Property, plant and equipment 1,117 (83) 1,034 1,076 (96) 980 1,117 (122) 995Deferred tax asset - 25 25 - 119 119 - 111 111Trade and other receivables - 610 610 - - - - - - 1,117 635 1,752 1,076 119 1,195 1,117 111 1,228 Current Assets Inventories 6,035 - 6,035 5,882 - 5,882 5,949 - 5,949Trade and other receivables due after more than one year 610 (610) - - - - - - -Trade and other receivables 3,254 - 3,254 2,382 - 2,382 2,949 - 2,949Cash and cash equivalents 3,083 - 3,083 3,386 - 3,386 2,585 - 2,585 12,982 (610) 12,372 11,650 - 11,650 11,483 - 11,483 Total assets 14,099 25 14,124 12,726 119 12,845 12,600 111 12,711 Current liabilities Trade and other payables 1,894 - 1,894 2,187 - 2,187 2,704 - 2,704Current tax payable 513 - 513 409 - 409 496 - 496 2,407 - 2,407 2,596 - 2,596 3,200 - 3,200 Non-current liabilities Retirement benefit obligations 59 25 84 278 119 397 258 111 369Other provisions for liabilities and charges 324 76 400 261 62 323 133 62 195 383 101 484 539 181 720 391 173 564Total liabilities 2,790 101 2,891 3,135 181 3,316 3,591 173 3,764 Net assets 11,309 (76) 11,233 9,591 (62) 9,529 9,009 (62) 8,947 Equity Called up share capital 251 - 251 251 - 251 248 - 248Share premium account 5,148 - 5,148 5,134 - 5,134 5,056 - 5,056Capital redemption reserve 38 - 38 38 - 38 38 - 38Revaluation reserve 253 (76) 177 206 (62) 144 206 (62) 144Retained earnings 5,619 - 5,619 3,962 - 3,962 3,461 - 3,461 Equity shareholders' funds 11,309 (76) 11,233 9,591 (62) 9,529 9,009 (62) 8,947 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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