28th Mar 2008 07:01
Intimas Group PLC28 March 2008 Intimas Group plc Preliminary results for the year ended 31 December 2007 Intimas Group plc ("Intimas" or "the Group") is a designer and supplier ofladies' intimate apparel, with a portfolio of brands comprising Lepel, Ted BakerIntimates, DM and Charnos Lingerie KEY POINTS • Range of external and internal factors contributed to disappointing results • Total group sales of £19.46m (2006: £21.26m) - down 8% • Loss before taxation of £3.85m (2006: profit of £1.07m) • Loss per share of 3.5p (2006: earnings per share of 2.6p) • Strategic Review launched by newly-appointed Chairman John Gibson, Chairman, comments: "We continue to capitalise on current opportunities and, through improvedcontrols and disciplines, maintain our high reputation as a leading supplier ofintimate apparel. Our challenge in the coming months will be to ensure that astable base exists from which to develop a platform for growth. Notwithstandingthe outcome of our Strategic Review, I believe we have the management team inplace that has the necessary experience and skills needed to stabilise theGroup's performance in 2008 and grow beyond." 28 March 2008 ENQUIRIES: Intimas Group plc Tel: 0115 983 6000John Gibson, ChairmanCarol Duncumb, Chief ExecutiveTim Laughton, Finance Director KBC Peel Hunt (Nominated Adviser) Tel: 020 7418 8900Matt Goode College Hill Tel: 020 7457 2020Gareth DavidAnthony Parker Chairman's Statement As anticipated in our Trading Update on 10 January, these results reflect a verydifficult final quarter's trading, in which the previously-expected upturn insales did not materialise. Total Group sales of £19.46m were 8% lower than theprevious year, leaving a loss before taxation of £3.85m (2006: profit beforetaxation of £1.07m) and a loss per share of 3.5p (2006: earnings per share of2.6p). Since my appointment as Chairman at the end of January, I have spent aconsiderable amount of time in attempting to gain a full understanding of whythe business has performed so poorly over the past year. Whilst interest raterises have hit the consumer market and business has been lost in some accounts,these are not the main reasons for the poor results. My initial conclusions arethat most, but not all, of the problems have been self-inflicted over anextended period and therefore can, and are, being recovered. For a number of reasons, there had been a lack of focus on the essentialelements of running a successful wholesale clothing business, designingcreatively, buying well, selling strongly and organising an effective supplychain. Mistakes had been made in most parts of the business, primarily due toerrors in resource allocation, strategic intent and application. In short,management had been focusing on the wrong issues at the wrong time in the wrongareas. However, during the course of 2007, a number of senior managementappointments were made and this new team is addressing these issues vigorously. The Group has been attempting to develop in a number of different areas which,whilst de-risking one area to a major downturn, has fully stretched itsmanagement and financial resources. Shareholder value has been dramaticallyeroded in recent months and we must now put in place plans to recover thissituation and build for the future. As a consequence of these results and the drain on our cash resources, I havelaunched a company-wide Strategic Review. This will be examining in detail eachpart of the business - brands, private label and retail - and assessing whetherwe have the right model to develop and grow Intimas back to an acceptable levelof profitability. I hope to have this Review completed by the time of our AnnualGeneral Meeting at the end of May and I will then be able to explain our plansto shareholders at this time. In view of the short time I have been with the Group, it is inappropriate for meto make detailed comment at this stage on the difficulties encountered over thepast year and these are covered in the Chief Executive's Review and theFinancial Review. However, I can confirm that in recent months considerableeffort has been put by the new team into areas of financial control, processmanagement and improving operational effectiveness. Today, the business has abetter understanding of its main drivers and what key performance indicatorsneed to be in place to ensure future success. We continue to capitalise on current opportunities and, through improvedcontrols and disciplines, to maintain our high reputation as a leading supplierof ladies' intimate apparel. Our challenge in the coming months will be toensure that a stable base exists from which to develop a platform for growth.Notwithstanding the outcome of our Strategic Review, I believe we have themanagement team in place that has the necessary experience and skills needed tostabilise the Group's performance in 2008 and grow beyond. John GibsonChairman 28 March 2008 CHIEF EXECUTIVE'S REVIEW Our very disappointing 2007 results reflect a number of major issues, disruptionand lack of focus. During the year, it became clear that a number of decisions,taken over previous years, were having a significant impact on general tradingactivities. With the advantage of hindsight, it is evident that therationalisation initiated in 2005 had cut too deep and that the business wasinadequately resourced to properly implement its plans. This issue was recognised in early 2007 and by the middle of the year we hadrecruited a strengthened financial and operational management team. However,with a business cycle of up to 18 months from product design through to customerdelivery, the full operational benefits of these management changes will not beseen until the middle of 2008. While service to our customers remained largely unaffected, internally we actedto re-establish strong operational and financial control, in particular, arigorous review of our stock levels and valuation. By the time of our InterimResults announcement, it was clear that a number of process issues within thebusiness had given rise to significant excess stocks and the Board recognisedthis by making an additional £700,000 impairment provision against those stocks. Initially, the recovery of our stock position had been built around a strategyof clearance through Intimas-managed retail outlet stores. Whilst theseclearance sales of distressed merchandise generated cash, it became evident thatthe scale of the stock issue was too great for a limited number of outlet storesto absorb. As improved operational controls meant that the level of futureclearance stock should reduce significantly, it was clearly inappropriate toopen more stores, with the associated long-term lease commitments. Consequentlywe have increased our year-end impairment provision to £1.62m to recognise thepotential markdown required to clear the stock on an accelerated basis,generating cash for the business and reducing storage costs. Total Group sales on continuing operations were down 8% on the previous year,reflecting a decline in wholesale turnover, whilst growth in our retail storesrecovered some of the shortfall. Brands Lepel continues to be a highly respected and popular mid-price lingerie,nightwear and swimwear brand. Improvements to our service levels andavailability to specialist independent and smaller store groups has resulted inan improved performance in this sector. In particular, our developing nightwearranges sold extremely well through the year and is rapidly becoming a brandleader, resulting in increased demand for the forthcoming year. The biggest challenge faced by the brand is the relentless requirement by majorretailers for margin improvement and their drive into private label. We areresponding to this by moving into areas of product traditionally associated withcomplexity, in particular fuller cup sizes at affordable prices. Moreover, wehave developed new customers, lessening our reliance on a small number of majorretailers, whilst continuing to grow our Scandinavian export business. Thisspring, in conjunction with our Swedish distributor, we will be able to supplycore lingerie styles from a Scandinavian warehouse, enabling the brand tomaintain its reliable delivery reputation outside the UK. The brand management team, under Jane Denereaz, are focused on the higheststandards of product development and design. Certainly, the lingerie collectionsrepresent excellent value for money for our customers, enabling them to offer anaffordable brand capable of competing with the high street chain stores. We nowhave to continue to take the brand a step further in its service levels,recognising the importance of strong, year round availability. This initiative,underpinned with strong forecast and planning, should enhance Lepel's growingstatus as a leading brand for independent retailers and department store groups. Charnos has had a difficult year in which issues relating to product fit anddesign led to confusion in its identity and a consequent drop in sales. Despitea poor year and much disruption, Charnos remains one of the Group's mostexciting prospects. We firmly believe in its re-identified future with designand fit problems now largely out of the system. The spring collections, launched last autumn, reflect the market's expectationof a traditional English heritage brand, elegant in its appeal to the mature,sophisticated woman. The launch of control wear, fuller cup sizing and, morerecently, modern classics such as bodies and slips, has been very well received. Early indications of sell-through this spring are very encouraging and we areforecasting a stronger order book for the Autumn/Winter. The launch of the brand into France through a recently appointed distributor hasalso been encouraging, with an initial trial in Printemps being extended into afurther five stores. Ted Baker We continue to work closely with the Ted Baker womenswear team inestablishing Ted Baker Intimates as unique within the lingerie sector. Theresult is the development of products that are well-executed, quirky, withexquisite detail and the required hidden 'Ted' messages. Having now developed an exciting handwriting for the brand, we need toconcentrate on strengthening its channels of lingerie distribution. Meanwhile,we are encouraged by the autumn sell-through of nightwear and the early launchof spring 2008 swimwear, which sold well to our retail customers and is showingsigns of success. We continue to review the performance of Ted Baker Intimates, but there areclear Group benefits arising from the high standards of design expected fromthis brand. Private Label Private Label is now showing signs of the benefit of a strongermanagement team, built during the course of 2007. Moreover, it is evident thathigh street retailers still require a full vendor supply base, particularly in aproduct as technically complex as lingerie. Our selling proposition is based ondesign and fit, and we continue to offer outstanding products. As a result of these improvements, we are pleased with the retailer enquiries weare attracting and we have secured a number of new customers. It is importantthat we build these relationships over time, recognising the often differentrequirements and processes of each customer, as well as sourcing adequatemanufacturing capacity to meet those differing requirements. Supply The biggest challenge faced by the business is rising production costs in theFar East, driven by wage inflation, the costs of improved working conditions andcommodity price inflation. Following many years of price deflation, largelydriven by reduced manufacturing costs and subsequently US dollar weakness pricesare now under severe pressure. Balancing retailers' margin expectations withrequired retail price points will inevitably lead to pressure on manufacturers,wholesalers and retailers. Given the current fragility of consumer confidenceand the consequent reluctance by retailers to increase price points, the likelyresult is falling margins throughout the supply chain. Retail During the course of the year, the Group embarked on a strategy to open retailoutlet stores, largely as a solution to our issues with redundant stock.Performance at the Long Eaton and York stores was encouraging, but we areconcerned at the performance of our outlets in Braintree and Castleford, whichwe are working hard to improve. In late autumn 2007 we opened two high street stores to gauge consumer interestin a specialist branded lingerie retailer. The proposition is based around highlevels of service, size availability and, above all, an expert fitting facility.The aim is to excel against a backdrop of increasing consumer awareness of thebenefits of a correctly fitting product. Our Derby store in the Westfield centre has been encouraging in its earlyperformance, quickly establishing itself as a favourite with local customers.The requirement now is to build on this success with marketing awarenesscampaigns and loyalty schemes. By contrast, we have found our Nottingham storemuch more challenging to establish, partly as a result of management andlocation issues. The store, whilst beautiful in its appearance, is off-pitch tothe main thoroughfare and will require greater effort than first envisaged inattracting attention. We are determined to build this premier store into aworthwhile business proposition and its management will remain a high priority. Outlook Trading in the first quarter is in line with expectations and the Boardcurrently expect the first half to be improved on last year. However, in thecontext of a worsening UK economic outlook, the immediate challenge in thecoming months will be to stabilise the Group's performance in 2008. A further update will be provided at the Annual General Meeting on 23 May 2008. Carol DuncumbChief Executive 28 March 2008 FINANCIAL REVIEW Income statement The Group incurred a loss for the year of £3,707,000 (2006: profit of£2,723,000), reflecting an underlying operating loss on continuing operations(excluding stock provision adjustment, reorganisation costs, pension settlementsand advisory costs and negative goodwill arising on the acquisition of theCharnos business) of £2,926,000 (2006: loss of £523,000). Key performance indicators The Group's key performance indicators relate to the development of Brand sales,gross margin and working capital control. 2007 2006Sales Wholesale - Branded £10.13m £11.73mWholesale - Private Label £8.02m £9.42mRetail £1.31m £0.11m £19.46m £21.26m Gross margin % 23.9% 29.4% Working capital * £6.98m £7.91m * Working capital comprises inventories, trade and other receivables and trade and other payablesexcluding amounts due to Pension Scheme members at 31 December 2006. Continuing operations As described in the Chief Executive's Review, sales declined by 8%. Brand salesdecreased by 14%, due principally to sales decline at Lepel and the absence ofsales growth at Charnos, despite the 2006 comparative period being restricted tothe nine month period after acquisition. Private Label sales declined by 15%,due principally to the customer losses experienced in 2006. Whilst the declinein wholesale activity was offset to a degree by a £1.20m increase in Retailsales, this growth reflected the opening of new stores and the annualisation ofthe 2006 new store openings. The decline in gross margin from 29.4% to 23.9% is primarily due to therecognition of the need for increased provisions against prior season andredundant stock, together with actual clearance activity undertaken during theyear. The movement in the level of stock provision alone was responsible for a£1.22m reduction in gross profit (2006: £0.09m increase in gross profit), theimpact of which was to reduce the gross margin reported for 2007 from 30.1% to23.9%. Excluding the impact of the 2007 stock provisioning, which is discussedfurther below, gross margin would have increased from 29.4% in 2006 to 30.1%,largely due to the favourable margin impact of the retail store sales. Despite the reduction in sales, there was a 36% increase in distribution costs,attributable primarily to the costs associated with the new store openings, theadditional overhead cost attributable to a full year's activity with the Charnosbrand and the investment into the management structure referred to in the ChiefExecutive's Review. Excluding the impact of reorganisation costs, pension settlements and advisorycosts and negative goodwill arising on the acquisition of the Charnos business,administrative expenses increased from £1.68m in 2006 to £1.86m in 2007, anincrease of 11%. Taxation The taxation charge for the year primarily reflects deferred tax movementsattributable to contributions to the defined benefit pension scheme. The Grouphas tax trading losses of approximately £8.36m available to carry forward;however, a decision has been taken not to recognise any additional deferred taxassets in 2007 over and above the losses brought forward of £4.68m, a level thatmight reasonably be anticipated to be utilised within the foreseeable future.Once the Group's profitability is restored, the additional tax trading losses of£3.68m will be available for recognition. This would equate to an additionaldeferred tax asset of approximately £1.0m. Discontinued operations The profit for the year from discontinued operations relates to the resolutionof residual issues from the re-organisation and disposal of the lace division in2003 and 2004. Following legal action against the landlord of a former Groupproperty, the Group secured the recovery of a rental deposit to the extent of£114,000. It also released an accrual of £235,000 against further rentpotentially payable in the event that the tenant to which the lease was assigneddefaulted under the lease of the same property. A further £36,000 final distribution was received from the liquidation of theGroup's associated company, Guy Birkin Limited. Balance sheet Total equity has reduced to £14.70m (13.9 pence per share) from £17.85m (16.9pence per share) due to the loss for the year partially offset by theelimination of the pension deficit. Property, plant and equipment During 2007 the Group invested £1.15m (2006: £0.63m) in property, plant andequipment, of which £0.77m (2006: £0.30m) related to the fit-out costs of newretail stores and £0.24m (2006: £0.16m) to fixturing to support Brand sales incustomer stores. Pensions Following the successful completion of the buy-out exercise, under which theGroup provided cash top-ups to deferred members of the Sherwood Group plcRetirement Benefits Scheme ("the Scheme"), it is pleasing to report that theScheme was in surplus on an IAS 19 basis at 31 December 2007 to the extent of£68,000 (2006: deficit of £1,480,000). The Group remains committed to the agreement reached with the Scheme Trustees tofund the deficit over an 8 year 5 month period from 1 January 2006, with currentannual deficit reduction contributions of £552,000. The funding level willcontinue to be monitored and will be re-addressed as part of the next triennialvaluation which is due at 1 January 2009. The Board is mindful of the new accounting guidance contained in IFRIC 14, 'TheLimits on a Defined Benefit Asset, Minimum Funding Requirements and TheirInteraction' which will be applied from 1 January 2008. Although it is not yetentirely clear how this guidance will be applied in practice, under oneinterpretation it is conceivable that the Group will be required to reflect aliability in its balance sheet based on the present value of the future deficitreduction contributions that the Group is committed to make. As IFRIC 14 iscurrently not endorsed by the European Union it is not available for earlyadoption. Stock provisioning It became clear at the time of our Interim Report to shareholders covering theperiod to 30 June 2007 that the Group had a major issue in terms of the level ofprior season and redundant stock requiring distress clearance. Previously theBoard had sought to maximise the margin on clearance of that stock by developinga chain of clearance outlets; however, it was quickly evident that some of thestock was unsuitable for clearance in this way and that although the outletsmaximised gross margin, this was at the expense of a high ongoing overhead cost.Accordingly the number of clearance outlets was restricted to a level suitablefor ongoing clearance activity and active steps were taken to properlycategorise the stock, to develop proper plans for its clearance and to place amore realistic level of provision against its cost in the financial statements. As a consequence, at 31 December 2007 the Group held a provision of £1.62m(2006: £0.40m) against inventory cost (excluding goods in transit fromsuppliers) of £5.91m (2006: £4.85m), representing 27.4% (2006: 8.2%) of theinventory cost. In addition, actual clearance activity during the second half ofthe year had a further significant impact on the Group's operating loss. Noequivalent activity took place in 2006. End of season clearance activity is part and parcel of a Brand business, butfollowing the management changes during 2007 the Board is confident that the keycontrols are now in place to ensure that the level of product purchasecommitment better reflects sensible customer demand forecasts. Where initialdemand indications are not positive, ranges are now cut before production. Withthis key control in place, the level of end of season stock requiring clearanceshould reduce to more normal levels. There remains much work to do to actually clear the old stock and even withaggressive markdown the Board does not expect to clear all of the old stockduring 2008, but the Board is confident that tight monitoring of clearance andcurrent season range sell-through will reduce stock-holding to more realisticlevels. Working capital As noted above, the Group's working capital at 31 December 2007 reduced to£6.98m from £7.91m, due principally to a reduction in trade receivables to£5.09m from £5.94m, reflecting the reduction in sales activity. Totalinventories increased to £5.37m from £5.00m, due to both an increase ininventories held and also to an increase in goods in transit to £1.08m (2006:£0.55m), which was offset by the increase in provisions against inventoriesoutlined above. The increase in goods in transit at 31 December 2007 was theprincipal reason for the increase in trade payables at that date. Cash flow Net cash balances reduced by £6.56m (2006: £1.06m), with an operational cashoutflow of £5.64m (2006: £3.91m) and a net outflow from investing activities of£0.92m (2006: inflow of £2.85m. In addition to the loss for the year and changes in working capital (see above),the main elements of the operational cash outflow are pension settlements of£2.35m (2006: £1.40m) and pension contributions in excess of operating chargesof £0.62m (2006: £0.91m). The principal cash flow from investing activitiesrelated to the investment of £1.15m (2006: £0.63m) in property, plant andequipment. In 2006 a further £647,000 was invested in the acquisition of theCharnos business and £3,732,000 was received from the sale of the Group'sBorrowash property. Principal risks and uncertainties The Board considers the following to be the principal risks: Reduced sales and margins The Group sells third party manufactured ladies apparel under its own Brandlabels and under customer's own labels. Risk is associated with over-reliance onany one customer, as the Group has limited ability to prevent customers fromre-sourcing different brands or different designs through alternative suppliers.This risk is mitigated by attracting new customers, continued investment inproduct design and development, Brand development and by the development of ahigh quality supply base. Product sourcing The Group sources all its products from overseas and maintains purchasingarrangements with a number of suppliers throughout the Far East, therebyavoiding disproportionate exposure to any one supplier or country of originwherever possible. Foreign currency exchange risk A substantial proportion of the Group's products are purchased from Far easternsuppliers in US dollars. The Group enters into foreign exchange forwardcontracts in order to cover a proportion of its anticipated seasonal US dollarpurchasing commitment. The Group's policy is to cover a proportion of itscurrency requirement for up to two seasons in advance, the balance beingpurchased during the season. The amount of currency covered at 31 December 2007was US$8.2 million (2006: US$12.0 million). Annual General Meeting The meeting will be held at the Company's registered office, Fields Farm Road,Long Eaton, Nottingham, NG10 3FZ on 23 May 2008 at 10.30am. Group Income Statement for the year ended 31 December 2007 2007 2006 £'000 £'000Revenue 19,457 21,261Cost of sales (14,815) (15,002)Gross profit 4,642 6,259Distribution costs (6,922) (5,103)Administrative expenses (1,963) (823)Negative goodwill on acquisition of business - 354Operating (loss)/profit (4,243) 687 Operating (loss)/profit includes: Increase in provision for impairment of inventories (1,217) - Pension settlements and advisory costs - 953 Negative goodwill on acquisition of business - 354 Reorganisation costs (100) (97) Finance incomeFinance income 1,223 1,409Finance costs (826) (1,026)Net finance income 397 383 (Loss)/profit before taxation (3,846) 1,070Income tax expense (246) (150)(Loss)/profit for the year from continuing operations (4,092) 920Profit for the year from discontinued operations 349 1,722Distribution from closure of associate 36 81(Loss)/profit for the year (3,707) 2,723 Basic and diluted earnings per share (pence)Continuing operations (3.8)p 0.9pDiscontinued operations 0.3p 1.7pTotal (3.5)p 2.6p Group Statement of Recognised Income and Expense 2007 2006 £'000 £'000(Loss)/profit for the year (3,707) 2,723Actuarial gain on pension scheme 739 737Movement on deferred tax asset relating to pension scheme (207) (222)Effect of change in tax rate on pension scheme deferred tax asset (15) -Effective portion of changes in fair value of cash flow hedges 46 -Movement on deferred tax relating to cash flow hedges (13) -Currency translation differences on overseas net investments - 21Total recognised income and expense (3,157) 3,259 Group Balance Sheet31 December 2007 2007 2006 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 2,900 2,167Intangible assets 1,767 1,831Deferred tax assets 1,065 1,546Pension Scheme surplus 68 -Total non-current assets 5,800 5,544 Current assetsInventories 5,372 5,005Trade and other receivables 5,267 6,258Other financial assets 46 -Cash and cash equivalents 1,873 8,433Assets held classified as for sale -Total current assets 12,558 19,696 TOTAL ASSETS 18,358 25,240 EQUITYIssued capital 5,270 5,270Share premium 89 89Capital redemption reserve 415 415Retained earnings 8,923 12,074TOTAL EQUITY 14,697 17,848 LIABILITIESNon-current liabilitiesPension Scheme deficit - 1,480 Current liabilitiesTrade and other payables 3,655 5,703Other financial liabilities 6 209Total current liabilities 3,661 5,912 TOTAL LIABILITIES 3,661 7,392 TOTAL EQUITY AND LIABILITIES 18,358 25,240 Group Cash Flow StatementYear ended 31 December 2007 2007 2006 £'000 £'000Cash flows from operating activities(Loss)/profit for the year (3,707) 2,723 Adjustments for: Depreciation, amortisation and impairment 493 254 Foreign exchange (gains)/losses (203) 395 Equity settled share-based payment expenses 6 - Negative goodwill on acquisition of subsidiary - (354) Finance income (1,223) (1,409) Finance costs 826 1,026 Taxation 246 150 Profit for the period from discontinued operations (349) (1,722) Distribution from closure of associate (36) (81) (3,947) 982Changes in working capitalIncrease in inventories (367) (267)Decrease/(increase) in trade and other receivables 991 (1,700)Increase/(decrease) in trade and other payables 540 (625) 1,164 (2,592) Cash used in operations (2,783) (1,610)Return of rental deposit 114 -Pension contributions in excess of operating charge (615) (905)Pension settlements (2,353) (1,397)Net cash used in operating activities (5,637) (3,912) Cash flows from investing activitiesInterest received 203 383Proceeds from sale of asset held for sale - 3,732Distribution from closure of associate 36 81Acquisition of property, plant and equipment and intangible assets (1,162) (699)Acquisition of a subsidiary - (647)Net cash from investing activities (923) 2,850 Net decrease in cash and cash equivalents (6,560) (1,062)Cash and cash equivalents at 1 January 8,433 9,495Cash and cash equivalents at 31 December 1,873 8,433 Basis of preparation The 2007 financial statements are the first financial statements prepared by theGroup in accordance with accounting standards as adopted for use in the EU andas such take account of the requirements and options in IFRS 1 (First-timeadoption of International Financial Reporting Standards) as they relate to the2006 comparatives included therein. The financial information set out above does not constitute statutory accountsas defined in section 240 of the Companies Act 1985. The financial informationhas been extracted from the Group's statutory financial statements upon whichthe auditors' opinion is unqualified and does not include any statement undersection 237 of the Companies Act 1985. Segment information The Directors consider that there is a single class of business, the design,sourcing and sale of lingerie, nightwear and swimwear. All activities are based in the United Kingdom. Pension Scheme surplus/(deficit) The fair value of the Scheme assets and the present value of the Schemeliabilities at 31 December 2007 and 31 December 2006 were as follows: 2007 2006 £'000 £'000Pension scheme assets 11,135 14,392Pension scheme liabilities (11,067) (15,872)Pension scheme surplus/(deficit) 68 (1,480) The movement in the fair value of the Scheme assets during the year is analysedbelow: 2007 2006 £'000 £'000Fair value of Scheme assets at the beginning of the year 14,392 14,620Contributions by plan participants 7 16Contributions by the Group 648 942Benefits paid (606) (802)Assets distributed on settlements (4,100) (2,100)Expected return on plan assets 1,020 1,026Actuarial (loss)/gain in Statement of Recognised Income and Expense (226) 690Fair value of Scheme assets at the end of the year 11,135 14,392 The movement in the present value of the Scheme liabilities during the year isanalysed below. 2007 2006 £'000 £'000Present value of Scheme liabilities at the beginning of the year 15,872 21,492Current service costs 33 37Contributions by plan participants 7 16Benefits paid (606) (802)Liabilities extinguished on settlements (4,100) (5,850)Interest on obligation 826 1,026Actuarial gain in Statement of Recognised Income and Expense (965) (47)Present value of Scheme liabilities at the end of the year 11,067 15,872 Basic and diluted earnings per share The calculation of basic and diluted earnings per share is based on a loss forthe year of £3,707,000 (2006: profit of £2,723,000) and the weighted averagenumber of shares in issue during the year of 105,394,178 (2006: 105,394,178). Annual Report Copies of the 2007 Annual Report will be sent to all shareholders. Copies willalso be available from the Company Secretary at Intimas Group plc, Fields FarmRoad, Long Eaton, Nottingham NG10 3FZ and available on the Company's website atwww.intimas.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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