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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Jourdan | LSE:JDR | London | Ordinary Share | GB00B0STXK93 | ORD GBP1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 200.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:6645P
Jourdan PLC
10 March 2008
Jourdan plc
("Jourdan" or the "Company")
Interim Results for the 6 months ended 31 December 2007
Chairman's Statement
The financial statements are somewhat lengthier than in previous years owing to
the requirement for the Group to report under International Financial Reporting
Standards ("IFRS") from 1 July 2007. Reconciliations between UK GAAP and IFRS
for previous periods are shown in the attached notes.
Results for the period under review are satisfactory in parts. Revenue in the
six months to 31 December 2007 increased by 14% to £16.0m compared to the same
period last year. Profit before tax, amortisation of intangible assets and
profit on disposal of non-current assets and investments increased by 8% to
£928,000 (2006: £859,000). Profit before tax rose by 40% to £1,417,000 (2006:
£1,015,000) resulting in earnings per share of 34.0p compared with 21.8p per
share for the six months to 31 December 2006. However, the results have been
flattered by the profit of £623k on the sale of the Andover factory, previously
utilised for the manufacture of Corby trouser presses.
As last year, your Board has decided not to declare an interim dividend (2006:
nil) but will consider the declaration of a final dividend at the time of the
full year results to 30 June 2008.
Operating Companies
Westfield Medical, enlarged by the acquisition of Clinipak in September 2006, is
a leading manufacturer and supplier of single-use sterilisation packaging
materials to the medical and healthcare sector. It achieved higher profits on
higher sales which included a full six months of Clinipak. Some integration,
particularly in the area of sales, and to a limited extent in manufacturing, has
been implemented and the increased product range of the two companies has
substantially strengthened the business.
Suncrest Surrounds, the fireplace, suites, mantels and electric fires business,
made a small profit on marginally increased sales, as our major High Street
customers took an increasing percentage of sales but at much lower margins than
those they replaced. However, we announced on 4 March 2008 that our biggest
single customer, a national house builder, had served notice that it would no
longer fit our fireplaces in all its houses but would only continue to purchase
on an 'options only' basis. This has had a substantial impact on sales, and
consultations are now taking place with employee representatives and trade
unions with the objective of downsizing the business at its Peterlee facility so
as to discontinue the mantelpiece, electric suites and fire operations. We
shall increase the focus of Suncrest's operations on the Corby trouser press
business. Any resulting impairment or closure costs will be recognised in the
second half year.
John Corby, the internationally renowned trouser press manufacturer, suffered
reduced profits on marginally increased sales. The pressure on margins both
from High Street customers and increasingly from international customers has had
a major impact. Export sales accounted for 47% in the period. The largest
markets are America and Japan, where the weakness of the US$ and the Yen has
resulted in extremely slim and in some cases negative margins in the short term.
In line with our predictions Sterling has now weakened significantly against
all currencies, thus making the overseas business more profitable.
Nelsons Labels, a leading supplier of fabric-based labels for the bedding,
carpet and upholstery industries, was expanded by the acquisition of Prime
Packaging Limited in March 2007. Whilst the subsequent consolidation of both
businesses into the Nelsons' factory had a beneficial impact on sales but a
negative one on profits owing to closure and redundancy costs, bank interest and
market conditions, the reduction in activity on the UK High Street has had a
major impact on sales and profits. However the rationalisation of the two
businesses is nearly complete and we look forward to a more prosperous 2008/
2009.
Group Pensions
Like many final salary pension schemes, our Fund's investments diminished in
value over the two years ended April 2004, the date of the last actuarial
valuation. However, I am pleased to say that the subsequent rise in world stock
markets is increasing the value of the investments and reducing the deficit,
even though lately some of the increase has been eliminated. The triennial
valuation at April 2007 will reflect increasing life expectancies, the cost of
which will offset gains on investments.
Outlook
Although the first six months results are reasonably satisfactory the reducing
activity in the High Street is having an increasingly negative impact on
Suncrest which has already been damaged by the loss of its major customer. Your
Board believes that the implementation of the proposed restructuring plan is
essential and will result in a stronger more focussed business once the turmoil
is over. Nelsons should begin to improve, Corby is steady and Westfield/
Clinipak, our most important businesses, continue to go from strength to
strength.
J David Abell
10 March 2008
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
For the six months ended 31 December 2007
Unaudited 6 months to 6 months to Year to 30
31 December 31 December
2007 2006 June 2007
£000s £000s £000s
Note
Continuing operations
Revenue 16,018 14,022 27,472
Cost of sales (10,854) (9,423) (18,584)
Gross profit 5,164 4,599 8,888
Net operating costs:
Operating costs (4,231) (3,645) (7,589)
Profit on disposal of non-current assets held for sale 623 - -
Net operating costs (3,608) (3,645) (7,589)
Operating profit 1,556 954 1,299
Profit on disposal of available-for-sale investments - 190 197
Finance income 11 5 8
Finance costs (150) (134) (269)
Profit before tax 1,417 1,015 1,235
Taxation (262) (309) (164)
Profit for the period attributable to equity holders 1,155 706 1,071
of the Parent Company
Earnings per share: total and continuing Pence Pence Pence
Basic 7 34.0 21.8 33.0
Diluted 7 33.8 21.7 33.0
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As at 31 December 2007
Unaudited 31 December 31 December 30 June
2007 2006 2007
Note £000s £000s £000s
ASSETS
Non-current assets
Property, plant and equipment 1,962 3,615 2,137
Goodwill 5,160 4,594 5,192
Other intangible assets 5 855 691 989
Available-for-sale investments - 306 -
Deferred tax assets 424 959 455
8,401 10,165 8,773
Current assets
Inventories 3,188 3,257 3,522
Trade and other receivables 6,162 5,274 5,146
9,350 8,531 8,668
Non-current assets held for sale 1,502 279 1,781
Total assets 19,253 18,975 19,222
LIABILITIES
Current liabilities
Trade and other payables (7,955) (8,780) (8,676)
Current portion of deferred consideration (395) - (419)
Current tax payable (362) (334) (292)
(8,712) (9,114) (9,387)
Non-current liabilities
Deferred consideration (75) - (224)
Long-term provision (44) (71) (44)
Deferred tax liabilities (144) (330) (208)
Pension liability (1,516) (3,195) (1,516)
(1,779) (3,596) (1,992)
Total liabilities (10,491) (12,710) (11,379)
Net assets 8,762 6,265 7,843
EQUITY
Share capital 6 3,400 3,240 3,400
Share premium account 6 260 - 260
Other reserves 6 3,145 3,145 3,145
Profit and loss reserve 6 1,957 (120) 1,038
Equity attributable to equity holders
of the Parent Company 8,762 6,265 7,843
CONDENSED CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the six months ended 31 December 2007
Unaudited 31 31 30
December December June
2007 2006 2007
£000s £000s £000s
Actuarial gain recognised in the pension scheme - - 1,068
Movement on deferred tax relating to pension liability - - (321)
Net income recognised directly in equity - - 747
Profit for the period 1,155 706 1,071
Total recognised income and expense in the period
attributable to equity holders 1,155 706 1,818
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT
For the six months ended 31 December 2007
Unaudited 6 months 6 months Year
to 31 to 30 to 30
December 2007 December 2006 June 2007
£000s £000s £000s
Cash flows from operating activities
Profit after tax 1,155 706 1,071
Adjustments for:
Depreciation 238 265 529
Amortisation of intangible assets 134 34 197
Profit on disposal of property, plant and equipment (623) - -
Profit on sale of investments - (190) (197)
Other (gains) and losses 36 20 (134)
Interest expense (net) 139 129 261
Tax expense recognised in income statement 262 309 164
Decrease in inventories 334 174 121
Increase in trade and other receivables (1,016) (668) (207)
Increase/(decrease) in trade and other payables 42 (156) 136
Cash generated from operations 701 623 1,941
Interest paid (150) (134) (282)
Tax paid (225) (124) (321)
Net cash from operating activities 326 365 1,338
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (141) (1,647) (2,158)
Purchase of property, plant and equipment (63) (51) (219)
Proceeds from sale of non-current assets 902 - -
Proceeds from disposal of equipment - - 31
Proceeds from disposal of available-for-sale investments - 300 613
Interest received 11 5 8
Net cash generated from / (used in) investing activities 709 (1,393) (1,725)
Cash flows from financing activities
Dividends paid 10 (272) (162) (162)
Net cash used in financing activities (272) (162) (162)
Net increase/(decrease) in cash and cash equivalents 763 (1,190) (549)
Cash and cash equivalents at beginning of period (3,401) (2,852) (2,852)
Cash and cash equivalents at end of period (2,638) (4,042) (3,401)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General information
These condensed consolidated interim financial statements are for the six months
ended 31 December 2007. They have been prepared taking into account the
requirements of IFRS 1 "First Time Adoption of International Financial Reporting
Standards" relevant to interim reports because they are part of the period
covered by the Group's first IFRS financial statements for the year ending 30
June 2008. They do not include all of the information required for full
financial statements, and should be read in conjunction with the consolidated
financial statements (under UK GAAP) of the Group for the year ended 30 June
2007. These condensed consolidated interim financial statements are presented
in Pounds Sterling, which is also the functional currency of the Parent Company.
They were approved for issue by the Board of Directors on 10 March 2008.
2. Basis of preparation
These condensed consolidated interim financial statements have been prepared
under the historical cost convention.
The Group's financial statements up to and including those for the year ended 30
June 2007 were prepared in accordance with United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice). With effect from 1
July 2007, the company, being listed on the Alternative Investment Market of the
London Stock Exchange, is required to present its consolidated financial
statements in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. Accordingly, these condensed consolidated
interim financial statements (the interim financial statements) have been
prepared in accordance with the accounting policies set out below which are
based on the recognition and measurement principles of IFRS in issue as adopted
by the European Union (EU) and are effective at 30 June 2008 or are expected to
be adopted and effective at 30 June 2008, the first annual reporting date at
which the Group is required to use IFRS accounting standards adopted by the EU.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparation of these condensed consolidated interim financial
statements.
3. Transition to IFRS
In accordance with the provisions of IFRS 1 "First time adoption of
International Financial Reporting Standards", the Group's transition date for
adoption of IFRS was 1 July 2006. Comparative figures have been restated in
these financial statements to reflect changes in accounting policies as a result
of the adoption of IFRS. The disclosures required by IFRS 1 concerning the
transition from UK GAAP to IFRS are given in the reconciliation schedules
presented in note 8. The Group has taken advantage of certain exemptions
available under IFRS 1. The exemptions used are explained under the respective
accounting policy.
4. Summary of significant accounting policies
4.1 Basis of consolidation
The Group financial statements include those of the Company and all its
subsidiaries. Subsidiaries are entities over which the Group has the power
through voting rights to control the financial and operating policies so as to
obtain benefits from its activities. Unrealised gains on transactions between
the Group and its subsidiaries are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the purchase method. The
purchase method involves the recognition at fair value of all identifiable
assets and liabilities, including contingent liabilities of the subsidiary, at
the acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group accounting
policies. In the case of acquisitions after 30 June 2006, goodwill is stated
after separating out identifiable intangible assets. Goodwill represents the
excess of acquisition cost over the fair value of the Group's share of the
identifiable net assets of the acquired subsidiary at the date of acquisition.
4.2 Business combinations completed prior to the date of transition to IFRS
The Group has elected not to apply IFRS 3 Business Combinations retrospectively
to business combinations prior to the date of transition. Accordingly the
classification of the combination (acquisition, reverse acquisition or merger)
remains unchanged from that used under UK GAAP. Assets and liabilities are
recognised at the date of transition if they would be recognised under IFRS, and
are measured using their UK GAAP carrying amounts immediately post-acquisition
as deemed cost, unless IFRS requires fair value measurement. Amounts recorded
as goodwill under UK GAAP have not been re-assessed to identify intangible
assets. Deferred tax has been adjusted for the impact of any consequential
adjustments after taking advantage of the transitional provisions.
4.3 Goodwill
Goodwill, representing the excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired, is capitalised and
reviewed annually for impairment. Goodwill is carried at cost less accumulated
impairment losses.
There is no re-instatement of goodwill that was amortised prior to transition to
IFRS.
4.4 Revenue
Revenue from the sale of goods (relevant for all income streams) represents the
value of goods supplied by subsidiaries, net of discounts and excluding
intra-Group sales and VAT. Revenue is recognised at the date of despatch of the
goods, which is when the Group is deemed to transfer to the buyer the
significant risks and rewards of ownership. Where appropriate, provision is
made for goods issued on sale or return terms, and for any volume rebates (or
similar) payable.
4.5 ntangible assets acquired as part of a business combination
In accordance with IFRS 3 "Business Combinations", an intangible asset acquired
in a business combination is deemed to have a cost to the Group of its fair
value at the acquisition date. The fair value of the intangible asset reflects
market expectations about the probability that the future economic benefits
embodied in the asset will flow to the Group. Amortisation begins when the
intangible asset is first available for use and is calculated on a discounted
straight-line basis to allocate the deemed cost over its estimated useful life.
4.6 Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any
provision for impairment.
Disposal of assets: The gain or loss arising on the disposal of an asset is
determined as the difference between the disposal proceeds and the carrying
amount of the asset and is recognised in the income statement.
Depreciation: Depreciation is provided at rates calculated to write down the
cost less residual value of all property, plant and equipment other than
freehold land in equal instalments over their expected useful economic lives.
The rates used are as follows:
* Freehold and long leasehold buildings 2%
* Plant and machinery 10%
* Tooling 20% - 50%
* Motor vehicles 25% - 33%
* Computer/office equipment 20% - 33%
Material residual value estimates are updated as required, but at least
annually.
4.7 Impairment testing of goodwill, other intangible assets and property,
plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and
some are tested at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies of the related
business combination and represent the lowest level within the Group at which
management monitors the related cash flows.
Goodwill, other individual assets or cash-generating units that include
goodwill, other intangible assets with an indefinite useful life and those
intangible assets not yet available for use are tested for impairment at least
annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell, and value in use based on an internal discounted cash flow
evaluation. Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying amount of
goodwill. Any remaining impairment loss is charged pro rata to the other assets
in the cash-generating unit. With the exception of goodwill, all assets are
subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist.
4.8 Non-current assets classified as held for sale
Assets held for sale include assets that the Group intends and expects to sell
within one year from the date of classification as held for sale. Assets
classified as held for sale are measured at the lower of their carrying amounts
immediately prior to their classification as held for sale and their fair value
less costs to sell. Assets classified as held for sale are not subject to
depreciation or amortisation.
4.9 Leases
In accordance with IAS 17, the economic ownership of a leased asset is
transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is
recognised at the time of inception of the lease at the fair value of the leased
asset or, if lower, the present value of the minimum lease payments plus
incidental payments, if any, to be borne by the lessee. A corresponding amount
is recognised as a finance leasing liability.
Assets held under finance leases and hire purchase contracts are capitalised in
the balance sheet and depreciated over their expected useful lives. The
interest element of leasing payments represents a constant proportion of the
capital balance outstanding and is charged to the income statement over the
period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the income statement on a straight line basis over the
period of the lease term. Lease incentives are spread over the term of the
lease.
4.10 Inventories
Inventories are stated at the lower of cost and net realisable value, after
making due allowance for old and obsolete items. Cost includes materials,
valued on a first in first out basis, direct labour and the attributable
proportion of manufacturing overheads based on normal levels of activity.
4.11 Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries is not provided if
reversal of those temporary differences can be controlled by the Group and it is
probable that reversal will not occur in the foreseeable future. In addition,
tax losses available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax is
also charged or credited directly to equity.
The interim tax charge on underlying business performance is calculated by
reference to the estimated effective tax rate for the full year. Tax on
disposals and other exceptional items is based on the expected tax impact of
each item.
4.12 Share-based payments
The Group has Share Option plans under which it makes equity settled share based
payments to certain Directors and employees. All share-based payment
arrangements granted after 7 November 2002 that had not vested prior to 1 July
2006 are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based
payment are measured at their fair values. Where employees are rewarded using
share-based payments, the fair values of employees' services are determined
indirectly by reference to the fair value of the instrument granted to the
employee. This fair value is appraised at the grant date and excludes the
impact of non-market vesting conditions (for example, profitability and sales
growth targets). Fair value is measured using the Black Scholes Merton model.
If vesting periods or other non-market vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of the
number of share options expected to vest. Estimates are subsequently revised if
there is any indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately exercised are different
to that estimated on vesting.
All equity-settled share-based payments are ultimately recognised as an expense
in the income statement with a corresponding credit to the profit and loss
reserve. Upon exercise of share options the proceeds received net of
attributable transaction costs are credited to share capital, and where
appropriate share premium.
4.13 Financial instruments
Financial instruments issued by the Group are classified as debt or equity
according to their underlying nature, as required by IAS32/39. Those containing
contractual obligations to transfer cash or other financial assets are
classified as financial liabilities. Those evidencing a residual interest in
the Group's assets after deducting all of its liabilities are classified as
equity and included within shareholders' funds.
Compound instruments, containing material components of both equity and
financial liabilities, are measured by calculating the present value of the
liability component, with the residual amount, after deducting from the fair
value of the financial instrument as a whole, representing the equity component.
Financial assets
Financial assets consist of loans and receivables and available-for-sale
financial assets. Financial assets are assigned to the different categories by
management on initial recognition, depending on the purpose for which they were
acquired. The designation of financial assets is re-evaluated at every
reporting date at which a choice of classification or accounting treatment is
available.
All financial assets are recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets are recognised at
fair value plus transaction costs.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Trade and other
receivables are classified as loans and receivables. Loans and receivables are
measured subsequent to initial recognition at amortised cost using the effective
interest method, less provision for impairment. Any change in their value
through impairment or reversal of impairment is recognised in the income
statement.
Provision against trade receivables is made when there is objective evidence
that the Group will not be able to collect all amounts due to it in accordance
with the original terms of those receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the present
value of estimated future cash flows.
Available-for-sale financial assets include non-derivative financial assets that
are either designated as such or do not qualify for inclusion in any of the
other categories of financial assets. All financial assets within this category
are measured subsequently at fair value, with changes in value recognised in
equity, through the statement of recognised income and expense. Gains and
losses arising from investments classified as available-for-sale are recognised
in the income statement when they are sold or when the investment is impaired.
A financial asset is derecognised only where the contractual rights to the cash
flows from the asset expire or the financial asset is transferred and that
transfer qualifies for derecognition. A financial asset is transferred if the
contractual rights to receive the cash flows of the asset have been transferred
or the Group retains the contractual rights to receive the cash flows of the
asset but assumes a contractual obligation to pay the cash flows to one or more
recipients. A financial asset that is transferred qualifies for derecognition
if the Group transfers substantially all the risks and rewards of ownership of
the asset, or if the Group neither retains nor transfers substantially all the
risks and rewards of ownership but does transfer control of that asset.
Financial liabilities
The Group's financial liabilities consist of trade and other payables and other
long term borrowings (which represent deferred consideration). Financial
liabilities are obligations to pay cash or other financial assets and are
recognised when the Group becomes a party to the contractual provisions of the
instrument.
All financial liabilities are initially recorded at amortised cost, net of
direct issue costs, using the effective interest method, with interest-related
charges recognised as an expense in finance costs in the income statement.
Finance charges, including premiums payable on settlement or redemption and
direct issue costs, are charged to the income statement on an accruals basis
using the effective interest method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they
arise.
A financial liability is derecognised only when the obligation is extinguished,
that is, when the obligation is discharged or cancelled or expires.
4.14 Pensions
Certain of the Group's employees belong to the Jourdan Group Pension Fund which
is funded by both employers' and employees' contributions, and is a defined
benefit fund. The Fund's assets are measured at fair values. The Fund's
liabilities are measured on an actuarial basis using the projected unit method
and are discounted at appropriate high quality corporate bond rates. The gross
surplus or deficit is presented on the face of balance sheet, separate from the
related deferred tax balance. A gross surplus is recognised only to the extent
that it is recoverable by the Company/Group.
The current service cost and costs from settlements and curtailments are charged
against operating profit. Past service costs are spread over the period until
the benefit increases vest. Interest on the Fund liabilities and the expected
return on the Fund's assets are included in other finance costs. Actuarial
gains and losses are recognised in full in the statement of recognised income
and expense.
4.15 Foreign currencies
Transactions in foreign currencies are translated into sterling at the exchange
rate ruling at the date of the transaction. At the end of the period, monetary
assets and liabilities denominated in foreign currencies are translated into
sterling at the rates of exchange ruling at the balance sheet date. Trading
results are translated at average rates for the period. Any exchange
differences arising on the settlement of monetary items or on translating
monetary items at rates different from those at which they were initially
recorded are recognised in the profit or loss in the period in which they arise.
4.16 Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of
judgement and/or estimation. These judgements and estimates are based on
management's best knowledge of the relevant facts and circumstances, having
regard to prior experience, but actual results may differ from the amounts
included in the financial statements. Information about such judgements and
estimation is contained in the accounting policies and/or the notes to the
financial statements and the key areas are summarised below:
Judgements in applying accounting policies
a) Fair value attributed to intangibles acquired as part of a business
combination under IFRS 3
b) Assessment of the impairment of assets is a judgement based on analysis
of the likely future cash flows from the relevant income generating unit
and an estimate of value in use
c) Discount rates in impairment testing under IAS 36
d) The directors must judge whether future profitability is
likely in making the decision whether or not to create a deferred tax asset
e) Recognition of provisions under IAS 37
f) Actuarial assumptions under IAS 19
g) What is classified as held for sale under IFRS 5.
Sources of estimation uncertainty
a) Depreciation rates are based on estimates of the useful lives and residual
values of the assets involved
b) Estimates of future profitability are required for the decision whether
or not to create a deferred tax asset
c) Estimates are required as to asset carrying values and impairment charges
d) Fair values in share based payment under IFRS 2
5. Additions and amortisation of intangible assets
The following tables show the significant additions to and amortisation of
intangible assets:
Order Contracted Other customer
book sales Patents relationships Total
£000s £000s £000s £000s £000s
Carrying amount at 1 July 2006 - - - - -
Additions 12 58 551 104 725
Amortisation (12) (4) (11) (7) (34)
Carrying amount at 31 December 2006 - 54 540 97 691
Additions - - - 461 461
Amortisation - (8) (44) (111) (163)
Carrying amount at 30 June 2007 - 46 496 447 989
Amortisation - (14) (25) (95) (134)
Carrying amount at 31 December 2007 - 32 471 352 855
The above additions to intangible assets arose through business combinations in
respect of Clinipak and Prime Packaging.
6. Movement on reserves
Share Share Other Profit & Total
capital premium reserve loss reserve equity
£000s £000s £000s £000s £000s
Restated balance at 1 July 2006 under IFRS 3,240 - 3,145 (684) 5,701
Changes in equity for the period
Net actuarial gain in respect of the defined - - - - -
benefit pension scheme
Net income recognised directly in equity - - - - -
Profit for the six months to 31 December 2006 - - - 706 706
Total recognised income and expense for the - - - 706 706
period
Dividends (162) (162)
Credit relating to issue of share options - - - 20 20
Balance at 31 December 2006 3,240 - 3,145 (120) 6,265
Changes in equity for the period
Net actuarial gain in respect of the defined - - - 747 747
benefit pension scheme
Net income recognised directly in equity - - - 747 747
Profit for the six months to 30 June 2007 - - - 365 365
Total recognised income and expense for the - - - 365 365
period
Dividends - - - - -
Credit relating to issue of share options - - - 46 46
Issue of share capital 160 260 - - 420
Balance at 30 June 2007 3,400 260 3,145 1,038 7,843
Changes in equity for the period
Net actuarial gain in respect of the defined - - - - -
benefit pension scheme
Net income recognised directly in equity - - - - -
Profit for the six months to 31 December 2007 - - - 1,155 1,155
Total recognised income and expense for the - - - 1,155 1,155
period
Dividends - - - (272) (272)
Credit relating to issue of share options - - - 36 36
Balance at 31 December 2007 3,400 260 3,145 1,957 8,762
7. Earnings per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the period.
The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares and the post-tax effect of
interest on the assumed conversion of all dilutive options and other dilutive
potential ordinary shares.
Reconciliations of the earnings and the weighted average number of shares used
in the calculations are set out below:
6 months to 31 December 2007 Earnings
attributable to Weighted
equity holders average Earnings
of the Parent number of per
Company shares share
£000s Number Pence
Profit after tax for calculation of basic earnings per share 1,155
Notional taxed interest income accruing on dilution -
Profit after tax for calculation of diluted earnings per share 1,155
Add-back amortisation of intangible assets, net of tax 98
Adjusted diluted profit before amortisation of intangible assets 1,253
Number of shares for calculation of basic earnings per share 3,400,010
Dilutive effect of potential shares 20,952
Number of shares for calculation of diluted earnings per share 3,420,962
Basic earnings per share 34.0
Diluted earnings per share 33.8
Adjusted basic earnings per share 36.9
Adjusted diluted earnings per share 36.6
6 months to 31 December 2006 Earnings
attributable to Weighted
equity holders average Earnings
of the Parent number of per
Company shares share
£000s Number Pence
Profit after tax for calculation of basic earnings per share 706
Notional taxed interest income accruing on dilution -
Profit after tax for calculation of diluted earnings per share 706
Add-back amortisation of intangible assets, net of tax 24
Adjusted diluted profit before amortisation of intangible assets 730
Number of shares for calculation of basic earnings per share 3,240,002
Dilutive effect of potential shares 9,138
Number of shares for calculation of diluted earnings per share 3,249,140
Basic earnings per share 21.8
Diluted earnings per share 21.7
Adjusted basic earnings per share 22.5
Adjusted diluted earnings per share 22.5
Year to 30 June 2007 Earnings
attributable to Weighted
equity holders average Earnings
of the Parent number of per
Company shares share
£000s Number Pence
Profit after tax for calculation of basic earnings per share 1,071
Notional taxed interest income accruing on dilution -
Profit after tax for calculation of diluted earnings per share 1,071
Add-back amortisation of intangible assets, net of tax 138
Adjusted diluted profit before amortisation of intangible assets 1,209
Number of shares for calculation of basic earnings per share 3,240,886
Dilutive effect of potential shares -
Number of shares for calculation of diluted earnings per share 3,240,886
Basic earnings per share 33.0
Diluted earnings per share 33.0
Adjusted basic earnings per share 37.3
Adjusted diluted earnings per share 37.3
8. Explanation of transition to IFRS
As stated in the Basis of Preparation, these are the Group's first condensed
consolidated interim financial statements for part of the period covered by the
first IFRS annual consolidated financial statements prepared in accordance with
IFRS. An explanation of how the transition from UK GAAP to IFRS has affected
the Group's financial position, financial performance and cash flows is set out
below.
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. These
interim financial statements have been prepared on the basis of taking the
following exemptions:
* business combinations prior to 1 July 2006, the Group's date of transition
to IFRS, have not been restated to comply with IFRS 3 Business Combinations.
Goodwill arising from these business combinations of £4,190,000 (net of
amortisation to 30 June 2006) has not been restated, other than for the add
back of goodwill amortisation as set out below.
In accordance with IFRS 2, the Group has elected not to apply the share based
payment accounting standard to options granted prior to 7 November 2002, or to
options granted after 7 November 2002 that had vested by 1 July 2006.
Reconciliation of equity at 1 July 2006
UK GAAP IFRS adjustments - 1 July 2006 IFRS
Deferred tax on
pension scheme Deferred tax Deferred tax on
on assets held for
balance share options sale
Note 8a 8b 8f
£000s £000s £000s £000s £000s
Non-current assets
Property, plant and equipment 3,767 - - - 3,767
Goodwill 4,190 - - - 4,190
Available-for-sale investments 416 - - - 416
Deferred tax assets - 959 - - 959
Current assets
Inventories 2,920 - - - 2,920
Trade and other receivables 4,080 - - - 4,080
Non-current assets held for sale 279 - - - 279
Current liabilities
Trade and other payables (7,443) - - - (7,443)
Current tax payable (89) - - - (89)
Non-current liabilities
Long-term provisions (71) - - - (71)
Deferred tax (135) - 10 13 (112)
Pension liability (2,236) (959) - - (3,195)
Net assets 5,678 - 10 13 5,701
Equity
Share capital 3,240 - - - 3,240
Share premium - - - - -
Other reserves 3,145 - - - 3,145
Profit and loss reserve (707) - 10 13 (684)
Total equity 5,678 - 10 13 5,701
Reconciliation of equity at 31 December 2006
UK GAAP IFRS adjustments - 31 December 2006 IFRS
Deferred Deferred
tax Deferred Deferred tax on
on Eliminate tax tax Business Amortisation assets
pension goodwill on Share on Share Combinations of held
balance amortisation options options Clinipak intangibles for sale
Note 8a 8c 8b 8b 8c 8c 8f
£000s £000s £000s £000s £000s £000s £000s £000s £000s
Non-current assets
Property, plant and 3,615 - - - - - - - 3,615
equipment
Goodwill 4,935 - 166 - - (507) - - 4,594
Other intangible - - - - - 725 (34) - 691
assets
Available-for-sale 306 - - - - - - - 306
investments
Deferred tax assets - 959 - - - - - - 959
Current assets
Inventories 3,257 - - - - - - - 3,257
Trade and other 5,274 - - - - - - - 5,274
receivables
Non-current assets 279 - - - - - - - 279
held for sale
Current liabilities
Trade and other (8,780) - - - - - - - (8,780)
payables
Current tax payable (334) - - - - - - - (334)
Non-current
liabilities
Long-term (71) - - - - - - - (71)
provisions
Deferred tax (135) - - 10 (10) (218) 10 13 (330)
Pension liability (2,236) (959) - - - - - - (3,195)
Net assets 6,110 - 166 10 (10) - (24) 13 6,265
Equity
Share capital 3,240 - - - - - - - 3,240
Share premium - - - - - - - - -
Other reserves 3,145 - - - - - - - 3,145
Profit and loss (275) - 166 10 (10) - (24) 13 (120)
reserves
Total equity 6,110 - 166 10 (10) - (24) 13 6,265
Reconciliation of equity at 30 June 2007
UK GAAP IFRS adjustments - 30 June 2007 IFRS
Deferred Eliminate Business Business Amortisation Amortisation Deferred Deferred
tax on goodwill Combinations Combinations of of Tax on
pension amortisation - Clinipak - Prime intangibles intangibles tax on Assets
balance - Clinipak - Prime Prime held for
fair sale
value
adj.
Note 8a 8c 8c 8c 8c 8c 8e 8f
£000s £000s £000s £000s £000s £000s £000s £000s £000s £000s
Non-current
assets
Property,
plant and
equipment 2,137 - - - - - - - - 2,137
Goodwill 5,692 - 348 (507) (323) - - (18) - 5,192
Other
intangible
assets - - - 691 461 (68) (95) - - 989
Deferred
tax - 455 - - - - - - - 455
assets
Current
assets
Inventories 3,522 - - - - - - - - 3,522
Trade and
other
receivables 5,146 - - - - - - - - 5,146
Non-current
assets held
for sale 1,781 - - - - - - - - 1,781
Current
liabilities
Trade and
other (9,095) - - - - - - - - (9,095)
payables
Current tax
payable (292) - - - - - - - - (292)
Non-current
liabilities
Long term
borrowings (224) - - - - - - - - (224)
Long-term
provisions (44) - - - - - - - - (44)
Deferred (106) - - (208) (138) 20 29 18 177 (208)
tax
Pension
liability (1,061) (455) - - - - - - - (1,516)
Net assets 7,456 - 348 (24) - (48) (66) - 177 7,843
Equity
Share 3,400 - - - - - - - - 3,400
capital
Share 260 - - - - - - - - 260
premium
Other 3,145 - - - - - - - - 3,145
reserves
Profit and
loss 651 - 348 (24) - (48) (66) - 177 1,038
reserve
Total 7,456 - 348 (24) - (48) (66) - 177 7,843
equity
Reconciliation of profit for the 6 months ended 31 December 2006
UK GAAP IFRS adjustments - 31 December 2006 IFRS
Deferred Eliminate Amortisation Interest Deferred
tax on goodwill of adj. tax on
share amortisation intangibles assets
options held
for sale
Note 8b 8c 8c 8d 8f
£000s £000s £000s £000s £000s £000s £000s
Revenue (continuing and 14,022 - - - - - 14,022
acquisitions)
Cost of sales (9,423) - - - - - (9,423)
4,599 - - - - - 4,599
Operating costs (3,611) - - - - - (3,611)
Goodwill amortisation (166) - 166 - - - -
Amortisation of intangibles - - - (34) - - (34)
Total operating costs (3,777) - 166 (34) - - (3,645)
Operating profit 822 - 166 (34) - - 954
Profit/(loss) on disposal and 190 - - - - - 190
changes in market values of
investments
Finance income - - - - 5 - 5
Finance costs (129) - - - (5) - (134)
Profit on ordinary activities 883 - 166 (34) - - 1,015
before taxation
Taxation (309) (10) - 10 - - (309)
Profit for the period 574 (10) 166 (24) - - 706
attributable to equity holders
of the Parent Company
Reconciliation of profit for the year ended 30 June 2007
UK GAAP IFRS adjustments - 30 June 2007 IFRS
Deferred Eliminate Amortisation Interest Deferred
tax on goodwill of adj. tax on
share amortisation intangibles assets held
options for sale
Note 8b 8c 8c 8d 8f
£000s £000s £000s £000s £000s £000s £000s
Revenue (continuing and 27,472 - - - - - 27,472
acquisitions)
Cost of sales (18,584) - - - - - (18,584)
8,888 - - - - - 8,888
Operating costs (7,392) - - - - - (7,392)
Goodwill amortisation (348) - 348 - - - -
Amortisation of intangibles - - - (197) - - (197)
Total operating costs (7,740) - 348 (197) - - (7,589)
Operating profit 1,148 - 348 (197) - - 1,299
Profit/(loss) on disposal and 197 - - - - - 197
changes in market values of
investments
Finance income - - - - 8 - 8
Finance costs (261) - - - (8) - (269)
Profit on ordinary activities 1,084 - 348 (197) - - 1,235
before taxation
Taxation (377) (10) - 59 - 164 (164)
Profit for the period 707 (10) 348 (138) - 164 1,071
attributable to equity holders
of the Parent Company
Notes to the reconciliations
a) In accordance with IFRS, the pension liability has been grossed up by
the underlying deferred taxation. This results in an increase in the
liability at 1 July 2006 and 31 December 2006 of £959,000 and at 30
June 2007 of £455,000. Deferred tax assets have been increased by the
corresponding amounts.
b) Under IFRS deferred taxation is provided on the discount on share options
which may be exercised, based on the difference between the share price
and the exercise price as at the balance sheet dates. Such deferred tax
balances are eliminated if the exercise price exceeds the share price at
the balance sheet date.
c) On 8 September 2006 Westfield Medical Limited acquired the whole of the
share capital of Clinipak Limited and on 16 March 2007 Nelsons Labels
(Manchester) Limited acquired the whole of the share capital of Prime
Packaging Limited. Goodwill recognised by the Group on these acquisitions
under UK GAAP was amortised over a period of 20 years. Under IFRS goodwill
is not amortised, but tested annually for impairment and therefore the
amortisation charge recognised in accordance with UK GAAP in the period to
31 December 2006 and the year to 30 June 2007 has been written back.
However, intangible assets identified on business combinations in
accordance with IFRS as described above are amortised in accordance with
the accounting policy explained above. Application of IFRS 3 to these
business combinations resulted in identification of a number of intangible
assets. Under IFRS these have been recognised separately in the balance
sheet at their fair values at the date of the combinations, together with
the associated deferred tax. Under UK GAAP these intangible assets were
subsumed within goodwill and amortised in accordance with the Group's
accounting policy above.
The result of these changes is:
(i) To decrease goodwill by £507,000 and increase intangible assets by £725,000
(with deferred tax of £218,000) as at the date of the combination in
the case of Clinipak Limited and to decrease goodwill by £323,000 and increase
intangible assets by £461,000 (with deferred tax of £138,000 ) in the case of
Prime Packaging Limited.
(ii) At 31 December 2006 and 30 June 2007 the value of these intangible assets,
net of amortisation, was £691,000 and £989,000 respectively.
(iii) The goodwill amortisation charge in respect of these acquisitions and
that of Westfield Medical Limited and Nelsons Labels (Manchester) Limited,
acquired prior to the date of transition to IFRS, in the 6 months ended 31
December 2006 and the year ended 30 June 2007 was reduced in aggregate by
£166,000 and £348,000 respectively. The equivalent intangible assets
amortisation charge was increased by £34,000 and £163,000 respectively. A
corresponding deferred tax adjustment (at 30%) has also been made within the
Income Statement.
d) IFRS requires interest receivable and interest payable to be separately
identified.
e) Under UK GAAP, no deferred tax was recognised in respect of fair value
adjustments arising on the acquisition of Prime. IFRS requires that
deferred tax be recognised in respect of such fair value adjustments.
Accordingly a deferred tax asset of £18,000 has been recognised at 30 June 2007.
There were no fair value adjustments in respect of the acquisition of Clinipak
Limited or in respect of any acquisitions prior to the transition date.
f) In accordance with IAS 12, deferred tax is accounted for on assets
held for sale in relation to the proposed sale of the land and buildings,
whereas historically under UK GAAP (FRS 19) deferred tax has been accounted for
based on industrial building allowances. Adjustment has therefore been made at
the appropriate period end based on management's intentions in connection with
the Group's properties.
9. Explanation of material adjustments to the cash flow statement
Application of IFRS has resulted in reclassification of certain items in the
cash flow statement as follows:
(i) 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'.
(ii) Income taxes are classified as operating cash flows under IFRS, but
were included in a separate category of tax cash flows under UK GAAP.
(iii) Interest paid and interest received are classified as cash flows from
investing activities under IFRS, but were included in the 'Returns on
investments and servicing of finance' category in cash flows under UK GAAP.
(iv) Equity dividends paid are classified as financing cash flows under
IFRS, but were included in a separate category of dividend cash flows under UK
GAAP.
There are no other material differences between the cash flow statement
presented under IFRS and that presented under UK GAAP.
10. Dividends
The Company paid a dividend of 8p per share (£272,000) on 9 November 2007
relating to the financial year ended 30 June 2007. A dividend of 5p per share
(£162,000) was paid on 10 November 2006 relating to the financial year ended 30
June 2006.
11. Status of interim report
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
Group's statutory financial statements for the year ended 30 June 2007, prepared
under UK GAAP, have been filed with the Registrar of Companies. The auditor's
report on those financial statements was unqualified and did not contain a
statement under Section 237(2) and Section 237(3) of the Companies Act 1985.
12. Distribution of document
Copies of these condensed consolidated interim financial statements will be sent
to shareholders and the AIM team shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
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