Final Results

Associated British Engineering PLC 28 July 2006 A â€¢ B â€¢ E ASSOCIATED BRITISH ENGINEERING PLCâ€¢ PRELIMINARY ANNOUNCEMENT ASSOCIATED BRITISH ENGINEERING PLC CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 The Group made a pre-tax loss of Â£78,000 from continuing operations compared with a pre-tax loss of Â£327,000 last year. This is the first financial year where the Group has produced its preliminary announcement in accordance with International Accounting Standards as adopted by the EU. As a result, whilst there is an additional charge in respect of the interest on the pension fund liability, the underlying performance from the only operating subsidiary British Polar Engines Limited ('BPE') has improved. There have been further ongoing costs relating to the negotiation of the settlement with the Trustees of the pension fund amounting to Â£35,000. We have been having negotiations with the Pensions Protection Fund ('PPF') for some time, and the satisfactory conclusion of these, which is anticipated by the Board in the near future, would result in the PPF taking over the obligations for the BPE section of the ABE Pension Fund, and the Company would then have no further liabilities to the ABE Pension Fund. BPE has not been able to meet its statutory obligations concerning its contributions to the Pension Fund, which has resulted in the need to conclude a settlement with the Pension Regulator and the PPF. All sections of the Pension Fund show an actuarial deficit of Â£4,395,000 at 31 March 2006 (Â£4,124,000 at 31 March 2005), but all sections of the Pension Fund, with the exception of the BPE section are in wind up. Further details of the Pension Fund are set out in note 7 to the preliminary financial statements. BPE again improved its performance significantly and made an operating profit of Â£337,000 against a profit of Â£65,000 last year. The Board of BPE should be congratulated for its endeavours for continuing to develop its businesses for a stable platform. At long last, the Board feels that a final resolution of the Pension Fund issues are in sight, and will be announcing at the appropriate time any completion of contractual arrangements with the PPF. Thereafter the Board will be able to devote more time to the future development of the Group, with the pension matters resolved and the operating subsidiary BPE performing well. The Board has continued to keep the central costs of the Company at as low a level as reasonably possible, and recognises that its priority will be to find a suitable corporate transaction to take the Group forward. The Board and I are very grateful for the patience of the shareholders in what has been a long and hard road to the resolution of the Pension issues. D A H Brown Chairman 27 July 2006 ASSOCIATED BRITISH ENGINEERING PLC GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 2006 2005 Â£'000 Â£'000 REVENUE 3,278 2,700 Cost of sales and overheads (3,050) (2,671) ______ ______ OPERATING PROFIT 228 29 Finance expense (340) (387) Finance income 34 31 LOSS BEFORE TAXATION (78) (327) Taxation - - ______ ______ LOSS FOR THE YEAR (78) (327) ====== ====== LOSS PER SHARE BASIC AND DILUTED (6)p (25)p ====== ====== GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31 MARCH 2006 2006 2005 Â£'000 Â£'000 Actuarial (losses)/gains on retirement benefit obligation (933) 1,013 Loss for the year (78) (327) ------ ------ TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR (1,011) 686 ====== ====== ASSOCIATED BRITISH ENGINEERING PLC GROUP BALANCE SHEET 31 MARCH 2006 2006 2005 Â£'000 Â£'000 ASSETS Non-current assets Property, plant and equipment 299 337 Current assets Inventories 1,328 1,273 Trade and other receivables 670 407 Held for trading investments 60 30 Cash and cash equivalents 1,205 1,173 3,263 2,883 Total assets 3,562 3,220 EQUITY AND LIABILITIES Called up share capital 2,627 2,627 Share premium account 5,038 5,038 Other reserve 11 11 Retained earnings (9,239) (9,178) --------- --------- Equity attributable to the Company's Equity shareholders (1,563) (1,502) --------- --------- LIABILITIES Non-current liabilities Retirement benefit obligation 4,395 4,124 Cumulative preference shares - - Obligations under finance leases 1 1 --------- --------- 4,396 4,125 --------- --------- Current liabilities Trade and other payables 728 593 Obligations under finance leases 1 4 --------- --------- 729 597 --------- --------- Total liabilities 5,125 4,722 --------- --------- Total equity and liabilities 3,562 3,220 --------- --------- ASSOCIATED BRITISH ENGINEERING PLC GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 2006 2005 Â£'000 Â£'000 Cash flows from operating activities Cash generated from operations 69 (57) Interest received 34 31 Interest paid (4) (9) Net cash from/(used in) operating activities 99 (35) Cash flows from investing activities Proceeds from sale of property, plant and equipment 5 - Purchase of property, plant and equipment (39) (7) (Purchase) /proceeds (of)/from trading investments (30) 9 Net cash (used in)/generated from investing activities (64) 2 Cash flows from financing activities Repayments of obligations under finance leases (3) (4) Net cash used in financing activities (3) (4) Net increase/(decrease) in cash and cash equivalents 32 (37) Cash and cash equivalents at beginning of year 1,173 1,210 Cash and cash equivalents at end of year 1,205 1,173 CASH FLOW FROM OPERATING ACTIVITIES 2006 2005 Â£'000 Â£'000 Net loss (78) (327) Adjustments for: Depreciation 72 83 Interest income (34) (31) Interest expense 4 9 Pension scheme interest expense 336 378 Current service cost (37) - Changes in working capital: Increase in inventories (55) (13) (Increase)/decrease in trade and other receivables (263) 109 Increase/(decrease) in payables 135 (139) Decrease in provisions (11) (126) ---------- ---------- Cash generated from/(used in) operations 69 (57) ===== ===== ASSOCIATED BRITISH ENGINEERING PLC GROUP ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2006 BASIS OF PREPARATION The preliminary announcement has been prepared in accordance with applicable accounting standards as stated in the interim financial statements for the six months ended 30 September 2005. The Group's interim report for the six months ended 30 September 2005 included details of the transition to IFRS. However, following the release of the interim report, further consideration has been given to the fair values of both the preference shares in issue and the unpaid dividends thereon, as required by IAS 39 'Financial Instruments: Recognition and Measurement', specifically the expected payment dates. As a result the fair values for both the preference shares in issue and the unpaid dividends is shown as zero. ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE PRELIMINARY STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 1. SEGMENTAL REPORTING Based on risks and returns the directors consider that the primary reporting format is by business segment. The directors consider that there is only one business segment being diesel and related engineering activities. Therefore the disclosures for the primary segment have been given in the Group income statement and Group balance sheet. The secondary reporting format is by geographical analysis by destination as shown below. The following table shows an analysis of the Group's sales by geographical market: 2006 2005 Â£'000 Â£'000 United Kingdom 1,347 1,120 Europe 769 667 Middle East 256 92 Far East and Australasia 312 354 Africa 57 209 North and South America 522 233 Russia 15 25 ------ ------ 3,278 2,700 ====== ====== All of the above turnover arises from diesel and related engineering activities and originates in the United Kingdom. In the year ended 31 March 2006 and 31 March 2005 all of the assets held by the group were located in the United Kingdom and all capital expenditure was incurred within the United Kingdom. 2. OPERATING PROFIT 2006 2005 Â£'000 Â£'000 Operating profit is stated after charging Depreciation on owned assets 70 82 Depreciation on assets held under finance leases 2 1 Auditor's remuneration: Audit (Company Â£15,000 (2005: Â£16,000)) 30 31 Operating lease rental on plant and machinery 25 32 Pension provision reversal (11) (49) Staff costs 1,120 956 Cost of inventories recognised as an expense 1,686 1,349 ====== ====== In addition an amount of Â£8,200 (2005: Â£18,000) was payable to the auditor in respect of the provision of non audit services during the year. The amount payable relates to corporation tax compliance and advisory work. 3. NET FINANCE EXPENSE 2006 2005 Â£'000 Â£'000 Interest on obligations under finance leases 4 9 7% Cumulative preference dividend - - 8% Cumulative redeemable preference dividend - - Pension interest cost less expected 336 378 return on scheme assets 340 387 Interest receivable (34) (31) (306) 356 ===== ===== The Company is required to pay cumulative dividends on the non-equity shares. However, the Company has insufficient distributable reserves to pay this dividend which has been provided in accordance with the Company's Articles of Association. Further information is disclosed within note 6 of the notes to this preliminary announcement. 4. LOSS PER SHARE The calculation of loss per ordinary share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Given the loss in the current year and the prior year, the share options in issue are not dilutive in accordance with IAS 33 'Earnings per share'. 2006 2005 Weighted Weighted Average Per shares Average Per shares Loss number of amount Loss Number of amount Â£'000 Shares pence Â£'000 Shares Pence Basic and diluted loss (78) 1,313,427 (6) (327) 1,313,427 (25) per share ========= ========= ========= ========= ========= ========= 5. PROPERTY, PLANT AND EQUIPMENT Freehold land and Plant and buildings machinery Total Â£'000 Â£'000 Â£'000 COST At 1 April 689 1,512 2,201 2004 Additions - 7 7 Disposals - (85) (85) ---------------- ------------------- ------------------- At 1 April 689 1,434 2,123 2005 Additions - 39 39 Disposals - (97) (97) ---------------- ------------------- ------------------- At 31 689 1,376 2,065 March 2006 ---------------- ------------------- ------------------- ACCUMMULATED DEPRECIATION At 1 April 457 1,331 1,788 2004 Charge for 32 51 83 year Eliminated - (85) (85) on disposals ---------------- ------------------- ------------------- At 1 April 489 1,297 1,786 2005 Charge for 32 40 72 year Eliminated - (92) (92) on disposals ---------------- ------------------- ------------------- At 31 521 1,245 1,766 March 2006 ---------------- ------------------- ------------------- CARRYING AMOUNTS At 31 168 131 299 March 2006 ======== ========= ========== At 31 200 137 337 March 2005 ======== ======== ========== Plant and machinery assets with a carrying amount of Â£10,000 (2005: Â£12,000) are held under finance leases. The amount of depreciation in respect of such assets amounted to Â£2,000 (2005: Â£1,000) for the year. 6. SHARE CAPITAL 2006 2005 Â£'000 Â£'000 Authorised: 1,699,078 ordinary shares of Â£2 each 3,398 3,398 750,000 7% Cumulative preference shares of Â£1 each 750 750 1,681,443 8% Cumulative redeemable preference shares of Â£1 each 1,681 1,681 ------------- ------------ 5,829 5,829 ====== ====== Allotted and fully paid: 1,313,427 ordinary shares of Â£2 each 2,627 2,627 555,000 7% Cumulative preference shares of Â£1 each 555 555 157,395 8% Cumulative redeemable preference shares of Â£1 each 157 157 ------------- ------------ 3,339 3,339 ====== ===== 6. SHARE CAPITAL (continued) 2006 2005 Â£'000 Â£'000 Equity shares: 1,313,427 ordinary shares of Â£2 each 2,627 2,627 ====== ====== Shares classed as financial liabilities 555,000 7% Cumulative preference shares of Â£1 each 555 555 157,395 8% Cumulative redeemable preference shares of Â£1 each 157 157 ------------- ------------ 712 712 ===== ====== There were no shares allotted during the course of the year ended 31 March 2006 or 31 March 2005. The company has one class of ordinary share which carries no right to fixed income. The company also has two classes of cumulative preference shares, which carry the right to fixed returns of 7% and 8% per annum respectively. The 7% cumulative preference shares and 8% cumulative redeemable preference shares, classified as debt under IAS 32, are non voting unless the dividends are six months in arrears or the resolution relates to the winding up of the Company or affects the rights attaching to them. The Company has the power to redeem the 8% Cumulative preference shares at par (together with arrears of dividends) at any time. Since the dividends are more than 6 months in arrears, the 8% Cumulative redeemable preference shares of Â£1 each have 50 votes per share and the 7% Cumulative preference shares of Â£1 each have 4 votes per share. In accordance with IAS 39 the 7% cumulative preference shares and the 8% cumulative redeemable preference shares are required to be carried at fair value within the financial statements. As there is no expectation of being able to redeem the preference shares in the foreseeable future the fair value is deemed to be zero. The 7% cumulative preference shares are accruing a dividend of Â£38,000 per annum and the 8% cumulative redeemable preference shares are accruing a dividend of Â£13,000 per annum. At 31 March 2006 total dividend arrears of Â£306,000 (2005: Â£255,000) had accrued, representing arrears to date of 42 pence per share relating to the 7% cumulative preference shares and 48 pence per share relating to the 8% cumulative redeemable preference shares. Under IAS 32 the preference dividends should be disclosed as finance charges and any arrears of dividends included with accruals. IAS 39 also permits the total of accumulated arrears of dividends to be discounted. As the company has no distributable reserves and there is no expectation of being able to pay the dividend arrears in the foreseeable future as a result of anticipated future cash flows, the accrued dividends are deemed to have a fair value of zero and therefore have been discounted to zero. 7. STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT Share Capital Share Premium Other reserve Retained Earnings Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 1 April 2004 2,627 5,038 11 (9,864) (2,188) Loss for the year - - - (327) (327) Actuarial gains in - - - 1,013 1,013 defined benefit plan -------------- -------------- -------------- --------------- ------------- Balance at 31 March 2005 2,627 5,038 11 (9,178) (1,502) Loss for the year - - - (78) (78) Actuarial losses in - - - (933) (933) defined benefit plan Defined benefit plan - - - 950 950 adjustment -------------- -------------- -------------- --------------- ------------- Balance at 31 March 2006 2,627 5,038 11 (9,239) (1,563) ====== ====== ====== ======= ====== 8. RETIREMENT BENEFIT SCHEMES The Group operates a defined benefit pension scheme, holding the assets in a separate trustee administered fund ('the ABE Pension Fund'). The required contributions are assessed with the advice of an independent qualified actuary using the projected unit credit method and charged to the profit and loss account so as to spread the cost of pensions over employees' working lives with the Group. The Group also has a designated Group personal pension plan which meets stakeholder requirements. The Company is in the process of leaving the ABE Pension Scheme and has negotiated 'in principle' Heads of Terms with the Trustees of the scheme. 2006 2005 Â£'000 Â£'000 (a) Pension cost (recognised in Income Statement) Operating charge Current service cost 109 103 --------------- --------------- Total operating charge 109 103 --------------- --------------- Other finance charges Interest on pension scheme liabilities 663 665 Expected return on pension scheme assets (327) (287) --------------- --------------- Net finance charge 336 378 --------------- --------------- Total pension cost recognised in the Income Statement 445 481 ======= ======= (b) Benefit liability Present value of funded obligations 14,088 12,186 Fair value of plan assets (9,693) (8,062) --------------- --------------- Net liability 4,395 4,124 ======= ======= The major categories of plan assets are as follows: Equities 4,103 4,404 Bonds 4,673 2,574 Cash (33) 1,084 Other 950 - --------------- --------------- 9,693 8,062 ======= ======= (c) Change in benefit obligation Benefit obligation at beginning of the year 12,186 12,200 Current service cost 109 103 Interest cost 663 665 Actuarial losses/(gains) 1,519 (444) Contributions by plan participants 24 23 Benefits paid (413) (361) --------------- --------------- Benefit obligation at end of the year 14,088 12,186 ======= ======= Â£'000 Â£'000 (d) Change in plan assets Fair value of plan assets at beginning of the year 8,062 7,315 Expected return on plan assets 327 287 Actuarial gains on plan assets 586 569 Contributions made by employer 157 229 Contributions by plan participants 24 23 Benefits paid (413) (361) Defined benefit plan adjustment 950 - --------------- --------------- Fair value of plan assets at end of the year 9,693 8,062 ======= ======= 2006 2005 % per annum % per annum Equities 5.4 5.4 Bonds 3.0 3.0 Cash 1.5 1.5 --------------- --------------- Overall rate of return for the plan 4.1 4.1 ======= ======= The actual return on the plan assets over the year ended 31 March 2006 was 19.27%. (e) Principal actuarial assumptions Inflation 3.0% 3.0% Rate of increase in pensionable salaries 4.0% 4.0% Discount rate 5.0% 5.5% Pension in payment increases 2.8% 2.8% Revaluation rate for deferred pensioners 3.0% 3.0% Estimate of contributions to be paid in the next accounting period Â£161,000 Â£157,000 Pre retirement mortality AM92,-5 (males) AM92,-5 (males) AF92,-5 (females) AF 92,-5 (females) Post retirement mortality PMA92 (males) PMA92 (males) PFA92 (females) PFA92 (females) (f) History of experience gains and losses (i) Difference between the expected and actual return on scheme assets: (a) Amount (Â£'000) 586 569 (b) Percentage of scheme assets 7% 7% (ii)Experience (gains) and losses on scheme liabilities (a) Amount (Â£'000) (424) 444 (b) Percentage of present value of scheme liabilities (3)% 4% The Group has taken advantage of the transitional exemption within IAS 1 to disclose the history of experienced gains and losses from the date of transition only. In accordance with these transitional exemptions, the Group is required to disclose the cumulative actuarial gains or losses from the date of transition which comprise a cumulative loss of Â£1,075,000. (g) Balance sheet reconciliation 2006 2005 Â£'000 Â£'000 Liability as at 1 April 4,124 4,885 Pension expense recognised in financial year 445 481 Amounts recognised in Statement of Recognised Income and Expense 933 (1,013) Employer contributions made in the financial year (157) (229) Defined benefit plan adjustment (950) - --------------- --------------- Liability at 31 March 4,395 4,124 ======= ======= Shown as: Non-current liability 4,395 4,124 ======= ======= 9. TRANSITION TO IFRS Associated British Engineering plc's Group financial statements were prepared in accordance with UK GAAP until the period ended 31 March 2005. UK GAAP differs in some areas from IFRS. In preparing the Group financial statements, management has amended certain accounting methods applied in the UK GAAP financial statements to comply with IFRS. The comparative figures in respect of 2005 have been restated to reflect these adjustments. The Group's transition date for IFRS was 1 April 2004 and it prepared its opening IFRS balance sheet at that date. In preparing the consolidated financial statements in accordance with IFRS 1, the Group has elected to apply the share-based payment exemption. It applied IFRS 2 'Share Based Payment' from 1 April 2004 to those options which were issued after 7 November 2002 but had not vested by 1 April 2005. 10. EXPLANATION OF THE EFFECT OF THE TRANSITION TO IFRS The following explains the material adjustments on the Group preliminary financial statements following the transition to IFRS. (a) Retirement benefit obligation At 1 At 31 April 2004 March 2005 Â£'000 Â£'000 Retirement benefit obligation (4,885) (4,124) Reversal of pension provision 60 11 ---------- ---------- (4,825) (4,113) ====== ====== Under IAS 19 Employee Benefits, actuarial gains and losses are recognised in the balance sheet and the provision recognised under UK GAAP is reversed. No adjustment has been made in respect of deferred tax as it is uncertain whether any tax is recoverable. (b) Non-equity financial instruments Under IAS 32 'Financial Instruments: Disclosure and Presentation' the group's 7% cumulative preference shares and 8% cumulative redeemable preference shares fall to be classified as debt in the balance sheet and the dividends classified as financial expense in the income statement. However, under IAS 39 'Financial Instruments: Recognition and Measurement', the preference shares and the dividend liability must be recognised at its fair value, taking into account the expected payment date. As there is no expectation of being able to redeem the preference shares in the foreseeable future the fair value is zero. As there is no expectation of being able to pay the dividend arrears totalling Â£204,000 at 1 April 2004 and Â£255,000 at 31 March 2005 in the foreseeable future the fair value is deemed to be zero. The ability of the Company to redeem the preference shares and to pay the dividend will be assessed on an ongoing basis. (c) Adjustments to Share capital At 1 At 31 April 2004 March 2005 Â£'000 Â£'000 Reclassification of non-equity instruments 712 712 ====== ====== (d) Adjustments to Retained Earnings At 1 At 31 April 2004 March 2005 Â£'000 Â£'000 Retirement benefit obligation (4,885) (4,124) Reversal of pension provision 60 11 Fair value adjustment to non-equity instruments 712 712 ------------ ------------ (4,113) (3,401) ====== ====== In addition, the following adjustments have also been made: â€¢ the operating profit has been adjusted for the recognition of the current service cost of Â£77,000 â€¢ the net finance expense for the Group has been adjusted for the effects of IFRS as follows: Net return on the pension scheme's Â£378,000 assets and liabilities ======== â€¢ Â£18,000 cash held by third parties is no longer recognised as an investment but is included within cash 11. RECONCILIATION OF EQUITY (i) At 1 April 2004 (date of transition to IFRS) Note UK GAAP Adjustments IFRS Â£'000 Â£'000 Â£'000 ASSETS Non-current assets Property, plant and equipment 413 - 413 ------------- ------------- ------------- Current assets Investments 39 - 39 Inventories 1,260 - 1,260 Trade and other receivables 516 - 516 Cash and cash equivalents 1,210 - 1,210 ------------- ------------- ------------- 3,025 - 3,025 ------------- ------------- ------------- Total assets 3,438 - 3,438 ====== ====== ====== EQUITY Capital and reserves attributable to the Company's equity shareholders Called up share capital 10(c) 3,339 (712) 2,627 Share premium account 5,038 - 5,038 Other reserve 11 - 11 Retained earnings 10d) (5,751) (4,113) (9,864) ------------- ------------- ------------ Total equity 2,637 (4,825) (2,188) ------------- ------------- ------------ LIABILITIES Non-current liabilities Retirement benefit obligation 10(d) 60 4,825 4,885 Obligations under finance leases 5 - 5 Borrowings - Cumulative preference shares 10(b and c) - - - --------- ------------- ------------ 65 4,825 4,890 --------- ------------- ------------ Current liabilities Trade and other payables 732 - 732 Obligations under finance leases 4 - 4 --------- --------- ------------ 736 - 736 --------- --------- ------------ Total liabilities 801 4,825 5,626 ------------- ---------- ----------- Total equity and liabilities 3,438 - 3,438 ====== ===== ===== (ii) At 31 March 2005 Note UK GAAP Adjustments IFRS Â£'000 Â£'000 Â£'000 ASSETS Non-current assets Property, plant and equipment 337 - 337 ------------- --------- ----------- Current assets Investments 10(d) 48 (18) 30 Inventories 1,273 - 1,273 Trade and other receivables 407 - 407 Cash and cash equivalents 10(d) 1,155 18 1,173 ------------- ---------- ------------ 2,883 - 2,883 ------------- ---------- ----------- Total assets 3,220 - 3,220 ====== ===== ===== EQUITY Capital and reserves attributable to the Company's equity shareholders Called up share capital 10(c) 3,339 (712) 2,627 Share premium account 5,038 - 5,038 Other reserve 11 - 11 Retained earnings 10(d) (5,777) (3,401) (9,178) ------------- ------------- ------------ Total equity 2,611 (4,113) (1,502) ------------- ------------- ------------ Non-current liabilities Retirement benefit obligation 10(d) 11 4,113 4,124 Obligations under finance leases 1 - 1 Borrowings - Cumulative preference shares 10(b and c) - - - ------------- ------------- ------------ 12 4,113 4,125 ------------- ------------- ------------ Current liabilities Trade and other payables 593 - 593 Obligations under finance leases 4 - 4 ------------- ------------- ------------ 597 - 597 ------------- ------------- ------------ Total liabilities 609 4,113 4,722 ------------- ------------- ------------ Total equity and liabilities 3,220 - 3,220 ====== ====== ===== 12. RECONCILIATION OF PROFIT AND LOSS (i) Year ended 31 March 2005 Note UK GAAP Adjustments IFRS Â£'000 Â£'000 Â£'000 TURNOVER 2,700 - 2,700 Operating expenses 10(d) (2,748) 77 (2,671) ------------- ------------- ------------- OPERATING LOSS (48) 77 29 Net finance expense 10(d) 22 (378) (356) ------------- ------------- ------------- LOSS BEFORE TAXATION (26) (301) (327) Taxation - - - ------------- ------------- ------------- LOSS FOR THE YEAR (26) (301) (327) ====== ====== ===== 13. RECONCILIATION OF CASH FLOW STATEMENT (i) Year ended 31 March 2005 Note UK GAAP Adjustments IFRS Â£'000 Â£'000 Â£'000 Cash outflow from operating activities (57) - (57) Net cash inflow from returns on investments and servicing of finance 22 - 22 Net cash inflow from capital expenditure and financial investment 2 - 2 Net cash outflow from the management of liquid resources 10(d) (18) 18 - ------------- ------------- ------------- Cash outflow before financing (51) 18 (33) Net cash outflow from financing (4) - (4) ------------- ------------- ------------- Decrease in cash in the year (55) 18 (37) ====== ====== ====== 14. PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in the preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985 but is derived from the 2006 financial statements. Statutory accounts for 2005, which were prepared under UK GAAP and contained an unqualified auditor's report, have been delivered to the Registrar of Companies, and those for 2006, prepared in accordance with International Financial Reporting Standards, will be delivered in due course. The auditors have reported on the accounts for the year ended 31 March 2006 and their report was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The auditors have included an emphasis of matter statement with regard to going concern. They have drawn attention to the Directors statement that 'BPE has not been able to meet its statutory obligations concerning the Pension Fund, which has resulted in the need to conclude a settlement with the Pension Regulator and the PPF. All sections of the ABE Pension Fund show an actuarial deficit of Â£4,395,000 at 31 March 2006 (Â£4,124,000 at 31 March 2005), but all sections of the Pension Fund, with the exception of the BPE section, are in wind up. The financial statements have been prepared on the going concern basis as the Board expects a successful outcome to negotiations with the Pension Regulator and the PPF, as explained in the Chairman's Statement. It therefore considers that the Group has sufficient resources to continue in operational existence for the foreseeable future.' D A H Brown 28 July 2006 Enquiries: Mr D.A.H. Brown (Chairman) This information is provided by RNS The company news service from the London Stock Exchange

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