Interim Results

Macfarlane Group PLC 05 September 2006 5 September 2006 MACFARLANE GROUP'S INTERIM RESULTS TO 30 JUNE 2006 Group profit for the six months of Â£0.3m Loss on continuing operations before tax of Â£0.4m Sale of Hungarian subsidiary in January 2006 for Â£2.4 million generated gain of Â£0.9 million Sales growth of 3.4% from continuing operations All businesses have the potential to deliver performance improvements Net debt of Â£6.5m at June 2006 Group expects to be strongly cash positive from trading activities in second half of 2006 Dividend intentions maintained Archie Hunter, Chairman of Macfarlane Group PLC today said:- 'In March, 2006, I reported that after four years of losses, Macfarlane Group had returned to profit in the year to 31 December 2005 and that for the current full year's trading, I was anticipating a significant advance in profits. While the first quarter was much in line with our expectations, we have been disappointed at the second quarter performance, which was weaker than projected resulting in a small loss at the half year. This was because of - pressure on gross margins in packaging distribution; - slower than planned pick-up in new sales in labels; and - higher materials and operating costs in the USA. Management action is being taken in the second half of 2006 to address all of these issues as follows:- - in packaging distribution, the acceleration of the price recovery programme, targeted materials cost savings and reductions in overheads and headcount; - strengthening of the sales team within the labels business; and - implementing price recovery and cost savings programmes in the USA The Board expects that the full year trading profits from continuing operations will show an improvement on last year's figures. The extent of the improvement will be dependent on the pace at which we can secure the results of these actions. A significant feature of attention in the second half of 2006 is the building of the foundations for sustainable growth in 2007 and beyond. The balance sheet continues to strengthen and the business's traditional strong cash generation in the second half of the year will further substantially reduce our debt. The Board is maintaining its intention, as reported in its statement in March 2006, to make dividend payments at the rate of 2p per share, 1p for each the interim and final dividends. The next dividend payment for the final dividend is expected to be made in May 2007. The Group's objective is to get the recovery back on track and the Board is confident that this will be achieved in the second half of 2006.' Further information: Archie S. Hunter Chairman 0141 333 9666 Peter D. Atkinson Chief Executive 0141 333 9666 John Love Finance Director 0141 333 9666 The interim report will be sent to shareholders on 15 September 2006 and be available to members of the public at the Company's Registered Office, 21 Newton Place, Glasgow G3 7PY from 18 September 2006. Trading performance Packaging Distribution The Macfarlane Packaging Distribution business is the leading UK distributor of a comprehensive range of packaging consumable products. In a highly fragmented market, Macfarlane currently has a 10% market share and through its 15 Regional Distribution Centres (RDCs) supplies customers on a local, regional and national basis. The business enables customers to cost effectively package their products by providing them with a comprehensive product range, single source supply, just-in-time delivery and tailored stock management programmes. In 2005 the Packaging Distribution business returned to profitability following three years of losses. Our objective in 2006 is to strengthen our position in the UK market through organic growth and targeted acquisitions. In the first half of 2006 sales per day have grown by almost 6% compared to the same period in 2005 with 10 RDCs showing growth in excess of 6%. The growth in sales has been generated through new business wins and through increased product penetration with existing customers. In addition we have improved our levels of customer service to almost 95% as measured by On-Time-in-Full (OTIF) deliveries. The first half of 2006 has been a significant period for supplier price increases due to inflation in raw materials, energy and oil related costs. This difficult pricing environment has caused delays in fully passing through supplier increases to customers, resulting in the gross margin being slightly lower than for the same period in 2005. Overhead costs have remained under control but we are continuing to make revenue investments in our web-based offering Packaging2U and to enhance the existing sales teams and to establish a New Business Development team, which will be operational in the second half of 2006. Our priorities in the second half of 2006 are to: â€¢ Accelerate the sales growth momentum seen in the first half of the year; â€¢ Return the gross margin to previous levels; â€¢ Fully deploy the New Business Development team; and â€¢ Evaluate suitable potential acquisition opportunities that can enhance our capabilities and create profitable business growth. Manufacturing Operations Both Macfarlane Labels and Macfarlane Plastics businesses supply major FMCG customers primarily, but not exclusively, based in the UK and Ireland. Labels operate from two plants, Kilmarnock and Dublin, supplying design and production of high quality self-adhesive and re-sealable labels for consumer packs. Plastics operate from Wicklow in Ireland designing and producing injection-moulded closures and dispensers primarily used in the packaging of powdered consumer products. We operate packaging manufacturing operations from two UK sites - Grantham and Westbury, both of which manufacture custom-designed packaging solutions for customers looking for cost-effective methods of protecting their products in storage and transit. Our US operations in California and Mexico focus particularly on foam-based packaging components particularly for use in the electronics, healthcare and fresh produce sectors. In the first half of 2006, the Labels business experienced sales 11% down on 2005 in the self-adhesive sector as it implemented the strategic transition from supplying the low margin own brand food-related product sector to the branded sector. This transition programme will continue until the first half of 2007. Sales of re-sealable labels continued to progress and first half sales were 2% ahead of 2005. We are also experiencing initial encouraging responses from potential re-sealable labels customers in the USA. Trading performance Manufacturing Operations (continued) The Plastics business experienced sales growth in the first half of 2006 almost 5% ahead versus the first half of 2005. However high oil prices continue to impact raw material costs and gross margins were slightly below those in the equivalent period in 2005. Our UK Packaging Manufacturing operations performed well with sales 6% ahead of the first half in 2005, through both the development of existing customers, including increased sales won in conjunction with our Distribution business and a number of good new business wins. First half sales in the US/Mexico were also 6% ahead of the same period last year, but there was some margin erosion as delays were experienced in fully passing on supplier price increases and we incurred additional costs to resolve service issues particularly in the Northern Californian market. Our new facility in Tijuana is now operational, performing in line with expectations and receiving encouraging support from existing and potential customers. Our priorities in the second half of 2006 are to: â€¢ Continue the strategic repositioning of the self-adhesive labels business; â€¢ Improve our penetration in the re-sealable labels market; â€¢ Maintain the good momentum in Plastics and UK Packaging Manufacturing; â€¢ Recover the margin erosion in Northern California; and â€¢ Fully benefit from the low cost operation now established in Tijuana. INDEPENDENT REVIEW REPORT TO MACFARLANE GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2006, which comprises the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 12. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2006. Deloitte & Touche LLP Chartered Accountants Glasgow United Kingdom 5 September 2006 MACFARLANE GROUP PLC CONSOLIDATED INCOME STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months to Six months to Year to 30 June 2006 30 June 2005 31 December 2005 Note Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Continuing operations Revenue 3 64,403 62,310 127,247 Cost of sales (43,940) (41,543) (85,122) ------- ------- ------- Gross profit 20,463 20,767 42,125 Distribution expenses (3,248) (3,119) (6,521) Administrative (17,074) (16,886) (32,676) expenses before vacant property costs Vacant property costs 3 (190) (130) (252) ------- ------- ------- Administrative expenses (17,264) (17,016) (32,928) ------- ------- ------- (49) 632 2,676 Gain on disposal of 3 - 1,335 1,300 property ------- ------- ------- Operating (loss)/ (49) 1,967 3,976 profit Investment income 59 - 103 Finance costs 4 (428) (622) (1,189) ------- ------- ------- (Loss)/profit before (418) 1,345 2,890 tax Tax 5 (230) (56) (161) ------- ------- ------- (Loss)/profit for the 8 (648) 1,289 2,729 period from continuing operations Discontinued 7 operations Profit for the period 920 196 656 from discontinued operations ------- ------- ------- Profit for the period 8 272 1,485 3,385 ======= ======= ======= (Loss)/earnings per 8 ordinary share of 25p From continuing operations Basic (0.57p) 1.15p 2.43p ======= ======= ======= Diluted (0.57p) 1.14p 2.41p ======= ======= ======= From continuing and discontinued operations Basic 0.24p 1.32p 3.01p ======= ======= ======= Diluted 0.24p 1.31p 2.99p ======= ======= ======= MACFARLANE GROUP PLC CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months Six months Year to 31 to 30 June to 30 June December 2006 2005 2005 Note Â£000 Â£000 Â£000 Exchange difference on translation of (390) (341) 144 foreign operations Actuarial gains/(losses) on defined 10 2,186 (150) (5,553) benefit pension schemes Tax on items taken directly to equity (655) 45 1,666 --------- -------- --------- Net income/(expense) recognised directly 1,141 (446) (3,743) in equity Profit for the period 272 1,485 3,385 --------- -------- --------- Total recognised income and expense for 1,413 1,039 (358) the period ========= ======== ========= MACFARLANE GROUP PLC CONSOLIDATED BALANCE SHEET AT 30 JUNE 2006 (UNAUDITED) As at As at As at 31 30 June 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Non-current assets Note Goodwill 17,195 17,054 17,182 Property, plant and equipment 13,360 15,943 14,608 Investment property 1,701 1,701 1,701 Other receivables 1,049 867 863 Deferred tax asset 11 5,806 5,059 6,651 -------- -------- -------- Total non-current assets 39,111 40,624 41,005 -------- -------- -------- Current assets Inventories 9,016 8,407 8,803 Trade and other receivables 29,235 29,205 29,639 Cash and cash equivalents 942 1,798 1,203 -------- -------- -------- Total current assets 39,193 39,410 39,645 Non current assets classified as held for - - 1,925 sale -------- -------- -------- 39,193 39,410 41,570 -------- -------- -------- -------- -------- -------- Total assets 78,304 80,034 82,575 ======== ======== ======== Current liabilities Trade and other payables 24,334 23,266 24,681 Tax liabilities 726 653 796 Obligations under finance leases 39 497 272 Bank overdrafts and loans 7,368 10,244 7,830 Liabilities directly associated with - - 485 assets classified as held for sale -------- -------- -------- Total current liabilities 32,467 34,660 34,064 -------- -------- -------- Net current assets 6,726 4,750 5,581 -------- -------- -------- Non current liabilities Retirement benefit obligations 10 20,035 17,574 22,977 Obligations under finance leases 75 120 95 -------- -------- -------- Total non-current liabilities 20,110 17,694 23,072 -------- -------- -------- -------- -------- -------- Total liabilities 52,577 52,354 57,136 ======== ======== ======== -------- -------- -------- Net assets 25,727 27,680 25,439 ======== ======== ======== Equity Share capital 28,755 28,755 28,755 Capital redemption reserve - 2,952 - Share premium - 7,547 - Revaluation reserve 167 274 167 Own shares held by employee share trust (1,406) (1,406) (1,406) Translation reserve (425) (521) (36) Retained earnings (1,364) (9,921) (2,041) -------- -------- -------- Total equity 12 25,727 27,680 25,439 ======== ======== ======== MACFARLANE GROUP PLC CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months Six months Year to to 30 June to 30 June 31 December Note 2006 2005 2005 Â£000 Â£000 Â£000 Net cash (outflow)/inflow from operating 9 (2,291) (1,090) 1,990 activities -------- -------- -------- Investing activities Interest received - 13 119 Disposal of subsidiary undertaking 7 2,174 - - Proceeds on disposal of property, plant 1,522 5,122 6,255 and equipment Purchases of property, plant and (417) (54) (869) equipment -------- -------- -------- Net cash from investing activities 3,279 5,081 5,505 -------- -------- -------- Financing activities Dividends paid (1,125) - (844) Repayments of obligations under finance (253) (229) (479) leases Decrease in bank overdrafts (462) (3,982) (6,396) -------- -------- -------- Net cash used in financing activities (1,840) (4,211) (7,719) -------- -------- -------- Net decrease in cash and cash (852) (220) (224) equivalents Cash and cash equivalents at beginning 1,794 2,018 2,018 of period -------- -------- -------- Cash and cash equivalents at end of 942 1,798 1,794 period ======== ======== ======== At 31 December 2005, cash balances of Â£591,000 were included within non-current assets classified as held for sale. MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2006 NOTES TO THE CONSOLIDATED ACCOUNTS (UNAUDITED) 1. General information The information for the year ended 31 December 2005 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985, but has been extracted from the Group's statutory accounts which have been filed with the Registrar of Companies. The auditors' report on these statutory accounts was unqualified pursuant to Section 235 of the Companies Act 1985 and did not contain a statement under sub-section 237 of that Act. 2. Basis of preparation These interim financial statements for the six months ended 30 June 2006 have been prepared on the basis of the accounting policies set out in the Group's 2005 statutory accounts and which were approved by the Board of Directors on 5 September 2006. The Group has not applied IAS 34 'Interim Financial Reporting' which is not mandatory for UK groups in the preparation of these interim financial statements. The financial statements have been prepared in accordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the Listing Rules. The interim financial statements are unaudited but have been formally reviewed by the auditors and their report to the Company is set out on page 4. 3. Segmental information The Group's activities are centred around two principal activities, with those manufacturing operations discontinued in the current and prior years disclosed separately. (i) Packaging Distribution The distribution of packaging materials from a network of 15 Regional Distribution Centres in the UK. (ii) Manufacturing Operations The manufacture and supply of self-adhesive and re-sealable labels and plastic-injection moulded products to a variety of FMCG customers in the UK and Europe and the manufacture, assembly and supply of timber, corrugated and foam based packaging materials in the UK and US/Mexico. (iii) Discontinued Operations The operations in Hungary were sold in January 2006 and are classified as discontinued in the financial statements for 2005. Revenue Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Group segment Â£000 Â£000 Â£000 Packaging Distribution 38,491 36,117 73,915 Manufacturing Operations 25,912 26,193 53,332 -------- -------- --------- Continuing operations 64,403 62,310 127,247 Discontinued operations - 1,631 3,618 -------- -------- --------- 64,403 63,941 130,865 ======== ======== ========= 3. Segmental information (continued) Trading results Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Group segment Â£000 Â£000 Â£000 Packaging Distribution (373) (362) 409 Manufacturing Operations 324 994 2,267 -------- -------- --------- Continuing operations (49) 632 2,676 Discontinued operations - 207 750 -------- -------- --------- Profit from continuing and discontinued (49) 839 3,426 operations Profit from discontinued operations - (207) (750) -------- -------- --------- Profit before property transactions (49) 632 2,676 Gain on disposal of property - 1,335 1,300 -------- -------- --------- Operating (loss)/profit (49) 1,967 3,976 ======== ======== ========= Net assets 30 June 30 June 31 December 2006 2005 2005 Group segment Â£000 Â£000 Â£000 Packaging Distribution 11,784 12,767 9,836 Manufacturing Operations 13,943 14,913 14,163 -------- -------- --------- Continuing operations 25,727 27,680 23,999 Discontinued operations - - 1,440 -------- -------- --------- Net assets 25,727 27,680 25,439 ======== ======== ========= Vacant property costs totalling Â£190,000 (June 2005 Â£130,000, December 2005 Â£252,000) have been re-categorised separately within administrative expenses, rather than being offset against property disposal gains, which gives a more appropriate classification within the business's activities. 4. Finance costs Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Interest on bank loans and overdrafts (281) (373) (698) Interest on obligations under finance leases (8) (26) (43) Interest cost of pension scheme liabilities (1,503) (1,371) (2,728) -------- -------- --------- Total interest expense (1,792) (1,770) (3,469) Expected return on pension scheme assets 1,364 1,148 2,280 -------- -------- --------- Net finance costs (428) (622) (1,189) ======== ======== ========= 5. Taxation Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Current tax UK corporation tax - - (40) Overseas taxation (53) (56) (121) Prior year 17 - - -------- -------- --------- Current tax (36) (56) (161) Deferred tax (194) - - -------- -------- --------- Total (230) (56) (161) ======== ======== ========= Corporation tax has been provided for the period to 30 June 2006, reflecting the expected tax rate for the full year on overseas earnings. Included within the deferred tax charge of Â£194,000 is Â£227,000 in relation to the pension deficit. No tax has been provided on the UK results, reflecting the expected tax rate for the full year. 6. Dividends Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Amounts recognised as distributions to equity holders in the period Interim dividend in respect of the year ended 31 1,125 - 844 December 2006 (1.00p per share) 2005 (0.75p per ======== ======== ========= share) Dividends are not payable on shares held in the employee share trust. 7. Discontinued operations In January 2006, the Group's Hungarian subsidiary was sold. The decision to sell the business was taken before 31 December 2005, consequently the component parts of the balance sheet sold in January 2006 were classified as non-current assets and current liabilities held for sale at 31 December 2005. The trading activities of the business in Hungary have been disclosed as discontinued operations in these financial statements and the relevant information for comparative periods is as follows:- Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Revenue - 1,631 3,618 -------- -------- --------- Profit from operations - 207 750 Investment income - 27 32 Gain on disposal of subsidiary undertaking 920 - - -------- -------- --------- Profit before tax 920 234 782 Tax - (38) (126) -------- -------- --------- Post-tax profit from discontinued operations 920 196 656 ======== ======== ========= 7. Discontinued operations The amounts treated as disposed of in the period are as follows:- Six months to 30 June 2006 Â£000 Â£000 Cash consideration (net of attributable expenses) 2,174 Deferred consideration 186 --------- Total consideration (net of attributable 2,360 expenses) Assets classified as held for sale 1,925 Liabilities directly associated with assets held for sale (485) 1,440 --------- Gain on disposal of subsidiary undertaking 920 ========= 8. (Loss)/earnings per share Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Earnings Earnings from continuing and discontinued 272 1,485 3,385 operations for the purposes of earnings per share -------- -------- --------- being net profit attributable to equity holders of the parent Adjustments to exclude discontinued operations - (196) (656) Profit for the year from discontinued operations (920) - - Profit on disposal of discontinued operations -------- -------- --------- (Loss)/earnings from continuing operations for (648) 1,289 2,729 the purposes of earnings per share being net ======== ======== ========= (loss)/profit attributable to equity holders of the parent Weighted average number of ordinary shares in 115,019 115,019 115,019 issue '000 Own shares in Employee Share Ownership Trusts (2,491) (2,491) (2,491) '000 -------- -------- --------- Weighted average number of shares in issue for 112,528 112,528 112,528 the purposes of basic earnings per share '000 Effect of dilutive potential ordinary shares due 970 620 602 to share options -------- -------- --------- ======== ======== ========= Weighted average number of shares in issue for 113,498 113,148 113,130 the purposes of diluted earnings per share '000 ======== ======== ========= 9. Notes to the cash flow statement Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Operating (loss)/profit Continuing operations (49) 1,967 3,976 Discontinued operations - 207 750 -------- -------- --------- (Loss)/profit from operations (49) 2,174 4,726 Adjustments for: Depreciation of property, plant and equipment 1,521 1,521 3,349 Gain on disposal of property, plant and equipment (2) (1,382) (1,075) -------- -------- --------- Operating cash flows before movements in working 1,470 2,313 7,000 capital (Increase)/decrease in inventories (213) 282 (379) (Increase)/decrease in receivables (913) 788 (1,981) Decrease in payables (1,296) (3,890) (1,233) Adjustment for pension scheme funding (736) - - -------- -------- --------- Cash generated by operations (1,688) (507) 3,407 Income taxes paid (123) (38) (212) Interest paid (480) (545) (1,205) -------- -------- --------- Net cash (outflow)/inflow from operating (2,291) (1,090) 1,990 activities ======== ======== ========= Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less. Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Movement in net debt Â£000 Â£000 Â£000 Decrease in cash and cash equivalents in the (852) (220) (224) period Decrease in bank overdrafts 462 3,982 6,396 Cash flows from debt and lease financing 253 229 479 -------- -------- --------- Movement in net debt in the year (137) 3,991 6,651 Opening net debt (6,403) (13,054) (13,054) -------- -------- --------- Closing net debt (6,540) (9,063) (6,403) ======== ======== ========= Net debt comprises:- Cash and cash equivalents 942 1,798 1,203 Cash and cash equivalents in business held for - - 591 resale Bank overdrafts and loans (7,368) (10,244) (7,830) Obligations under finance leases (114) (617) (367) -------- -------- --------- Closing net debt (6,540) (9,063) (6,403) ======== ======== ========= 10. Pension scheme creditor The figures below have been based on the results of the triennial actuarial valuation as at 1 May 2005, updated to 30 June 2006, 31 December 2005 and 30 June 2005. The assets in the scheme, the net liability position of the scheme as calculated under IAS 19 and the principal assumptions were: 30 June 30 June 31 December 2006 2005 2005 Â£000 Â£000 Â£000 Fair value of assets 41,037 37,294 40,776 Present value of scheme liabilities (61,072) (54,868) (63,753) -------- --------- -------- Pension scheme deficit (20,035) (17,574) (22,977) Deferred tax asset 6,011 5,272 6,893 -------- --------- -------- Pension scheme deficit net of related deferred (14,024) (12,302) (16,084) tax asset ======== ========= ======== The scheme's liabilities were calculated on the following bases as required under IAS 19: Assumptions 30 June 2006 30 June 2005 31 December 2005 Discount rate 5.25% 5.00% 4.75% Rate of increase in salaries 3.00% 2.50% 2.75% Rate of increase in pensions in payment 3% or 5% 3% or 5% 3% or 5% for fixed for fixed for fixed increases increases increases or 2.75% for LPI or 2.75% for or 2.75% for LPI LPI Inflation assumption 3.00% 2.50% 2.75% Movement in scheme deficit in the period Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 At start of period (22,977) (17,424) (17,424) Current service cost (221) (152) (298) Employer contributions 1,116 375 746 Net finance costs (139) (223) (448) Actuarial gain/(loss) in the period 2,186 (150) (5,553) -------- -------- --------- At end of period (20,035) (17,574) (22,977) ======== ======== ========= 10. Pension scheme creditor (continued) Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Movement in assets during the period Assets at start of period 40,776 35,121 35,121 Expected return on assets 1,364 1,148 2,280 Actual less expected return on assets (1,542) 1,433 4,093 Employer contributions 1,116 375 746 Employee contributions 110 111 231 Benefits paid (787) (894) (1,695) -------- -------- --------- 41,037 37,294 40,776 ======== ======== ========= Movement in liabilities during the period Liabilities at start of period (63,753) (52,545) (52,545) Service costs (221) (152) (298) Interest costs (1,503) (1,371) (2,728) Employee contributions (110) (111) (231) Actuarial gain/(loss) on liabilities in the 3,728 (1,583) (9,646) period Benefits paid 787 894 1,695 -------- -------- --------- (61,072) (54,868) (63,753) ======== ======== ========= 11. Deferred tax asset 30 June 30 June 31 December 2006 2005 2005 Â£000 Â£000 Â£000 Deferred tax asset on pension scheme deficit 6,893 5,227 5,227 at start of period (Charge)/credit on actuarial movement in the (655) 45 1,666 period applied through statement of recognised income and expense (Charge) through income statement based on (227) - - payments made to reduce deficit in the period -------- -------- --------- Deferred tax asset on pension scheme deficit 6,011 5,272 6,893 (see note 10) Deferred tax liabilities on timing (205) (213) (242) differences -------- -------- --------- Net deferred tax asset 5,806 5,059 6,651 ======== ======== ========= 12. Reconciliation of movements in equity Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 Â£000 Â£000 Â£000 Profit for the period 272 1,485 3,385 Dividends to equity holders in the period (1,125) - (844) Exchange differences on translation of (390) (341) 144 foreign operations Actuarial gains/(losses) on pension schemes 2,186 (150) (5,553) Taxation on items taken direct to equity (655) 45 1,666 -------- -------- --------- Movements in equity in the period 288 1,039 (1,202) Opening equity 25,439 26,641 26,641 -------- -------- --------- Closing equity 25,727 27,680 25,439 ======== ======== ========= This information is provided by RNS The company news service from the London Stock Exchange

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