Interim Results

Printing.com plc 12 November 2007 FOR RELEASE 7.00AM 12 November 2007 Printing.com plc ('Printing.com' or 'the Company') Specialist retail chain with 224 Outlets open and pending across the UK & Ireland Unaudited Interim Results for the period ended 1 October 2007 Six months Six months ended ended 1 October 1 October 2007 2006 (*restated) £'000 £'000 Change Total Retail Sales** 12,119 10,579 +14.6% Turnover 6,439 5,647 +14.0% EBITDA 1,593 1,303 +22.3% Profit before tax 968 924 +4.8% EPS - Basic 1.51p 1.45p +4.1% EPS - Fully Diluted 1.45p 1.38p +5.1% Dividend 1.00p 0.60p +66.7% Outlets Active at Period end Stand alone stores 49 48 +2.1% Bolt-ons 163 127 +28.3% Total Active 212 175 +21.1% Contracted 12 13 - Total Outlets open and pending 224 188 +19.1% * The comparative figures for the six month period ended 1 October 2006 have been restated from the previously reported results for the 28 week period ended 15 October 2006 to allow comparable financial results for the current period. In addition, the comparative figures have been restated to reflect the change in revenue recognition policy adopted in the financial statements for the year ended 2 April 2007 and to reflect the correct treatment for rollover relief claimed in the period as identified in the financial statements for the year ended 2 April 2007. Note 1 to the interim statements provides details of this restatement. In addition the results presented are prepared under IFRS. The conversion to IFRS is explained in the attached Restatement Report. There was no impact on profit as a result of the transition. ** Total Retail Sales is the retail sales value of product which goes through the Printing.com network and for which Printing.com earns revenue. * Sales, profits and earnings per share at record levels * Expansion accelerates with 29 new outlets signed in the period * Like for like growth during the interim period increased to 12.9% * Cash in hand £2.74 million * Record sales volumes in October * Strong pipeline of prospective Bolt-on Franchises * Good progress in New Zealand, Iceland and France * Websites by Printing.com pass the 300 live site mark * Internal budget weighted strongly to second half * Cautiously optimistic that growth will continue For further information: Printing.com plc Tony Rafferty (Chief Executive) 07966 517 336 Alan Roberts (Finance Director) 07977 277 521 Cubitt Consulting Brian Coleman-Smith / James Verstringhe / Nicola Krafft 020 7367 5100 Printing.com Printing.com offers a broad product range including leaflets, booklets, postcards, promotional cards, invitations, letterheads and business cards to consumers and small and medium sized companies. Unlike its competitors, Printing.com's Stores and Franchises do not depend on any printing equipment on location. The Company's printing and ancillary equipment is based at the centralised Production Hub with the head office in Manchester. All work is produced in full four colour rather than two colour. The printing sector has traditionally been served by smaller printing companies or other On Demand Printers and is estimated to be worth some £1 billion. Printing.com has three routes to market: Franchise Stores, Bolt-on Franchises and Company owned Stores. Printing.com plc ('Printing.com' or 'the Company') Specialist retail chain with 224 Outlets open and pending across the UK & Ireland Unaudited Interim Results for the period ended 1 October 2007 Chairman's & Chief Executive's Statement Trading Results and Dividend We are pleased to announce that, for the Interim Period covering the 6 months ending 1 October 2007, your Company increased pre-tax profits by 4.8% to £968,000 (2006: £924,000). Total Retail Sales increased by 14.6% to £12,119,000 (2006: £10,579,000) and provides the measure that we believe best indicates transactional volumes. Turnover increased by 14.0% to £6,439,000 (2006: £5,647,000). During the Interim Period the Printing.com estate expanded by 26 outlets to 224 (including 12 pending), almost equalling the expansion for the whole of the previous year. We previously expressed, when reporting Preliminary results, the belief that EBITDA would increase by circa £1m for each additional £5m of Total Retail Sales. We are pleased to report that the Interim Results support this important metric. At the close of the Interim Period, the Company had cash-in-hand of £2,740,000. During the period, working capital decreased by £214,000 and the Company paid dividends of £850,000. Capital expenditure in the period amounted to £831,000 of which £202,000 was financed. The Directors are declaring an interim dividend of 1p per share to be paid on 14 December 2007 to shareholders on the register at 23 November 2007. Current Trading We are pleased to report, that post the AGM update and through to the close of the Interim Period, sales volumes continued to perform in line with the Company's internal budget. Post the Interim Period, October recorded a historic high with volumes also in line with the Company's internal budget. Estate Development The table below sets out the encouraging growth in Bolt-on Franchises during the Interim Period. 1 October 1 October 2 April 2007 2006 2007 Company owned Stores 4 6 2 Franchised Stores 45 42 47 Open and pending Bolt-on Franchises 175 140 149 Total Outlets open and 224 188 198 pending The marginal change in 'Owned' versus 'Franchised' Stores reflects the buying back of two Stores. After the conversion of the Oxford Store to Franchised ownership during March 2007, Company owned Stores had dropped to just two. Our preference is to always maintain a small number of Stores for training and development purposes and these buy-backs proved a convenient way to address the balance. During the previous fiscal year, the Bolt-on Franchise estate grew by 31 Outlets. In the recent AGM statement, we outlined our objective to accelerate this expansion. We are pleased to report that during the Interim Period the Bolt-on Franchise estate grew by 26 Outlets - almost the same as the whole of the previous year. We enjoy a strong pipeline of prospective Bolt-on Franchises and believe that we will see this momentum continue. Like for Like The Printing.com like for like metric takes into account the growth of Territory Franchises (in geographic terms outside of London these are typically the size of a county) embracing not only the Store but also the Bolt-on Franchises under the umbrella of the Territory Franchisee. Only Territory Franchises operational for over three years are included. On this basis, like for like growth during the interim period was 12.9% versus 6.8% reported for the previous Interim Period. International Development Our New Zealand partners continue to report good progress and the grant of additional outlets in their country. This initiative is also starting to generate a small but worthwhile royalty for your Company. Our partners in Iceland commenced trading from a company owned outlet in Reykjavik and have already granted their first Bolt-on Franchise. Whilst Iceland is a small country in relative terms, the opportunity there represents real progress in making our systems work across the language barrier and another step in the Master License program. We previously reported our intention to commence a French operation by distributing overnight to France from the Manchester Hub. To this end the first French Printing.com Franchise has been granted and the first orders shipped. Post an initial test marketing campaign in a French printing magazine, an encouraging number of enquiries have been generated from prospective franchise partners. Initially these will be offered on an 'easy in - easy out' basis until the Printing.com reputation and brand is suitably established. Elsewhere, including Australia, we continue to have a number of ongoing discussions with prospective Master License partners. Websites by Printing.com Across the network over 300 client websites have now been completed. Whilst the average per Franchise is still modest the distribution is more polarized: with some Franchisees still to fully embrace this initiative whilst others have completed more than a site per month, with the best performer now heading toward the 20 mark. These metrics encourage us that with the right presentation, the website solution is well received. With more Franchisees embracing the system, we believe that Websites by Printing.com has the potential to be a useful additional revenue stream. Over the coming months we expect to see the volume in websites continue to gain momentum. Production Hub and Infrastructure Post the increase in Hub capacity to Total Retail Sales £40-45m (from the previous Total Retail Sales £20-25m) we are pleased with the progress made and expect to derive further manufacturing efficiencies. Also, during the Interim Period, plate making equipment was upgraded to take advantage of more efficient processes. We continue to invest in your Company's Flyerlink software and this represents a material proportion of overall capital investment. During the Interim Period the multi-lingual capabilities of Flyerlink were significantly enhanced to facilitate operations in France and Iceland. Outlook In the recent AGM statement we highlighted that the Company's internal budget is weighted towards the second half year and realising this objective relies upon further sales growth and progress with our other initiatives. We remain cautiously optimistic that growth will continue and that this objective is realistic. Beyond the current fiscal year we believe that scope exists for further material progression for the reasons set out below. The rate at which the network has expanded has accelerated over the Interim Period in line with our previously declared objective and we expect this expansion to continue for some time yet. The Company's like for like metric also progressed to 12.9%. Together these metrics signal the prospect for a future increase in sales volumes. The Printing.com Hub has unutilised capacity. Annualising Total Retail Sales for the Interim Period would point towards a run rate of £25m versus the estimated Hub capacity of circa £40-45m. This would indicate that unutilised capacity is in the range £15-20m. As previously envisaged EBITDA increased by circa 20% of the increase in Total Retail Sales during the Interim Period. Save for the development of Flyerlink, foreseen capital investment is marginal. Accordingly, and looking ahead to the next fiscal year, a closer correlation should exist between the progression of EBITDA and that of Net Profit. Finally we believe that Websites by Printing.com, the potential to develop the model in France, and for further growth in our Master Licence initiative provide the scope for further earnings growth. George Hardie Tony Rafferty Chairman Chief Executive 12 November 2007 12 November 2007 Printing.com plc ('Printing.com' or 'the Company') Specialist retail chain with 224 Outlets open and pending across the UK & Ireland Unaudited Interim Results for the period ended 1 October 2007 Chairman's & Chief Executive's Statement Consolidated Income Statement for the six months ended 1 October 2007 Note Unaudited Unaudited Unaudited As restated As restated Six months Six months Year to 1 to 1 ended October October 2 April 2007 2006 2007 £000 £000 £000 Revenue 6,439 5,647 12,136 Changes in stocks of finished (18) 21 (20) goods Raw materials and consumables (2,113) (1,879) (3,977) Gross profit 4,308 3,789 8,139 Staff costs (1,678) (1,501) (3,007) Other operating charges (1,037) (985) (1,928) Depreciation and amortisation (650) (384) (1,039) Operating profit 943 919 2,165 Other Income - - 141 Financial income 121 99 194 Financial expenses (96) (94) (207) Net financing income/ (costs) 25 5 (13) Profit before tax 968 924 2,293 Taxation 2 (291) (277) (707) Profit for the period 677 647 1,586 attributable to equity holders of the Company Basic earnings per share 3 1.51p 1.45p 3.55p Diluted earnings per share 3 1.45p 1.38p 3.38p Consolidated Statement of Changes in Shareholders Equity for the six months ended 1 October 2007 (unaudited) Share Share Merger Other Retained Total capital premium reserve reserves earnings £000 £000 £000 £000 £000 £000 Issue of new shares 2 24 - - - 26 Share options - - - 43 - 43 Net income 2 24 - 43 - 69 recognised directly in equity Profit for the - - - - 677 677 period Dividends - - - - (850) (850) Total recognised income and expense 2 24 - 43 (173) (104) Opening shareholders funds at 3 April 2007 447 3,833 211 332 1,983 6,806 Closing shareholders funds at 1 October 2007 449 3,857 211 375 1,810 6,702 for the six months ended 1 October 2006 (unaudited) Share Share Merger Other Retained Total capital premium reserve reserves earnings £000 £000 £000 £000 £000 £000 Issue of new shares - 10 - - - 10 Share options - - - 107 - 107 Net income - 10 - 107 - 117 recognised directly in equity Profit for the - - - - 647 647 period Dividends - - - - (559) (559) Total recognised - 10 - 107 88 205 income and expense Opening 447 3,823 211 234 1,226 5,941 shareholders funds at 1 April 2006 Closing 447 3,833 211 341 1,314 6,146 shareholders funds at 1 October 2006 Consolidated Statement of Changes in Shareholders Equity (continued) for the year ended 2 April 2007(unaudited) Share Share Merger Other Retained Total capital premium reserve reserves earnings £000 £000 £000 £000 £000 £000 Issue of new shares - 10 - - - 10 Share options - - - 98 - 98 Net income recognised directly in equity - 10 - 98 - 108 Profit for the - - - - 1,586 1,586 period Dividends - - - - (828) (828) Total recognised income and expense - 10 - 98 758 866 Opening shareholders funds at 1 April 2006 447 3,823 211 234 1,226 5,941 Closing shareholders funds at 2 April 2007 447 3,833 211 332 1,984 6,807 Consolidated Balance Sheet at 1 October 2007 Unaudited Unaudited Unaudited As As restated restated 1 October 1 October 2 April 2007 2006 2007 £000 £000 £000 Non-current assets Property, plant and equipment 5,533 5,941 5,700 Intangible assets 1,128 774 921 Deferred tax 108 154 108 Other receivables 458 497 581 Total non-current assets 7,227 7,366 7,310 Current assets Inventories 121 102 104 Trade and other receivables 3,392 3,213 3,368 Cash and cash equivalents 2,740 3,065 2,855 Total current assets 6,253 6,380 6,327 Total assets 13,480 13,746 13,637 Current liabilities Other interest-bearing loans and (985) (915) (918) borrowings Trade and other payables (2,165) (1,576) (1,808) Current tax payable (89) (1,043) (220) Accruals and deferred income (878) (940) (998) Other liabilities (147) (213) (213) Total current liabilities (4,264) (4,687) (4,157) Non-current liabilities Other interest-bearing loans and (1,840) (2,594) (2,170) borrowings Deferred tax liabilities (674) (319) (503) Total non-current liabilities (2,514) (2,913) (2,673) Total liabilities (6,778) (7,600) (6,830) Net assets 6,702 6,146 6,807 Equity Share capital 449 447 447 Share premium 3,857 3,833 3,833 Merger reserve 211 211 211 Other reserves 375 341 332 Retained earnings 1,810 1,314 1,984 Total equity 6,702 6,146 6,807 Consolidated Cash Flow Statement for the six months ended 1 October 2007 Unaudited Unaudited Audited As restated Six months Six months Year to 1 to ended October 1 October 2 April 2007 2006 2007 £000 £000 £000 Cash flows from operating activities Profit for the year 677 647 1,586 Adjustments for: Depreciation 650 384 1,039 Financial income (121) (99) (194) Financial expense 96 95 207 Loss / (profit) on sale of property, - 1 (22) plant and equipment Exchange gain 4 - - Equity settled share-based payment 43 57 114 expenses Taxation 291 277 707 Operating profit before changes in 1,640 1,362 3,437 working capital and provisions Decrease/ (increase) in trade and 98 (626) (865) other receivables (Increase)/ decrease in stock (19) 22 20 Increase in trade and other payables 135 69 323 Cash generated from the operations 1,854 827 2,915 Tax paid (217) - (1,042) Net cash inflow from operating 1,637 827 1,873 activities Cash flows from investing activities Interest received 121 99 194 Acquisition of property, plant and (502) (266) (910) equipment Acquisition of intangible assets (189) (35) - Sale of property, plant and equipment - - 82 Net cash outflow from investing (570) (202) (634) activities Cash flows from financing activities Proceeds from the issue of share 26 10 10 capital Interest paid (96) (95) (207) Payment of finance lease liabilities (464) (368) (811) Advances on finance leases 202 - - Payment of equity dividend (850) (559) (828) Net cash outflow from financing (1,182) (1,012) (1,836) activities Net decrease in cash and cash (115) (387) (597) equivalents Cash and cash equivalents at start of 2,855 3,452 3,452 period Cash and cash equivalents at end of 2,740 3,065 2,855 period Notes (forming part of the interim financial statements) 1 Basis of preparation The interim financial statements of Printing.com PLC ('PDC') for the period ended 1 October 2007 are unaudited and do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. Under the AIM rules, PDC is required to prepare its next set of consolidated financial statements in accordance with adopted International Financial Reporting Standards (IFRS) as adopted by the European Union ('adopted IFRSs'). Reconciliations and descriptions of the effect of the transition from UK GAAP to adopted IFRSs' on the Group's balance sheet and its income statement are provided at the back of this Interim Report. This interim financial information has been prepared on the basis of the recognition and measurement requirements of adopted IFRSs as at 1 October 2007 that are effective (or available for early adoption) at 31 March 2008, the Group's first annual reporting date at which it is required to apply adopted IFRSs. Based on these adopted IFRSs, the directors have applied the accounting policies set out in the restatement report, included in this document, which they expect to apply when the first annual financial statements are prepared in accordance with adopted IFRSs' for the year ending 31 March 2008. However the adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 March 2008 are still subject to change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the year ending 31 March 2008. The comparative figures for the financial year ended 2 April 2007 are not the Company's statutory accounts for that financial year. Those statutory accounts, which were prepared under UK GAAP, have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. Prior period restatement The comparative figures for the six month period ended 1 October 2006 have been restated from the previously reported results for the 28 week period ended 15 October 2006 to allow comparable financial results for the current period. The impact of this restatement is shown in the table below. In addition, the following adjustments were detailed in the financial statements for the year ended 2 April 2007 prepared under UK GAAP: * the comparative figures have been restated to reflect the change in the UK GAAP revenue recognition policy adopted in the financial statements for the year ended 2 April 2007. Previously all initial licence fees were recognised upon signing the franchise agreements and only an element of the ongoing annual fee was deferred over the year. In the year ended 2 April 2007, this policy was revised to defer an element of the initial fee over the first year of the agreement and defer all of the annual fees over each respective year. Comparative figures for the year ended 1 October 2006 and brought forward at 1 April 2006 have been restated to reflect this change in accounting policy, decreasing turnover in each year and increasing deferred income as shown in the table below. Notes (continued) (forming part of the interim financial statements) * the UK GAAP comparative results for the six month period ended have been restated to correct the treatment for rollover relief claimed in the period as identified in the financial statements for the year ended 2 April 2007. The impact of this restatement has been to increase the tax on profit on ordinary activities in each period, and increase the corporation tax creditor at the end of each period as shown in the table below. Six months ended 1 October 2006 £000 Profit on ordinary activities after taxation as 718 previously reported under UK GAAP Change in accounting reference date (126) Deferred licence revenue (net of tax) 21 Previously capitalised costs - net of (5) amortisation Reduced taxation charge 39 Profit on ordinary activities after taxation 647 restated under UK GAAP and IFRS The impact on basic earnings per share of the above restatements has been to decrease from 1.61p per share to 1.45p per share. Six months ended 1 October 2006 £000 Net assets as previously reported under UK GAAP 6,600 Change in accounting reference date (126) Deferred licence revenue (net of tax) 21 Adjusted FRS20 Reserve (115) Disallowed roll over relief (233) Net assets as restated under UK GAAP 6,147 Adjustments on transition to IFRS (1) Net assets as stated under IFRS 6,146 2 Taxation The tax charge is based on the estimated tax rate for the year ending 31 March 2008. 3 Earnings per share The calculation of the basic earnings per share is based on the profit after taxation divided by the weighted average number of shares in issue, being 44,820,669 (period ended 1 October 2006:44,718,617; year ended 2 April 2007: 44,730,883). The diluted earnings per share takes the weighted average number of ordinary shares in issue during the period and adjusts this for dilutive impact of share options existing at the period end. The diluted weighted average number of shares in the period ended 1 October 2007 was 46,690,604 (period ended 1 October 2006: 47,005,417; year ended 2 April 2007:46,904,112 ). The profit used in the diluted earnings per share is based on profit after taxation. Independent Review Report to Printing.com plc Introduction We have been engaged by the company to review the condensed set of financial statements in the half-yearly report for the six months ended 1 October 2007 which comprises the Consolidated Income Statement, the Consolidated Statement of Recognised Income and Expense, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 reached. Directors' responsibilities The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules. As disclosed in note 1, the next annual financial statements of the group will be prepared in accordance with IFRSs as adopted by the EU. The accounting policies that have been adopted in preparing the condensed set of financial statements are consistent with those that the directors currently intend to use in the next annual financial statements. There is, however, a possibility that the directors may determine that some changes to these policies are necessary when preparing the full annual financial statements for the first time in accordance with IFRSs as adopted by the EU. Our responsibility Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independent Review Report to Printing.com plc (continued) Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 1 October 2007 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU and the AIM Rules. KPMG Audit Plc Chartered Accountants Manchester Date: 9 November 2007 IFRS Restatement report (unaudited) Printing.com PLC transition to IFRS From 1 April 2007 PDC ('the Group') is required to prepare its consolidated accounts under International Accounting Standards and International Financial Reporting Standards (collectively referred to as 'adopted IFRS's' throughout this document) as adopted by the European Union ('EU') having previously prepared its accounts under UK Generally Accepted Accounting Principles ('UK GAAP'). The transition date for the Group is 1 April 2006 and set out in the following tables is the UK GAAP to adopted IFRS reconciliation for profit for the six month period ending 1 October 2006 and for the year ended 2 April 2007 and a reconciliation of total equity as at 1 April 2006, 1 October 2006 and 2 April 2007. Transitional arrangements - Application of IFRS 1 The Group's financial statements for the year ending 31 March 2008 will be the Group's first annual financial statements in compliance with adopted IFRSs. On transition to adopted IFRSs an entity is generally required to apply adopted IFRSs retrospectively, except where an exemption is available under IFRS 1 'First-time Adoption of International Financial Reporting Standards'. The following are the key elections from IFRS 1 that were made by the Group: * The Group has elected to adopt the IFRS 1 exemption in relation to the valuation of property, plant and equipment by taking the UK GAAP FRS 15 revaluation as deemed cost * The Group has elected to adopt the IFRS 1 option to reset foreign currency cumulative translation reserves to zero on transition to adopted IFRS's. International Financial Reporting Standards - Changes in accounting policies The interim results for the period ended 1 October 2007 have been prepared in accordance with accounting policies under adopted IFRS's. The Group's revised accounting policies under IFRS are included in note 2 to this restatement report. Reconciliation of income statement from UK GAAP to adopted IFRS's (unaudited) The adjustment to the income statement from UK GAAP to adopted IFRS's is explained in detail in note 1 to the restatement report. The adjustment results in an increase of £29,000 in other operating charges in the six months ended 1 October 2006 (Year ended 2 April 2007: £78,000 increase), a decrease in depreciation and amortisation costs of £24,000 in the six months ended 1 October 2006 (Year ended 2 April 2007: £41,000 decrease) and a decrease in taxation of £2,000 in the six months ended 1 October 2006 (Year ended 2 April 2007: £12,000 decrease). Reconciliation of cash flow statements from UK GAAP to adopted IFRS's (unaudited) With the exception of reclassifications, there were no material differences between cash flows presented under adopted IFRS's and the cash flows presented under UK GAAP for the six months ended 1 October 2006 and for the year ended 2 April 2007 as a result of the conversion to adopted IFRSs. Reconciliation of retained earnings from UK GAAP to adopted IFRS's (unaudited) The adjustment to retained earning from UK GAAP to adopted IFRS's is explained in detail in note 1 to the restatement report. IFRS Restatement report (continued) Reconciliation of balance sheet from UK GAAP to adopted IFRS's (unaudited) Restated Restated UK GAAP Adopted IFRS UK GAAP Adopted IFRS UK GAAP Adopted IFRS IFRS IFRS IFRS 1 October Adj. 1 October 2 April Adj. 2 April 1 April adj 1 April 2006 (note 1) 2006 2007 (note 1) 2007 2006 (note 1) 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non current assets Property plant and 6,720 (779) 5,941 6,621 (921) 5,700 3,855 (667) 3,188 equipment Intangible assets 68 706 774 105 816 921 68 599 667 Deferred tax asset - 154 154 - 108 108 - 221 221 Other receivables 497 - 497 581 - 581 561 - 561 7,285 81 7,366 7,307 3 7,310 4,484 153 4,637 Current assets Inventories 102 - 102 104 - 104 124 - 124 Trade and other 3,213 - 3,213 3,368 - 3,368 2,523 - 2,523 receivables Cash and cash 3,065 - 3,065 2,855 - 2,855 3,452 - 3,452 equivalents 6,380 - 6,380 6,327 - 6,327 6,099 - 6,099 Total assets 13,665 81 13,746 13,634 3 13,637 10,583 153 10,736 Current liabilities Trade and other (3,666) - (3,666) (3,969) - (3,969) (3,172) - (3,172) payables Current tax payable (1,043) 22 (1,021) (220) 32 (188) (771) 20 (751) (4,709) 22 (4,709) (4,189) 32 (4,157) (3,943) 20 (3,923) Non current liabilities Other liabilities (2,594) - (2,594) (2,170) - (2,170) (499) - (499) Provisions (215) (104) (319) (448) (55) (503) (221) (152) (373) (2,809) (104) (2,913) (2,618) (55) (2,673) (720) (152) (872) Total liabilities (7,518) (82) (7,600) (6,807) (23) (6,830) (4,663) (132) (4,795) Net assets 6,147 (1) 6,146 6,827 (20) 6,807 5,920 21 5,941 Equity Share capital 447 - 447 447 - 447 447 - 447 Share premium 3,833 - 3,833 3,833 - 3,833 3,823 - 3,823 Merger reserve 211 - 211 211 - 211 211 - 211 Other reserve 291 50 341 279 53 332 165 69 234 Retained earnings 1,365 (51) 1,314 2,057 (73) 1,984 1,274 (48) 1,226 Total equity attributable to equity shareholders 6,147 (1) 6,146 6,827 (20) 6,807 5,920 21 5,941 Notes to the IFRS Restatement report 1. IFRS adjustments IAS 12 'Deferred tax' IAS 12 requires the deferred tax on temporary differences to be recognised in proportion to the vesting period to match the IFRS accounting treatment. This approach is different than that adopted under FRS 19. The impact on PDC is to recognise a deferred tax asset of £69,000 at 1 April 2006, £53,000 at 2 April 2007 and £50,000 at 1 October 2006, with a corresponding adjustment to reserves. In addition deferred tax assets previously netted from deferred tax liabilities have been separately disclosed in the restated IFRS financial statements. The adjustment at 1 April 2006 of £152,000, 2 April 2007 £55,000 and at 1 October 2006 £104,000. IAS 38 Under UK GAAP certain costs have been capitalised as intangible assets. These costs are strictly prohibited from being capitalised under IAS 38. This has resulted in £37,000 costs (net of amortisation recorded under UK GAAP) being written off to the income statement in the year ended 2 April 2007, £5,000 in the six months ended 1 October 2006 and £48,000 adjustment to opening reserves at 1 April 2006. 2. Accounting policies The following accounting policies represent the Group's revised policies under IFRS which will be adopted by the Group in it's financial statements for the year ending 31 March 2008. Basis of consolidation The Group financial statements comprise the financial statements of the Company and all of its subsidiarys made up to the financial year end. Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Accounting policies are consistently applied throughout the Group. Intercompany balances and transactions have been eliminated. Material profits from inter company sales, to the extent that they are not yet realised outside the Group, have also been eliminated. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairments. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Leases in which the Company assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Where land and buildings are held under finance leases the accounting treatment of the land is considered separately from that of the buildings. Leased assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. Lease payments are accounted for as described below. Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows: Fixtures and fittings - 20% - 33% straight line Plant and equipment - 10% - 30% straight line Domain name and website costs - 5% straight line Leasehold improvements - over remaining lease life Inventories Inventories are valued at the lower of cost and net realisable value. Net realisable value is based on estimated selling price less additional costs to completion. Intangible assets All research costs are written off as incurred. Development costs are also charged to the profit and loss account in the year of expenditure, except when individual projects satisfy the following criteria: the project is clearly defined and related expenditure is separately identifiable; the project is technically feasible and commercially viable; current and future costs will be exceeded by future sales; and adequate resources exist for the project to be completed. In such circumstances the costs are carried forward and amortised over time in all cases over a period not exceeding three years commencing in the year when the Group begins to benefit from the expenditure. Amortisation on domain name, website costs and software is charged to the income statement on a straight-line basis over the useful economic life of the asset. Domain name and website costs - 5% straight line Software - 20% straight line Intangible assets include customer lists purchased on the buy-back of own stores from existing franchisees. Revenue Revenue represents the invoiced amount, net of Value Added Tax, of goods sold and services provided to customers outside the Group recognised when orders are completed or services provided in line with the terms of the agreement in place with customers. Revenue also includes franchise fee income which is recognised in line with the provision of services as detailed in the franchise agreement. Annual renewal licence fees are deferred over a twelve month period from the licence anniversary date in line with the provision of services as detailed in the franchise agreement. Revenue is stated net of any discounts or commissions. Taxation Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying value amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Interest bearing borrowings Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis. Notes to the IFRS Restatement report (continued) 2. Accounting policies (continued) Impairment of assets The carrying amounts of the Group's assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. For assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Intangible assets that are not yet available for use were tested for impairment as at 1 April 2006, the date of transition to adopted IFRS's, even though no indication of impairment existed. Calculation of recoverable amount The recoverable amount of the Group's receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted. The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Expenses Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense over the term of the lease. Finance lease payments Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Notes to the IFRS Restatement report (continued) 2. Accounting policies (continued) Financing costs Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date the entity's right to receive payments is established. Employee benefits Defined contribution plan The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the income statement. Share based payments The share option programme allows Group employees to acquire shares in the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold for vesting. Financial instruments Financial instruments issued by the Group are treated as equity (i.e. forming part of shareholders' funds) only to the extent that they meet the following two conditions: (a) they include no contractual obligations upon the company (or group as the case may be) to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company (or group); and (b) where the instrument will or may be settled in the company's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company's own equity instruments or is a derivative that will be settled by the company's exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares. Where a financial instrument that contains both equity and financial liability components exists these components are separated and accounted for individually under the above policy. The finance cost on the financial liability component is correspondingly higher over the life of the instrument. Notes to the IFRS Restatement report (continued) 2. Accounting policies (continued) Finance payments associated with financial liabilities are dealt with as part of finance expenses. Finance payments associated with financial instruments that are classified in equity are dividends and are recorded directly in equity. The Group does not hold or issue derivative financial instruments for trading purposes. The Interim Report will be posted to all shareholders of the Company and copies will be available upon application to the registered office, Printing.com plc, Focal Point, 3rd Avenue, The Village, Trafford Park, Manchester M17 1FG. This information is provided by RNS The company news service from the London Stock Exchange

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