Interim Results
Tandem Group PLC
17 October 2007
The Group made a profit before tax of £335,000 for the six months ended 31 July
2007, compared to a loss of £373,000 in the same period last year. Group sales
revenue increased by 11.8% from £16,143,000 to £18,052,000. This was an
encouraging result despite the bad weather in the second quarter. No dividend is
proposed.
CYCLES
The number of bicycles sold was 7.7% up on the same period last year. The
average selling price was down, with lower sales of the higher priced models,
resulting in sales revenue for our cycle businesses being 1.0% lower. With
improved margins and a tight control of costs the operating profit, before
exceptional items, increased by £246,000 compared to the first half last year.
We continue to design and develop new bicycles to provide our customers with
innovative and exciting products.
SPORTS, LEISURE AND TOYS
Turnover in our sports, leisure and toys business increased by 32.4% over the
same period last year. Traditionally the first half of the year for this
business has been loss making, but improved sales revenue from our Hedstrom
outdoor play equipment and new licences for Transformers and C'Mons have turned
the half year into profit. We continue to increase sales of our Ben Sayers golf
equipment through product development and a wider distribution.
New licences should generate further sales revenue in the second half of the
year.
SUMMARY
I highlighted the situation with the Group's pension schemes in my statement
with the results for the year ended 31 January 2007. The deficit has reduced by
£680,000 since 31 January 2007 and work is continuing on ways to further
decrease or eliminate the shortfall.
The Group is now in a position to explore ways to enhance shareholder value and
a number of options are being considered for 2008.
So far this year the Group has enjoyed an improving sales trend which should
continue for the rest of the year. The management teams of our individual
businesses are clearly focused on their products, sales and operations and we
therefore remain optimistic about the prospects for the current financial year.
Graham Waldron
Chairman
17 October 2007
For further information contact:
Tandem Group plc Mervyn Keene 01733 211399
KBC Peel Hunt (Nominated adviser and broker) Nick Maslen 0121 633 8330
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2007 2006 2007
Unaudited Unaudited Unaudited
Note £'000 £'000 £'000
Continuing operations
Revenue 18,052 16,143 33,785
Cost of sales (12,586) (11,651) (23,169)
Gross profit 5,466 4,492 10,616
Distribution expenses (3,338) (2,859) (4,890)
Administrative expenses (1,622) (1,876) (4,806)
Operating profit/(loss) 506 (243) 920
Finance costs (171) (130) (271)
Profit/(loss) before taxation 335 (373) 649
Tax (expense)/income (1) 78 297
Profit/(loss) for the period 334 (295) 946
Pence Pence Pence
Earnings/(loss) per share
Basic 5 0.89 (0.78) 2.52
Diluted 5 0.89 (0.78) 2.52
At 31
At 31 July At 31 July January
2007 2006 2007
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Non current assets
Goodwill 2,677 2,677 2,677
Property, plant and equipment 522 480 403
Deferred taxation 1,167 633 1,354
4,366 3,790 4,434
Current assets
Inventories 5,994 5,577 5,676
Trade and other receivables 7,929 7,372 5,435
Cash and cash equivalents 2,357 1,421 551
16,280 14,370 11,662
Total assets 20,646 18,160 16,096
Current liabilities
Trade and other payables (8,829) (8,845) (6,076)
Financial liabilities (4,194) (3,497) (2,456)
Current tax liabilities (352) (213) (365)
(13,375) (12,555) (8,897)
Non current liabilities
Pension schemes' deficits (1,457) (2,940) (2,137)
Total liabilities (14,832) (15,495) (11,034)
Net assets 5,814 2,665 5,062
Equity
Share capital 1,503 1,503 1,503
Share premium 5,258 5,258 5,258
Other reserves 2,455 2,523 2,431
Profit and loss account (3,402) (6,619) (4,130)
Total equity 5,814 2,665 5,062
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2007 2006 2007
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Foreign exchange differences on translation of 24 22 (70)
overseas subsidiaries
Actuarial gain on pension schemes 595 - 1,221
Movement in pension schemes' deferred tax (204) - -
provision
Net income recognised directly in equity 415 22 1,151
Net profit/(loss) for the period 334 (295) 946
Total recognised income and expense 749 (273) 2,097
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2007 2006 2007
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Cash flows from operating activities
Profit/(loss) for the period 334 (295) 946
Adjustments:
Depreciation of property, plant and equipment 59 83 173
Loss on sale of property, plant and equipment 1 4 48
Finance costs 171 130 271
Taxation expense/(income) 1 (78) (297)
Share based payments 3 - 27
Fair value adjustments of forward contracts 78 259 37
Adjustment for pension funding (86) (97) (118)
Net cash inflow from operating activities 561 6 1,087
before movements in working capital
(Increase)/decrease in inventories (318) 87 (12)
Increase in trade and other receivables (2,511) (2,201) (681)
Increase/(decrease) in trade and other 2,723 1,106 (1,048)
payables
Cash generated/(utilised) from operations 455 (1,002) (654)
Interest paid (154) (113) (276)
Taxation paid - - (85)
Net cash inflow/(outflow) from operating 301 (1,115) (1,015)
activities
Cash flows from investing activities
Purchases of property, plant and equipment (180) (34) (94)
Sale of property, plant and equipment 1 30 31
Net cash used in investing activities (179) (4) (63)
Financing activities
Increase/(decrease) in invoice financing 1,659 92 (726)
Capital element of finance lease rentals - - (1)
Net cash from/(used in) financing 1,659 92 (727)
activities
Net increase/(decrease) in cash and cash 1,781 (1,027) (1,805)
equivalents
Cash and cash equivalents at beginning of 551 2,426 2,426
period
Effect of foreign exchange rate changes 25 22 (70)
Cash and cash equivalents at end of period 2,357 1,421 551
1 GENERAL INFORMATION
Tandem Group plc is a public limited company incorporated and domiciled in the
United Kingdom with its shares listed on the Alternative Investment Market of
the London Stock Exchange.
The principal activity of the Group is the manufacture and distribution of
sports and leisure equipment.
The ultimate parent company of the Group is Tandem Group plc whose principal
place of business and registered office address is 9a South Street, Crowland,
Peterborough, PE6 0AH.
The interim financial statements for the period ended 31 July 2007 (including
the comparatives for the periods ended 31 July 2006 and 31 January 2007) were
approved by the board of directors on 17 October 2007. Under the Security
Regulations Act of the European Union ('EU'), amendments to the financial
statements are not permitted after they have been approved.
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
Group's statutory financial statements for the year ended 31 January 2007,
prepared under the United Kingdom Generally Accepted Accounting Principles
('UK GAAP'), have been filed with the Registrar of Companies. The auditor's
report on those financial statements was unqualified and did not contain
statements under Section 237(2) of the Companies Act 1985.
2 ACCOUNTING POLICIES
Basis of preparation
The interim financial report has been prepared under the historical cost
convention and in accordance with International Accounting Standard 34 Interim
Financial Reporting and the requirements of International Financial Reporting
Standard 1 First Time Adoption of International Reporting Standards relevant to
interim reports. It does not include all of the information required for full
annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 31 January
2007.
The Group has adopted International Financial Reporting Standards ('IFRS') for
the first time in its consolidated financial statements. The transition to IFRS
reporting has resulted in a change in the reported financial statements, notes
thereto and accounting principles compared to the previous annual report. Note 3
provides further details on the transition from UK GAAP to IFRS.
These consolidated interim financial statements have been prepared in accordance
with the accounting policies set out below which are based on the recognition
and measurement principles of IFRS in issue as adopted by the EU and are
effective at 31 January 2008 or are expected to be adopted and effective at
31 January 2008, our first annual reporting date at which we are required to use
IFRS accounting standards adopted by the EU.
The principal accounting policies of the Group are set out below.
Consolidation and investments in subsidiaries
The Group has elected not to apply IFRS 3 Business Combinations retrospectively
to business combinations prior to 1 February 2006.
Subsidiaries are all entities over which the Group has the power to control the
financial and operating policies. The Group obtains and exercises control
through voting rights. The consolidated financial statements of the Group
incorporate the financial statements of the parent company as well as those
entities controlled by the Group by full consolidation.
In addition, acquired subsidiaries are subject to application of the purchase
method. This involves the revaluation at fair value of all identifiable assets
and liabilities, including contingent liabilities of the subsidiary, at the
acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their revalued amounts, which are also used as the
bases for subsequent measurement in accordance with the Group accounting
policies. Goodwill represents the excess of acquisition cost over the fair value
of the Group's share of the identifiable net assets of the acquired subsidiary
at the date of acquisition.
Material intra-group balances and transactions, and any unrealised gains or
losses arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
Income recognition
Revenue is measured by reference to the fair value of consideration received or
receivable by the Group for goods supplied and services provided, excluding VAT
and trade discounts. Revenue is recognised upon the performance of services or
transfer of risk to the customer.
Revenue from the sale of goods is recognised when all the following conditions
have been satisfied:
• the Group has transferred to the buyer the significant risks and rewards
of ownership of the goods which is generally when they are received
by the customer at the agreed place of delivery
• the Group retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the
goods sold
• the amount of revenue can be measured reliably
• it is probable that the economic benefits associated with the transaction
will flow to the Group, and
• the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
Goodwill
Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses.
Impairment
The Group's goodwill and property, plant and equipment are subject to impairment
testing.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies of the related
business combination and represent the lowest level within the Group at which
management controls the related cash flows.
Individual intangible assets or cash-generating units that include goodwill with
an indefinite useful life are tested for impairment at least annually. All other
individual assets or cash-generating units are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset's or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell, and value in use, based on an internal discounted cash flow
evaluation. Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying amount of
goodwill. Any remaining impairment loss is charged pro rata to the other assets
in the cash-generating unit. With the exception of goodwill, all assets are
subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist.
Property, plant and equipment
Computer equipment, fixtures and fittings, vehicles and short leasehold land and
buildings are carried at acquisition cost less subsequent depreciation and
impairment losses. Depreciation is charged on these assets on a straight line
basis over the estimated useful economic life of each asset.
The useful lives of property, plant and equipment can be summarised as follows:
Computer equipment 3 years
Fixtures and fittings 3 years
Vehicles 3 - 4 years
Short leasehold land and buildings Over term of lease
Material residual value estimates are updated as required, but at least
annually, whether or not the asset is revalued.
Leases
In accordance with IAS 17 (revised 2003), the economic ownership of a leased
asset is transferred to the lessee if the lessee bears substantially all the
risks and rewards related to the ownership of the leased asset. The related
asset is recognised at the time of inception of the lease at the fair value of
the leased asset or, if lower, the present value of the lease payments plus
incidental payments, if any, to be borne by the lessee. A corresponding amount
is recognised as a finance leasing liability.
Subsequent accounting for assets held under finance lease agreements, i.e.
depreciation methods and useful lives, correspond to those applied to comparable
acquired assets. The corresponding finance leasing liability is reduced by lease
payments less finance charges, which are expensed to finance costs. Finance
charges represent a constant periodic rate of interest on the outstanding
balance of the finance lease liability.
All other leases are treated as operating leases. Payments on operating lease
agreements are recognised as an expense on a straight-line basis. Associated
costs, such as maintenance and insurance, are expensed as incurred. The Group
does not act as a lessor.
Taxation
Current income tax assets and/or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
period, that are unpaid at the balance sheet date. They are calculated according
to the tax rates and tax laws applicable to the fiscal periods to which they
relate, based on the taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets and
liabilities in the consolidated financial statements with their respective tax
bases. However, in accordance with the rules set out in IAS 12, no deferred
taxes are recognised in conjunction with goodwill. This applies also to
temporary differences associated with shares in subsidiaries if reversal of
these temporary differences can be controlled by the Group and it is probable
that reversal will not occur in the foreseeable future. In addition, tax losses
available to be carried forward as well as other income tax credits to the Group
are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets
are recognised to the extent that it is probable that they will be able to be
offset against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply to
their respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component
of tax expense in the income statement. Only changes in deferred tax assets or
liabilities that relate to a change in value of assets or liabilities that is
charged directly to equity are charged or credited directly to equity.
Employee benefits
Defined contribution pension schemes
Pensions to employees are provided through contributions to individual personal
pension plans. A defined contribution plan is a pension plan under which the
Group pays fixed contributions into an independent entity. The Group has no
legal or constructive obligations to pay further contributions after payment of
the fixed contribution.
The contributions recognised in respect of personal pension plans are expensed
as they fall due. Liabilities and assets may be recognised if underpayment or
prepayment has occurred and are included in current liabilities or current
assets as they are normally of a short term nature.
Defined benefit pension schemes
Assets are measured at fair values. Liabilities are measured on an actuarial
basis using the projected unit method and are discounted at appropriate high
quality corporate bond rates that have terms to maturity approximating to the
terms of the related liability. Appropriate adjustments are made for
unrecognized actuarial gains or losses and past service costs. Past service cost
is recognised as an expense on a straight-line basis over the average period
until the benefits become vested. To the extent that benefits are already vested
the Group recognizes past service cost immediately.
Actuarial gains and losses are recognized immediately in the statement of
recognised income and expense. The net surplus or deficit is presented with
other net assets on the balance sheet. The related deferred tax is shown with
other deferred tax balances. A surplus is recognized only to the extent that it
is recoverable by the Group.
The current service cost, past service cost and costs from settlements and
curtailments are charged to distribution and administrative expenses. Interest
on the scheme liabilities and the expected return on scheme assets are included
in other finance costs. Post-employment benefits other than pensions are
accounted for in the same way.
Short-term employee benefits, including holiday entitlement, are included in
current pension and other employee obligations at the undiscounted amount that
the Group expects to pay as a result of the unused entitlement. Other long-term
employee benefit obligations are accounted for at the net of the present value
of the defined benefit obligation and the fair value of plan assets at the
balance sheet date.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of
ordinarily interchangeable items are assigned using the first in, first out cost
formula. Cost includes materials, direct labour and an attributable proportion
of manufacturing overheads based on normal levels of activity.
Financial assets
The Group's financial assets include cash and trade receivables.
All financial assets are recognised on their settlement date. All financial
assets are initially recognised at fair value, plus transaction costs.
Interest and other cash flows resulting from holding financial assets are
recognised in profit or loss when receivable, regardless of how the related
carrying amount of financial assets is measured.
Trade receivables are provided against when objective evidence is received that
the Group will not be able to collect all amounts due to it in accordance with
the original terms of the receivables. The amount of the write-down is
determined as the difference between the assets' carrying amount and the present
value of estimated future cash flows.
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand.
Equity
Share capital is determined using the nominal value of shares that have been
issued.
The share premium account represents premiums received on the initial issuing of
the share capital. Any transaction costs associated with the issuing of shares
are deducted from share premium, net of any related income tax benefits.
Other reserves comprise of merger reserve, capital reserve and foreign currency
reserve.
Retained earnings include all current and prior period results as disclosed in
the income statement.
Share based employee remuneration
All share based payment arrangements granted after 7 November 2002 that had not
vested prior to 1 February 2006 are recognised in the consolidated financial
statements. The Group operates equity-settled share based remuneration plans for
remuneration of its employees.
All employee services received in exchange for the grant of any share based
remuneration are measured at their fair values. These are indirectly determined
by reference to the fair value of the share options awarded. Their value is
appraised at the grant date and excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth targets).
All share based remuneration is ultimately recognised as an expense in profit or
loss with a corresponding credit to retained earnings, net of deferred tax where
applicable. If vesting periods or other vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of the
number of share options expected to vest. Non-market vesting conditions are
included in assumptions about the number of options that are expected to become
exercisable. Estimates are subsequently revised, if there is any indication that
the number of share options expected to vest differs from previous estimates. No
adjustment is made to the expense recognised in prior periods if a different
number of share options ultimately are exercised than originally estimated.
Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued are
allocated to share capital with any excess being recorded as share premium.
Financial liabilities
The Group's financial liabilities include bank overdrafts, an invoice financing
loan and trade and other payables.
Financial liabilities are recognised when the Group becomes a party to the
contractual agreements of the instrument. All interest related charges are
recognised as an expense in the finance cost in the income statement.
Trade payables are recognised initially at their nominal value and subsequently
measured at amortised cost less settlement payments.
Other provisions, contingent liabilities and contingent assets
Other provisions are recognised when present obligations will probably lead to
an outflow of economic resources from the Group and they can be estimated
reliably. Timing or amount of the outflow may still be uncertain. A present
obligation arises from the presence of a legal or constructive commitment that
has resulted from past events, for example, legal disputes or onerous contracts.
Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the balance
sheet date, including the risks and uncertainties associated with the present
obligation. Any reimbursement expected to be received in the course of
settlement of the present obligation is recognised, if virtually certain as a
separate asset, not exceeding the amount of the related provision. Where there
are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as
a whole. In addition, long-term provisions are discounted to their present
values, where time value of money is material. All provisions are reviewed at
each balance sheet date and adjusted to reflect the current best estimate.
In those cases where the possible outflow of economic resource as a result of
present obligations is considered improbable or remote, or the amount to be
provided for cannot be measured reliably, no liability is recognised in the
consolidated balance sheet.
Probable inflows of economic benefits to the Group that do not yet meet the
recognition criteria of an asset are considered contingent assets and therefore
not recognised.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Non-monetary items that are measured at historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in the profit or loss in the period in which
they arise. Exchange differences on non-monetary items are recognised in the
statement of recognised income and expenses to the extent that they relate to a
gain or loss on that non-monetary item taken to the statement of recognised
income and expenses, otherwise such gains and losses are recognised in the
income statement.
The assets and liabilities in the financial statements of foreign subsidiaries
are translated at the rate of exchange ruling at the balance sheet date. Income
and expenses are translated at the actual rate. The exchange differences arising
from the retranslation of the opening net investment in subsidiaries are taken
directly to the 'Foreign currency reserve' in equity. On disposal of a foreign
operation the cumulative translation differences are transferred to the income
statement as part of the gain or loss on disposal.
The Group has taken advantage of the exemption in IFRS 1 and has deemed
cumulative translation differences for all foreign operations to be nil at the
date of transition to IFRS. The gain or loss on disposal of these operations
excludes translation differences that arose before the date of transition to
IFRS and includes later translation differences.
3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
The transition from previous UK GAAP to IFRS has been made in accordance with
IFRS 1, First-time Adoption of International Financial Reporting Standards. The
Group's interim financial statements for the six months ended 31 July 2007 and
the comparatives presented for the periods ended 31 July 2006 and 31 January
2007 comply with all presentation recognition and measurement requirements of
IFRS applicable for accounting periods ending on 31 January 2008.
The following reconciliations and explanatory notes thereto describe the effects
of the transition for the financial periods ended 31 July 2006 and 31 January
2007. All explanations should be read in conjunction with the IFRS accounting
policies of Tandem Group plc.
The reconciliation of the Group's profit and loss reported under previous UK
GAAP to its profit and loss under IFRS for the periods ended 31 July 2006 and 31
January 2007 may be summarised as follows:
Reconciliation for the period ended 31 July 2006
£'000
Loss for the period transferred to reserves previously (207)
reported under UK GAAP
Reversal of goodwill amortisation 92
Accounting for forward contracts at fair value (258)
Related deferred tax on forward contracts 78
Net loss for the period as restated under IFRS (295)
Reconciliation for the year ended 31 January 2007
£'000
Profit for the year transferred to reserves previously 796
reported under UK GAAP
Reversal of goodwill amortisation 175
Accounting for forward contracts at fair value (37)
Related deferred tax on forward contracts 12
Net profit for the year as restated under IFRS 946
The reconciliation of the Group's equity reported under previous UK GAAP to its
equity under IFRS as at 31 January 2006, 31 July 2006 and at 31 January 2007 may
be summarised as follows:
31 January 31 July 31 January
2006 2006 2007
£'000 £'000 £'000
Reversal of goodwill amortisation - 92 175
Accounting for prior year forward contracts at - (4) (4)
fair value
Accounting for forward contracts at fair value (4) (258) (37)
Related deferred tax on forward contracts - 78 12
Total adjustment to equity (4) (92) 146
UK GAAP equity shareholders' funds 2,941 2,757 4,916
IFRS equity shareholders' funds 2,937 2,665 5,062
The re-measurement of balance sheet items as at 31 January 2006, 31 July 2006
and at 31 January 2007 may be summarised as follows:
Reconciliation as at 31 January 2006
Effect of
UK GAAP transition IFRS
£'000 £'000 £'000
Deferred tax provision 354 198 552
Financial liabilities (3,141) (5) (3,146)
Pension schemes' deficits (2,003) (198) (2,201)
Other reserves (2,462) (38) (2,500)
Profit and loss account 6,281 43 6,324
Reconciliation as at 31 July 2006
Effect of
UK GAAP transition IFRS
£'000 £'000 £'000
Goodwill 2,585 92 2,677
Deferred tax provision 356 277 633
Financial liabilities (3,227) (270) (3,497)
Pension schemes' deficits (2,742) (198) (2,940)
Other reserves (2,462) (61) (2,523)
Profit and loss account 6,459 160 6,619
Reconciliation as at 31 January 2007
Effect of
UK GAAP transition IFRS
£'000 £'000 £'000
Goodwill 2,502 175 2,677
Deferred tax provision 700 654 1,354
Financial liabilities (2,414) (42) (2,456)
Pension schemes' deficits (1,496) (641) (2,137)
Other reserves (2,489) 58 (2,431)
Profit and loss account 4,334 (204) 4,130
Profit and loss reported under UK GAAP for the periods ended 31 July 2006 and 31
January 2007 is reconciled to IFRS as follows:
Reconciliation for the period ended 31 July 2006
Effect of
UK GAAP transition IFRS
£'000 £'000 £'000
Revenue 16,143 - 16,143
Cost of sales (11,393) (258) (11,651)
Gross profit 4,750 (258) 4,492
Operating expenses (4,735) - (4,735)
Amortisation of goodwill and intangibles (92) 92 -
Operating result (77) (166) (243)
Finance costs (130) - (130)
Result for the period before taxation (207) (166) (373)
Tax income - 78 78
Net result for the period (207) (88) (295)
Reconciliation for the year ended 31 January 2007
Effect of
UK GAAP transition IFRS
£'000 £'000 £'000
Revenue 33,785 - 33,785
Cost of sales (23,132) (37) (23,169)
Gross profit 10,653 (37) 10,616
Operating expenses (9,696) - (9,696)
Amortisation of goodwill and intangibles (175) 175 -
Operating result 782 138 920
Finance costs (271) - (271)
Result for the period before taxation 511 138 649
Tax income 285 12 297
Net result for the year 796 150 946
The Group has modified its former balance sheet and income statement structure
on transition to IFRS. The main changes may be summarised as follows:
. the elimination of amortisation of goodwill charged under UK GAAP.
Goodwill is now subject to an annual impairment test. The effect of this
adjustment was to add back amortisation of £175,000 as at 31 January 2007
and £92,000 at 31 July 2006.
. forward foreign currency contracts are accounted for at fair value under
IFRS resulting in a loss through the profit and loss account in the 6
months to 31 July 2007 of £78,000 and a loss in the year to 31 January 2007
of £37,000. The balance sheet values of the related financial instrument
liabilities were £120,000 at 31 July 2007, £42,000 at 31 January 2007
and £264,000 at 31 July 2006.
. the deferred tax asset in relation to defined benefit pension schemes is
now shown as part of the deferred tax asset balance within non-current
assets. Under UK GAAP this asset was netted off the pension scheme
liability in the balance sheet.
Explanation of material adjustments to the cash flow statement
Application of IFRS has resulted in reclassification of certain items in the
cash flow statement as follows:
. under UK GAAP, payments to acquire property, plant and equipment were
classified as part of 'Capital expenditure and financial investment'.
Under IFRS, payments to acquire property, plant and equipment have been
classified as part of 'Investing activities'.
. income taxes paid during the period ended 31 July 2007 are classified as
operating cash flows under IFRS, but were included in a separate category
of tax cash flows under previous GAAP.
There are no other material differences between the cash flow statement
presented under IFRS and the cash flow statement presented under UK GAAP.
4 SEGMENTAL REPORTING
For management purposes the Group is organised into two operating segments. The
revenues and net results for these segments are shown below.
Sports,
Bicycles and leisure and
accessories toys Total
£'000 £'000 £'000
6 months to 31 July 2006
Restated
Revenue 9,957 6,186 16,143
Segment result 118 (359) (241)
Unallocated corporate expenses (2)
Operating profit (243)
Finance costs (130)
Result for the period before taxation (373)
Tax income 78
Net result for the period (295)
Year ended 31 January 2007
Restated
Revenue 19,852 13,933 33,785
Segment result 1,260 147 1,407
Unallocated corporate expenses (487)
Operating profit 920
Finance costs (271)
Result for the period before taxation 649
Tax income 297
Net result for the period 946
6 months to 31 July 2007
Revenue 9,859 8,193 18,052
Segment result 562 126 688
Unallocated corporate expenses (182)
Operating profit 506
Finance costs (171)
Result for the period before taxation 335
Tax expense (1)
Net result for the period 334
5 EARNINGS PER SHARE
The calculation of earnings/(loss) per share is based on the net result and
ordinary shares in issue during the period as follows:
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2007 2006 2007
£'000 £'000 £'000
Net result for the period 334 (295) 946
Weighted average shares in issue used for 37,584,412 37,584,412 37,584,412
basic earnings per share
Weighted average dilutive shares under option 460,000 88,219 -
Number of shares that would have been issued (402,450) (79,120) -
at fair value
Average number of shares used for diluted 37,641,962 37,593,511 37,584,412
earnings per share
Pence Pence Pence
Basic earnings/(loss) per share 0.89 (0.78) 2.52
Diluted earnings/(loss) per share 0.89 (0.78) 2.52
6 RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES
Share Profit
Share premium Other and loss
capital account reserves account Total
£'000 £'000 £'000 £'000 £'000
At 1 February 2006 1,503 5,258 2,501 (6,324) 2,938
Total recognised income and - - 22 (295) (273)
expense
At 31 July 2006 1,503 5,258 2,523 (6,619) 2,665
Total recognised income and - - (92) 2,462 2,370
expense
Share based payments - - - 27 27
At 31 January 2007 1,503 5,258 2,431 (4,130) 5,062
Total recognised income and - - 24 725 749
expense
Share based payments - - - 3 3
At 31 July 2007 1,503 5,258 2,455 (3,402) 5,814
This information is provided by RNS
The company news service from the London Stock Exchange
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