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Macfarlane Group PLC (MACF)

Macfarlane Group PLC

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 £0.3m

               Loss on continuing operations before tax of £0.4m

 Sale of Hungarian subsidiary in January 2006 for £2.4 million generated gain of
                                 £0.9 million

                Sales growth of 3.4% from continuing operations

     All businesses have the potential to deliver performance improvements

                         Net debt of £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:

   • Accelerate the sales growth momentum seen in the first half of the year;
   • Return the gross margin to previous levels;
   • Fully deploy the New Business Development team; and
   • 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:

   • Continue the strategic repositioning of the self-adhesive labels business;
   • Improve our penetration in the re-sealable labels market;
   • Maintain the good momentum in Plastics and UK Packaging Manufacturing;
   • Recover the margin erosion in Northern California; and
   • 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   £000     £000     £000     £000     £000      £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       £000       £000       £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
                                                     £000      £000       £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
                                                       £000       £000      £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 £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                                         £000       £000       £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                                         £000       £000       £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                                         £000       £000       £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 £190,000 (June 2005 £130,000, December 2005
£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
                                                      £000       £000       £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
                                                      £000       £000       £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 £194,000 is £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
                                                      £000       £000       £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
                                                      £000       £000       £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
                                           £000        £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
                                                      £000       £000       £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
                                                      £000       £000       £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                                  £000       £000       £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
                                                    £000        £000       £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
                                                    £000       £000        £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
                                                  £000       £000        £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
                                                  £000       £000        £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
                                                  £000       £000        £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
Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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