ACE.L Regulatory News (ACE)

7 Dec 2005 07:17

Accident Exchange Group PLC07 December 2005 7 December 2005 Accident Exchange Group Plc('Accident Exchange' or 'the Company') Interim Results for the Six Months Ended 31 October 2005Declaration of Interim Dividend Financial Highlights 2005 2004Revenue £20.7m £7.7m +169%Operating Profit £6.3m £2.5m +151%Profit Before Taxation £5.6m £2.1m +161%*Adjusted Profit Before Taxation £6.0m £2.5m +144%Earnings Per Share 5.9p 2.3p +157%*Adjusted Earnings Per Share 6.6p 2.8p +136%Recommended Interim Dividend 1.0p 0.5p +100% *Adjusted profit before taxation and earnings per share is stated beforegoodwill amortisation and share option charges of £0.4m (2004: £0.4m) • Revenue growth of 169% to £20.7m (2004: £7.7m) • Earnings per share up 157% to 5.9 pence (2004: 2.3 pence) • Adjusted Earnings per share up 136% to 6.6 pence (2004: 2.8 pence) • Recommended interim dividend doubled to 1.0 pence (2004: 0.5 pence) • £8m fundraising and £7m placing of existing stock at £2.30 in June 2005 - broadening the share register and increasing liquidity Operational Highlights • Significant new dealer group and independent dealer account wins and contract renewals in the period • 195 dealer outlets now contracted to our Accident Management solution • Renewal of 1 year agreement with Listers Group Ltd announced today • New leasehold North West distribution centre opening January 2006 • Board and management team strengthened Commenting on the results, Lord Young of Graffham, Non-Executive Chairman, said: "We are delighted to be able to report yet another extremely rewarding andprofitable first half. The business is in excellent shape and with hire startsin November significantly ahead of October we are expecting much higher rentalvolumes in the second half of the year compared to the first. We believe thatthe business remains on track to deliver another year of outstanding progress. "The Board looks to the future with confidence." For further information, please contact: Steve Evans CEO, Accident Exchange 07801 560 156Martin Andrews CFO, Accident Exchange 07730 517 699Jonathon Brill / Edward Westropp Financial Dynamics 020 7831 3113 There will be a meeting for analysts at 10.00am on Wednesday 7 December 2005 atthe offices of Numis Securities Limited, Cheapside House, 138 Cheapside, London,EC2V 6LH. Interim Results for the Six Months Ended 31 October 2005 Chairman's and Chief Executive's Joint Statement We are delighted to be able to report yet another extremely rewarding andprofitable financial period. Our strategy of focusing on providing replacement vehicle solutions throughautomotive manufacturers and retailers, supported by a service proposition whichcreates a protective intimacy with our distribution partners, is fundamental tothe continued growth achieved over the last six months and to our improvingmarket share. This achievement is to the great credit of our team who continueto perform with the highest levels of professionalism, focus and energy. During the last six months we have continued to recruit, develop and invest inour people. In August, using external consultants for the purpose, we designedand commenced the roll out of a company wide 'Six Sigma' quality measurement andprocess improvement programme. The implementation of this project is ongoing andwe believe that this will continue to reduce the operational risks associatedwith growth whilst optimising the customer experience as we continue to increasethe size of our team. We will not allow our growth to dilute the quality of ourservice offering. In July your board was strengthened by the appointment of David Galloway (asDeputy Chairman) and Graham Stanley, both as non-executive directors. Betweenthem they bring substantial experience of the support services, automotive andvehicle financing sectors as well as the corporate governance landscape. Financial Review Turnover for the six months to 31 October 2005 was £20.7 million (2004: £7.7million), an increase of 169%. Gross profit for the period was £11.0 million(2004: £4.5m) and profit before taxation rose 161% to £5.6 million (2004: £2.1million). Earnings per share rose 157% to 5.9 pence (2004: 2.3 pence). Adjustedprofit before taxation (before goodwill amortisation and share option charges)increased 144% to £6.0 million (2004: £2.5 million). Adjusted earnings per share(before goodwill amortisation and share option charges) increased 136% to 6.6pence (2004: 2.8 pence). During the period, our total fleet grew materially from a closing fleet of 960vehicles at 30 April 2005 to 1,704 vehicles as at 31 October 2005. Our recordedutilisation for the revenue generating proportion of our total fleet was 82% forthe period. Utilisation fluctuated between 85% through Q1 and 79% through thesummer months of Q2 where the fleet grew considerably in response to a number ofkey account wins. Our utilisation target remains in the range of 80% to 85% andthroughout November the recorded utilisation was 81% whilst the closing totalfleet had grown to 1944 vehicles by the month end. Cash and financing In June 2005 we raised £8.0 million (£7.7 million net of expenses) by the issueof 3,478,261 new ordinary shares at an issue price of £2.30. These new fundswere raised to strengthen the balance sheet and provide working capitalheadroom. At the same time some of our founder shareholders placed £7 million ofshares into the market which, combined with the issue of new shares, helped tobroaden the share register and improve the liquidity of the shares of theCompany. During the period the vehicle fleet was expanded at an investment of £15.8million with a consequent increase in finance lease borrowings to £29.7 millionat the period end (30 April 2005: £17.3 million). Our net cash inflow from operating activities during the period was £2.5 million(2004: £1.2 million). After finance lease repayments of £6.3 million (2004: £1.9million), interest payments of £0.8 million (2004: £0.4 million), payment of the2004 year end dividend of £0.7 million (2004: nil), the receipt of £1.9 million(2004: £0.3 million) from vehicle disposals and £0.5 million (£0.2 million)spent on other capital expenditure our net cash inflow for the period was £3.8million (2004: net cash outflow £0.9 million). Net debt at the period end was£25.9 million (30 April 2004: £17.3 million) representing an improved gearingratio of 86% (30 April 2005: 90%). Recommended Dividend We have decided to declare an interim dividend of 1.0 pence per share (2004: 0.5pence per share). This dividend is covered 6.6 times by adjusted earnings pershare and will be paid on 17 January 2006 to shareholders on the register on 16December 2005. Business Review In line with our expectations the number of referral sources and the number ofhire starts recorded during the period has grown significantly. We recorded157,074 rental days in the period against 58,219 in the same period in 2004. Inanticipation of this trend, and anticipating further growth in the year, werecruited a further 130 employees in the first half of the year. Furthermore,continued expansion of infrastructure and resource to ensure we are able tohandle the anticipated growth expectations and consequent demands from thebusiness remains a key priority. Whilst people are key to our success, the increasing demand for our servicedictates that physical distribution and location become increasinglysignificant. In 2005 we started trading from a regional hub in Glasgow inaddition to our head office location in Coleshill. We are pleased to announcethat we have now added a further distribution point in Warrington which weexpect to become operational in late January 2006. As well as enablingdistribution across the North of England, our Warrington facility will also actas regional headquarters for our Northern Sales and Support team. Business activity has grown significantly over the period. As well as organicgrowth from our existing referral sources, we entered into new contracts with anumber of dealers and dealer groups for both our core credit hire propositionand our accident management service. A number of these contracts were announcedas they occurred through the period and included agreements with The CooperGroup, the Mercedes Benz, Toyota, Lexus, Jaguar, Land Rover, Volvo and Ferrariand Maserati divisions of Inchcape Motors Retail Ltd, the Porsche, BMW andMercedes franchises of JCT 600 Ltd, the Land Rover, Jaguar and BMW franchises ofHR Owen plc and Hartwell plc. In addition to these agreements, we have alsosigned contracts with a further 66 independent prestige dealerships in relationto credit hire services during the period and have renewed a number of existingcontracts that have fallen due for renewal in the period. We can also announcetoday the renewal of a 1 year agreement with Listers Group Limited encompassingtheir 29 dealership outlets. We are also pleased to report that we have concluded our first contract with aleasing and contract hire company for whom we are providing replacement vehicleand claim management services. We believe that this sector is a key part of ourdevelopment plan and we have an active pipeline of enquires currently beingnegotiated. We now have a total of 195 dealers contracted to the accident management serviceof which 58 have already had their "own branded" accident management solutiondistributed by us to more than 300,000 of their customers. It takes up to two months from contract win to full dealer roll out of theaccident management product and the roll out for the further 137 alreadycontracted dealers, who have a combined customer base of over 487,000 customers,will be completed in the first quarter of 2006 at which time we anticipateproviding first line response accident management support for almost 800,000motorists. Outlook Our expectations for the sector remain strong and stable with both the number ofprestige vehicles and road traffic accidents increasing year on year. We have invested heavily in building our team and we have committed to relationships with our referral partners that we believe are defensible and which we know differentiate us from our competitors. We continue to innovate and also to invest in product developments that we believe will further enhance the AccidentExchange service offering. The business is in excellent shape and with hire starts in November significantly ahead of October we are expecting much higher rental volumes in the second half of the year compared to the first. We believe that the business remains on track to deliver another year of outstanding progress. We look to the future with confidence. Lord Young of Graffham Steve EvansNon-Executive Chairman Chief Executive Officer 7 December 2005 Consolidated Profit and Loss Account for the six months ended 31 October 2005 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed (*Restated) And *Restated) Note £'000 £'000 £'000------------------------------- -------- -------- -------- -------- Turnover 20,651 7,670 21,680Cost of sales (9,667) (3,194) (8,865)------------------------------- -------- -------- -------- --------Gross profit 10,984 4,476 12,815------------------------------- -------- -------- -------- --------------------------------------- -------- -------- -------- --------Administrative expenses:Other administrative expenses (4,315) (1,626) (4,438)Amortisation of goodwill (328) (328) (656)------------------------------- -------- -------- -------- --------Administrative expenses (4,643) (1,954) (5,094)Operating profit 6,341 2,522 7,721Net interest payable (784) (389) (1,016)------------------------------- -------- -------- -------- --------Profit on ordinary activitiesbefore taxation 5,557 2,133 6,705Taxation 3 (1,825) (718) (2,241)------------------------------- -------- -------- -------- --------Profit on ordinary activitiesafter taxation 3,732 1,415 4,464Equity dividends 4 (652) - (309)------------------------------- -------- -------- -------- --------Profit on ordinary activitiesfor the financial period 3,080 1,415 4,155 -------- -------- -------- ---------------------------------------Basic and diluted earnings pershare 5 5.9p 2.3p 7.2p------------------------------- -------- -------- -------- -------- There is no difference between the reported profit on ordinary activities beforetax and the historical cost profit on ordinary activities before tax. There are no gains or losses other than the profits for the periods above andtherefore no separate statement of total recognised gains and losses has beenpresented. * See Note 2 - Restatement ofprior period comparatives Consolidated Balance Sheet at 31 October 2005 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed (*Restated) And *Restated) Note £'000 £'000 £'000------------------------------- -------- -------- -------- --------Fixed assetsIntangible assets 12,213 12,724 12,562Tangible assets 28,294 10,528 16,413------------------------------- -------- -------- -------- -------- 40,507 23,252 28,975------------------------------- -------- -------- -------- -------- Current assetsDebtors 23,338 7,466 12,272Cash in bank and in hand 3,775 - -------------------------------- -------- -------- -------- -------- 27,113 7,466 12,272Creditors:Amounts falling due within one year (18,653) (5,916) (9,119) ------------------------------- -------- -------- -------- --------Net current assets 8,460 1,550 3,153------------------------------- -------- -------- -------- -------- Total assets less currentliabilities 48,967 24,802 32,128 Creditors:Amounts falling due after morethan one year (17,599) (7,927) (12,009) Provisions for liabilities andcharges (1,252) (442) (936)------------------------------- -------- -------- -------- --------Net Assets 30,116 16,433 19,183------------------------------- -------- -------- -------- -------- Capital and reservesCalled up share capital 6 3,887 3,713 3,713Share premium 7 7,959 410 410Other reserves 7 10,846 10,846 10,846Profit and loss account 7 7,424 1,464 4,214------------------------------- -------- -------- -------- --------Equity shareholders' funds 8 30,116 16,433 19,183------------------------------- -------- -------- -------- -------- * See Note 2 - Restatement ofprior period comparatives Consolidated Cash Flow Statement for the six months ended 31 October 2005 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed) Note £'000 £'000 £'000------------------------------- ------- -------- -------- --------Net cash inflow from operatingactivities 9 2,482 1,200 5,552 Returns on investments and servicingof financeInterest received 89 1 2Interest on bank loans and overdrafts (9) (13) (39)Interest element of finance leasepayments (864) (377) (979)------------------------------- ------- -------- -------- --------Net cash outflow from returns oninvestments and servicing of finance (784) (389) (1,016)------------------------------- ------- -------- -------- -------- Taxation - - (81) Capital expenditure and financialinvestmentPurchase of tangible fixed assets (530) (182) (314)Proceeds of disposals of fixed assets 1,902 276 987------------------------------- ------- -------- -------- --------Net cash inflow from capitalexpenditure and financial investment 1,372 94 673------------------------------- ------- -------- -------- -------- Equity dividends paid 4 (652) - (309)------------------------------- ------- -------- -------- --------Net cash inflow before financing 2,418 905 4,819------------------------------- ------- -------- -------- -------- FinancingIssue of ordinary share capital 6 8,000 55 -Share issue costs 7 (277) - -Capital element of finance leasepayments 10 (6,349) (1,887) (5,158)------------------------------- ------- -------- -------- --------Net cash inflow / (outflow) fromfinancing 1,374 (1,832) (5,158)------------------------------- ------- -------- -------- --------------------------------------- ------- -------- -------- --------Increase / (decrease) in cash 10 3,792 (927) (339)------------------------------- ------- -------- -------- -------- Independent Review Report to Accident Exchange Group Plc Introduction We have been instructed by the Company to review the financial information whichcomprises the profit and loss account, the balance sheet, the cash flowstatement and the related notes. We have read the other information contained inthe interim report and considered whether it contains any apparent misstatementsor material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The Directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. This report, including the conclusion, has beenprepared for and only for the Company for the purpose of the Listing Rules ofthe Financial Services Authority and for no other purpose. We do not, inproducing this report, accept or assume responsibility for any other purpose orto any other person to whom this report is shown or into whose hands it may comesave where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 October 2005. PricewaterhouseCoopers LLPChartered AccountantsBirmingham 7 December 2005 Notes to the Financial Information for the period ended 31 October 2005 1. Basis of preparation This Interim Report has been prepared on the historical cost basis usingaccounting policies consistent with UK Generally Accepted Accounting Practice("UK GAAP") and therefore, except for the items referred to in Note 2, on abasis consistent with the Statutory Accounts for the year ended 30 April 2005.The Interim Report is not audited but has been reviewed by the Group's auditorsand their review opinion is given in this report. The reviewed financial information for the six months ended 31 October 2005 doesnot constitute statutory financial accounts as defined in Section 240 of theCompanies Act 1985. The figures for the year ended 30 April 2005, subject toprior period adjustments as per Note 2, have been extracted from the AnnualReport and Accounts for that period which received an unqualified auditors'report and which did not contain a statement under Section 237(2) or Section 237(3) of the Companies Act 1985 and which have been delivered to the Registrar ofCompanies. 2. Restatement of prior period comparatives Impact of FRS 20 - Share based payment In these financial statements grants of share options have been reported inaccordance with FRS 20, as opposed to the previous treatment under UITF 17. Thisreflects early adoption of this standard. This has resulted in the calculated of an embedded value for the option grantsas at their date of grant and the resulting fair value charge is spread over the(three year) vesting period. The charge reflects, for example, the time value ofmoney ( as the options are not paid for until the end of the three year vestingperiod) and also factors such as share price volatility ( for which a risk freecost of capital of between 4.2% and 4.6% and share price volatility of 35% havebeen used). As the share options were issued in the second half of the prior year, there wasno profit and loss account charge in the comparative six month (first half)period. As such, adopting FRS 20 does not result in restated prior period (firsthalf) comparisons. Coincidentally, applying FRS 20 and determining the newcharge for the whole of the prior year also results in a charge of £10,000 (thesame as under UITF 17). Hence the profit and loss account for the year ended 30April 2005 (whilst having different accounting policies applied to it) remainsunaltered.The effect of FRS 20 on the balance sheet as at 30 April 2005 is to reclassifythe credit previously made to "Other Reserves" as a credit to "Profit & LossAccount Reserves". The current period FRS 20 application results in a charge of £130,000 to theprofit and loss account, compared to £70,000 that would have been charged ifUITF 17 had continued to apply. Impact of FRS 21 - Events after the balance sheet date FRS 21 has been adopted in these financial statements. The interim and finaldividends, which are both declared after the relevant balance sheet dates,cannot be accrued for, as was the case previously. As a result the balancesheets and profit and loss accounts for both comparative periods have beenrestated to reflect this with the comparative period interim dividend of£309,000 being removed and the previous year end dividend of £617,000 beingremoved from that year and instead treated as a dividend in the current period. 3. Taxation on profit on ordinary activities The tax charge provided for the period is based on the estimated effective taxrate for the year applied to the taxable profits for the period. 4. Equity dividends 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed (*Restated) and *Restated) £'000 £'000 £'000------------------------------- -------- -------- -------- --------Ordinary shares Interim dividend 0.5p per sharedeclared 25 November 2004 - - 309 Final dividend of 1.0p pershare declared 10 June 2005 652 - -(see Notes 2 and 6)------------------------------- -------- -------- -------- -------- 652 - 309------------------------------- -------- -------- -------- -------- The Directors are recommending the payment of an interim dividend of 1.0p pershare (2004: 0.5p). The payment will be made on 17 January 2006 to shareholderson the register on 16 December 2005. 5. Earnings per share Basic and diluted earnings per share The calculation of basic earnings per share is based on the earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during the period. Whilst share options were in issue over 841,472 shares as at 31 October 2005 thedilutive effect of these potential ordinary shares is not material andconsequently there is no material difference between basic earnings per shareand diluted earnings per share. Details of the earnings and weighted average number of shares used in thecalculations are set out below: 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed (*Restated) and *Restated)------------------------------- -------- -------- --------Profit on ordinary activities aftertaxation (£'000) 3,732 1,415 4,464------------------------------- -------- -------- --------Weighted average number of shares 63,717,529 61,681,122 61,710,273------------------------------- -------- -------- --------Basic and diluted earnings per share(pence) 5.9 2.3 7.2------------------------------- -------- -------- -------- Adjusted earnings per share The calculation of the adjusted earnings per share is based on earnings beforegoodwill and share option charges as set out below: 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005------------------------------- ------- -------- -------- -------- (Reviewed) (Reviewed (*Restated) and *Restated)------------------------------- ------- -------- -------- --------Profit on ordinary activitiesafter taxation (£'000) 3,732 1,415 4,464Goodwill (£'000) 328 328 656Cost of employee share schemes(£'000) 130 - 10------------------------------- ------- -------- -------- --------Adjusted profit on ordinaryactivities after taxation (£'000) 4,190 1,743 5,130 ------------------------------- ------- -------- -------- --------Weighted average number of shares 63,717,529 61,681,122 61,710,273------------------------------- ------- -------- -------- --------Basic and diluted earnings pershare (pence) 5.9 2.3 7.2Goodwill (pence) 0.5 0.5 1.1Cost of employee share schemes(pence) 0.2 - 0.0------------------------------- -------- -------- -------- --------Adjusted earnings per share (pence) 6.6 2.8 8.3 ------------------------------- -------- -------- -------- -------- 6. Share capital 31 October 31 October 30 April------------------------------- -------- -------- -------- -------- 2005 2004 2005 £'000 £'000 £'000------------------------------- -------- -------- -------- --------Authorised87,485,520 ordinary shares of 5p and12,514,500 deferred shares of 5p 5,000 5,000 5,000------------------------------------ -------- -------- --------Allotted, issued and fully paid65,226,480 (31 October 2004 and 30April 2005: 61,748,219) ordinaryshares of 5p and 12,514,500deferred shares of 5p 3,887 3,713 3,713------------------------------- -------- -------- -------- -------- Allotments during the periodOn 10 June 2005 3,478,261 new ordinary 5p shares were issued at a price of £2.30per share. The aggregate nominal value of shares issued amounted to £173,913.These new shares qualified for the year end dividend declared on 10 June 2005amounting to £35,000. Deferred SharesThe Deferred Shares carry no right to dividend or to attend or vote at a generalmeeting and on a return of capital, the right only to receive the amount paid upthereon after the holders of Ordinary Shares have received the aggregate amountpaid up thereon plus £100,000 per share. 7. Reserves The Group Share *Other *Profit and------------------------------- -------- premium reserves loss account £'000 £'000 £'000 -------- -------- -------- At 30 April 2005 410 10,856 3,587 Prior year restatement (see *Note 2) - (10) 627 ------------------------------- -------- -------- -------- --------At 30 April 2005 as restated 410 10,846 4,214 Employee share scheme charges - - 130 Issue of ordinary share capital 7,826 - - Share issue costs (277) - - Retained profit for the period - - 3,080 ------------------------------- -------- -------- -------- --------At 31 October 2005 7,959 10,846 7,424 ------------------------------- -------- -------- -------- -------- Other reserves relate to the difference between the market value and the nominalvalue of shares issued as consideration for the acquisition of Accident ExchangeLimited in April 2004, where the group has taken advantage of Section 131 of theCompanies Act 1985. 8. Reconciliation of movements in shareholders' funds 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed (*Restated) and *Restated) £'000 £'000 £'000------------------------------- -------- -------- --------Retained profit for the period 3,080 1,415 4,155Employee share scheme charges 130 - 10Issue of ordinary share capital(including share premium) 8,000 55 55Share issue costs (277) - -------------------------------- -------- -------- --------Net increase in shareholders' funds 10,933 1,470 4,220Equity shareholders' funds broughtforward 19,183 14,963 14,963------------------------------- -------- -------- --------Equity shareholders' funds carriedforward 30,116 16,433 19,183------------------------------- -------- -------- -------- 9.Reconciliation of operating profit to net cash inflow from operating activities 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed) £'000 £'000 £'000Reconciliation of operating profit to netcash inflow from operating activitiesOperating profit 6,341 2,522 7,721Amortisation and impairment of goodwill 328 328 656Amortisation of intangible assets 21 - 41Depreciation 2,516 884 2,412Loss / (profit) on sale of tangible fixedassets 37 (18) 20Non-cash share option charge 130 - 10Increase in debtors (8,184) (2,981) (6,446)Increase in creditors 1,293 465 1,138------------------------------- -------- -------- --------Net cash inflow from operating activities 2,482 1,200 5,552------------------------------- -------- -------- -------- 10. Reconciliation of net cash flow to movement in net debt 6 Months 6 Months Year ended ended ended 31 October 31 October 30 April 2005 2004 2005 (Reviewed) (Reviewed) £'000 £'000 £'000------------------------------- -------- -------- --------Increase / (decrease) in cash in period 3,792 (927) (339)Capital element of finance leases 6,349 1,887 5,158------------------------------- -------- -------- --------Decrease in net debt resulting from cashflows 10,141 960 4,819Inception of finance leases (18,688) (8,696) (18,224)------------------------------- -------- -------- --------Increase in net debt in period (8,547) (7,736) (13,405)Net debt brought forward (17,349) (3,944) (3,944)------------------------------- -------- -------- --------Net debt carried forward (25,896) (11,680) (17,349)------------------------------- -------- -------- -------- 11. Analysis of changes in net debt As at As at 30 April Non-cash 31 October 2005 Cashflows items 2005 £'000 £'000 £'000 £'000 ------------------------------- -------- -------- -------- --------Cash at bank and in hand - 3,775 - 3,775Bank overdraft (17) 17 - -------------------------------- -------- -------- -------- -------- (17) 3,792 - 3,775Finance leases (17,332) 6,349 (18,688) (29,671)------------------------------- -------- -------- -------- --------Net debt (17,349) 10,141 (18,688) (25,896)------------------------------- -------- -------- -------- -------- 12. Policy for adoption of new accounting standards As an AIM listed company, the Group is not required to report underInternational Financial Reporting Standards ("IFRS") until our year ending 30thApril 2008. Ordinarily therefore the Interim Results for the 6 month periodending 31 October 2007 would be the first set of financial statements to bereported under IFRS. Since we reported our last set of financial statements a large number of newFinancial Reporting Standards ("Standards'") have been embedded into UK GAAP.These new Standards, in the main, have been derived from or closely resembletheir counterpart IFRS or International Accounting Standard ("IAS"). Some ofthese new Standards have an implementation date that requires the Group to adoptthem, some have a later implementation date but allow for early or voluntaryadoption, and some, conversely, have a later implementation date and preventearly or voluntary adoption. Where we are permitted to adopt the Standards earlywe have done so. This policy has resulted in the adoption of FRS 20 in thesefinancial statements. We continue to consider the appropriateness of adopting new standards to assistthe users of the accounts in making comparisons with other companies. To thisend we have begun to consider the potential impacts of the standards that wecannot adopt early, for example in relation to financial instruments, to ensurethat our financial statements reflect best practice and that transition to newstandards are managed appropriately. This information is provided by RNS The company news service from the London Stock Exchange