ALY.L Regulatory News (ALY)

22 Sep 2005 07:03

Ashley (Laura) Hldgs PLC22 September 2005 LAURA ASHLEY HOLDINGS plc ("the Company") Results for the 26 weeks to 30 July 2005 Laura Ashley announces an improvement in net profitability (excluding allproperty profits) of £1.9 million for the first 26 weeks of the currentfinancial year compared to the first half of last year. This is due to thesuccessful realignment of the store base, improved efficiencies across thebusiness and the maintenance of gross margins in spite of difficult tradingconditions. Summary • Loss before tax (excluding property profits) £0.4 million (2004: loss of £2.3 million), an improvement in net profitability of £1.9 million. • Loss before tax (including property profits) £0.2 million (2004: loss of £1.5 million). • Group turnover down 14.7% to £100.7 million (2004: £118.0 million). • Total UK sales (including Mail Order and E-Commerce) down 15.6%, like-for-like sales down 11.8%. • Gross margin rate maintained. • Continued cost savings across the business. • Planned realignment of UK store portfolio continues with 9 stores closed and 4 new stores opened in the first half (total UK stores at 30 July 2005: 179). Commenting on the results, Lillian Tan, Chief Executive Officer, said: "The general economic environment experienced during the 26 week period to theend of July 2005 has been challenging for us and most retailers. Although we gointo the second half with our business in better shape than before, marketconditions in the UK high street remain extremely difficult and our performancewill depend upon how consumer confidence progresses in the coming months. Inresponse to this period of uncertainty we will continue to drive efficienciesand increase productivity throughout our business." Enquiries:Laura Ashley Holdings plc 020 7404 5959 (22 Sep)David Cook, Chief Financial Officer 020 7880 5100 (thereafter)Brunswick 020 7404 5959Tom BuchananJames Olley Overview The general economic environment experienced during the 26 week period to theend of July 2005 has been challenging for the retail sector. However, thefinancial results of the Group have shown continued, steady improvement, drivenby ongoing efficiency improvements and cost savings. For the 26 weeks ended 30 July 2005, Laura Ashley recorded total Group turnoverof £100.7 million (2004: £118.0 million). The majority of this reduction wasaccounted for by lower UK sales, particularly the planned reduction of Fashionsales. Total UK retail sales, including Mail Order and E-Commerce, for the 26weeks to 30 July 2005 were down by £15.8 million (15.6%) to £85.4 million. TotalUK retail like-for-like ("LFL") sales for the period were down 11.8%. The Group recorded a loss before taxation of £0.2 million that included thebenefit of £0.2 million of one-off property gains. For the same period lastyear, the Group recorded a loss before taxation of £1.5 million that includedthe benefit of £0.8 million of one-off property gains. Operating expenses have reduced significantly. The savings are the result of theongoing rationalisation of the UK store portfolio together with improvedefficiency across all areas of the business and the benefit of cost savingmeasures implemented in the 2004/5 financial year. Product We indicated on 14 April 2005 that, henceforth, we would change the way wereport retail performance. This decision reflects a truer picture of the way thebusiness is managed. The relative split of total UK retail sales in the firsthalf is as follows: Furniture 32%, Decorating 24%, Home Accessories 28% andFashion 16%. Furniture The Furniture product category includes upholstered furniture, beds and cabinetfurniture. During the 26 weeks to 30 July 2005, Furniture sales declined by 8.2%(LFL -8.1%). The Furniture performance reflects the current downturn in thehousing market and the drop in consumer confidence. In general, customers havebeen more cautious when purchasing 'big ticket' items and this is borne out bythe British Retail Consortium (BRC) figures for the corresponding period. Wehave also seen better performance in the more directional product areas such asdistressed leather upholstery, glass cabinet furniture and our oak modularranges. Decorating The Decorating product category includes made to measure curtains, fabric, readymade curtains, paint and wallpaper. During the 26 weeks to 30 July 2005,Decorating sales declined by 11.3% (LFL -8.7%). As with the Furniture category,Decorating was negatively impacted by the tough housing market and the drop inconsumer confidence. We are seeing the purchase of higher price products slowingin areas such as made to measure curtains and blinds. Despite this, we are stillseeing a returning trend for customers to improve their homes with wallpaper andwe have had great success with fashionable statement wallpaper (such as theKimono and Erin prints) inspired by our archives. Home Accessories The Home Accessories product category includes lighting, gift, bed linen, rugs,throws and cushions. During the 26 weeks to 30 July 2005, sales of UK Home Accessories declined by4.1% (LFL -2.0%). The Home Accessories category has performed better than ourother categories because our customers are able to choose a number of items andsuccessfully update the look of a room in a quick and cost effective way. Thereintroduction of our casual dining range has proved to be a success. As aresult this area has grown significantly for Autumn/Winter 2005 with the use ofsignature prints from the archive. We have seen better performance in glasslighting and quilted bedspreads, reflecting the key consumer trends in theseproduct areas. Fashion During the 26 weeks to 30 July 2005, UK Fashion sales declined by 48.8% (LFL-35.5%). The reduction in sales was planned as part of our repositioning ofFashion as a niche clothing brand. As a result, the Fashion category nowrepresents 16% of total UK retail sales (2004: 25%). Fashion still represents avery significant proportion of our international franchise business. Fashionfinished the Spring/Summer season with a clean stock position and positive salesreactions to those products with a special Laura Ashley look which have drawn onour rich design heritage. UK Operations Retail Stores At 30 July 2005, the property portfolio in the UK comprised 179 stores. We havethree main store types: 79 mixed product stores (selling all productcategories), 51 Home stores (selling the full range of Home products) and 49Home concession stores. As part of the ongoing process of realigning our property portfolio, during thefirst half of the current financial year, five Home concession stores and fourmixed product stores were closed. We have previously stated our intention to addup to 100,000 square feet of new, mainly Home, retail space over the next twoyears. In line with this strategy, we have opened four new Home stores in the 26weeks to 30 July 2005 and expect to open another six in the second half of thecurrent financial year. Mail Order and E-Commerce Sales through our direct channel (Mail Order and E-Commerce) now represent 13%of our total UK retail business (2004: 11%) and are a vital part of ourmulti-channel retail strategy. Total Mail Order and E-Commerce sales were £11.5million, down 2.8% on last year. This was mainly caused by a decision towithdraw from selling Fashion through Mail Order to focus on Home products. Growth in E-Commerce sales continued at 31%, in addition to driving salesthrough our stores. We now have over 280,000 registered E-Commerce customers andwe continue to invest in the development of this important retail channel. Ahigher margin rate together with cost savings has resulted in an improvement inthe net profitability of our direct business. Manufacturing The consolidation of our manufacturing operations in to one purpose-built siteis now complete. In addition to the cost savings that arise through operating from one site, theeventual disposal of the land and buildings in Carno, Powys is expected togenerate a one-off property profit. International Operations Franchising In the 26 weeks to 30 July 2005, Franchise sales were down 12.5% to £10.8million. This was caused by difficult retail markets experienced by some of ourFranchise partners. There are currently 205 franchised stores in 28 countriesworldwide. Licensing In the 26 weeks to 30 July 2005, Licensing income increased by 7.8% to £1.8million. In particular, we have seen increasing revenues from Japan. We continueto develop further Licensing opportunities globally. Despite reduced gross profit from reduced Franchise sales, the increase inroyalties and licensing income has meant that total gross profit levels in ourInternational Operations have been maintained. Brand The business continues to capitalise on the strength of the Laura Ashley brandin order to generate increased revenue streams both in the UK andinternationally. All brand activities have been consolidated into one Groupcompany. Pension Fund Laura Ashley operates a defined benefit pension scheme. In common with manyother UK companies, the present value of the pension scheme liabilities exceedsthe market value of the assets. At 30 July 2005, the resulting deficit wasvalued under International Accounting Standard 19 (IAS 19) at £13.2 million. Thescheme has been closed to new members since 2002. Earlier this year, a scheduleof payments was agreed with the trustees of the scheme to clear the deficit overa fixed number of years. The schedule of proposed payments will be reviewed on aregular basis. With effect from 1 September 2005, active members of the schemewere transferred to a new defined contribution scheme. As a result, the accrualof benefits under the defined benefit scheme ceased along with the risk anduncertainty related to final salary schemes of this type. Benefits alreadyaccrued by active and deferred members up to this date were unaffected. International Financial Reporting Standards The financial information shown in this Interim Report has been compiled underInternational Financial Reporting Standards and the comparative figures for theprevious periods have consequently been restated. Details of the changesrequired under IFRS are shown in Notes 8 to 12 of the accounts. Full details ofthe Group's accounting policies can be found at www.lauraashley.com. Dividend In light of the Group's current financial results, an interim dividend will notbe paid. Current trading As previously explained, current trading statistics at this point in thefinancial calendar do not serve as a useful indicator of overall performance. Inthe 33 weeks to 17 September 2005, like-for-like trading was broadly in linewith that of the first half. Although we go into the second half with ourbusiness in better shape than before, market conditions in the UK high streetremain extremely difficult and our performance will depend upon how consumerconfidence progresses in the coming months. In response to this period ofuncertainty we will continue to drive efficiencies and increase productivitythroughout our business. Group Income StatementFor the 26 weeks ended 30July 2005 Restated Restated 26 weeks to 26 weeks to 52 weeks to 30 July 2005 31 July 2004 29 January 2005 (unaudited) (unaudited) (audited) £m £m £m------------------------- --------- --------- -----------Revenue 100.7 118.0 238.9Cost of sales (59.3) (69.9) (137.9)------------------------- --------- --------- -----------Gross profit 41.4 48.1 101.0Operating expenses (41.6) (49.4) (96.3)------------------------- --------- --------- -----------(Loss)/profit fromoperations (0.2) (1.3) 4.7Share of operatingprofit of associate 0.1 0.2 0.4Net interest payable (0.1) (0.4) (0.7)------------------------- --------- --------- -----------(Loss)/profit beforetaxation (0.2) (1.5) 4.4Taxation 0.1 0.4 (1.3)------------------------- --------- --------- -----------(Loss)/profit for theperiod (0.1) (1.1) 3.1------------------------- --------- --------- -----------(Loss)/earnings pershare - basic anddiluted (0.01)p (0.15)p 0.42p------------------------- --------- --------- ----------- The Group's results shown above are derived entirely fromcontinuing operations. The Group has applied IAS 19 "Employee Benefits" for the first time in itsinterim financial statements for 2005. IAS 19 requires that the operating andfinancing costs of retirement benefits scheme be recognised immediately in theIncome Statement. The impact of IAS 19 in the Income Statement for the 26 weeks ended 30 July 2005is a reduction in the net operating expenses of £0.2 million and an increase inthe net financing costs of £0.2 million. The comparative Income Statements have been restated to take into account theimpact of IAS 19. The reconciliation from Generally Accepted Accounting Practice("GAAP") to International Financial Reporting Standards ("IFRS") for thecomparative Income Statements is set out in notes 8 and 9. Group Balance SheetAs at 30 July 2005 Restated Restated At 30 July 2005 At 31 July 2004 At 29 January 2005 (unaudited) (unaudited) (audited) £m £m £m----------------- ----------- ----------- ------------Non-current assets ----------- ----------- ------------Property,plant andequipment 29.8 31.9 31.9Deferred taxasset 4.0 4.1 4.3Investment inassociate 3.4 3.3 3.5 ----------- ----------- ------------ 37.2 39.3 39.7Current assets ----------- ----------- ------------Inventories 35.2 40.5 34.9Trade andotherreceivables 19.5 26.1 23.1Cash and cashequivalents 18.3 10.3 16.1 ----------- ----------- ------------ 73.0 76.9 74.1----------------- ----------- ----------- ------------Total Assets 110.2 116.2 113.8----------------- ----------- ----------- ------------ Current LiabilitiesTrade andother payables 37.4 46.5 39.9 Non-currentliabilities ----------- ----------- ------------Bankborrowings 4.3 5.0 5.1Retirementbenefitobligations 13.2 13.8 14.2Provisions andotherliabilities 0.3 0.5 0.2 ----------- ----------- ------------ 17.8 19.3 19.5----------------- ----------- ----------- ------------TotalLiabilities 55.2 65.8 59.4----------------- ----------- ----------- ----------------------------- ----------- ----------- ------------Net Assets 55.0 50.4 54.4----------------- ----------- ----------- ------------ EquityShare capital 37.3 37.3 37.3Share premium 86.4 86.4 86.4Own shares (0.8) (0.8) (0.8)Retainedearnings (67.9) (72.5) (68.5)----------------- ----------- ----------- ------------Total Equity 55.0 50.4 54.4----------------- ----------- ----------- ------------ The comparative Balance Sheets have been restated to account for the impact of IAS19. See notes 11 and 12 for thereconciliations from GAAP toIFRS. Statement of Changes inShareholders' EquityAs at 30 July 2005 Share Share Own Retained Total Capital Premium Shares Earnings Equity £m £m £m £m £m------------------------- ------- --- ------- --- ------ --- ------- --- ----- Balance as at1 February2004 37.3 86.4 (0.8) (62.0) 60.9Adoption ofIAS 19 - - - (8.6) (8.6) ------- --- ------- --- ------ --- ------- --- -----Restated 37.3 86.4 (0.8) (70.6) 52.3 Loss for the 6months ended31 July 2004 - - - (1.1) (1.1)Adoption ofIAS 19 - - - (0.8) (0.8)------------------------- ------- --- ------- --- ------ --- ------- --- -----Balance as at31 July 2004 37.3 86.4 (0.8) (72.5) 50.4 Profit for the6 months ended31 January2005 - - - 4.2 4.2Exchangedifferences ontranslation ofinvestments - - - (0.1) (0.1)Actuarial losson definedbenefitpension scheme - - - (0.1) (0.1)------------------------- ------- --- ------- --- ------ --- ------- --- -----Balance as at31 January2005 37.3 86.4 (0.8) (68.5) 54.4 Loss for the 6months ended30 July 2005 - - - (0.1) (0.1)Actuarial gainon definedbenefitpension scheme - - - 0.7 0.7Balance as at30 July 2005 37.3 86.4 (0.8) (67.9) 55.0------------------------- ------- --- ------- --- ------ --- ------- --- ----- Group Cash Flow StatementFor the 26 weeks ended 30 July2005 26 weeks to 26 weeks to 52 weeks to 30 July 2005 31 July 2004 29 January 2005 (unaudited) (unaudited) (audited) £m £m £m------------------------- --------- --------- ----------- Operating activities --------- --------- -----------Cash generated from operations 4.3 (1.9) 7.2Corporation tax paid (0.7) (0.4) (0.8)Net finance income/(cost) 0.2 (0.3) (0.3) --------- --------- ----------- 3.8 (2.6) 6.1 Investing activities --------- --------- -----------Purchase of property, plantand equipment (1.1) (1.5) (3.8)Sale of property, plant andequipment 0.1 1.1 1.6Net cash received fromassociate 0.1 0.1 0.1 --------- --------- ----------- (0.9) (0.3) (2.1)Financing activities --------- --------- -----------Loan repaid (0.5) (1.0) (1.8)Payment of finance leaseobligations (0.2) (0.9) (1.2) --------- --------- ----------- (0.7) (1.9) (3.0)------------------------- --------- --------- -----------Net increase/(decrease) incash and cash equivalents 2.2 (4.8) 1.0------------------------- --------- --------- ----------- Reconciliation of Net CashFlowto Movement in Net FundsFor the 26 weeks ended 30July 2005 26 weeks to 26 weeks to 52 weeks to 30 July 2005 31 July 2004 29 January 2005 (unaudited) (unaudited) (audited) £m £m £m------------------------------- --------- --- --------- --- -----------Netincrease/(decrease)in cash and cashequivalents 2.2 (4.8) 1.0Cash inflow fromchanges in loans andleases 0.5 1.9 3.0------------------------------- --------- --- --------- --- -----------Change in net cashresulting from cashflows 2.7 (2.9) 4.0New finance leases - - (1.0)------------------------------- --------- --- --------- --- -----------Change in net fundsduring the period 2.7 (2.9) 3.0Net funds at thebeginning of theperiod 9.8 6.8 6.8------------------------------- --------- --- --------- --- -----------Net funds at the endof the period 12.5 3.9 9.8------------------------------- --------- --- --------- --- ----------- Notes 1. Basis of preparation EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidatedfinancial statements of the Group for the 52 weeks ending 28 January 2006 beprepared in accordance with IFRS adopted for use in the EU. The Group adopted IFRS with effect from 30 January 2005. Our transition date is1 February 2004, being the start date of the previous period for which we willpresent the full comparative information in our 2006 annual report and accounts. This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRS in issue that are eitherendorsed by the EU and effective (or available for early adoption) at 28 January2006 or are expected to be endorsed and effective (or available for earlyadoption) at 28 January 2006 which is the Group's first annual reporting dateunder IFRS. Based on the IFRS adopted by the Group and those to be adoptedlater, the directors have made assumptions about the accounting policiesexpected to be applied when the first annual IFRS financial statements are to beprepared in 2006. As such, the accounting policies for that annual period willbe determined only when the annual financial statements are prepared for the 52weeks ending 28 January 2006. The preparation of this financial information which is under IFRS, resulted inchanges to the accounting policies as compared with the most recent annualfinancial statements prepared under previous GAAP. The revised accountingpolicies have been applied consistently to all periods presented in thisfinancial information. The significant revised accounting policy is in relationto the Group's pension arrangement where a provision for retirement benefitobligations has been provided in full in the Balance Sheet to reflect the marketvalue of the assets of the scheme. This is made in compliance with IAS 19'Employee Benefits'. 2. Accounting policies The Group's accounting policies have been updated following the transition toIFRS and are available on the Group's website at www.lauraashley.com. 3 Segmental analysis 26 weeks to 26 weeks to 52 weeks to 30 July 2005 31 July 2004 29 January 2005 Total Total Total (unaudited) (unaudited) (audited) £m £m £m ------------------- ----- --------- ---------- ---------- Revenue Retail 86.1 102.1 206.5 Non-retail 14.6 15.9 32.4 ------------------- ----- --------- ---------- ---------- 100.7 118.0 238.9 ------------------- ----- --------- ---------- ---------- Retail revenue reflects sales through Laura Ashley's managed stores, Mail Order and E-Commerce. Non-retail revenue includes Licensing, Franchising and Manufacturing. (Loss)/profit before taxation Branch contribution Retail 6.1 6.9 18.5 Non-retail 3.5 3.7 9.1 ------------------- ----- --------- ---------- ---------- 9.6 10.6 27.6 Indirect overhead costs (9.8) (11.9) (22.9) ------------------- ----- --------- ---------- ---------- Operating (loss)/profit (0.2) (1.3) 4.7 Share of oprating profit of associate 0.1 0.2 0.4 Net interest receivable/ (payable) (0.1) (0.4) (0.7) ------------------- ----- --------- ---------- ---------- (Loss)/profit before taxation (0.2) (1.5) 4.4 ------------------- ----- --------- ---------- ---------- Retail branch contribution reflects contribution through Laura Ashley's managed stores, Mail order and E-Commerce. Branch contribution is stated after deducting direct operating expenses, buying, marketing and administrative costs. 4 Principal exchange rates 26 weeks to 26 weeks to 53 weeks to 30 July 2005 31 July 2004 29 January 2005 Average Period end Average Period end Average Period end ------------- ------- -------- ------- -------- ------- --------- US Dollar 1.85 1.75 1.81 1.82 1.83 1.88 Euro 1.46 1.45 1.49 1.51 1.47 1.45 Japanese Yen 199 197 199 203 198 195 ------------- ------- -------- ------- -------- ------- --------- 5 Taxation Taxation has been calculated by applying the forecast full year effective rateof tax in the individual fiscal territories to the results for this period. 6 (Loss)/earnings per share Restated Restated 26 weeks to 26 weeks to 52 weeks to 30 July 2005 31 July 2004 29 January 2005 (unaudited) (unaudited) (audited) ---------------- - ---- ---- ------- ----- --------- --- ---------- --- ---------- (Loss)/earnings attributable to ordinary shareholders (£m) (0.1) (1.1) 3.1 Weighted average number of ordinary shares ('000) (basic and diluted) 743,547 743,547 743,547 (Loss)/earnings per share (0.01)p (0.15)p 0.42p ---------------- - ---- ---- ------- ----- --------- --- ---------- --- ---------- Basic and diluted (loss)/earnings per share is calculated by dividing the (loss)/earnings attributable to ordinary shareholders by the weighted average number of ordinary shares during the year (excluding those shares held by the Laura Ashley Employee Benefit Trust). 7 Reconciliation of operating (loss)/profit to net cash inflow/(outflow) from operating activities 26 weeks to 26 weeks to 52 weeks to 30 July 2005 31 July 2004 29 January 2005 (unaudited) (unaudited) (audited) £m £m £m -------------------------- -------- --------- ----------- Operating (loss)/profit (0.4) (1.2) 4.8 Depreciation charge 3.2 3.3 6.3 Profit on sale of (0.2) (0.8) (1.0) property,plant and equipment Change in inventories (0.2) 1.3 6.9 Change in receivables 3.6 (5.3) (2.2) Change in payables (1.8) 1.3 (6.7) Change in provisions and other liabilities 0.1 (0.5) (0.9) -------------------------- -------- --------- ----------- Net cash inflow/(outflow) from operating activities 4.3 (1.9) 7.2 -------------------------- -------- --------- ----------- 8 Reconciliation of loss for the 26 weeks ended 31 July 2004 UK GAAP Effect of transition IFRS to IFRS (IAS 19) £m £m £m -------------------- --- ------- -- ----------- ---- ----- Revenue 118.0 - 118.0 Cost of sales (69.9) - (69.9) -------------------- --- ------- -- ----------- ---- ----- Gross profit 48.1 - 48.1 Operating expenses (49.3) (0.1) (49.4) -------------------- --- ------- -- ----------- ---- ----- Loss from operations (1.2) (0.1) (1.3) Share of operating profit of associate 0.2 - 0.2 Net interest receivable /(payable) (0.2) (0.2) (0.4) -------------------- --- ------- -- ----------- ---- ----- Loss before taxation (1.2) (0.3) (1.5) Taxation 0.4 - 0.4 -------------------- --- ------- -- ----------- ---- ----- Loss for the period (0.8) (0.3) (1.1) -------------------- --- ------- -- ----------- ---- ----- The impact of the transition to IFRS is an increase in the net operatingexpenses and net financing costs of £0.1 million and £0.2 million respectively. 9 Reconciliation of profit for the 52 weeks ended 31 January 2005 UK GAAP Effect of transition IFRS to IFRS (IAS 19) £m £m £m --------------------- --- -------- --- ---------- --- ------- Revenue 238.9 - 238.9 Cost of sales (137.9) - (137.9) --------------------- --- -------- --- ---------- --- ------- Gross profit 101.0 - 101.0 Operating expenses (96.2) (0.1) (96.3) --------------------- --- -------- --- ---------- --- ------- Profit from operations 4.8 (0.1) 4.7 Share of operating profit of associate 0.4 - 0.4 Net interest payable (0.4) (0.3) (0.7) --------------------- --- -------- --- ---------- --- ------- Profit before taxation 4.8 (0.4) 4.4 Taxation (1.3) - (1.3) --------------------- --- -------- --- ---------- --- ------- Profit for the period 3.5 (0.4) 3.1 --------------------- --- -------- --- ---------- --- ------- The impact of the transition to IFRS is an increase in the net operatingexpenses and net financing costs of £0.1 million and £0.3 million respectively. 10 Reconciliation of net assets as at 31 January 2004 UK GAAP Effect of IFRS transition to IFRS (IAS 19) £m £m £m ----------------- ----------- ----------- --- ---------- Non-current assets ----------- ---------- Property, plant and equipment 33.9 - 33.9 Deferred tax asset - 3.7 3.7 Investment in associate 3.4 - 3.4 ----------- ---------- 37.3 41.0 Current assets ----------- ---------- Inventories 41.8 - 41.8 Trade and other receivables 20.8 - 20.8 Cash and cash equivalents 15.1 - 15.1 ----------- ---------- 77.7 77.7 ----------------- ----------- ----------- --- ---------- Total Assets 115.0 3.7 118.7 ----------------- ----------- ----------- --- ---------- Current liabilities Trade and other payables 47.4 - 47.4 Non-current liabilities ----------- ---------- Bank borrowings 5.6 - 5.6 Retirement benefit - 12.3 12.3 obligations Provisions and other liabilities 1.1 - 1.1 ----------- ---------- 6.7 19.0 ----------------- ----------- ----------- --- ---------- Total Liabilities 54.1 12.3 66.4 ----------------- ----------- ----------- --- ---------- ----------------- ----------- ----------- --- ---------- Net Assets 60.9 (8.6) 52.3 ----------------- ----------- ----------- --- ---------- The impact of implementing IAS 19 is to recognise a pension liability of £12.3million in the Group's Balance Sheet. The net impact is a reduction in theconsolidated net assets of £8.6 million after deducting the related deferred taxof £3.7 million. 11 Reconciliation of net assets as at 31 July 2004 UK GAAP Effect of IFRS transition to IFRS (IAS 19) £m £m £m ----------------- --- -------- --- ----------- --- -------- Non-current assets -------- -------- Property, plant and equipment 31.9 - 31.9 Deferred tax asset - 4.1 4.1 Investment in associate 3.3 - 3.3 -------- -------- 35.2 39.3 Current assets -------- -------- Inventories 40.5 - 40.5 Trade and other receivables 26.1 - 26.1 Cash and cash equivalents 10.3 - 10.3 -------- -------- 76.9 76.9 ----------------- --- -------- --- ----------- --- -------- Total Assets 112.1 4.1 116.2 ----------------- --- -------- --- ----------- --- -------- Current liabilities Trade and other payables 46.5 - 46.5 Non-current liabilities -------- -------- Bank borrowings 5.0 - 5.0 Retirement benefit obligations - 13.8 13.8 Provisions and other liabilities 0.5 - 0.5 -------- -------- 5.5 19.3 ----------------- --- -------- --- ----------- --- -------- Total Liabilities 52.0 13.8 65.8 ----------------- --- -------- --- ----------- --- -------- ----------------- --- -------- --- ----------- --- -------- Net Assets 60.1 (9.7) 50.4 ----------------- --- -------- --- ----------- --- -------- The impact of implementing IAS 19 is to recognise a pension liability of £13.8million in the Group's Balance Sheet. The net impact is a reduction in theconsolidated net assets of £9.7 million after deducting the related deferred taxof £4.1 million. 12 Reconciliation of net assets as at 31 January 2005 UK GAAP Effect of IFRS transition to IFRS (IAS 19) £m £m £m ----------------- --- -------- --- ----------- --- -------- Non-current assets -------- -------- Property, plant and equipment 31.9 - 31.9 Deferred tax asset - 4.3 4.3 Investment in associate 3.5 - 3.5 -------- -------- 35.4 39.7 Current assets -------- -------- Inventories 34.9 - 34.9 Trade and other receivables 23.1 - 23.1 Cash and cash equivalents 16.1 - 16.1 -------- -------- 74.1 74.1 ----------------- --- -------- --- ----------- --- -------- Total Assets 109.5 4.3 113.8 ----------------- --- -------- --- ----------- --- -------- Current liabilities Trade and other payables 39.9 - 39.9 Non-current liabilities -------- -------- Bank borrowings 5.1 - 5.1 Retirement benefit obligations - 14.2 14.2 Provisions and other liabilities 0.2 - 0.2 -------- -------- 5.3 19.5 ----------------- --- -------- --- ----------- --- -------- Total Liabilities 45.2 14.2 59.4 ----------------- --- -------- --- ----------- --- -------- ----------------- --- -------- --- ----------- --- -------- Net Assets 64.3 (9.9) 54.4 ----------------- --- -------- --- ----------- --- -------- The impact of implementing IAS 19 is to recognise a pension liability of £14.2million in the Group's Balance Sheet. The net impact is a reduction in theconsolidated net assets of £9.9 million after deducting the related deferred taxof £4.3 million. This information is provided by RNS The company news service from the London Stock Exchange