Andrew Sykes Regulatory News (ASY)

27 Sep 2007 16:00

Andrews Sykes Group PLC27 September 2007 Andrews Sykes Group plc Interim Financial Statements 30 June 2007 Overview and financial highlights I am pleased to be able to report that, despite unfavourable weather conditions,the underlying Group trading profit has been maintained at a similar levelcompared with the same period in 2006. This is due to our continuing costcontrol and diversification strategies which ensure that satisfactory resultscan be achieved even in the face of less than ideal trading conditions. The financial highlights of this period compared with the first half of 2006 areas follows: 2007 2006 £'000 £'000 Revenue 27,185 27,609 Trading profit before pension curtailment 5,665 5,442charge EBITDI* 6,635 7,211 Profit for the financial 2,857 3,340period Adjusted basic earnings per share from 7.88 7.50continuing operations excluding pension pence pencecurtailment charge Basic earnings per share from continuing 6.41 7.50operations pence pence Net cash inflow from operating 3,414 3,691activities * Earnings Before Interest, Taxation, Depreciation and Impairment provisions asreconciled on the face of the income statement. Operations review Continued close and detailed operational, marketing and financial managementhave delivered a very good result in the face of unhelpful climate conditions.We regard good customer relations as key to maintaining and developing marketshare in highly competitive markets. Thus the much lower temperatures in the UKin the early summer compared with 2006, though reducing our comfort airconditioning revenues, have not had a proportionate effect on our market sharewhich has held up in difficult times. We have also started, very cautiously, using our group expertise and resourcesto open new depots in Holland and Belgium as well as a company specialising inair conditioning in Florida, USA. Initial results from these start ups areencouraging. Pension curtailment offer During the financial period an offer was made to all deferred members of ourdefined benefit pension scheme giving them the opportunity to transfer theiraccrued pension rights to an alternative pension scheme provider. Whilst it willtake several months for this offer to be finalised, the anticipated financialeffects have been reflected in these interim financial statements. In summary it is expected that the cash cost to the group will be approximately£4.6 million, of which £0.1 million had been paid by the period end, and thiswill be financed primarily by new bank borrowings. It is anticipated that theoffer will result in a reduction in the pension scheme deficit of approximately£3.7 million and a charge to the income statement of £0.9 million. Prospects The continuation of unfavourable weather conditions in the UK and NorthernEurope has resulted in air conditioning revenues below those of the remarkablesummer of 2006. We have however held onto our market share but lowertemperatures have impacted on the opening months of the second half. Fortunatelythe pump division continues to perform well, ahead of both last year and ourexpectations. Nevertheless, overall, I am confident that I will still be able to report areasonable result for the second half of 2007. JG MurrayChairman 27 September 2007 Andrews Sykes Group plcConsolidated Income StatementFor the 26 weeks ended 30 June 2007 (unaudited) 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000Continuing operations Revenue 27,185 27,609 59,768Cost of sales -12,696 -13,434 -26,918 Gross profit 14,489 14,175 32,850 Distribution costs -4,250 -4,433 -9,471Administrative expenses -4,574 -4,300 -8,107 Trading profit before pension curtailment charge 5,665 5,442 15,272 Pension curtailment charge (see note 5) -934 - - Operating profit 4,731 5,442 15,272 EBITDI* 6,635 7,211 18,887Depreciation and impairment losses -2,255 -2,012 -4,153Profit on the sale of property, plant and 351 243 538equipmentOperating profit 4,731 5,442 15,272 Finance income 1,480 1,197 2,277Finance costs -1,910 -1,855 -3,549 Profit before taxation 4,301 4,784 14,000 Taxation -1,444 -1,444 -4,150 Profit for the period from continuing operations 2,857 3,340 9,850 Discontinued operations Loss for the period from discontinued operations - - -142 Profit for the financial period 2,857 3,340 9,708 Earnings per share from continuing operations Basic (pence) 6.41p 7.50p 22.11pDiluted (pence) 6.41p 7.49p 22.10p Earnings per share from total operations Basic (pence) 6.41p 7.50p 21.79pDiluted (pence) 6.41p 7.49p 21.79p * Earnings Before Interest,Taxation, Depreciation andImpairment provisions Andrews Sykes Group plcConsolidated Balance SheetAs at 30 June 2007 (unaudited) 30 June 2007 1 July 2006 31 December 2006 £'000 £'000 £'000Non-current assetsProperty, plant and equipment 15,340 13,205 15,201Goodwill - 31 31Lease prepayments 224 234 229Trade investments 164 164 164Deferred tax asset 2,361 3,223 3,201Derivative financial instruments 161 - 23 18,250 16,857 18,849Current assetsStocks 5,830 4,475 4,336Trade and other receivables 15,318 14,528 16,217Cash and cash equivalents 11,908 11,435 10,190Assets held for sale - 188 - 33,056 30,626 30,743 Current liabilitiesTrade and other payables -14,436 -8,560 -10,108Current tax liabilities -1,343 -2,133 -2,292Bank loans -5,000 -5,000 -5,000Obligations under finance leases -233 -233 -233Provisions -15 -495 -24 -21,027 -16,421 -17,657 Net current assets 12,029 14,205 13,086 Total assets less current liabilities 30,279 31,062 31,935 Non-current liabilitiesBank loans -20,000 -25,000 -20,000Obligations under finance leases -1,078 -1,214 -1,147Retirement benefit obligations -2,190 -5,633 -6,577 -23,268 -31,847 -27,724 Net assets / (liabilities) 7,011 -785 4,211 EquityShare capital 446 446 446Retained earnings 6,701 -1,366 3,854Translation reserve -368 -97 -321Other reserves 222 222 222 Surplus / (deficit) attributable to the parent's 7,001 -795 4,201shareholdersMinority interest 10 10 10 Total equity 7,011 -785 4,211 Andrews Sykes Group plcConsolidated Cash Flow StatementFor the 26 weeks ended 30 June 2007 (unaudited) 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000Cash flows from operating activitiesCash generated from operations 5,259 5,356 15,935Interest paid -211 -877 -1,591Net UK Corporation tax paid -1,352 -600 -2,465Withholding tax paid -69 -52 -52Overseas tax paid -213 -136 -290 Net cash flow from operating 3,414 3,691 11,537activities Investing activitiesDisposal costs paid less consideration received 295 -138 -183on prior year disposalsSale of property, plant and equipment 389 342 526Purchase of property, plant & equipment -2,408 -2,804 -7,067Interest received 136 164 476 Net cash flow from investing activities -1,588 -2,436 -6,248 Financing activitiesLoan repayments - - -5,000Finance lease capital repayments -69 -64 -131Purchase of own shares - -16 -16Sale of own shares by ESOP - 4 4 Net cash flow from financing activities -69 -76 -5,143 Net increase in cash and cash equivalents 1,757 1,179 146 Cash and cash equivalents at beginning of period 10,190 10,342 10,342Effect of foreign exchange rate changes -39 -86 -298 Cash and cash equivalents at end of period 11,908 11,435 10,190 Reconciliation of net cash flow to movement in net debt in the period Net increase in cash and cash equivalents 1,757 1,179 146Cash outflow from the decrease in debt 69 64 5,131Non cash movements in the fair value of 138 - 23derivativesMovement in net debt during the period 1,964 1,243 5,300Opening net debt at the beginning of period -16,167 -21,169 -21,169Effect of foreign exchange rate changes -39 -86 -298Closing net debt at the end of period -14,242 -20,012 -16,167 Andrews Sykes Group plcConsolidated Statement of Recognised Income and ExpenseFor the 26 weeks ended 30 June 2007 (unaudited) 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Actual return less expected return on pension - - 636scheme assetsExperience gains and losses arising on plan - - -340obligationChanges in demographic and financial assumptionsunderlying the present value of - - -1,937plan obligationsCurrency translation differences on foreign -46 -97 -321currency net investmentsDeferred tax on items posted directly to equity -11 - 493 Net income recognised directly in equity -57 -97 -1,469 Profit for the period attributable to equity 2,857 3,340 9,708shareholders Total recognised income and expense for theperiod attributable to equity shareholders 2,800 3,243 8,239 Andrews Sykes Group plcNotes to the consolidated financial statementsFor the 26 weeks ended 30 June 2007(unaudited) 1. General information Basis of preparation These interim financial statements have been prepared in accordance withInternational Accounting Standards (IAS) and International Financial ReportingStandards (IFRS) as adopted by the European Union and with the Companies Act1985. It complies with the requirements of IAS 34 - Interim Financial Reporting. The information for the 52 weeks ended 31 December 2006 does not constitute theGroup's statutory accounts for 2006 as defined in Section 240 of the CompaniesAct 1985. Statutory accounts for 2006 have been delivered to the Registrar ofCompanies. The Auditors' report on those accounts was unqualified and did notcontain statements under Section 237(2) or (3) of the Companies Act 1985. Theseinterim Financial Statements, which were approved by the Board of Directors on26 September 2007, have not been audited or reviewed by the Auditors. These interim financial statements have been prepared using the historical costbasis of accounting except for: i) Properties held at the date of transition to IFRS which are stated at deemedcost; ii) Assets held for sale which are stated at the lower of fair value lessanticipated disposal costs and carrying value and iii) Derivative financial instruments (including embedded derivatives) which arevalued at fair value. Functional and presentational currency The financial statements are presented in pounds sterling because that is thefunctional currency of the primary economic environment in which the groupoperates. First time adoption of International Financial Reporting Standards This is the Group's first interim statement that has been prepared in accordancewith IFRS. The Group's transition date for adoption of IFRS is 1 January 2006.An explanation of how the transition to IFRS has affected the Group's financialposition at the date of transition, 1 July 2006 (the date of the last interimreport prepared in accordance with UK GAAP) and 31 December 2006 (the lastreporting date under UK GAAP) together with a reconciliation of the results forthe 26 weeks ended 1 July 2006 and 52 weeks ended 31 December 2006 under UK GAAPto IFRS are given in note 11. The Group has revised its accounting policies where applicable to conform withIFRS and the significant policies having an effect on the interim statement areset out below. These policies have been applied consistently to all the periodspresented across all group companies and in preparing the opening balance sheetas at 1 January 2006 for the purpose of transition to IFRS. The Group has taken advantage of the following exemptions on transition to IFRSas permitted by paragraph 13 of IFRS 1: • The requirements of IFRS 3 - Business Combinations - have not been applied to business combinations that occurred before the date of transition to IFRS. • The carrying values of freehold and leasehold properties are based on previously adopted UK GAAP valuations and these are now taken as deemed cost on transition to IFRS. 2. Significant accounting policies Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and entities controlled by the Company (its subsidiaries) made up to30 June 2007. Control is achieved where the Company has the power to govern thefinancial and operating policies of an investee so as to obtain benefits fromits activities. Minority interests in the net assets of consolidated subsidiaries are identifiedseparately from the Group's equity therein. Minority interests consist of theamount of those interests at the date of the original business combination (seebelow) and the minority's share of changes in equity since the date of thecombination. Losses applicable to the minority in excess of the minority'sinterest in the subsidiary's equity are allocated against the interests of theGroup except to the extent that the minority has a binding obligation and isable to make an additional investment to cover the losses. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Business combinations and goodwill Goodwill arising on consolidation represents the excess of consideration overthe group's interest in the fair value of assets acquired. Goodwill isrecognised as an asset and is not amortised. It is reviewed for impairment ateach reporting date as detailed in "impairment of non-financial assets" below. In accordance with the options that are available under IFRS 1, the Group haselected not to apply IFRS 3 retrospectively to past business combinations thatoccurred before the date of transition to IFRS. Accordingly goodwill amountingto £37,206,000 that had previously been offset against reserves under UK GAAPhas not been recognised in the opening IFRS balance sheet. Trade investments The results of entities over which the Group is not in a position to be able toexercise significant influence despite holding a significant shareholding arenot accounted for as associates and therefore are not equity accounted. Thesecompanies are classified as trade investments and are carried at cost withinnon-current assets as they are held as long term investments. Dividend income isrecognised in the income statement on a cash basis when received. Property, plant and equipment Property is carried at deemed cost at the date of transition to IFRS based onthe previous UK GAAP valuations adopted in 1998. Plant and equipment held at thedate of transition and subsequent additions to property, plant and equipment arestated at purchase cost including directly attributable costs. The Group doesnot have a revaluation policy. Freehold land is not depreciated. Depreciation of other property, plant andequipment is provided on a straight line basis using rates calculated to writedown the cost of each asset to its estimated residual value over its estimateduseful life as follows: Property:Freehold buildings and long leasehold property 2%Short leasehold buildings Period of the lease Equipment for hire:Heating, air conditioning and other environmental control 20%equipmentPumping equipment 10% to 33%Accessories 33% Motor vehicles 20% to 25% Plant and machinery 7.5% to 33% Fixtures and fittings 20% Annual reviews are made of estimated useful lives and material residual values. Leased assets Lessor accounting The group does not hold any assets for hire under finance leases. Assets held for use under operating leases are recorded as hire fleet assetswithin property, plant and equipment and are depreciated over their useful livesto their estimated residual value. Lessee accounting Property leases are split into two elements, land and buildings and eachconsidered in isolation. The land element is always classified as an operatinglease and the building element is reviewed to determine if it is operating orfinance in nature. Initial rental payments in respect of operating leases areincluded in current and non-current assets as appropriate and amortised to theincome statement over the period of the lease. Ongoing rental payments arecharged as an expense in the income statement on a straight line basis until thedate of the next rent review. Finance leases are capitalised and depreciated inaccordance with the accounting policy for property, plant and equipment. As permitted by IFRS 1 at the date of transition to IFRS, the carrying value oflong leasehold properties are based on the previous UK GAAP valuations adoptedin 1998 and this has been taken as deemed cost. Immaterial peppercorn rentals and ground rents in respect of all properties areexpensed to the profit and loss account on an accruals basis. The group does not have any items of plant and equipment financed by financeleases or similar hire purchase agreements. Rental costs arising from operating leases are charged as an expense in theincome statement on a straight line basis over the period of the lease. Non-current assets held for sale Non-current assets and disposal groups are reclassified as assets held for saleif their carrying value will be recovered through a sale transaction which ishighly probable to be completed within 12 months of the initial classification.Assets held for sale are valued at the lower of carrying amount at the date ofinitial classification and fair value less costs to sell. Impairment of non-financial assets Goodwill is tested annually for impairment, or more frequently if there are anychanges in circumstances or events that indicate that a potential impairment mayexist. Goodwill impairments cannot be reversed. Property, plant and equipment are reviewed for indications of impairment whenevents or changes in circumstances indicate that the carrying amount may not berecovered. If there are indications then a test is performed on the assetaffected to assess its recoverable amount against carrying value. An asset impaired is written down to the higher of value in use or its fairvalue less costs to sell. Deferred and current taxation The charge for taxation is based on the taxable profit or loss for the periodand takes into account taxation deferred because of differences between thetreatment of certain items for taxation and for accounting purposes. Fullprovision is made for the tax effects of these differences. Deferred tax isprovided on unremitted earnings from overseas subsidiaries where it is probablethat these earnings will be remitted to the UK in the foreseeable future.Deferred tax is measured using tax rates that have been enacted, orsubstantively enacted, by the year end balance sheet date. Deferred tax assetsand liabilities are not discounted. The carrying amount of deferred tax assets is reviewed at each reporting balancesheet date to ensure that it is probable that sufficient taxable profits will beavailable to allow the asset to be recovered. Assets and liabilities, in respectof both deferred and current tax, are only offset when there is a legallyenforceable right to offset and the assets and liabilities relate to taxeslevied by the same taxation authority. Deferred and current tax are charged or credited in the income statement exceptwhen they relate to items charged directly to equity in which case theassociated tax is also dealt with in equity. Stocks Stocks are valued at the lower cost of purchase and net realisable value. Costcomprises actual purchase price and where applicable associated direct costsincurred bringing the stock to its present location and condition. Netrealisable value is based on estimated selling price less further costs expectedto be incurred to completion and disposal. Provision is made for obsolete, slowmoving or defective items where appropriate. Financial instruments Financial assets and financial liabilities are recognised on the consolidatedbalance sheet when the group becomes a party to the contractual provisions ofthe instrument. Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the group afterdeducting all of its liabilities. Derivative financial instruments and hedge accounting The Group's borrowings are subject to floating rates based on LIBOR plus amargin of between 0.5% and 1.25%. The Group uses financial derivatives to capthe term loan (£20 million at 30 June 2007) exposure to LIBOR to a maximum of5.5% throughout its term. The Group's policy is not to hedge its international assets with respect toforeign currency balance sheet translation exposure, nor against foreigncurrency transactions. The Group does not use financial instruments forspeculative purposes. Derivatives embedded in other financial instruments or other host contracts aretreated as separate derivatives when their risks and characteristics are notclosely related to those of the host contracts. Derivative financial instruments are initially measured at cost and areremeasured at fair value at the balance sheet date. Changes in the fair value ofderivative financial instruments that are designated and are effective as hedgesof future cash flows are recognised directly in equity and the ineffectiveportion is recognised immediately in the income statement. Changes in the fairvalue of derivative financial instruments that do not qualify for hedgeaccounting are recognised in the income statement as they arise. Trade and other receivables Trade and other receivables are measured at initial recognition at fair valueand are subsequently measured at amortised cost using the effective interestrate method. Allowances for irrecoverable amounts, which are dealt with in theincome statement, are calculated based on the difference between the asset'scarrying amount and the present value of estimated future cash flows discountedat the effective interest rate computed at initial recognition. Cash and cash equivalents Cash and cash equivalents includes cash-in-hand, cash-at-bank and short termhighly liquid investments that are readily convertible into known amounts ofcash within three months from the date of initial acquisition with aninsignificant risk of a change in value. Trade and other payables Trade and other payables are measured at initial recognition at fair value andare subsequently measured at amortised cost using the effective interest ratemethod. Bank loans Interest bearing bank loans are recorded at the proceeds received less capitalrepayments made. Finance charges are accounted for on an accruals basis in theprofit and loss account using the effective interest rate method. They areincluded within accruals to the extent that they are not settled in the periodin which they arise. Provisions Provisions are created where the group has a present obligation (legal orconstructive) as a result of a past event where it is probable that the groupwill be required to settle that obligation. Provisions are measured at thedirectors' best estimate of the expenditure required to settle the obligation atthe balance sheet date. Provisions are only discounted to present value wherethe effect is material. Defined benefit retirement benefit costs The interest cost and the expected return on assets are included within financecosts and finance income respectively within the income statement. Actuarialgains and losses are recognised immediately in the consolidated Statement ofRecognised Income and Expense (SORIE). The defined benefit scheme is funded with the assets of the scheme heldseparately in trustee administered funds. Pension scheme assets are measured atfair value and liabilities are measured on an actuarial basis using theprojected unit method and discounted at a rate equivalent to the current rate ofreturn on a high quality corporate bond of equivalent currency and term to thescheme liabilities. Full actuarial valuations are obtained triennially and areupdated at each year end balance sheet date in accordance with IAS 19. Theassumptions used in the half year interim statements are normally consistentwith the previous year end unless the directors are aware of any significantfactors which would render these assumptions invalid. Net defined benefit pension scheme deficits are presented separately on thebalance sheet within non-current liabilities before tax relief. The attributabledeferred tax asset is included within deferred tax and is subject to therecognition criteria as set out in the accounting policy on deferred and currenttaxation. Net defined benefit pension scheme surpluses are only recognised tothe extent of any refunds and reductions in future contributions to the scheme. Net debt Net debt is defined as cash and cash equivalents, bank and other loans includingfinance lease obligations and derivative financial instruments stated at currentfair value. Revenue recognition Revenue Revenue represents the fair value of the consideration received and receivablefor the hire, sale and installation of environmental control products afterdeducting trade discounts and volume rebates. Revenue is recognised for sales ondespatch of goods and for short term hire items on a straight line basis overthe period of the hire. Installation revenue is recognised as the contractprogresses on the basis of work completed. Revenue excludes Value added Tax. Investment and interest income Dividend income is recognised in the income statement when the shareholder'sright to receive payment has been established. Interest income from bank deposit accounts is accrued on a time basis calculatedby reference to the principal on deposit and the effective interest rateapplicable. Foreign currencies Transactions in foreign currencies are recorded at the rate of exchange at thedate of the transaction. Monetary assets and liabilities in foreign currenciesare translated into pounds sterling at the financial reporting period end rates. The results of overseas subsidiary undertakings, associates and tradeinvestments are translated into pounds sterling at average rates for the periodunless exchange rates fluctuate significantly during that period in which caseexchange rates at the date of transactions are used. The closing balance sheetsare translated at the period end rates and the exchange differences arising aretransferred to the group's translation reserve as a separate component of equityand are reported within the Statement of Other Recognised Income and Expense.All other exchange differences are included within the Income Statement in theperiod. Operating profit Operating profit is defined as the profit for the period from continuingoperations after all operating costs and income but before investment income,income from other participating interests, finance income, finance costs, othergains and losses and taxation. Operating profit is disclosed as a separate lineon the face of the income statement. Finance costs Finance costs are recognised in the income statement on an accruals basis in theperiod in which they are incurred. 3 Revenue An analysis of the Group's revenue is as follows: 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Continuing operations Hire 19,693 19,151 43,088 Sales 4,084 4,539 8,762 Installations 3,408 3,919 7,918 Group consolidated revenue from the sale of goods and services 27,185 27,609 59,768 Finance income 1,480 1,197 2,277 Gross consolidated revenue 28,665 28,806 62,045 4 Business and Geographical Segmental Analysis Explanation The Group operates in the United Kingdom, Northern Europe, the United Arab Emirates and America providing the hire and sale of a range of environmental control equipment. It also installs fixed air conditioning equipment within the United Kingdom. The directors consider that the nature of the risks and returns within the hire and sales market are comparable across the geographical sectors within which the group operates. However different risks and returns are faced by the fixed air conditioning installation business. The Group hires and sells similar equipment to the same market from its depot network. The integrated nature of this operation does not permit a meaningful analysis of profit, assets or liabilities between hire and sales. Principal business segment are therefore as follows: The hire and sale of environmental control equipment - Hire & sales The installation and maintenance of fixed air conditioning equipment - Fixed installation UK Direct costs are allocated to each segment, central costs are included in unallocated overheads and expenses. Principal geographical segments are: United Kingdom Rest of Europe Middle East and Africa The Group was also previously involved in the hire and sale of accommodation units and the sale of light engineering products in the UK. There were no sales of these products in either the current or preceding financial periods, the discontinued activities relate to adjustments made following the disposal of these businesses (see note 6 ). Segmental information about these businesses is presented below. Inter segment sales are charged at arms length prices. Business Segments Income statement analysis Hire & Fixed Sub Eliminations Consolidated 26 weeks ended 30 June 2007 sales installation total results £'000 £'000 £'000 £'000 £'000 Revenue External sales 23,777 3,408 27,185 - 27,185 Inter-segment sales 42 7 49 -49 - Total revenue 23,819 3,415 27,234 -49 27,185 Segment result 5,813 160 5,973 -7 5,966 Unallocated overheads and expenses -301 Pension curtailment charge -934 Operating profit 4,731 Finance income 1,480 Finance costs -1,910 Profit before taxation 4,301 Taxation -1,444 Profit for the financial period 2,857 Balance sheet information Hire & Fixed Sub Eliminations Consolidated As at 30 June 2007 sales installation total results £'000 £'000 £'000 £'000 £'000 Segment assets 44,614 3,293 47,907 -42 47,865 Trade investments 164 Deferred tax asset 2,361 Derivative financial instruments 161 Unallocated corporate assets 755 Consolidated total assets 51,306 Segment liabilities -12,670 -1,147 -13,817 42 -13,775 Current tax liabilities -1,343 Bank loans -25,000 Obligations under finance leases -1,311 Provisions -15 Pensions -2,190 Unallocated corporate liabilities -661 Consolidated total liabilities -44,295 Other information Hire & Fixed Sub Eliminations Consolidated 26 weeks ended 30 June 2007 sales installation total results £'000 £'000 £'000 £'000 £'000 Capital additions 2,380 28 2,408 - 2,408 Depreciation 2,156 68 2,224 - 2,224 Income statement analysis Hire & Fixed Sub Eliminations Consolidated 26 weeks ended 1 July sales installation total results 2006 £'000 £'000 £'000 £'000 £'000 Revenue External sales 23,690 3,919 27,609 - 27,609 Inter-segment sales 47 12 59 -59 - Total revenue 23,737 3,931 27,668 -59 27,609 Segment result 5,811 149 5,960 -9 5,951 Unallocated overheads and expenses -509 Operating profit 5,442 Finance income 1,197 Finance costs -1,855 Profit before taxation 4,784 Taxation -1,444 Profit for the financial period 3,340 Balance sheet information Hire & Fixed Sub Eliminations Consolidated As at 1 July 2006 sales installation total results £'000 £'000 £'000 £'000 £'000 Segment assets 38,893 3,110 42,003 -23 41,980 Trade investments 164 Deferred tax asset 3,223 Assets held for sale 188 Unallocated corporate 1,928 assets Consolidated total assets 47,483 Segment liabilities -7,052 -1,168 -8,220 23 -8,197 Current tax liabilities -2,133 Bank loans -30,000 Obligations under finance leases -1,447 Provisions -495 Pensions -5,633 Unallocated corporate liabilities -363 Consolidated total liabilities -48,268 Other information Hire & Fixed Sub Eliminations Consolidated 26 weeks ended 1 July sales installation total results 2006 £'000 £'000 £'000 £'000 £'000 Capital additions 2,800 5 2,805 - 2,805 Depreciation 1,922 90 2,012 - 2,012 Income statement analysis Hire & Fixed Sub Eliminations Consolidated 52 weeks ended 31 December 2006 sales installation total results £'000 £'000 £'000 £'000 £'000 Revenue External sales 51,850 7,918 59,768 - 59,768 Inter-segment sales 109 16 125 -125 - Total revenue 51,959 7,934 59,893 -125 59,768 Segment result 15,862 269 16,131 -19 16,112 Unallocated overheads and expenses -840 Operating profit 15,272 Finance income 2,277 Finance costs -3,549 Profit before taxation 14,000 Taxation -4,150 Profit for the period from continuing operations 9,850 Post tax profit for the period from discontinued operations -142 Profit for the financial period after taxation and discontinued operations 9,708 Balance sheet information Hire & Fixed Sub Eliminations Consolidated As at 31 December 2006 sales installation total results £'000 £'000 £'000 £'000 £'000 Segment assets 41,591 3,543 45,134 -345 44,789 Trade investments 164 Deferred tax asset 3,201 Derivative financial instruments 23 Unallocated corporate 1,415 assets Consolidated total assets 49,592 Segment liabilities -8,724 -1,586 -10,310 345 -9,965 Current tax liabilities -2,292 Bank loans -25,000 Obligations under finance leases -1,380 Provisions -24 Pensions -6,577 Unallocated corporate liabilities -143 Consolidated total liabilities -45,381 Other information Hire & Fixed Sub Eliminations Consolidated 52 weeks ended 31 December 2006 sales installation total results £'000 £'000 £'000 £'000 £'000 Capital additions 7,060 7 7,067 - 7,067 Depreciation 3,984 169 4,153 - 4,153 Geographical segments The geographical analysis of the Group's revenue was as follows: By origin By destination 26 weeks 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks ended ended ended ended ended ended 30 June 1 July 31 December 30 June 1 July 31 December 2007 2006 2006 2007 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 22,761 22,487 50,254 21,987 22,137 49,070 Rest of Europe 2,095 3,131 5,435 2,854 3,180 6,240 Middle East and Africa 2,172 1,991 4,079 2,173 2,027 4,116 Rest of the world 157 - - 171 265 342 27,185 27,609 59,768 27,185 27,609 59,768 The carrying amount of segment assets and additions to property, plant and equipment analysed by the geographical area in which the assets are located are as follows: Additions to property, Segment assets plant and equipment 26 weeks 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks ended ended ended ended ended ended 30 June 1 July 31 December 30 June 1 July 31 December 2007 2006 2006 2007 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 41,769 36,532 39,265 2,050 2,484 6,374 Rest of Europe 2,979 2,734 2,767 163 182 487 Middle East and Africa 2,876 2,714 2,757 111 139 206 Rest of the world 241 - - 84 - - 47,865 41,980 44,789 2,408 2,805 7,067 5 Pension curtailment charge 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Pension curtailment -934 - - charge During the financial period an offer was made to all deferred members of the Andrews Sykes Group Pension Scheme (a closed defined benefit scheme) to transfer their accrued pension rights to an alternative pension scheme provider of their choice. Independent Financial Advice was made available free of charge to all deferred members. In summary the offer was to increase each individual member's transfer value by 40% compared with the amount that was then available from the scheme, this bonus could be paid either as a cash payment direct to the member or as an enhanced transfer value to the member's new pension scheme provider. These interim financial statements include estimated reserves of the likely cost of this offer, including legal expenses, employment costs and curtailment settlement gains and losses. However as the process of transferring the member's pension rights was still in progress when these interim financial statements were prepared, the estimated liabilities will be recalculated in the year end financial statements. It is currently estimated that the net cash outflow as a result of this offer will be approximately £4,582,000 of which £66,000 had been spent at 30 June 2007. The movement in the Retirement benefit obligation during the period is as follows: £'000 Liability at the beginning of the period before 6,577 deferred tax Ordinary contributions paid during the period -750 Expected return on assets -1,050 Interest on liabilities 1,061 Anticipated effect of transfer value -3,648 offer Liability at the end of the period before deferred 2,190 tax In accordance with the Group's accounting policies, the actuarial assumptions used to calculate the above obligation are those applied in the last annual report and financial statements. These assumptions will be reviewed in detail at the end of the financial year. 6 Discontinued activities 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Adjustments directly related to prior period disposals Provisions for onerous lease - - 115 commitments Profit adjustments in respect of the sale of subsidiary - - 27 undertakings Loss for the period before taxation - - 142 Attributable tax charge - - - Loss for the period from discontinued operations - - 142 During the 52 weeks ended 31 December 2005 the Group sold two subsidiary undertakings, Accommodation Hire Limited and Engineering Appliances Limited realising a combined profit on disposal of £6,564,000 under UK GAAP. During the 52 weeks ended 31 December 2006 certain adjustments were made to both the deferred consideration receivable and legal costs payable which resulted in the net charge of £27,000 under UK GAAP last year. The Group has various onerous property lease commitments inherited from the Cox Plant business which was sold during 2002. During the previous financial years the directors re-assessed the level of provisions required in respect of these commitments and have accordingly adjusted the onerous lease provision. This resulted in a charge to the income statement of £115,000 under UK GAAP during the 52 weeks ended 31 December 2005. Cash flows attributable to the above discontinued activities have been included within the following categories in the cash flow statement: 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Investing activities 295 -138 -183 7 Earnings per share Basic earnings per share The basic figures have been calculated by reference to the weighted average number of ordinary shares in issue, excluding those in the ESOP reserve, and the earnings as set out below: 26 weeks to 30 June 2007 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 2,857 2,857 44,552,715 Basic earnings per ordinary share 6.41p 6.41p (pence) 26 weeks to 1 July 2006 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 3,340 3,340 44,562,701 Basic earnings per ordinary share 7.50p 7.50p (pence) 52 weeks to 31 December 2006 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 9,850 9,708 44,557,701 Basic earnings per ordinary share 22.11p 21.79p (pence) Adjusted basic earnings per share excluding pension curtailment charge The basic figures excluding the pension curtailment charge have been calculated by reference to the weighted average number of ordinary shares in issue, excluding those in the ESOP reserve, and the earnings as set out below: 26 weeks to 30 June 2007 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 2,857 2,857 44,552,715 Add back pension curtailment charge net of tax 654 654 Adjusted basic earnings/weighted average number of shares 3,511 3,511 44,552,715 Adjusted basic earnings per ordinary share (pence) excluding 7.88p 7.88p pension curtailment charge The pension curtailment charge has no impact on the calculation of the basic earnings per ordinary share for either the 26 weeks ended 1 July 2006 or the 52 weeks ended 31 December 2006. Diluted earnings per share The calculation of the diluted earnings per ordinary share is based on the profits and shares as set out in the tables below. The share options have a dilutive effect for the period calculated as follows: 26 weeks to 30 June 2007 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 2,857 2,857 44,552,715 Weighted average number of shares under option 15,000 Number of shares that would have been issued at fair value -8,001 Earnings/ diluted weighted average number of 2,857 2,857 44,559,714 shares Diluted earnings per ordinary share (pence) 6.41p 6.41p 26 weeks to 1 July 2006 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 3,340 3,340 44,562,701 Weighted average number of shares under option 16,194 Number of shares that would have been issued at fair value -13,369 Earnings/ diluted weighted average number of 3,340 3,340 44,565,526 shares Diluted earnings per ordinary share (pence) 7.49p 7.49p 52 weeks to 31 December 2006 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 9,850 9,708 44,557,701 Weighted average number of shares under option 15,603 Number of shares that would have been issued at fair value -11,132 Earnings/ diluted weighted average number of 9,850 9,708 44,562,172 shares Diluted earnings per ordinary share (pence) 22.10p 21.79p Adjusted diluted earnings per share excluding pension curtailment charge The calculation of the diluted earnings per ordinary share excluding the pension curtailment charge is based on the profits and shares as set out in the table below. The share options have a dilutive effect for the period calculated as follows: 26 weeks to 30 June 2007 Continuing Total Number earnings earnings of shares £'000 £'000 Basic earnings/weighted average number of shares 2,857 2,857 44,552,715 Add back pension curtailment charge net of tax 654 654 Weighted average number of shares under option 15,000 Number of shares that would have been issued at fair value -8,001 Adjusted earnings/ diluted weighted average number of shares 3,511 3,511 44,559,714 Adjusted diluted earnings per ordinary share (pence) excluding 7.88p 7.88p pension curtailment charge The pension curtailment charge has no impact on the calculation of the diluted earnings per ordinary share for either the 26 weeks ended 1 July 2006 or the 52 weeks ended 31 December 2006. 8 Share capital 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Authorised: 1,398,170,943 ordinary shares of one pence each 13,982 13,982 13,982 Issued and fully paid: 44,552,865 ordinary shares of one pence each (1 July 2006: 44,552,865, 31 December: 44,552,865 ordinary 446 446 446 shares of one pence each) During the period the company did not buy back any shares for cancellation (26 weeks ended 1 July 2006: 15,000 shares). The company has one class of ordinary shares which carry no right to fixed income. At 30 June 2007 cash options to subscribe for ordinary shares under the executive share option scheme were held as follows: Number of one pence Date of Grant Date normally exercisable Subscription ordinary shares price per 30 June 1 July 30 December share 2007 2006 2006 November 2001 November 2004 to October 89.5 pence 15,000 15,000 15,000 2011 No share options were granted, forfeited or expired during either the current or previous financial periods. No share options were exercised during the period. (26 weeks ended 1 July 2006: 5,000 share options on 16 February 2006 when the average share price was £1.115). 9 Cash generated from operations 26 weeks 26 weeks 52 weeks ended ended ended 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Profit for the period attributable to equity 2,857 3,340 9,708 shareholders Adjustments for: Loss from discontinued operations - - 142 Taxation charge 1,444 1,444 4,150 Finance costs 1,910 1,855 3,549 Finance income -1,480 -1,197 -2,277 Profit on the sale of property, plant and -351 -243 -538 equipment Depreciation and 2,224 2,012 4,153 amortisation Impairment losses 31 - - Excess of pension contributions compared with service cost -750 -750 -1,503 Cash generated from operations before movements in working 5,885 6,461 17,384 capital (Increase) / decrease in stocks -1,493 57 196 Decrease / (increase) in trade and other 760 -1,247 -2,829 receivables Increase in trade and other payables 116 59 1,544 (Decrease) / increase in provisions -9 26 -360 Cash generated from operations 5,259 5,356 15,935 10 Analysis of net debt 30 June 1 July 31 December 2007 2006 2006 £'000 £'000 £'000 Cash and cash equivalents per cash flow statement 11,908 11,435 10,190 Derivative financial instruments 161 - 23 Financial assets 161 - 23 Bank loans -25,000 -30,000 -25,000 Obligations under finance leases -1,311 -1,447 -1,380 Financial liabilities -26,311 -31,447 -26,380 Net debt -14,242 -20,012 -16,167 11 Explanation of transition to IFRS This is the first period that the group has prepared its consolidated financial statements under IFRS. The following disclosures are required in the year of transition to explain the financial impact of adopting IFRS on the group. The last financial statements under UK GAAP were for the 52 weeks ended 31 December 2006 and the date of transition to IFRS was 1 January 2006. Reconciliation of equity as at 1 January 2006 (date of transition to IFRS) UK GAAP Reclas IFRS 1 IFRS 5 IAS 17 IAS 19 IAS 39 IFRS sifi First time Non Leases Employee Fair value cations adoption current benefits adjustments assets Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-current assets Goodwill 31 - - - - - - 31 Property, plant & 12,011 - - - 699 - - 12,710 equipment Lease prepayments - - - - 239 - - 239 Trade investments 164 - - - - - - 164 Deferred tax asset - 2,672 - - 169 17 - 2,858 12,206 2,672 - - 1,107 17 - 16,002 Current assets Stocks 4,532 - - - - - - 4,532 Trade and other 13,929 -772 - - 10 - - 13,167 receivables Cash and cash 10,342 - - - - - - 10,342 equivalents 28,803 -772 - - 10 - - 28,041 Current liabilities Trade and other -14,687 6,060 - - - - - -8,627 payables Current tax - -1,060 - - - - - -1,060 liabilities Bank loans - -5,000 - - - - - -5,000 Obligations under finance leases - - - - -233 - - -233 Provisions - -469 - - - - - -469 -14,687 -469 - - -233 - - -15,389 Net current assets 14,116 -1,241 - - -223 - - 12,652 Total assets less 26,322 1,431 - - 884 17 - 28,654 current liabilities Non-current liabilities Bank loans -25,000 - - - - - - -25,000 Obligations - - - - -1,278 - - -1,278 under finance leases Pension -4,434 -1,900 - - - -58 - -6,392 liabilities Provisions -469 469 - - - - - - -29,903 -1,431 - - -1,278 -58 - -32,670 Net liabilities -3,581 - - - -394 -41 - -4,016 Equity Called-up share 446 - - - - - - 446 capital ESOP reserve -6 - - - - - - -6 Retained earnings -4,994 - 741 - -394 -41 - -4,688 Revaluation reserve 741 - -741 - - - - - Other reserves 222 - - - - - - 222 Deficit -3,591 - - - -394 -41 - -4,026 attributable to equity holders of the parent Minority interest 10 - - - - - - 10 Total equity -3,581 - - - -394 -41 - -4,016 Reconciliation of equity as at 1 July 2006 (date of last UK GAAP Interim Statement) UK GAAP Reclass- IFRS 1 IFRS 3 IAS 17 IAS 19 IFRS 5 IFRS ifications First time Business Leases Employee Asset held adoption combinations benefits for sale Note 1 Note 2 Note 3 Note 4 Note 5 Note 7 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-current assets Goodwill 24 - - 7 - - - 31 Property, plant & 12,741 - - - 652 - -188 13,205 equipment Lease prepayments - - - - 234 - - 234 Trade investments 164 - - - - - - 164 Deferred tax asset - 3,041 - - 165 17 - 3,223 12,929 3,041 - 7 1,051 17 -188 16,857 Current assets Stocks 4,475 - - - - - - 4,475 Trade and other 15,886 -1,368 - - 10 - - 14,528 receivables Cash and cash 11,435 - - - - - - 11,435 equivalents Assets held - - - - - - 188 188 for sale 31,796 -1,368 - - 10 - 188 30,626 Current liabilities Trade and other -8,560 - - - - - - -8,560 payables Current tax -2,133 - - - - - - -2,133 liabilities Bank loans -5,000 - - - - - - -5,000 Obligations - - - -233 - - - -233 under finance leases Provisions - -495 - - - - - -495 -15,693 -495 - - -233 - - -16,421 Net current 16,103 -1,863 - - -223 - 188 14,205 assets Total assets 29,032 1,178 - 7 828 17 - 31,062 less current liabilities Non-current liabilities Bank loans -25,000 -25,000 Obligations - -1,214 -1,214 under finance leases Pension -3,902 -1,673 -58 -5,633 liabilities Provisions -495 495 - -29,397 -1,178 - - -1,214 -58 - -31,847 Net assets -365 - - 7 -386 -41 - -785 Equity Called-up share 446 446 capital Retained earnings -1,776 92 738 7 -386 -41 -1,366 Translation reserve - -97 -97 Revaluation reserve 738 -738 - Other reserves 217 5 222 Surplus -375 - - 7 -386 -41 - -795 attributable to equity holders of the parent Minority interest 10 10 Total equity -365 - - 7 -386 -41 - -785 Reconciliation of equity as at 31 December 2006 (date of last UK GAAP Financial Statements) UK GAAP Reclass- IFRS 1 IFRS 3 IAS 17 IAS 19 IAS 39 IFRS ifications First time Business Leases Employee Fair value adoption combinations benefits adjustments Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-current assets Goodwill 17 - - 14 - - - 31 Property, plant & 14,599 - - - 602 - - 15,201 equipment Lease prepayments - - - - 229 - - 229 Trade investments 164 - - - - - - 164 Deferred tax asset - 3,046 - - 162 - -7 3,201 Derivative financial - - - - - - 23 23 instruments 14,780 3,046 - 14 993 - 16 18,849 Current assets Stocks 4,336 - - - - - - 4,336 Trade and other 17,280 -1,073 - - 10 - - 16,217 receivables Cash and cash 10,190 - - - - - - 10,190 equivalents 31,806 -1,073 - - 10 - - 30,743 Current liabilities Trade and other -17,400 7,292 - - - - - -10,108 payables Current tax - -2,292 - - - - - -2,292 liabilities Bank loans - -5,000 - - - - - -5,000 Obligations - - - - -233 - - -233 under finance leases Provisions - -24 - - - - - -24 -17,400 -24 - - -233 - - -17,657 - - - - - - - - Net current 14,406 -1,097 - - -223 - - 13,086 assets Total assets 29,186 1,949 - 14 770 - 16 31,935 less current liabilities Non-current liabilities Bank loans -20,000 - - - - - - -20,000 Obligations - - - - -1,147 - - -1,147 under finance leases Pension -4,604 -1,973 - - - - - -6,577 liabilities Provisions -24 24 - - - - - - -24,628 -1,949 - - -1,147 - - -27,724 Net assets 4,558 - - 14 -377 - 16 4,211 Equity Called-up share 446 - - - - - - 446 capital Retained earnings 3,153 312 736 14 -377 - 16 3,854 Translation - -321 - - - - - -321 reserve Revaluation 736 - -736 - - - - - reserve Other reserves 213 9 - - - - - 222 Surplus 4,548 - - 14 -377 - 16 4,201 attributable to equity holders of the parent Minority interest 10 - - - - - - 10 Total equity 4,558 - - 14 -377 - 16 4,211 Reconciliation of profit for the 26 weeks ended 1 July 2006 UK GAAP Reclass- IFRS 3 IAS 17 IAS 19 IAS 39 IFRS ifications Business Leases Employee Fair value combinations benefits adjustments Note 1 Note 3 Note 4 Note 5 Note 6 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 27,609 27,609 Cost of sales -13,441 - 7 - - - -13,434 Gross profit 14,168 - 7 - - - 14,175 Distribution costs -4,433 - - - - - -4,433 Administrative -4,372 - - 72 - - -4,300 expenses Operating profit 5,363 - 7 72 - - 5,442 Finance income 282 - - - 915 - 1,197 Finance costs -880 - - -60 -915 - -1,855 Profit before taxation 4,765 - 7 12 - - 4,784 Taxation -1,440 - - -4 - - -1,444 Profit for the financial 3,325 - 7 8 - - 3,340 period Reconciliation of profit for the 52 weeks ended 31 December 2006 UK GAAP Reclass- IFRS 3 IAS 17 IAS 19 IAS 39 IFRS ifications Business Leases Employee Fair value combinations benefits adjustments Note 1 Note 3 Note 4 Note 5 Note 6 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 59,768 - - - - - 59,768 Cost of sales -26,932 - 14 - - - -26,918 Gross profit 32,836 - 14 - - - 32,850 Distribution costs -9,471 - - - - - -9,471 Administrative -8,458 206 - 145 - - -8,107 expenses Operating profit 14,907 206 14 145 - - 15,272 Finance income 477 - - - 1,777 23 2,277 Finance costs -1,651 - - -121 -1,777 - -3,549 Profit on the sale of 206 -206 - - - - - property Loss on disposal -142 142 - - - - - of business - discontinued Profit before taxation 13,797 142 14 24 - 23 14,000 Taxation -4,136 - - -7 - -7 -4,150 Profit for the period 9,661 142 14 17 - 16 9,850 from continuing operations Loss for the period - -142 - - - - -142 from discontinued operations Profit for the financial 9,661 - 14 17 - 16 9,708 period Notes to the reconciliations of equity and profit 1 Reclassifications are required as certain items are shown differently under IFRS compared with UK GAAP. Reclassifications relate to (i) disclosing the defined benefit pension obligation gross of deferred tax under IFRS compared with net under UK GAAP, (ii) the disclosure of current tax liabilities and financial liabilities as separate items on the face of the balance sheet under IFRS, ( iii ) the split of provisions for liabilities between current and long term creditors under IFRS, (iv) the reclassification of profit on sale of property within administration expenses under IFRS and (v) the disclosure of loss on disposal of business as a discontinued operation. In addition the foreign exchange translation adjustments are disclosed as a separate reserve under IFRS from the date of transition. 2 As permitted by IFRS 1 - First time adoption of IFRS, the group has elected to treat the October 1998 revaluation of the UK freehold and long leasehold properties as deemed cost at that date. The valuation was carried out by DTZ Debenham Tie Leung, Chartered Surveyors, at open market value for existing use in accordance with the RICS Statement of Asset Valuation Practice and Guidance notes. The aggregate deemed gross cost included within property, plant and equipment is £2,731,000. Although no adjustment is required to the carrying value of property, plant and equipment; the revaluation reserve carried under UK GAAP has been transferred to retained earnings as a consequence of this election. 3 As required by IFRS 3 - Business Combinations, purchased goodwill is not amortised and is stated at it's carrying value at the date of transition to IFRS. Accordingly goodwill amortisation charged in accordance with UK GAAP has been reversed. 4 IFRS requires property leases to be split into two elements, Land and Buildings. Each element is then considered independently and treated as a finance or operating lease as appropriate. This treatment differs to UK GAAP which requires the wholeproperty lease to be considered in its entirety. Consequently certain leasehold buildings have been brought onto the balance sheet under IFRS and conversely certain leasehold land, that was previously treated as a finance lease under UK GAAP, has been reclassified as an off balance sheet operating lease. Lease premiums relating to land have been reclassified as prepayments. 5 The calculation of the defined benefit pension scheme liability under IFRS requires the schemes assets to be valued at the lower bid market value compared with mid market value required by UK GAAP. In addition the disclosure requirements under IAS 19 differ in certain respects to FRS 17 with interest charges being disclosed on a gross rather than net basis. 6 IAS 39 requires all derivative financial instruments to be valued and brought onto the balance sheet. There was no equivalent requirement under UK GAAP. During the second half of 2006 the group purchased an interest rate cap and this has been brought onto the balance sheet at fair value at 31 December 2006. 7 At 30 June 2006 the group held certain assets whose carrying value was recovered primarily through a sales transaction rather than by continuing use. In accordance with IFRS 5 - Non-current assets held for sale and discontinued operations - these have been reclassified as a separate non-current asset and are carried at the lower of the previous accounts written down value and the net anticipated sale proceeds. Other than presentational differences, there are no material adjustments to the previous cash flow statements presented under UK GAAP. 12 Distribution of interim financial statement A copy of these interim financial statements will be posted to all shareholders and is available from the Company's registered office at Premier House, Darlington Street, Wolverhampton, WV1 4JJ. A copy will also be available on the Company's website, www.andrews-sykes.com This information is provided by RNS The company news service from the London Stock Exchange