DTG.L Regulatory News (DTG)

28 Jun 2007 07:03

Dart Group PLC28 June 2007 DART GROUP PLC PRELIMINARY RESULTS FOR YEAR ENDED 31 MARCH 2007 Dart Group PLC, the aviation services and distribution group, announces itspreliminary results for the year ended 31 March 2007. CHAIRMAN'S STATEMENT I am pleased to report on the Group's trading for the year ended 31 March 2007. Profit before tax, goodwill amortisation and exceptional items amounted to£16.6m (2006 - £14.5m restated). Profit before tax and after goodwillamortisation and exceptional items amounted to £18.1m (2006 - £14.8m restated).Turnover was £352.0m (2006 - £310.6m). Earnings per share before theamortisation of goodwill and exceptional items were 8.78p (2006 - 7.11prestated), whilst basic earnings per share were 9.73p (2006 - 7.95p restated).The Board is recommending a final dividend of 1.430p (2006 - 1.295p), taking thetotal dividend for the year to 2.08p (2006 - 1.86p), an increase of 12%. Thedividend, if approved, will be payable on 24 August 2007 to shareholders on theregister on 6 July 2007. The lower tax charge of 25% is as a result of thelargely tax free gain on the Channel Islands' business disposal together with anumber of prior year tax credits, both of which are unlikely to re-occur inthe future. In total, capital expenditure amounted to £71.8m (2006 - £48.7m), and mainlyrelated to the acquisition of five Boeing 757-200 aircraft, spare engines andthe Group's spending on capitalised aircraft maintenance. As at 31 March 2007the Group's net debt amounted to £14.1m (2006 - £5.5m). Gearing asat 31 March 2007 was 20% (2006 - 9%). In excess of 72% of the expected 2007/08 Jet2.com fuel requirements have been hedged for the year ending 31 March 2008, together with 100% of the forecast US$requirements. Neither Jet2.com's contract charter operations nor FowlerWelch-Coolchain currently has any material exposure to oil price risk as this issubstantially covered in their commercial contracts. The Group completed the sale of its non-core Channel Islands' distributionbusiness on 3 July 2006. The exceptional credit of £2.2m relates to the surplusof proceeds over book cost. Jet2.com Jet2.com, the Group's low-cost airline, expanded its operations from each of itssix Northern UK bases during the year. The move of the administration andoperational offices to Leeds Bradford International Airport was substantiallycompleted and the Group's owned fleet increased to 29 aircraft with the additionof the five Boeing 757-200 aircraft. Leased-in aircraft have also been operatedto meet seasonal demand. Jet2.com's aim is to be the leading supplier of scheduled leisure flights fromthe North and the brand is aggressively promoted to achieve the public'srecognition, via on-line advertising, press, posters, TV and radio. During theyear the number of destinations served increased to 38 for summer 2007(2006: 31). Passengers carried are forecast to rise to 4.3m compared to 3.0m inthe year ended 31 March 2007. The company also operates night-time mail flightson behalf of Royal Mail and many series and individual charter flights for adiverse customer base. In the autumn of 2006 the company commenced services to The Canary Islands fromLeeds Bradford, Manchester, Newcastle, Belfast and Blackpool utilising Boeing757 aircraft. During the winter of 2007/08 up to 27 services a week will beflown to Tenerife, Gran Canaria and Lanzarote. It is also planned to introduceother year-round sun destinations. The company's policy is to offer the lowestpossible fares throughout its network. The revenue from these is supplementedwith value-added ancillary revenue streams such as commission on sales ofinsurance, hotels and car hire together with the profits on sales of in-flightfood, drink and gifts. The associated revenues per passenger for the currentyear are forecast to increase considerably over that achieved in the lastfinancial year. In February 2007, Jet2holidays.com was launched to offer flexible durationflight, transfers and hotel packages linked, primarily, to our scheduledservices. Whilst this is a highly competitive market, we believe that bypackaging attractive hotels with our low fares we can give our leisure customersgreat value holidays. The concept is currently being marketed on a limited basiswhilst the mechanics of the process are developed. However, we are pleased thatcustomer feedback to date has been good and we look forward to putting fullpromotional spend behind the product for the next year. Jet2.com aims to expand its business by serving traditional leisure markets athighly competitive prices and developing a range of longer distance low-costservices that meet the aspirations of leisure travellers. Obviously routes taketime to develop and costs are incurred in building volumes and taking marketshare. We will be continuing investment in new routes over the coming year soprofit growth in this area of our business is likely to be flat. Fowler Welch-Coolchain The Group's logistics company, Fowler Welch-Coolchain, made considerableprogress in the last financial year with new business wins, increased sales andimproved profits. The company primarily provides an integrated supply chainsolution to supermarkets and their suppliers as well as food manufacturers,growers and importers. Capabilities include both chilled and ambient (nontemperature-controlled) distribution together with warehousing and pick-to-orderservices. The company's warehousing and picking operations, which feed thedistribution network, continue to expand with substantial new business wins atboth Kent and Spalding sites during the year. Volume is important to thebusiness to increase the load fill of the distribution vehicles. On 28 April 2006, Fowler Welch-Coolchain acquired the business and assets of R FFielding Cheshire Ltd (In Administration), for a de minimis sum. This businessspecialises in ambient distribution from its base in North West England.Employee numbers amounted to 226 and the business utilised 79 tractor units and133 trailers. It is operated from a 187,500 sq.ft leased premises in Stockport.Not only has this acquisition provided a foothold in this larger market, it hasalso improved the utilisation of the transport fleet via network synergies. A 40,000 sq.ft. freehold facility on an 8 acre site was acquired in Washington,Tyne and Wear, on 4 September 2006 This facility replaced the company's existingpremises in Gateshead and is being fitted out for temperature-controlled storageand distribution. It will provide the North East England platform for growth inboth the company's chilled and ambient business. It is Fowler Welch-Coolchain's strategy to invest and grow its chilled andambient distribution businesses and warehousing by a combination of organicgrowth and selective acquisition. Our Staff The relocation of Dart Group's and Jet2.com's operational and administrativeheadquarters to Leeds Bradford International Airport has now been substantiallycompleted and I am extremely grateful to the majority of the key staff who havemade the move and ensured that the companies' operations have continuedseamlessly. We will be sorry to lose our Group Finance Director, Mike Forder, in July andthank him for his substantial contribution to the Group's development. However, we are very pleased to welcome his successor, Andrew Merrick, FCMA, whojoins us on 2 July from Bradford and Bingley PLC where he was Director ofFinance. Before, from 1988 to 1997, Andrew had a successful career at ThomasCook Group where he undertook a number of operational finance roles. Prior tothis Andrew worked for the international division of Midland Bank Limited.Andrew will bring valuable banking and travel industry experience to the Group. It is important to acknowledge the dedication and hard work of each of theGroup's operational and administrative staff in both Fowler Welch-Coolchain andJet2.com. Both businesses are customer-focused and operationally demanding atall hours of the day. We are grateful to all and look forward to continuing togrow our business together. Outlook We expect to grow both our businesses organically in the year ahead, with alsothe possibility of selective acquisitions in Fowler Welch-Coolchain when thereare sensibly priced opportunities. In the competitive scheduled low-cost travel market, which is becomingprogressively later booking and therefore more difficult to predict, whilst our235 seat Boeing 757s differentiate our product and capabilities from several ofour competitors, new routes take time and money to develop to profitability.However, the consolidation of the major tour operators, who currently have largecapacity to many of the destinations we also serve, should give realopportunities both for our scheduled business and Jet2holidays.com. Therefore,overall, whilst I believe it is unlikely that the Group's profits will increasethis year, growth should resume thereafter. Philip Meeson Chairman 28 June 2007 For further information about Dart Group PLC and its subsidiary companies pleasevisit our website, www.dartgroup.co.uk REVIEW OF OPERATIONS Jet2.com Jet2.com now operates 29 owned Boeing 737-300 and Boeing 757-200 aircraft withadditional capacity leased-in seasonally, as needed, to meet demand, from itssix airport bases in the North - Leeds Bradford, Manchester, Newcastle, Belfast,Blackpool and Edinburgh. The company has a thriving passenger charter businessand a long-term contract with Royal Mail to fly its unique Boeing 737-300 "QuickChange" aircraft on nightly mail flights throughout the UK. Following theseflights, the aircraft are reconfigured to make a full operational contributionto the company's passenger flying programme. The company has now substantially completed the move to Leeds BradfordInternational Airport - even transporting its Portacabin "duplex" officebuildings from Bournemouth for occupation at the new airport site. Someengineering administration functions, together with the management of the RoyalMail operation, will remain in Bournemouth. The company has significantly increased the number of city, sun and snowdestinations it serves from each of its bases this year. Five new routes wereopened from Leeds Bradford, eight from Manchester, seven from Newcastle, fivefrom Belfast and four from Blackpool. For further details, visit our website atwww.jet2.com. The company believes that The Canary Islands, which have formerly mainly beenserved by charter flights, will become an increasingly popular scheduled servicedestination, ideally suited to the performance of our 235 seat Boeing 757aircraft. After successful services last winter to Tenerife and Lanzarote wewill be operating up to 27 flights a week to the Islands this financial year.The Canary Islands Tourist Authorities will actively promote the destinationsthroughout our region and bookings to date are encouraging. The company plans tofurther expand its longer distance services and winter sun routes to enhance ouroverall offering to our customers. Our ancillary revenues are a vital contributor to our income and allow thecompany to offer the lowest possible fares. Ancillary revenue per passengerincreased by 39% in the year ended 31 March 2007 and it is anticipated furthergrowth will be achieved in the new financial year. Contributing to this arecharges for hold bags, extra leg room, seat allocation, internet check-in,commissions on sales of insurance, hotel and car hire and profits from on-boardsales of food, beverages and gifts. The promotion of this sector of the businessis hugely important. Crews are highly incentivised to continually increaseon-board sales and great effort is made to introduce new products and find thebest and most competitive providers. The company is also working hard to ensure that its aircraft are flown in themost environmentally friendly and fuel efficient way. A full time projectGeneral Manager is committed to continuous monitoring of our fuel andenvironmental performance. Jet2.com is committed to contracting out many of its support operations, such asits call centre and purchase ledger functions, which are now handled extremelycapably in India. However, it was decided this year to undertake our owncheck-in and handling of passengers and aircraft at Leeds Bradford and inseveral airports in Spain. By bringing these operations in-house, we will offera better more efficient service at a competitive price. Our aim is to beregarded as a friendly airline with good customer service. We know that ourstaff will achieve this. During the year the company acquired five Boeing 757-200 aircraft. The Boeing757-200 is a versatile aircraft able to carry up to 235 passengers over 3,000miles. Its overall performance is particularly suited to Leeds Bradford which isa high airport with some operational constraints. The Boeing 757-200 allows thecompany to offer a range of destinations from both Leeds Bradford and its otherbases that other aircraft cannot match. At the same time it is extremelyenvironmentally friendly in terms of noise, fuel efficiency and emissions. Weexpect to increase our Boeing 757 fleet over the coming years and also tooperate similar, larger types which will allow our customers to explore anexpanding range of popular destinations at the lowest possible fares. On 17 June 2007, we were pleased to sign a 15 year agreement with Pratt & Whitney for the fixed-price maintenance of the CFM56-3 series engines whichpower our Boeing 737-300 aircraft. Pratt & Whitney will also increasingly supply various parts that they will manufacture for this engine under theirGlobal Material Solutions Programme. This agreement brings both price certaintyand cost reductions. We look forward to a long and successful association withPratt & Whitney. The company now operates seven Boeing 737 Quick Change and one Freighter for theRoyal Mail nightly. These are based at Newcastle, Belfast, Edinburgh, Stanstedand Exeter. The Northern based aircraft fly Jet2.com passenger services duringthe day before their 40 minute transformation into mail aircraft, during whichthe seats are removed and mail loaded in containers. The Stansted based aircraftalso flies a very busy charter programme both for tour operators, specialistholiday providers, and in support of promotional and sporting events. This is abusiness in which the company has a long history of success and which we expectto further develop in the future alongside our low-cost services. Fowler Welch-Coolchain Fowler Welch-Coolchain has distribution centres strategically located inSpalding, Lincs, Teynham, Kent, Stockport, Cheshire, and Washington, Tyne andWear, and is one of the UK's leading temperature-controlled distributionbusinesses, specialising in the distribution of fresh produce and chilled foodson behalf of UK supermarkets, other multiple retailers and their suppliers. Inaddition the business has substantial pick-to-order and warehousingcapabilities, together with a growing ambient (non temperature-controlled)distribution business. It is the company's strategy to grow and invest in eachof these business areas. During the year considerable investment has beenmade in the development of the company's IT systems to ensure the most cost-effective and efficient service is delivered to our customers. The distribution market place is, of course, very competitive and cost-conscious. Nevertheless despite these challenges the company grew its businessthis year with increased sales in both chilled distribution, pick-to-order andwarehousing operations, as well as building its new revenue stream in ambientdistribution. On 28 April 2006, the Group acquired the business and assets of R F FieldingCheshire Ltd (In Administration), a business specialising in ambientdistribution to major retailers and other wholesalers. Sales in this area areexpected to grow in 2007/08 due to a new business win from a major supermarketgroup. As a result of its strategic location in Stockport, Cheshire, moreefficient fleet synergy and utilisation for the whole distribution business hasbeen achieved through the new flows of product for distribution from the NorthWest. On 3 July 2006, the Group sold its Channel Islands' transport and distributionbusiness to a third party specialising in this sector of the market. In thelight of the decline in the Channel Islands' horticultural industry, the Boardconsidered this business was no longer core, and that management time should befreed up to concentrate on growing the mainland UK logistics operations. Pick-to-order operations have been an important area of growth in recent yearsand this trend continued in 2006/07. In a typical week Fowler Welch-Coolchainpicks and delivers approximately 1 million cases of prepared meats, cheeses,ready meals and pasta. An ambient goods picking operation is also carried out inStockport providing important volumes which feed into the distribution network.The new computer system to support the growth in this market segment is alsocurrently being implemented. The lack of warehouse space and associated facilities for vehicles at theGateshead site had become a constraint on growth in this region. It was,therefore, necessary to find bigger premises to enable the company to tender forlarger contracts in this area. During the year a new 8 acre freehold site waspurchased in Washington, Tyne and Wear. The 40,000 sq.ft. warehouse facility,which is currently being converted for the company's operations, willbe the first multi-purpose ambient and chilled warehouse in the business, thusenabling both ambient and chilled distribution customers to be serviced from thesame depot. Although the premises are currently operational, further coldstoresand seven loading bays are presently being built. When complete, the newbuilding, costing in the region of £5.5m, will provide a first-class facilityfor customers in this important region. Fowler Welch-Coolchain offers a quality logistics solution to supermarkets,growers and food manufacturers based both in the UK and mainland Europe. Withthe recent investments in new premises in the North East of England, togetherwith the ambient business in the North West the business offers a truly nationalsolution to its customers' supply chain needs. The ongoing need to be cost competitive remains a key business driver and thecompany believes that as volumes grow it will increase its competitiveness inthe marketplace. Looking forward, the business anticipates a further year ofgrowth in 2007/08 and is confident that it is competitively placed to take fulladvantage of the opportunities in this sector in the future. For further information contact: Dart Group PLC Tel: 01202 597676Philip Meeson, Mobile: 07785 258666Group Chairman and Chief ExecutiveMike Forder, Mobile: 07721 865850Group Finance Director Group Profit And Loss Accountfor the year ended 31 March 2007 Notes 2007 2007 2007 2006 2006 2006 Before Exceptional Before exceptional items exceptional Exceptional items (note 5) Total items items Total (restated) (note 5) (restated) £m £m £m £m £m £m Turnover 1 Continuingoperations 349.0 - 349.0 289.6 - 289.6Discontinuedoperations 3.0 - 3.0 21.0 - 21.0 -------- -------- ------ -------- -------- ------- 352.0 - 352.0 310.6 - 310.6 -------- -------- ------ -------- -------- -------- Net operatingexpenses Excluding goodwillamortisation (332.8) (0.1) (332.9) (296.6) (6.2) (302.8)Goodwillamortisation (0.5) - (0.5) (0.5) - (0.5) -------- -------- ------ -------- -------- --------Net operatingexpenses (333.3) (0.1) (333.4) (297.1) (6.2) (303.3) -------- -------- ------ -------- -------- -------- Operating profitContinuingoperations 18.5 (0.1) 18.4 12.4 (6.2) 6.2Discontinuedoperations 0.2 - 0.2 1.1 - 1.1 -------- -------- ------ -------- -------- -------- 18.7 (0.1) 18.6 13.5 (6.2) 7.3Profit ondisposal ofdiscontinuedoperations - 2.2 2.2 - 3.7 3.7 (Loss)/profiton disposal offixed assets - (0.1) (0.1) - 3.3 3.3Net interest(includingexchange(loss)/gains) (2.6) - (2.6) 0.5 - 0.5 -------- -------- ------ -------- -------- -------- Profit onordinaryactivitiesbefore taxation 16.1 2.0 18.1 14.0 0.8 14.8 Taxation (4.3) (0.2) (4.5) (4.7) 0.9 (3.8) -------- -------- ------ -------- -------- -------- Profit for theyear 11.8 1.8 13.6 9.3 1.7 11.0 -------- -------- ------ -------- -------- -------- Earnings per share - total - basic 8.42p 9.73p 6.75p 7.95p- diluted 8.36p 9.66p 6.70p 7.89p Earnings per share- continuing operations - basic 8.10p 7.98p 6.19p 4.74p- diluted 8.04p 7.92p 6.15p 4.70p Earnings pershare - discontinuedoperations - basic 0.32p 1.75p 0.56p 3.21p- diluted 0.32p 1.74p 0.55p 3.19p Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2007 2007 2006 (restated) £m £m ------------ --------Profit on ordinary activities after taxation 13.6 11.0 ------------ --------Total recognised gains and losses relating to the 13.6 11.0period ------------ --------Prior year adjustment FRS20 share based payment expense (note 6) (0.3) - ------------ -------- Total recognised gains and losses since previous 13.3 11.0annual report ------------ -------- Balance Sheetat 31 March 2007 Group 2007 2006 Notes £m £m --------- ---------Fixed assets Intangible assets 6.3 6.8Tangible assets 179.1 131.5 --------- --------- 185.4 138.3Current assets Stock 8.2 7.5Debtors 44.0 23.8Cash at bank and in hand 3.9 26.0 --------- --------- 56.1 57.3Current liabilities Creditors: amounts falling due (138.1) (98.6)within one year --------- --------- Net current liabilities (82.0) (41.3) --------- --------- Total assets less current liabilities 103.4 97.0 Creditors: amounts falling due after (18.0) (28.0)more than one year Provisions for liabilities (14.3) (9.7) --------- --------- Net assets 71.1 59.3 --------- ---------Capital and reserves Called up share capital 1.8 1.7Share premium account 9.2 8.6Profit and loss account 60.1 49.0 --------- --------- Shareholders' funds - equity interests 2 71.1 59.3 --------- --------- Group Cash Flow Statementfor the year ended 31 March 2007 2007 2006 Note £m £m ---------- -------- Net cash inflow from operating activities 3 62.2 41.0 Returns on investment and servicing of finance (1.1) (1.6) Taxation (1.0) (5.2) Capital expenditure and financial investment (69.0) (45.5) Disposal of subsidiary undertakings 3.8 4.0 Equity dividends paid (2.7) (2.4) ---------- -------- Cash outflow before financing (7.8) (9.7) Financing (12.8) 6.8 ---------- -------- Decrease in cash in the year (20.6) (2.9) ---------- -------- Reconciliation of net cash flow to movement in net debt 2007 2006 £m £m ---------- --------Decrease in cash in the year (20.6) (2.9)Cash outflow/(inflow) from the decrease/(increase) indebt in the year 13.5 (6.2) ---------- -------- Change in net debt resulting from cash flows (7.1) (9.1)Exchange differences (1.5) 1.2Net debt at 1 April (5.5) 2.4 ---------- -------- Net debt at 31 March (14.1) (5.5) ---------- -------- NOTES 1. Turnover Analyses of profit before taxation and net assets between the different segmentsof the Group are not given as, in the opinion of the directors, such analyseswould be seriously prejudicial to the commercial interests of the Group. 2007 2006 (restated) £m £mDistribution - continuing operations 110.0 95.2- discontinued operations 3.0 11.5 Aviation Services- continuing operations 239.0 194.4- discontinued operations - 9.5 -------- -------- 352.0 310.6 -------- -------- 2007 2006 (restated) £m £mTurnover arising :- Continuing operations Within the United Kingdom and the Channel Islands 156.2 164.3 Between the United Kingdom and Mainland Europe 192.8 125.3 - Discontinued operations Within the United Kingdom and the Channel Islands 3.0 20.6 Within the Far East - 0.4 -------- -------- 352.0 310.6 -------- -------- On 28 April 2006 Fowler Welch-Coolchain Limited acquired the trade and assets ofR F Fielding Cheshire Limited (In Administration) for a de minimis sum. Nogoodwill arose on the acquisition and there have been no fair value adjustmentsin respect of the assets acquired. The turnover reflected in the Group Profitand Loss Account in respect of this business amounted to £14.5m during the year.There were no material profits arising in respect of this business in the year. 2. Reconciliation of movements in equity shareholders' funds Group 2007 2006 (restated) £m £m Profit for the year 13.6 11.0Dividends paid in the year (2.7) (2.4)Reserves movement arising from share basedpayment charge 0.2 0.2 --------- --------- 11.1 8.8Issue of shares under share option schemes 0.7 0.6 --------- --------- Net addition to shareholders' funds 11.8 9.4 Opening equity shareholders' funds 59.3 49.9 --------- --------- Closing equity shareholders' funds 71.1 59.3 --------- --------- 3. Reconciliation of operating profit to net cash flow from operating activities 2007 2006 (restated) £m £m Operating profit 18.6 7.5Depreciation and impairment 20.9 16.6Amortisation of goodwill 0.5 0.5Increase in stock (0.7) (2.9)(Increase)/decrease in debtors (21.5) 1.7Increase in creditors 44.2 17.4Share based payments charge 0.2 0.2 --------- -------- Net cash inflow from operating activities 62.2 41.0 --------- -------- 4. Earnings per share The calculation of basic earnings per share is based on earnings for the yearended 31 March 2007 of £13,627,637 (2006 as re-stated : £11,009,520). Thecalculation of basic earnings per share before exceptional items is based onearnings for the year ended 31 March 2007 of £11,795,637 (2006 as restated :£9,349,144). Both calculations are based on 140,073,882 shares (2006 -138,469,604) being the weighted average number of shares in issue for the year. The calculation of diluted earnings per share is based on earnings for the yearended 31 March 2007 of £13,627,637 (2006 as restated : £11,009,520). The dilutedearnings per share before exceptional items is based on earnings for the yearended 31 March 2007 of £11,795,637 (2006 as restated : £9,349,144). Bothcalculations are based on 141,122,024 ordinary shares (2006 - 139,488,044)calculated as follows: 2007 2006 Basic weighted average number of shares 140,073,882 138,469,604Dilutive potential ordinary shares: Employee share options 1,048,142 1,018,440 ------------ ------------ 141,122,024 139,488,044 ------------ ------------ 5. Exceptional items 2007 2006 £m £mOperating items (continuing operations)Re-organisation costs (0.1) (2.2)A300 closure costs - (0.7)Impairment of fixed assets - (3.3) Profit on disposal of fixed assets and investments(Loss)/gain on disposal of A300 (continuing operations) (0.1) 3.3Profit on disposal of discontinued operations 2.2 3.7 --------- ------------ Net exceptional items before taxation 2.0 0.8 --------- ------------ All of the exceptional items in both the current and previous year arechargeable to corporation tax at a rate of 30%, with the exception of theprofits on disposal of discontinued operations. The 2007 profit on disposal ofdiscontinued operations of £2.2m (2006: £3.7m) attracted a tax charge of £0.2m(2006:£nil). The reorganisation costs in both years relate to the move of the Jet2.comoperational departments from Bournemouth International Airport to Leeds BradfordInternational Airport. A decision to withdraw from Airbus A300 airfreightoperations in the prior year resulted in redundancy and other closure costs. Oneof the remaining Airbus A300 aircraft was sold prior to 31 March 2006 at aprofit of £3.3m. Whilst an exchange of contracts had taken place for the sale ofthe last Airbus A300, the 2006 impairment charge of £3.3m relates to thisaircraft. The impairment was necessary as neither the value in use nor theanticipated sale proceeds supported the unimpaired book value. The sale of thisaircraft was completed on 22 June 2006 giving rise to a loss on disposal of£0.1m. On 3 July 2006 the Group completed the sale of the trade, assets and liabilitiesof Channel Express (CI) Limited to a third party specialising in ChannelIslands' distribution. 6. Accounting policy changes FRS20: Share-based Payments The fair value of employee share option plans is measured at the date of grantof the option using the binomial valuation model. The resulting cost, asadjusted for the expected and actual level of vesting of the options, is chargedto income over the period in which the options vest. At each balance sheet datebefore vesting the cumulative expense is calculated, representing the extent towhich the vesting period has expired and management's best estimate of theachievement or otherwise of non-market conditions, of the number of equityinstruments that will ultimately vest. Cumulative expense since the previousbalance sheet date is recognised in the income statement with a correspondingentry in reserves. The Group has taken advantage of the transitional provisionsof FRS20 in respect of the fair value of equity- settled awards so as to applyFRS20 only to those equity-settled awards granted after 7 November 2002 that hadnot vested before 31 March 2006. The cost of these share options reflected inthe results of the Group for the year is £0.2m (2006 restated - £0.2m). 7. The financial information set out in the announcement does not constitute theGroup's statutory accounts for the financial years ended 31 March 2007 or 2006.The financial information for the year ended 31 March 2006 is derived from thestatutory accounts for that year, which have been delivered to the Registrar ofCompanies and those for 2007 will be delivered following the Company's AnnualGeneral Meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain statements under Section 237 (2) of theCompanies Act 1985. 8. The proposed final dividend of 1.430p per share will, if approved, be payableon 24 August 2007 to shareholders on the Company's register at the close ofbusiness on 6 July 2007. 9. The 2007 Annual Report and Accounts (together with the Auditors Report) willbe posted to shareholders no later than 17 July 2007. The Annual General Meetingwill be held on 9 August 2007. This information is provided by RNS The company news service from the London Stock Exchange