GRA.L Regulatory News (GRA)

12 Nov 2007 07:01

Printing.com plc12 November 2007 FOR RELEASE7.00AM12 November 2007 Printing.com plc ("Printing.com" or "the Company")Specialist retail chain with 224 Outlets open and pending across the UK & Ireland Unaudited Interim Results for the period ended 1 October 2007 Six months Six months ended ended 1 October 1 October 2007 2006 (*restated) £'000 £'000 Change Total Retail Sales** 12,119 10,579 +14.6% Turnover 6,439 5,647 +14.0%EBITDA 1,593 1,303 +22.3%Profit before tax 968 924 +4.8% EPS - Basic 1.51p 1.45p +4.1%EPS - Fully Diluted 1.45p 1.38p +5.1%Dividend 1.00p 0.60p +66.7% Outlets Active at Period endStand alone stores 49 48 +2.1%Bolt-ons 163 127 +28.3% Total Active 212 175 +21.1%Contracted 12 13 - Total Outlets open and pending 224 188 +19.1% * The comparative figures for the six month period ended 1 October 2006 havebeen restated from the previously reported results for the 28 week period ended15 October 2006 to allow comparable financial results for the current period. Inaddition, the comparative figures have been restated to reflect the change inrevenue recognition policy adopted in the financial statements for the yearended 2 April 2007 and to reflect the correct treatment for rollover reliefclaimed in the period as identified in the financial statements for the yearended 2 April 2007. Note 1 to the interim statements provides details of thisrestatement. In addition the results presented are prepared under IFRS. The conversion toIFRS is explained in the attached Restatement Report. There was no impact onprofit as a result of the transition. ** Total Retail Sales is the retail sales value of product which goes throughthe Printing.com network and for which Printing.com earns revenue. * Sales, profits and earnings per share at record levels* Expansion accelerates with 29 new outlets signed in the period* Like for like growth during the interim period increased to 12.9%* Cash in hand £2.74 million* Record sales volumes in October* Strong pipeline of prospective Bolt-on Franchises* Good progress in New Zealand, Iceland and France* Websites by Printing.com pass the 300 live site mark* Internal budget weighted strongly to second half* Cautiously optimistic that growth will continue For further information: Printing.com plcTony Rafferty (Chief Executive) 07966 517 336Alan Roberts (Finance Director) 07977 277 521 Cubitt ConsultingBrian Coleman-Smith / James Verstringhe / Nicola Krafft 020 7367 5100 Printing.com Printing.com offers a broad product range including leaflets, booklets,postcards, promotional cards, invitations, letterheads and business cards toconsumers and small and medium sized companies. Unlike its competitors,Printing.com's Stores and Franchises do not depend on any printing equipment onlocation. The Company's printing and ancillary equipment is based at thecentralised Production Hub with the head office in Manchester. All work isproduced in full four colour rather than two colour. The printing sector hastraditionally been served by smaller printing companies or other On DemandPrinters and is estimated to be worth some £1 billion. Printing.com has three routes to market: Franchise Stores, Bolt-on Franchisesand Company owned Stores. Printing.com plc ("Printing.com" or "the Company") Specialist retail chain with 224 Outlets open and pending across the UK & Ireland Unaudited Interim Results for the period ended 1 October 2007 Chairman's & Chief Executive's Statement Trading Results and Dividend We are pleased to announce that, for the Interim Period covering the 6 monthsending 1 October 2007, your Company increased pre-tax profits by 4.8% to£968,000 (2006: £924,000). Total Retail Sales increased by 14.6% to £12,119,000 (2006: £10,579,000) andprovides the measure that we believe best indicates transactional volumes.Turnover increased by 14.0% to £6,439,000 (2006: £5,647,000). During the Interim Period the Printing.com estate expanded by 26 outlets to 224(including 12 pending), almost equalling the expansion for the whole of theprevious year. We previously expressed, when reporting Preliminary results, the belief thatEBITDA would increase by circa £1m for each additional £5m of Total RetailSales. We are pleased to report that the Interim Results support this importantmetric. At the close of the Interim Period, the Company had cash-in-hand of £2,740,000.During the period, working capital decreased by £214,000 and the Company paiddividends of £850,000. Capital expenditure in the period amounted to £831,000 ofwhich £202,000 was financed. The Directors are declaring an interim dividend of 1p per share to be paid on 14December 2007 to shareholders on the register at 23 November 2007. Current Trading We are pleased to report, that post the AGM update and through to the close ofthe Interim Period, sales volumes continued to perform in line with theCompany's internal budget. Post the Interim Period, October recorded a historic high with volumes also inline with the Company's internal budget. Estate Development The table below sets out the encouraging growth in Bolt-on Franchises during theInterim Period. 1 October 1 October 2 April 2007 2006 2007 Company owned Stores 4 6 2 Franchised Stores 45 42 47 Open and pending Bolt-on Franchises 175 140 149 Total Outlets open and 224 188 198 pending The marginal change in 'Owned' versus 'Franchised' Stores reflects the buyingback of two Stores. After the conversion of the Oxford Store to Franchisedownership during March 2007, Company owned Stores had dropped to just two. Ourpreference is to always maintain a small number of Stores for training anddevelopment purposes and these buy-backs proved a convenient way to address thebalance. During the previous fiscal year, the Bolt-on Franchise estate grew by 31Outlets. In the recent AGM statement, we outlined our objective to acceleratethis expansion. We are pleased to report that during the Interim Period theBolt-on Franchise estate grew by 26 Outlets - almost the same as the whole ofthe previous year. We enjoy a strong pipeline of prospective Bolt-on Franchisesand believe that we will see this momentum continue. Like for Like The Printing.com like for like metric takes into account the growth of TerritoryFranchises (in geographic terms outside of London these are typically the sizeof a county) embracing not only the Store but also the Bolt-on Franchises underthe umbrella of the Territory Franchisee. Only Territory Franchises operationalfor over three years are included. On this basis, like for like growth during the interim period was 12.9% versus6.8% reported for the previous Interim Period. International Development Our New Zealand partners continue to report good progress and the grant ofadditional outlets in their country. This initiative is also starting togenerate a small but worthwhile royalty for your Company. Our partners in Iceland commenced trading from a company owned outlet inReykjavik and have already granted their first Bolt-on Franchise. Whilst Icelandis a small country in relative terms, the opportunity there represents realprogress in making our systems work across the language barrier and another stepin the Master License program. We previously reported our intention to commence a French operation bydistributing overnight to France from the Manchester Hub. To this end the firstFrench Printing.com Franchise has been granted and the first orders shipped. Post an initial test marketing campaign in a French printing magazine, anencouraging number of enquiries have been generated from prospective franchisepartners. Initially these will be offered on an 'easy in - easy out' basis untilthe Printing.com reputation and brand is suitably established. Elsewhere, including Australia, we continue to have a number of ongoingdiscussions with prospective Master License partners. Websites by Printing.com Across the network over 300 client websites have now been completed. Whilst theaverage per Franchise is still modest the distribution is more polarized: withsome Franchisees still to fully embrace this initiative whilst others havecompleted more than a site per month, with the best performer now heading towardthe 20 mark. These metrics encourage us that with the right presentation, the websitesolution is well received. With more Franchisees embracing the system, webelieve that Websites by Printing.com has the potential to be a usefuladditional revenue stream. Over the coming months we expect to see the volume in websites continue to gainmomentum. Production Hub and Infrastructure Post the increase in Hub capacity to Total Retail Sales £40-45m (from theprevious Total Retail Sales £20-25m) we are pleased with the progress made andexpect to derive further manufacturing efficiencies. Also, during the InterimPeriod, plate making equipment was upgraded to take advantage of more efficientprocesses. We continue to invest in your Company's Flyerlink software and this represents amaterial proportion of overall capital investment. During the Interim Period themulti-lingual capabilities of Flyerlink were significantly enhanced tofacilitate operations in France and Iceland. Outlook In the recent AGM statement we highlighted that the Company's internal budget isweighted towards the second half year and realising this objective relies uponfurther sales growth and progress with our other initiatives. We remaincautiously optimistic that growth will continue and that this objective isrealistic. Beyond the current fiscal year we believe that scope exists for further materialprogression for the reasons set out below. The rate at which the network has expanded has accelerated over the InterimPeriod in line with our previously declared objective and we expect thisexpansion to continue for some time yet. The Company's like for like metric alsoprogressed to 12.9%. Together these metrics signal the prospect for a futureincrease in sales volumes. The Printing.com Hub has unutilised capacity. Annualising Total Retail Sales forthe Interim Period would point towards a run rate of £25m versus the estimatedHub capacity of circa £40-45m. This would indicate that unutilised capacity isin the range £15-20m. As previously envisaged EBITDA increased by circa 20% of the increase in TotalRetail Sales during the Interim Period. Save for the development of Flyerlink, foreseen capital investment is marginal.Accordingly, and looking ahead to the next fiscal year, a closer correlationshould exist between the progression of EBITDA and that of Net Profit. Finally we believe that Websites by Printing.com, the potential to develop themodel in France, and for further growth in our Master Licence initiative providethe scope for further earnings growth. George Hardie Tony RaffertyChairman Chief Executive12 November 2007 12 November 2007 Printing.com plc ("Printing.com" or "the Company") Specialist retail chain with 224 Outlets open and pending across the UK & Ireland Unaudited Interim Results for the period ended 1 October 2007 Chairman's & Chief Executive's Statement Consolidated Income Statementfor the six months ended 1 October 2007 Note Unaudited Unaudited Unaudited As restated As restated Six months Six months Year to 1 to 1 ended October October 2 April 2007 2006 2007 £000 £000 £000 Revenue 6,439 5,647 12,136Changes in stocks of finished (18) 21 (20)goods Raw materials and consumables (2,113) (1,879) (3,977) Gross profit 4,308 3,789 8,139Staff costs (1,678) (1,501) (3,007)Other operating charges (1,037) (985) (1,928)Depreciation and amortisation (650) (384) (1,039) Operating profit 943 919 2,165Other Income - - 141Financial income 121 99 194Financial expenses (96) (94) (207) Net financing income/ (costs) 25 5 (13) Profit before tax 968 924 2,293Taxation 2 (291) (277) (707) Profit for the period 677 647 1,586attributable to equityholders of the Company Basic earnings per share 3 1.51p 1.45p 3.55pDiluted earnings per share 3 1.45p 1.38p 3.38p Consolidated Statement of Changes in Shareholders Equityfor the six months ended 1 October 2007 (unaudited) Share Share Merger Other Retained Total capital premium reserve reserves earnings £000 £000 £000 £000 £000 £000Issue of new shares 2 24 - - - 26Share options - - - 43 - 43 Net income 2 24 - 43 - 69recognised directlyin equityProfit for the - - - - 677 677periodDividends - - - - (850) (850) Total recognised income and expense 2 24 - 43 (173) (104)Openingshareholders fundsat 3 April 2007 447 3,833 211 332 1,983 6,806 Closingshareholders fundsat 1 October 2007 449 3,857 211 375 1,810 6,702 for the six months ended 1 October 2006 (unaudited) Share Share Merger Other Retained Total capital premium reserve reserves earnings £000 £000 £000 £000 £000 £000Issue of new shares - 10 - - - 10Share options - - - 107 - 107 Net income - 10 - 107 - 117recognised directlyin equityProfit for the - - - - 647 647periodDividends - - - - (559) (559) Total recognised - 10 - 107 88 205income and expenseOpening 447 3,823 211 234 1,226 5,941shareholders fundsat 1 April 2006 Closing 447 3,833 211 341 1,314 6,146shareholders fundsat 1 October 2006 Consolidated Statement of Changes in Shareholders Equity (continued)for the year ended 2 April 2007(unaudited) Share Share Merger Other Retained Total capital premium reserve reserves earnings £000 £000 £000 £000 £000 £000Issue of new shares - 10 - - - 10Share options - - - 98 - 98 Net income recognised directlyin equity - 10 - 98 - 108Profit for the - - - - 1,586 1,586periodDividends - - - - (828) (828) Total recognisedincome and expense - 10 - 98 758 866Openingshareholders fundsat 1 April 2006 447 3,823 211 234 1,226 5,941 Closingshareholders fundsat 2 April 2007 447 3,833 211 332 1,984 6,807 Consolidated Balance Sheetat 1 October 2007 Unaudited Unaudited Unaudited As As restated restated 1 October 1 October 2 April 2007 2006 2007 £000 £000 £000Non-current assetsProperty, plant and equipment 5,533 5,941 5,700Intangible assets 1,128 774 921Deferred tax 108 154 108Other receivables 458 497 581 Total non-current assets 7,227 7,366 7,310 Current assetsInventories 121 102 104Trade and other receivables 3,392 3,213 3,368Cash and cash equivalents 2,740 3,065 2,855 Total current assets 6,253 6,380 6,327 Total assets 13,480 13,746 13,637 Current liabilitiesOther interest-bearing loans and (985) (915) (918)borrowingsTrade and other payables (2,165) (1,576) (1,808)Current tax payable (89) (1,043) (220)Accruals and deferred income (878) (940) (998)Other liabilities (147) (213) (213) Total current liabilities (4,264) (4,687) (4,157) Non-current liabilitiesOther interest-bearing loans and (1,840) (2,594) (2,170)borrowingsDeferred tax liabilities (674) (319) (503) Total non-current liabilities (2,514) (2,913) (2,673) Total liabilities (6,778) (7,600) (6,830) Net assets 6,702 6,146 6,807 EquityShare capital 449 447 447Share premium 3,857 3,833 3,833Merger reserve 211 211 211Other reserves 375 341 332Retained earnings 1,810 1,314 1,984 Total equity 6,702 6,146 6,807 Consolidated Cash Flow Statementfor the six months ended 1 October 2007 Unaudited Unaudited Audited As restated Six months Six months Year to 1 to ended October 1 October 2 April 2007 2006 2007 £000 £000 £000Cash flows from operating activitiesProfit for the year 677 647 1,586Adjustments for:Depreciation 650 384 1,039Financial income (121) (99) (194)Financial expense 96 95 207Loss / (profit) on sale of property, - 1 (22)plant and equipmentExchange gain 4 - -Equity settled share-based payment 43 57 114expensesTaxation 291 277 707 Operating profit before changes in 1,640 1,362 3,437working capital and provisionsDecrease/ (increase) in trade and 98 (626) (865)other receivables(Increase)/ decrease in stock (19) 22 20Increase in trade and other payables 135 69 323 Cash generated from the operations 1,854 827 2,915Tax paid (217) - (1,042) Net cash inflow from operating 1,637 827 1,873activities Cash flows from investing activitiesInterest received 121 99 194Acquisition of property, plant and (502) (266) (910)equipmentAcquisition of intangible assets (189) (35) -Sale of property, plant and equipment - - 82 Net cash outflow from investing (570) (202) (634)activities Cash flows from financing activitiesProceeds from the issue of share 26 10 10capitalInterest paid (96) (95) (207)Payment of finance lease liabilities (464) (368) (811)Advances on finance leases 202 - -Payment of equity dividend (850) (559) (828) Net cash outflow from financing (1,182) (1,012) (1,836)activities Net decrease in cash and cash (115) (387) (597)equivalentsCash and cash equivalents at start of 2,855 3,452 3,452period Cash and cash equivalents at end of 2,740 3,065 2,855period Notes(forming part of the interim financial statements) 1 Basis of preparation The interim financial statements of Printing.com PLC ('PDC') for the periodended 1 October 2007 are unaudited and do not comprise statutory accounts withinthe meaning of Section 240 of the Companies Act 1985. Under the AIM rules, PDC is required to prepare its next set of consolidatedfinancial statements in accordance with adopted International FinancialReporting Standards (IFRS) as adopted by the European Union ('adopted IFRSs').Reconciliations and descriptions of the effect of the transition from UK GAAP toadopted IFRSs' on the Group's balance sheet and its income statement areprovided at the back of this Interim Report. This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs as at 1 October 2007that are effective (or available for early adoption) at 31 March 2008, theGroup's first annual reporting date at which it is required to apply adoptedIFRSs. Based on these adopted IFRSs, the directors have applied the accountingpolicies set out in the restatement report, included in this document, whichthey expect to apply when the first annual financial statements are prepared inaccordance with adopted IFRSs' for the year ending 31 March 2008. However the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 March 2008are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 March 2008. The comparative figures for the financial year ended 2 April 2007 are not theCompany's statutory accounts for that financial year. Those statutory accounts,which were prepared under UK GAAP, have been reported on by the Company'sauditors and delivered to the registrar of companies. The report of the auditorswas (i) unqualified, (ii) did not include a reference to any matters to whichthe auditors drew attention by way of emphasis without qualifying their report,and (iii) did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. Prior period restatement The comparative figures for the six month period ended 1 October 2006 have beenrestated from the previously reported results for the 28 week period ended 15October 2006 to allow comparable financial results for the current period. Theimpact of this restatement is shown in the table below. In addition, the following adjustments were detailed in the financial statementsfor the year ended 2 April 2007 prepared under UK GAAP: * the comparative figures have been restated to reflect the change inthe UK GAAP revenue recognition policy adopted in the financial statements forthe year ended 2 April 2007. Previously all initial licence fees were recognisedupon signing the franchise agreements and only an element of the ongoing annualfee was deferred over the year. In the year ended 2 April 2007, this policy wasrevised to defer an element of the initial fee over the first year of theagreement and defer all of the annual fees over each respective year.Comparative figures for the year ended 1 October 2006 and brought forward at 1April 2006 have been restated to reflect this change in accounting policy,decreasing turnover in each year and increasing deferred income as shown in thetable below. Notes (continued)(forming part of the interim financial statements) * the UK GAAP comparative results for the six month period ended havebeen restated to correct the treatment for rollover relief claimed in the periodas identified in the financial statements for the year ended 2 April 2007. Theimpact of this restatement has been to increase the tax on profit on ordinaryactivities in each period, and increase the corporation tax creditor at the endof each period as shown in the table below. Six months ended 1 October 2006 £000Profit on ordinary activities after taxation as 718previously reported under UK GAAPChange in accounting reference date (126)Deferred licence revenue (net of tax) 21Previously capitalised costs - net of (5)amortisationReduced taxation charge 39Profit on ordinary activities after taxation 647restated under UK GAAP and IFRS The impact on basic earnings per share of the above restatements has been todecrease from 1.61p per share to 1.45p per share. Six months ended 1 October 2006 £000Net assets as previously reported under UK GAAP 6,600Change in accounting reference date (126)Deferred licence revenue (net of tax) 21Adjusted FRS20 Reserve (115)Disallowed roll over relief (233)Net assets as restated under UK GAAP 6,147Adjustments on transition to IFRS (1)Net assets as stated under IFRS 6,146 2 Taxation The tax charge is based on the estimated tax rate for the year ending 31 March2008. 3 Earnings per share The calculation of the basic earnings per share is based on the profit aftertaxation divided by the weighted average number of shares in issue, being44,820,669 (period ended 1 October 2006:44,718,617; year ended 2 April 2007:44,730,883). The diluted earnings per share takes the weighted average number of ordinaryshares in issue during the period and adjusts this for dilutive impact of shareoptions existing at the period end. The diluted weighted average number ofshares in the period ended 1 October 2007 was 46,690,604 (period ended 1 October2006: 47,005,417; year ended 2 April 2007:46,904,112 ). The profit used in thediluted earnings per share is based on profit after taxation. Independent Review Report to Printing.com plc Introduction We have been engaged by the company to review the condensed set of financialstatements in the half-yearly report for the six months ended 1 October 2007which comprises the Consolidated Income Statement, the Consolidated Statement ofRecognised Income and Expense, the Consolidated Balance Sheet, the ConsolidatedCash Flow Statement and the related explanatory notes. We have read the otherinformation contained in the half-yearly report and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. This report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The half-yearly report is the responsibility of, and has been approved by, thedirectors. The directors are responsible for preparing the half-yearly report inaccordance with the AIM Rules. As disclosed in note 1, the next annual financial statements of the group willbe prepared in accordance with IFRSs as adopted by the EU. The accounting policies that have been adopted in preparing the condensed set offinancial statements are consistent with those that the directors currentlyintend to use in the next annual financial statements. There is, however, apossibility that the directors may determine that some changes to these policiesare necessary when preparing the full annual financial statements for the firsttime in accordance with IFRSs as adopted by the EU. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly report based on our review. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. Independent Review Report to Printing.com plc (continued) Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly report for thesix months ended 1 October 2007 is not prepared, in all material respects, inaccordance with the recognition and measurement requirements of IFRSs as adoptedby the EU and the AIM Rules. KPMG Audit PlcChartered AccountantsManchester Date: 9 November 2007 IFRS Restatement report (unaudited) Printing.com PLC transition to IFRS From 1 April 2007 PDC ('the Group') is required to prepare its consolidatedaccounts under International Accounting Standards and International FinancialReporting Standards (collectively referred to as "adopted IFRS's" throughoutthis document) as adopted by the European Union ("EU") having previouslyprepared its accounts under UK Generally Accepted Accounting Principles ("UKGAAP"). The transition date for the Group is 1 April 2006 and set out in thefollowing tables is the UK GAAP to adopted IFRS reconciliation for profit forthe six month period ending 1 October 2006 and for the year ended 2 April 2007and a reconciliation of total equity as at 1 April 2006, 1 October 2006 and 2April 2007. Transitional arrangements - Application of IFRS 1 The Group's financial statements for the year ending 31 March 2008 will be theGroup's first annual financial statements in compliance with adopted IFRSs. On transition to adopted IFRSs an entity is generally required to apply adoptedIFRSs retrospectively, except where an exemption is available under IFRS 1'First-time Adoption of International Financial Reporting Standards'. The following are the key elections from IFRS 1 that were made by the Group: * The Group has elected to adopt the IFRS 1 exemption in relation to thevaluation of property, plant and equipment by taking the UK GAAP FRS 15revaluation as deemed cost * The Group has elected to adopt the IFRS 1 option to reset foreigncurrency cumulative translation reserves to zero on transition to adoptedIFRS's. International Financial Reporting Standards - Changes in accounting policies The interim results for the period ended 1 October 2007 have been prepared inaccordance with accounting policies under adopted IFRS's. The Group's revisedaccounting policies under IFRS are included in note 2 to this restatementreport. Reconciliation of income statement from UK GAAP to adopted IFRS's (unaudited) The adjustment to the income statement from UK GAAP to adopted IFRS's isexplained in detail in note 1 to the restatement report. The adjustment resultsin an increase of £29,000 in other operating charges in the six months ended 1October 2006 (Year ended 2 April 2007: £78,000 increase), a decrease indepreciation and amortisation costs of £24,000 in the six months ended 1 October2006 (Year ended 2 April 2007: £41,000 decrease) and a decrease in taxation of£2,000 in the six months ended 1 October 2006 (Year ended 2 April 2007: £12,000decrease). Reconciliation of cash flow statements from UK GAAP to adopted IFRS's(unaudited) With the exception of reclassifications, there were no material differencesbetween cash flows presented under adopted IFRS's and the cash flows presentedunder UK GAAP for the six months ended 1 October 2006 and for the year ended 2April 2007 as a result of the conversion to adopted IFRSs. Reconciliation of retained earnings from UK GAAP to adopted IFRS's (unaudited) The adjustment to retained earning from UK GAAP to adopted IFRS's is explainedin detail in note 1 to the restatement report. IFRS Restatement report (continued)Reconciliation of balance sheet from UK GAAP to adopted IFRS's (unaudited) Restated Restated UK GAAP Adopted IFRS UK GAAP Adopted IFRS UK GAAP Adopted IFRS IFRS IFRS IFRS 1 October Adj. 1 October 2 April Adj. 2 April 1 April adj 1 April 2006 (note 1) 2006 2007 (note 1) 2007 2006 (note 1) 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Non current assetsProperty plant and 6,720 (779) 5,941 6,621 (921) 5,700 3,855 (667) 3,188equipmentIntangible assets 68 706 774 105 816 921 68 599 667Deferred tax asset - 154 154 - 108 108 - 221 221Other receivables 497 - 497 581 - 581 561 - 561 7,285 81 7,366 7,307 3 7,310 4,484 153 4,637Current assetsInventories 102 - 102 104 - 104 124 - 124Trade and other 3,213 - 3,213 3,368 - 3,368 2,523 - 2,523receivablesCash and cash 3,065 - 3,065 2,855 - 2,855 3,452 - 3,452equivalents 6,380 - 6,380 6,327 - 6,327 6,099 - 6,099Total assets 13,665 81 13,746 13,634 3 13,637 10,583 153 10,736 Current liabilitiesTrade and other (3,666) - (3,666) (3,969) - (3,969) (3,172) - (3,172)payablesCurrent tax payable (1,043) 22 (1,021) (220) 32 (188) (771) 20 (751) (4,709) 22 (4,709) (4,189) 32 (4,157) (3,943) 20 (3,923)Non currentliabilitiesOther liabilities (2,594) - (2,594) (2,170) - (2,170) (499) - (499)Provisions (215) (104) (319) (448) (55) (503) (221) (152) (373) (2,809) (104) (2,913) (2,618) (55) (2,673) (720) (152) (872)Total liabilities (7,518) (82) (7,600) (6,807) (23) (6,830) (4,663) (132) (4,795) Net assets 6,147 (1) 6,146 6,827 (20) 6,807 5,920 21 5,941EquityShare capital 447 - 447 447 - 447 447 - 447Share premium 3,833 - 3,833 3,833 - 3,833 3,823 - 3,823Merger reserve 211 - 211 211 - 211 211 - 211Other reserve 291 50 341 279 53 332 165 69 234Retained earnings 1,365 (51) 1,314 2,057 (73) 1,984 1,274 (48) 1,226Total equityattributable toequity shareholders 6,147 (1) 6,146 6,827 (20) 6,807 5,920 21 5,941 Notes to the IFRS Restatement report 1. IFRS adjustments IAS 12 'Deferred tax' IAS 12 requires the deferred tax on temporary differences to be recognised inproportion to the vesting period to match the IFRS accounting treatment. Thisapproach is different than that adopted under FRS 19. The impact on PDC is torecognise a deferred tax asset of £69,000 at 1 April 2006, £53,000 at 2 April2007 and £50,000 at 1 October 2006, with a corresponding adjustment to reserves. In addition deferred tax assets previously netted from deferred tax liabilitieshave been separately disclosed in the restated IFRS financial statements. Theadjustment at 1 April 2006 of £152,000, 2 April 2007 £55,000 and at 1 October2006 £104,000. IAS 38 Under UK GAAP certain costs have been capitalised as intangible assets. Thesecosts are strictly prohibited from being capitalised under IAS 38. This hasresulted in £37,000 costs (net of amortisation recorded under UK GAAP) beingwritten off to the income statement in the year ended 2 April 2007, £5,000 inthe six months ended 1 October 2006 and £48,000 adjustment to opening reservesat 1 April 2006. 2. Accounting policies The following accounting policies represent the Group's revised policies underIFRS which will be adopted by the Group in it's financial statements for theyear ending 31 March 2008. Basis of consolidation The Group financial statements comprise the financial statements of the Companyand all of its subsidiarys made up to the financial year end. Subsidiaries areentities controlled by the Group. Control exists when the Group has the power,directly or indirectly, to govern the financial and operating policies of anentity so as to obtain benefits from its activities. In assessing control,potential voting rights that are currently exercisable or convertible are takeninto account. The financial statements of subsidiaries are included in theconsolidated financial statements from the date that control commences until thedate that control ceases. Accounting policies are consistently applied throughout the Group. Intercompanybalances and transactions have been eliminated. Material profits from intercompany sales, to the extent that they are not yet realised outside the Group,have also been eliminated. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call withbanks, other short term highly liquid investments. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciationand impairments. Where parts of an item of property, plant and equipment have different usefullives, they are accounted for as separate items of property, plant andequipment. Leases in which the Company assumes substantially all the risks and rewards ofownership of the leased asset are classified as finance leases. Where land andbuildings are held under finance leases the accounting treatment of the land isconsidered separately from that of the buildings. Leased assets acquired by wayof finance lease are stated at an amount equal to the lower of their fair valueand the present value of the minimum lease payments at inception of the lease,less accumulated depreciation and impairment losses. Lease payments areaccounted for as described below. Depreciation is charged to the income statement on a straight-line basis overthe estimated useful lives of each part of an item of property, plant andequipment. Land is not depreciated. The estimated useful lives are as follows: Fixtures and fittings - 20% - 33% straight linePlant and equipment - 10% - 30% straight lineDomain name and website costs - 5% straight lineLeasehold improvements - over remaining lease life Inventories Inventories are valued at the lower of cost and net realisable value. Netrealisable value is based on estimated selling price less additional costs tocompletion. Intangible assets All research costs are written off as incurred. Development costs are also charged to the profit and loss account in the year ofexpenditure, except when individual projects satisfy the following criteria: theproject is clearly defined and related expenditure is separately identifiable;the project is technically feasible and commercially viable; current and futurecosts will be exceeded by future sales; and adequate resources exist for theproject to be completed. In such circumstances the costs are carried forward andamortised over time in all cases over a period not exceeding three yearscommencing in the year when the Group begins to benefit from the expenditure. Amortisation on domain name, website costs and software is charged to the incomestatement on a straight-line basis over the useful economic life of the asset. Domain name and website costs - 5% straight lineSoftware - 20% straight line Intangible assets include customer lists purchased on the buy-back of own storesfrom existing franchisees. Revenue Revenue represents the invoiced amount, net of Value Added Tax, of goods soldand services provided to customers outside the Group recognised when orders arecompleted or services provided in line with the terms of the agreement in placewith customers. Revenue also includes franchise fee income which is recognised in line with theprovision of services as detailed in the franchise agreement. Annual renewallicence fees are deferred over a twelve month period from the licenceanniversary date in line with the provision of services as detailed in thefranchise agreement. Revenue is stated net of any discounts or commissions. Taxation Tax on the profit or loss for the year comprises current and deferred tax. Taxis recognised in the income statement except to the extent that it relates toitems recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year,using tax rates enacted or substantively enacted at the balance sheet date, andany adjustment to tax payable in respect of previous years.Deferred tax isprovided on temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used for taxationpurposes. The following temporary differences are not provided for: differencesrelating to investments in subsidiaries to the extent that they will probablynot reverse in the foreseeable future. The amount of deferred tax provided isbased on the expected manner of realisation or settlement of the carrying valueamount of assets and liabilities, using tax rates enacted or substantivelyenacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable thatfuture taxable profits will be available against which the asset can beutilised. Interest bearing borrowings Interest bearing borrowings are recognised initially at fair value lessattributable transaction costs. Subsequent initial recognition, interest bearingborrowings are stated at amortised cost with any difference between cost andredemption value being recognised in the income statement over the period of theborrowings on an effective interest basis. Notes to the IFRS Restatement report (continued) 2. Accounting policies (continued) Impairment of assets The carrying amounts of the Group's assets other than inventories and deferredtax assets, are reviewed at each balance sheet date to determine whether thereis any indication of impairment. If any such indication exists, the asset'srecoverable amount is estimated. For assets that have an indefinite useful life and intangible assets that arenot yet available for use, the recoverable amount is estimated at each balancesheet date. An impairment loss is recognised whenever the carrying amount of an asset or itscash-generating unit exceeds its recoverable amount. Impairment losses arerecognised in the income statement. Intangible assets that are not yet available for use were tested for impairmentas at 1 April 2006, the date of transition to adopted IFRS's, even though noindication of impairment existed. Calculation of recoverable amount The recoverable amount of the Group's receivables carried at amortised cost iscalculated as the present value of estimated future cash flows, discounted atthe original effective interest rate (i.e. the effective interest rate computedat initial recognition of these financial assets). Receivables with a shortduration are not discounted. The recoverable amount of other assets is the greater of their net selling priceand value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflectscurrent market assessments of the time value of money and the risks specific tothe asset. For an asset that does not generate largely independent cash inflows,the recoverable amount is determined for the cash generating unit to which theasset belongs. Expenses Operating lease payments Payments made under operating leases are recognised in the income statement on astraight-line basis over the term of the lease. Lease incentives received arerecognised in the income statement as an integral part of the total leaseexpense over the term of the lease. Finance lease payments Minimum lease payments are apportioned between the finance charge and thereduction of the outstanding liability. The finance charge is allocated to eachperiod during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability. Notes to the IFRS Restatement report (continued) 2. Accounting policies (continued) Financing costs Interest income and interest payable is recognised in profit or loss as itaccrues, using the effective interest method. Dividend income is recognised inthe income statement on the date the entity's right to receive payments isestablished. Employee benefits Defined contribution plan The Group operates a defined contribution pension scheme for employees. Theassets of the scheme are held separately from those of the company. The annualcontributions payable are charged to the income statement. Share based payments The share option programme allows Group employees to acquire shares in theCompany. The fair value of options granted is recognised as an employee expensewith a corresponding increase in equity. The fair value is measured at grantdate and spread over the period during which the employees becomeunconditionally entitled to the options. The fair value of the options grantedis measured using an option valuation model, taking into account the terms andconditions upon which the options were granted. The amount recognised as anexpense is adjusted to reflect the actual number of share options that vestexcept where forfeiture is due only to share prices not achieving the thresholdfor vesting. Financial instruments Financial instruments issued by the Group are treated as equity (i.e. formingpart of shareholders' funds) only to the extent that they meet the following twoconditions: (a) they include no contractual obligations upon the company (or group as thecase may be) to deliver cash or other financial assets or to exchange financialassets or financial liabilities with another party under conditions that arepotentially unfavourable to the company (or group); and (b) where the instrument will or may be settled in the company's own equityinstruments, it is either a non-derivative that includes no obligation todeliver a variable number of the company's own equity instruments or is aderivative that will be settled by the company's exchanging a fixed amount ofcash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue areclassified as a financial liability. Where the instrument so classified takesthe legal form of the company's own shares, the amounts presented in thesefinancial statements for called up share capital and share premium accountexclude amounts in relation to those shares. Where a financial instrument that contains both equity and financial liabilitycomponents exists these components are separated and accounted for individuallyunder the above policy. The finance cost on the financial liability component iscorrespondingly higher over the life of the instrument. Notes to the IFRS Restatement report (continued) 2. Accounting policies (continued) Finance payments associated with financial liabilities are dealt with as part offinance expenses. Finance payments associated with financial instruments thatare classified in equity are dividends and are recorded directly in equity. The Group does not hold or issue derivative financial instruments for tradingpurposes. The Interim Report will be posted to all shareholders of the Company and copieswill be available upon application to the registered office, Printing.com plc,Focal Point, 3rd Avenue, The Village, Trafford Park, Manchester M17 1FG. This information is provided by RNS The company news service from the London Stock Exchange