H&t Group Plc Regulatory News (HAT)

24 Aug 2007 11:20

H&T Group PLC24 August 2007 H&T Group plc advises that the announcement below replaces the Interim Resultsannouncement released on 22 August 2007 at 07:02 under RNS number 6050C. The fourth bullet of the Operational review should have stated that "Theimprovement in the retail gross profit margin in 2006 continued in H1 2007 withthe retail gross profit margin rising from 39.8% in H1 2006 to 45.6% in H1 2007"and not 49.6% in H1 2007. All other details remain unchanged. The correctedannouncement is set out in full below. H&T Group plc "H&T" or "the Group" Interim Results for the six months ended 30 June 2007 H&T Group plc, which trades under the H&T Pawnbrokers and Get>Go brands, is theUK's leading pawnbroking business by size of pledge book. The Group todayannounces its Interim Results, for the period ended 30 June 2007. Financial highlights (under IFRS) 6 months to 6 months to Change 30 June 2007 30 June 2006 £m £m %Gross profit 12.8 10.6 +20.9Earnings before Interest, Tax, Depreciation, Amortisation (EBITDA) before exceptional items 4.6 3.7 +26.3Operating profit before exceptional items 4.0 3.1 +30.1Operating profit 4.0 1.2 +242.0Pledge book 25.6 24.3 +5.4 Operational highlights • Interim dividend declared of 1.6p per share payable on 15 October 2007 • Successful placing in May 2007 at 204p raising £7m for store acquisition and expansion programme • 6 new stores have opened since the beginning of the year giving a current total of 83 stores John Nichols, Chief Executive, comments: "This is an excellent result for the first half of 2007 with all product linesshowing double digit growth and gold asset backed lending continuing to prove asuccess. We are capitalising on the opportunities we described at last year'sIPO, both in terms of revenue growth and development of our store base throughnew builds and acquisitions. We have also declared an interim dividend of 1.6pper share. Christmas remains a key season for our retail segment so providedcurrent retail conditions continue, we can look forward to the outturn of thefull year with confidence." 21 August 2007 Enquiries: H&T Group plc Tel: 0870 9022 600John Nichols, Chief ExecutiveLaurent Genthialon, Finance Director Hawkpoint (Nominated adviser) Tel: 020 7665 4500Lawrence Guthrie/Sunil Duggal Numis Securities (Broker) Tel: 020 7260 1000Oliver Hemsley/Charles Farquhar College Hill Tel: 020 7457 2020Gareth David/Paddy Blewer Report of the Chief Executive Officer and Finance Director H&T Group plc is pleased to report a very positive trading performance for thefirst six months of 2007 ("H1 2007"). Gross profit for H1 2007 was £12.8 millioncompared with £10.6 million for the first six months of 2006 ("H1 2006"), anincrease of 20.9%. Earnings before interest, tax, depreciation and amortisation("EBITDA") before exceptional items rose by 26.3% from £3.7 million in H1 2006to £4.6 million in H1 2007. The directors have approved a 1.6p interim dividend (nil pence last year). Thiswill be payable on 15 October 2007 to all shareholders on the register at the close of business on 14 September 2007. In May 2007, H&T completed the placing of 3.6 million new ordinary shares toexisting shareholders, all leading UK institutions, and provides the Group with£7 million of additional finance for its store expansion programme. In accordance with the AIM Rules for Companies, this is the first period when H&T will use International Financial Reporting Standards ("IFRS") accountingstandards rather than UK Generally Accepted Accounting Practices ("UK GAAP") asthe basis to report its financial results. This transition may lead to somedifferences between reported numbers under IFRS and UK GAAP that are simply aresult of the accounting framework change and are not a reflection of a changein business performance. Pawnbroking activities, comprising Pawn Service Charge and Disposition,performed well in the first six months of 2007 with gross profit increasing by16.2% on the equivalent period last year, driven by an increase in pledge bookyield. The jewellery retail element has experienced growth in both revenue(21.6%) and gross margin (39.1%) between H1 2006 and H1 2007. The financial services segment's gross profit increased by 63.0% between H1 2006and H1 2007; this strong performance was driven by growth across the financialservices product range including cheque cashing, pay day advance and KwikLoan. In line with the Group's growth strategy, H&T has continued to grow its storeestate with two new stores opening in the first half of 2007. Since 30 June2007, the Group has acquired an additional four stores. Taking intoconsideration these six new stores H&T currently operates through 83 storesacross the United Kingdom. Operational review Pawnbroking: - Pawnbroking activities contributed £11.1 million (H1 2006: £9.5million) or 87% of the Group gross profit in H1 2007 (H1 2006: 90%). - The Group's pledge book was £25.6 million at 30 June 2007(£24.3 million at 30 June 2006). - Pawn Service Charge rose to £8.4 million in H1 2007, anincrease of 10.8% on H1 2006 (£7.6 million). - Disposition combines contributions from both the retail andscrap operations. The retail segment recovery experienced in H2 2006 continuedin the first half of 2007 with retail gross revenues up by 21.6% on H1 2006(12.9% on a like for like basis). The improvement in the retail gross profitmargin in 2006 continued in H1 2007 with the retail gross profit margin risingfrom 39.8% in H1 2006 to 45.6% in H1 2007. This translated in an increase inretail gross profit of 39.1%, from £1.4 million in H1 2006 to £2.0 million in H12007. Scrap gross profit increased by £0.2 million between H1 2006 and H1 2007,driven by higher volume of scrap sales. Financial services: - In H1 2007, the Group financial services activities contributed£1.7 million (H1 2006: £1.1 million) or 13% of the Group's gross profit (H12006: 10%). - The transition to in-house facilities for the underwriting ofcheque cashing and pay day advances implemented in early 2006 has enabled H&T todrive both volumes and margins. The cheque cashing and pay day advance grossprofit increased from £1.0 million in H1 2006 to £1.6 million in H1 2007, anincrease of 60%. - KwikLoan, the Group's unsecured loan product, doubled its loanbook from £0.3 million at30 June 2006 to £0.6 million at 30 June 2007 (£0.4 million at 31 December 2006).The pre-paid debit card product continues to attract new customers to the storesalthough the general market awareness of the product has taken longer to developthan anticipated. As a result, the pre-paid debit card operation has made only asmall contribution to the Group's H1 2007 results. However, the H&T Group Boardbelieves there is further potential in this product driven by the increasedconvenience it grants to the consumer. Strategy review Update on business acquisitions On 16 May 2007, the Group announced the placing of 3.6 million new ordinaryshares to finance the expansion of its store estate, in particular to fund thecash element of acquisitions and the working capital required to grow thesebusinesses. At the time of the placing, H&T had already acquired a store inWillesden, which was subsequently relocated to a nearby H&T store, and a storein Wolverhampton. The contribution of these two new stores to the H1 2007results was limited due to the timing of their acquisitions (mid May 2007).Four stores for which key terms and exclusivity had been agreed in May 2007 wereacquired on 20 August 2007. Exclusivity terms have been signed for a further 6 stores and completions areexpected to take place between September and November 2007 and terms are beingprogressed on further opportunities. Update on Greenfield sites The Group opened one Greenfield store in H1 2007 (one in H1 2006) in Watford.Leases have been signed in respect of four further sites and subject to planningconsents these stores will be opened during the second half of 2007. Update on new point of sale development The development of the replacement point of sale system for the business remainswithin budget and the full roll out is expected in the second half of 2007 asplanned. Trading outlook The Board is pleased with the overall trading performance of the Group whichremains in line with expectations. Seasonality within the business means that the second half of the year tends tomake a larger contribution to the full year result than the first half. Theextent of the impact of seasonality is affected by retail sentiment,particularly during the Christmas period. The business has good prospects forgrowth driven by a combination of further branch openings in the second half ofthe year together with recent and scheduled store acquisitions. Financial review The financial results provided in the main body of this report have beenprepared using IFRS. For information only, we have included in the appendix theGroup's financial results under pro-forma UK GAAP and a reconciliation betweenthe pro-forma UK GAAP and IFRS. We should also point readers to the Group'sreport on the impact of IFRS (relative to UK GAAP) on H&T's results released on1 August 2007 and accessible on the Group's website (www.handtgroup.co.uk). Turnover and gross profit Turnover for the first six months of 2007 amounted to £17.3 million comparedwith £14.5 million for the corresponding period in 2006; a 19.5% increase drivenby strong growth across all of the Group's activities. The improvement in retailgross margin together with the growth in Pawn Service Charge and financialservices resulted in H1 2007 total gross profit of £12.8 million, an increase of20.9% on H1 2006 (£10.6 million). Administrative expenses The Group's administrative expenses before exceptional items increased from £7.5million in H1 2006 to £8.8 million in H1 2007. The increase was mainly due tothe higher number of stores owned by the Group (additional ten stores), thedevelopment of the authorisations and collections back office and costinflation. There were no exceptional expenses in H1 2007 while £1.9 million wereincurred as part of the Initial Public Offer ("IPO") in H1 2006. Operating profit The Group recorded an operating profit before exceptional items of £4.0 millionfor H1 2007 compared with £3.1 million in H1 2006. Earnings before interest,taxation, depreciation, amortisation and exceptional items increased by 26.3%between H1 2006 (£3.7 million) and H1 2007 (£4.6 million). After taking accountof the exceptional items, operating profit in H1 2007 was £4.0 million comparedwith £1.2 million in H1 2006. Other gains The Group disposed of a freehold property in H1 2007 resulting in an exceptionalgain of £0.2 million (£nil in H1 2006). Finance costs and similar charges Finance costs before exceptional items decreased by £1.1 million from £2.5million in H1 2006 to £1.4 million in H1 2007. This reduction resulted from therepayment of the Rutland loan notes and the restructuring of bank facilities atthe time of the Group's admission to AIM in May 2006. The financialrestructuring in 2006 incurred an exceptional charge of £0.8 million. Had thisrestructuring and IPO been effective from the beginning of 2006, the Boardestimates that the interest payable before exceptional items would have been£1.6 million for H1 2006. Under IFRS, movements in the fair value of the Group's interest rate swap arerecognised in the income statement. As a result, the Group recorded changes inthe fair value of the instrument amounting to income of £0.5 million in H1 2007compared with income of £0.2 million in H1 2006. Financial review (continued) Profit/(loss) before taxation The Group recorded a profit before taxation of £3.3 million in H1 2007 comparedwith a loss before taxation of £1.9 million in H1 2006. In H1 2006, the Groupincurred £2.7 million exceptional costs compared with£0.2 million of exceptional profit in H1 2007. Profit before taxation, fairvalue hedge accounting and exceptional items in H1 2007 was £2.6 millioncompared with £0.6 million in H1 2006. Profit before taxation and exceptionalitems in H1 2007 was £3.1 million compared with £0.8 million in H1 2006. Earnings/(loss) per share Basic earnings per share for H1 2007 was 7.15 pence compared with basic loss pershare of 7.99 pence in H1 2006. After adjusting for exceptional items, adjusted basic earnings per share for H1 2007 was 6.64 pence compared with 1.81 pence in H1 2006. Dividends The directors have approved a 1.6p interim dividend (nil pence last year)payable on the 15 October 2007. In June 2007, the Group paid a 3p final dividendfor the 2006 financial year results. Interim Financial Statements Unaudited consolidated income statementFor the 6 months ended 30 June 2007 6 months ended 30 June 2007 6 months ended 30 June 2006 Note Before Exceptional Before Exceptional Exceptional Items Exceptional Items Items (Note 4) Total Items (Note 4) Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited £'000 £'000 £'000 £'000 £'000 £'000 Continuing operations Revenue 17,269 - 17,269 14,453 - 14,453 Cost of sales (4,459) - (4,459) (3,856) - (3,856) Gross profit 12,810 - 12,810 10,597 - 10,597 Administrative expenses (8,827) - (8,827) (7,534) (1,896) (9,430) Operating profit 3,983 - 3,983 3,063 (1,896) 1,167 Depreciation and 3 (664) - (664) (620) - (620) amortisation EBITDA* 4,647 - 4,647 3,683 (1,896) 1,787 Investment revenues 8 - 8 11 - 11Other gains and losses 4 - 196 196 - - -Finance costs 7 (1,409) - (1,409) (2,479) (800) (3,279)Movement in fair value of 481 - 481 229 - 229interest rate swap Profit/(loss) before 3,063 196 3,259 824 (2,696) (1,872)taxation Tax on profit/(loss) 5 (947) (36) (983) (399) 400 1 Profit/(loss) for the period 2,116 160 2,276 425 (2,296) (1,871) Earnings/(loss) per ordinary 7.15 p (7.99) p share - basic 6Earnings/(loss) per ordinary 7.14 p (7.99) p share - diluted 6 *EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation The consolidated income statement for the 12 months ended 31 December 2006 isprovided in note 2. Unaudited consolidated statement of changes in equityFor the 6 months ended 30 June 2007 Note 6 months 6 months 12 months ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Opening total equity 19,606 498 498 Profit/(loss) for the period 2,276 (1,871) 1,002Dividend paid 10 (945) - -Deferred tax credit on share based payments - - 400taken directly to equity Total of recognised income and expense for the period 20,937 (1,373) 1,900 Issue of new shares 8 7,063 17,687 17,687Share option charge taken directly to equity 44 - 19 Closing total equity 28,044 16,314 19,606 Unaudited consolidated balance sheetAt 30 June 2007 At 30 June At 30 June At 31 December 2007 2006 2006 Unaudited Unaudited Audited Note £'000 £'000 £'000Non-current assetsGoodwill 15,300 14,346 14,899Other intangible assets 1,216 554 804Property, plant and equipment 5,594 4,825 5,396 22,110 19,725 21,099 Current assetsInventories 6,290 4,442 4,237Trade and other receivables 33,198 30,908 31,869Assets held for sale - 58 37Cash and cash equivalents 1,368 1,220 2,108Derivative financial instruments 614 - 133 41,470 36,628 38,384 Current liabilitiesTrade and other payables (3,322) (3,843) (3,510)Current tax liabilities (857) (50) (88)Bank overdrafts and loans (2,860) (1,043) (1,255)Derivative financial instruments - (199) - (7,039) (5,135) (4,853)Net current assets 34,431 31,493 33,531 Non-current liabilitiesBorrowings (28,034) (34,846) (34,617)Deferred tax liabilities (463) (58) (407) (28,497) (34,904) (35,024)Total liabilities (35,536) (40,039) (39,877)Net assets 28,044 16,314 19,606 EQUITYShare capital 8 1,754 1,574 1,574Share premium 23,995 17,113 17,112Share option reserve 63 - 19Retained earnings 2,232 (2,373) 901Total equity 28,044 16,314 19,606 Unaudited consolidated cash flow statementFor the 6 months ended 30 June 2007 6 months 6 months 12 months ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Unaudited £'000 £'000 £'000Cash flows from operating activitiesProfit/(loss) for the period 2,276 (1,871) 1,002Adjustments for:Investment revenues (8) (11) (27)Other gains and losses (196) - (46)Finance costs 1,409 3,279 4,737Movement in fair value of interest rate swap (481) (229) (561)Income tax expense 983 1 1,035Depreciation of property, plant and equipment 623 526 1,154Amortisation of intangible assets 41 94 204Share based payment expense 44 - 19Profit on disposal of fixed assets (8) (7) (12) Operating cash flows before movements in working 4,683 1,782 7,505capital Increase in inventories (1,772) (939) (734)(Increase)/decrease in receivables (898) 456 (298)(Decrease)/increase in payables (195) 1,721 1,152 Cash generated from operations 1,818 3,020 7,625 Income taxes paid (158) (150) (291)Debt restructuring cost - (800) (801)Interest paid (1,287) (1,299) (6,787) Net cash from/(used by) operating activities 373 771 (254) Investing activitiesInterest received 8 11 27Proceeds on disposal of property, plant and equipment 260 42 118Purchases of property, plant and equipment (1,021) (1,462) (2,642)Acquisition of trade and assets of businesses (1,377) - (1,013) Net cash used in investing activities (2,130) (1,409) (3,510) Financing activitiesDividends paid (945) - -Repayments of borrowings (6,450) (23,663) (19,500)Increase in borrowings - 6,400 6,251Proceeds on issue of shares 7,063 17,687 17,687Increase in bank overdrafts 1,349 - - Net cash from financing activities 1,017 424 4,438 Net (decrease)/increase in cash and cash equivalents (740) (214) 674 Cash and cash equivalents at beginning of period 2,108 1,434 1,434 Cash and cash equivalents at end of period 1,368 1,220 2,108 Notes to the Interim Financial Report Note 1 Basis of preparation The AIM rules require that the next annual consolidated financial statements ofthe Group for the year ending 31 December 2007, be prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EU. Thecompany published its statement on the impact of the adoption of IFRS on 1August 2007 which is available on the company website at www.handtgroup.co.ukand the financial information presented in that document has been used as thecomparative information for the year ended 31 December 2006 and the period ended30 June 2006. The directors have applied the same accounting policies, as set out in thedocument on the impact of the adoption of IFRS, which they expect to apply whenthe first annual IFRS financial statements are prepared for the year ended 31December 2007. This documented was audited by Deloitte & Touche LLP, the Groupauditors. The document, which includes their audit opinions on the IFRS openingconsolidated balance sheet as at 1 January 2006, and the IFRS consolidatedbalance sheet as at 31 December 2006 is available from www.handtgroup.co.uk. The comparative figures for the year ended 31 December 2006 or for the periodended 30 June 2006 do not constitute statutory accounts for the purposes ofsection 240 of the Companies Act 1985. A copy of the statutory accounts for theyear 31 December 2006, prepared under UK GAAP, has been delivered to theRegistrar of Companies and contained an unqualified auditors' report which madeno statement under sections 237(2) or (3) of the Companies Act 1985. This interim financial report is unaudited. Note 2 Consolidated income statement for the year ended 31 December 2006 Note Before Exceptional Total Exceptional Items (Note 4) Items Audited Audited Audited £'000 £'000 £'000 Continuing operationsRevenue 32,115 - 32,115Cost of sales (8,787) - (8,787) Gross profit 23,328 - 23,328 Administrative expenses (15,285) (1,903) (17,188) Operating profit 8,043 (1,903) 6,140 Depreciation and amortisation 3 (1,358) - (1,358)EBITDA 9,401 (1,903) 7,498 Investment revenues 27 - 27Other gains and losses 4 - 46 46 Finance costs 7 (3,936) (801) (4,737)Movement in fair value of interest rate 561 - 561swap Profit before taxation 4,695 (2,658) 2,037 Tax on profit 5 (1,421) 386 (1,035) Profit for the financial year 3,274 (2,272) 1,002 Earnings per ordinary share - basic 6 3.65Earnings per ordinary share - diluted 6 3.65 Notes to the Interim Financial Report (continued) Note 3 Depreciation and amortisation Operating profit is stated after charging: 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Depreciation on property, plant and equipment 623 526 1,154 Amortisation charge on intangible assets 41 94 204 664 620 1,358 Note 4 Exceptional items During the first 6 months of 2007, the Group disposed of one freehold property(6 months ended 30 June 2006: nil and year ended 31 December 2006: one which wasleased back as an operating lease) generating a profit of £196,000 (6 monthsended 30 June 2006: £nil and year ended 31 December 2006: £46,000). During the first 6 months of 2006, the Group incurred a charge of £1,896,000 (6months ended 30 June 2007: £nil and year ended 31 December 2006: £1,903,000) aspart of administrative expenses relating to the Initial Public Offering (IPO)and £800,000 (6 months ended 30 June 2007: £nil and year ended 31 December 2006:£801,000) as part of finance costs relating to the restructuring of the bankfacilities held by the Group following the IPO. Note 5 Taxation The taxation charge for the 6 months ended 30 June 2007 has been calculated byreference to the expected effective corporation tax and deferred tax rates forthe full financial year to end on 31 December 2007. The underlying effectivefull year tax charge is estimated to be 30.1% (6 months ended 30 June 2006:48.4% and year ended 31 December 2006: 30.3%). Note 6 Earnings/(loss) per share Basic earnings/(loss) per share is calculated by dividing the profit for theperiod attributable to equity shareholders by the weighted average number ofordinary shares in issue during the period. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. With respect to the Group these represent share options granted toemployees where the exercise price is less than the average market price of theCompany's ordinary shares during the period. The directors also present an adjusted earnings/(loss) per share as thedirectors consider that it reflects the Group results on a comparable basis oncenon recurring items are taken into consideration. All the adjustments made tothe non-adjusted earnings/(loss) per share in arriving at adjusted earnings/(loss) per share are for exceptional items disclosed separately on the face ofthe consolidated income statement. Other than for the adjusting items, thecalculation is the same as for the statutory per share amounts. Notes to the Interim Financial Report (continued) Note 6 Earnings/(loss) per share (continued) Reconciliations of the earnings/(loss) per ordinary share and weighted averagenumber of shares used in the calculations are set out below: Unaudited Unaudited Audited 6 months ended 30 June 2007 6 months ended 30 June 2006 Year ended 31 December 2006 Earnings Weighted Per-share (Loss)/ Weighted Per-share Earnings Weighted Per-share average amount earnings average amount average amount £'000 number of pence number of pence £'000 number of pence shares £'000 shares shares Earnings/(loss) pershare basic 2,276 31,863,607 7.15 (1,871) 23,426,675 (7.99) 1,002 27,489,310 3.65 Effect of dilutivesecuritiesOptions - 57,538 (0.01) - - - - 388 - Earnings/(loss) pershare diluted 2,276 31,921,145 7.14 (1,871) 23,426,675 (7.99) 1,002 27,489,698 3.65 Earnings/(loss) per 2,276 31,863,607 7.15 (1,871) 23,426,675 (7.99) 1,002 27,489,310 3.65share - basicIPO costs - - - 1,896 - 8.09 1,903 - 6.92Fixed assets (196) - (0.62) - - - (46) - (0.17)disposalDebt issue costs - - - 800 - 3.41 801 - 2.91Tax adjustment 36 - 0.11 (400) - (1.70) (386) - (1.40) Adjusted earningsper share - basic 2,116 31,863,607 6.64 425 23,426,675 1.81 3,274 27,489,310 11.91 Effect of dilutivesecuritiesOptions - 57,538 (0.01) - - - - 388 - Adjusted earningsper share - diluted 2,116 31,921,145 6.63 425 23,426,675 1.81 3,274 27,489,698 11.91 Note 7 Finance costs 6 months 6 months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Interest payable on bank loans and 1,265 1,360 2,684overdraftOn loan notes - 896 896Other interest 22 15 16Amortisation of debt issue costs 122 208 340 1,409 2,479 3,936Exceptional items - note 4 - 800 801 Total finance costs 1,409 3,279 4,737 Notes to the Interim Financial Report (continued) Note 8 Share capital At 30 June 2007 At 30 June 2006 At 31 December 2006 Unaudited Unaudited Audited £ £ £Authorised (Ordinary Shares of £0.05 each)£ Sterling 2,098,500 2,098,500 2,098,500 Number 41,970,000 41,970,000 41,970,000 Allotted, called up and fully paid (Ordinary Shares of £0.05 each)£ Sterling 1,754,285 1,574,285 1,574,285 35,085,706 31,485,706 31,485,706Number The reconciliation of the movement in share capital and share premium account isset out below: Share premium account Total Share capital share capital Unaudited Unaudited Unaudited £'000 £'000 £'000 At 1 January 2006 1,000 - 1,000Issue of share capital 574 17,790 18,364Issue expenses - (677) (677) At 30 June 2006 1,574 17,113 18,687Issue expenses - (1) (1) At 31 December 2006 1,574 17,112 18,686Issue of share capital 180 7,164 7,344Issue expenses - (281) (281) At 30 June 2007 1,754 23,995 25,749 Notes to the Interim Financial Report (continued) Note 9 Business combinations The Group made the following acquisitions during the period: Total Total Total 6 months 6 months year Acquisition Acquisition ended ended ended 1 2 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited £'000 £'000 £'000 £'000 £'000Assets acquired:Intangible assets 74 175 249 - 163Property, plant and equipment - 15 15 - -Retail inventory - 281 281 - -Current trade and other 142 289 431 - 297receivables Cash and cash equivalent - 18 18 - 7Total assets acquired 216 778 994 - 467Consideration:Cash 236 1,159 1,395 - 1,020 Total consideration 236 1,159 1,395 - 1,020 Goodwill 20 381 401 - 553 The Group will present further disclosures with respect to the acquisition asrequired by IFRS 3, "Business Contributions", in the financial statements forthe year ending 31 December 2007. Note 10 Dividends On 16 May 2007, the shareholders approved the payment of a 3.0p final dividendfor 2006 which equates to a dividend payment of £945,000. The dividend was paidon 4 June 2007. On 21 August 2007, the directors approved a 1.6p interim dividend (30 June 2005:nil pence) which equates to a dividend payment of £563,000 (30 June 2006: £nil). The dividend will be paid on 15 October 2007 to shareholders on the shareregister at the close of business on 14 September 2007and has therefore notbeen provided for in the 2007 interim results. Appendix 1 Reconciliation of proforma UK GAAP* to IFRS Six months ended 30 June 2007 (unaudited) Profit before tax Tax Profit after tax £'000 £'000 £'000 Proforma UK GAAP * 2,688 (961) 1,727IAS 12 Deferred tax on business combinations - 28 28IAS 17 Lease incentives (1) - (1)IAS 19 Holiday pay accrual (229) 69 (160)IAS 38 Intangible assets amortisation (24) - (24)IAS 39 Interest receivable recognition (59) 18 (41)IAS 39 Interest hedging fair value 481 (137) 344IFRS 3 Business combinations: reversal of 403 - 403goodwill amortisation IFRS 3,259 (983) 2,276 Six months ended 30 June 2006 (unaudited) Loss before tax Tax Loss after tax £'000 £'000 £'000 Proforma UK GAAP * (2,307) (8) (2,315)IAS 12 Deferred tax on business combinations - 25 25IAS 17 Lease incentives 11 (3) 8IAS 19 Holiday pay accrual (199) 60 (139)IAS 39 Interest receivable recognition (25) 7 (18)IAS 39 Interest hedging fair value 229 (69) 160IFRS 3 Business combinations: reversal of 384 - 384goodwill amortisationChange in accounting policy for stock 35 (11) 24 IFRS (1,872) 1 (1,871) Year ended 31 December 2006 (audited) Profit before tax Tax (Loss)/profit £'000 £'000 after tax £'000 Proforma UK GAAP * 669 (903) (234)IAS 12 Deferred tax on business combinations - 48 48IAS 17 Lease incentives 15 (5) 10IAS 19 Holiday pay accrual - - -IAS 38 Intangible assets amortisation (9) - (9)IAS 39 Interest receivable recognition (15) 4 (11)IAS 39 Interest hedging fair value 561 (168) 393IFRS 3 Business combinations: reversal of 779 - 779goodwill amortisationChange in accounting policy for stock 37 (11) 26 IFRS 2,037 (1,035) 1,002 * The UK GAAP applied in this appendix to prepare the proforma UK GAAP figuresabove is defined as that which was applicable to the Group's UK GAAP statutoryfinancial statements for the year ended 31 December 2006. 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