Macfarlane Grp. Regulatory News (MACF)

5 Sep 2006 07:03

Macfarlane Group PLC05 September 2006 5 September 2006 MACFARLANE GROUP'S INTERIM RESULTS TO 30 JUNE 2006 Group profit for the six months of £0.3m Loss on continuing operations before tax of £0.4m Sale of Hungarian subsidiary in January 2006 for £2.4 million generated gain of £0.9 million Sales growth of 3.4% from continuing operations All businesses have the potential to deliver performance improvements Net debt of £6.5m at June 2006 Group expects to be strongly cash positive from trading activities in secondhalf of 2006 Dividend intentions maintained Archie Hunter, Chairman of Macfarlane Group PLC today said:- "In March, 2006, I reported that after four years of losses, Macfarlane Grouphad returned to profit in the year to 31 December 2005 and that for the currentfull year's trading, I was anticipating a significant advance in profits. While the first quarter was much in line with our expectations, we have beendisappointed at the second quarter performance, which was weaker than projectedresulting in a small loss at the half year. This was because of - pressure on gross margins in packaging distribution;- slower than planned pick-up in new sales in labels; and- higher materials and operating costs in the USA. Management action is being taken in the second half of 2006 to address all ofthese issues as follows:- - in packaging distribution, the acceleration of the price recovery programme, targeted materials cost savings and reductions in overheads and headcount;- strengthening of the sales team within the labels business; and- implementing price recovery and cost savings programmes in the USA The Board expects that the full year trading profits from continuing operationswill show an improvement on last year's figures. The extent of the improvementwill be dependent on the pace at which we can secure the results of theseactions. A significant feature of attention in the second half of 2006 is the building ofthe foundations for sustainable growth in 2007 and beyond. The balance sheet continues to strengthen and the business's traditional strongcash generation in the second half of the year will further substantially reduceour debt. The Board is maintaining its intention, as reported in its statement in March2006, to make dividend payments at the rate of 2p per share, 1p for each theinterim and final dividends. The next dividend payment for the final dividend isexpected to be made in May 2007. The Group's objective is to get the recovery back on track and the Board isconfident that this will be achieved in the second half of 2006." Further information: Archie S. Hunter Chairman 0141 333 9666 Peter D. Atkinson Chief Executive 0141 333 9666 John Love Finance Director 0141 333 9666 The interim report will be sent to shareholders on 15 September 2006 and beavailable to members of the public at the Company's Registered Office, 21 NewtonPlace, Glasgow G3 7PY from 18 September 2006. Trading performance Packaging Distribution The Macfarlane Packaging Distribution business is the leading UK distributor ofa comprehensive range of packaging consumable products. In a highly fragmentedmarket, Macfarlane currently has a 10% market share and through its 15 RegionalDistribution Centres (RDCs) supplies customers on a local, regional and nationalbasis. The business enables customers to cost effectively package their productsby providing them with a comprehensive product range, single source supply,just-in-time delivery and tailored stock management programmes. In 2005 the Packaging Distribution business returned to profitability followingthree years of losses. Our objective in 2006 is to strengthen our position inthe UK market through organic growth and targeted acquisitions. In the first half of 2006 sales per day have grown by almost 6% compared to thesame period in 2005 with 10 RDCs showing growth in excess of 6%. The growth insales has been generated through new business wins and through increased productpenetration with existing customers. In addition we have improved our levels ofcustomer service to almost 95% as measured by On-Time-in-Full (OTIF) deliveries. The first half of 2006 has been a significant period for supplier priceincreases due to inflation in raw materials, energy and oil related costs. Thisdifficult pricing environment has caused delays in fully passing throughsupplier increases to customers, resulting in the gross margin being slightlylower than for the same period in 2005. Overhead costs have remained under control but we are continuing to make revenueinvestments in our web-based offering Packaging2U and to enhance the existingsales teams and to establish a New Business Development team, which will beoperational in the second half of 2006. Our priorities in the second half of 2006 are to: • Accelerate the sales growth momentum seen in the first half of the year; • Return the gross margin to previous levels; • Fully deploy the New Business Development team; and • Evaluate suitable potential acquisition opportunities that can enhance our capabilities and create profitable business growth. Manufacturing Operations Both Macfarlane Labels and Macfarlane Plastics businesses supply major FMCGcustomers primarily, but not exclusively, based in the UK and Ireland. Labelsoperate from two plants, Kilmarnock and Dublin, supplying design and productionof high quality self-adhesive and re-sealable labels for consumer packs.Plastics operate from Wicklow in Ireland designing and producinginjection-moulded closures and dispensers primarily used in the packaging ofpowdered consumer products. We operate packaging manufacturing operations from two UK sites - Grantham andWestbury, both of which manufacture custom-designed packaging solutions forcustomers looking for cost-effective methods of protecting their products instorage and transit. Our US operations in California and Mexico focusparticularly on foam-based packaging components particularly for use in theelectronics, healthcare and fresh produce sectors. In the first half of 2006, the Labels business experienced sales 11% down on2005 in the self-adhesive sector as it implemented the strategic transition fromsupplying the low margin own brand food-related product sector to the brandedsector. This transition programme will continue until the first half of 2007.Sales of re-sealable labels continued to progress and first half sales were 2%ahead of 2005. We are also experiencing initial encouraging responses frompotential re-sealable labels customers in the USA. Trading performance Manufacturing Operations (continued) The Plastics business experienced sales growth in the first half of 2006 almost5% ahead versus the first half of 2005. However high oil prices continue toimpact raw material costs and gross margins were slightly below those in theequivalent period in 2005. Our UK Packaging Manufacturing operations performedwell with sales 6% ahead of the first half in 2005, through both the developmentof existing customers, including increased sales won in conjunction with ourDistribution business and a number of good new business wins. First half sales in the US/Mexico were also 6% ahead of the same period lastyear, but there was some margin erosion as delays were experienced in fullypassing on supplier price increases and we incurred additional costs to resolveservice issues particularly in the Northern Californian market. Our new facilityin Tijuana is now operational, performing in line with expectations andreceiving encouraging support from existing and potential customers. Our priorities in the second half of 2006 are to: • Continue the strategic repositioning of the self-adhesive labels business; • Improve our penetration in the re-sealable labels market; • Maintain the good momentum in Plastics and UK Packaging Manufacturing; • Recover the margin erosion in Northern California; and • Fully benefit from the low cost operation now established in Tijuana. INDEPENDENT REVIEW REPORT TO MACFARLANE GROUP PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006, which comprises the consolidated incomestatement, the consolidated statement of recognised income and expense, theconsolidated balance sheet, the consolidated cash flow statement and relatednotes 1 to 12. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLPChartered AccountantsGlasgowUnited Kingdom5 September 2006 MACFARLANE GROUP PLC CONSOLIDATED INCOME STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months to Six months to Year to 30 June 2006 30 June 2005 31 December 2005 Note £000 £000 £000 £000 £000 £000Continuing operationsRevenue 3 64,403 62,310 127,247Cost of sales (43,940) (41,543) (85,122) ------- ------- -------Gross profit 20,463 20,767 42,125 Distribution expenses (3,248) (3,119) (6,521)Administrative (17,074) (16,886) (32,676)expenses beforevacant property costsVacant property costs 3 (190) (130) (252) ------- ------- ------- Administrative expenses (17,264) (17,016) (32,928) ------- ------- ------- (49) 632 2,676Gain on disposal of 3 - 1,335 1,300property ------- ------- -------Operating (loss)/ (49) 1,967 3,976profitInvestment income 59 - 103Finance costs 4 (428) (622) (1,189) ------- ------- ------- (Loss)/profit before (418) 1,345 2,890taxTax 5 (230) (56) (161) ------- ------- ------- (Loss)/profit for the 8 (648) 1,289 2,729period fromcontinuing operations Discontinued 7operationsProfit for the period 920 196 656from discontinued operations ------- ------- -------Profit for the period 8 272 1,485 3,385 ======= ======= ======= (Loss)/earnings per 8ordinary share of 25pFrom continuingoperationsBasic (0.57p) 1.15p 2.43p ======= ======= ======= Diluted (0.57p) 1.14p 2.41p ======= ======= ======= From continuing anddiscontinuedoperationsBasic 0.24p 1.32p 3.01p ======= ======= ======= Diluted 0.24p 1.31p 2.99p ======= ======= ======= MACFARLANE GROUP PLC CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months Six months Year to 31 to 30 June to 30 June December 2006 2005 2005 Note £000 £000 £000 Exchange difference on translation of (390) (341) 144foreign operationsActuarial gains/(losses) on defined 10 2,186 (150) (5,553)benefit pension schemesTax on items taken directly to equity (655) 45 1,666 --------- -------- --------- Net income/(expense) recognised directly 1,141 (446) (3,743)in equityProfit for the period 272 1,485 3,385 --------- -------- --------- Total recognised income and expense for 1,413 1,039 (358)the period ========= ======== ========= MACFARLANE GROUP PLC CONSOLIDATED BALANCE SHEET AT 30 JUNE 2006 (UNAUDITED) As at As at As at 31 30 June 30 June December 2006 2005 2005 £000 £000 £000Non-current assets NoteGoodwill 17,195 17,054 17,182Property, plant and equipment 13,360 15,943 14,608Investment property 1,701 1,701 1,701Other receivables 1,049 867 863Deferred tax asset 11 5,806 5,059 6,651 -------- -------- --------Total non-current assets 39,111 40,624 41,005 -------- -------- -------- Current assetsInventories 9,016 8,407 8,803Trade and other receivables 29,235 29,205 29,639Cash and cash equivalents 942 1,798 1,203 -------- -------- -------- Total current assets 39,193 39,410 39,645Non current assets classified as held for - - 1,925sale -------- -------- -------- 39,193 39,410 41,570 -------- -------- -------- -------- -------- -------- Total assets 78,304 80,034 82,575 ======== ======== ======== Current liabilitiesTrade and other payables 24,334 23,266 24,681Tax liabilities 726 653 796Obligations under finance leases 39 497 272Bank overdrafts and loans 7,368 10,244 7,830Liabilities directly associated with - - 485assets classified as held for sale -------- -------- -------- Total current liabilities 32,467 34,660 34,064 -------- -------- -------- Net current assets 6,726 4,750 5,581 -------- -------- -------- Non current liabilitiesRetirement benefit obligations 10 20,035 17,574 22,977Obligations under finance leases 75 120 95 -------- -------- -------- Total non-current liabilities 20,110 17,694 23,072 -------- -------- -------- -------- -------- -------- Total liabilities 52,577 52,354 57,136 ======== ======== ======== -------- -------- -------- Net assets 25,727 27,680 25,439 ======== ======== ======== EquityShare capital 28,755 28,755 28,755Capital redemption reserve - 2,952 -Share premium - 7,547 -Revaluation reserve 167 274 167Own shares held by employee share trust (1,406) (1,406) (1,406)Translation reserve (425) (521) (36)Retained earnings (1,364) (9,921) (2,041) -------- -------- -------- Total equity 12 25,727 27,680 25,439 ======== ======== ======== MACFARLANE GROUP PLC CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months Six months Year to to 30 June to 30 June 31 December Note 2006 2005 2005 £000 £000 £000 Net cash (outflow)/inflow from operating 9 (2,291) (1,090) 1,990activities -------- -------- -------- Investing activitiesInterest received - 13 119Disposal of subsidiary undertaking 7 2,174 - -Proceeds on disposal of property, plant 1,522 5,122 6,255and equipmentPurchases of property, plant and (417) (54) (869)equipment -------- -------- -------- Net cash from investing activities 3,279 5,081 5,505 -------- -------- -------- Financing activitiesDividends paid (1,125) - (844)Repayments of obligations under finance (253) (229) (479)leasesDecrease in bank overdrafts (462) (3,982) (6,396) -------- -------- -------- Net cash used in financing activities (1,840) (4,211) (7,719) -------- -------- -------- Net decrease in cash and cash (852) (220) (224)equivalents Cash and cash equivalents at beginning 1,794 2,018 2,018of period -------- -------- -------- Cash and cash equivalents at end of 942 1,798 1,794period ======== ======== ======== At 31 December 2005, cash balances of £591,000 were included within non-currentassets classified as held for sale. MACFARLANE GROUP PLC SIX MONTHS ENDED 30 JUNE 2006 NOTES TO THE CONSOLIDATED ACCOUNTS (UNAUDITED) 1. General information The information for the year ended 31 December 2005 does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985, but hasbeen extracted from the Group's statutory accounts which have been filed withthe Registrar of Companies. The auditors' report on these statutory accounts wasunqualified pursuant to Section 235 of the Companies Act 1985 and did notcontain a statement under sub-section 237 of that Act. 2. Basis of preparation These interim financial statements for the six months ended 30 June 2006 havebeen prepared on the basis of the accounting policies set out in the Group's2005 statutory accounts and which were approved by the Board of Directors on 5September 2006. The Group has not applied IAS 34 "Interim Financial Reporting"which is not mandatory for UK groups in the preparation of these interimfinancial statements. The financial statements have been prepared in accordancewith the recognition and measurement criteria of IFRS and the disclosurerequirements of the Listing Rules. The interim financial statements areunaudited but have been formally reviewed by the auditors and their report tothe Company is set out on page 4. 3. Segmental information The Group's activities are centred around two principal activities, with thosemanufacturing operations discontinued in the current and prior years disclosedseparately. (i) Packaging Distribution The distribution of packaging materials from a network of 15 RegionalDistribution Centres in the UK. (ii) Manufacturing Operations The manufacture and supply of self-adhesive and re-sealable labels andplastic-injection moulded products to a variety of FMCG customers in the UK andEurope and the manufacture, assembly and supply of timber, corrugated and foambased packaging materials in the UK and US/Mexico. (iii) Discontinued Operations The operations in Hungary were sold in January 2006 and are classified asdiscontinued in the financial statements for 2005. Revenue Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005Group segment £000 £000 £000 Packaging Distribution 38,491 36,117 73,915Manufacturing Operations 25,912 26,193 53,332 -------- -------- --------- Continuing operations 64,403 62,310 127,247Discontinued operations - 1,631 3,618 -------- -------- --------- 64,403 63,941 130,865 ======== ======== ========= 3. Segmental information (continued)Trading results Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005Group segment £000 £000 £000 Packaging Distribution (373) (362) 409Manufacturing Operations 324 994 2,267 -------- -------- --------- Continuing operations (49) 632 2,676Discontinued operations - 207 750 -------- -------- --------- Profit from continuing and discontinued (49) 839 3,426operationsProfit from discontinued operations - (207) (750) -------- -------- --------- Profit before property transactions (49) 632 2,676Gain on disposal of property - 1,335 1,300 -------- -------- --------- Operating (loss)/profit (49) 1,967 3,976 ======== ======== ========= Net assets 30 June 30 June 31 December 2006 2005 2005Group segment £000 £000 £000 Packaging Distribution 11,784 12,767 9,836Manufacturing Operations 13,943 14,913 14,163 -------- -------- --------- Continuing operations 25,727 27,680 23,999Discontinued operations - - 1,440 -------- -------- --------- Net assets 25,727 27,680 25,439 ======== ======== ========= Vacant property costs totalling £190,000 (June 2005 £130,000, December 2005£252,000) have been re-categorised separately within administrative expenses,rather than being offset against property disposal gains, which gives a moreappropriate classification within the business's activities. 4. Finance costs Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000 Interest on bank loans and overdrafts (281) (373) (698)Interest on obligations under finance leases (8) (26) (43)Interest cost of pension scheme liabilities (1,503) (1,371) (2,728) -------- -------- --------- Total interest expense (1,792) (1,770) (3,469)Expected return on pension scheme assets 1,364 1,148 2,280 -------- -------- --------- Net finance costs (428) (622) (1,189) ======== ======== ========= 5. Taxation Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000Current taxUK corporation tax - - (40)Overseas taxation (53) (56) (121)Prior year 17 - - -------- -------- --------- Current tax (36) (56) (161)Deferred tax (194) - - -------- -------- --------- Total (230) (56) (161) ======== ======== ========= Corporation tax has been provided for the period to 30 June 2006, reflecting theexpected tax rate for the full year on overseas earnings. Included within thedeferred tax charge of £194,000 is £227,000 in relation to the pension deficit.No tax has been provided on the UK results, reflecting the expected tax rate forthe full year.6. Dividends Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000Amounts recognised as distributions to equityholders in the periodInterim dividend in respect of the year ended 31 1,125 - 844December 2006 (1.00p per share) 2005 (0.75p per ======== ======== =========share) Dividends are not payable on shares held in the employee share trust. 7. Discontinued operations In January 2006, the Group's Hungarian subsidiary was sold. The decision to sellthe business was taken before 31 December 2005, consequently the component partsof the balance sheet sold in January 2006 were classified as non-current assetsand current liabilities held for sale at 31 December 2005. The tradingactivities of the business in Hungary have been disclosed as discontinuedoperations in these financial statements and the relevant information forcomparative periods is as follows:- Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000 Revenue - 1,631 3,618 -------- -------- --------- Profit from operations - 207 750Investment income - 27 32Gain on disposal of subsidiary undertaking 920 - - -------- -------- --------- Profit before tax 920 234 782Tax - (38) (126) -------- -------- --------- Post-tax profit from discontinued operations 920 196 656 ======== ======== ========= 7. Discontinued operations The amounts treated as disposed of in the period are as follows:- Six months to 30 June 2006 £000 £000 Cash consideration (net of attributable expenses) 2,174Deferred consideration 186 --------- Total consideration (net of attributable 2,360expenses) Assets classified as held for sale 1,925Liabilities directly associated with assets held for sale (485) 1,440 --------- Gain on disposal of subsidiary undertaking 920 ========= 8. (Loss)/earnings per share Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000EarningsEarnings from continuing and discontinued 272 1,485 3,385operations for the purposes of earnings per share -------- -------- ---------being net profit attributable to equity holdersof the parentAdjustments to exclude discontinued operations - (196) (656)Profit for the year from discontinued operations (920) - -Profit on disposal of discontinued operations -------- -------- --------- (Loss)/earnings from continuing operations for (648) 1,289 2,729the purposes of earnings per share being net ======== ======== =========(loss)/profit attributable to equity holders ofthe parent Weighted average number of ordinary shares in 115,019 115,019 115,019issue '000Own shares in Employee Share Ownership Trusts (2,491) (2,491) (2,491)'000 -------- -------- --------- Weighted average number of shares in issue for 112,528 112,528 112,528thepurposes of basic earnings per share '000Effect of dilutive potential ordinary shares due 970 620 602to share options -------- -------- --------- ======== ======== =========Weighted average number of shares in issue for 113,498 113,148 113,130thepurposes of diluted earnings per share '000 ======== ======== ========= 9. Notes to the cash flow statement Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000 Operating (loss)/profit Continuing operations (49) 1,967 3,976Discontinued operations - 207 750 -------- -------- --------- (Loss)/profit from operations (49) 2,174 4,726Adjustments for:Depreciation of property, plant and equipment 1,521 1,521 3,349Gain on disposal of property, plant and equipment (2) (1,382) (1,075) -------- -------- --------- Operating cash flows before movements in working 1,470 2,313 7,000capital (Increase)/decrease in inventories (213) 282 (379)(Increase)/decrease in receivables (913) 788 (1,981)Decrease in payables (1,296) (3,890) (1,233)Adjustment for pension scheme funding (736) - - -------- -------- --------- Cash generated by operations (1,688) (507) 3,407Income taxes paid (123) (38) (212)Interest paid (480) (545) (1,205) -------- -------- --------- Net cash (outflow)/inflow from operating (2,291) (1,090) 1,990activities ======== ======== ========= Cash and cash equivalents (which are presented as a single class of assets onthe face of the balance sheet) comprise cash at bank and other short-term highlyliquid investments with a maturity of three months or less. Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005Movement in net debt £000 £000 £000 Decrease in cash and cash equivalents in the (852) (220) (224)periodDecrease in bank overdrafts 462 3,982 6,396Cash flows from debt and lease financing 253 229 479 -------- -------- --------- Movement in net debt in the year (137) 3,991 6,651Opening net debt (6,403) (13,054) (13,054) -------- -------- --------- Closing net debt (6,540) (9,063) (6,403) ======== ======== ========= Net debt comprises:-Cash and cash equivalents 942 1,798 1,203Cash and cash equivalents in business held for - - 591resaleBank overdrafts and loans (7,368) (10,244) (7,830)Obligations under finance leases (114) (617) (367) -------- -------- --------- Closing net debt (6,540) (9,063) (6,403) ======== ======== ========= 10. Pension scheme creditor The figures below have been based on the results of the triennial actuarialvaluation as at 1 May 2005, updated to 30 June 2006, 31 December 2005 and 30June 2005. The assets in the scheme, the net liability position of the scheme ascalculated under IAS 19 and the principal assumptions were: 30 June 30 June 31 December 2006 2005 2005 £000 £000 £000 Fair value of assets 41,037 37,294 40,776Present value of scheme liabilities (61,072) (54,868) (63,753) -------- --------- -------- Pension scheme deficit (20,035) (17,574) (22,977)Deferred tax asset 6,011 5,272 6,893 -------- --------- -------- Pension scheme deficit net of related deferred (14,024) (12,302) (16,084)tax asset ======== ========= ======== The scheme's liabilities were calculated on the following bases as requiredunder IAS 19:Assumptions 30 June 2006 30 June 2005 31 December 2005 Discount rate 5.25% 5.00% 4.75%Rate of increase in salaries 3.00% 2.50% 2.75%Rate of increase in pensions in payment 3% or 5% 3% or 5% 3% or 5% for fixed for fixed for fixed increases increases increases or 2.75% for LPI or 2.75% for or 2.75% for LPI LPIInflation assumption 3.00% 2.50% 2.75% Movement in scheme deficit in the period Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000 At start of period (22,977) (17,424) (17,424)Current service cost (221) (152) (298)Employer contributions 1,116 375 746Net finance costs (139) (223) (448)Actuarial gain/(loss) in the period 2,186 (150) (5,553) -------- -------- --------- At end of period (20,035) (17,574) (22,977) ======== ======== ========= 10. Pension scheme creditor (continued) Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000Movement in assets during the periodAssets at start of period 40,776 35,121 35,121Expected return on assets 1,364 1,148 2,280Actual less expected return on assets (1,542) 1,433 4,093Employer contributions 1,116 375 746Employee contributions 110 111 231Benefits paid (787) (894) (1,695) -------- -------- --------- 41,037 37,294 40,776 ======== ======== =========Movement in liabilities during the periodLiabilities at start of period (63,753) (52,545) (52,545)Service costs (221) (152) (298)Interest costs (1,503) (1,371) (2,728)Employee contributions (110) (111) (231)Actuarial gain/(loss) on liabilities in the 3,728 (1,583) (9,646)periodBenefits paid 787 894 1,695 -------- -------- --------- (61,072) (54,868) (63,753) ======== ======== ========= 11. Deferred tax asset 30 June 30 June 31 December 2006 2005 2005 £000 £000 £000 Deferred tax asset on pension scheme deficit 6,893 5,227 5,227at start of period(Charge)/credit on actuarial movement in the (655) 45 1,666period applied through statement ofrecognised income and expense(Charge) through income statement based on (227) - -payments made to reduce deficit in the period -------- -------- --------- Deferred tax asset on pension scheme deficit 6,011 5,272 6,893(see note 10)Deferred tax liabilities on timing (205) (213) (242)differences -------- -------- --------- Net deferred tax asset 5,806 5,059 6,651 ======== ======== ========= 12. Reconciliation of movements in equity Six months Six Months Year to 31 to 30 June to 30 June December 2006 2005 2005 £000 £000 £000 Profit for the period 272 1,485 3,385Dividends to equity holders in the period (1,125) - (844)Exchange differences on translation of (390) (341) 144foreign operationsActuarial gains/(losses) on pension schemes 2,186 (150) (5,553)Taxation on items taken direct to equity (655) 45 1,666 -------- -------- --------- Movements in equity in the period 288 1,039 (1,202)Opening equity 25,439 26,641 26,641 -------- -------- --------- Closing equity 25,727 27,680 25,439 ======== ======== ========= This information is provided by RNS The company news service from the London Stock Exchange