Rm Regulatory News (RM.)

14 May 2007 07:01

RM PLC14 May 2007 14th May 2007 RM: Interim Results for the six months to 31 March 2007 RM, the leading supplier of information and communications technology (ICT) toUK education, reports continued good performance in the six months to 31 March2007. Financial headlines - Profit before tax: £5.6m (2006: £2.0m) - Profit before tax (before amortisation of acquisition related intangibles of £0.1m and exceptional pension credit of £3.5m): £2.2m (2006:£2.0m) - Profit is after expensing BSF bid costs in the period of £1.6m - Revenue: £115.6m (2006: £114.2m) - Dividend per share up 6% to 1.19p (2006: 1.12p) - Net funds less deferred consideration: £21.4m (2006: £21.6m) - Good progress in addressing pension deficit Operational headlines - Committed revenues exceed £300m; a three-fold increase since 2002 - Significant developments in each of our four focus areas: Learning Technologies Assessment and Data Services Education Management Systems Education Resources and Software - Further improvement in customer satisfaction score to 7.51 (2006 full year: 7.41) - BSF success; win rate ahead of target Commenting on the results, Tim Pearson, CEO of RM, said: "With further project wins in BSF, two major e-Assessment contracts andcontinued excellent growth in our Education Resources business, we've made greatprogress developing the business in the first half of 2007. "As always with RM, the first half results are not necessarily a good indicatorof full-year outcome; however, I'm pleased that we've made a good start to theyear. For the year as a whole, our expectations are unchanged and we're wellpositioned to make further progress across the business. "Education is a national and international priority. The opportunities availableto us are extremely exciting and, with an increasingly strong and broadportfolio of businesses, we're uniquely well placed to respond to them." For further information, please contact:Mike Greig/Phil Hemmings, RM plc 08450 700300Andrew Fenwick/Mark Antelme/Raphael Mazet, Brunswick 020 7404 5959 A briefing to analysts will take place at 9.30am on Monday 14 May 2007 at theLincoln Centre, Brunswick, 18 Lincoln's Inn Fields, London, WC2A 3ED. A liveaudio feed will be available to those analysts and shareholders unable to attendthis meeting in person. To access this facility, please dial +44 (0) 1452 541077. A copy of the presentation will be available at www.rm.com from 8.30am on 14 May2007. Results RM's business mix continues to improve, with an increasing proportion of theGroup's revenues coming from longer term contracts. Committed revenues (orderbook, deferred revenue and projects at preferred bidder stage) at the end of theperiod exceeded £300m, a three-fold increase since September 2002. Revenue inthe period was £115.6m (2006: £114.2m). Profit before tax was £5.6m (2006: £2.0m); this includes an exceptional creditof £3.5m related to a reduction in the Group's pension deficit. Profit beforetax before this exceptional credit and before amortisation of acquisitionrelated intangibles of £0.1m was up 11% to £2.2m (2006: £2.0m). Operating costs (before amortisation of acquisition related intangibles and theexceptional pension credit) were £30.1m (2006: £29.3m) and reflect increasedinvestment in business development and product development across the Group. Thecost of bidding for Building Schools for the Future (BSF) projects expensedduring the period was £1.6m (2006: £2.0m). Net funds less deferred consideration were £21.4m at the end of the period(2006: £21.6m). Significant cash outflows during the period included: a £2.0mpayment to the pension scheme (the first part of a special payment of £3.5m);and a £2.7m investment in a new building for TTS, the Group's specialisteducation resources business. The interim dividend will increase by 6% to 1.19p per share (2006: 1.12p pershare); the dividend is payable on 29 June 2007 to shareholders on the registerat 1 June 2007. Business context RM is wholly focused on serving the education market; we provide products andservices that help teachers to teach and learners to learn. Our strategy is togrow shareholder returns by developing businesses which build on and reinforceour three competitive advantages: education focus, technical ability andrelative scale. The Government's March 2007 Budget confirmed the importance of education in theUK, with real terms growth of 2.5% in public spending on education planned forthe next three government years. Education is also a key priority across theworld; OECD statistics show that, on average, between 1995 and 2003, educationspend increased as a percentage of GDP in the group of 24 countries for whichdata was available. The education market presents a wide range of opportunities for RM. In each ofour four focus areas - Learning Technologies, Assessment and Data Services,Education Management Systems, and Education Resources & Software - we have madegood progress in the first half of the year, both in the UK and increasingly ininternational markets. Learning Technologies BSF - the Government's £45 billion programme to renew all English secondaryschools - is the largest single opportunity available to RM. We are ahead of ourtarget of winning 30% of BSF projects: with preferred bidder appointments inKnowsley, Leeds and Lambeth in the first half, we have won five of the fourteenICT projects awarded so far. These five contracts represent future businessworth over £70m in the next seven years. We are currently bidding on a furthertwelve projects, with bidding for an additional seven projects expected to startin the second half. BSF bid costs expensed in the year as a whole are likely tobe £3.5m (2006 full year: £3.8m). Learning Platforms - which provide communication & collaboration, online contentdelivery and secure access to school information - are a natural evolution ofthe sophisticated ICT infrastructure software and services we already supply toschools. We are leading the way in this new area with the £37.5m Glow project, anational intranet for all learners in Scotland which we believe to be thelargest Learning Platform in the world and which entered phase 2 pilots duringthe period. Community Connect - the most widely used school network product in the UK - willnow be used in all state schools in Northern Ireland. It is being provided foruse in primary schools as part of Lot 6 of the C2K programme and was alreadyused in secondary schools as a result of an earlier phase of the C2K programme. Pupils at 20 schools in Newham routinely use RM-supplied computers at home, withencouraging educational results. The experience gained from this projectpositions us well for the Government's Computers for Pupils programme, which isintended to provide personal access to ICT equipment for the most disadvantagedpupils. In March, we were chosen as preferred supplier of computing devices andconnectivity services for the London Computers for Pupils programme, a contractwhich is likely to be worth approximately £5m. Assessment and Data Services We have made excellent progress in our assessment and data business, securinglong-term managed service agreements with two key partners: Cambridge Assessmentand the Assessment and Qualifications Alliance (AQA). These two partnerships,along with our work with other exam boards and professional associations,position us as a leader in the provision of e-Assessment services. Our £21m, five-year education process outsourcing contract with CambridgeAssessment confirms us as their on-screen marking partner, providing a completemarking service which includes: scanning and hosting of examination scripts;electronic distribution of exam scripts to individual markers; on-screenmarking; electronic return of marks; workflow; and improving control andmonitoring of the whole process. The Cambridge Assessment service is built on scoris(R), the third-generation ofRM's innovative e-Marking platform, which we are also using to provide servicesto other exam boards and other organisations (such as professional associations)that provide examinations and assessments. For AQA we are providing a range of computer-based test authoring and deliveryservices. The agreement will allow AQA to make its GCSE and A Levelqualifications increasingly available for students to take "on-screen" using anInternet-connected computer. The technology used to distribute tests to testcentres builds on the work we have done with the QCA on the groundbreaking KeyStage 3 ICT test. Education Management Systems Our IntegrisG2 school management software is now in use in 100 schools andrecent authority-wide project wins in Powys and Wakefield will substantiallyincrease the installed base. We introduced IntegrisG2 Finance, a schoolfinancial management system developed in partnership with CODA, at BETT 2007 inJanuary and already have a good pipeline for this product. The benefits of aWeb-based, centrally-hosted delivery model to Local Authorities are clear:reduced cost & complexity, saved time for teachers & administrators and easieraccess to better information. In Australia, CAZ Software, which we acquired just under a year ago, has beensuccessfully integrated. There are a range of interesting opportunities for RMin Australia, including state-wide contracts for both education managementsoftware and for Learning Platforms. Education Resources and Software The supply of specialist education resources for use in the classroom has beenan increasingly important part of our business since we acquired TTS inSeptember 2004. We have expanded the range of products TTS offers, principallyby the introduction of new catalogues (most notably addressing specialeducational needs and sports equipment), but also with the targeted acquisitionof MES last year. We have also extended our relationship with Tesco, securingthe contract to supply the Tesco Sport for Schools and Clubs scheme which willrun in Autumn 2007. TTS' revenues in FY2007 are on course to have grown by more than 80% since itjoined the RM Group. There is scope for significant further growth: organically,through acquisition, and internationally. Education software in the UK is a more interesting market than it has been atany time for the last five years, following the suspension of BBC jam in Marchby the BBC Trust (the regulator of the BBC). It will be some time before itbecomes clear what the BBC's future activities in the education area will be. Inthe meantime, we are reviewing our plans in this area, with the intention ofidentifying areas for renewed investment. There are also international opportunities for our education software products.We established RM Educational Software Inc. in the US in 2004 and now employ 15people there selling a range of products including Easiteach, Maths Alive andPodium Podcasting. Revenue doubled year-on-year (albeit from a small base) andwe expect this business to move into a profit during the second half. Customer satisfaction Our people's continuing commitment to delivering the highest levels of customersatisfaction is notable. In the first half, the customer satisfaction score -our most important non-financial measure - increased further to 7.51 (2006 fullyear: 7.41), putting us ahead of our target for the year. We have also receivedexternal recognition as the UK's best help desk by receiving the Help DeskInstitute's Support Team Excellence Award for 2007. Pensions The deficit on the Group's defined benefit pension scheme decreased by £9.8m inthe period (IAS 19 deficit March 2007: £8.9m; September 2006: £18.7m).Management actions accounted for £6.3m of this reduction and included: agreeingwith active scheme members a 5% cap on future pensionable salary increases,which reduced the deficit by £3.5m; paying the first £2.0m of a special pensionpayment of £3.5m; and the continuation of £1.7m pa additional cashcontributions. The balance of £3.5m resulted from market-related movements.Further details are provided in note 9 to the Accounts. Outlook Each year we note in our interim results statement that half-year performance isnot necessarily a good indicator of the outcome for the year as a whole;schools' purchasing patterns mean that the majority of revenues and profitoccurs in the second half of the Group's financial year. Nonetheless, we havemade a good start to the year and our expectations for 2007 are unchanged. Our new structure is allowing us to develop newer areas of the business, whilstat the same time retaining focus on the needs of our existing customers.Education Resources & Software and Assessment and Data Services are nowsignificant contributors to the overall success of RM, whilst EducationManagement Systems has established momentum in a conservative market. For themoment, BSF remains an investment activity with bid costs continuing to reducereported profit; however, we expect BSF to contribute positively to profit from2010/11. Education is a national and an international priority and RM is one of a veryfew companies dedicated to delivering educational improvement. The opportunitiesavailable to us are extremely exciting and with an increasingly strong and broadportfolio of businesses, RM is in good shape to respond to them. Consolidated income statement for the half-year ended 31 March 2007 £'000 Notes Half-year ended Half-year Year ended ended 30 31 March 31 March September 2007 2006 2006 2 Before Amortisation of Total amortisation of acquisition acquisition related related intangible intangible assets and assets and exceptional exceptional pension credit pension credit ____________________________________________________________________________________________Revenue 115,562 - 115,562 114,185 262,310Cost of sales (84,276) - (84,276) (83,719) (191,177)____________________________________________________________________________________________Gross profit 31,286 - 31,286 30,466 71,133Selling anddistributioncosts (16,570) - (16,570) (16,159) (33,166)Research anddevelopmentexpenses (8,097) - (8,097) (7,514) (14,918)Administrativeexpenses (5,436) - (5,436) (5,633) (10,193)Amortisationof acquisitionrelatedintangibleassets - (119) (119) - (53)Exceptionalpension credit 9 - 3,500 3,500 - -____________________________________________________________________________________________ (30,103) 3,381 (26,722) (29,306) (58,330)____________________________________________________________________________________________Profit fromoperations 1,183 3,381 4,564 1,160 12,803Investmentincome 1,007 - 1,007 893 1,876Finance costs - - - (86) (135)____________________________________________________________________________________________Profit beforetax 2,190 3,381 5,571 1,967 14,544Tax 3 (596) (1,014) (1,610) (544) (4,055)____________________________________________________________________________________________Profit for theperiodattributableto equityholders of theparent 1,594 2,367 3,961 1,423 10,489____________________________________________________________________________________________ Earnings perordinary share: 4Basic 1.7p 2.6p 4.3p 1.6p 11.6pDiluted 1.7p 2.6p 4.3p 1.6p 11.5p Proposeddividend pershare: 5Interim 1.19p 1.12p 1.12pFinal - - 4.05p All activities relate to continuing operations. Consolidated statement of recognised income and expensefor the half-year ended 31 March 2007 £'000 Note Half-year ended Year ended 31 March 31 March 30 September 2007 2006 2006_________________________________________________________________________________Exchange differences on translation offoreign operations 10 21 40 (48)Actuarial gains/(losses) on definedbenefit pension scheme 10 3,200 4,211 (3,914)Tax on items taken directly to equity 10 (913) (1,283) 1,287_________________________________________________________________________________Net income/(loss) recognised directlyin equity 2,308 2,968 (2,675)_________________________________________________________________________________Profit for the period 3,961 1,423 10,489_________________________________________________________________________________Total recognised income and expensefor the period attributable to equityholders of the parent 6,269 4,391 7,814_________________________________________________________________________________ Consolidated balance sheetas at 31 March 2007 £'000 Notes Half-year ended Year ended 31 March 31 March 30 September 2007 2006 2006 ________________________________________________________________________________Non-current assetsGoodwill 22,450 20,771 22,332Acquisition related intangible assets 1,001 - 1,002Other intangible assets 2,140 1,478 2,460Property, plant and equipment 22,119 26,134 22,483Deferred tax assets 5,076 5,504 7,394________________________________________________________________________________ 52,786 53,887 55,671Current assetsInventories 9,446 9,555 10,815Trade and other receivables 7 42,474 40,000 51,361Cash and cash equivalents 22,323 24,503 30,092________________________________________________________________________________ 74,243 74,058 92,268 Non-current assets held for sale 1,094 - 1,094________________________________________________________________________________Total assets 128,123 127,945 149,033________________________________________________________________________________ Current liabilitiesTrade and other payables 8 (68,796) (68,964) (78,871)Tax liabilities - (45) (1,416)________________________________________________________________________________ (68,796) (69,009) (80,287)________________________________________________________________________________Net current assets 5,447 5,049 11,981________________________________________________________________________________ Non-current liabilitiesRetirement benefit obligation 9 (8,950) (11,136) (18,707)Deferred tax liabilities (158) - (234)Other payables (3,681) (6,721) (6,793)Provisions (601) (970) (737)________________________________________________________________________________ (13,390) (18,827) (26,471)________________________________________________________________________________Total liabilities (82,186) (87,836) (106,758)________________________________________________________________________________________________________________________________________________________________Net assets 45,937 40,109 42,275________________________________________________________________________________ Equity attributable to equity holdersof the parent 10Share capital 1,851 1,836 1,836Share premium account 25,297 23,818 23,877Own shares (855) (654) (954)Capital redemption reserve 94 94 94Translation reserve 17 84 (4) Retained earnings 19,533 14,931 17,426________________________________________________________________________________Total equity 45,937 40,109 42,275________________________________________________________________________________ Consolidated cash flow statementfor the half-year ended 31 March 2007 £'000 Notes Half-year ended Year ended 31 March 31 March 30 September 2007 2006 2006________________________________________________________________________________Profit from operations 4,564 1,160 12,803Adjustments for:Loss/(gain) on derivatives 120 41 (14)Depreciation of property, plant andequipment 4,410 4,348 9,071Amortisation of acquisition related intangible assets 119 - 53Amortisation of other intangibleassets 520 282 342(Gain)/loss on disposal of property,plant and equipment (99) 125 77Decrease in provisions (136) - (233)Share-based payment charge 545 588 803Pension charge 2,100 885 2,358Pension contribution (2,631) (1,504) (3,554)Exceptional pension credit (3,500) - -________________________________________________________________________________Operating cash flows before movementsin working capital 6,012 5,925 21,706Decrease in inventories 1,369 2,312 1,211Decrease in receivables 8,395 14,260 3,035(Decrease)/increase in payables (12,390) (10,712) 585________________________________________________________________________________Cash generated by operations 3,386 11,785 26,537Additional special pensioncontribution 9 (2,000) - -Tax paid (1,729) (1,493) (3,110)Income from sale of finance lease debt 397 399 854Interest paid - (10) (36)________________________________________________________________________________Net cash inflow from operatingactivities 54 10,681 24,245 Investing activitiesInterest received 515 376 784Proceeds on disposal of property,plant and equipment 518 425 743Purchases of property, plant andequipment (4,465) (6,392) (8,903)Purchases of other intangible assets (558) (47) (803)Acquisition of subsidiaries, net of cash acquired - - (2,281)________________________________________________________________________________Net cash used in investing activities (3,990) (5,638) (10,460) Financing activitiesDividends paid 5 (3,707) (3,399) (4,473)Proceeds from share capital issue, netof share issue costs 927 797 831Repayment of borrowings assumed inacquisitions - - (322)Purchase of own shares (416) (516) (816)Share buy backs - - (65)Repayment of loan notes and deferredconsideration (642) (367) (1,790)________________________________________________________________________________Net cash used in financing activities (3,838) (3,485) (6,635)________________________________________________________________________________Net (decrease)/increase in cash andcash equivalents (7,774) 1,558 7,150________________________________________________________________________________ Cash and cash equivalents at thebeginning of period 30,092 22,942 22,942Effect of foreign exchange ratechanges 5 3 -________________________________________________________________________________Cash and cash equivalents at the endof period 6 22,323 24,503 30,092 Notes to the interim financial report 1. General information RM plc is a company incorporated in the United Kingdom. The unauditedconsolidated interim financial statements as at 31 March 2007 and for the sixmonths then ended comprise those of the Company and its subsidiaries (togetherreferred to as the "Group"). The information for the year ended 30 September 2006 does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statutory accounts for that year has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was not qualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985. Theconsolidated financial statements of the Group as at and for the year ended 30September 2006 are available upon request from the Company's registered officeor at www.rm.com/investors The consolidated interim financial statements have been prepared in accordancewith International Financial Reporting Standards (IFRS). The Group has chosennot to apply IAS 34 "Interim Financial Reporting" in the preparation of theseconsolidated interim financial statements. The accounting policies applied bythe Group in the consolidated interim financial statements are the same as thoseapplied by the Group in its consolidated financial statements for the year ended30 September 2006. The preparation of consolidated interim financial statementsrequires management to make judgements, estimates and assumptions that affectthe application of accounting policies and the reported amounts of assets andliabilities, income and expense. Actual results may differ from these estimates.In preparing these consolidated interim financial statements, the significantjudgements made by management in applying the Group's accounting policies andthe key sources of estimation uncertainty were the same as those that applied tothe consolidated financial statements as at and for the year ended 30 September2006. This interim report was approved by the Board of Directors on 14 May 2007. 2. Income statement presentation The income statement for the half-year ended 31 March 2007 has been presented inthree columns. This presentation is intended to give a better guide to businessperformance by separately identifying the amortisation charge relating toacquisition related intangible assets and, for the half-year, the exceptionalpension credit. The columns extend down the income statement to allow the taxand earnings per share impacts of these transactions to be understood. 3. Tax Corporation tax for the interim period is charged at the expected effective taxrate for the full financial year, based upon profit before acquisition relatedintangible asset amortisation and the exceptional pension credit andincorporates both current and deferred taxation: £'000 Half-year ended Half-year Year ended ended 31 March 31 March 30 September 2007 2006 2006 Before Amortisation of Total amortisation of acquisition acquisition related related intangible intangible assets and assets and exceptional exceptional pension credit pension credit ________________________________________________________________________________Profit before tax 2,190 3,381 5,571 1,967 14,597*Tax charge 596 1,014 1,610 (544) (4,055)________________________________________________________________________________Effective rate 27.2% 30.0% 28.9% 27.6% 27.8% * before £53,000 amortisation of acquisition related intangibles. 4. Earnings per ordinary share The calculation of the basic and diluted earnings per ordinary share is shownbelow. As explained in note 2, adjusted diluted earnings per share have alsobeen presented which remove the impact of the exceptional pension credit andalso amortisation of acquisition related intangible assets. Half-year ended Half-year ended Year ended 1 March 2007 31 March 2006 30 September 2006 Profit Number Pence Profit Number Pence Profit Number Pence after of per after of per after of per tax shares share tax shares share tax shares share £'000 '000 £'000 '000 £'000 '000_______________________________________________________________________________________________________________Basic earnings per ordinary share 3,961 91,747 4.3 1,423 90,820 1.6 10,489 90,755 11.6 Effect of dilutivepotential ordinary shares: share options - 518 - - 560 - - 560 (0.1) _______________________________________________________________________________________________________________Diluted earnings perordinary share 3,961 92,265 4.3 1,423 91,380 1.6 10,489 91,315 11.5Exceptional pensioncredit andamortisation of acquisition relatedintangible assets (2,367) - (2.6) - - - 53 - -_______________________________________________________________________________________________________________Diluted earnings perordinary share adjustedfor exceptional pensioncredit and amortisationof acquisition relatedintangible assets 1,594 92,265 1.7 1,423 91,380 1.6 10,542 91,315 11.5 5. Dividends Amounts recognised as distributions to equity holders in the period: £'000 Half-year ended Year ended 31 March 31 March 30 September 2007 2006 2006________________________________________________________________________________Interim dividend for the half-year ended31 March 2006 of 1.12p per share - - 1,022Final dividend for the year ended 30September 2006 of 4.05p (2005: 3.80p) pershare 3,688 3,399 3,399________________________________________________________________________________ 3,688 3,399 4,421 The proposed interim dividend of 1.19p per share was approved by the Board on 11May 2007. The expected cost of £1,094,000 has not been included as a liabilityat 31 March 2007. 6. Notes to the cash flow statement 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. Net funds £'000 Year ended Cash flow Non-cash Half-year ended 30 September movements 31 March 2006 2007________________________________________________________________________________Cash and cashequivalents 30,092 (7,774) 5 22,323Loan notes (884) - - (884)________________________________________________________________________________Net funds 29,208 (7,774) 5 21,439Deferred consideration (703) 642 - (61)________________________________________________________________________________ 28,505 (7,132) 5 21,378 7. Trade and other receivables £'000 Half-year ended Year ended 31 March 31 March 30 September 2007 2006 2006________________________________________________________________________________Trade receivables 33,646 29,707 41,863Long-term contract balances 1,655 5,115 5,490Other receivables 494 750 725Prepayments and accrued income 6,679 4,428 3,283________________________________________________________________________________ 42,474 40,000 51,361 8. Trade and other payables £'000 Half-year ended Year ended 31 March 31 March 30 September 2007 2006 2006________________________________________________________________________________Trade payables 15,249 16,914 20,544Other taxation and social security 5,450 5,370 9,682Other payables - deferred consideration 61 1,000 703Other payables - other 6,053 3,915 1,624Accruals 21,535 21,480 24,527Amounts due from long term contractcustomers - - 43Deferred income 19,564 18,353 20,864Loan notes 884 1,932 884________________________________________________________________________________ 68,796 68,964 78,871 9. Pensions As described in the report and accounts for the year ended 30 September 2006,the Group conducted a consultation exercise with active members of the Group'sdefined benefit pension scheme. Following conclusion of the exercise in January2007, members voted for the introduction of a 5% cap on pensionable salaryinflation which has been implemented from February 2007. The impact of this is areduction of £3.5m in the pension scheme deficit, which has been reflected as anexceptional credit in the income statement, in line with IAS 19 EmployeeBenefits. In the half-years ended 31 March 2007 and 2006 the deficit on the Group'sdefined benefit pension scheme has been rolled forward from the respective prioryear end. The roll forward includes actual investment returns for the periodsand market derived discount rates on liabilities of 5.40% at 31 March 2007(5.05% at 31 March 2006 and 30 September 2006) and market derived inflationassumptions. Mortality assumptions have not been updated at the half-years. Theroll forward includes the impact of the pensionable salary inflation cap. Thelatest triennial valuation of the scheme took place as at 31 May 2006 and wasused as a basis for the 30 September 2006 and 31 March 2007 IAS 19 valuations. Additionally, the Group paid a special contribution of £2.0m into the pensionscheme in March 2007 and has agreed to pay an additional special contribution of£1.5m into the scheme later in calendar year 2007. The £1.5m has not beenrecorded against the scheme deficit at 31 March 2007. These cash payments are inaddition to the Group's current service contributions and £1.7m per annumdeficit catch up payments agreed with the scheme's trustees in 2006. Following the above actions and updating to reflect current market conditions,the deficit in the scheme has fallen by £9.75m to £8.95m (September 2006 £18.7m)with the related deferred tax asset also falling. This represents significantprogress in stabilising the financial position of the scheme and limiting riskto the Group. 10. Reconciliation of shareholders' equity £'000 Half-year ended Year ended 31 March 30 September 2007 2006 2006________________________________________________________________________________ Equity brought forward 42,275 38,248 38,248Profit for the period 3,961 1,423 10,489Exchange differences on translation of foreignoperations 21 40 (48)Actuarial gains/(losses) on retirement benefitscheme 3,200 4,211 (3,914)Tax (charge)/credit on items taken directly toequity (913) (1,283) 1,287Share-based payment transactions 545 588 803Dividends paid (3,688) (3,399) (4,421)Other reserve movements 536 281 (169)________________________________________________________________________________Equity carried forward 45,937 40,109 42,275 This information is provided by RNS The company news service from the London Stock Exchange