STU.L Regulatory News (STU)

29 Nov 2007 07:01

Findel PLC29 November 2007 29 November 2007 Findel plc ("Findel" or "the Group") Interim Results for the six months ended 30th September 2007 Findel plc, one of the UK's leading Home Shopping and Educational Suppliesbusinesses, today announces its Interim Results for the six months ended 30thSeptember 2007. Business Highlights • Record first half of year in sales and profit • Home Shopping Internet sales account for over 50% of divisional sales • Strong performance from the established Home Shopping credit business • Development of Findel Direct, benefiting from successful integration of acquired businesses • Educational Supplies successful focus on improved service and product innovation • Strong sales performance continues in first 34 weeks Financial Highlights • Sales up 33% to £298.3m (2006: £224.9m) • Benchmark* Profit before Tax up 107% to £8.5m (2006: £4.1m) • Profit before Tax of £2.5m (2006: loss of £23.0m) • Group benchmark * operating margins strengthened to 6.5% (2006: 5.4%) • Benchmark* earnings per share up 139% to 8.6p (2006: 3.6p) • Earnings per share of 3.5p (2006: loss per share of 19.5p) • Interim dividend up 12% at 4.70p (2006: 4.20p) • Renewed five year banking facilities on improved terms Keith Chapman, Chairman of Findel plc said: "We are pleased with the Group's strong first half, achieving record sales andprofit. Progress has been driven in Home Shopping with a strong performancefrom our long established credit business and through the integration and growthof Findel Direct. We have also seen excellent growth of sales via the internet,which now account for over 50% of divisional sales. In Educational Supplies wehave focussed on doing the basics right and achieved growth despite challengingmarket conditions, and in Healthcare we have maximised the revenue from ourexisting contracts. I believe that the recent acquisitions we have made have exciting prospects aspart of the larger Findel Group and will deliver material shareholder value. Ifirmly believe that the Group is in the right place at the right time. We haveno exposure to the high street and our home shopping retail business is balancedby a blue chip educational business. We have a strong and growing creditbusiness, we have developed an exciting cash with order business and we haveestablished a major, growing, presence on the internet. We continue to beexcited by the prospects for the Group and I look forward to a successfuloutcome to the year." - Ends - For further information, please contact: Keith Chapman, Chairman Today: +44 (0) 207 831 3113Patrick Jolly, Chief Executive Thereafter: +44 (0) 1943 864686Chris Hinton, Finance DirectorFindel plc Jonathon Brill/Billy Clegg/Caroline Stewart T: +44 (0) 207 831 3113Financial Dynamics Chairman's Statement The Board is pleased to report today record sales and benchmark* profit for thefirst six months of the financial year, while having delivered on our planswithin our core markets. Progress has been driven in Home Shopping with a strongperformance from our long established credit business, through the integrationand growth of Findel Direct and with the growth of sales via the internet, whichnow account for over 50% of divisional sales. In Educational Supplies we havefocussed on doing the basics right and achieved growth despite challengingmarket conditions, and in Healthcare we maximised the revenue from our existingcontracts. Financial Results In the period, sales increased by 33% to £298.3m (2006: £224.9m) and benchmark*operating profit increased by 60% to £19.3m (2006: £12.1m). Benchmark* operatingmargins improved to 6.5% (2006: 5.4%) reflecting the more efficient utilisationof Group assets following the integration of last year's acquisitions. The Groupachieved a benchmark* profit before tax in the first six months of £8.5m (2006:£4.1m), a 107% increase on the same period last year. The statutory result forthe period was a profit before taxation of £2.5m (2006: loss of £23.0m). Theprincipal difference between the benchmark* and statutory result is exceptionalcosts (£4.8m) which related to the previously reported integration ofacquisitions made in the last financial year together with amortisation ofintangible assets (£1.1m). Net finance costs rose to £10.9m (2006: £7.9m)reflecting increased borrowings to finance acquisitions and an increase inoverall lending rates. On 2nd October 2007 we announced that we had renewed our revolving creditfacility for the next five years on much improved terms both in respect ofinterest margins and covenants. The facility increased from £200m to £250m andwas oversubscribed by participating banks. In addition to this funding, we operate a securitisation programme of £105m.This facility operates in a sector of the market which has no exposure to the USsub-prime mortgage market and has an equal standby liquidity facility throughHSBC. Dividend The directors have declared an interim dividend of 4.70p (2006: 4.20p), anincrease of 12% over last year. The interim dividend will be paid on 11thJanuary 2008 to shareholders on the register on 14th December 2007, with anex-dividend date of 12th December 2007. Trading Home Shopping Divisional sales in the first half were 59% higher at £176.5m (2006: £111.3m).Like for like sales were 9% ahead of the same period last year. Benchmark*operating profit increased by 51% to £8.6m (2006: £5.7m). Historically, at thistime most of our Christmas sales have been booked and I am pleased to reportthat product sales in our long established credit business in the first 34 weeksto 23rd November 2007 are 7% ahead of the same period last year. The division now has three main components: credit, cash with order and networkmarketing which all share a common infrastructure. The credit business has again turned in a very strong performance. Product salesare up 11% with overall sales up 9% as financial services income follows productsales. Customer retention rates remain strong at 70%. Bad debt remains undercontrol and within budget. Over 35% of orders are now taken over the internet.The customer base for our credit business now stands at over 1.53m. These results have been achieved against a background of significant integrationactivity in the whole division. We were keen to act quickly to achieve thesynergies we had identified in order to fully benefit from them in the financialyear 2008/9. This integration process has been completed to plan and we are nowseeing the ongoing benefits. The biggest challenge during the integrationprocess was Kleeneze. We acquired the business at a time when its sales anddistributor numbers were falling through underinvestment and poor service. Weimmediately conducted a thorough review of its cost structure, not only toaddress the fall in revenues but also to position it for future growth. Ourreview identified tremendous potential in this business. In order to realisethis we had to move the entire operation from Bristol to Accrington. With veryfew key staff prepared to make the move and a demanding customer base who wantedresults from us immediately it was always going to be a difficult exercise. Thatwe achieved it in time is a credit to our entire management team and thebusiness is now positioned for growth. Findel Direct has a dedicated management team who control all our cash withorder businesses and are responsible for the 1m customers who have activelytraded in that business this year. However although the majority of commonfunctions have been centralised, brand integrity remains firmly with customerfacing management. Among the brands Findel Direct controls: Letterbox, IWOOT, Kitbag, Cotswold andConfetti, all attract the majority of their sales on the internet. Indeed, as awhole, our Home Shopping Division now attracts over 50% of its sales over theinternet. In October the division had over 5.7m visits to our sites and wasranked in the top 10 online UK retailers. In recruitment, marketing, brand and product promotion, we are planning to makemuch greater use of the internet. We now have over 2.5m customers in the HomeShopping division and a very strong product offering that we can now reallypromote. We have an exciting opportunity for cross promotion between brands andin due course we intend utilising our financial services expertise with thiscustomer base. Further indication of our progress on the internet is being demonstrated byKitbag. Kitbag is already the definitive internet site for football but weintend to develop it as a strong generic brand for all sport. To that end,Kitbag has announced two new contracts today to provide e-commerce sites. Thefirst is with the English Cricket Board and the second with Formula One. Bothorganisations will have online stores designed, developed and managed by Kitbag.Formula One in particular has significant global on-line traffic with over 20munique visits a year to its web site. Healthcare Divisional sales in the first half were 7% higher at £26.8m (2006: £25.1m).There was a small operating loss of £0.4m (2006: profit of £1.1m) reflecting anumber of one off charges. In the first 34 weeks to 23rd November 2007 sales are8% ahead of the same period last year. The largest market in our Healthcare division is running Integrated CommunityEquipment Supply contracts for Primary Care Trusts ("PCTs") and localauthorities. This is a market that is likely to undergo some change in the shortto medium term as the Government is undertaking a review of the way in whichpatients are provided with support and services on hospital discharge. Two pilotprojects are being run in Cheshire and Oldham and will be completed in the firstquarter of 2008. We are closely involved with the Government sponsored workingparties and are actively assisting them with a commercial view of how theindustry should operate in the future. Against this background no new tenders are being placed and so this year ourfocus is on maximising the revenue from our existing contracts through increasedsales and contract extensions. To that end we have successfully negotiatedcontract extensions with a value of over £27m with South Gloucestershire,Dorset, Lincolnshire, Warwickshire and Surrey. Our wheelchair services business, NRS Mobility Care, is performing ahead of ourexpectations and has recently won a contract to provide services to Heywood,Middleton and Rochdale PCTs with a number of further tender opportunities in thepipeline. The Primary Care business has been re-launched with a new catalogue and fullytransactional website. Product innovation is a key focus in this business and wewere pleased to have been recently awarded first prize in the Independent LivingDesign Award for 2007. Educational Supplies Divisional sales in the first half were 8% higher at £95.1m (2006: £88.4m).Benchmark* operating profit increased by 129% to £11.2m (2006: £4.9m). Saleshave continued this upward trend and in the first 34 weeks to 23rd November 2007are 7% ahead of the same period last year. This is a very strong performance in a flat trading environment where TheBritish Educational Supplies Association reports that over 50% of its membersare suffering falling sales. Our strategy, which focuses on product innovation and the provision of premiumservice for our customers, is paying dividends and we are gaining profitablemarket share. The main drivers of growth have been the curricular brands withinprimary schools and all sports offerings, the very areas where the governmenthas recently announced substantial additional funding. With our strong brandrepresentation in these areas we confidently predict continued growth, inparticular in sport which will continue to be a key focus in the run up to the2012 Olympics. Online sales for the Education division have grown to £5m, a strong improvementbut still a modest proportion of the division's total. We continue to invest inthis efficient method which we believe will be central to the provision ofEducational supplies in the future. Internationally we have continued to make progress and have secured businesswith a number of foreign Ministries of Education, both on turnkey solutionsworking with local suppliers on sustainable projects, and on product specificbids fulfilling an international requirement. Three new contracts have beenawarded which together will account for over £16m of sales to be delivered overthe next 3 years. Following the extensive reorganisation 18 months ago, this division has focussedon the basics of innovative product development and the provision of goodreliable service. An indication of our success with this strategy is thatservice levels today are consistently over 95%, which is optimal for a businessof this nature. In a market where funding remains difficult it is essentialthat we develop the right product, we produce it at a competitive price and weprovide all round top quality service. By supporting our industry leading brandsin this way we will continue to profitably grow market share. It is also worthremembering that we are the largest operator by far in a highly fragmentedmarket and as such the natural consolidator within that market. As we havedemonstrated in the past we will seek to boost organic growth with acquisitionswhere we can see value added opportunities for our shareholders. Prospects I believe that the acquisitions that we have made over the last 12 months willsignificantly enhance shareholder value. I am confident that we bought well. Weacquired fundamentally good businesses some of which were in distressedsituations, but all of them are businesses that will benefit from being in theFindel portfolio and add to strong organic growth. I firmly believe that Findel is in the right place at the right time. We have noexposure to the high street. Home shopping retail is balanced by a blue chipeducational business. We have a strong and growing credit business, we havedeveloped an exciting cash with order business and we have a major presence onthe internet. We continue to be excited by the prospects for the Group and lookforward to a successful outcome for the full year. K ChapmanChairman29 November 2007 * Benchmark results are defined as being before the results of businesses soldor terminated in the period, amortisation of acquired intangibles, netrestructuring charges and other one off exceptional items, profits and losses onsale of investments, profits and losses on sales of businesses, share optionexpenses and net fair value remeasurement adjustments to financial instruments. Condensed Financial Statements Condensed Income Statement Notes 6 months to 6 months to Year to 30 Sept 2007 30 Sept 2006 31 March 2007 Unaudited Unaudited Audited £000 £000 £000 Revenue 3From ongoing businesses 298,295 224,855 555,424From terminated businesses - 3,842 31,354 298,295 228,697 586,778 Cost of sales (154,284) (124,356) (304,067) Gross profit 144,011 104,341 282,711 Trading costs (124,624) (94,929) (216,446)Share of result of associate (88) 315 990Amortisation of intangible assets (1,133) (519) (1,637)Negative goodwill arising on 246 - 7,787acquisitions in the periodExceptional items 4 (4,833) (7,851) (18,775)Loss on disposal of businesses - (16,350) (19,496)Share-based payment expense (197) (113) (309) Operating profit/(loss) 3 13,382 (15,106) 34,825Finance income 3,292 3,045 6,966Finance costs (14,154) (10,930) (24,332) Profit/(loss) before taxBenchmark 8,476 4,107 56,038Losses from terminated businesses - (2,162) (6,066)Amortisation of intangible assets (1,133) (519) (1,637)Negative goodwill arising on 246 - 7,787acquisitions in the periodExceptional items (4,833) (7,851) (18,775)Loss on disposal of businesses - (16,350) (19,496)Share-based payment expense (197) (113) (309)Derivative remeasurements (39) (103) (83)Total profit/(loss) before tax 2,520 (22,991) 17,459 Profit/(loss) before tax 2,520 (22,991) 17,459Income tax credit/(expense) 5 428 6,536 (1,393) Profit/(loss) for the period 2,948 (16,455) 16,066Attributable to:Equity holders of the parent 2,948 (16,354) 16,198Minority interest - (101) (132) 2,948 (16,455) 16,066 Earnings per share 6Basic 3.52p (19.53)p 19.33pBenchmark 8.56p 3.60p 50.17pDiluted 3.46p (19.28)p 19.09p All results relate to continuing operations Condensed Statement of Recognised Income and Expense 6 months to 6 months to 30 Year to 30 Sept 2007 Sept 2006 31 March 2007 Unaudited Unaudited Audited £000 £000 £000 Currency translation differences (197) (391) (663) Net expense recognised directly in equity (197) (391) (663)Profit/(loss) for the period 2,948 (16,455) 16,066 Total recognised income and expense for the period 2,751 (16,846) 15,403 Attributable to:Equity holders of the parent 2,751 (16,745) 15,535Minority interest - (101) (132) 2,751 (16,846) 15,403 Condensed Balance Sheet Notes 30 Sept 2007 30 Sept 2006 31 March 2007 Unaudited Unaudited Audited £000 £000 £000 (Restated)ASSETSNon-current assetsGoodwill 66,152 51,329 65,290Other intangible assets 78,760 40,935 78,207Property, plant and equipment 78,794 64,293 70,451Investments in associates 6,224 10,639 6,312 229,930 167,196 220,260 Current assetsInventories 126,225 94,587 102,008Trade and other receivables 289,788 259,325 247,566Current tax recoverable - 1,238 -Derivative financial instruments 309 127 274Cash and cash equivalents 3,608 14,275 7,624 419,930 369,552 357,472 Assets held for resale 10 3,000 1,100 - Total assets 652,860 537,848 577,732 LIABILITIESCurrent liabilitiesTrade and other payables 132,146 116,654 97,837Current tax liabilities 4,918 - 2,227Obligations under finance leases 513 533 522Bank overdrafts and loans 46,637 55,446 33,000Derivative financial instruments 202 - 127Provisions - - 1,681 184,416 172,633 135,394 Non-current liabilitiesBank loans 327,402 244,570 289,211Obligations under finance leases 212 725 464Deferred tax liabilities 14,980 9,215 15,009Retirement benefit obligation 13,209 16,861 14,876 355,803 271,371 319,560 Total liabilities 540,219 444,004 454,954 NET ASSETS 112,641 93,844 122,778 EQUITYCapital and reservesShare capital 4,250 4,248 4,250Capital reserves 51,043 50,591 50,846Hedging and translation reserves (602) (132) (404)Retained earnings 57,950 39,056 68,086 Equity attributable to equity holders 112,641 93,763 122,778of the parentMinority interest - 81 - Total equity 112,641 93,844 122,778 Condensed Cash Flow Statement 6 months to 6 months to 30 Year to 30 Sept 2007 Sept 2006 31 March 2007 Unaudited Unaudited Audited £000 £000 £000 Operating activitiesOperating profit/(loss) 13,382 (15,106) 34,825 Adjustments for:Depreciation of property, plant and equipment 4,776 4,114 8,384Amortisation of intangible assets 1,133 519 1,637Negative goodwill arising on acquisitions in the (246) - (7,787)periodLoss on disposal of businesses - 16,350 19,496Share-based payment expense 197 113 309Gain on disposal of property, plant and equipment (58) (1,198) (1,188)Pension contributions less income statement charge (1,410) (1,022) (2,843)Share of result of associate 88 (315) (990) Operating cash flows before movements in working 17,862 3,455 51,843capital(Increase) in inventories (22,711) (9,308) (4,191)(Increase) in receivables (41,281) (25,661) (6,483)Increase/(decrease) in payables 31,525 36,437 (6,229) Cash generated from operations (14,605) 4,923 34,940Income taxes recovered/(paid) 2,527 1,685 (1,729)Interest paid (12,629) (7,614) (15,751) Net cash from operating activities (24,707) (1,006) 17,460 Investing activitiesInterest received 364 640 740Proceeds on disposal of property, plant and 116 47 2,183equipmentPurchases of property, plant and equipment (10,966) (5,952) (14,131)Acquisition of subsidiaries (7,273) (6,336) (43,221) Net cash used in investing activities (17,759) (11,601) (54,429) Financing activitiesDividends paid (13,083) (11,904) (15,425)Repayments of obligations under finance leases (261) (280) (518)Proceeds on issue of shares - 102 165New bank loans raised 31,887 43,000 54,472Movement on securitisation loan 3,191 398 5,039 Net cash from financing activities 21,734 31,316 43,733 Net (decrease)/increase in cash and cash (20,732) 18,709 6,764equivalentsCash and cash equivalents at the beginning of the (904) (6,798) (6,798)periodEffect of foreign exchange rate changes (34) (82) (870) Cash and cash equivalents at the end of the period (21,670) 11,829 (904) Notes to the condensed financial statements 1. General Information The condensed financial statements have been approved by the board, but have notbeen reviewed or audited by the auditors. The financial information for the year ended 31 March 2007 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 a statement under either s237(2) or s237(3) of the Companies Act 1985. Risks and Uncertainties There are a number of risks and uncertainties that could impact the performanceof the Group over the remaining six months of the financial year. These includethe following: The Home Shopping division is significantly impacted by movements in interestrates and the state of the wider consumer credit market. Any adverse movementin interest rates could have a consequent adverse impact on the performance ofthe Home Shopping division. The Home Shopping industry is witnessing increased penetration of the market byinternet based businesses challenging the historical dominance of cataloguebased home shopping businesses. The Home Shopping division has responded tothis challenge and is fully e-enabled, leaving it well placed to respond. The Educational Supplies division is influenced by government spending onEducation. Any downward movement in government spending on Education mayadversely impact the performance of the Educational Supplies division. The Healthcare business is reliant on a small number of contracts forsubstantially all of its revenues. There can be no guarantee that each of thecontracts will be successfully renewed when the current contract terms expire.However, the business is the market leader within the industry, and thereby itis well placed to renew its current contracts and successfully bid for any newcontracts that are put to tender. Finally, each of the Group's trading divisions are dependent on third partycarriers to distribute the Group's products. The Group employs several carriersso as to spread this risk such that over dependence on a single carrier isavoided to the maximum extent possible. The Group has a comprehensive system of risk management installed within allparts of its business to mitigate these risks as far as is possible. Business Seasonality Sales within the Home Shopping business segment are more heavily weightedtowards the second half of the financial year, with approximately 60%-65% ofannual sales occurring during that period. As described within the Chairman'sstatement, Home Shopping sales have increased by 59% during the first half ofthe financial year. 2. Accounting Policies The condensed financial statements have been prepared using accounting policiesconsistent with International Financial Reporting Standards ("IFRS") and inaccordance with IAS 34 "Interim Financial Reporting". The same accounting policies, presentation and methods of computation arefollowed in the preparation of the condensed financial statements as wereapplied in the Group's latest annual audited financial statements. Change in accounting policies In the current financial year, the Group will adopt IFRS 7 "FinancialInstruments: Disclosures" for the first time. As IFRS 7 is a disclosurestandard, there is no impact of that change in accounting policy on thehalf-yearly financial report. Full details of the change will be disclosed inour annual report for the year ended 31 March 2008. 3. Segmental analysis For management purposes, the Group is currently organised into three operatingdivisions: Home Shopping, Educational Supplies and Healthcare. These divisionsare the basis on which the Group reports its primary segment information. Previously, the Group reported a fourth business segment: the Services segment.Following the disposal and closure of the larger part of the Services businesssegment in the prior year, the remaining activities have been incorporated inthe Home Shopping business segment. Segment information about these businesses is presented below. 6 months to Ongoing Terminated 6 months to 30 30 Sept 2007 businesses businesses Sept 2006 £000 £000 £000 £000 RevenueHome Shopping 176,462 111,324 3,095 114,419Educational Supplies 95,061 88,433 747 89,180Healthcare 26,772 25,098 - 25,098 298,295 224,855 3,842 228,697 ResultHome Shopping 8,583 5,742 (2,518) 3,224Educational Supplies 11,191 4,932 144 5,076Healthcare (387) 1,112 - 1,112Share of result of associate (88) 315 - 315 19,299 12,101 (2,374) 9,727 Amortisation of intangible assets (1,133) (519)Negative goodwill arising on acquisitions 246 -in the periodExceptional items (4,833) (7,851)Loss on disposal of businesses - (16,350)Share-based payment expense (197) (113)Operating profit/(loss) 13,382 (15,106)Finance income 3,292 3,045Finance costs (14,154) (10,930)Profit/(loss) before tax 2,520 (22,991)Income tax credit/(expense) 428 6,536Profit/(loss) after tax 2,948 (16,455) Ongoing Terminated Year to businesses businesses 31 March 2007 £000 £000 £000 RevenueHome Shopping 338,363 29,954 368,317Educational Supplies 168,224 1,400 169,624Healthcare 48,837 - 48,837 555,424 31,354 586,778 ResultHome Shopping 48,377 (6,193) 42,184Educational Supplies 22,719 (486) 22,233Healthcare 1,848 - 1,848Share of result of associate 990 - 990 73,934 (6,679) 67,255 Amortisation of intangible assets (1,637)Negative goodwill arising on acquisitions in the period 7,787Exceptional items (18,775)Loss on disposal of businesses (19,496)Share-based payment expense (309)Operating profit 34,825Finance income 6,966Finance costs (24,332)Profit before tax 17,459Income tax expense (1,393)Profit after tax 16,066 Share of result of associate relates to the Home Shopping business segment.Amortisation of intangible assets relates to the Home Shopping segment(£653,000); Educational Supplies segment (£465,000) and the Healthcare segment(£15,000). Segment information relating to the Exceptional items is discussedin note 4. Share-based payment expenses cannot be allocated to a specificbusiness segment. After allocation of these items, the segmental results are as follows: HomeShopping, profit of £3,690,000; Educational Supplies, profit of £10,291,000; andHealthcare, loss of £402,000 leaving unallocated expenses of £197,000. 4. Exceptional items 6 months to 6 months to 30 Year to 30 Sept 2007 Sept 2006 31 March 2007 £000 £000 £000 Aborted transaction costs - (1,582) (1,632)Warehouse reorganisation costs - (7,450) (11,243)Restructuring costs (4,833) - (7,207)Profit on land sale - 1,181 1,307 (4,833) (7,851) (18,775) Restructuring costs relate to the Home Shopping business segment (£4,152,000)and the Educational Supplies business segment (£681,000). These costs arisefrom the ongoing integration of the Group's cash with order division, theinitial phase of which commenced in the previous year, and the integration ofthe Philip & Tacey educational supplies business acquired in April 2007. 5. Taxation Income tax for the six month period is a credit at 17% of profit before tax.This reflects a one off credit to the income statement arising as a result ofthe revaluation of the Group's deferred tax liability. This follows from achange to the main rate of corporation tax applicable from 30% to 28% effectivefrom April 2008 and announced in the Budget 2007 and is based on the estimatedeffective tax rate for the full year. 6. Earnings per share 6 months to 6 months to 30 Year to 30 Sept 2007 Sept 2006 31 March 2007 £000 £000 £000 Net profit/(loss) attributable to equity holders 2,948 (16,354) 16,198of the parent for the purposes of basic anddiluted earnings per shareLosses from terminated businesses (net of tax) - 1,513 4,246Amortisation of intangible assets (net of tax) 794 519 1,147Negative goodwill arising on acquisitions in the (246) - (7,787)periodExceptional items (net of tax) 3,504 5,736 13,654Loss on disposal of businesses (net of tax) - 11,445 14,312Share-based payment expense and derivative 177 152 275remeasurements (net of tax) Benchmark earnings 7,177 3,011 42,045 Weighted average number of shares 83,853,899 83,745,230 83,799,565Dilutive share options 1,336,054 1,077,045 1,059,781 Adjusted weighted average number of shares 85,189,953 84,822,275 84,859,346 Earnings per share - basic 3.52p (19.53)p 19.33p Earnings per share - benchmark 8.56p 3.60p 50.17p Earnings per share - diluted 3.46p (19.28)p 19.09p 7. Dividends 6 months to 6 months to 30 Year to 30 Sept 2007 Sept 2006 31 March 2007 £000 £000 £000 Amounts recognised as distributions to equityholders in the periodFinal dividend for the year ended 31 March 2007 13,083 11,904 11,904of 15.60p (2006: 14.20p) per shareInterim dividend for the year ended 31 March 2007 - - 3,521of 4.20p (2006: 3.80p) per share 13,083 11,904 15,425 The proposed interim dividend of 4.70 pence per ordinary share in respect of theyear ending 31 March 2008 was approved by the board on 21 November 2007. Inaccordance with IFRS it has not been included as a liability as at 30 September2007. 8. Bank overdrafts and loans During the period, the Group renewed its revolving credit facilities with itssyndicate of banks for a further 5 year term. On renewal, the facilities wereextended from £200m to £250m. 9. Acquisition of subsidiaries On 2 April 2007, the Group acquired the entire issued share capital of SynergyManaged Equipment Services Limited ("SMES") for consideration of £1,494,000.The transaction has been accounted for by the purchase method of accounting. The following table sets out the provisional fair values of the net assetsacquired and the resultant goodwill arising on the acquisition. These valueswill be finalised within the hindsight period set out within IFRS 3 'BusinessCombinations' as further evidence becomes available. Book Value Fair Value £000 £000Net assets acquiredIntangible assets - customer relationships - 589Property, plant & equipment 124 124Inventories 232 232Trade and other receivables 361 361Cash and cash equivalents 15 15Trade and other payables (429) (429)Current tax liabilities (91) (91)Deferred tax liabilities - (165) 212 636Goodwill 858Total consideration 1,494 Satisfied by:Cash 1,400Directly attributable costs 94 1,494Net cash outflow arising on acquisition:Cash consideration 1,494Cash and cash equivalents acquired (15) 1,479 The goodwill arising on the acquisition of SMES is attributable to the staffacquired with the business, the anticipated profitability of the business andthe anticipated future operating synergies from the combination, all of whichare specifically excluded in the identification of intangible assets onacquisition by the relevant accounting standards. SMES contributed £1,749,000 of revenue and £207,000 to the Group's profit beforetax for the period between the date of acquisition and the balance sheet date.Had the acquisition been completed on the first day of the current financialperiod, this contribution, and consequently Group revenues and Group profitattributable to equity holders of the parent, would have been unchanged. On 3 April 2007, the Group acquired the entire issued share capital ofPhilograph Publications Limited ("Philograph") for consideration of £1,378,000.The transaction has been accounted for by the purchase method of accounting. The following table sets out the provisional fair values of the net assetsacquired and the resultant goodwill arising on the acquisition. These valueswill be finalised within the hindsight period set out within IFRS 3 'BusinessCombinations' as further evidence becomes available. Book Value Fair Value £000 £000Net assets acquiredIntangible assets - brand names - 1,097Property, plant & equipment 2,089 2,089Inventories 1,329 1,329Trade and other receivables 634 634Cash and cash equivalents (1,416) (1,416)Trade and other payables (1,802) (1,802)Deferred tax liabilities - (307) 834 1,624Negative goodwill (246)Total consideration 1,378 Satisfied by:Cash 1,316Directly attributable costs 62 1,378Net cash outflow arising on acquisition:Cash consideration 1,378Cash and cash equivalents acquired 1,416 2,794 The negative goodwill arising on the transaction has been written back to theincome statement in accordance with IFRS 3 'Business Combinations'. Philograph contributed £4,158,000 of revenue and £459,000 to the Group's profitbefore tax for the period between the date of acquisition and the balance sheetdate. Had the acquisition been completed on the first day of the currentfinancial period, this contribution, and consequently Group revenues and Groupprofit attributable to equity holders of the parent, would have been unchanged. During the period, adjustments have been made to the carrying value ofinventories (£357,000) and payables (£250,000) acquired in the prior year, aspermitted by the hindsight provisions of IFRS 3 'Business Combinations'. Theseadjustments have increased goodwill by £607,000 and have been reflected in theGroup's results by restating the amounts reported in the Condensed Balance Sheetat 31 March 2007. 10. Assets held for sale On 5 September 2007, the Group acquired certain trade and assets of Choices UKGroup ("Choices") for cash consideration of £3,000,000, on behalf of itsassociate Webb Group Limited ("Webb group"). This business will be legallytransferred into the Webb group and, consequently, is classified as held forsale at the balance sheet date. 11. Related party transactions Transactions between the Company and its subsidiaries, which are related partiesof the Company, are not discussed in this note. During the period to 30 September 2007, Group purchases from its associate, onnormal commercial terms amounted to £nil (30 September 2006: £nil; 31 March2007: £0.01m) and in the same period the Group supplied goods and services toits associate of £5.20m (30 September 2006: £3.45m; 31 March 2007: £7.10m). At30 September 2007 the Group indebtedness to its associate was £nil (30 September2006: £nil; 31 March 2007: £nil) and that of its associate to the Group was£8.50m (30 September 2006: £5.85m; 31 March 2007: £6.25m). The Group has a trading relationship with Herbert Walker & Son (Printers)Limited, a commercial printing company which is controlled by Mr K Chapman, adirector. During the period to 30 September 2007, Group purchases from HerbertWalker, on normal commercial terms amounted to £0.24m (30 September 2006:£0.31m; 31 March 2007: £0.72m) and in the same period the Group supplied goodsand services to Herbert Walker of £0.07m (30 September 2006: £0.07m; 31 March2007: £0.07m). At 30 September 2007 the Group indebtedness to Herbert Walker was£0.09m (30 September 2006: £0.16m; 31 March 2007: £0.02m) and that of HerbertWalker to the Group was £0.03m (30 September 2006: £0.03m; 31 March 2007:£0.03m). Responsibility statement We confirm that to the best of our knowledge: (a) the condensed financial statements have been prepared in accordance withIAS 34; (b) the interim Chairman's statement and condensed financial statements includea fair review of the information required by DTR 4.2.7R (indication of importantevents during the first six months and description of principal risks anduncertainties for the remaining six months of the year); and (c) the interim Chairman's statement and condensed financial statements includea fair review of the information required by DTR 4.2.8R (disclosure of relatedparty transactions and changes therein). By order of the Board P E JollyChief Executive Officer C D HintonGroup Finance Director 29 November 2007 This information is provided by RNS The company news service from the London Stock Exchange