RM Interim Results
RM PLC
14 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) to
UK education, reports continued good performance in the six months to 31 March
2007.
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 and
continued excellent growth in our Education Resources business, we've made great
progress developing the business in the first half of 2007.
'As always with RM, the first half results are not necessarily a good indicator
of full-year outcome; however, I'm pleased that we've made a good start to the
year. For the year as a whole, our expectations are unchanged and we're well
positioned to make further progress across the business.
'Education is a national and international priority. The opportunities available
to us are extremely exciting and, with an increasingly strong and broad
portfolio of businesses, we're uniquely well placed to respond to them.'
For further information, please contact:
Mike Greig/Phil Hemmings, RM plc 08450 700300
Andrew 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 the
Lincoln Centre, Brunswick, 18 Lincoln's Inn Fields, London, WC2A 3ED. A live
audio feed will be available to those analysts and shareholders unable to attend
this meeting in person. To access this facility, please dial +44 (0) 1452 541
077.
A copy of the presentation will be available at www.rm.com from 8.30am on 14 May
2007.
Results
RM's business mix continues to improve, with an increasing proportion of the
Group's revenues coming from longer term contracts. Committed revenues (order
book, deferred revenue and projects at preferred bidder stage) at the end of the
period exceeded £300m, a three-fold increase since September 2002. Revenue in
the period was £115.6m (2006: £114.2m).
Profit before tax was £5.6m (2006: £2.0m); this includes an exceptional credit
of £3.5m related to a reduction in the Group's pension deficit. Profit before
tax before this exceptional credit and before amortisation of acquisition
related intangibles of £0.1m was up 11% to £2.2m (2006: £2.0m).
Operating costs (before amortisation of acquisition related intangibles and the
exceptional pension credit) were £30.1m (2006: £29.3m) and reflect increased
investment in business development and product development across the Group. The
cost of bidding for Building Schools for the Future (BSF) projects expensed
during 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 £2.0m
payment 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 specialist
education resources business.
The interim dividend will increase by 6% to 1.19p per share (2006: 1.12p per
share); the dividend is payable on 29 June 2007 to shareholders on the register
at 1 June 2007.
Business context
RM is wholly focused on serving the education market; we provide products and
services that help teachers to teach and learners to learn. Our strategy is to
grow shareholder returns by developing businesses which build on and reinforce
our three competitive advantages: education focus, technical ability and
relative scale.
The Government's March 2007 Budget confirmed the importance of education in the
UK, with real terms growth of 2.5% in public spending on education planned for
the next three government years. Education is also a key priority across the
world; OECD statistics show that, on average, between 1995 and 2003, education
spend increased as a percentage of GDP in the group of 24 countries for which
data was available.
The education market presents a wide range of opportunities for RM. In each of
our four focus areas - Learning Technologies, Assessment and Data Services,
Education Management Systems, and Education Resources & Software - we have made
good progress in the first half of the year, both in the UK and increasingly in
international markets.
Learning Technologies
BSF - the Government's £45 billion programme to renew all English secondary
schools - is the largest single opportunity available to RM. We are ahead of our
target of winning 30% of BSF projects: with preferred bidder appointments in
Knowsley, Leeds and Lambeth in the first half, we have won five of the fourteen
ICT projects awarded so far. These five contracts represent future business
worth over £70m in the next seven years. We are currently bidding on a further
twelve projects, with bidding for an additional seven projects expected to start
in the second half. BSF bid costs expensed in the year as a whole are likely to
be £3.5m (2006 full year: £3.8m).
Learning Platforms - which provide communication & collaboration, online content
delivery and secure access to school information - are a natural evolution of
the sophisticated ICT infrastructure software and services we already supply to
schools. We are leading the way in this new area with the £37.5m Glow project, a
national intranet for all learners in Scotland which we believe to be the
largest Learning Platform in the world and which entered phase 2 pilots during
the period.
Community Connect - the most widely used school network product in the UK - will
now be used in all state schools in Northern Ireland. It is being provided for
use in primary schools as part of Lot 6 of the C2K programme and was already
used 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, with
encouraging educational results. The experience gained from this project
positions us well for the Government's Computers for Pupils programme, which is
intended to provide personal access to ICT equipment for the most disadvantaged
pupils. In March, we were chosen as preferred supplier of computing devices and
connectivity services for the London Computers for Pupils programme, a contract
which is likely to be worth approximately £5m.
Assessment and Data Services
We have made excellent progress in our assessment and data business, securing
long-term managed service agreements with two key partners: Cambridge Assessment
and 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 Cambridge
Assessment confirms us as their on-screen marking partner, providing a complete
marking service which includes: scanning and hosting of examination scripts;
electronic distribution of exam scripts to individual markers; on-screen
marking; electronic return of marks; workflow; and improving control and
monitoring of the whole process.
The Cambridge Assessment service is built on scoris(R), the third-generation of
RM's innovative e-Marking platform, which we are also using to provide services
to 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 delivery
services. The agreement will allow AQA to make its GCSE and A Level
qualifications increasingly available for students to take 'on-screen' using an
Internet-connected computer. The technology used to distribute tests to test
centres builds on the work we have done with the QCA on the groundbreaking Key
Stage 3 ICT test.
Education Management Systems
Our IntegrisG2 school management software is now in use in 100 schools and
recent authority-wide project wins in Powys and Wakefield will substantially
increase the installed base. We introduced IntegrisG2 Finance, a school
financial management system developed in partnership with CODA, at BETT 2007 in
January and already have a good pipeline for this product. The benefits of a
Web-based, centrally-hosted delivery model to Local Authorities are clear:
reduced cost & complexity, saved time for teachers & administrators and easier
access to better information.
In Australia, CAZ Software, which we acquired just under a year ago, has been
successfully integrated. There are a range of interesting opportunities for RM
in Australia, including state-wide contracts for both education management
software and for Learning Platforms.
Education Resources and Software
The supply of specialist education resources for use in the classroom has been
an increasingly important part of our business since we acquired TTS in
September 2004. We have expanded the range of products TTS offers, principally
by the introduction of new catalogues (most notably addressing special
educational needs and sports equipment), but also with the targeted acquisition
of MES last year. We have also extended our relationship with Tesco, securing
the contract to supply the Tesco Sport for Schools and Clubs scheme which will
run in Autumn 2007.
TTS' revenues in FY2007 are on course to have grown by more than 80% since it
joined 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 at
any time for the last five years, following the suspension of BBC jam in March
by the BBC Trust (the regulator of the BBC). It will be some time before it
becomes clear what the BBC's future activities in the education area will be. In
the meantime, we are reviewing our plans in this area, with the intention of
identifying 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 15
people there selling a range of products including Easiteach, Maths Alive and
Podium Podcasting. Revenue doubled year-on-year (albeit from a small base) and
we 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 customer
satisfaction is notable. In the first half, the customer satisfaction score -
our most important non-financial measure - increased further to 7.51 (2006 full
year: 7.41), putting us ahead of our target for the year. We have also received
external recognition as the UK's best help desk by receiving the Help Desk
Institute's Support Team Excellence Award for 2007.
Pensions
The deficit on the Group's defined benefit pension scheme decreased by £9.8m in
the period (IAS 19 deficit March 2007: £8.9m; September 2006: £18.7m).
Management actions accounted for £6.3m of this reduction and included: agreeing
with 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 pension
payment of £3.5m; and the continuation of £1.7m pa additional cash
contributions. 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 is
not necessarily a good indicator of the outcome for the year as a whole;
schools' purchasing patterns mean that the majority of revenues and profit
occurs in the second half of the Group's financial year. Nonetheless, we have
made 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, whilst
at the same time retaining focus on the needs of our existing customers.
Education Resources & Software and Assessment and Data Services are now
significant contributors to the overall success of RM, whilst Education
Management Systems has established momentum in a conservative market. For the
moment, BSF remains an investment activity with bid costs continuing to reduce
reported profit; however, we expect BSF to contribute positively to profit from
2010/11.
Education is a national and an international priority and RM is one of a very
few companies dedicated to delivering educational improvement. The opportunities
available to us are extremely exciting and with an increasingly strong and broad
portfolio 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 - 115,562 114,185 262,310
Cost of sales (84,276) - (84,276) (83,719) (191,177)
____________________________________________________________________________________________
Gross profit 31,286 - 31,286 30,466 71,133
Selling and
distribution
costs (16,570) - (16,570) (16,159) (33,166)
Research and
development
expenses (8,097) - (8,097) (7,514) (14,918)
Administrative
expenses (5,436) - (5,436) (5,633) (10,193)
Amortisation
of acquisition
related
intangible
assets - (119) (119) - (53)
Exceptional
pension credit 9 - 3,500 3,500 - -
____________________________________________________________________________________________
(30,103) 3,381 (26,722) (29,306) (58,330)
____________________________________________________________________________________________
Profit from
operations 1,183 3,381 4,564 1,160 12,803
Investment
income 1,007 - 1,007 893 1,876
Finance costs - - - (86) (135)
____________________________________________________________________________________________
Profit before
tax 2,190 3,381 5,571 1,967 14,544
Tax 3 (596) (1,014) (1,610) (544) (4,055)
____________________________________________________________________________________________
Profit for the
period
attributable
to equity
holders of the
parent 1,594 2,367 3,961 1,423 10,489
____________________________________________________________________________________________
Earnings per
ordinary share: 4
Basic 1.7p 2.6p 4.3p 1.6p 11.6p
Diluted 1.7p 2.6p 4.3p 1.6p 11.5p
Proposed
dividend per
share: 5
Interim 1.19p 1.12p 1.12p
Final - - 4.05p
All activities relate to continuing operations.
Consolidated statement of recognised income and expense
for 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 of
foreign operations 10 21 40 (48)
Actuarial gains/(losses) on defined
benefit 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 directly
in equity 2,308 2,968 (2,675)
_________________________________________________________________________________
Profit for the period 3,961 1,423 10,489
_________________________________________________________________________________
Total recognised income and expense
for the period attributable to equity
holders of the parent 6,269 4,391 7,814
_________________________________________________________________________________
Consolidated balance sheet
as at 31 March 2007
£'000 Notes Half-year ended Year ended
31 March 31 March 30 September
2007 2006 2006
________________________________________________________________________________
Non-current assets
Goodwill 22,450 20,771 22,332
Acquisition related intangible assets 1,001 - 1,002
Other intangible assets 2,140 1,478 2,460
Property, plant and equipment 22,119 26,134 22,483
Deferred tax assets 5,076 5,504 7,394
________________________________________________________________________________
52,786 53,887 55,671
Current assets
Inventories 9,446 9,555 10,815
Trade and other receivables 7 42,474 40,000 51,361
Cash 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 liabilities
Trade 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 liabilities
Retirement 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 holders
of the parent 10
Share capital 1,851 1,836 1,836
Share premium account 25,297 23,818 23,877
Own shares (855) (654) (954)
Capital redemption reserve 94 94 94
Translation reserve 17 84 (4)
Retained earnings 19,533 14,931 17,426
________________________________________________________________________________
Total equity 45,937 40,109 42,275
________________________________________________________________________________
Consolidated cash flow statement
for 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 12,803
Adjustments for:
Loss/(gain) on derivatives 120 41 (14)
Depreciation of property, plant and
equipment 4,410 4,348 9,071
Amortisation of acquisition related
intangible assets 119 - 53
Amortisation of other intangible
assets 520 282 342
(Gain)/loss on disposal of property,
plant and equipment (99) 125 77
Decrease in provisions (136) - (233)
Share-based payment charge 545 588 803
Pension charge 2,100 885 2,358
Pension contribution (2,631) (1,504) (3,554)
Exceptional pension credit (3,500) - -
________________________________________________________________________________
Operating cash flows before movements
in working capital 6,012 5,925 21,706
Decrease in inventories 1,369 2,312 1,211
Decrease 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 26,537
Additional special pension
contribution 9 (2,000) - -
Tax paid (1,729) (1,493) (3,110)
Income from sale of finance lease debt 397 399 854
Interest paid - (10) (36)
________________________________________________________________________________
Net cash inflow from operating
activities 54 10,681 24,245
Investing activities
Interest received 515 376 784
Proceeds on disposal of property,
plant and equipment 518 425 743
Purchases of property, plant and
equipment (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 activities
Dividends paid 5 (3,707) (3,399) (4,473)
Proceeds from share capital issue, net
of share issue costs 927 797 831
Repayment of borrowings assumed in
acquisitions - - (322)
Purchase of own shares (416) (516) (816)
Share buy backs - - (65)
Repayment of loan notes and deferred
consideration (642) (367) (1,790)
________________________________________________________________________________
Net cash used in financing activities (3,838) (3,485) (6,635)
________________________________________________________________________________
Net (decrease)/increase in cash and
cash equivalents (7,774) 1,558 7,150
________________________________________________________________________________
Cash and cash equivalents at the
beginning of period 30,092 22,942 22,942
Effect of foreign exchange rate
changes 5 3 -
________________________________________________________________________________
Cash and cash equivalents at the end
of 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 unaudited
consolidated interim financial statements as at 31 March 2007 and for the six
months then ended comprise those of the Company and its subsidiaries (together
referred to as the 'Group').
The information for the year ended 30 September 2006 does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on those accounts was not qualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985. The
consolidated financial statements of the Group as at and for the year ended 30
September 2006 are available upon request from the Company's registered office
or at www.rm.com/investors
The consolidated interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS). The Group has chosen
not to apply IAS 34 'Interim Financial Reporting' in the preparation of these
consolidated interim financial statements. The accounting policies applied by
the Group in the consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements for the year ended
30 September 2006. The preparation of consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these estimates.
In preparing these consolidated interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied to
the consolidated financial statements as at and for the year ended 30 September
2006.
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 in
three columns. This presentation is intended to give a better guide to business
performance by separately identifying the amortisation charge relating to
acquisition related intangible assets and, for the half-year, the exceptional
pension credit. The columns extend down the income statement to allow the tax
and earnings per share impacts of these transactions to be understood.
3. Tax
Corporation tax for the interim period is charged at the expected effective tax
rate for the full financial year, based upon profit before acquisition related
intangible asset amortisation and the exceptional pension credit and
incorporates 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 shown
below. As explained in note 2, adjusted diluted earnings per share have also
been presented which remove the impact of the exceptional pension credit and
also 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 dilutive
potential ordinary
shares: share options - 518 - - 560 - - 560 (0.1)
_______________________________________________________________________________________________________________
Diluted earnings per
ordinary share 3,961 92,265 4.3 1,423 91,380 1.6 10,489 91,315 11.5
Exceptional pension
credit and
amortisation of
acquisition related
intangible assets (2,367) - (2.6) - - - 53 - -
_______________________________________________________________________________________________________________
Diluted earnings per
ordinary share adjusted
for exceptional pension
credit and amortisation
of acquisition related
intangible 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 ended
31 March 2006 of 1.12p per share - - 1,022
Final dividend for the year ended 30
September 2006 of 4.05p (2005: 3.80p) per
share 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 11
May 2007. The expected cost of £1,094,000 has not been included as a liability
at 31 March 2007.
6. Notes to the cash flow statement
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid 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 cash
equivalents 30,092 (7,774) 5 22,323
Loan notes (884) - - (884)
________________________________________________________________________________
Net funds 29,208 (7,774) 5 21,439
Deferred 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 41,863
Long-term contract balances 1,655 5,115 5,490
Other receivables 494 750 725
Prepayments 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 20,544
Other taxation and social security 5,450 5,370 9,682
Other payables - deferred consideration 61 1,000 703
Other payables - other 6,053 3,915 1,624
Accruals 21,535 21,480 24,527
Amounts due from long term contract
customers - - 43
Deferred income 19,564 18,353 20,864
Loan 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's
defined benefit pension scheme. Following conclusion of the exercise in January
2007, members voted for the introduction of a 5% cap on pensionable salary
inflation which has been implemented from February 2007. The impact of this is a
reduction of £3.5m in the pension scheme deficit, which has been reflected as an
exceptional credit in the income statement, in line with IAS 19 Employee
Benefits.
In the half-years ended 31 March 2007 and 2006 the deficit on the Group's
defined benefit pension scheme has been rolled forward from the respective prior
year end. The roll forward includes actual investment returns for the periods
and 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 inflation
assumptions. Mortality assumptions have not been updated at the half-years. The
roll forward includes the impact of the pensionable salary inflation cap. The
latest triennial valuation of the scheme took place as at 31 May 2006 and was
used 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 pension
scheme 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 been
recorded against the scheme deficit at 31 March 2007. These cash payments are in
addition to the Group's current service contributions and £1.7m per annum
deficit 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 significant
progress in stabilising the financial position of the scheme and limiting risk
to 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 38,248
Profit for the period 3,961 1,423 10,489
Exchange differences on translation of foreign
operations 21 40 (48)
Actuarial gains/(losses) on retirement benefit
scheme 3,200 4,211 (3,914)
Tax (charge)/credit on items taken directly to
equity (913) (1,283) 1,287
Share-based payment transactions 545 588 803
Dividends paid (3,688) (3,399) (4,421)
Other reserve movements 536 281 (169)
________________________________________________________________________________
Equity carried forward 45,937 40,109 42,275
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