Interim Results

The Vitec Group PLC 05 September 2005 For immediate release 5 September 2005 The Vitec Group plc Half Year Results to 30 June 2005 The Vitec Group plc, the international supplier of products, services and solutions to the Broadcast, Entertainment and Media industries, announces its results for the half year to 30 June 2005, in accordance with International Financial Reporting Standards as expected to be adopted by the European Union ('IFRS'). H1 2005 H1 2004 % Change ------- ------- -------- Revenue £89.6m £89.1m +0.6 Before significant items* Operating profit £8.1m £7.6m + 6.6 Pre-tax profit £7.3m £7.0m + 4.3 Basic EPS 10.0p 9.3p + 7.5 After significant items* Operating profit £7.7m £7.7m - Pre-tax profit £6.9m £7.1m -2.8 Basic EPS 9.0p 9.5p -5.3 Interim dividend 6.1p 6.1p - * Significant items comprise restructuring costs, negative goodwill and non-interest finance charges KEY POINTS • Continued improvement in revenue and operating profit**, on reported and constant currency bases • Operating profit** in constant currency up 21% • EPS** up 7.5% • Photographic driven by continued growth in digital SLR camera sales • Broadcast Systems benefiting from stronger demand for robotic and studio pedestals • Restructurings delivering the expected benefits • Kata acquisition trading in line with expectations • Interim dividend maintained ** Before significant items Commenting on the results, Gareth Rhys Williams, Chief Executive, said: 'The Group has grown revenue for the third successive year, despite the adverse impact of the weaker dollar. This growth, coming from the continued demand for accessories for digital SLR cameras and robotic systems, and from increased sales of studio camera supports, was achieved against a background of weak demand on the Continent for our products, a flat US rentals market and our policy of improving margins within Air Traffic Control intercom systems. 'We continue to develop market-leading products and to improve the underlying business performance, offsetting the adverse currency impacts and lack of major sporting events this year. Going forward, the Board views the second half of 2005 with confidence.' Enquiries The Vitec Group plc Gareth Rhys Williams 020 8939 4650 Alastair Hewgill 020 8939 4650 Financial Dynamics Rob Gurner 020 7269 7291 Results Overview The Group is reporting its interim results under IFRS for the first time, including a restatement of the 2004 interim results. Whilst IFRS has no effect on sales or cash flows, it does affect the presentation of the income statement and the balance sheet. In the remainder of the statement profits are reported before significant items (which comprise restructuring costs, negative goodwill and non-interest finance charges), which we believe appropriately reflects the operating performance of the Group. We are pleased to report that sales have increased for the third year in succession, despite the adverse effects of the weaker dollar. Headline sales grew by £0.5m to £89.6m, including £0.2m relating to the Kata acquisition. After adjusting for adverse foreign exchange (FX) movements, the sales growth was 3.1%. This growth is more modest than in 2004, and reflects continued weak demand in mainland Europe, flat demand in our US rentals business and a deliberate policy of improving margins within air traffic control (ATC) systems, having entered that market strongly last year. Three years ago we embarked on our Consolidate - Leverage - Grow strategy, which initially involved a complex series of plant closures. Last year we announced that we would be rationalising the commercial side of our Broadcast Systems division, which is continuing. These actions are yielding the benefits we expected and have contributed to the increase in operating profit of 6.6% to £8.1m, or 21.3% before the effects of FX. After net financial expenses and a reduced tax rate, our adjusted basic earnings per share under IFRS increased by 7.5% to 10.0p. Kata, a leading manufacturer of high end broadcast and photographic camera bags, acquired at the end of May, continues to trade in line with expectations. The Board has declared an unchanged interim dividend of 6.1p per share in line with expectations. Photographic H1 2005 H1 2004 ---------------- -------- -------- Revenue £36.0m £34.8m ---------------- -------- -------- Operating Profit* £5.6m £6.0m ---------------- -------- -------- Operating Margin* 15.6% 17.2% ---------------- -------- -------- *before significant items The Photographic Division continues to perform well, with an underlying increase in sales of 5.6%, reduced to 3.4% by the effects of FX. Growth was, as expected, not as strong as 2004 partly because the one-off reduction in production leadtime in 2004 was not replicated in 2005. Operating profit was £5.6m, 6.7% below last year, but would have increased before FX effects. Underlying operating margins before FX effects increased marginally. Sales in our US distribution business, Bogen Imaging, were good but the performances of its sister businesses in mainland Europe were disappointing, reflecting the more challenging trading environment they faced. The Litec business grew strongly and benefited from the closer linkage with the IFF product range of lighting support systems. Together they have a very attractive range of lighting structures that will enable them to grow quickly. Litec's products were used extensively in the Live8 staging in Rome. A further step in growing the Photographic business has come from the successful acquisition of Kata on 31 May 2005. The division's strategy includes expanding the range of in-house or third party accessories that are sold through our distribution businesses and we are delighted that the Kata products are now part of the Vitec portfolio. Kata has a strong reputation for quality and innovation and we believe it has significant potential. The IT rollout has now been completed in all of the long-standing divisional companies following the implementations at Bogen Imaging Italy and at Litec. Within the tripod businesses, Gitzo France has been reorganised with some further functions moving to Italy, where the manufacturing and supply chain performance continues to improve. Broadcast Systems H1 2005 H1 2004 ---------------- -------- -------- Revenue £40.9m £41.0m ---------------- -------- -------- Operating Profit* £2.2m £1.4m ---------------- -------- -------- Operating Margin* 5.4% 3.4% ---------------- -------- -------- *before significant items Underlying sales within Broadcast Systems grew 2.3% in the first half, but were flat in sterling terms after the adverse effects of FX. Operating profit grew by 57.1% to £2.2m, reflecting the increased cost savings from restructuring actions. New product introductions remain a key feature of our strategy and it was pleasing to receive the Star Award at NAB (the major broadcast US tradeshow) for the new 'Eclipse Pico' product, targeted at outside broadcast vans, amongst several others. The Broadcast market remains patchy, nevertheless two of our three broadcast businesses are now performing very well. In camera support a strong finish to the first half produced an excellent improvement over last year. All markets, with the exception of Japan, are performing well and with sales of robotic products remaining steady it is encouraging that demand for studio products has improved. High Definition production (HD) is also driving the demand for higher end equipment, particularly for sports applications, despite reductions in average camera sizes. Broadcast intercoms remains a difficult area, with slow order intake in the first quarter, especially in Europe where the market remains weak. After a glut of ATC orders in 2004, we have focused on more profitable contracts in 2005 which has resulted in lower sales. The large multi-site voice communications project shipped to the European Space Agency last year was used successfully in monitoring the Soyuz mission in April. The FreeSpeak and CellCom digital wireless products are gaining acceptance and the market opportunity will be increased as the US market opens to us following the approval of the underlying technology by the FCC. The process to gain a product licence has now begun. Our portable power business, Anton Bauer, had a successful first half, including designing and delivering over $0.3m of custom power supply units to Panavision for exclusive use on their new 'Genesis' HD Super 35 digital cinematography camera system. This system is being employed in Australia on the new 'Superman' movie. While Anton Bauer's strongest market has traditionally been the US, significant sales have also been made to major rentals and broadcast companies in Russia, Hong Kong (Cable TV), Canada (City TV), Sweden (24/7) and Malaysia (TV3 and RTM). We continue to develop non-broadcast applications and the growth in this area is also encouraging. Broadcast Services H1 2005 H1 2004 ---------------- -------- -------- Revenue £12.7m £13.3m ---------------- -------- -------- Operating Profit* £0.3m £0.2m ---------------- -------- -------- Operating Margin* 2.4% 1.5% ---------------- -------- -------- *before significant items US dollar revenue was broadly flat compared with 2004, a US Presidential Election year. Sterling revenue slipped 4.5% to £12.7m but sterling operating profit rose by £0.1m to £0.3m. We began supplying HD broadcast rental equipment to American Idol, which was the top-rated television programme in the US, and renewed our agreements with two more Top-10 programmes, Survivor and The Apprentice. However, general market demand was lacklustre, following the strong growth last year. The US networks appear to have launched fewer new high-end live events and reality show programmes that demand our specialist skills in the first half than they had in prior periods. Nevertheless, planned investments in HD equipment, now that standards are stabilizing, have meant that we were able to fulfill a higher proportion of contracts with our own equipment this year, rather than using expensive sub-rentals from third parties. Those cost savings, along with previously instituted structural operating improvements, allowed us to generate slightly higher profits in the first half of 2005. Our aim will be to track our 2004 performance in the second half of 2005 - despite not having the benefits of additional rentals arising from the Athens Olympics and US Presidential Election. Tax As a result of actions taken by the Group, our tax rate has reduced by 2%, in line with the guidance given in March. However, instead of last year's UK GAAP rate of 42% reducing to 40%, the application of IFRS has increased our tax charge by 4%, all of which is deferred and non-cash, giving an estimated rate of 44% for 2005. Of this, 16% is deferred and 28% current. However, due principally to the benefit of the exceptional tax credit on the sale of the ALU business in 2003 and brought forward tax losses, we expect to pay little or no tax in 2005 (2004 £1.4m paid). In the first half there was a net tax receipt of £0.7m because of a historic UK tax rebate. Board Changes John Potter, who joined the Board in 1999 and who will have served almost seven years on the Board by Christmas, will be stepping down in the New Year, following the appointment of a successor, the search for whom has commenced. Outlook We have had an encouraging start to the second half, with order intake remaining satisfactory, and while the boost we received last year from the Olympics will not be repeated and we are exposed to movements in exchange rates, Kata will make a full contribution in the second half. Overall the Board views the outlook for the full year with confidence. Michael Harper Gareth Rhys Williams Chairman Chief Executive Consolidated income statement For the half year ended 30 June 2005 (unaudited) Half year to June 2005 Half year to June 2004 Year to 31 ----------------------------- --------------------------- December 2004 Before Significant Total Before Significant Total significant items(1) significant items(1) items items -------- -------- ------ -------- -------- ------ -------- £m £m £m £m £m £m £m -------------- -------- -------- ------ -------- -------- ------ -------- Revenue Existing operations 89.4 89.4 89.1 89.1 185.4 Acquisitions 0.2 0.2 - - - -------------- -------- -------- ------ -------- -------- ------ -------- Continuing operations 89.6 89.6 89.1 89.1 185.4 Operating profit before significant items Existing operations 8.0 8.0 7.6 7.6 17.7 Acquisitions 0.1 0.1 - - - -------------- -------- -------- ------ -------- -------- ------ -------- Continuing operations 8.1 8.1 7.6 7.6 17.7 Significant items Restructuring costs (0.4) (0.4) (0.5) (0.5) (2.1) Goodwill impairment - - - - (0.7) Negative goodwill - - 0.6 0.6 0.6 -------------- -------- -------- ------ -------- -------- ------ -------- Operating profit 8.1 (0.4) 7.7 7.6 0.1 7.7 15.5 Financial income 0.1 - 0.1 0.2 0.2 0.4 0.3 Financial expense (0.9) - (0.9) (0.8) (0.2) (1.0) (1.7) -------------- -------- -------- ------ -------- -------- ------ -------- Net financial expense (0.8) - (0.8) (0.6) - (0.6) (1.4) -------------- -------- -------- ------ -------- -------- ------ -------- Profit before tax 7.3 (0.4) 6.9 7.0 0.1 7.1 14.1 Current tax (2.0) - (2.0) (2.2) - (2.2) (4.3) Deferred tax (1.2) - (1.2) (1.0) - (1.0) (2.2) -------------- -------- -------- ------ -------- -------- ------ -------- Taxation (3.2) - (3.2) (3.2) - (3.2) (6.5) -------------- -------- -------- ------ -------- -------- ------ -------- Profit for the period attributable to equity shareholders 4.1 (0.4) 3.7 3.8 0.1 3.9 7.6 -------------- -------- -------- ------ -------- -------- ------ -------- Basic earnings per share 9.0p 9.5p 18.5p Diluted earnings per share 9.0p 9.5p 18.4p -------------- ------ ------ -------- Average exchange rates : Euro 1.45 1.48 1.47 US$ 1.88 1.82 1.82 -------------- ------ ------ -------- (1) See Note 2 Consolidated balance sheet For the half year ended 30 June 2005 (unaudited) ------------------- --------- --------- --------- As at 30 June As at 30 June As at 31 December 2005 2004 2004 £m £m £m ------------------- --------- --------- --------- Assets Non-current assets Goodwill 15.7 10.5 9.6 Intangible assets 3.1 3.0 3.2 Property, plant and equipment 30.7 32.7 30.7 Deferred tax assets 6.3 7.6 7.2 ------------------- --------- --------- --------- 55.8 53.8 50.7 ------------------- --------- --------- --------- Current assets Inventories 37.0 34.1 32.6 Trade and other receivables 37.5 38.9 35.2 Current tax assets 2.4 2.4 2.3 Cash and cash equivalents 12.1 6.8 14.4 ------------------- --------- --------- --------- 89.0 82.2 84.5 ------------------- --------- --------- --------- Total assets 144.8 136.0 135.2 ------------------- --------- --------- --------- Liabilities Current liabilities Bank loans and overdrafts 5.4 - 25.7 Trade and other payables 27.2 27.9 27.5 Current tax liabilities 1.5 0.4 2.6 Provisions 2.8 3.9 3.4 ------------------- --------- --------- --------- 36.9 32.2 59.2 ------------------- --------- --------- --------- Non-current liabilities Bank loans 25.5 28.4 - Other creditors 0.2 0.3 0.1 Provisions 11.3 7.8 9.4 Deferred tax liabilities 6.8 2.3 2.4 ------------------- --------- --------- --------- 43.8 38.8 11.9 ------------------- --------- --------- --------- Total liabilities 80.7 71.0 71.1 ------------------- --------- --------- --------- Net assets 64.1 65.0 64.1 ------------------- --------- --------- --------- Shareholders' equity Share capital including share premium 11.0 10.9 10.9 Retained earnings and other reserves 53.1 54.1 53.2 ------------------- --------- --------- --------- Total equity 64.1 65.0 64.1 ------------------- --------- --------- --------- Consolidated statement of recognised income and expense For the half year ended 30 June 2005 (unaudited) ---------------------------- -------- -------- -------- Half year to Half year to Year to 31 June 2005 June 2004 December 2004 £m £m £m ---------------------------- -------- -------- -------- Profit for the period 3.7 3.9 7.6 Actuarial loss on post-employment obligations (0.3) (0.2) (0.5) Currency translation differences on foreign net investments (0.2) (2.2) (4.0) ---------------------------- -------- -------- -------- Total recognised income and expense in the period 3.2 1.5 3.1 ---------------------------- -------- -------- -------- Statement of changes in equity For the half year ended 30 June 2005 (unaudited) ---------------------------- -------- -------- -------- Half year to Half year to Year to 31 June 2005 June 2004 December 2004 £m £m £m ---------------------------- -------- -------- -------- Profit for the period 3.7 3.9 7.6 Dividends paid (3.6) (6.8) (9.3) ---------------------------- -------- -------- -------- Retained profit/(loss) for the period 0.1 (2.9) (1.7) Currency translation differences on foreign net investments (0.2) (2.2) (4.0) Gains on derivative financial instruments (including IAS 39 transition adjustments) 0.1 - - New share capital subscribed 0.1 0.1 0.1 Share based payments 0.2 0.1 0.1 Actuarial loss on post-employment obligations (0.3) (0.2) (0.5) ---------------------------- -------- -------- -------- Net decrease in equity - (5.1) (6.0) Opening equity 64.1 70.1 70.1 ---------------------------- -------- -------- -------- Closing equity 64.1 65.0 64.1 ---------------------------- -------- -------- -------- Consolidated cash flow statement For the half year ended 30 June 2005 (unaudited) ---------------------------- -------- -------- -------- Half year to Half year to Year to 31 June 2005 June 2004 December 2004 £m £m £m ---------------------------- -------- -------- -------- Cash flows from operating activities Profit for the period 3.7 3.9 7.6 Adjustments for : Impairment of goodwill - - 0.7 Negative goodwill - (0.6) (0.6) Depreciation 4.9 5.1 10.2 Movement in post-employment obligations (0.1) 0.1 0.2 Charge for share based payments 0.2 0.1 0.1 Financial income (0.1) (0.4) (0.3) Financial expense 0.9 1.0 1.7 Taxation 3.2 3.2 6.5 Working capital and other items (7.3) (7.4) (3.6) ---------------------------- -------- -------- -------- Cash generated from operations 5.4 5.0 22.5 Interest received - - 0.1 Interest paid (0.8) (0.7) (1.7) Tax received/(paid) 0.7 (0.8) (1.4) ---------------------------- -------- -------- -------- Net cash from operating activities 5.3 3.5 19.5 ---------------------------- -------- -------- -------- Cash flows from investing activities Proceeds from sale of property, plant and equipment 0.2 0.2 1.6 Purchase of property, plant and equipment (4.6) (6.0) (10.0) Purchase of subsidiary undertakings (4.4) (1.5) (1.5) ---------------------------- -------- -------- -------- Net cash from investing activities (8.8) (7.3) (9.9) ---------------------------- -------- -------- -------- Cash flows from financing activities Proceeds from the issue of shares 0.1 0.1 0.1 Net receipt/(repayment) of loans 1.4 2.4 (1.6) Equity dividends paid (3.6) (6.8) (9.3) ---------------------------- -------- -------- -------- Net cash from financing activities (2.1) (4.3) (10.8) ---------------------------- -------- -------- -------- Net decrease in cash and cash equivalents (5.6) (8.1) (1.2) ---------------------------- -------- -------- -------- Reconciliation of decrease in cash and cash equivalents to movement in net debt For the half year ended 30 June 2005 (unaudited) ---------------------------- -------- -------- -------- Half year to Half year to Year to 31 June 2005 June 2004 December 2004 £m £m £m ---------------------------- -------- -------- -------- Decrease in cash and cash equivalents (5.6) (8.1) (1.2) Net (receipt)/ repayment of loans (1.4) (2.4) 1.6 ---------------------------- -------- -------- -------- (Increase)/reduction in net debt resulting from cash flows (7.0) (10.5) 0.4 Exchange rate movements (0.5) (0.7) (1.3) ---------------------------- -------- -------- -------- Movements in net debt in the period (7.5) (11.2) (0.9) Net debt at 1 January (11.3) (10.4) (10.4) ---------------------------- -------- -------- -------- Closing net debt (18.8) (21.6) (11.3) ---------------------------- -------- -------- -------- Analysis of net debt Cash and cash equivalents 12.1 6.8 14.4 Overdrafts (5.4) - (1.0) ---------------------------- -------- -------- -------- 6.7 6.8 13.4 Debt due after one year (25.5) (28.4) - Debt due within one year - - (24.7) ---------------------------- -------- -------- -------- Total (18.8) (21.6) (11.3) ---------------------------- -------- -------- -------- Segmental analysis of revenue and operating profit For the half year ended 30 June 2005 (unaudited) ---------------------- -------- -------- ------- -------- 2005 2004 2005 2004 £m £m £m £m ---------------------- -------- -------- ------- -------- Class of business Revenue Operating profit Broadcast systems 40.9 41.0 2.2 1.4 Photographic 36.0 34.8 5.6 6.0 Broadcast services 12.7 13.3 0.3 0.2 ---------------------- -------- -------- ------- -------- 89.6 89.1 8.1 7.6 Restructuring costs (0.4) (0.5) Negative goodwill - 0.6 ---------------------- -------- -------- ------- -------- 89.6 89.1 7.7 7.7 ---------------------- -------- -------- ------- -------- Geographical revenue By destination By origin ---------------------- -------- -------- ------- -------- United Kingdom 5.0 4.9 11.8 10.9 The rest of Europe 25.9 25.1 26.9 28.8 The Americas 44.9 45.3 49.3 46.6 Asia and Australasia 11.6 11.7 1.6 2.8 Africa and Middle East 2.2 2.1 - - ---------------------- -------- -------- ------- -------- 89.6 89.1 89.6 89.1 ---------------------- -------- -------- ------- -------- Notes to the interim financial statements 1 Basis of preparation EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidated financial statements of the Vitec Group PLC ('the Group'), for the year ended 31 December 2005, be prepared in accordance with International Financial Reporting Standards adopted for use in the EU ('IFRSs'). The Group adopted IFRS with effect from 1 January 2005. The Group's transition date is 1 January 2004, being the start date of the earliest period for which the Group presents full comparative information in our 2005 Annual Report and Accounts. This interim information has been prepared on the basis of the recognition and measurement requirements of IFRS in issue that either are endorsed by the EU and effective at 31 December 2005 or are expected to be endorsed and effective at 31 December 2005, the Group's first annual reporting date at which it is required to use adopted IFRS'. Based on these adopted and unadopted IFRSs, the directors have made assumptions about the accounting policies expected to be applied when the first annual IFRS financial statements are prepared for the year ending 31 December 2005. These accounting policies and reconciliations of our financial statements from UK GAAP to IFRS at key dates are available on our web site at www.vitecgroup.com. However, these IFRS' are still subject to change and to additional interpretations and therefore cannot be determined with certainty. In particular, the amendment to IAS 19 ('Employee Benefits - Actuarial Gains and Losses, Group Plans & Disclosure') has yet to be adopted by the EU. Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the year ended 31 December 2005. The financial information set out above is unaudited and does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim financial statements have been prepared under IFRS and comparative figures for the first half and full year 2004 have been re-stated accordingly. Reconciliations of profit and net assets from UK GAAP to IFRS are shown for the six months to June 30 2004. The statutory accounts for the year ended 31 December 2004 prepared in accordance with UK GAAP have been filed with the Registrar of Companies. The auditors have reported on the 2004 accounts; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2 Significant items are those items of financial performance that the directors consider should be separately disclosed to assist in the understanding of the underlying trading and financial performance achieved by the Group and in making projections of future results. Amounts taken account of relating to operating items include the costs of major restructuring programmes and amounts relating to the credit arising on negative goodwill arising on acquisitions or charges made for the impairment of capitalised goodwill. The Group uses options as part of its hedging of future cash flows. Under IFRS, the Group is able to hedge account for the intrinsic value of such options, but is not permitted to hedge account for the time value of such options. This time value is therefore marked-to-market at each balance sheet date. As such options are held to maturity, the ultimate net amount charged to the income statement in respect of any one option will always equate to the initial premium paid for that option. However, as a result of the mark to market, this may introduce volatile income and expenses between periods and such amounts are therefore being identified as non-interest finance significant items. Under IFRS, currency translation differences arising on long-term intra-group funding loans that are similar in nature to equity are charged/credited to reserves. Amounts relating to the currency translation differences arising on certain other intra-group funding balances that do not meet this strict criteria but that are very similar in nature are included within non-interest finance significant items. In the half year to June 2005 significant items comprise restructuring costs of £0.4 million (2004: £0.5 million) in the Broadcast Systems Division, negative goodwill of £nil (2004: £0.6 million) in the Broadcast Services Division, financial income of £nil (2004: £0.2 million) relating to changes in fair value of financial instruments, and financial expense of £nil (2004: £0.2 million) relating to net foreign exchange losses. 3 Financial income comprises net finance income on post employment benefits of £0.1 million (2004: £0.2 million) and changes in fair value of financial instruments of £nil (2004: £0.2 million). Financial expense comprises interest expense of £0.9 million (2004: £0.8 million) and net foreign exchange loss of £nil (2004: £0.2 million). 4 The tax rate on profits before significant items for the half year is estimated at 44% on the basis of the anticipated tax rates which will apply for the full year, and the charge comprises current tax £2.0 million (2004: £2.2 million) and deferred tax £1.2 million (2004: £1.0 million). The tax credit on significant items was £nil (2004: £nil). 5 Earnings per share Basic earnings per share of 9.0 pence (2004: 9.5 pence) is based on profit for the period attributable to equity shareholders of £3.7 million (2004: £3.9 million) and the weighted average number of shares of 41,082,140 (2004: 41,045,922). Adjusted basic earnings per share of 10.0 pence (2004: 9.3 pence) is based on profit for the period attributable to equity shareholders but before significant items, using the same number of shares. Diluted earnings per share of 9.0 pence (2004: 9.5 pence) is based on profit for the period attributable to equity shareholders and the weighted average number of shares as adjusted for the weighted number of shares under option, of 41,238,319 (2004: 41,260,547). 6 Interim dividend The directors have declared an interim dividend of 6.1 pence per share, which will absorb £2.5 million (2004: 6.1 pence absorbing £2.5 million). The dividend will be paid on 3 November 2005 to shareholders on the register at the close of business on 30 September 2005. 7 Acquisition On 31 May 2005 the Group acquired the business and assets of Kata International Limited and Kata Professional (Kimchi & Tishler) Limited ('Kata'), the designer and manufacturer of premium protective carrying bags for cameras and accessories in the photographic and broadcast markets. The net cash consideration (after taking account of £0.1 million cash in the business at the acquisition date) amounted to US$8.1 million (£4.4 million) and there is an estimated deferred consideration of US$3.6 million (£2.0 million) conditional upon future sales and profitability targets. Based on a provisional assessment of the fair values of the tangible and intangible assets, goodwill of £6.0 million arose on acquisition. The results of Kata have been included in the Photographic Division 8 Copies of this statement will be sent to all shareholders on the share register as at 5 September 2005. Copies are available on application to the Company Secretary. 9. IFRS transition adjustments Consolidated income statement For the half year ended 30 June 2004 (unaudited) -------------------------- ----------- ---------- --------- Reformatted UK GAAP Total IFRS Restated in as previously Adjustments accordance with reported (1) IFRS £m £m £m -------------------------- ----------- ---------- --------- Revenue Existing operations 89.1 - 89.1 Acquisitions - - - -------------------------- ----------- ---------- --------- Continuing operations 89.1 - 89.1 -------------------------- ----------- ---------- --------- Operating profit before significant items Existing operations 7.6 - 7.6 Acquisitions - - - -------------------------- ----------- ---------- --------- Continuing operations 7.6 - 7.6 Significant items Restructuring costs (0.5) - (0.5) Goodwill amortisation (0.8) 0.8 - Negative goodwill - 0.6 0.6 -------------------------- ----------- ---------- --------- Operating profit 6.3 1.4 7.7 Financial income - 0.4 0.4 Financial expense (0.8) (0.2) (1.0) -------------------------- ----------- ---------- --------- Net financial expense (0.8) 0.2 (0.6) -------------------------- ----------- ---------- --------- Profit before tax 5.5 1.6 7.1 Current tax (2.5) 0.3 (2.2) Deferred tax (0.4) (0.6) (1.0) -------------------------- ----------- ---------- --------- Taxation (2.9) (0.3) (3.2) -------------------------- ----------- ---------- --------- Profit for the period attributable to equity shareholders 2.6 1.3 3.9 -------------------------- ----------- ---------- --------- -------------------------- ----------- ---------- --------- Basic earnings per share 6.4p 9.5p -------------------------- ----------- ---------- --------- Diluted earnings per share 6.3p 9.5p -------------------------- ----------- ---------- --------- -------------------------- ----------- ---------- --------- Average exchange rates : -------------------------- ----------- ---------- --------- Euro 1.48 1.48 1.48 -------------------------- ----------- ---------- --------- US$ 1.82 1.82 1.82 -------------------------- ----------- ---------- --------- (1) The total IFRS adjustments are analysed on the following page Analysis of IFRS adjustments to the consolidated income statement For the half year ended 30 June 2004 (unaudited) Total Employee Development Goodwill Nega- Tax Forex Other adjustments benefits costs amorti- tive UK sation good- will £m £m £m £m £m £m £m £m ------------ -------- -------- -------- -------- -------- ------ ------ ------ Revenue Existing - - - - - - - - operations Acquisitions - - - - - - - - ------------ -------- -------- -------- -------- -------- ------ ------ ------ Continuing - - - - - - - - operations Operating profit before significant items Existing - (0.1) 0.1 - - - - - operations Acquisitions - - - - - - - - ------------ -------- -------- -------- -------- -------- ------ ------ ------ Continuing - (0.1) 0.1 - - - - - operations Significant items Restructuring - - - - - - - - costs Goodwill 0.8 - - 0.8 - - - - amortisation Negative 0.6 - - - 0.6 - - - goodwill ------------ -------- -------- -------- -------- -------- ------ ------ ------ Operating profit 1.4 (0.1) 0.1 0.8 0.6 - - - Financial income 0.4 0.2 - - - - - 0.2 Financial (0.2) - - - - - (0.2) - expense ------------ -------- -------- -------- -------- -------- ------ ------ ------ Net financial 0.2 0.2 - - - - (0.2) 0.2 expense ------------ -------- -------- -------- -------- -------- ------ ------ ------ Profit before 1.6 0.1 0.1 0.8 0.6 - (0.2) 0.2 tax Current tax 0.3 - - - - 0.3 - - Deferred tax (0.6) - - - - (0.6) - - ------------ -------- -------- -------- -------- -------- ------ ------ ------ Taxation (0.3) - - - - (0.3) - - ------------ -------- -------- -------- -------- -------- ------ ------ ------ Profit for the period attributable to 1.3 0.1 0.1 0.8 0.6 (0.3) (0.2) 0.2 equity shareholders ------------ -------- -------- -------- -------- -------- ------ ------ ------ Consolidated balance sheet For the half year ended 30 June 2004 (unaudited) Reformatted Total IFRS Restated in UK GAAP as Adjustments accordance with previously (1) IFRS reported £m £m £m ------------------------- --------- ---------- --------- Assets Non current assets Goodwill 8.9 1.6 10.5 Intangible assets 0.3 2.7 3.0 Property, plant and equipment 35.7 (3.0) 32.7 Deferred tax assets - 7.6 7.6 ------------------------- --------- ---------- --------- 44.9 8.9 53.8 ------------------------- --------- ---------- --------- Current assets Inventories 34.1 - 34.1 Trade and other receivables 39.7 (0.8) 38.9 Current tax assets 2.6 (0.2) 2.4 Cash and cash equivalents 6.8 - 6.8 ------------------------- --------- ---------- --------- 83.2 (1.0) 82.2 ------------------------- --------- ---------- --------- Total assets 128.1 7.9 136.0 ------------------------- --------- ---------- --------- Liabilities Current liabilities Bank loans and overdrafts - - - Trade and other payables 30.3 (2.4) 27.9 Current tax liabilities 1.5 (1.1) 0.4 Provisions 7.2 (3.3) 3.9 ------------------------- --------- ---------- --------- 39.0 (6.8) 32.2 ------------------------- --------- ---------- --------- Non current liabilities Bank loans 28.4 - 28.4 Other creditors 0.2 0.1 0.3 Provisions - 7.8 7.8 Deferred tax liabilities 3.5 (1.2) 2.3 ------------------------- --------- ---------- --------- 32.1 6.7 38.8 ------------------------- --------- ---------- --------- Total liabilities 71.1 (0.1) 71.0 ------------------------- --------- ---------- --------- Net assets 57.0 8.0 65.0 ------------------------- --------- ---------- --------- Shareholders' equity Share capital including share premium 10.9 - 10.9 Retained earnings and other reserves 46.1 8.0 54.1 ------------------------- --------- ---------- --------- Total equity 57.0 8.0 65.0 ------------------------- --------- ---------- --------- (1) The total IFRS adjustments are analysed on the following page Analysis of IFRS adjustments to the consolidated balance sheet For the half year ended 30 June 2004 (unaudited) Total Emplo- Emplo- Emplo- Share Tax Devel- Posi- Nega- Divi- Recla- Forex Other adjus- yee yee yee based opment tive tive dends ssifi- tments benef- benef- benef- paym- costs good- good- catio- its its its ents will will ns UK Italy Germany £m £m £m £m £m £m £m £m £m £m £m £m £m ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Assets Non current assets Goodwill 1.6 - - - - - - 0.8 0.8 - - - - Intangible assets 2.7 - - - - - (0.4) - - - 3.1 - - Property, plant and equipment (3.0) - - - - - - - - - (3.0) - - Deferred tax assets 7.6 - - - - - - - - - 7.6 - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 8.9 - - - - - (0.4) 0.8 0.8 - 7.7 - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Current - assets Inventories - Trade and other receivables (0.8) (1.1) (0.7) - - - - - - - 0.1 - 0.9 Current tax assets (0.2) - - - - - - - - - (0.2) - - Cash and cash - - - - - - - - - - - - equivalents ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (1.0) (1.1) (0.7) - - - - - - - (0.1) - 0.9 ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total assets 7.9 (1.1) (0.7) - - - (0.4) 0.8 0.8 - 7.6 - 0.9 ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Liabilities - Current - liabilities Bank loans and overdrafts - - - - - - - - - - - - - Trade and other payables (2.4) - - - 0.1 - - - - (2.5) - - - Current tax liabilities (1.1) - - - - (0.9) - - - - (0.2) - - Provisions (3.3) - (0.6) 0.1 - - - - - - (2.8) - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Current liabilities (6.8) - (0.6) 0.1 0.1 (0.9) - - - (2.5) (3.0) - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Bank loans - - - - - - - - - - - - - Other creditors 0.1 - - - - - - - - - 0.1 - - Provisions 7.8 5.0 - - - - - - - - 2.8 - Deferred tax liabilities (1.2) - - - - 1.2 - - - - (2.4) - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Non current liabilities 6.7 5.0 - - - 1.2 - - - - 0.5 - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total liabilities (0.1) 5.0 (0.6) 0.1 0.1 0.3 - - - (2.5) (2.5) - - ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Net assets 8.0 (6.1) (0.1) (0.1) (0.1) (0.3) (0.4) 0.8 0.8 2.5 10.1 - 0.9 ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Shareholders' - equity Share capital - - - - - - - - - - - - - including share premium IFRS adjustments at 01.01.04 10.3 (6.0) - (0.1) - - (0.5) - 0.1 6.8 10.0 - - Other reserves (3.6) (0.2) (0.1) - (0.1) - - - 0.1 (4.3) 0.1 0.2 0.7 Profit and loss 1.3 0.1 - - - (0.3) 0.1 0.8 0.6 - - (0.2) 0.2 ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total equity 8.0 (6.1) (0.1) (0.1) (0.1) (0.3) (0.4) 0.8 0.8 2.5 10.1 - 0.9 ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ This information is provided by RNS The company news service from the London Stock Exchange

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